About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2013
>>
[2013] ZAWCHC 132
|
|
Combined Developers v Arun Holdings and Others (6105/2013) [2013] ZAWCHC 132; 2015 (3) SA 215 (WCC) (5 August 2013)
6105/2013
REPORTABLE
1
IN THE HIGH COURT OF SOUTH AFRICA
(
WESTERN CAPE HIGH COURT, CAPE TOWN
)
CASE NUMBER
: 6105/2013
DATE
: 5 AUGUST 2013
In the matter between:
COMBINED DEVELOPERS
...............................................................................
Applicant
and
ARUN HOLDINGS & 2 OTHERS
..................................................................
Respondent
J U D G M E N T
DAVIS, J
:
INTRODUCTION
In this case the applicant contends that the first respondent
committed an ‘event of default’ as set out in a written
loan agreement, the provisions of which show that the first
respondent borrowed money from the applicant. Applicant contends
that,
in terms of an acceleration clause, all amounts owing by
applicant became due and payable to first respondent owing to
respondent’s
default. This also triggered applicant’s
right to execute on the security that the first respondent provided
in terms of
a cession
in securitatm debiti
of the firstrespondent’s shares in second and third respondent.
Applicant therefore seeks relief in enforcing not only the
terms of
the loan agreement but also its rights in terms of this cession
in
securitatm debiti
. First respondent denies that any act which it
might have committed constitutes an event of default and that the
cession is valid
and can be justifiably invoked.
EVENT OF DEFAULT
I turn to deal firstly with the question of the meaning of an ‘event
of default’ and whether it was committed by first
respondent.
In terms of clause 4.1 of the loan agreement, the monthly repayment
instalments were due on the last day of each calendar
year. In terms
of clauses 4.3.3 and 4.3.4 payment was to be made in cash, by cheque
or per electronic transfer before 15h00 on
the due date. As indicated
in the introduction to the judgment, applicant avers that the first
respondent committed an ‘event
of default’ as
contemplated in clause 7.2 which provides thus:
“
Events of default if ...
7.2 The borrower fails to pay to the lender any amount including any
interest payment when due in terms of this agreement and fails
to pay
the amount together with
mora
interest at the floating
interest rate to the lender within a period three (3) business days
after receipt of deemed or deemed
receipt of written demand from the
lender requiring the borrower to pay the amount to the lender; or ...
then in event of default
shall be deemed to have occurred and the
lender shall be entitled (but not obliged) in addition to and without
prejudice to any
other right or remedy which the lender may have in
terms of this agreement or at law, forthwith and on written notice to
the borrower
to claim and recover from the borrower all amounts owing
under this agreement (including the balance of the capital amount not
repaid and all interest owing and not paid) which shall become
immediately due and payable upon despatch by the lender of the
aforesaid
notice.”
On the papers, it is common cause that an instalment of R42 133.15
was due and payable on the 31
st
March 2003 and, further,
that the applicant submitted a statement to first respondent
reflecting this amount and its calculation
on the 28
th
March 2003. It is also common cause that the first respondent failed
to pay the instalment on the due date. On the 3
rd
April
2013 applicant sent an email to the first respondent stating:
“
Sien asb hieronder en aangeheg ons het nog
nie betaling ontvang nie. Sal julle dit asb laat regstel of indien
betaling reeds gemaak
is ‘n bewys van betaling laat aanstuur
?”
Suffice to say at this stage of the judgment that it is applicant’s
case that this email constituted a demand as contemplated
by clause
7.2 of the agreement.
It is further common cause that the first respondent paid the amount
of R42 133.15 on 3 April 2013 but
mora
interest had not been
paid at the same time.
Applicant therefore contends that an event of default in terms of 7.2
has occurred which entitled the applicant on written notice:
“
To claim and recover ... all amounts owing
under this agreement (including the balance of the capital amount not
repaid and all
interest owing and not paid) which shall become
immediately due and payable upon despatch ... of the aforesaid
notice.”
The applicant therefore despatched a notice by way of a letter of the
15
th
April 2013 setting out the events and claiming an
amount of R7 665 040.14 together with interest.
