Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd v Fantastic View Properties CC (3352/2012) [2013] ZAECGHC 33 (5 April 2013)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION – GRAHAMSTOWN)

CASE NO: 3352/2012

DATE HEARD: 28/02/2013

DATE DELIVERED: 05/04/2013

In the matter between

PETROLEUM OIL AND GAS CORPORATION

OF SOUTH AFRICA (PTY) LTD ...................................................................PLAINTIFF

and

FANTASTIC VIEW PROPERTIES CC ......................................................DEFENDANT

JUDGMENT

________________________________________________________________

ROBERSON J:-

[1] This is an application for summary judgment. It is common cause that the plaintiff and the defendant entered into an agreement in terms of which the plaintiff sold petroleum products to the defendant. Material terms of the agreement as pleaded included the following:

[1.1] The plaintiff would open a credit account for the defendant that would be subject to a credit limit as determined by Plaintiff.

[1.2] Sales would be at an agreed price, as per confirmation of orders, but which prices would be subject to escalations and or price variances.

[1.3] Subject to the other provisions of the agreement and unless otherwise agreed to by the parties in writing, debit balances would be paid by the defendant to the plaintiff no less frequently than monthly, as stipulated in the invoices without set-off or deduction, on or before due date.

[1.4] The defendant’s failure to make payment of the debit balance in full by the payment due date would result in all amounts due to plaintiff becoming due and payable immediately.

[2] Further clauses which were the subject of argument were:

[2.1] Clause 3.4: Written notices for any discrepancies shall be supported by the relevant documents produced by an independent surveyor and such notices must be made and submitted to PetroSA within 14 (fourteen) days from the date of discharge of the Goods; and,

[2.2] Clause 7: In the event of a difference in the measurement of the Goods dispatched and the Goods received, the Parties shall endeavour to resolve the issue before the relevant payment is due.

[3] The plaintiff alleged that it delivered petroleum products as ordered by the defendant, debited the account of the defendant and presented a statement of the account monthly to the defendant. As at 30 July 2012 there was a debit balance of R10 038 972.10 allegedly due and payable by the defendant which despite demand the defendant failed or refused to pay.

[4] Rule 32 (2) of the Uniform Rules provides:

“The plaintiff shall within 15 days after the date of delivery of notice of intention to defend, deliver notice of application for summary judgment, together with an affidavit made by himself or by any other person who can swear positively to the facts verifying the cause of action and the amount, if any, claimed and stating that in his opinion there is no bona fide defence to the action and that notice of intention to defend has been delivered solely for the purpose of delay. If the claim is founded on a liquid document a copy of the document shall be annexed to such affidavit and the notice of application for summary judgment shall state that the application will be set down for hearing on a stated day not being less than 10 days from the date of the delivery thereof.”

[5] The affidavit in support of summary judgment was deposed to by one Owen Tobias who stated as follows:

“1. I am an adult male and the Head Legal Counsel of the claimant in this action and am duly authorised by it to make this affidavit. The facts herein stated are within my own knowledge and to the best of my belief true and correct.

2. I hereby verify and confirm the cause of action of the Applicant and the amounts claimed as appear in the Summons and Particulars of Claim which are annexed thereto. I verily believe that the Defendant has no bond fide defence to Plaintiff’s claim and that Defendant has entered an appearance to defend solely for the purpose of delay.”

[6] In opposing summary judgment, the defendant raised two defences. The first was by way of a point in limine that Tobias did not have personal knowledge of the facts giving rise to the claim. The relevant portions of the opposing affidavit are as follows:

“5. Owen Cedric Tobias states that he is the Head Legal Counsel of Plaintiff. This matter relates to the sale of petroleum products by Plaintiff to Defendant and the deponent to this affidavit has never been involved in any negotiations or discussions pertaining to this matter.

6. I therefore deny that Mr. Tobias has any personal knowledge whatsoever of the facts giving rise to the claim and most probably

rely (sic) exclusively on the perusal of records and documents in order to verify the cause of action and the facts giving rise to it.

7. Mr. Tobias’ affidavit however does not say this and he merely states that the facts are within his own knowledge and he verifies the cause of action. This is not so.”

[7] The second defence was a challenge to the correctness of the volume of petroleum products for which the plaintiff had issued invoices. The defendant alleged that certain invoices had not been accompanied by bills of lading and further alleged that the volume of certain deliveries was less than stated in the bills of lading. Meetings were held with officials of the plaintiff to try and resolve the dispute but no resolution was reached, the defendant alleging that the plaintiff did not provide the defendant with all the bills of lading in order to reconcile them with the invoices issued. The defendant maintained that clause 7 of the agreement was inserted to cover this sort of situation.

