BE Bop a Lula Manufacturing & Printing CC v Kingtex Marketing (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Harms ADP, Navsa JA, Lewis JA, Hurt AJA and Malan AJA
• Judgment Date: 29 November 2007
• Citation: 2008 (3) SA 327 (SCA)
• Docket Number: 042/07
• Hearing Date: 20 November 2007
• Counsel: M Wagener (attorney) for the appellant. J Viljoen for the respondent.
• Court: Supreme Court of Appeal

Malan AJA:

[1] This is an appeal with leave of this court against the judgment of the full court of the Cape High Court, [1] dismissing the appellant's appeal against the judgment of the trial court (Traverso DJP), and upholding G the respondent's claim. The appeal concerns the rejection of the appellant's defence of compromise based on the deposit and payment of a cheque marked 'full and final settlement of account' and sent to the respondent. This judgment overrules the judgment of the court a quo.

[2] The appellant ordered 60 000 T-shirts from the respondent, a H garment manufacturer. Forty thousand were delivered and invoiced at R1 003 104,35. Four payments were made and a credit passed leaving a balance of R229 846,07. The T-shirts were ordered to enable the appellant to sell them to Adidas, its customer. They were delivered late and a dispute arose as to their quality. Meetings were held but the I appellant eventually repaired some of the garments and sold the remainder to Adidas at half price. On 19 February 2002 the appellant sent a letter to the respondent headed 'Credit Request', proposing in this

Malan AJA

way to recoup its losses on the Adidas contract by claiming a discount of A R122 649,18 to be deducted from the balance owing. The appellant sent its cheque for the balance, R107 196,89 with this letter as well as a letter headed 'Final Reconciliation', also dated 19 February 2002, to the respondent. The cheque was postdated 28 February 2002. The cheque was deposited for special clearance by an employee of the respondent B and paid on 28 February 2002. On 1 March 2002 the respondent's attorneys faxed a message to the appellant purporting to reject the offer of compromise, and suggesting that the appellant stop payment of the cheque but stating that, should this not be possible, the money would be held in trust pending an action by the respondent to recover the full balance owing. This letter was faxed to the appellant after business hours C on Friday 1 March 2002 and came to the notice of the appellant's member, Mr Webster, only on Monday 4 March 2002. He called the bank to ascertain whether it was still possible to stop payment of the cheque and, on learning that it was not, wrote to the respondent's attorneys on that day informing them that it was too late to stop payment D and that if the respondent wished to pursue its claim for the balance the appellant would counterclaim for loss of profits on the T-shirts short delivered and for damages for late delivery. The proceeds of the cheque were paid into the respondent's attorneys' trust account on 8 March 2002 and R12 750,89 was deducted in respect of fees owed by the E respondent to his attorneys. The balance of R94 446 was paid over to the respondent's new attorneys on 30 June 2002 and appropriated to legal fees in other matters in which they acted for the respondent.

[3] The Credit Request refers to 'Rejects Delivered To Adidas At Half Price' and sets out their value totalling R52 702 to which the cost of F 're-examining', 'repairs' and value added tax is added, leaving a balance of R122 649,18 for which a credit is requested. The letter states that most of the defects related to 'spirality' and that all garments were re-examined, except 2 819 'uniform'. The repairs related to 'uneven hems' which were 'unpicked, trimmed straight, and re-hemmed'.

[4] The Final Reconciliation shows the total of R1 003 104,35 invoiced G by the respondent, four payments made as well as a credit note passed by the respondent, leaving a balance owing of R229 846,07. From this amount is then deducted the amount of the Credit Request, R122 649,18 leaving a balance 'due' at 28 February 2002 of H R107 196,89. This was also the amount of the cheque dated 28 February 2002 which was payable to the respondent or bearer and bore the words 'full and final settlement of account' underlined and written at the foot of the cheque across its face.

[5] Mr Wang, a director of the respondent, testified that the cheque was I deposited on 28 February 2002 for special clearance according to company policy, without his knowledge and when he was not present at the office. After he received information of the cheque and its deposit he consulted with the respondent's attorneys. The consultation led to the letter of the respondent's attorneys dated 1 March 2002 recording the following: J

Malan AJA

A We address this letter to you on behalf of our client who has approached us for advise [sic] and attention herein.

Our instructions are to place the following facts on record:

1.

Our client sold garments to yourselves of which the total amount due and owing amounts to R229 846,07.

2.

On the 19th of February 2002 our client received a letter requesting B a credit request with which our client disagrees and places in dispute.

3.

On the 28th of February 2002 our client received a cheque from yourselves in favour of our client in the amount of R107 196,89, furthermore with the wording thereon 'in full and final settlement of the account'.

C Our instructions now are to inform you as follows:

1.

Our client does not accept this payment in full and final settlement and if you do not agree with our client's claim of R229 846,07 you must arrange to stop payment on the said cheque.

2.

Should you put stop...