Respondents contend that the email of the 3
rd
April 2013
did not constitute a demand as contemplated in clause and accordingly
have resisted applicant’s claim.
Mr Joubert, on behalf of the applicant, submitted that,
notwithstanding the informal and polite wording of the email of the
3
rd
April 2013, that email constituted a valid letter of
demand and it required the first respondent to pay the full amount
which was
due to the applicant. In support of his argument that an
event of default falling within the provisions of clause 7.2 had
occurred,
which, in turn, justified the cause of action taken by the
applicant Mr Joubert heavily on a decision of
Chatrooghoon v Desai
and Others
1951(4) SA 122 (N).
The importance attached by Mr Joubert to this case necessitates a
careful examination of the judgment. It appears that six plaintiffs
leased a property to the defendant in 1946. The lease was in writing.
The material clause of the lease, clause 18, provided:
“
In the event of the lessee failing to pay
the rent hereby reserved or any part thereof on due date or failing
to observe it perform
any of the terms and conditions of this lease
by him to be observed or performed the lessor shall be entitled by
notice in writing
to the lessee to call upon him to pay such rent or
perform or observe such conditions and on the failure of the lessee
to comply
with the terms of such notice within in one calendar month
of receipt thereof, the lessor shall be entitled to cancel this lease
without further notice and resume possession of the lease plan by any
mean subject to any claim or action they may be entitled
to for
arrears of rent or damages or otherwise.”
The rental was payable yearly in arrears on the 1
st
April
of each year. Defendant failed to pay the rent falling due on 1
st
April 1950. Consequently on 5
th
May 1950 plaintiffs called
upon the defendant by notice in writing to pay the rent which had
fallen due. This notice read thus:
“
We have to draw your attention that two
hundred pounds rent for the land due on 1
st
April 1950 is not yet reached us and also the interest of 23 pounds
six s eight b please let us have this per return of post.”
On behalf of a Full Bench, Broome JP analysed this notice, together
with clause 18 of the agreement, as follows at 127B-C:
“
First, what are the conditions which clause
18 requires to be fulfilled? The lessors must call upon the lessee by
written notice
to pay the arrear rent. Those being the conditions,
the second question is whether the notice fulfils them. Manifestly
the notice
calls upon the lessee to pay the arrear rent. How then can
it be said that the notice does not fulfil the conditions?”
The contention with which the Court was required to deal was that the
words ‘return of post’ vitiate any conception
of demand.
To this argument the Court said at 127C:
“
They do not qualify the demand? Rather they
make it more peremptory. It must be remembered that the notice
requires payment of an
amount overdue. It reminds the lessee that it
is overdue and it calls upon him to make by return of post a payment
which should
have been made some time before.”
Turning to the question of whether the phrase ‘please let us
have this per return of post’ constituted a demand Broome
JP
said at 127E:
“
The truth is of course that the use of the
word “please” is merely an incident of polite business
intercourse and the
use of the phrase “per return of post”
is no more than the normal method of emphasising a demand for
payment. These
polite and emphatic appendages do not alter the nature
of the notice; it remains essentially a demand for payment. It is
true that
clause 18 entitles the lessor to cancel on the lessee’s
failure to comply with the terms of the notice within one calendar
month ... no lessee receiving such a notice could possibly attach any
importance to the phrase “per return of post”.
He would
regard the notice as what it really was viz, a demand for payment and
he would have only had to look at clause 18 to realise
what would
happen if he ignored the demand for a month.”
To the argument, which was pressed heavily by respondent in the
present dispute, that
mora
interest was only in the amount of
R86.57, Mr Joubert referred to a dictum of Herbstein J in
Chomse v
Lotz
1953(3) SA 738(C) at 741H:
“
However unreasonable the Court might
consider the plaintiff to be in taking advantage of a situation for
which the defendant was
in no way responsible it cannot depart from
the actual terms of the agreement itself.”
