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[1989] ZASCA 5
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Da Costa de Atouguia v Braz (592/1987) [1989] ZASCA 5; [1989] 2 All SA 262 (A) (9 March 1989)
LL
Case No 592/1987
IN THE SUPREME COURT OF SOUTH APRICA
APPELLATE
DIVISION
In the matter between:
MANUEL DA COSTA DE
ATOUGUIA
Appellant
and
EDUARDO FERNANDES BRAZ
Respondent
CORAM
: VAN HEERDEN, E.M. GROSSKOPF, NESTADT,
VIVIER JJA et NICHOLAS AJA
HEARD
: 2 MARCH 1989
DELIVERED
: 9 MARCH 1989
JUDGMENT
VAN HEERDEN JA
:
2.
The respondent ("the plaintiff") instituted provisional sentence proceedings
against the appellant in the Witwatersrand Local Divison.
The plaintiff
preferred nine claims, only seven of which are material to this appeal. Those
claims were based on seven cheques. On
its face, each cheque was drawn by the
defendant in favour of the plaintiff as payee for an amount of R12 000. The
first was dated
1 April 1986 and the dates of the remaining six cheques were the
first day of the succeeding six months. On presentment the cheques
were
dishonoured, the defendant having countermanded payment.
In his answering affidavit the defendant alleged that during 1981 he was
indebted to the plaintiff in an amount of R270 000. In June
of that year he
signed an acknowledgment of debt reflecting this indebtedness ("the first
document"). The material part thereof provided
as follows:
"I, the undersigned,
3.
MANUEL DA COSTA DE ATOUGUIA
do hereby acknowledge that I am lawfully and legally indebted
to
EDUARDO FERNANDES BRAZ
in the amount of R270 000-00 being monies lent to me on my special instance and
request.
I herewith acknowledge receipt of the said amount and renounce the legal
exceptions known as non causa debiti and non numeratae
pecuniae which I herewith acknowledge that I understand.
I herewith acknowledge that the said amount bears interest at the rate of 12 per
annum, calculated annually in advance on the reducing
balance as from year to
year.
The said amount is to be paid in monthly instalments of R12 000 per month, the
first instalment being due and payable on the 1st
day of 1/7/83 and thereafter
monthly on the 1st day of each and every succeeding
month."
Of particular importance is
para 5 of the
answering affidavit. It reads as follows:
"Pursuant thereto and in repayment of the monthly instalments due in terms of
the acknowledgement of debt, I handed to the Plaintiff
a cheque book containing
40 cheques. Each of the cheques
contained
4.
therein was signed by me in blank and the
Plaintiff undertook to complete same by
inserting the dates and the amounts
of the
instalments."
Further
salient allegations in the answering
affidavit may be thus summarised:
1)
Thirty three cheques, each
for the amount of R12 000 and completed by the plaintiff, were met during the
period 1 July 1983 to 1 March
1986.
2)
Towards
the end of March 1986 a dispute arose between the parties. The defendant
contended that the amount of R270 000 plus interest
at the rate of 12% per annum
had been paid in full. The plaintiff, however, denied that the applicable rate
of interest was 12% per
annum. He relied upon an acknowledgement of debt ("the
second document"), signed by the defendant which was in all respects identical
to the first document save that where the figure "12" appeared in the latter
document immediately before the words "per annum" the
word "bank" was
inserted.
5.
3)
When the defendant signed
the first document the figure "12" appeared on it. This was intended as 12%.
However, the plaintiff asked
the defendant to sign an identical document in
which the rate of interest was to be left blank. He explained that he needed the
second
document "to show to the Receiver of Revenue". The defendant did not
understand this explanation but since he had a "very great respect"
for the
plaintiff he complied therewith.
4)
During the
course of the discussion which took place towards the end of March 1986 the
defendant accused the plaintiff of having inserted
the word "bank" in the second
document after it had been signed by the former and without authority to do so.
The plaintiff insisted,
however, that he was entitled to interest at bank
rate.
5)
Because he believed that the full
indebtedness had been extinguished the defendant stopped payment of the seven
cheques in issue,
but
6.
subsequent to the service of the provisional sentence summons he recalculated
the amount owing in terms of the first document and
ascertained that a balance
of R10 702,08 remained owing. Even if the plaintiff were entitled to compound
interest (which was denied)
the amount would be R22 865,86. (The former amount
was paid into Court.)
