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[2014] ZAWCHC 189
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Mystic Pearl 133 (Pty) Limited v Basson T/A Combined Game Services (13452/2014) [2014] ZAWCHC 189 (4 December 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
CASE
NUMBER: 13452/2014
DATE:
4 DECEMBER 2014
In the matter
between:
MYSTIC PEARL 133
(PTY)
LIMITED
.....................................................................
Applicant
And
GARY BASSON t/a
COMBINED GAME
SERVICES
..........................................
Respondent
EX
TEMPORE JUDGMENT
ROGERS, J:
[1] This is an
application in which the applicant is seeking specific performance of
an agreement for the purchase of ten bontebokke
with an alternative
claim for payment of R400 000 plus VAT in the event that the
respondent fails to deliver the animals. Mr Ferreira
appears for the
applicant and Ms De Wet for the respondent.
[2] The background
to the matter is as follows. The person who represented the applicant
in its dealings with the respondent was
a Mr Van Zyl. He met the
respondent, Mr Basson, during 2009 and they concluded certain
transactions in terms whereof Van Zyl or
his company purchased game
from Basson. During July 2009 the applicant pursuant to these
dealings bought 11 rooihartbeeste from
Basson. Those animals were
delivered and payment made. This is common cause.
[3] In the replying
papers the applicant says that the 11 rooihartbeeste were of poor
quality and that some of them died. Also
in July 2009 Van Zyl bought,
he says, 14 kudu and another eight rooihartbeeste. Some of the new
rooihartbeeste also died.
[4] The applicant’s
version is that Van Zyl told Basson that he would deduct the value of
the animals which had died from
the balance of the purchase price
owing under the transactions for the purchase of the eight
rooihartbeeste and 14 kudu. Basson
has a somewhat different version.
He refers to the transaction for the purchase of the eight
rooihartbeeste in July 2009 and also
refers to an alleged purchase of
26 impala during July 2009. He claims that the purchase price for the
eight rooihartbeeste and
the 26 Impala was not paid.
[5] The applicant
says in reply that he never requested the impalas, that they were
delivered while he was away on holiday, that
he requested Basson to
remove them and that when Basson failed to do so he eventually had
them culled.
[6] Be that as it
may, these dealings all seem to have occurred during July 2009
although at one point Basson, by way of a typographical
error I
think, refers to transactions in 2012 and even in 2014. The 2009
transactions are not directly relevant to the present
case. The
present case concerns a transaction which was concluded towards the
end of 2012, more than three years later. The applicant,
through Mr
Van Zyl, says that it was wanting to acquire a breeding group of
bontebokke and that Van Zyl asked Basson for a quote
which Basson
furnished on 21 November 2012. The quote simply refers to ten
bontebokke and the quoted price was R142 500 inclusive
of VAT.
[7] The quote was
sent to the applicant under cover of an email which said, and I
translate from the Afrikaans:
‘I attach a
quotation for the game as requested. I will need your details to
make the application. See the attached file.
If your particulars have
changed please let me know.
Please also note: It
is a condition, before the permit will be applied for or the animals
delivered, that the full price should
have been paid into our
account. As soon as we have received the money, we will make
application for the permit in order to move
the animals.’
[8] The permit
referred to in the email is a permit sought from Cape Nature for
permission to move animals from one farm or location
to another.
[9] On the same day
Van Zyl on behalf of the applicant replied, observing that he found
it strange that he would have to make payment
in advance. He attached
one of his earlier permits containing his details for the application
to Cape Nature. He also said the
following, and I translate again
from the Afrikaans:
‘I accept that
the purity of the bontebokke will be demonstrated, that they will not
be lambs, seven ewes and three rams,
and that they can also be
delivered this year.’
[10] About two
weeks later, on 4 December 2012, the applicant caused a sum of R142
500 to be deposited into the respondent’s
bank account. In
January 2013 the person charged with Basson’s administration
sent an email to Van Zyl stating that she was
busy going through her
administration and saw that she had never issued a VAT invoice, only
a quotation. She accordingly attached
an invoice for the applicant’s
records. This again referred to ten bontebokke at the price of R142
500 including VAT.