Accordingly, Mr Joubert submitted that, to the extent that the
respondent sought to argue that the amount of R86.57 was so
insignificant
that the maxim
de minimus non curat lex
applied,
or that enforcement of the provisions of the loan agreement would in
the circumstances be highly unfair, he submitted
that the provisions
of clause 7.2 could be equated to a
lex commissoria
which are:
“
Enforceable strictly according to their
terms and the court has no equitable jurisdiction to relieve a debtor
from the automatic
forfeiture resulting from such clause.” (see
in this connection R H Christie
The Law
of Contract
(6
th
ed) at 527)
RESPONDENT’S CASE
So much thus for the contentions of the applicant. Mr MacWilliam, who
appeared on behalf of respondent together with Mr Engela,
referred to
the precise wording of clauses 7.2 and 7.3. A reading thereof made it
clear that there was a distinction between a
written demand (as set
out in clause 7.2) and a written notice as provided in clause 7.3.
The contract itself gave different meanings
to the words ‘demand’
and ‘notice’. Relying on the
South African Concise
Oxford Dictionary
’s definition that a demand is ‘insistent
and peremptory request made as of right and that the word peremptory
was defined
as ‘not open to appeal or challenge’, Mr
MacWilliam submitted that there was no basis by which the word demand
as set
out in clause 7.2 equated with the email of the 3
rd
April 2013.
In this connection he referred to
Ashley v The Southern African
Prudential Limited
1929 TPD 283
at 285:
“
There is no reason for construing the word
“demand” in a sense other than its ordinary sense which
is well understood
and means “claim”; in other words an
extrajudicial demand.”
Referring to the decision which had been relied upon so heavily by Mr
Joubert and to which I have devoted analysis, namely
Chatrooghoon
,
supra,
Mr MacWilliam contended that this case dealt with an
agreement of lease. The agreement of lease did not make reference to
a demand
but provided that:
“
The lessor shall be entitled by notice in
writing to the lessee to call upon him to pay such rent or perform or
observe such a conditions.”
In Mr MacWilliam’s view, the email was no more than an informal
request and could not be interpreted to have constituted
a demand for
the purpose of clause 7.2 or to be equated with the notice which had
been provided in
Chatrooghoon
supra
. In his view, at
best for the applicant the email constituted an enquiry, or a request
that, if payment of the amount had not been
made, it should be paid
as opposed to a written demand as required in terms of clause 7.2. Mr
MacWilliam further contended that
clause 7.2 referred to a ‘failure’
to pay an amount and expressly required the borrower to pay “the
amount”
to the lender. In his view, upon a natural construction
of the words and in order to constitute a demand in terms of the
clause,
the precise amount demanded had to be stated which was the
case in
Chatrooghoon
.
The reference to an amount in the present case was not a reference to
any amount specified in terms of the agreement of loan. What
was due
at the end of April was an interest instalment which had to be
calculated each and every month in circumstances in which
the second
loan agreement had only been concluded the month prior thereto and
provided for its own separate calculation of interest.
The calculated
amount which was due would differ from month to month. Not even “a
base rate” referred to in the agreement
of loan was defined as
specific percentage but the rate had to be ascertained from the South
African Reserve Bank. Furthermore
Mr MacWilliam submitted that it
could never have been intended by the parties that the borrower could
be compelled himself to calculate
the amount due, not knowing what
amount the lender had calculated or that, when making the demand, the
lender could expressly withhold
from the borrower exactly what amount
he expected the borrower to pay so that he could then invoke clause
7.2 and ensure to his
benefit, the draconian consequences which would
follow from a breach thereof.
Accordingly to ignore the reference to the “amount” as
set out in clause 7.2 and determine that a demand in terms of
clause
7.2 need not refer to any amount or merely a statement which had been
sent by way of a separate email as would be unacceptable
and would
resulted in the situation where the lender could set out to trap the
borrower and engineer the bringing into operation
of the acceleration
clause which would have significant, detrimental consequences for the
respondents. Finally Mr MacWilliam pointed
to the wording of clause
7.2 which referred not only to “the amount” but also to
“the amount together with
mora
interest at a floating
interest rate”. The floating rate of interest was defined in
the agreement to mean “the base
rate plus 25 percent per annum
compounded monthly in arrears”. The base rate was defined to
mean “the repurchase rate
quoted by the South African Reserve
Bank from time to time”.
