Seasonaire v Mahe Construction (Pty) Ltd (2) (APPEAL 245 of 2001) [2001] NAHC 36 (17 October 2001)

A. 245/2001 SEASONAIRE v MAHE CONSTRUCTION (PTY) LTD PRACTICE Respondent giving notice of intention to raise questions of law and reserving the right to file affidavits on the merits should those questions not be determined in its favour. Held that save in exceptional circumstances affidavits should be filed irrespective of whether a preliminary question of law is to be argued. Jurisdiction. Applicant did not state the country of incorporation of the respondent. As respondent had a place of business in Namibia and as it had not put the words'Tncorporated in ..." after its name it could properly be inferred that it was incorporated in Namibia. Alternatively, respondent carried on business in Namibia and was therefore resident in Namibia for the purposes of section 16 of the High Court Act. C A SE NO. (P) I 7 6 2 / 2 0 01 IN T HE HIGH C O U RT OF NAMIBIA In the matter between: G E O R GE DIEDERIK DU P L E S S IS PLAINTIFF and VASANA N D J A V E RA D E F E N D A NT CORAM: MARITZ, J. Heard on: 2 0 0 1 . 0 5 . 0 2, 03: 2 0 0 1 . 0 9 . 25 Delivered on: 2 0 0 1 . 0 9 . 27 J U D G M E NT MARITZ, J .: Plaintiffs action against the defendant is for payment of N$47 0 0 0 . 0 0, interest thereon at the rate of 2 3% p.a. a nd c o s t s. His c a u se of action is b a s ed on a document, purporting in its heading to be an acknowledgement of debt, executed under the h a n ds of both parties on 7 August 1996 at Gobabis (the "acknowledgement"). In terms thereof the defendant acknowledges his indebtedness for payment of that amount and interest to the plaintiff in the following terms: I, (the defendant) herewith acknowledge to be truly a nd lawfully liable to (the plaintiff) in the s um of N$47 0 0 0 . 00 ...in respect of water engines, implements, equipment, and effects purchased by me on the farm Maranika No 144, Gobabis district. The before-mentioned capital amount shall be subject to an interest of 23%...per a n n um which interest as calculated from the 1st of September 1996, together with the capital s um of N$47 0 0 0 . 0 0 . . ., shall be payable by me to said GD Du Plessis on 1 September 1997. And I, the undersigned GD Du Plessis herewith undertake to move and install all outstanding pipelines on said farm as agreed as well as to clean the boreholes and to connect the existing pipelines..." The contents of the acknowledgement may perhaps be better understood if it is noted that the Plaintiff also sold his farm "Maranika" to the defendant some time earlier but, at the time the acknowledgement w as signed, the transfer w as still pending. That sale w as regulated by a separate contract. The terms thereof are not material to the i s s u es in this action. It is common c a u se between the parties that the defendant did not pay the s um of N$47 0 0 0 . 00 or any interest to the plaintiff on the due or any other date. According to his plea, he refused to do so b e c a u se the plaintiff had failed to honour his undertaking in relation to the pipelines and boreholes referred to in the last paragraph of the acknowledgement. As a consequence, so the defendant pleads, he had to contract with third parties to render those services at a cost of N$46 0 4 0 . 0 0. The plaintiff, on the other hand, maintains that he h as complied with those obligations, or (according to an amendment allowed during the trial) that he h as complied with some of them a nd is e x c u s ed from complying with the remaining in terms of a tripartite contract subsequently concluded between the parties a nd one Riedel to the effect that the latter would to perform the outstanding services on a future date. In the absence of an alternative claim by the plaintiff for the payment of a reduced a m o u nt (in the event of the court finding that his performance w as incomplete) or of a counterclaim by the defendant, the main i s s u es to e decided in this c a se can be s u m m a r i s ed as follows: (a) Was the defendant's obligation to pay the acknowledged indebtedness reciprocal to the plaintiffs obligation to render the services stipulated in the last paragraph of the acknowledgement, t h us entitling the defendant to validly raise the exceptio non adampleti contractus as a defence to the claim for payment? (b) If so, did the plaintiff comply with all his obligations that constituted conditions precedent to payment of the acknowledged