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1989
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[1989] ZASCA 173
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Western Flyer Cycles (Pty) Ltd. v Teltron (Pty) Ltd. (172/89) [1989] ZASCA 173 (1 December 1989)
IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between:
WESTERN FLYER CYCLES (PTY) LTD
Appellant
and
TELTRON (PTY)
LTD
. . Respondent
Coram
: JOUBERT, VAN HEERDEN, NESTADT, KUMLEBEN JJA
et
FRIEDMAN
AJA.
Hearing
: 9 November 1989 Delivered: 1 December 1989
JUDGMENT JOUBERT
JA:
2
This is an appeal on two guestions of law submitted to this Court in the form
of a special case in terms of Rule 5(4)(i) of the Rules
of this Court, leave to
appeal having been granted by the Court
a quo
.
For the purposes of
this appeal it is necessary to summarize in brief the relevant background facts
of the case. In doing so it will
be convenient to refer to Western Flyer Cycles
(Pty) Ltd as the "appellant" and to the respondent as "Teltron (Pty)
Ltd".
During September 1982' at Johannesburg the appellant entered into a
verbal agreement, which it mistakenly believed it had entered
into with Canoco
(Pty) Ltd, in regard to two copier machines. The precise nature and terms of the
agreement are not relevant to the
present case save for stating that a warranty
was furnished to the appellant according to which the copier machines would
provide
copies of clearly legible and high guality. The two copier
/3
3
machines were delivered to the appellant during March 1983 but the latter
claimed that they did not conform to the warranty. During
March 1984 the
appellant instituted an action in the Witwatersrand Local Division against
Canoco (Pty) Ltd for payment of R20 344-38
for breach of the warranty. At a
pre-trial conference held on 22 October 1985 attorney Richard Treisman disclosed
that he had at
all relevant times represented both Canoco (Pty) Ltd and Teltron
(Pty) Ltd and that the latter had entered into the verbal agreement
with the
appellant. On that date the appellant for the first time became aware of the
fact that it had apparently contracted with
Teltron (Pty) Ltd. Acting on this
information the appellant obtained a postponement of the trial on 5 November
1985 for an opportunity
to apply for the joinder of Teltron (Pty)Ltd. The
application for the joinder of Teltron (Pty) Ltd was served on 20 November 1985
at the registered address of Teltron (Pty) Ltd which was also the registered
address of Bromain Trading (Pty) Ltd.
/4
4
On 4 December 1985 a power of attorney was filed by Teltron (Pty) Ltd to
defend the appellant's action. It was accompanied by a resolution
adopted by its
Board of Directors to defend the action.
On 9 December 1985 attorney Richard
Treisman informed the appellant's attorneys that Teltron (Pty) Ltd did not
intend to oppose the
application for its joinder. The following day an order
was.granted in the Witwatersrand Local Division joining Teltron (Pty) Ltd
as
second defendant in the appellant's action. Pleadings were then exchanged
between the parties and duly filed. The plea of Teltron
(Pty) Ltd was filed on
21 February 1986. No mention was made therein of the fact that the appellant's
claim had become compromised.
I shall in due course explain the matter of
compromise with reference to Bromain Trading (Pty) Ltd.
It is appropriate to mention at this stage the rather strange history of the
name of Teltron (Pty) Ltd
/5
5
which, unbeknown to the appellant until 10 September 1987, was changed from
time to time in an almost chameleon-like manner viz.
1. On 24 March 1950 Saul Pincus (Pty) Ltd was inoorporated which changed its
name on 10 November 1966 to Teltron (Pty) Ltd.
2. On 28 January 1983 Teltron (Pty) Ltd changed its name to Teltron Holdings
(Pty) Ltd which traded at all relevant times as "Teltron".
3. On 26 September 1984 Teltron Holdings (Pty) Ltd changed its name to Bromain
Trading (Pty) Ltd which traded at all relevant times
as "Teltron".
4. On 7 May 1986 Bromain Trading (Pty) Ltd changed its name back to Teltron
(Pty) Ltd and continued to trade as "Teltron".
I now
turn to refer to the compromise proceedings involving Bromain Trading (Pty) Ltd.
By October
/6
6
1985 the latter was liable to be wound up under the provisions
of the
Companies Act 61 of 1973 (the"Act"). Macsteel
Commercial Investments (Pty)
Ltd as creditor submitted on
30 October 1985 an offer of compromise (the
"Bromain offer
of compromise") in terms of sec 311(1) of the Act. On
5
November 1985 Bromain Trading (Pty) Ltd applied
ex parte
in
the
Witwatersrand Local Division for an order directing meetings
to be held of
its creditors to consider the Bromain offer
of compromise. Such meetings were
held on 3 December 1985.
The Bromain offer of compromise was sanctioned by an
order
of Court on 17 December 1985 and thereafter duly registered
in terms of sec 311(6) of the Act. The appellant was,
however, at all relevant times unaware of the terms of the
Bromain offer of compromise, its submission, the meeting
of the creditors and its sanction by an order of Court.
Nor was the appellant aware of the fact that it was a creditor
of Bromain Trading (Pty) Ltd.
/7......
7
At a further pre-trial conference held on 10 September 1987 Teltron (Pty) Ltd
for the first time advised the appellant of the existence
of the Bromain offer
of compromise. Teltron (Pty) Ltd also indicated to the appellant that if the
trial Court found that it was a
creditor of the appellant then the latter's
claim was compromised by the Bromain offer of compromise.