In his view, it was apparent that reference to the agreement to the
loan was not sufficient to ascertain base rate. That information
had
to be ascertained from the South African Reserve Bank, a calculation
would have to be done in order to arrive at the precise
amount of
mora
interest which would have to be paid. In order for a
demand to serve the purpose for which it was designed, it had to make
reference
to all actions that the borrower should do in order to
avoid the consequent default event. In the present case, in order to
constitute
a demand in terms of clause 7.2, the demand had to set out
the amount of the instalment and the amount of the
mora
interest claimed; hence the total amount which the respondent was
required to pay.
THE DEMAND
In the light of these submissions and the critical importance of the
email it now becomes necessary to examine this email in its
totality.
The email reads thus:
“
Menere sien asb hieronder aangeheg ons het
nog nie betaling ontvang nie sal julle asb laat regstel of indien
betaling reeds gemaak
is bewys van betaling laat aanstuur?
Dankie Renier Kriek
”
In the same email the following earlier email is reproduced:
“
Renier ek het nog nie ‘n betaling van
Arun ontvang vir rente Maart 2013 nie. Tot wanneer moet ek hulle kans
gee om die betaling
te maak? Sewende?
Groete Juanita De Villiers
”
In the light thereof it is possible to engage in an analysis of the
parties arguments.
EVALUATION
Significantly, the attached email from Ms De Villiers makes reference
only to an extension to the time within which the payment
should be
made. Furthermore, it requires no more than that the omission should
be corrected. The first words of the email state:
“
Sien
asb hieronder en aangeheg
” . It is quite clear therefrom
that Ms De Villiers’ email forms part of the totality which was
presented to the respondents.
When Ms De Villiers asks Mr
Kriek:
“Tot wanneer moet ek hulle kans gee om die betaling te maak
”
it is a legitimate interpretation to contend that the applicant had
posed the question to the first respondent that is regarding
precisely when payment could be expected and whether it would be the
next day or the seventh as the case might be.
This exchange is unlike the clearly stipulated contents of the notice
in
Chatrooghoon
supra
to which I have made extensive
reference, where the exact amounts are set out and the request is
made to pay return of post.
In this case it is not unreasonable to conclude that Ms De Villiers
was awaiting a response from first respondent as to when it
would pay
and thereafter to assess the situation accordingly. The fact is that
the actual payment was made within hours of receipt
of that email.
The events relating to this payment are documented fully in the
answering affidavit as follows:
“
What had happened was that the preceding
statements which set out the actual amount payable by the first
respondent at the end of
the month had been sent by the applicant to
one of the first respondent’s directors, Johan Loubser, as well
as to the first
respondent’s financial manager, Koos Williams,
they were thereafter forwarded it to me. However the statement for
the end
of March 2013 which sets out the calculation of the amount
due of R42 133.15 was sent to Johan Loubser only and not to Koos
Williams
as well ... It was furthermore sent at approximately 13h16
on Thursday afternoon before the commencement of the Easter long
weekend
... At that stage Johan Loubser was on leave and he did not
see it at all and as the applicant’s calculation interest had
not been sent by the applicant before then it’s not surprising
that it was not paid. It was only after the Easter long weekend
on 3
April 2013 at approximately 11h55 that I received the email ... I
immediately (only 89 minutes later) informed the Renier
Kriek that
Johan Loubser was away on leave and that I would attend to payment as
can be seen from my email ... On the very same
day the interest
instalment was paid. At the time neither Renier Kriek nor the
applicant made any complaint about late payment
nor was any request
or demand for extra interest made whether in the amount of R86.57 or
any other amount. What did happen is that
on 12 April 2013 the
dispute arose in relation to second and third respondent shares ...
