Johannes Jacobus Swart t/a JJ and Company, Building & Structural Steel Contractors v LEB Construction CC and Others (33552/2015) [2017] ZAGPPHC 933 (14 June 2017)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO : 33552/2015

14/06/2017

In the matter between :

JOHANNES JACOBUS SWART T/A JJ AND

COMPANY, BUILDING & STRUCTURAL STEEL

CONTRACTORS Applicant

and

LEB CONSTRUCTION CC First Respondent

PA LEBEA Second

Respondent

MOSOMO CONSULTING ENGINEERS

Third Respondent

THE MOPANI DISTRICT MUNICIPALITY Fourth

Respondent

THE AGANANG MUNICIPALITY Fifth

Respondent

JUDGMENT

MBONGWE AJ:

INTRODUCTION

[1] The applicant seeks, in the main, an order directing the 4th and 5th respondents to pay directly to him the amounts of R1,680,499.05

and R438,926.78, respectively, with interest. The 4th and fifth respondents had concluded unrelated contracts with the 1st respondent for the construction of a road and for sewerage repairs and maintenance, respectively. The 1st respondent, represented by its sole member, the 2nd respondent, engaged the services of the applicant as a subcontractor for the fulfilment of its obligations to the 4th and 5th respondents. To guarantee payments to the applicant, the 2nd respondent signed and furnished the applicant with two documents one titled Deed of Suretyship incorporating a Cession of claims and the other Cession and Pledge, being annexures A6 and A7 to the applicant's founding affidavit. Both documents were signed by the 2nd respondent. Owing to the 1st respondent's failure to settle invoices for services rendered by the applicant in the amounts aforementioned, the applicant relies on these two annexures to seek direct payment to him by the 4th and 5th respondents.

[2] In the alternative, the applicant, who simultaneously with this application, instituted action proceedings against the 1st and 2nd respondents to recover the said amounts, seeks an interdict prohibiting the 4th and 5th respondents from paying the said amounts to the 1st respondent and directing them to deposit these amounts into the trust account of the applicant's attorneys to be invested in an interest bearing account in terms of Section 78A of the Attorneys Act, 53 of 1979 pending the outcome of the action proceedings.

OPPOSITION

[3] This application is opposed by the1st, 2nd, and 4th respondents. No relief is sought against the 3rd respondent who was the co-ordinator between the applicant and the 1st respondent and entrusted with the duty to verify invoices submitted by the applicant and the applicant's performance of the services to which they relate and, if satisfied, approve payment in settlement thereof by the 1st respondent. It is worth mentioning that despite its continued opposition , the 4th respondent has since paid the amount it is sought to be directed to pay directly to the applicant, albeit more than a year after the applicant had instituted these proceedings. For this reason, the applicant seeks only costs against the 4th respondent.

[4] With regard to the 5th respondent who is not opposing this application, the applicant seeks an order for payment as prayed in respect of the main relief sought.

BASIS OF OPPOSITION

[5] The common defence raised by the opposing respondents is that the documents the applicants relies on ( annexures A6 and A7) were signed by the 2nd respondent in his personal capacity and not on behalf of the 1st respondent. Consequently, the respondents submit, both the suretyship incorporating a cession of claims as well as the cession and pledge, signed in favour of the applicant, were signed by the 2nd respondent in his personal capacity and have no bearing on the 1st respondent's claims against, inter alia, the 4th and 5th respondents. Thus, it was argued, the applicant is not entitled to seek direct payment to him by the 4th and 5th respondents. The applicant, on the other end, argues that these documents were signed by the 2nd respondent on behalf of the 1st respondent and submits that applicant is entitled to seek direct payment on the basis of the cessions in his favour.

[6] A further and separate defence raised by the 4th respondent is that the applicant has not performed or adequately performed and, therefore, is not entitled to the relief he is seeking. In this regard it was submitted that the matter ought to be referred to trial as there is a dispute which is incapable of adjudication on the papers. The applicant denied the alleged dispute and the need for the referral of the matter to trial.