As was to be expected, the plaintiff disputed the above
version. In the replying affidavit he made the following material
allegations:
(a) As at 31 May 1981 the defendant owed the plaintiff the sum
of R470 000. It was then agreed that the said sum would be divided
into the
amounts of R200 000 and R270 000, that they would be payable in instalments and
that the rate of interest payable by the
defendant would be 12% per annum in
respect of the first amount and, in regard to the second amount, the same rate
of interest that
the plaintiff was being charged by the Bank of Lisbon on his
overdraft. (At
7. that time the applicable rate was 18% per annum on daily
balances.) It was also agreed that the defendant would furnish the plaintiff
with an acknowledgement of debt in respect of the amount of R270 000. (It is
unnecessary to set out the plaintiff's version of the
arrangements relating to
the amount of R200 000.)
(b)
On or about 1 June 1981 at
his office the defendant handed to the plaintiff the second document signed by
him. At that stage the rate
of interest was left blank. Subsequently the
plaintiff wrote in the word "bank" since this insertion accorded with the
parties' prior
agreement. At no stage did the plaintiff maké mention of
the Receiver of Revénue.
(c)
The figure
"12" was not inserted in any document which was given or shown to the plaintiff
on that occasion. It was only after the
first of the seven cheques had been
dishonoured that the defendant
8. contended that the
agreed rate of interest (in respect of the amount of R270 000) was 12% per
annum. The defendant then for the
first time produced the first document.
(d)
Shortly after receipt of
the second document the defendant handed to the plaintiff a book of forty
cheques, each of which had been
signed by him in blank; i e, the name of the
payee, the date and the amount had not been filled in by him. It was agreed that
the
plaintiff would complete each cheque in his favour as payee for an amount of
R12 000. In terms of the second document the first of
these cheques was to be
postdated to 1 July 1983 and the remaining cheques were to be made payable at
monthly intervals. The plaintiff
then completed the cheques in accordance with
what had been agreed.
(e)
It was not possible
to calculate precisely how many cheques would be required to discharge the debt
of R270 000 plus interest since
it
9. was understood
that the rate of interest charged by the Bank of Lisbon on the plaintiff's
overdraft would fluctuate from time to
time. It was therefore also agreed that
after the last of the forty cheques had been met, further cheques would be
furnished to the
plaintiff by the defendant. But if the rate of interest had
been fixed at 12%, it would have been possible to calculate in advance
the total
amount (inclusive of interest) to be paid by the defendant. And, if only simple
interest was payable, a calculation made
in advance would have shown that no
more than 34 cheques, if duly paid, would extinguish the total indebtedness.
(f) On the basis that the rate of interest was to be the bank rate, as
explained above, the sum still owing to the plaintiff by the
defendant at 31
March 1987 was R217 132,21.
The first question considered by the court a
quo
concerned the
incidence of the onus of proof.
10.
That question was thus formulated by the court:
"... who bears the onus, in these provisional sentence proceedings, of
establishing, as between the plaintiff and the defendant,
who are immediate
parties to the cheques, that the cheques were completed in accordance with the
true underlying agreement between
the
parties."
Having discussed conflicting authorities,
the court held that if provisional sentence is claimed by
inter alia
the
payee of a negotiable instrument and it is common cause that the instrument was
not completed prior to its delivery to the payee,
the onus rests on the drawer
to show that the instrument was completed at variance with the true agreement
between the partles. In
support of this finding the court relied upon s 18 (2)
of the Bills of Exchange Act (34 of 1964) which provides that if a bill of
exchange is wanting in any material particular the person in possession of it
has a
prima facie
authority to fill up the omission in question in any
way he thinks fit.
The court then went on to consider the
11.
further question whether the defendant had discharged the onus resting upon
him. Its conclusion was that at best for the defendant
the probabilities were
evenly balanced. Hence provisional sentence was granted on
inter alia
the
seven cheques in issue in this appeal.
