Adapt It (Pty) Ltd v Landis + GYR (Pty) Ltd [2021] ZAGPPHC 385 (4 June 2021)

Background facts

The plaintiff, Adapt IT (Pty) Ltd, issued summons against the defendant, Landis + Gyr (Pty) Ltd, claiming payment of various amounts pursuant to a contract concluded between the parties. The plaintiff's claim is based on two written agreements: the Teaming Agreement (TA) and the Specific Teaming Agreement (STA), both concluded on 28 May 2015.

The plaintiff alleges that the defendant breached the STA by failing to pay the amounts invoiced from October 2018 until 30 March 2020. The plaintiff accepted the defendant's repudiation of the STA or alternatively cancelled the STA with effect from 28 April 2020.

The plaintiff seeks summary judgment in respect of three principal claims: (1) approximately R12 million for past services rendered under the contract, (2) approximately R155,000 for damages flowing from the early termination of the contract, and (3) approximately 1.3 million for lost profits due to the early termination of the contract (which the plaintiff later conceded is not liquidated).

The defendant raised various preliminary points regarding compliance with the Practice Manual and the Rules, including the argument that the claims are unliquidated, and that the plaintiff failed to comply with Rule 32(2)(b) by stating that the defence raised "does not raise any genuine triable issues for trial. The defendant's defences include disputing the existence of the STA, arguing that the TA has terminated by effluxion of time, and claiming non-compliance with clause 7.2 of the TA regarding payment.

The plaintiff argued that the defendant had not demonstrated a bona fide defense and has not fully disclosed the nature and grounds of its defense and the material facts relied upon, as required by Rule 32(3)(b) of the Rules. The plaintiff contended that the defendant avoided answering the points raised by the plaintiff in its founding papers, which allegedly demonstrate that there are no genuine triable issues in the matter.

The law

The court referred to the case of Maharaj v Barclays National Bank Ltd, which established the requirements for summary judgment. The court must determine whether the defendant has fully disclosed the nature and grounds of their defense and the material facts upon which it is based, and whether the defence is both bona fide and good in law. (Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 426 B-E).

The court interpreted Rule 32(3)(b) and explained that the defendant must disclose their defence and the material facts upon which it is based with sufficient particularity and completeness to enable the court to decide whether it is a bona fide defense.

The court interpreted Rule 32(2)(b) and clarified that the requirement for the plaintiff's supporting affidavit to explain briefly why the defense as pleaded "does not raise any genuine triable issues for trial" should be read as "explain briefly why the defense as pleaded does not genuinely raise any issue for trial." The court emphasized that the purpose of the rule is not to determine the substantive merit or prospects of success of the defense but to assess whether it is genuinely advanced or a sham. (Tumileng Trading CC v National Security and Fire (Pty) Ltd; E and D Security Systems CC v National Security and Fire (Pty) Ltd, [2020] ZAWCHC 28; 2020 (6) SA 624 (WCC)).

The court referred to the case of Standard Bank of South Africa Ltd v Renico Construction (Pty) Ltd 2015 (2) SA 89 (GJ), which established that the computation of contractual damages is not a mere arithmetic calculation but involves a value judgment and consideration of the plaintiff's reasonable efforts to mitigate the damages. The court noted that contractual damages cannot be the subject of summary judgment.

Application of the law to the facts

The court examined the defendant's defense regarding the existence of the Specific Teaming Agreement (STA). The defendant argued that no STA was concluded in compliance with the Teaming Agreement (TA) and that the agreement attached to the papers did not establish the necessary terms. However, the court found that the STA was indeed concluded, as evidenced by the fact that services were rendered, and payments were made for three years. The defendant's defense did not raise a genuine triable issue on the existence of the STA.

The court then considered the defendant's defense based on the termination of the STA by effluxion of time. The defendant claimed that the TA had terminated, and therefore, the plaintiff could not claim payment for invoices falling outside the period of the TA. However, the court noted that the STA was a separate agreement and not dependent on the TA. The defendant did not explain why it continued to make payments after the alleged termination. The court concluded that no triable issue was raised regarding the termination of the STA.

The court addressed the defendant's defense of non-compliance with clause 7.2 of the TA. The defendant argued that the plaintiff's invoices would only become due if and when the defendant received payment from the client. However, the defendant did not expressly state that it had not received payment. The court found that the defendant's defense did not raise a triable issue, especially considering that the defendant did not dispute the correctness of the invoices.

Based on the above analysis, the court concluded that the defendant had not raised any genuine triable issues in relation to the plaintiff's claims for past services rendered.