Courier-It S.A (Pty) Ltd v Frankees (Pty) Ltd and Another (17044/2020) [2021] ZAWCHC 138 (8 July 2021)

Key Facts

Transaction Type

Issues

• The third issue is the respondents' argument that the applicant's motion application should be dismissed because of material disputes of fact. These disputes include the first respondent's claim that the applicant misallocated payments and overcharged for deliveries. The court found the respondents abandoned this ground to the extent it relied on payment disputes, as the critical issue was the compromise. The applicant's conduct, including requesting reconciliation details, demonstrated it did not accept the offer.
• The central issue is whether the first respondent's payment of R50,000 in May 2020, described as 'full and final settlement,' constitutes a compromise. The applicant contends the payment was not accepted as a compromise, while the respondents argue the applicant's retention of the funds and delayed response indicate acceptance. The court held the respondents failed to prove unequivocal acceptance, as the applicant requested further information and did not refund the payment.
• The first issue concerns the respondents' challenge that the application is based on hearsay evidence. The deponent to the founding affidavit, Mr Van Der Meer, is not an employee or director of the applicant and thus lacks personal knowledge of the facts prior to 17 September 2020. The respondents argued this renders the evidence inadmissible, but the court found no basis for dismissal on this ground as the material facts are undisputed and/or admitted.

Holdings

• The court determined the applicant is entitled to the sum of R204,182.12 plus interest at 5% above the maximum rate of interest a tempore morae, calculated from 28 September 2020 to the date of payment. The first respondent's failure to query invoices within the 15-day period deemed them liable under the agreement terms. The second respondent, as a surety, shares this liability.
• The court dismissed the respondents' hearsay ground as it was not pursued with vigour in written or oral submissions, and the critical facts were undisputed or admitted by the respondents. The applicant's founding and replying affidavits, though deposed to by a person without personal knowledge, were not the basis for the court's determination.
• The court held that the respondents failed to prove a compromise extinguishing their indebtedness. The applicant's retention of the R50,000 payment and subsequent requests for reconciliation were inconsistent with acceptance of the compromise. The delay in responding to the offer was insufficient to infer acceptance.
• The court found no material dispute of fact as the respondents' case primarily hinged on the compromise argument rather than the amount owed. The respondents abandoned their reliance on disputes about the first respondent's indebtedness to the applicant.

Remedies

• The first and second respondents are ordered to pay the applicant the sum of R204,185.12, along with interest at 5% above the maximum rate a tempore morae, calculated from 28 September 2020 until the date of payment.
• The respondents are ordered to pay the applicant's costs on the appropriate Magistrate's Court scale and on a scale as between attorney and own client, including costs of counsel on brief.

Monetary Damages

Legal Principles

• The court applied the contra proferentem principle to interpret an ambiguous contractual offer against the party who caused the ambiguity (the respondents). This was central to determining whether the applicant's retention of the R50,000 payment constituted acceptance of the respondents' compromise offer.
• The court emphasized that the respondents bore the burden of proving a compromise had occurred, as per the established legal principle that the party alleging a compromise must demonstrate it clearly. The respondents failed to meet this burden.
• The court analyzed whether the first respondent's payment of R50,000 in full and final settlement constituted a valid offer and whether the applicant's conduct (retaining the payment and requesting further documentation) demonstrated unequivocal acceptance of the offer.
• The principle of pacta sunt servanda (agreements must be kept) was invoked to enforce the terms of the written agreement between the parties, including the stipulation that unchallenged invoices are deemed correct and the contractual costs clause.

Precedent Name

• Odendaal v Du Plessis
• Karson v Minister of Public Works
• Hubbard v Mostert
• Reid Bros (South Africa) Ltd v Fischer Bearings Co Ltd
• Buffalo Freight Systems (Pty) Ltd v Crestleigh Trading (Pty) Ltd and another
• Absa Bank Ltd v Van De Vyver NO

Key Disputed Contract Clauses

• The agreement stipulated that invoices not queried within 15 business days would be deemed correct. The first respondent did not challenge any invoices during this period, forming the basis for the applicant's claim of R254,182.12.
• The agreement required the first respondent to pay interest at 5% above the maximum rate of interest a tempore morae for late payments. This clause became relevant after the first respondent failed to meet the 30-day payment deadline.
• The agreement provided that the first respondent would be liable for all costs incurred by the applicant in recovering unpaid amounts, including collection commissions and counsel costs. This clause underpinned the applicant's costs claim.

Judge Name

Passage Text

• 1. We do not believe that we owe you the +-R250,000 claimed in that your accounts department has never correctly allocated any of the payments that we have made from inception to date. 2. We believe that you have overcharged us on thousands of deliveries. 3. You have caused us significant damage, some of which is intangible and some of which is tangible. We are aware of at least +-R75,000 of damage suffered by you holding on to our deliveries (which amounts to theft). We have written off these deliveries and refunded customers including providing them with discounts on future purchases to keep them aligned. Naturally, we have lost customers as a result of this and that damage is still being quantified. 4. As a result of the above, we are terminating our agreement with you and offering you R50,000 in full and final settlement of any claims that either party may have against the other arising out of any cause whatsoever, which amount has already been paid to you and can be found attached hereto with this proof of payment. 5. Please note that payment was made by another company in our group of companies, Brand Mash Pty Ltd, however can be refunded to Frankees pty Ltd, details below, if you disagree with our settlement offer.
• The respondents having failed to establish the compromise, it falls on this court to determine whether the applicant is entitled to the relief it seeks.
• The applicant's conduct that fall to be considered in order to determine whether it accepted the first respondent's offer include: (a) the fact that it retained the payment made by the first respondent; (b) the delay in responding to the offer; and (c) the response when the applicant ultimately responded.

Damages / Relief Type

• Payment of R204,185.12 plus 5% interest above the maximum rate a tempore morae from 2020-09-28 to payment date.
• Costs awarded on Magistrate's Court scale and attorney and own client scale.