[11] It is clear
that after this date the respondent did nothing to comply with the
agreement which had been concluded. He did
not cause any permit
application to be made to Cape Nature and never delivered the
animals. During June, July and August of 2013
Van Zyl sent emails to
him asking about progress, saying that he had spoken to Cape Nature
and requesting details of the permit
application made by Basson so
that Van Zyl could expedite its grant. These emails were not
responded to and it appears that the
respondent had by that stage
resolved not to make any application or to deliver the animals.
[12] The present
application was issued on 30 July 2014 claiming the relief I
summarised earlier. Included in the founding papers
was an affidavit
by an expert, Mr Mitchell, on the current value of a breeding group
of ten bontebokke comprising seven ewes and
three rams. The value of
R400 000 excluding VAT was said to be a minimum value with the true
value likely to be higher. The respondent
filed a notice of
opposition and in due course an answering affidavit. Replying papers
were file and so the matter came before
me today.
[13] The
respondent’s version is a somewhat surprising one. He says that
he was still owed money from the 2009 transactions,
being the supply
of the eight rooihartbeeste for a price including VAT of R36 024 and
the supply of the 26 kudu at R50 388 including
VAT, coming to a total
sum of R86 412. He says that interest from July 2009 to
December 2012 amounted to a further R44
805. He alleges, further,
that when the payment of R142 500 was made on 4 December 2012 he
appropriated it to those outstanding
2009 debts which, after
deducting the capital and the interest on those alleged debts, left
only an amount of R11 283. He said
in his answering affidavit that he
acknowledged being indebted to the applicant in that amount and he
tendered repayment of it.
[14] The manner in
which the payment of 4 December 2012 was said to achieve this result
was by set-off. I am perfectly satisfied
that the respondent’s
approach to the matter is entirely misconceived. The question is not
one of set-off but rather appropriation
of payments. There had been
no dealings between the parties since 2009 until the latter part of
2012. When the parties transacted
with each other in the latter part
of 2012, it was on the basis of a quote for the supply of ten
bontebokke at a price of R142
500. The emails were exchanged to which
I have already referred and one knows that the respondent had
specified, as a condition
of the transaction, that the purchase price
should be paid up front. That is exactly what happened on 4 December
2012. The payment
corresponded exactly with the amount of the quote.
[15] The
authorities dealing with the appropriation of payments are perfectly
clear on this point. The debtor has the right to
make the
appropriation at the time of payment, failing which the right passes
to the creditor, whereafter – if neither of
them have made an
appropriation – the law determines the manner of appropriation
in accordance with certain residual rules.
Here the debtor in regard
to the transaction was the applicant. Wessels deals with the matter
fully in The Law of Contract In South
Africa in para 2284 ff. He says
the following at para 2293 (citation of supporting authority
omitted):
‘The
circumstances under which a debt is paid may enable the court to
infer an appropriation which was not expressed. Thus
if there are two
debts, a payment which corresponds exactly to the one and not to the
other would be presumed to be an extinction
of the debt to which it
corresponds… So also if one debt is admitted and another
disputed, the debtor will be presumed to
have intended to pay the
admitted debt… Again, if a creditor demands a specific debt
and the debtor, without any explanation,
forwards an amount equal to
that debt, the payment will be considered to be in discharge of that
debt…’
[13] Christie The
Law of Contract in South Africa 6th Ed contains the following passage
to similar effect at page 445 (footnotes
omitted):
‘Appropriation
by the debtor need not be express but may be tacit or implied, as
when there has been a course of dealing between
the parties, giving
the creditor reasonably to understand that the payment was to be
appropriated in a particular way, or when
the amount of the payment
corresponds with one debt but not the other, or one debt is admitted
and the other disputed or the creditor
has demanded payment of a
particular debt and the amount of the payment corresponds with his
demand, or when the creditor sells
a pledge specially given in
respect of one debt.’
[14] As I have said
here, the business dealings between the parties in November and
December 2012, coupled with the amount of the
payment, place beyond
doubt that the applicant was intending to pay the purchase price of
the ten bontebokke referred to in the
quote. Accordingly it was not
open for the respondent to keep the money except on that basis. It
was not open to the respondent
to appropriate it rather to earlier
debts. Even if those earlier debts were not disputed, this would be
the position, though according
to the applicant the earlier debts are
indeed disputed. There is also a question as to whether they have
prescribed. However, it
suffices for me to put my decision on
appropriation on the basis of the course of dealing between the
parties in late 2012 and
the amount of the payment.
