Dryden Combustion Company (Pty) Ltd v Palmer Rubber (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Ntshangase J
• Judgment Date: 11 August 2008
• Docket Number: 10451/2006
• Court: Durban and Coast Local Division
• Hearing Date: 06 May 2008
• Citation: 2008 JDR 1043 (D)

Ntshangase J:

[1]

The plaintiff's claim against the defendant is for payment of a sum of R270 000. The claim arises out of Clause 4.4 of a written contract between the parties annexed as "A" to the summons to which I shall refer later. Annexure "A", is a memorandum of agreement concluded in November 2005 in terms whereof a boiler was to be sold by the defendant to the plaintiff for a price of R270 000 payable, in terms of Clause 5.1 of the agreement as follows:

"5.1

The purchase price for the boiler exclusive of value added tax shall be R270 000 (two hundred and seventy thousand rand) which sum shall be paid as follows:

(a)

on or before the 18th November 2005 the sum of R50 000 (fifty thousand rand), plus value added tax

(b)

on or before the 31st December 2005 the sum of R50 000 (fifty thousand rand), plus value added tax;

2008 JDR 1043 p2

Ntshangase J

(c)

on or before the 31st January 2005 (sic) (apparently meant to be 2006), the sum of R50 000 (fifty thousand rand), plus value added tax;

(d)

on or before the 28th February 2005 (sic) the sum of R50 000 (fifty thousand rand), plus value added tax;

(e)

finally the balance of R70 000 (seventy thousand rand), plus value added tax to be paid on the effective date."

In terms of Clause 1.3(c) of the agreement the "effective date" is –

"… the date on which the boiler is available for removal, but this date shall not be later than 15th April 2006."

Clauses 4.1 and 4.2 stipulate for delivery as follows:

"4.1

On the effective date the Seller shall deliver at the Seller's premises at 2 Wilcox Road, Isipingo, Durban to the Purchaser

4.2

the boiler referred to in Annexure "A"."

[2]

Delivery of the boiler did not take place on or before 15 April 2006. It is this and the alleged use of the boiler by the defendant after 15 April 2006 which has triggered the plaintiff's action which relies on Clause 4.4 of the agreement which provides –

"Should the boiler not be available by 15 April 2006, and the Seller wishes to continue to utilise the equipment, a rental agreement will be entered into between the Seller and the Purchaser where the Seller will pay the Purchaser an amount of R6 000 (six thousand rand) per day for the rental of the boiler until the equipment is available for removal."

2008 JDR 1043 p3

Ntshangase J

To succeed the plaintiff must therefore establish that the boiler was not available by 15 April 2006; it must establish also the aspect of the use of the boiler by the defendant after 15 April 2006 as entitling it to the claimed payment. The defendant resists the claim on the grounds of an oral variation of the "effective date" from 15 April to 1 June 2006; that the conditions which needed to prevail in order for Clause 4.4 of the agreement to come into operation did not exist in that the plaintiff had not, in the period of its claim paid the full purchase price of the boiler but did so only on 5 June 2006; and on the ground that Clause 4.4 constitutes a penalty stipulation in terms of section 1(3) of the Conventional Penalties Act 15 of 1962 which is disproportionate to the prejudice suffered by the plaintiff.

[3]

At the commencement of proceedings Ms Annandale who appeared for the defendant applied for determination, as a separate issue in terms of Rule 33(4) of the Uniform Rules of Court, with reference to the terms of the memorandum of agreement, whether or not the plaintiff could properly invoke Clause 4.4 thereof to oblige the defendant to pay rental as claimed for the use of the boiler in the period 15 April 2006 until 31 May 2006 notwithstanding the fact that the plaintiff had itself, in such period, not fully discharged its obligation to pay the agreed price. I was loathe, in the exercise of my discretion, to accede to the separation of such issue particularly in the light of opposing submissions by Mr Pretorius, who appeared for the plaintiff, which postulated availability of admissible evidence of background circumstances which would yield a proper interpretation of the agreement, which is central to the determination of issues in this matter. I declined to order for separation of the issue.

[4]

The plaintiff's case is that the...