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IN THE HIGH COURT OF SOUTH AFRICA,

MPUMALANGA DIVISION, MIDDELBURG

(LOCAL SEAT)

CASE NO: 2685/19

In the matter between:

AFRICAN PIPES VALVES & FITTINGS (PTY) LIMITED                                  APPLICANT

and

JACOB GIDEON JORDAAN                                                             FIRST RESPONDENT

DRAAIHALS BELEGGINS (PTY) LTD                                         SECOND RESPONDENT

 

JUDGMENT

BRAUCKMANN AJ

[1] This is an application for a monetary judgment against the respondents.  This causa is a suretyship signed by the respondents for Pro Plastic Welding (Pty) Ltd (the principal debtor) (herein referred to as “PPW”) on 18 October 2018.  The respondents admit that they signed the suretyship and that they are bound to it.  The first respondent represented the second respondent in the said negotiations and signature of the suretyship.   

[2] PPW failed to comply with the terms of the agreement (so the applicant alleges) between the applicant and the PPW and accordingly the applicant issued an application for the liquidation of PPW in this court under case number 2656/19.  This application (“the liquidation application”) was heard by this court, and an order was granted in favour of the applicant in terms whereof PPW was provisionally wound-up.

[3] During or about August 2018 the applicant and PPW entered into an agreement as set out in annexure C to the applicant’s founding affidavit.  The annexure is an application for credit account facility and general terms and conditions of sale between the respondent and the applicant (“the Agreement).

[4] This application was approved by the applicant and a credit facility was granted to PPW, which facility, amongst others, held that credit to the amount of R2.5 million was approved.  In the deed of suretyship, the terms and conditions of payment between the applicant and PPW is set out.  The respondents bound themselves as co-principal debtor for the due and proper fulfilment of PPW’s obligations in terms or in connection with or arising in any way what so ever from/out of the credit account facility, incorporating the creditor’s general terms and conditions of sale agreement between African Pipes Valves & Fittings (Pty) Ltd to sell and/or supply products to Pro Plastic Welding (Pty) Ltd that requires payment to be made within 15 days of delivery of any products supplies.

[5] In terms of the suretyship the respondents agreed that they are fully acquainted with all the terms and conditions of the secured agreement and, as appears from the opposing affidavit filed on behalf of the respondents, the terms and conditions of the suretyship is not in dispute.

[6] It was an express term of the agreement that:

“8.(a) The amount of my/our indebtedness hereunder, and that of the debtor, to the creditor at any time, shall be determined and proved by a certificate signed by the creditor (or by one of the creditor’s directors whose appointed, qualification and/or authority need not be proved).

(b) A certificate in terms of sub-clause (a) hereof shall be binding on me/us, shall be prima facie proof of the amount of my/our indebtedness hereunder shall be valid as a liquid document against me/us and in any competent court for the purpose of obtaining provisional sentence or summary judgment against me/us thereon.”

[7] PPW failed to effect payment of the amount of R2 194 078.49 to the applicant.     

[8] The applicant then issued this application against the respondents on 5 July 2019.  However, in the meantime, an application for the liquidation application was also launched by applicant. 

[9] The respondent’s defence to the applicant’s application is very terse.  The respondent’s defence basically boils down the following:

9.1 There is a substantial factual dispute between the parties as to the amount due to the applicant, if any.  The reason for that proposition, according to respondents, is that the applicant is unable to properly account for the amount due and owed to it.  According to the respondents there had been “countless issues with the invoices issued to the applicant (sic)” which is the reasons for these invoices being unpaid.  I accept the reference to applicant” is a typing error.  To date the applicant, according to the respondents, has not bothered to correct these errors or to ensure that an effective accounting procedure is implemented.

9.2 PPW, according to the respondents, intends to claim damages from the applicant for losses suffered due to the applicant’s inability to comply with its obligations.  I pause to refer to the  agreement between the parties and more specific to clause 8.3 - 8.5 thereof).  In terms of the said clauses, the applicant and PPW agreed that should PPW have any complaints of whatsoever nature concerning any of the products supplied it shall be entitled to query the company (the applicant) to cede any of its rights the applicant may have against the original supplier of those products and shall have no other claim against the applicant what so ever.  PPW waived its right to claim any amount from the applicant, whether it be for any indirect or consequential loss or damages or any other damages what so ever.  This included the applicant’s failure to deliver timeously according to the orders placed on it.

[10] The respondents and PPW, if it had any counter claim, waived such counter claim by signing the agreement on 16 August 2018 and such counter claim must not be instituted against the liquidators of PPW.

[11] The respondents also state that the applicant should never have launched this application as it should have joined this application in the liquidation application.  This advice, which was maintained with during argument and in the respondent’s heads of argument, is not good in Law.

