About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1990
>>
[1990] ZASCA 136
|
|
Deloitte Haskins & Sells Consultants (Pty) Ltd. v Bowthorpe Hellerman Deutsch (Pty) Ltd. (303/1989) [1990] ZASCA 136; 1991 (1) SA 525 (AD); [1991] 1 All SA 400 (A) (16 November 1990)
LL
Case No 303/1989
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
DELOITTE HASKINS & SELLS CONSULTANTS
(PROPRIETARY)
LIMITED
Appellant
and
BOWTHORPE HELLERMAN DEUTSCH
(PROPRIETARY) LIMITED
Respondent
CORAM
: VAN HEERDEN, MILNE, KUMLEBEN, F H GROSSKOPF JJA et NICHOLAS
AJA
HEARD
: 1 NOVEMBER 1990
DELIVERED
: 16 NOVEMBER 1990
JUDGMENT
VAN HEERDEN JA
:
2.
In August 1985 the respondent sued the appellant in the Witwatersrand Local
Division for payment of the sum of R92 436,10. The respondent
preferred a main
claim and an alternative claim. Since the main claim was, in effect, abandoned
in the trial court, and since counsel
for the respondent did not seek to rely
upon it in this court, nothing more need be said about it.
In the respondent's particulars of claim, as amplified, the alternative claim
(hereinafter simply referred to as the respondent's
claim) was based on the
following averments:
1)
On 30 July 1980 the parties
entered into a written agreement in terms of which the appellant undertook to
design and implement certain
computer application modules for the respondent at
an agreed remuneration of R50 000.
2)
It was a
term of the agreement that should the appellant fail to supply the complete
system
3.
by 30 June 1981 the respondent would be
entitled to employ the services of a third party for its completion and to
recover the costs
from the appellant.
3)
In breach of its obligation
the appellant failed to supply the entire system by 30 June 1981, and "from
December 1982 onwards" the
respondent employed the services of third parties for
its completion.
4)
The costs occasioned by the
employment of third parties amounted to R92
436,10.
The appellant filed a plea on the merits and
a special plea. In the latter, as amplified, the appellant pleaded that the
respondent's
claim had become prescribed because the debt had become due more
than three years before the service of the summons on the appellant.
The
liability upon which the claim was based arose, so the appellant alleged, when
the breach of contract took place.
In its replication the respondent denied the
4.
allegations in the special plea and furthermore averred
that its claim
only became "due" when it was reasonably
able to assess the amount and nature
thereof, which
occurred "in or about Pebruary 1985". It would appear
that
this averment was founded on the provisions of
s 1(3) of the Prescription
Amendment Act 11 of 1984
which came into operation on 7 March 1984. Until
that
date
s 12(3)
of the
Prescription Act 68 of 1969
had
provided:
"A debt which does not arise from contract shall not be deemed to be due until
the creditor has knowledge of the identity of the
debtor and of the facts from
which the debt arises: Provided that a creditor shall be deemed to have such
knowledge if he could have
acquired it by exercising reasonable
care."
This subsection was amended by
the 1984 Act
in that the phrase "which does not arise f rom the
contract" was deleted. However, in
Protea Inter-
national (Pty) Ltd v Peat Marwick Mitchell and Co
1990
(2) SA 566 (A) , this court decided that the amendment
5. was not intended
to operate retrospectively, i e, in respect of prescription which commenced to
run prior to 7 March 1984. If,
therefore, a debt became due prior to that date,
the amended subsection has no application.
When the matter came to trial, the parties asked the court to adjudicate at
the outset on the issue raised by the special plea. The
court acceded to this
request, presumably in terms of Rule of Court 33(4). No evidence was led, the
issue being argued on the pleadings
only. The appellant's argument was that the
respondent could have sued the appellant on 1 July 1981 for the cost of
completion of
the computer system, and that prescription accordingly ran from
that date. The respondent, on the other hand, contended that at the
earliest
prescription began to run in December 1982 when it employed third parties to
complete the system (that date being less than
three years prior to the service
of summons). In particular the respondent
6.
submitted that its claim was based exclusively on the
provisions of clause
15 of the agreement between the
parties. That clause reads:
"Should the consultants [the appellant] fail to supply the complete system ...
by 30 June 1981, the customer [the respondent] may,
at his discretion, employ
the service of a third party for the completion of the same, the costs of which
will be met by the consultants."