The next thing we knew was that out of
the blue the loan was
purportedly cancelled by the applicant it was only some time later
that we were able to discover this had
been attempted because the
applicant alleged that the amount of R86.57 in respect of additional
interest which had never been demanded
nor referred to before had not
been paid. According to the applicant it was this alleged failure to
pay this insignificant amount
of R86.57 which it concedes had never
been demanded which had the effect that the full outstanding amount
of the loan of R7,6 million
had become immediately due and payable.”
The question arises as to whether, if clause 7.2 is read in the
manner contended by applicants and where the non-payment of R86.57
is
common cause, can this latter failure precipitate a trigger to claim
R7.6 million and as appears to be the case, perhaps even
more, being
R20 million? In other words, assuming that Mr Joubert’s
argument that there is only one reading of clause 7.2,
being a strict
construction which follows the line of argument of Broome JP in
Chatrooghoon
is correct, and that the query from Ms De
Villiers should not be read in the manner suggested by applicant,
would this approach
to clause 7.2 be in accordance with public
policy?
This question, which was never fully argued in the matter, although
it was certainly raised by Mr MacWilliam sufficient for this
Court to
interrogate it, concerns questions of a constitutional nature.
There are three approaches in my view which follow from our
constitutional dispensation and which relate to the law of contract.
There are cases where it may be that there is no rule of common law
which permits a vindication of a constitutional right, which
is
applicable in a horizontal relationship, and which would then trigger
the application of section 8 of the Republic of South
Africa
Constitution at 1996 (‘The Constitution’). This is not
such a case and section 8 therefore is not thus applicable.
Secondly,
there are cases where the Court is required by virtue of the
interpretation given to section 39(2) of the Constitution
to develop
the common law so that the common law, in the context of the
particular case, is rendered congruent with the spirit,
purport and
objects of the Constitution.
Is section 39(2) applicable in this case? In my view, there is no
relevant rule of common law invoked in the present dispute which
is
unconstitutional. Manifestly the law of contract can permit
provisions such as clause 7.2 to be part of a contract. There is
nothing in the contents of such a clause which inevitably would
trigger the kind of concern which may justify the application of
section 39(2) of the Constitution.
But there is a third component to the enquiry in which the
Constitution plays a role. I have in mind a case, such as the
present,
where the applicants contend for an interpretation of the
clause, which if correct, may run counter to public policy. In other
words, the question arises as to whether, if the interpretation of
the applicants is correct, would such a clause interpreted in
terms
of the version contended for by applicants breach public policy?
Public policy, in the context of our constitutional democracy, must
accord with the normative framework of our Constitution. It
follows
therefore that if public policy is in accordance with the normative
framework of the Constitution, would the application
of clause 7.2
which is central to applicant’s case be against public policy?
This is not a radical position. In
Sasfin (Pty) Ltd v Beukes
1989(1) SA 1 (A) at 9, the Appellate division, long before the
Constitution was implemented, said the following:
“
No court shall therefore shrink from the
duty of declaring a contract contrary to public policy when the
occasion so demands. The
power to declare contracts contrary to
public policy should, however, be exercised sparingly only in the
clearest of cases lest
uncertainty as to the validity of contracts
resulted from arbitrary and indiscriminate use of the power. One must
be careful not
to conclude that a contract is contrary to public
policy merely because its terms (or some of them) offend one’s
individual
sense of proprietary and fairness.”
That a court should be careful about invoking public policy in these
cases does not mean that public policy serves no useful purpose
in
the examination of a contract and the determination of whether the
contents of the contract is against public policy and thus
contra
bonos mores
. But as I shall show presently it is not a question
of a contract offending an individual sense of proprietary and
fairness but
rather whether the values of the Constitution are
breached by an interpretation. As the Constitution provides an
important source
of the values which inform public policy, this must
guide a court in determining what the content of public policy is in
this particular
context.
It has been suggested that the paramount principle to be adopted is
that ‘the parties should know what their bargain is’.
(Carole Lewis
2013 (76) THRHR 80
at 94.) But the nature of language
does not always admit to one a clear answer and, even if it did,
public policy still plays a
role as a default position in the
evaluation of the contents of the agreement.