[12] The current application is a different application.  In this application the applicant must establish the quantum of its claim and does not rely on the insolvency of PPW.  In a winding-up application it is not necessary for a creditor to establish the exact quantum of its claim.  Provided that the applicant is a creditor, then the only question is whether the creditor has established a case for winding up, in this instance whether the applicant has established that the principal debtor (PPW) is unable to pay its debts and has complied with the formal requirements.  It does not assist the respondent to dispute part of the indebtedness in such an application[1].  The respondent’s contention that this application is an abuse of process is not correct.  As authoritavely stated in Collett v Priest[2] :

“An order placing a person’s estate under sequestration cannot fittingly be described as an order for a debt due by the debtor to the creditor.  Sequestration proceedings are instituted by a creditor against a debtor not for the purpose of claiming something from the latter, but for the purpose of setting the machinery of the law in motion to have the debtor declared insolvent. No order in the nature of a declaration of rights or of giving or doing something is given against the debtor. The order sequestrating his estate affects the civil status of the debtor and results in vesting his estate in the Master. No doubt, before an order so serious in its consequences to the debtor is given the Court satisfies itself as to the correctness of the allegations in the petition. It may for example have to determine whether the debtor owes the money as alleged in the petition. But whilst the Court has to determine whether the allegations are correct, there is no claim by the creditor against the debtor to pay him what is due nor is the Court asked to give any judgment, decree or order against the debtor upon any such claim.”

A liquidation application is not proceedings for recovery of a debt.  The proceedings are unique in nature and its ultimate aim is to establish an concursus creditorum.  The proceedings are not the same, and an application for liquidation cannot be launched in the same proceedings as the current proceedings before this court. 

[13] Having found in the liquidation application that no genuine disputes of facts were raised by the respondent (in that matter), and having granted the order as sought by the applicant in the liquidation application, I cannot but find that PPW is indebted to the applicant the amount as claimed in this matter. 

[14] The respondent’s position as stated in their opposing affidavit, and as already referred to by me, is very terse.  The respondents relies on the opposing affidavits in the liquidation application annexed to their opposing affidavits in this application as annexure DD1 and DD2 respectively.  The court is asked to decide this application by having regard to those affidavits.  Brief statements are made about substantial disputes of facts and the fact that the same facts and circumstances as in the liquidation applicant applies to the current application.  The respondents submit that the applicant brought this application on essentially the same facts and for the same relief as an unnecessary duplication of resources and brought with the intention of misleading the court as to all the relevant facts and circumstances surrounding these applications are not before court in this application.

[15] This court cannot base its judgment on documents annexed to answering affidavits unless the relevant passages relied upon by respondent are highlighted in their opposing affidavit.  To expect of the court to trawl through lengthy documents and decide what is relevant to respondent’s defense, is not proper. 

[16] In National Director of Public Prosecutions v Zuma[3] Harms DP held that:

“The trial judge, again, failed to comply with basic rules of procedure.  Judgment by ambush is not permitted. It is not proper for a court in motion proceedings to base its judgment on passages in documents which have been annexed to the papers when the conclusions sought to be drawn from such passages have not been canvassed in the affidavits. The reason is manifest the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts. A party cannot be expected to trawl through annexures to the opponent's affidavit and to speculate on the possible relevance of facts therein contained. The position is no different from the case where a witness in a trial is not called upon to deal with a fact and the court then draws an adverse conclusion against that witness”.

[17] Although I heard and decided liquidation application this is a substantive, separate application in which both parties must make out their cases in the affidavits before court.  The respondents cannot rely on lengthy affidavits without drawing this court’s attention (as well as the applicant’s attention) to the specific portions they rely on or their defence.  Trial by ambush is not allowed in our courts.

[18] The affidavits in the winding-up application are lengthy and canvas issues that are not relevant to this application.  In consequence, the respondents defence must be considered based only on the content of its very terse answering affidavit.

[19] In the current application the applicant alleges that the respondents, in their capacity as sureties and co-principal debtors, are indebted to the applicant to the amount as stated earlier. 

[20] In terms of the agreement of suretyship it was specifically agreed between the parties that a certificate signed by, amongst others, a director of the respondent, of whom Mr Gischen, the deponent to the applicant’s founding affidavit is one, shall serve as prima facie evidence of the debt due.  This certificate was annexed to the applicant’s founding affidavit as Annexure E. 