[15] The payment
having been kept, the applicant can be taken to have discharged his
side of the bargain in paying the purchase
price. If the respondent
has claims in respect of earlier transactions he would have had to
pursue them either by way of a counter-application
in the present
proceedings, which he has not done, or by separate proceedings.
[16] Another
question which arises on the transaction is precisely what it was
that the applicant bought. The applicant alleges
in his founding
papers that the ten bontebokke were to be a breeding group,
comprising seven ewes and three rams. The quote and
the invoice do
not specifically refer to that composition of animals but Van Zyl
alleges that this is indeed what was discussed.
Furthermore, the
email he sent in response to the quote on 21 November 2012
specifically referred to seven ewes and three rams.
Although not
quite clear from the context, it appears to me to be confirmation
that this is what the respondent had been asked
to quote on. In any
event, payment was only made about two weeks later. There was no
response from Basson to the email of 21 November
2012 stating that
the transaction was not for seven ewes and three rams but for
something else.
[17] In that regard
the principle laid down by Miller, JA in MacWilliams v First
Consolidated Holdings (Pty) Limited
1982 (2) SA 1
(A) at page 10
applies:
‘I accept that
“quiescence” is not necessarily acquiescence ... and that
a party’s failure to reply to a
letter asserting the existence
of an obligation owed by such a party to the writer does not always
justify an inference that the
assertion was accepted as the truth.
But in general, when according to ordinary commercial practice and
human expectation firm
repudiation of such an assertion would be the
norm if it was not accepted as correct, such party’s silence
and inaction,
unless satisfactorily explained, may be taken to
constitute an admission by him of the truth of the assertion or at
least will
be an important factor telling against him in the
assessment of the probabilities and in the final determination of the
dispute.
And an adverse inference will the more readily be drawn when
the unchallenged assertion has been preceded by correspondence or
negotiations between the parties relative to the subject matter of
the assertion.’
[18] Here there had
clearly been interaction between the parties prior to the furnishing
of the quotation and then there was the
email which followed, leading
two weeks later to a payment. Contracts are not concerned with the
private workings of individuals’
minds but rather with what the
objective manifestations of their interactions indicate to be their
consensus.
[19] I do not think
there is any bona fide dispute of fact regarding the composition of
the ten bontebokke. It strikes me as ludicrous
that a quote would be
given for bontebokke without some background as to what the
requirements were. It is clear from the expert
evidence of Mr
Mitchell that the value of animals and of a group of animals will
depend on their composition and whether or not
they constitute a
breeding group. The respondent, though denying baldly that he was
required to deliver seven ewes and three rams
and that they should
not be lambs, does not refer to his negotiations with Van Zyl nor say
precisely what it was that he was to
deliver. In other respects his
affidavit comprises shotgun denials of the allegations in the
founding papers.
[20] There is also
what I regard as his reprehensible conduct in accepting the money in
regard to the transaction for the ten bontebokke
and then sitting
back and doing nothing and claiming several years later that he had
taken the money in discharge of earlier transactions.
It appears
either that he took the money under false pretences in December 2012
or that, having taken it for this particular transaction,
he later
fabricated a defence in terms of which he claims it related to
earlier transactions.
[21] I am thus
satisfied that the applicant has established its agreement.
[22] The respondent
argues through counsel that he does not have the ten bontebokke to
deliver but that of course is no answer
to the claim for specific
performance. He does not say that the animals are not available as a
commodity in South Africa. A person
does not have to own that which
he sells. The respondent has not begun to make out the case that he
cannot procure a breeding
group of ten bontebokke for delivery to the
applicant.
[23] Mr Ferreira
submits that a sufficient time period for delivery of the animals
would be until the end of April 2015. I am satisfied
that that would
be a generous allowance. It will allow time for an application to be
made to Cape Nature for the animals to be
moved and for them to be
delivered.
