Baragwanath v Olifants Asbestos Co (Pty) Ltd

• Jurisdiction: South Africa
• Citation: 1951 (3) SA 222 (T)

Baragwanath v Olifants Asbestos Co (Pty) Ltd
1951 (3) SA 222 (T)

1951 (3) SA p222

Citation	1951 (3) SA 222 (T)
Court	Transvaal Provincial Division
Judge	Murray J, and Neser J
Heard	April 27, 1951
Judgment	May 14, 1951

Flynote : Sleutelwoorde

Arbitration — Clause in agreement providing for arbitration in event D of dispute — Validity of defendant's counterclaim dependent on construction of agreement — Plaintiff excepting to plea based on such counterclaim — Decision on exception would deprive defendant of right to have meaning of agreement decided by arbitration — Evidence E in any event necessary — Exception dismissed.

Headnote : Kopnota

To a claim by the plaintiff for certain amounts alleged to be due for asbestos sold and delivered, the defendant in its plea admitted liability but pleaded that it was excused from payment either wholly or in part until the Court had adjudicated upon the counter-claim it had against the plaintiff. It alleged that plaintiff and one M. had under a F written agreement undertaken to lend it money to finance its asbestos milling operations should it require further finances, and that it had so required a further sum, greater than the amounts claimed, which it had demanded from plaintiff. A clause in the agreement provided for arbitration in the event of a dispute. Plaintiff excepted to the plea as disclosing no cause of action, contending (1) that upon a proper construction of the agreement the defendant's requirements for the G financing of the operation of the mill could not include payment of the two sums admittedly due to plaintiff; (2) that specific performance of the undertaking to make a loan would not be enforced by the Court; (3) that in any event the promise to make a loan in the agreement was too vague for enforcement in the absence of the expression of the conditions as to rate of interest, security, etc; (4) that as plaintiff's liability, if any, was only jointly with M., that be could not be called H upon to advance more than half the sum; (5) that it was necessary to join M. in the proceedings to demand a loan of the full amount. Defendant contended, inter alia, that plaintiff should not have excepted, but should have pleaded specifically in his replication his contentions as to the proper construction of the contract so that defendant could claim that the construction of the contract be referred to arbitration.

Held, as to (1), that there was nothing absurd in a construction of the agreement under which the defendant company could require plaintiff to lend it money required for financing its operations in circumstances such that these operations required the purchase of raw materials from plaintiff as one of its normal

1951 (3) SA p223

suppliers. Bookkeeping entries would adjust the dual capacity of plaintiff as lender and as seller of asbestos.

Held, as to (2), that it was not possible for the Court at this stage to say that no trial Court, after hearing all the evidence, could order plaintiff to perform his undertaking.

Held, as to (3), that until all the circumstances existing before and at A the conclusion of the agreement had been investigated, it was impossible to say definitely what the implied obligations connected with the loan were.

Held, as to (4), that the wording of the agreement was a matter for the arbitrator, there being portions of the agreement which indicated that the liability might be joint and several and not merely joint; for the Court to decide this matter on exception would involve the exclusion of B evidence of the surrounding circumstances existing at the time of the agreement, which was admissible.

Held, further, that defendant's contention, which covered all the grounds of exception, was correct; as it was now manifest that there was a dispute as to the construction of the contract, to decide the matter on exception would be to deprive the defendant of its rights to C arbitration under the arbitration clause, for, in the light of such rights, the plea could not be said to be bad in law as disclosing no defence; exception accordingly dismissed.

Case Information

Argument on an exception to a plea. The nature of the pleadings appears from the reasons for judgment.

C. Isaacson, K.C. (with him G. P. C. Kotze), for the excipient: The plea is one of confession and avoidance. Exception is taken to it only in so far as it relates to the first two claims. If defendant is not entitled ex facie the pleadings to obtain from plaintiff £5,000 its defence falls away. The grounds of exception are: (1) Defendant's E requirements cannot include the amount of its indebtedness to plaintiff, for that would lead to an absurdity. (2) The Court will not in general enforce specific performance of a promise to lend, but will leave the promisee to his action for damages. (3) In any event the Court will not enforce such a promise when the terms of the loan have been F completely omitted from the agreement. Here there was no reference to interest, instalments, period, or security. (4) On the agreement read as whole the obligation, if any, assumed by the plaintiff is an obligation assumed jointly with Miller: it is not joint and several. Consequently, if defendant requires £5,000 it is not entitled to claim more than G £2,500 from plaintiff. (5) Defendant cannot make demand of the plaintiff alone without joining Miller. D

D. Gould, K.C., for the respondent, interposing: Points 1, 3 and 4 are matters of dispute arbitratable under clause 26 of the agreement, and cannot be decided on exception. No procedure exists for notifying an H excipient that a submission to arbitration will be invoked if arbitratable matters are canvassed on exception.

Isaacson, K.C., continuing: This is a simple claim for goods sold and delivered. Since the claim is not disputed defendant cannot rely upon a submission to arbitration.

As to point (2): The position in English law is trite. South African Territories v Wallington, 1898 A.C. at p. 312; Rogers v Challis, 27 Beav. 175; Sichel v Mosenthal, 30 Beav. 371. Our

1951 (3) SA p224

Courts will be guided by English principles regarding specific performance:

Wessels, Vol. II, para. 3113.

As to point (3): even less will our Courts enforce a promise of loan when the terms have not been decided upon.

A Point (4) depends on the construction of the agreement as recited in the plea.

As to (5), see, regarding ' requirements ', Union Government v Vianini Ferro-Concrete Pipes Ltd., 1938 AD at p. 569. It could not have been B contemplated that one of the parties alone would be obliged to meet one half of the defendant's requirements only.

D. Gould, K.C. (with him J. B. Edwards), for the respondent:

As regards point (2): It is perfectly competent for a South African Court to decree specific performance of an agreement to lend money; the C principles of English law in that regard have no application here, and in any event are limited, in so far as they refuse specific performance, to simple contracts of loan. Two reasons for the English rule are discernible: (i) In England, unlike South Africa, the normal remedy for breach of contract is damages, and specific performance is only a supplementary equitable remedy; (ii) specific...