indebtedness? (c) If the answer to (b) is not in the affirmative, did the parties subsequently entered into a contract in terms of which the plaintiff is excused from discharging the obligations that he h as failed to perform under the acknowledgement? I shall hereunder deal with those i s s u es in that order. Reciprocal or collateral obligations contemplated in the acknowledgement? The exceptio non adampleti contractus as a defence in a action for specific performance is inextricably linked to the principle of reciprocity under a bilateral a contract - as J a n s e n, JA remarked after an extensive analysis of the Roman Law and the Roman Dutch Common Law in BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk, 1979(1) SA 391 (A) at 417H, the exceptio is a "meeganger" of the principle of reciprocity. It is only if and when there are reciprocal obligations contemplated in a contract (irrespective of whether they are to be discharged concurrently or consecutively) that the exceptio may afford a defence to a claim for specific performance. The position is, in my view, correctly stated in the judgment of Corbett, J (as he then was) in Ese Financial Services (Pty) Ltd v Cramer, 1973 (2) SA 8 05 (C) at 808H to 809D: "In a bilateral contract certain obligations may be reciprocal in the s e n se that the performance of the one may be conditional upon the performance, or tender of performance, of the other. This reciprocity may itself be bilateral in the s e n se that the performance, or tender of performance, of them represent concurrent conditions; that is, each is conditional upon the other. A ready example of this would be delivery of the res vendita and payment of the p u r c h a se price under a c a sh sale. (See Crispette and Candy Co. Ltd. v Oscar Michaelis, N. O. and Another, (4) SA 5 21 (AD) at p. 537). Alternatively, the reciprocity may be one sided in that the complete performance of his contractual obligation by one party may be a condition precedent to the performance of his reciprocal obligation by the other party. In other words the obligations, though inter-dependent, fall to be performed consecutively. An example of this would be a locatio-conductio operis whereunder the conductor operis is normally obliged to carry out the work which he is engaged to do before the contract money can be claimed. In s u ch a c a se the obligation to pay the money is conditional on the preperformance of the obligation to carry out the work, but, of course, the converse does not apply (see, e.g., Kamaludin v Gihwala, 1956 (2) SA 323 (C) at p. 326; de Wet and Yeats, Kontraktereg, 3rd ed., p. 139)." The question whether the obligations created in a contract are reciprocal or not, is to be ascertained from the intention of the contacting parties as expressed therein (See: BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk, supra, at 418B-C). In some type of contracts, s u ch those referred to by Corbett, J. (i.e. contracts of sale or for the rendering of services), "the principle is so appropriate to the nature of the contract that it applies by operation of law u n l e ss a contrary intention appears." (See; Christie, The Law of Contract, ( 3rd ed.) p . 4 7 1; See further BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk, supra, at 418D). The fact that a contract is bilateral in nature affords no a s s i s t a n ce in answering that question. Neither does the fact that the obligations are due on the s a me date (see: Strydom v Van Rensburg, 1949 (3) SA 4 65 (T) at 467). "For reciprocity to exist there m u st be s u ch a relationship between the obligation to be performed by the one party a nd that due by the other party as to indicate that one w as undertaken in exchange for the performance of the other and, in c a s es where the obligations are not consecutive, vice versa" (per Corbett, J in Ese Financial Services (Pty) Ltd v Cramer, supra, at 809E.) It is on this b a s is that I now turn to the interpretation of the acknowledgement on which the plaintiffs c a u se of action is founded. I shall accept for p u r p o s es of this judgment, as Mr. K a u ta on behalf of the defendant contends, that the acknowledgment is in this c a se also a bilateral contract. A reading thereof shows that the indebtedness of N$47 0 0 0 . 