[24] In regard to
the alternative claim for payment of money if the respondent should
not deliver the animals, the question arises
whether it is
appropriate to grant such relief on motion. A preliminary issue
which was debated by Mr Ferreira in that regard
was whether this was
truly a case of damages or whether it was a claim for payment of
money as a surrogate for performance. He
referred me to the leading
case on the subject, ISEP Structural Engineering and Plating (Pty)
Limited v Inland Exploration Co (Pty)
Limited
1981 (4) SA 1
(A) and
the doubts expressed on the correctness of that judgment in Mostert v
Old Mutual
2001 (4) SA 159
(SCA).
[23] The ISEP case
has not as yet been overruled. Mostert’s case indicated that
ISEP might require reconsideration but as
matters presently stand I
am bound by the majority judgment in ISEP. I nevertheless wish to
refer to something I said (as an acting
judge) in an unreported
judgment Du Plessis N.O. v Swiss Invest 02 (Pty) Limited Case
10064/2001. I quote from para 69 of that
judgment:
‘The majority
decision in the ISEP case supra precludes the grant of a monetary
award calculated not as conventional damages
but as the objective
financial equivalent of performance. I am mindful of the doubt
expressed concerning the correctness of the
majority decision (see
most recently Mostert v Old Mutual
2001 (4) SA 159
(SCA) para 74),
but it has not as yet been overruled and is binding on me. I would
nevertheless venture to suggest that some of
the criticism of the
majority decision in ISEP may stem from a confusion of terminology.
In Mostert, for example, reference is
made to the critical remarks in
De Wet and Van Wyk Kontraktereg en Handelsreg 5de Uitg at 212. When
the learned authors of that
work speak of damages as a “surrogate”
of performance they seem to me to be referring to the damages which
an aggrieved
party who has not cancelled the contract can claim for
an absence of performance or for defective performance (see at 196
and 209),
in contra-distinction with the damages claimable pursuant
to cancellation (at 212). I find no suggestion by the learned authors
that “surrogate” damages in this sense fall to be
calculated otherwise than in accordance with the conventional
contractual
method, ie the shortfall in the plaintiff’s
patrimony by virtue of the fact that he did not get his bargain (see
their example
at 196). The ISEP case fully acknowledges the
recoverability of such damages. What is impermissible, according to
ISEP, is to award
monetary compensation measured not in the
conventional way but simply as the objective cost of performance. It
is to this (impermissible)
measure of compensation that the label of
“surrogate” damages has sometimes been attached. The
effect of ISEP is that
where there has been no or defective
performance there is (in the absence of specific performance) only
one measure of damages
(the conventional one), not two alternative
measures. It is by no means clear that this is a proposition from
which the learned
authors of Kontraktereg would dissent. Of course
the two measures of compensation may often lead to the same result
but this is
only because the objective cost of rendering performance
is often a reliable guide to the patrimonial shortfall suffered by
the
aggrieved party in consequence of defective performance. The
issue arose in ISEP only because it was one of those cases where
there
was not a correlation between the cost of performance and
patrimonial shortfall.’
[24] In the Swiss
Invest case from which I have just quoted, one similarly had a case
where there was no correlation between the
objective cost of making
performance and shortfall in the aggrieved party’s patrimony.
This was because the party in breach
was required to perform certain
work not on the plaintiff’s property but on neighbouring
property. The question, therefore,
was by how much the plaintiff’s
property was less valuable by virtue of the fact that certain work
had not been performed
on adjoining property. That difference in
value would not be given by the cost of performing the work on the
adjoining property.
[25] To revert then
to the circumstances of the present matter, this seems to me to be a
case where it is unnecessary to concern
oneself with surrogate
damages in any special sense. If the respondent fails to make
specific performance, the applicant’s
patrimony will be reduced
by the value of the animals which have not been delivered, given that
the applicant has already paid
the purchase price. That is a
conventional, contractual measure of damages.
