McGill v Vlakplaats Brickworks (Pty) Ltd *

• Jurisdiction: South Africa
• Judge: Melamet J
• Judgment Date: 23 June 1980
• Citation: 1981 (1) SA 637 (W)
• Hearing Date: 05 June 1980
• Court: Witwatersrand Local Division

Melamet J:

In this action plaintiff sues for provisional sentence in the sum of R36 000 with interest thereon at 11 per cent a tempore morae, ie 20 February 1980, to date of payment and costs, by virtue of a cheque drawn by defendant in favour of plaintiff, of which cheque plaintiff is the holder.

The cheque, dated 5 February 1980, was payable at the Standard Bank of South Africa Ltd, Malvern, Johannesburg, on that date and on due

Melamet J

presentation was dishonoured by non-payment, being returned, marked "Payment stopped".

At the hearing of the action, the original cheque and an affidavit of A presentment was filed. An answering affidavit was filed by defendant in the action and plaintiff filed a replying affidavit thereto.

It is not necessary to set out the affidavits in great detail as on behalf of the defendant it was conceded, and in my view properly so, that the B defendant could not contend that on such affidavits the preponderance of probabilities were in favour of the version of the defendant. It is necessary, however, to refer to certain documents in the affidavits filed on behalf of the defendant in connection with the other defences raised by the defendant. It will be convenient so to do before detailing, specifically, the defences raised.

Plaintiff is cited in the summons as J Q McGill, an adult male of 5 C Cookham Road, Auckland Park, Johannesburg. In an affidavit filed by him in support of the main affidavit filed on his behalf his full names are given as James Quinton McGill. I set this out in relation to the preliminary defence raised that the description of the plaintiff does not D comply with the provisions of Rule 17 (4) read with Rule 8 (2) and is defective on that count.

Defendant is a manufacturer of bricks. In the course of its business it sold and delivered bricks to a company, Transvaal Home Builders (Pty) Ltd (hereinafter called "Transvaal Homes"). During September 1979, investigations into the affairs of the above company, which owed defendant E money, showed that its financial position was very precarious. Defendant was advised that the best method of recovering its monies was to place Transvaal Homes into liquidation and make an offer of compromise to its creditors. Defendant was advised further that to make such an offer, effectively, it would be necessary for the defendant to acquire all the F shares in Transvaal Homes, either immediately or on the discharge of the company from liquidation. Pursuant to the said advice, the managing director of defendant, one Hattingh, acquired the entire share capital of Transvaal Homes. On or about 5 October 1979 the director of defendant learned that the position of Transvaal Homes was even more unsatisfactory than had been anticipated and, on 11 October 1979, an application to G liquidate that company was brought in this Court as a matter of urgency. For purposes of the application defendant ceded its claim to Jacray Investments (Pty) Ltd who acted as the applicants in the application for liquidation.

During the course of the negotiations with the directors of Transvaal Homes, defendant's financial manager was informed that Transvaal Homes H had borrowed monies at usurious rates from plaintiff acting through his agent, one Swartzberg. He was informed further that it was possible to raise a substantial amount of money from this source provided that the borrower was prepared to pay usurious rates.

Defendant had arranged to purchase a certain steel structure from Otavi Mine in Belfast, Transvaal, and the said Hattingh instructed the financial manager to approach the said Swartzberg with a view to raising the sum of R50 000. The financial manager was introduced to the said Swartzberg by one Greenberg, an accountant who was a director of

Melamet J

Transvaal Homes. A meeting was held with the said Swartzberg on 5 October 1979, who informed the financial manager that plaintiff had an amount of A R36 000 which would be available on 16 October 1979 for a period of four months, that is until 1 February 1980. The consideration for the grant of such loan was to be a raising fee of 5 per cent and interest at the rate of 14 per cent per annum. The raising fee was to be paid in cash and interest was to be calculated with immediate effect in advance and was to B be paid in advance. The interest calculated in advance was to be paid as from 5 October 1979 and the full amount of such interest was to be paid in advance of the receipt of the loan.

The said Swartzberg insisted that defendant immediately issue a cheque post-dated to 5 February 1980 in repayment, as also pay the interest and raising fee. Defendant accepted the loan on the terms stipulated and, on 5 October 1979, the financial manager paid an amount of R1 800 in cash, C bank notes, being the raising fee, and handed Swartzberg the cheque for R36 000 post-dated to 5 February 1980. On 12 October 1979 an amount of R1 680 was paid to the said Swartzberg, being in respect of the interest in advance. Despite repeated demands, plaintiff has failed to pay over the sum of R36 000 which he loaned to defendant and in respect of which the post-dated cheque of R36 000, the subject-matter of this action, was issued.

D On 12 November 1979 defendant in writing demanded from plaintiff payment of the sum of R36 000 or return of the cheque. On 21 November 1979 the attorneys of plaintiff replied in writing, repudiating the claim made by defendant. In the said letter it is admitted that plaintiff received an E amount of R1 800 as a raising fee, and R1 680 as interest in advance in connection with the cheque for R36 000 issued by the defendant. Plaintiff's version in the said letter, and thereafter, is and has been that a sum of R36 000 was due and owing by Transvaal Homes to plaintiff and the cheque issued by defendant was to cover an extension for the repayment of the said loan until February 1980, which was agreed to by plaintiff at the request of defendant who was taking over Transvaal Homes. F The said Hattingh deposes further that the steel structure from Otavi Mines was urgently required by defendant at its brickworks to dry bricks and it was essential that this be obtained before the start of the rainy season to avert damage being caused to the raw bricks prior to their being dried. Defendant had arranged bond finance for the purpose of this G acquisition, but this was only available from the end of January 1980. The finance required from Swartzberg was for bridging finance for the interim period of four months. As a result of plaintiff's failure to supply the finance, defendant has suffered damage in the sum of R100 000. This was originally calculated to be R45 000.

H As a result of the aforegoing, defendant issued a summons against plaintiff in this Court on 1 February 1980 for return of the cheque, the subject-matter in this action, payment of the sum of R45 000 as and for damages, payment...