00 and interest relates to the sale of movables a nd the last paragraph creates an obligation on the part of the plaintiff to render services in connection with pipelines and boreholes. As I have mentioned earlier, u n l e ss a contrary intention a p p e a r s, those types of contracts create reciprocal obligations. B ut does the acknowledgement, on a proper reading thereof, create s u ch obligations in the c i r c u m s t a n c es of this c a s e? It is evident from the acknowledgement that the s um of N$47 0 0 0 . 00 constitutes the p u r c h a se price of movables p u r c h a s ed by the defendant on credit. By the nature of a contract for the sale of goods on credit, delivery of the merx would normally be a condition precedent to the obligation to pay. That condition, according to the acknowledgement, had already been fulfilled. As far as the preceding contract of sale is concerned, the acknowledgement is no more than an undertaking by the defendant to pay the p u r c h a se price and interest a nd to record the terms of payment. Mr Kauta, referring to the obligations created for the plaintiff in the last paragraph of the acknowledgement, a r g u es that that they were reciprocal to and therefore conditions precedent to payment of the s um of N$47 0 0 0 . 0 0. He s u b m i ts that, should the Court find that he did not comply with one or more of them, the exceptio as pleaded should be applied and the claim should fail. I m u s t, immediately point out that, although the acknowledgement refers both to a sale of movables and a locatio-conductio operis (both types of contracts where reciprocity is normally presumed), the "reciprocity" contended for by the defendant in this c a se does not follow from the nature of those contracts. What the defendant's counsel s u b m i ts is that the defendant's obligation to pay the p u r c h a se price under the contract of sale is conditional on (and therefore reciprocal to) fulfilment of the plaintiffs obligation to render certain services under a locatio-conductio operis. Those obligations, arising from two different types of contract, are not normally regarded as reciprocal in our law. What remains is to decide, regard being had to the formulation of the acknowledgement itself, whether the parties nevertheless have intended them to be reciprocal? The intentions of the parties are, except under certain circumstances not relevant for p u r p o s es of this enquiry, to be found in the contract (in this case, the acknowledgement) itself (See: Union government v Smith 1935 AD 2 32 at 241). The words recorded in the written instrument are those that they have chosen to reflect their common intention in a memorial of the transaction. With that as a point of departure in the interpretation of contracts, a large number of rules have been developed in our law to ascertain the common intention of the parties. I need not refer to all of them, but only to those that find application in the c i r c u m s t a n c es of this case. In so far as any of the parties relies on evidence, other than secondary evidence (such as which "outstanding" or "existing pipelines" or "boreholes" the acknowledgement refers to), of what their intentions have been or how they have understood to be their obligations, the parol evidence rule m u st be applied (See: Union Government v Vianini Ferro concrete Pipes (Pty) Ltd, 1941 AD 43 at 47). In this context, I have also carefully scrutinised the i s s u es defined in the pleadings a nd have not found any e x p r e ss admission by the plaintiff that payment of the claimed amount is conditional upon performance of his obligations concerning the pipelines and boreholes. The furthest he h as gone, is to state in the further particulars to his declaration, that payment of the s um of N$47 0 0 0 . 00 w as not unconditional. Whether the "conditions" he h ad in mind related to those under the contract of sale or any other undertakings (such as those mentioned in the acknowledgment) are not apparent. The statement, in any event, falls short of an admission. Even if it is an admission, it relates to a question of interpretation that the Court is ultimately required to decide on. There is nothing in the words of the acknowledgement, given their ordinary grammatical meaning (compare: Sassoon Confirming and Acceptance Co (Pty) Ltd v Barclays National Bank Ltd, (1) SA 641 (A) at 646B) from which it is apparent that the defendant's obligation to pay the p u r c h a se price of the movables is reciprocal to the plaintiffs undertaking to render services in connection with certain boreholes and pipelines. Moreover, the amount of N$47 0 0 0 . 