[8] In Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 423D-H, Corbett JA said the following with regard to founding affidavit in summary judgment applications:

“Generally speaking, before a person can swear positively to facts in legal proceedings they must be within his personal knowledge. For this reason the practice has been adopted, both in regard to the present Rule 32 and in regard to some of its provincial predecessors (and the similar rule in the magistrates' courts), of requiring that a deponent to an affidavit in support of summary judgment, other than the plaintiff himself, should state, at least, that the facts are within his personal knowledge (or make some averment to that effect), unless such direct knowledge appears from other facts stated (see e.g. Joel's Bargain Store v. Shorkend Bros. (Pty.) Ltd., 1959 (4) SA 263 (E); Misid Investments (Pty.) Ltd. v. Leslie, 1960 (4) SA 473 (W); Sand and Co. Ltd. v. Kollias, supra at pp. 165 - 7; Fischereigesellschaft v. African Frozen Products, supra at pp. 109 - 110; Flamingo Knitting Mills (Pty.) Ltd. v. Clemans, supra at p. 694 - 5; Barclays National Bank Ltd. v. Love, 1975 (2) SA 514 (D) at pp. 515 - 6). The mere assertion by a deponent that he 'can swear positively to the facts' (an assertion which merely reproduces the wording of the Rule) is not regarded as being sufficient, unless there are good grounds for believing that the deponent fully

appreciated the meaning of these words (see African Frozen Products case, supra at p. 110; Love's case, supra at p. 515). In my view, this is a salutary practice. While undue formalism in procedural matters is always to be eschewed, it is

important in summary judgment applications under Rule 32 that, in substance, the plaintiff should do what is required of him by the Rule. The extraordinary and drastic nature of the remedy of summary judgment in its present form has often been judicially emphasised (see, e.g., Mowschenson and Mowschenson v. Mercantile Acceptance Corporation of SA Ltd., 1959 (3) SA 362 (W) at p. 366; Arend and Another v. Astra Furnishers (Pty.) Ltd., 1974 (1) SA 298 (C) at pp. 304 - 5; Shepstone v. Shepstone, 1974 (2) SA 462 (N) at p. 467). The grant of the remedy is based upon the supposition that the plaintiff's claim is unimpeachable and that the defendant's

defence is bogus or bad in law. One of the aids to ensuring that this is the position is the affidavit filed in support of the application; and to achieve this end it is important that the affidavit should be deposed to either by the plaintiff himself or by someone who has personal knowledge of the facts.

Where the affidavit fails to measure up to these requirements, the defect may, nevertheless, be cured by reference to other documents relating to the proceedings which are properly before the Court (see Sand and Co. Ltd. v. Kollias, supra at p. 165). The principle is that, in deciding whether or not to grant summary judgment, the Court looks at the matter 'at the end of the day' on all the documents that are properly before it (ibid. at p. 165).”

[9] In Shackleton Credit Management (Pty) Ltd Microzone Trading 88 CC and Another 2010 (5) SA 112 (KZP), Wallis J (as he then was) stated as follows at para [7]:

“The requirement that the founding affidavit be deposed to by the applicant or some other person who can swear positively to the facts precludes the affidavit being deposed to by someone whose knowledge of those facts is purely a matter of hearsay. Thus a person who deposes to such an affidavit on the basis that their information comes from another source, whether another person or from documents, is not a person who can swear positively to the facts giving rise to the claim. It is for that reason that the application for summary judgment in Raphael & Co v Standard Produce Co (Pty) Ltd was held to be defective. The deponent to the affidavit was the applicant’s Cape Town attorney and the court said:

‘There is nothing from the circumstances of his making of this affidavit which can lead the Court to the conclusion that it is within his knowledge. The ordinary presumption would be that they are facts which have come within his knowledge through his acting for the applicants in this matter.’

An application by an attorney based on information given to the attorney by the client does not comply with the rule because the attorney is not in a position to swear positively to the facts. Such an affidavit is nothing more than an affidavit of information and belief, containing inadmissible hearsay. An application founded on such an affidavit is as a result defective.”

[10] When one examines the plaintiff’s cause of action, Tobias would have to have personal knowledge of the conclusion of the contract, the delivery of products, the issue of invoices for such deliveries, and non-payment by the defendant.

[11] Tobias does not say from what source he acquired his information. His job description is not helpful. I accept in the plaintiff’s favour that he is employed by the plaintiff as an in-house lawyer, although even that is not clearly stated. However I think it is safe to say that the plaintiff conducts many other business activities besides the sale of petroleum products to the defendant, and that as head legal counsel Tobias would be involved in an advisory capacity in many types of matters on behalf of the plaintiff, and not be involved in the day to day administration of sales and receipt or non-receipt of payments. The title of head legal counsel suggests that the plaintiff has more than one in-house lawyer in its employ and it is therefore not clear that Tobias deals exclusively with the plaintiff’s litigation. One therefore cannot say that he was not in the same position as an attorney who is given information by his client.

[12] In Shackleton Credit Management (supra) Wallis J dealt with the position of a legal advisor at para [15] as follows:

“Mr. van Rooyen said that in many cases that come before this court the affidavit in support of an application for summary judgment is deposed to by a legal advisor in the employ of the applicant. His suggestion, as I understand it, is that such a person is in the same position as Mr Lombard, deriving his or her knowledge entirely from a perusal of documents. If he is correct in that then all I can say is that such an application would also be defective. However, there may be reasons connected with such a person’s employment that would result in their acquiring sufficient personal knowledge of the facts to depose to an affidavit in support of an application for summary judgment. Each case will necessarily depend upon its own facts.”