[26] The
difficulty, of course, is that in motion proceedings one does not
ordinarily award damages. The learned authors of Herbstein
and Van
Winsen The Civil Practice of the High Courts in South Africa 5th Ed
say at page 292 that there are certain classes of cases
in which
motion proceedings are not permissible at all and among these are
illiquid claims for damages. At pages 294-295 they
give examples of
cases where motion proceedings have been held to be permissible in
the absence of real disputes of fact, one of
those being for the
cancellation of a contract provided that no damages are claimed in
respect of the cancellation, and they refer
to Estate Behr v Matcham
1924 CPD 6.
[27] I am not aware
of any authority or any reported judgment in which damages have been
awarded on motion and Mr Ferreira was
not able to refer me to any. I
accept that the position as stated by the learned authors of
Herbstein and Van Winsen may not be
an absolute rule of law, since
the likelihood of genuine disputes of fact is not directly determined
by the nature of the relief
sought. Nevertheless, illiquid damages
are typically the sort of matters where disputes do arise. The
respondent in the present
case did deny the valuation advanced by Mr
Mitchell and also pointed to the fact that the purchase price for the
animals in November
2012 was only R142 500 whereas barely a year and
a half later the value was said to be R400 000 plus VAT.
[28] Although I am
not particularly impressed by what the respondent has said on the
question of value and although the applicant
may very well prove to
be right in its valuation, it would be inappropriate, I think, to fix
the damages at this stage. Given the
general rule in terms whereof
damages are not awarded in motion proceedings, the respondent perhaps
thought that he did not have
to go further than he did in order to
ward off a claim for damages. I would simply add that the question of
the valuation of the
animals for purposes of determining the amount
payable to the applicant in the event of the animals not being
delivered is properly
regarded as one of illiquid damages.
[29] However, I am
satisfied that the applicant would be entitled to damages if the
animals are not delivered, though not in an
amount which I can now
determine. Given the manner in which the notice of motion was framed
and the prayer for further and alternative
relief, I think I can at
least grant a declaratory order in regard to the recoverability of
damages though quantum will still need
to be established.
[30] In regard to
the date at which the value of the animals should be determined, it
seems to me that in a case like this, where
the purchase agreement
has not been cancelled but the damages are claimed by virtue of a
failure by the respondent to make performance,
the appropriate date
for determining the value of the damages is the date on which the
applicant elects to recover damages following
non-performance. In the
present case that will be on or after 30 April 2015, which is the
date by which the respondent will have
to make specific performance.
[31] I must also
deal with the question of costs. Mr Ferreira for the applicant asked
for costs on a scale as between attorney and
own client. I do think
that the respondent’s conduct has been reprehensible,
particularly the manner in which he accepted
the payment on 4
December 2012, did nothing towards the discharge of his obligations
and then, only when sued, came up with a version
that the money had
been applied to earlier transactions. As I observed earlier, either
he took the money under false pretences
in December 2012 or he
fabricated a defence when he made his answering affidavit. Either
way, that is worthy of censure. However,
to the extent that there is
a difference between an award of attorney and client costs and an
award of attorney and own client
costs, I propose only to order the
former order.
[32] I therefore
grant the following order:
(1) THE RESPONDENT
SHALL BY 30 APRIL 2015 DELIVER TO THE APPLICANT, AT THE APPLICANT’S
GAME FARM, SITUATED AT FARM 220, SANDOWN
ESTATE, BREDASDORP AND KNOWN
AS DUINEFONTEIN, TEN (10) BONTEBOKKE COMPRISING OF SEVEN (7) EWES AND
THREE (3) RAMS (“THE BONTEBOKKE”).
(2) IF THE
RESPONDENT FAILS TO MAKE DELIVERY AS AFORESAID BY 30 APRIL 2015, THE
APPLICANT SHALL BE ENTITLED TO RECOVER DAMAGES FROM
THE RESPONDENT
EQUAL TO THE VALUE OF THE BONTEBOKKE AS AT 30 APRIL 2015.
(3) IF THE APPLICANT
ELECTS TO CLAIM DAMAGES TO AFORESAID, THE QUANTUM OF THE DAMAGES
SHALL, IF NOT AGREED, BE DETERMINED BY ORAL
EVIDENCE. THE APPLICANT
IS GRANTED LEAVE TO APPROACH THE COURT ON THE SAME PAPERS,
SUPPLEMENTED AS NEEDS BE, FOR DIRECTIONS IN
REGARD TO THE HEARING OF
ORAL EVIDENCE.
(4) THE RESPONDENT
IS TO PAY THE APPLICANT’S COSTS ON AN ATTORNEY AND CLIENT
SCALE.
ROGERS, J