Iliad Africa Trading (Pty) Ltd v Elegant Line Trading 898 CC and Others (62772/2017) [2018] ZAGPPHC 546 (2 August 2018)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

REPUBLIC OF SOUTH AFRICA

(1) NOT REPORTABLE

(2) NOT OF INTEREST TO OTHER JUDGES

(3) REVISED

Case Number: 62772/2017

2/8/2018

In the matter between:

ILIAD AFRICA TRADING (PTY) LTD

Plaintiff / Applicant

And

ELEGANT LINE TRADING 898 CC

First Defendant/First Respondent

AMANDA JOHANNA PRETORIUS

Second Defendant I Second Respondent

GERHARD PRETORIUS

Third Defendant/ Third Respondent

JUDGMENT

JANSE VAN NIEUWENHUIZEN J

[1] The plaintiff issued summons against the defendants claiming payment of an amount of R 856 116, 38 from the first defendant for goods sold and delivered and from the second and third defendants in their capacities as co­ principal debtors and sureties.

[2] The defendants filed a notice of intention to defend the action, which prompted the present application for summary judgment.

Plaintiffs claim

[3] The contractual relationship between the plaintiff and the first defendant is regulated by a written agreement, which agreement is attached to the particulars of claim as annexure "A". The second and third defendants both stood surety for the debt of the first defendant in terms of written suretyship agreements.

Defendants' defences

[4] The second and third defendants did not disclose any defence in respect of their liability in terms of the suretyship agreements.

Consequently, and should the first defendant's defences fail, judgment against the second and third defendants jointly and severally with judgment against the first defendant will follow.

Security

[5] The defendant’s initially, endeavoured to provide security, in terms of the provisions of rule 32(2) of the Uniform Rules of Court, for the claimed amount. The registrar ordered the defendants to provide security for the amount by way of a Bank Guarantee. Upon receipt of the order, the defendants abandoned the setting of security and raised the defences set out infra.

Particulars of claim defective

[6] The point is raised in respect of annexure "A" (written agreement) attached to the particulars of claim. The defendants

averred that pages 2 and 3 were not attached to the particulars of claim and consequently the particulars of claim are defective.

Annexure "A" attached to the particulars of claim filed in the court file is complete and Mr Sullivan, counsel for the

defendants, to his credit, did not pursue the point any further.

Contractual limit

[7] According to the defendants the credit limit in respect of the first defendant's purchases was initially set at R 150 000, 00 and

increased with the consent of the first defendant to R 350 000, 00. The first defendant avers that the credit limit was thereafter

further increased without its consent. The aforesaid conduct constitutes, according to the first defendant, reckless credit as

contemplated in the National Credit Act, 34 of 2005 and is a material breach of the provisions of the agreement.

[8] In support of its averment that the increased credit limit is a material breach of the terms of the agreement, the first defendant relies on clause 1.4 which reads as follows:

"1.4 The Company will increase the credit limit under the credit facilities with the written consent of the Customer, provided that the Company is satisfied that the Customer will be able to meet its obligations under the increased credit limit."

[9] Clause 1.5, however, makes it clear that the credit limit does not limit the first defendant's indebtedness to the plaintiff.

[10] The National Credit Act, 34 of 2005 is furthermore not applicable to the agreement between the plaintiff and first defendant and any reliance on the Act is legally unsustainable.

Tacit agreement (repayment in instalments)

[11] The defendants state that the original debt claimed by the plaintiff was R 916 116, 38. The defendants do not dispute that the amount was due and owing, but state that during May 2017 and in reduction of the debt, the defendants commenced making payments of R 20 000, 00 per month.

[12] According to the defendants the amount claimed is, as a consequence, incorrect and should be R 796 116, 38.

[13] Furthermore, and due to the fact that the plaintiff accepted these payments, the first defendant alleges that a tacit agreement came into being between the parties in respect of the repayment of the debt in instalments.

[14] The following clauses in the agreement pertain to the defence of a tacit agreement of variation for the of repayment of the debt, to wit:

i. clause 3.1 read with clause 3.2 which provides that payment should be made 30 days from date of statement and that the first defendant shall not be entitled to withhold, deduct from or defer any amount due to the plaintiff;

ii. clause 13.2 provides that no amendment or cancellation of the agreement shall be of any force or effect unless reduced to writing and signed by the plaintiff and the first defendant; and

iii. lastly, clause 13.3 states that no relaxation or indulgence which the plaintiff may give to the first defendant shall prejudice or be deemed to be a waiver of any of the plaintiffs rights in terms of the agreement.

[15] Consequently, he alleged tacit agreement to vary the terms of the repayment of the debt must, in view of the non-variation clause, fail.

[See: SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere 1964 (4) SA 760 (A).]

Payment of claimed amount by a third party

[16] The defendants allege that an insurance company known as Credit Guarantee Insurance Corporation has paid the plaintiff at least 80 % of the claim amount. An e-mail from a certain Pascaline Meletse is attached to the answering affidavit in confirmation of the aforesaid allegation.

[17] Ex facie the e-mail, it is not possible to establish whether a payment was made to the plaintiff in respect of the present claim. Be that as it may, in response to the aforesaid allegation and in an e-mail dated 19 March 2018, the plaintiffs attorney responded as follows to the aforesaid allegation:

"We again confirm that our client has not received payment from your client and that you have also not provided us with proof of payment. If our client has received payment from their insurance that is no defence for your client to rely on. "

[18] The response is in accordance with the principle of privity of contract. In Christie's law of Contract in South Africa, 7th edition, GB Bradfield, the principle is stated as follows:

"The basic idea of contract being that people must be bound by the contracts they make with each other it would obviously be ridiculous if total strangers could sue or be sued on contracts with which they were in no way connected ,,

[19] Similarly it would be preposterous to allow a stranger to a contract to rely on performance by the parties to the contract, as a defence.

[20] If payment of the debt was made by an insurance company, such payment would have been made on the terms and conditions contained in the contract between the plaintiff and such company.

[21] The first defendant received the goods in terms of the agreement between itself and the plaintiff and remains liable to pay the plaintiff in accordance with the terms and conditions of the agreement.

Conclusion

[22] In the premises none of the defences relied upon by the first defendant constitutes a bona fide defence and the plaintiff is entitled to summary judgment.

[23] Mr Stoop SC, submitted that, having regard to the payments made by the first defendant, judgment in the amount of R 768 097, 00 together with interest and costs should be granted.

ORDER

[24] In the premises, summary judgment is granted against the first, second and third defendants jointly and severally, the one to pay the other to be absolved:

1. Payment of the amount of R 768 097, 00;

2. Interest on the aforesaid amount at 10, 25% from 19 September 2017 to date of payment.

3. Cost of suit on an attorney and client scale.

N. JANSE VAN NIEUWENHUIZEN J

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

DATE HEARD

18 June 2018

JUDGMENT DELIVERED

2 August 2018

APPEARANCES

Counsel for the Plaintiff:

Advocate B. Stoop SC

(083 461 7640/012 452 8783)

Instructed by:

Kotze and Roux Attorneys

(012 940 3470)

Ref: V Roux/V10093

Counsel for the First,

Second and Third Defendants: Advocate J.H. Sullivan

Instructed by: Hills

Incorporated

(087 944 1800)

Ref: K Van Schalkwyk/KS499/17