Tetra Pak S.A (Pty) Limited v Blakey Investments (Pty) Limited (14082/2011) [2021] ZAKZDHC 6; 2021 (6) SA 252 (KZD) (11 March 2021)

Tetra Pak S.A (Pty) Limited v Blakey Investments (Pty) Limited (14082/2011) [2021] ZAKZDHC 6; 2021 (6) SA 252 (KZD) (11 March 2021)

The court found that the defendants had complied fully with their obligations under the settlement agreement, having paid the required R10 million and interest. The late payment of one instalment did not constitute dishonour of the cheque, as the delay was due to a bank security check and not refusal of payment. The penalty clause, which would increase the defendants' liability from R10 million to R25 million for late payment, was held to be a penalty stipulation under the Conventional Penalties Act, operating in terrorem and not reflecting an actual admission of liability for the higher amount. As the plaintiff suffered no prejudice from the brief delay, the penalty was reduced to nil...

Citation
[2021] ZAKZDHC 6
Parties
Plaintiff: Tetra Pak S.A (Pty) Limited; Defendant: Blakey Investments (Pty) Limited; Defendant: Suman Panday
Court
Kwazulu-Natal High Court, Durban
Jurisdiction
South Africa
Judgment Date
11 March 2021
Case Number
14082/2011
Procedural Posture
Civil Procedure / Application for Rescission of Judgment and Declaratory Relief
Outcome
Application granted. Judgment rescinded. Penalty clause declared unenforceable. Defendants declared to have complied fully with the settlement agreement. Costs awarded against the plaintiff.
Judges
Ploos van Amstel
Legal Topics
Settlement Agreement, Conventional Penalties Act, Rescission of Judgment, Penalty Clause, Declaratory Relief
Civil Procedure Commercial and Corporate Settlement Agreement Conventional Penalties Act Rescission of Judgment Penalty Clause Declaratory Relief

Case Brief

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Parties

Tetra Pak S.A (Pty) Limited

Plaintiff

Blakey Investments (Pty) Limited

Defendant

Suman Panday

Defendant

Procedural Posture

Civil Procedure / Application for Rescission of Judgment and Declaratory Relief

Legal Issues

  1. 1 Whether the defendants complied fully with their obligations under the settlement agreement.
  2. 2 Whether the penalty clause in the settlement agreement constitutes a penalty under the Conventional Penalties Act 15 of 1962.
  3. 3 Whether the penalty should be reduced to nil or set aside.

Ratio Decidendi

The court found that the defendants had complied fully with their obligations under the settlement agreement, having paid the required R10 million and interest. The late payment of one instalment did not constitute dishonour of the cheque, as the delay was due to a bank security check and not refusal of payment. The penalty clause, which would increase the defendants' liability from R10 million to R25 million for late payment, was held to be a penalty stipulation under the Conventional Penalties Act, operating in terrorem and not reflecting an actual admission of liability for the higher amount. As the plaintiff suffered no prejudice from the brief delay, the penalty was reduced to nil...

Court Disposition

Application granted. Judgment rescinded. Penalty clause declared unenforceable. Defendants declared to have complied fully with the settlement agreement. Costs awarded against the plaintiff.

Orders

  • The judgment granted by the registrar on 6 March 2020 is rescinded and set aside.
  • The penalty provided for in the settlement agreement of 17 May 2019 is reduced to nil and clause 4 thereof declared unenforceable.