Before turning to the Constitutional Court’s examination of
this concept, it is instructive to refer to a more recent decision
from the Supreme Court of Appeal of Heher JA in
Jugdal v Shoprite
Checkers (Pty) Ltd
2004(5) SA 248 (SCA) at 258:
“
Because the courts will conclude that
contractual provisions are contrary to public policy only when that
is their clear effect
... it follows that the tendency of a proposed
transaction towards such a conflict ... can only be found to exist if
there is a
probability that unconscionable immoral or illegal conduct
will result from the implementation of the provisions according to
their
tenor. (It may be that the cumulative effect of the
implementation of provisions not individually objectionable may
disclose such
a tendency). If however, a contractual provision is
capable of implementation in a manner that is not against public
policy but
the tenor of the provision is neutral then the offending
tendency is absent. In such event the creditor who implements the
contract
in a manner which is unconscionable, illegal or immoral will
find that a court refuses to give effect to his conduct but that the
contract itself will stand. Much of the appellant’s reliance
before us on consideration of the public policy suffered from
a
failure to make the distinction between the contract and its
implementation and the unjustified assumption that because its terms
were open to oppressive abuse by the creditor, they must as a
necessary consequence be against public policy.
An attempt to identify the tendency of contractual provisions may
require a consideration of the purpose of the contract, discernible
from its terms and from the objective circumstances of its
conclusion.”
It is important within the context of this dispute to drill down into
the core of this
dictum
. What the learned judge of appeal
appears to have said is that a contractual provision may not itself
run counter to public policy
but that the implementation may be so
objectionable that it is sufficiently oppressive, unconscionable or
immoral to constitute
a breach of public policy, in which case public
policy can be invoked in justification of a refusal to enforce a
provision.
I am conscious of the cautionary remarks of Smalberger JA in
Sasfin
supra
namely that: “Ones individual sense of proprietary
and fairness” is not the test. If public policy is to be
invoked
in this case, in the manner suggested by Heher JA in
Jugdal
then some objective standard must be found. As I have already
suggested, this is to be found in the normative framework of the
Constitution.
The Constitutional Court provides guidance to a court in its decision
in
Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty)
Ltd
2012(3) BCLR 219(CC). At paragraph 22 Yacoob J said:
“
Good faith is a matter of considerable
importance in our contract law and the extent to which our courts
enforce the good faith
requirement in contract law is a matter of
considerable public and constitutional importance. The question
whether the spirit,
purport and objects of the Constitution require
courts to encourage good faith in contractual dealings and whether
our Constitution
insists that good faith requirements are enforceable
should be determined sooner rather than later. Many people enter into
contracts
daily and every contract has the potential not to be
performed in good faith. The issue of good faith in contract touches
the lives
of many ordinary people in our country.
The values embraced by an appropriate appreciation of ubuntu are also
relevant in the process of determining the spirit, purport
and
objects of the Constitution. The development of our economy and
contract law has thus far predominantly been shaped by a colonial
legal tradition represented by English law, Roman law and Roman Dutch
law. The common law of contract regulates the environment
within
which trade and commerce takes place. Its development should take
cognisance of the values of the vast majority of people
who are now
able to take part without hindrance in trade and commerce. And it may
well be that the approach of the majority of
people in our country
place a higher value on negotiating in good faith than would
otherwise have been the case. Contract law cannot
confine itself to
colonial legal tradition alone.
It may be said that a contract of lease between two business entities
with limited liability does not implicate questions of ubuntu.
This
is, in my view, too narrow an approach. It is evident that
contractual terms to negotiate are not entered into only between
companies with limited liability. They are often entered into between
individuals and often between poor, vulnerable people on
one hand and
powerful, well-resourced companies on the other. The idea that people
or entities can undertake to negotiate and then
not do so because
this attitude becomes convenient for some or other commercial reason,
certainly implicates ubuntu.”
