Parekh v Shah Jehan Cinemas (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Leon J
• Judgment Date: 21 December 1981
• Citation: 1982 (3) SA 618 (D)
• Hearing Date: 16 October 1981
• Court: Durban and Coast Local Division

Leon J:

This is an application for judgment against the six respondents jointly and severally for payment of the sum of R90 811,70 together with interest thereon at the rate of 11 per cent per annum from 1 March 1981 to date of payment.

F The facts are largely common cause. On 22 February 1979 the applicant caused an action to be instituted out of this Court against the respondents who were the defendants therein. The issues in that action are not before me but it is common cause that the action was settled in G terms of a written agreement of settlement executed at Durban and which has been annexed to these papers. In terms of the agreement of settlement:

(a)

Respondents agreed jointly and severally to pay to the applicant the sum of R109 022,02 together with interest at the rate of 11 per cent per annum calculated monthly in advance from 15 October H 1980 on the reducing monthly balances by way of 24 equal monthly instalments the first of which being payable on 1 December 1980 and subsequent instalments on the first day of each and every succeeding month.

(b)

As security for their indebtedness the respondents agreed to deliver to the applicant's attorneys cheques in his favour signed on behalf of the first respondent covering the instalments each of which cheques was to be endorsed as surety and co-principal debtor by the second, third, fourth, fifth and sixth respondents.

Leon J

(c)

It was agreed that if any one of the monthly instalments was not paid on due date or if any one of the cheques was dishonoured A upon presentation for payment in accordance with its tenor the full balance owing by the respondents to the applicant would immediately fall due and payable without notice.

The respondents duly delivered to the applicant's attorneys a series of post-dated cheques in accordance with their obligations under the B agreement of settlement. The cheques were made up of the monthly capital amounts to which were added the amounts of interest which would be owing. The cheques which were payable respectively on 1 December 1980, 1 January 1981, 1 February 1981 and 1 March 1981 were duly met on presentation for payment in accordance with their tenor. The cheque for C the sum of R5 375,02 which was payable on 1 April 1981 was dishonoured upon presentation for payment in accordance with its tenor and returned by the first respondent's bankers marked 'effects not cleared'. In view of the fact that the respondents failed to pay the instalment which was due on 1 April 1981 timeously, because the aforesaid cheque was D dishonoured, it is the applicant's case that the full balance owing by the respondents to him became immediately due and payable. That is in dispute but it is common cause that the balance of capital owing by the respondents to the applicant after payment of the cheque due on 1 March 1981 was the sum of R90 811,70 (ie the sum claimed) together with interest thereon at the rate of 11 per cent per annum from 1 March 1981 to date of payment.

E The relevant paragraphs of the agreement of settlement read as follows:

'1. In full settlement of the plaintiff's claim against the first defendant in respect of rent, rates and insurance premiums in terms of agreement of lease dated 28 July 1977 ('the lease') up to and including the month of October 1980 and against the remaining defendants based on F their suretyship of the first defendant's obligations in terms of the lease, the defendants shall, jointly and severally, pay to the plaintiff the sum of R109 022,02 together with interest at the rate of 11 per cent per annum calculated monthly in advance from 15 October 1980 on the reducing monthly balances by way of 24 equal monthly instalments, the first instalment being payable on 1 December 1980 and thereafter on the first day of each and every succeeding month.

G 2. As security for their indebtedness in terms of clause 1 hereof the defendants shall, simultaneously with the execution hereof, deliver to the plaintiff's attorneys cheques in favour of the plaintiff signed on behalf of the first defendant in negotiable form covering the instalments referred to in clause 1 hereof, each of which cheques shall be endorsed as surety and co-principal debtor by the second, third, fourth, fifth and sixth defendants.

H 3. In the event of any one of the said monthly instalments not being paid on due date and/or any one of the said cheques being dishonoured upon presentation for payment in accordance with its tenor and/or the first defendant failing to pay the rental referred to in clause 6 hereof, the full balance owing by the defendants to the plaintiff hereunder shall immediately fall due and payable without notice.'

The fifth respondent deposed to an affidavit on behalf of the other respondents save for the third respondent whose position I shall deal with shortly. In that affidavit a number of defences were raised but all save two were expressly and formally abandoned at the hearing by Mr

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Mahomed who appeared on behalf of the first, second, fourth, fifth and sixth respondents.

The third respondent died on 10 April 1981 and his estate has been A reported under No 3204/81. He is survived by his wife to whom he was married out of community of property and five children, four of whom are majors. No letters of executorship have been granted by the Master of the Supreme Court and the attorneys attending to the winding up of the estate are the same attorneys who are acting for the respondents herein. B The Master has called for the original will which he has not yet received and at the date of the hearing of this application no letters of executorship had been granted by the Master. In these circumstances it was not possible for any executor to be substituted for the third respondent.

The remaining defences upon which the first, second, fourth, fifth and sixth respondents rely are:

1.

C In view of the fact that the third respondent is deceased he has been incorrectly cited which has resulted in a material non-joinder. In view of the alleged material non-joinder it is claimed on behalf of the respondents that this application must be stayed until an executor has been appointed.

2.

D The clause in the agreement of settlement upon which the applicant relies, ie clause 3, is, upon a proper construction thereof, a penalty stipulation as provided for in the Conventional Penalties Act 15 of 1962.

In this regard it is claimed on behalf of the respondents that, if the E applicant is held to be entitled to immediate payment of the full accelerated amount of R90 811,17 in terms of the alleged penalty stipulation, the respondents will be obliged to raise such amount from their bankers on overdraft and shall thereby become obliged to pay interest thereon at the present prime overdraft rate of 16½ per cent per annum. It is accordingly claimed that the respondents will suffer F prejudice in having to pay an additional 5½ per cent per annum interest over the interest which they agreed to pay in terms of the settlement agreement. It is also claimed that the alleged penalty is out of proportion to the prejudice suffered by the applicant by reason of the omission in respect of which the alleged penalty was stipulated and G that it should be reduced by the Court to the extent that the Court considers equitable in the circumstances in terms of s 3 of the Conventional Penalties Act 15 of 1962.

There does not seem to me to be any difference in principle between the case of the wrong joint and several debtor being sued (as here) and that H of such a debtor not being sued at all. Counsel were therefore agreed that the answer to the first question must depend upon whether, in the case of joint and several debtors, the plaintiff is entitled to pick his target.

In support of his contention that the application had to be stayed until an executor had been appointed, Mr Mahomed relied upon the principle that all parties with a direct and substantial interest should be joined and that each joint and several debtor had such an interest. He also cited direct authority in support of his contention that all joint and

Leon J

several debtors should be joined. He referred to Grotius on The Jurisprudence of Holland vol I by R W Lee. In s iii 8, 9, 10 and 11 the following is stated: A

'8. When several persons are parties as principals to a single contract, according to the latest Roman law they must all then be...