The
trial court found for the appellant and
consequently dismissed the respondent's claim with
costs. Its reasoning ran along these lines:
1)
The agreement was one of
locatio conductio operis
. Should the workman under such a contract fail
to complete the work by the promised date and the other party ("the employer")
decide
to take the benefit of the incomplete work, the employer is entitled by
way of damages to the difference between the contract price
of the work and the
cost of having the work completed by another workman.
2)
Clause 15 of the agreement did not
7.
involve a deviation from the above principles. In particular it did not confer
upon the respondent an independent contractual remedy.
3)
A claim for damages based
upon non-completion of the computer system postulates a cancellation of the
agreement or a severable portion
thereof. And although clause 15 "does not talk
about cancellation, the notion is ... implicit in the very act of employing
another
contractor".
4)
Nothing turns on
whether the respondent's claim is founded on a common law remedy or on the
provisions of clause 15. In either case
the claim is one for damages flowing
from the breach of a duty to perform within a stipulated
period.
On analysis the view of the trial court
seems to have been that clause 15 merely provided for a common law remedy which
in any event
would have been available had the appellant failed to complete the
computer system by 30 June 1981 . On this approach it is not
8. clear to me,
however, why the court found it necessary to introduce the concept of
cancellation of the agreement, Had the respondent
cancelled the agreement, it
would have been obliged to return, or at least to tender the return óf,
that part of the system
already installed by the appellant. In any event, it is
trite law that even if a party to a contract is entitled to resile because
of
the other party's failure to perform, he is not obliged to do so. He may instead
claim performance, either in
forma specifica
(subject to the court's
discretion) or by way of damages in lieu of performance:
Farmers'
Co-operative Society (Reg.) v Berry
1912 AD 343
, 350. And if there has been
partial (or defective) performance, damages may be claimed in lieu of incomplete
performance ("complementary
damages"). It would therefore appear that the true
basis of the trial court's finding was this: clause 15 conferred upon the
respondent
no more or less than a remedy which in any event would have accrued
ex
lege
9.
had there been a failure to perform fully by 30 June
1981; viz, a claim
for complementary damages.
With the leave of the trial court the
respondent appealed to a full bench of the Transvaal
Provincial Division.
Having set out a number of the
provisions of the agreement the full bench
(per
Kriegler J) came to the conclusion that it is "one not
fitting comfortably into any familiar legal niche, and
that it cannot simply be categorized as a contract of
locatio conductio operis
". The court went on to hold
that clause 15 did not introduce a
mora
date in the
sense that this term is ordinarily understood, and that
the remedy conferred by the clause did not co-incide
with any common law remedy. In this regard Kriegler J
said:
"Plaintiff's [respondent's] alternative claim is not one for damages for
breach of contract based on defendant's [appellant's] failure
to complete its
contractual obligations by an essential
mora
date. It is founded on
ciause 15 alone and not on the common law. That clause entitled the plaintiff,
from 1 July
10.
1981 onwards to make the election stated. Unless and until it made that election
there was no obligation on defendant or 'no debt
due'. It may well be - although
I make no such finding - that it was implicit in clause 15 that plaintiff had to
exercise that right
within a reasonable time. But that does not derogate from
the conclusion that such right did not arise, nor did defendant's consequent
obligation or debt to bear the costs of the third party arise, upon the mere
effluxion of time.
Dies non interpellát pro hominem
.
The proposition can be illustrated in this way. Assume 30 June 1981 had come and
gone; assume further that plaintiff had not yet
appointed someone else for the
completion of the system. Could it, in those circumstances, have made any claim
on respondent under
clause 15? The answer is clearly in the negative. Defendant
could have raised as a good defence to any such claim that any liability
on its
part was predicated by the exercise by plaintiff of the discretion vested in it
by clause 15 to appoint a third party."
In the
result the full bench reversed the decision of the trial court but subsequently
granted the appellant leave to appeal to this
court.
In my view nothing turns
on the question whether the agreement is one of
locatio conductio operis
or whether it is an innominate contract. I
11
shall therefore assume, in favour of the appellant, that it falls within the
former category.
The main submissions of counsel for the appellant may be
thus summarised:
(1)
Although the agreement did
not specifically provide when the design and implementation of the computer
modules should be completed,
clause 15 did introduce a
mora
date. Had the
appellant failed to supply the complete system by 30 June 1981, the respondent
would have been entitled to exercise
any of the rights normally arising from
such a breach of contract. So, for instance, it could have cancelled the
agreement, or have
kept it intact and have claimed
damages.