00 is, according to the express provisions of the acknowledgement, the quid pro quo for the movables earlier sold by the plaintiff to the defendant. That a m o u nt does not include any consideration for the services still to be rendered by plaintiff in terms of the last paragraph of the acknowledgement. Neither is it liked thereto in any way except that it a p p e a rs in the s a me document. If the c l a u s es creating those obligations are read in the context of the other provisions, due consideration being afforded to the prevailing circumstances and being read against the background of the other transactions (i.e. the sale of the movables and the sale of the farm), the apparent a b s e n ce of reciprocity is strengthened. There is no indication that the preceding agreement of sale w as linked to any obligation on the part of the plaintiff to render services. Moreover, interest on the p u r c h a se price w as stipulated to run from 1 September 1996 - a date wholly unconnected to the date on which the plaintiff h ad to honour his undertaking to render the services referred to. No date by which the services should be rendered w as specified in the acknowledgement. In s u ch instances, a reasonable period would normally be implied by law and, before it could have been said the plaintiff w as in breach, he first had to be placed in mora - and that could have been months after 1 September 1996. B ut even if the evidence by the plaintiff, that he thought that he should render those services before the date of transfer, can be regarded supplementary, the date of transfer w as at that point in time uncertain. The Court is therefore of the view that the defendant's obligation to pay the amount of N$47 0 0 0 . 00 plus interest thereon in respect of movables sold and delivered by the plaintiff to him is not reciprocal to the plaintiffs obligation to render services in connection with certain boreholes and pipelines. Those obligations, although incorporated in the s a me bilateral agreement, are collateral and distinct from one another. In the result, the exceptio non adampleti contractus (which is inextricably linked to the existence of s u ch reciprocity) is not competent defence in this matter. On this b a s is alone, the plaintiffs claim m u st succeed. I should p e r h a ps add that the defendant w as at liberty to institute a counterclaim a g a i n st the plaintiff h ad the latter been in breach of his contractual undertaking in relation to the pipelines and boreholes. That w as not done. This finding m a k es it u n n e c e s s a ry for the Court to deal with the remaining two purely factual questions referred to earlier in this judgement. To the extent that I may have erred in my interpretation of the acknowledgement or in the application of the law to the provisions thereof, it may be of some a s s i s t a n ce if I deal with them briefly hereunder. The judgment contains an analysis of the evidence relevant to those issues and then concludes as follows: Having considered all the evidence, I am satisfied that the plaintiff h as proven on a balance of probabilities that (i) he w as e x c u s ed from the obligation to install Riedel's pipeline and, for that purpose, to move the pipeline to the farm Bonanza, in terms of the tripartite contract subsequently concluded and (ii) that he h as honoured all the other undertakings given in the acknowledgement. In the result, but mainly for the r e a s o ns mentioned as the Court's principal findings in the first part of this j u d g m e n t, alternatively and in any event, on the b a s is of the Court's findings on the evidence and for the r e a s o ns mentioned in the last part of this judgement, the plaintiffs claim a g a i n st the defendant s u c c e e d s. In the result the following order is made: 1. The defendant is ordered to pay the plaintiff the s um of N$ 47 0 0 0 . 0 0. 2. The defendant is ordered to pay the plaintiff interest on the a m o u nt of N$47 0 0 0 . 00 at the rate of 2 3% per a n n um calculated from the 1st of September 1996 to date of payment. 3. The defendant is ordered to pay the plaintiffs c o s ts of suit. MARITZ, J. (The unabbreviated j u d g m e nt is signed) ON BEHALF OF T HE PLAINTIFF A dv J J S w a n e p o el Instructed by: Dr. Weder Kruger & Hartmann ON BEHALF OF D E F E N D A NT Mr P K a u ta Instructed by: K a u ta B a s s on & K a m u h a n ga Inc.