This theme is further developed by Moseneke DCJ in a separate
judgment at para 71:
“
Indeed it is highly desirable, in fact
necessary, to infuse the law of contract with constitutional values
including values of
ubuntu
which aspire much of our constitutional compact. On a number of
occasions in the past this Court has had regard to the meaning
and
content of the concept of
ubuntu
it emphasises the cardinal nature of society and “carries in it
the ideas of humanness, social justice and fairness”
and
envelopes “the key values of group solidarity compassion,
respect, human dignity, conformity to basic values and collective
unity”. Were a court to entertain Everfresh’s argument
the underlying notion of good faith in contract law, the maxim
of
contractual doctrine that agreements seriously entered into should be
enforced, and the value of
Ubuntu
which inspires much of our constitutional compact may tilt the
argument in its favour. Contracting parties certainly need to relate
to each other in good faith. Where there as a contractual obligation
to negotiate, it would be hardly imaginable that our constitutional
values would not require that the negotiation must be done reasonably
with a view to reaching an agreement and in good faith.”
Lewis
op cit
at 92 complains that this approach holds
potential harm for the ‘fabric of law in contract’, in
that there will be
uncertainty about testing all contractual
arrangements going forward. To claim that the development of public
policy along the
lines set out in
Everfresh
is a disincentive
to ‘development and investment’ is to step into a very
contested economic debate which judges should
seek to refrain from
entering without clear evidence.
As I indicated it may well be that the applicant in this case is not
part of the sadly very large constituency of poor and vulnerable
of
which Yacoob J spoke eloquently in his judgment in
Everfresh
.
But the same principle must apply that in some measure public policy
embraces the concept of good faith and reasonableness expressed
more
in the words of Heher JA in
Jugdal
supra.
The implementation of clause 7.2 as sought by applicants is so
startlingly draconian and unfair that this particular construction
of
the clause must be in breach of public policy. Some form of
communication to pay a measly sum of R86.57 immediately following
payment of the large principal sum should surely have been required.
In other words, it cannot be congruent with public policy
that a
demand, in an ambiguous form as I have indicated in terms of my
interpretation of the email of the 3
rd
April 2013, can
first be met with silence because R86.57 has not been paid and then a
week later the full weight of clause 7.2
be applied by the applicant
to gain massive commercial advantage to the significant disadvantage
of respondent.
To sum up: there are at least two basis upon which I have found that
the applicant’s case must fail. In the first place the
email of
the 3
rd
April 2013 is not on ‘all fours’ with
the approach which was adopted in
Chatrooghoon
. Ms De
Villiers’ qualification must be read, at least, to have placed
in the mind of respondent the idea that respondent
may have come back
to say ‘I will pay in two days’ time’ so that
negotiation may have followed. Clause 7.2 has
draconian implications
and hence it is the least that could be expected for a proper demand
to be made which would inform respondent
of the entire amount, as was
the case in
Chatrooghoon
where both the principal and interest
was set out in the letter of demand.
The fact that the sum of R86.57 was not paid due to some
miscalculation (it would be highly unusual for the respondents to
have
refused to have paid this small amount when they were already
prepared to pay forthwith the total outstanding sum) should surely
have been met by some communication to remind the respondent that it
remained in arrears, albeit by so small a sum.
Assuming however, that the interpretation that I have given to the
contract and to the conduct of the parties is incorrect, a further
question arises as to whether, in such a case, the interpretation
placed upon clause 7.2 by the applicants would not be in breach
of
public policy.
I have found for the reasons that I have articulated that this
interpretation would breach public policy as it must now be
constituted.
In the light of this analysis there is no necessity for me to deal
with any of the interesting and thoughtful arguments developed
by Mr
Joubert and by Mr MacWilliam concerning the validity of the cession.
It is clear that if the first leg of the argument failed,
applicant’s
case must also fail.
Mr MacWilliam passionately argued that I should impose an adverse
costs order, that is a punitive costs order, given the conduct
which
has been adopted by the applicant. I have thought carefully about
this submission but, in the light of the range of arguments
that have
been raised, the nature of the clause and the manner in which Mr
Joubert argued on the basis of very strict construction,
it appears
to me that it would be inappropriate to make such an order.
Accordingly, the application is dismissed with costs including the
cost of two counsel.
___________________________
DAVIS, J
/NY /...