[21] I pause to mention that the respondents, in their opposing affidavit state that Annexure E was not annexed to the founding affidavit served on them, and therefore they could not comment thereon.  Mr Osry, the applicant’s attorney, states in an affidavit that the application and annexures was also mailed to the respondents.  To the said mail, according to Mr Osry it appears that Annexure E was annexed, and he also tendered in a letter that respondent’s attorney could inspect it at his offices.  It begs the question, that under the circumstances, why respondents, faced with a judgment in excess of R2 million, and knowing full-well that their defence would be that the quantum of respondent’s claim is in dispute, did not accept the offer by Mr Osry.  The original application is also in the court file and I am surprised that the respondents did not instruct their attorney to either attend court to make a copy of the said certificate or to address a letter to the applicant’s attorneys requesting a copy of the said certificate.  I accept that as confirmed in the affidavit of Mr Osry, he carefully checked the courtesy email sent to the respondent’s attorneys which included the application and that such a copy included the certificate of balance.

[22] The respondents cannot lament their fate at this late stage and fail to answer to the important evidence contained in the certificate of balance.  This could have been dealt with in a further answering affidavit, but respondents elected not to do so.

[23] The certificate of balance is admissible and constitutes prima facie evidence of the debt.  The respondents have a duty to adduce evidence to rebut its content.  If they fail to do so, they will not be successful in their defence, and judgment will be entered against them[4].

[24] The respondents, in its answering affidavit, apart from stating that there was no certificate of balance annexed to the affidavit served on them, baldly denies the indebtedness of PPW to the applicant.  Save for the unsubstantiated allegations in the opposing affidavit that there were countless issues with invoices issued for amounts due and owing to it, and that PPW’s indebtedness, if any, is in dispute, no basis is laid by the respondents for its denial of the indebtedness.  It is important to note that the respondents cannot rely on the numerous pages of founding, opposing and replying affidavits in the liquidation application, annexed to the papers to disclose a defence.  I have dealt with this aspect.  Even if I’m wrong, I have found against PPW in the liquidation application and further found that PPW did not disclose a bona fide and reasonable defence in the said application.

[25] The failure by respondents to disclose a defence, in casu, is fatal to their case.  The respondents should have taken the court into their confidence by detailing the alleged errors, or by producing, at least, reconciliation of the account to indicate that the amount allegedly due is in dispute.  Failure to do so caused the prima facie proof of the certificate to became conclusive proof of PPW, and respondents, indebtedness.  The respondents failed to provide any evidence rebutting the prima facie case by the applicant[5]. 

[26] The respondent also alleged that one of the statements annexed to the founding affidavit indicates as “nil balance” and PPW thus does not owe applicant any money is comprehensively explained by the applicant in its replying affidavit.  The applicant explains that on advice of its auditor, and because it had never in the past provided for bad debt, it erroneously passed a credit note in the matter which indicated that there was no money due to the applicant.  It is also stated in reply that it was never the intention to waive indebtedness by PPW to applicant.  The onus rests on the party relying on waiver to allege and prove the waiver[6].  The respondents failed to acquit the onus.

[27] Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts.  Unless the circumstances are special they cannot be used to resolve factual issues because they are not designed to determine probabilities.  It is well established under the Plascon-Evans rule that where in motion proceedings a dispute of fact arise on affidavits, final order can be granted only if the facts averred in the applicant’s affidavits, which have been admitted by a respondent, together with the facts alleged by the latter justifies such an order.  It may be different if the respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or show clearly untenable that the court is justified rejecting them merely on the papers[7] .

[28] Having decided that the court will not have regard to the papers filed in the liquidation application, I find that the defences raised by the respondents in this matter is clearly untenable and that the court is justified in rejecting them merely on the papers.  The defence consists of bald denials, unsubstantiated by any facts at all.

 

COSTS

[29] In this matter the respondents, in the suretyship, agreed to pay the costs on the scale as between attorney and client.  The applicant is successful in the application and I can see no reason to deprive them of such costs.

[38] I accordingly make the following order:

1. First and second respondents are ordered to pay the applicant an amount of R2 194 078.49 jointly and severally, the one paying the other to be absolved.

2. Interest thereon at the legal rate tempore mora from date of judgment to date of payment.

3. Costs on a scale as between attorney and client.           

 

 

_ _____________________________

HF BRAUCKMANN

ACTING JUDGE OF THE HIGH COURT

 

 

 

REPRESENTATIVE FOR THE APPLICANT: ADV. S VIVIAN (SC)        

INSTRUCTED BY: DAVID OSHRY & ASSOCIATES

REPRESENTATIVE FOR THE RESPONDENT: ADV C.J MARNEWECK  

INSTRUCTED BY: VAN KAAM-OBERHOLSTER INC          

DATE OF HEARING: 3 DECEMBER 2019                              

DATE OF JUDGMENT: 10 JANUARY 2020                    

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