Steinberg v Lazard (157/05) [2006] ZASCA 55; 2006 (5) SA 42 (SCA) (31 March 2006)

Steinberg v Lazard (157/05) [2006] ZASCA 55; 2006 (5) SA 42 (SCA) (31 March 2006)

The Supreme Court of Appeal held that the penalty clause in the agreement was enforceable against the appellant, as he had breached the undertaking to complete the dwelling house by the stipulated date. The court confirmed that, under section 3 of the Conventional Penalties Act, the debtor bears the onus of proving that the penalty is disproportionate to the prejudice suffered by the creditor. The appellant failed to adduce any evidence to establish that the respondent suffered no prejudice or that the penalty was excessive. The court rejected the appellant's argument that the creditor must allege and prove prejudice, finding that the law places the burden squarely on the debtor. The High...

Citation
[2006] ZASCA 55
Parties
Appellant: Colin Steinberg; Respondent: Terence Lazard
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
31 March 2006
Case Number
157/05
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
C N Jafta, Howie, Brand, Nugent, Van Heerden
Legal Topics
Conventional Penalties Act, Onus of Proof, Penalty Clause Enforcement
Commercial and Corporate Civil Procedure Conventional Penalties Act Onus of Proof Penalty Clause Enforcement

Case Brief

Summary, issues, holding and outcome

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Parties

Colin Steinberg

Appellant

Terence Lazard

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether the penalty stipulated in the agreement is payable by the appellant.
  2. 2 Whether the penalty amount should be reduced under section 3 of the Conventional Penalties Act 15 of 1962.
  3. 3 Who bears the onus of proving that the penalty is out of proportion to the prejudice suffered.

Ratio Decidendi

The Supreme Court of Appeal held that the penalty clause in the agreement was enforceable against the appellant, as he had breached the undertaking to complete the dwelling house by the stipulated date. The court confirmed that, under section 3 of the Conventional Penalties Act, the debtor bears the onus of proving that the penalty is disproportionate to the prejudice suffered by the creditor. The appellant failed to adduce any evidence to establish that the respondent suffered no prejudice or that the penalty was excessive. The court rejected the appellant's argument that the creditor must allege and prove prejudice, finding that the law places the burden squarely on the debtor. The High...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed.
  • The appellant is ordered to pay the respondent's costs, including the costs of two counsel.