(2)
Clause 15 did no more than simply
spell out one of these remedies, i e, the right to claim complementary
damages.
(3)
Were the clause to be interpreted
as conferring an additional remedy on the respondent,
it
12. would lead to the ahsurd result that the
respondent would be entitled to employ the services of a third party and
simultaneously
to exact performance in
forma specifica
, i e, to compel
the appellant to rectify its incomplete performance.
(4)
It follows that immediately
the breach occurred the respondent could have sued the appellant for
complementary damages. Hence the
debt became due on 1 July
1981.
(5)
Even if clause 15 required actual
employment of a third party, there is no reason why the respondent could not
have sued the appellant
on 1 July 1981 for the cost of employing such a party to
complete the system.
On the assumption that clause
15 did stipulate a
mora
date (and that the date did not apply only for
the purposes of that clause), it seems clear that the submissions, apart from
(5)
above, raise one question only, viz, whether the remedy provided for by
13.
the clause is co-extensive with a common law claim for complementary damages.
Now, when a party fails to perform fully by the date
specified for performance,
the innocent party may forthwith claim such damages. If the agreement is one of
locatio conductio operis
, the measure of damages is the cost of
completion of the work. This amount may be claimed whether or not any cost is
actually incurred
by the completion of the work, or whether or not the innocent
party intends to engage the services of someone else to rectify the
incomplete
performance. Thus, the claim may be maintained even if the work was completed f
ree of charge by a f riend of the innocent
party (cf
G and M Builders
Supplies (Pty) Ltd v South African Railways and Harbours
1942 TPD 120).
By contrast clause 15 makes provision for the recovery of the actual cost of
completion of the system. In order to recover under this
clause the respondent
had i) to employ the services of a third
14. party and ii) to incur
expenditure by doing so. It is unnecessary to determine whether such expenditure
could be recovered in
so far as it exceeded the reasonable or usual cost of
completing the system; it suffices to say that unless expenditure was incurred
as a result of the employment of a third party the respondent could not sue the
appellant under clause 15.
It is therefore clear that the remedy provided by
clause 15 differs markedly from an ordinary claim for complementary damages. In
essence the clause limited the appellant's liability which would have arisen ex
lege
had the clause merely provided that the system was to be completed
by 30 June 1981. It follows that the clause was intended to provide
a remedy in
substitution of, and not in addition to, a common law claim for complementary
damages.
There is no provision in the agreement militating against the above
construction of clause 15.
15. Indeed, clause 8 tends to support it. This
clause limits in several respects the common law liability of the appellant.
Thus,
clause 8(1) provides that the appellant "shall not incur any liability by
reason of any failure ... to fulfil any obligation in terms
of this agreement if
such failure is not due to the fault or negligent act" of the appellant. Again,
clause 8.3 excludes liability
for consequential loss and furthermore stipulates
that if the computer system should prove defective after acceptance thereof by
the respondent "then the ... [appellant's] ... liability shall be limited to
rectifying the fault".
I therefore share the view of the court a
quo
that the respondent's
claim is founded on clause 15 alone and not on a liability arising by operation
of law.
I now turn to the fifth submission of counsel for the appellant.
S 12(1)
of
the
Prescription Act 68 of 1969
provides that "prescription shall commence
to
16.
run as soon as the debt is due". This means that there has to be a debt
immediately claimable by the debtor or, stated in another
way, that there has to
be a debt in respect of which the debtor is under an obligation to perform
immediately. See
The Master v I L Back and Co Ltd and Others
1983 (1) SA
986
(A) 1004, read with
Benson and Others v Walters and Others
1984 (1)
SA 73
(A) 82. It follows that prescription cannot begin to run against a
creditor before his cause of action is fully accrued; i e, before
he is able to
pursue his claim (cf
Van Vuuren v Boshoff
1964 (1) SA 395
(T) 401).
As has been shown, the respondent could not have preferred a claim under
clause 15 before, at the earliest, it had engaged a third
party to complete the
work for reward. Prior to such employment a necessary element of the
respondent's cause of action would have
been lacking and any claim based upon
clause 15 would have been premature. The debt to which the
17. respondent's
claim relates could therefore not have become due before the actual engagement
of a third party.
The appeal is dismissed with costs.
H.J.O. VAN HEERDEN JA
MILNE JA
KUMLEBEN JA
CONCUR
F H GROSSKOPF JA
NICHOLAS AJA