In the present case no reasons connecting Tobias’ employment to the acquisition of personal knowledge of the facts emerge from the founding affidavit.

[13] Mr. Paterson, who appeared on behalf of the plaintiff, fairly conceded that there were deficiencies in the founding affidavit, but submitted, in accordance with the dictum in the Maharaj judgment quoted above, that the deficiencies could be cured by reference to other documents properly before the court. The other documents were the particulars of claim which contained the cause of action, the contract, and the nature of the defence. It was submitted that the cause of action as pleaded was the submission of invoices and non-payment by the defendant, and that in the context of the agreement these allegations were sufficient to establish a cause of action. Further, these allegations were not in

dispute. No knowledge was required on the part of Tobias with regard to the disputes about the quantities of products delivered, because these disputes were not relevant to the cause of action as pleaded. In all these circumstances, so it was submitted, because of the “reduced scope of the facts” the plaintiff’s head legal counsel was “probably, almost certainly” in a position to say that invoices had been issued and had not been paid.

[14] In my view, and as mentioned above, the cause of action is more than the contract, the issue of invoices and non-payment. Payment was claimed following not only the issue of invoices, but also following delivery of the products for which payment was claimed. Delivery of all the products for which payment was claimed was not admitted. It was submitted on behalf of the plaintiff that the defence which challenged the quantities of the products delivered could not succeed because of the time-bar clause, clause 3.4. I do not intend to deal with the merits of this defence, but suffice it to say that Mr. de la Harpe, who appeared for the defendant, submitted that the dictum in Maharaj relied upon by Mr. Paterson related to a finding of whether or not the deponent to the founding affidavit was a person who could “swear positively to the facts”. Mr. de la Harpe further submitted that weaknesses in the defence raised on the merits could not be used to strengthen the weaknesses in the founding affidavit.

[15] I agree with these submissions, particularly when one has regard to the challenge to Tobias’ knowledge contained in the opposing affidavit. It was specifically stated that the matter related to the sale of petroleum products and that Tobias had never been involved in related negotiations or discussions. In these circumstances, as I understood the argument, the requisite knowledge could not be imputed to Tobias merely because the defendant did not dispute the contract, the issue of invoices and non-payment, and had a weak defence. If this was the case, theoretically anyone could depose to a founding affidavit and there would be no need for personal knowledge.

[16] Mr. Paterson referred to the case of Firstrand Bank v Huganel Trust 2012 (3) SA 167 (WCC). In that case Davis J referred to conflicting judgments relating to founding affidavits in summary judgment applications, following Maharaj. At p 177B-D he stated as follows:

“While a measure of commercial pragmatism needs to be taken into account, in that many of these summary judgment applications are brought by large corporations and, accordingly, it may well be that first-hand knowledge of every fact cannot and should not be required, each case must be assessed on the facts which were placed before the court. It follows that the nature of the defence becomes the starting point. For example in Maharaj’s case Corbett JA found that it was a borderline case but one which fell on the right side of the border insofar as the plaintiff/applicant was concerned. On an evaluation of both the claim and the defence, it could be concluded with justification that the deponent had sufficient knowledge to depose to the affidavit, which formed the basis of the factual matrix to sustain an application for summary judgment.”

[17] In my view, this passage does not assist the plaintiff. Tobias’ affidavit gives no indication whatsoever that because of his position or records under his control he has personal knowledge of any facts at all. His position cannot be equated for example, to a bank manager of a branch where the account of the defendant is conducted. In Maharaj, the claim was based on an oral agreement in terms of which the plaintiff provided overdraft facilities to the defendant, disbursed monies on his behalf and charged interest on such amounts. On demand, the defendant failed to pay the balance owing on his overdrawn account. The founding affidavit was deposed to by the plaintiff’s branch manager’s assistant who stated that he could swear positively to the affidavit. In the opposing affidavit the defendant only placed in dispute the manager’s assistant’s ability to depose to the conclusion of the oral agreement. He did not deny the deponent’s ability to depose to the current state of his account, and did not allege that the deponent was not present when arrangements were made or that the deponent could not have acquired first hand knowledge of the arrangement in the course of his duties. Although it was considered a borderline case, the affidavit was found to be sufficient. In the present matter, the opposing affidavit does not leave open the question of the knowledge Tobias would acquire in the course of his duties, which in any event he does not divulge. His knowledge of the

facts and his source of information are specifically challenged.

[18] In my view therefore, when all the documents properly before the court are considered, the deficiencies in Tobias’ affidavit to which I referred earlier, are not cured, and I am not satisfied that Tobias’s affidavit was based on personal knowledge as opposed to “information and belief”.

[19] In the result, the following order is made:

[19.1] Summary judgment is refused and the defendant is given leave to defend the action.

[19.2] The costs of the application for summary judgment are to be costs in the cause.

_____________

J M ROBERSON

JUDGE OF THE HIGH COURT

Appearances:

For the Plaintiff: Adv T Paterson SC, instructed by Whitesides Attorneys, Grahamstown

For the Defendant: Adv D de la Harpe, instructed by Wheeldon Rushmere & Cole, Grahamstown