Counsel for the plaintiff submitted
that the first question, as formulated by the court a
quo
, does not arise
in
casu
. In my view the submission is well-founded. The defendant did not
allege that the cheques were completed at variance with what had
been agreed
upon by the parties. In particular he did not allege that the plaintiff had to
wait until the due date of an instalment,
or shortly before that date, to
complete each cheque. Indeed, his only reievant assertion was that "the
plaintiff undertook to complete
same [ i e each of the f orty cheques contained
in the book] by inserting the dates and the amounts of the instalments". This is
precisely what the plaintiff did. He filled in each cheque for the agreed
amount
12. of R12 000 and inserted the first day of July 1983 on the first
cheque and the first day of each succeeding month on each of the
remaining 39
cheques. He also inserted his name as payee, which he was plainly entitled to
do.
The defendant did not rely on an express term that the cheques were only
to be completed as instalments fell due. Nor can such a term
be implied. It
would indeed have been surprising had the parties contemplated that for a period
of years blank cheques signed by
the defendant would remain in possession of the
plaintiff. Had the instruments been stolen, and had the thief, after completion
of
the cheques for amounts in excess of R12 000, negotiated them to a holder in
due course, the defendant could clearly have been in
an unenviable position.
Counsel for the defendant contended, however, that on the plaintiff's version
the parties might have intended a completion of the
instruments
immediately
13. after the plaintiff obtained possession thereof. The
plaintiff would then have been authorised, so the submission continued, to
fill
in as many cheques as would be required to extinguish the debt of R270 000 plus
interest at 12% per year. Put differently, the
plaintiff had to make a
calculation of the total amount, inclusive of interest, payable if each
instalment was paid on due date a'ccording
to the first document, and to
complete the number of cheques, each for an amount of R12 000 (or, in the case
of the last cheque,
for a lesser amount), which on presentment on due date wouid
discharge the defendant's total indebtedness.
The first answer to this submission is that the defendant did not allege that
the parties' agreement encompassed the rather involved
term contended for by
counsel. Here again there is no room for the implication of such a term. The
parties could hardly have intended
that a number of uncompleted
14. chegues
(5 or 6, on the plaintiff's version, as it turned out) signed by the defendant
would remain in the possession of the plaintiff
for a number of years. On the
other hand, the plaintiff could not have been expected to make the required
calculation and tear up
such instruments as would, according to the calculation,
be redundant. After all, if the remaining cheques, or some of them, were
not to
be paid on due date, further
mora
interest would be payable.
In
passing I may point out that when dealing with the probabilities in his heads of
argument, counsel for the defendant submitted
that it could not have been
expected of the defendant to make involved calculations prior to handing over
the incomplete instruments
to the plaintiff. Yet, if the term under
consideration is to be implied,. the plaintiff would have had to make those very
calculations
shortly thereafter.
15.
I may add that on the plaintiff's version it was anticipated that more than
forty cheques would be required, and that the parties
expressly agreed that
further cheques would in due course be handed over to the plaintiff.
In the
result this is not a case, even on the defendant's own version, of completion of
inchoate instruments in conflict with the
parties' underlying agreement. It
appears to me that at best for the defendant the foliowing is the true nature of
the defence raised
by him: although the plaintiff was authorised to complete
each cheque for an amount of R12 000 and to make each payable at dates
ranging
from 1 July 1983 to 1 October 1986, it was impliedly agreed that should the
defendant's indebtedness be extinguished prior
to the latter date (39 months
after 1 July 1983), no further cheques would be presented for payment. In the
result there is no question
of an unauthorised completion of inchoate
instruments by the
16.
plaintiff. Hence, when instituting the proceedings, he was armed with
seven cheques regular and complete on the face of them and filled
in according
to the parties' underlying agreement. In order to avoid liability the defendant
relied upon a condition
dehors
the instruments and the onus therefore
clearly rested upon him to show that the plaintiff's presentment of the cheques
for payment
was at variance with their underlying agreement. (See e g
Inglestone v Pereira
1939 WLD 55
, 71.)
On the assumption that the
plaintiff's completion of the cheques was not unauthorised, counsel for the
defendant readily conceded
that the onus rested upon the defendant. He also
conceded, rightly in my view, that the defendant failed to discharge that
onus.
The appeal is dismissed with costs.
H.J.O. VAN HEERDEN JA
E.M. GROSSKOPF JA
NESTADT JA CONCUR
VIVIER JA
NICHOLAS AJA