ISSUES

[7] There are two issues for determination; first, whether annexures A6 and A7 signed by the 2nd respondent in favour of the applicant were so signed by the 2nd respondent in his personal capacity or on behalf of the 1st respondent. The determination of the second issue, in my view, lies in the test of the veracity of the facts or case of each party as set out in the papers as well as supporting evidence.

[8] In considering the first issue I deem it necessary to refer to the relevant contents of the annexures concerned.

8.1 ANNEXURE A6 ( DEED OF SURETYSHIP INCORPORATING A CESSION)

(a) Clause 1 of this document reads as follows: "I/WE the the undersigned P A Lebea.... Hereby bind myself/ ourselves jointly and severally to Jacobus Johannes Swart (Id No. ) and its successors in title.......... ( hereinafter referred to as "the creditor") as surety/ies for and co - principal debtor/s in solidum with LEB CONSTRUCTION....... Reg Nr.......("the debtor").....( own emphasis).

(b) Clause 5 reads thus: "5. Should the debtor fail to discharge any of its obligations on due date, the creditor shall be entitled notwithstanding any contrary arrangement with the debtor, to demand from me or us immediate performance of all obligations then owing the (sic) debtor to the creditor whether the due date for performance of the obligations shall have arrived or not."

(c) Clause 11 reads as follows: "11. As security for the fulfilment of all obligations hereby undertaken I/We do hereby pledge, cede, assign, transfer over unto and in favour of the creditor all rights, title and interest in and to any amounts and claims from whatsoever source arising and which are now, which may hereinafter become owing to me/us from any source."

[9] The wording in clause 1 and, in particular, the insertion of the name and registration of the 1st respondent after the words "... surety/ies for and co-principal debtor/sin solidum with.... .." unambiguously indicate that the signatory and sole member of the 1st respondent bound not only himself, but the 1st respondent as well. The argument that the cession affects the personal claims of the 2nd respondent is untenable and ought to be dismissed. Thus I find that annexure A6 is indeed a cession of the claims, rights and interests

of both the 1st and 2nd respondents in favour the applicant and that the application should succeed.

[10] THE CESSION AND PLEDGE -ANNEXURE A7

It is apparent from this document signed by the 2n d respondent that the name of the 1st respondent is not mentioned. However, taking into consideration the purpose for which the document was executed and the omission to scratch out the word "we", it is by no means far fetched to interpret it as referring to both the 1st and second respondents. This would be a wider, but purpose

based interpretation. A narrow interpretation will be that, despite the omission to scratch out the word "we", and considering

that the signatory, 2nd respondent, has already bound himself personally in solidum with the 1st respondent in A6, he may have intended to cede his personal claims only in this annexure A7. I find, therefore, that the applicant can succeed on the basis of this document against 1st and 2nd respondents and, at worst, against the 2nd respondent only. He in any event must succeed against the 1st respondent on the basis of annexure A6.

[11] With regard to the second defence raised by the 4th respondent, namely, non performance or partial performance, I this defence to be a mere clutching at straws for two reasons ; the 4th respondent paid the amount involved subsequent to applicant instituting these proceedings and, secondly, the 4th respondent would have attached, as an annexure to the answering affidavit, an affidavit of the 3rd respondent refuting the applicant's claim and the invoices annexed to the applicant's founding affidavit. The 4th respondent’s opposition in this regard is untenable and ought to be dismissed.

COSTS

[12] It is trite that costs follow the outcome of the litigation. The applicant has asked for costs against the 1st, 2nd, 4th and 5th

respondents, the latter not having opposed the application. With regard to the 4th respondent, I agree with the applicant that this respondent had no reason to continue with its opposition after it had settled its debt.

[13] In the result I make the following orders:

1. The 5th respondent is ordered to pay the amount of R438 926.78, earmarked for payment to the 1st respondent, to the applicant.

2. The 5th respondent is ordered to pay interest on the said amount at the rate of 9% per annum from 25 November 2014 to date of payment, being 30 days from the date of this order.

3. The 5th respondent is ordered to the costs of this application on an unopposed party and party scale.

4. The 1st, 2nd and 4th respondents pay the costs of this application on an opposed party and party scale.

MBONGWE AJ

ACTING JUDGE OF THE HIGH COURT