On 15 September
1987 Teltron (Pty) Ltd served on the appellant a notice of its intention to
amend its plea in order to provide for
a defence that the appellant's claim
against it had become extinguished by the terms of the Bromain offer of
compromise. On the following
day Teltron (Pty) Ltd filed another power of
attorney which "ratifying and adopting any action already taken by my Attorney
in defending
this action, and further authorising my Attorney to continue
defending the action instituted against Teltron (Pty) Ltd by the Plaintiff."
The
appellant's reaction was to give on
/8
8
17 September 1987 notice of its objection to the proposed amendment.
When
the trial of the appellant's action commenced on 18 September 1987 in the
Witwatersrand Local Division before WEYERS J
Mr Joseph
on behalf of
Teltron (Pty) Ltd moved the proposed amendment of the plea without any
supporting affidavits.
Mr Kruger
on behalf of the appellant opposed the
proposed amendment. WEYERS J allowed the amendment, granted a postponement of
the trial and
ordered Teltron (Pty) Ltd to pay the wasted costs on an attorney
and client scale. Since the granting of the amendment of the plea
forms the
basis of the first question of law raised in the stated case I shall revert to
it more fully hereinafter.
Teltron (Pty) Ltd on 25 January 1988 amended its plea in terms of the order
of court, dated 18 September 1988. On 3 February 1988
the appellant filed its
replication to the amended plea. The replication raised the defence
/9
9 of estoppel, viz that Teltron (Pty) Ltd was estopped from
relying on the Bromain offer of compromise as a defence to the appellant's
claim.
The trial of the action on the merits was heard by VAN SCHALKWYK J in
the Witwatersrand Local Division. During the course of the trial
Canoco (Pty)
Ltd was permitted to withdraw from it. The trial then proceeded against Teltron
(Pty) Ltd as sole defendant. Schmal
and Campbell-Russel testified as expert
witnesses on behalf of the appellant and Teltron (Pty) Ltd respectively. On 25
February 1988
VAN SCHALKWYK J held that the appellant had succeeded in proving
the warranty and a breach thereof by Teltron (Pty) Ltd. The appellant
had
failed, however, to prove that Teltron (Pty) Ltd was estopped from relying on
the Bromain offer of compromise which had compromised
the appellant's claim. He
accordingly granted absolution from the instance. Teltron (Pty) Ltd was ordered
to pay the appellant's
costs up to and including 17 September 1987 whereas the
appellant was to pay the costs of Teltron (Pty) Ltd as
/10
10
from 17 September 1987 until 25 February 1988.
The two
questions of law raised in the stated case are:
1. Whether or not Teltron (Pty) Ltd was entitled to the amendment of its plea
granted by WEYERS J.
2. Whether or not Teltron (Pty) Ltd was estopped from raising the offer of
compromise as a defence against the appellant's
claim.
As regards the first question of law I have
already stated
supra
that on 15 September 1987 Teltron (Pty) Ltd served
on the appellant a notice of its intention to amend its plea while the appellant
on 17 September 1987 gave notice of its objection to the proposed amendment. The
hearing of the trial had been set dówn for
18 September 1987 before
WEYERS J. At the commencement of the hearing
Mr Joseph
on behalf of
Teltron (Pty) Ltd moved the proposed amendment of the plea without supporting
affidavits or other admissible evidence.
The proposed amendment
/11
11
did not relate to the mere formal corrections of obvious
mistakes in the plea. It sought the introduction of a far-reaching defence.
An
inordinate delay of more than 18 months had occurred since Teltron (Pty) Ltd
filed its plea on 21 February 1986. There had been
ample opportunity for an
amendment of the plea before the notice of the proposed amendment was given on
15 September 1987 and before
commencement of the hearing of the trial on 18
September 1987. In the circumstances it was incumbent on Teltron (Pty) Ltd, in
seeking
the indulgence to amend its plea, to explain the apparent unreasonable
delay in making the application for the proposed amendment.
All Mr
Joseph
did was to suggest that it was due to an oversight on the part of Teltron (Pty)
Ltd. That was not good enough. Moreover, it was hearsay.
There was no admissible
evidence adduced in support of the application to explain the undue delay on the
part of Teltron (Pty) Ltd.
It follows that WEYERS J failed to exercise a proper
discretion in the circumstances by
/12
12
allowing the proposed amendment. The correct order would have
been to have dismissed the application with costs. That is the answer
to the
first question of law raised in the stated case. In view of this answer it
becomes unnecessary to consider the second question
of law raised in the stated
case, since the amendment of the plea, which sought to introduce the Bromain
'offer of compromise as
a defence against which the estoppel was directed,
should not have been granted.
It is common cause that the amount of R20 344-38 constitutes liquidated
damages.
When the application for leave to appeal to this court was granted by VAN
SCHALKWYK J, costs of the application were ordered to be
costs in the cause. At
the instance of the appellant, who employed two counsel for the purpose of the
application for leave to appeal,
VAN SCHALKWYK J reserved the question involving
the costs of two counsel for determination by this Court. In this Court reasons
have
not
/13
13
been advanced to justify the costs of two counsel in the event
of the appeal succeeding.
In the result the following orders are granted:
1. The appeal succeeds with costs. Such costs are to include the costs of the
application for leave to appeal to this Court on the
basis of one counsel
only.
2. The following order is substituted for the order, dated 18 September 1987,
amending the respondent's plea: "The application is
dismissed with costs."
3. The following order is substituted for the order of the Court
a
quo
:
/14......
14
"(a) Payment of the sum of R20 344-38
(b) Interest on the said sum of R20 344-38
a tempore morae
(c) costs of suit, including the qualifying fees of
the witness
Schmal."
C. P. JOUBERT JA
VAN HEERDEN JA NESTADT JA Concur
KUMLEBEN JA FRIEDMAN AJA
/15......