Plastomark (Pty) Ltd v ATS Corporation (Pty) Ltd t/a ATS Packaging and Another (14991/2019) [2019] ZAGPJHC 483 (22 November 2019)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NUMBER:14991/2019

In the matter between:

PLASTOMARK (PTY) LTD Plaintiff/Applicant

and

ATS CORPORATION (PTY) LTD t/a

ATS PACKAGING First Defendant/ Respondent

ANTONIO GUVEIA DE JESUS Second Defendant/ Respondent

JUDGMENT

DIPPENAAR J:

[1] The applicant/plaintiff (“plaintiff”) seeks summary judgment against the first and second respondents/defendants (“defendants”), based on a written credit application form (“the agreement”) concluded on 7 May 2018, in terms whereof, the applicant would sell raw plastic materials to the first defendant based on its standard conditions of sale. Its claim against the second respondent is based on a deed of suretyship included in the credit application form, signed by the second defendant, in terms of which the second defendant stood as surety and co-principal debtor with the first defendant for amounts due to the plaintiff. It is common cause that the second defendant is the sole director of the first defendant.

[2] In order to successfully resist summary judgment, the defendants must disclose the nature and grounds of a bona fide defence and the material facts relied on therefor[1].

[3] The plaintiff’s claim relates to the payment of two unpaid invoices for August and September 2018, addressed to ATS Packaging. These invoices are not in dispute. It is further not in dispute that these invoices have not been paid.

[4] The central issue raised by the defendants revolves around the capacity in which the materials were purchased by the defendants and in what capacity the agreement was concluded. It is common cause that the second defendant completed the credit application form. The question is between which parties it was concluded. The second defendant contends that he, as sole proprietor of a business conducted in the name of ATS Packaging, completed the credit application form in such capacity.

[5] The plaintiff’s claim is formulated on the basis that the agreement between the parties was concluded with the first defendant during May 2018 and that the materials reflected on the outstanding invoices were purchased by the first defendant pursuant to that agreement. It seeks to hold the second defendant liable for this debt as surety and co-principal debtor. It pleads that the National Credit Act[2] (“the Act”) is not applicable as the first defendant is a juristic person with an annual turnover exceeding R1 million at the time of conclusion of the agreement and that the provisions of section 4(2)(c) as read with section 85 of the Act are not

applicable.

[6] In their affidavit, the defendants contend that:

[6.1] The wrong party is before court as the second respondent concluded the written agreement in his own name as sole proprietor, evidenced by the words “sole proprietor” reflected on the credit application form;

[6.2] The first respondent’s registration number was inserted on the said form by an unknown person, and not by the second respondent;

[6.3] The registration number pertains to a corporate entity (the first respondent) which the second respondent incorporated subsequent to the establishment of ATS.

[6.4] The invoices presented by the applicant in support of its claim are made out to ATS Packaging and not to the first respondent;

[6.5] The suretyship does not comply with the provisions of the General Law Amendment Act[3] in that the second respondent, being the sole proprietor who signed the credit application as applicant, could not stand surety for himself. On this basis it is contended that the summons does not disclose a cause of action.

[6.6] The Act applies as the agreement was concluded with a natural person;

[6.7] It is further contended that the second respondent has a counterclaim arising from the applicant’s knowledge that it was the second respondent’s only supplier and its failure to timeously advise it of potential stock shortages, estimated at between R250 000 and R300 000.00;

[6.8] Lastly, the defendants challenge the authority of the deponent to the plaintiff’s affidavit supporting the summary judgment application.

[7] The assertion that the second respondent concluded the agreement in his personal capacity as sole proprietor of ATS Packaging is central to the defences raised.

[8] In assessing the version of the defendants, it must be considered whether it is needlessly vague, bald and sketchy[4]. The defendants are obliged to depose to facts, that if accepted as the truth or proved at the trial, with admissible evidence, would constitute a defence to the plaintiff’s action.

[9] The credit application form, dated 7 May 2018 is completed in the name of AG de Jesus t/a ATS Packaging. It reflects that the entity is a sole proprietorship. The registration number of the first defendant appears next to the words “sole proprietorship”, which the second defendant disputes was inserted by him. The invoices are made out simply to ATS Packaging.

[10] There is merit in the plaintiff’s contention that the defendants’ version fails to grapple meaningfully with various aspects pertaining to their defences. Their affidavit is entirely silent on why the second defendant continued operating as a sole proprietor after the incorporation of the first defendant and what the relationship was between the first defendant and the sole proprietorship trading as ATS Packaging. The second defendant further does not explain why he executed the deed of suretyship if he had already concluded the credit application in his personal capacity.

[11] Considering the version of the defendants as to the parties to the agreement, albeit set out in terse terms, and the contents of the documentation relied on by the plaintiff in its particulars of claim, I am persuaded that there is a triable issue in relation to the liability of the first defendant.

[12] The plaintiff has urged me to consider the real issue between the parties irrespective of the agreement pleaded and to consider that on his own version, the second defendant concedes liability to the plaintiff, whether as principal debtor or surety. In doing so, the plaintiff relies on the well-known dictum in Robinson v Randfontein Estates Gold Mining Co[5] that:

“The object of pleadings is to define the issues; and the parties will be kept strictly to their pleas where any departure would cause prejudice or would prevent full enquiry. But within those limits the Court has a wide discretion. For pleadings are made for the Court, not the Court for pleadings”.

[13] I cannot however for purposes of summary judgment ignore that if the defendants’ version of the agreement is proved at trial, such agreement is totally at variance with the agreement and cause of action pleaded by the plaintiff. The departure from the pleadings

would be significant and amount to ignoring the cause of action made out in the particulars of claim. This would be prejudicial to the second defendant[6]. Moreover, the Act would be applicable and it is common cause that the plaintiff has not complied with its provisions.

[14] As summary judgment is not intended to deprive a defendant with a triable or sustainable defence from his day in court[7], I am persuaded that leave to defend should be granted to the second defendant. In my view there is at least a triable issue, considering

the cause of action relied on in the particulars of claim.

[15] In light of the conclusions reached, it is not necessary to deal with the other defences raised.

[16] The defendants sought a costs order against the plaintiff as their defences were set out in correspondence and the plaintiff was invited to withdraw its application. In my view, justice is best served by an order granting costs to be in the cause.

[17] I grant the following order.

[1] The defendants are granted leave to defend;

[2] The costs of this application are costs in the cause.

_____________________________________

EF DIPPENAAR

JUDGE OF THE HIGH COURT JOHANNESBURG

APPEARANCES

DATE OF HEARING: 07 November 2019

DATE OF JUDGMENT: 22 November 2019

APPLICANT’S COUNSEL: Adv JM Hoffman

APPLICANT’S ATTORNEYS Swartz Weill Van der Merwe

Ms Weil

RESPONDENTS’ COUNSEL: Adv CB Britz

RESPONDENTS’ ATTORNEYS: JNS Attorneys

Mr K Swart

[1] Maharaj v Barclays Bank Ltd 1976 (1) SA 418 (A) at 426.

[2] 34 of 2005

[3] 50 of 1956

[4] Breytenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T) 228B-C, 228E-F

[5] 1925 AD 173 at 198

[6] Mastlite (Pty) Ltd v Stavracopoulous 1978 (3) SA 296 (T) at 299C

[7] Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture [2009] 3 All SA 407 (SCA)