Swaziland Civils (Pty) Ltd v Kukhanya Civil Engineering Ltd (1154/2018) [2019] SZHC 12 (07 February 2019);

 

IN THE HIGH COURT OF ESWATINI

                                                  JUDGMENT          

 

In the matter Between:                                                                                Case No. 1154/2018

 

 

SWAZILAND CIVILS (PTY) LTD                                                         Plaintiff

 

 

And

 

 

KUKHANYA CIVIL ENGINEERING LTD                                         Defendant

 

 

Neutral citation        :           Swaziland Civils (Pty) Ltd v Kukhanya Civil Engineering

                                                 Ltd (1154/2018) [2019] SZHC 12 (7th February, 2019 )

 

Coram                        :           M. Dlamini J

 

Heard                         :           26th October, 2018

 

Delivered                   :           7th February, 2019

 

 

 

Civil law                               :           claim for cost of suit at punitive scale together with collection commission as per deed of acknowledgment of debt clauses -  further justification for claim of cost of suit is that defendant lied under oath by deposing that he had liquidated the debt by plaintiff and yet during hearing defendant conceded his indebtedness to plaintiff

Held              :                       It is unconscionable to do so in our jurisdiction – parties bargaining for settlement of debt are without doubt at different levels.  The creditor stands at an advantageous position to that of the debtor.  In other words, the power to bargain for a better deal by the debtor is at a weaker position by then as at the bargaining period, he would be in mora.  Its aim is to avoid legal suit.

 

:           to order a party to pay both costs of suit together with collection commission would result in double jeopardy.   No doubt to allow a party to claim costs of suit together with collection commission based on the other party’s mora arising from a single transaction would result in the language of  Christie’s  (supra) in “excessive attorney’s fees” which the law cannot countenance.  At any rate, the purpose of ordering the losing party to pay legal fees is to reimburse the winning party of losses incurred as a result of the unwarranted legal process at the hands of the losing party.   Our courts have emphasised time and again that an order for costs of suit is not meant for the winning party to make profit.

 

:           it would grossly be injustice to conclude that defendant lied under oath without an iota of evidence establishing so.   The plaintiff ought to have submitted evidence under oath to that effect and not from the bar.

 

 

                                    :         Plaintiff’s application dismissed – each party to bear its own costs

Summary:     The bone of contention herein is for payment of costs at primitive scale together with collection commission. This is after the defendant conceded to the plaintiff’s claim initially instituted by means of summons followed by summary judgement application.  The defendant offered costs at ordinary scale and resisted payment of collection commission.

 

                        The Parties

[1]                   The plaintiff and the defendant are the companies dully incorporated and registered in terms of the company laws of the Kingdom.  They have their principal places of business at Matsapha and Manzini respectively in the Manzini region.

 

                        The Pleadings

[2]                   The plaintiff instituted action proceedings claiming a sum of E295 105.16 as a balance owing and due following the parties entering into an acknowledgement of debt.  Upon the defendant filling its defence, the plaintiff moved a summary judgement application.  In defence, the defendant deposed that it had liquidated the entire debt to the plaintiff.  The plaintiff was abusing the court’s processes.

 

[3]                     On the hearing date, plaintiff submitted that the defendant had after the pleadings paid part of the sum due.  Only the sum of E147 553.08 was owing and due on the hearing date.  Defendant’s Counsel pointed out that it was not opposed to the sum of E147 553.08 being ordered against it together with costs of suit at ordinary scale. 

 

[4]                   On this note, Counsel on behalf of plaintiff applied that the court order the defendant to pay costs at punitive scale.  The main reason advanced was that defendant lied under oath by stating that it had paid the entire debt and nothing was due, well knowing that such was false.  The plaintiff demanded further collection commission over and above costs at higher scale.  Its reasoning was that the acknowledgement of debt signed by the parties provided for collection commission as well as costs of suit at attorney-client scale.

 

                        Determination

[5]                   In support of its application for costs at punitive scale together with collection commission, the plaintiff referred this court to Mavangira J. [1]  The learned Justice referred to a citation by Smith and Gillespie JJ [2]  as follows:  

 

                        It is well known, costs are awarded at higher rate only in exceptional circumstances.  They may, however, be awarded when there is agreement to such an effect.  The purpose of such agreement, quite obviously, is the same as the intention behind an agreement that the debtor will be liable to reimburse his creditor collection commission.  It is to ensure that the creditor does not suffer the inevitable loss which will be incurred as a result of the taxation of a party and party bill, even though he recovers costs.”

 

[6]                 Their Lordships having stipulated so, then proceeded to point out:

 

            “The appropriate form of order for such relief moved in the High Court is accordingly the following, where there is an agreement between the creditor and debtor that collection commission and costs on the higher scale may be recovered:

                        ‘Judgement for the plaintiff in the sum of $x together with interest at the prescribed rate, presently y% per annum from …… until the amount is paid in full and collection commission thereon calculated in accordance with by-law 70 of the Law Society of Zimbabwe by-laws, 1982, and costs on the legal practitioner and client scale to the extent such costs are permitted in proviso (iii) to by-law 70(2).”

 

[7]                   Clearly, from the above except, it is explicit that their Lordships were guided by an enactment of Parliament under the By Laws of Zimbabwe.  In our jurisdiction, we have no legislation warranting a claim for both collection commission and costs of suit at the same time.  On the contrary, voluminous case law points to one direction and that is one cannot claim both at the same time.  Hlophe J [3] eloquently pointed out in this regard:

 

                        “Consequently, I grant Summary Judgement in terms of prayers (a), (b) and (c) of the particulars of claim except that (c) does not include collection commission, which in my view cannot possible be claimed together with costs and where the agreement allows it such agreement is to that extent unconscionable in my view.”

 

[8]                   I do not intend to deviate from this well settled principle of our law in our jurisdiction.    The rationale for it is not very far to fathom.  Parties bargaining for settlement of debt are without doubt at different levels.  The creditor stands at an advantageous position to that of the debtor.  In other words, the power to bargain for a better deal by the debtor is at a weaker position by then as at the bargaining period, he would be at mora.  Its aim is to avoid legal suit.  Worse still, in this jurisdiction the debtor is not privy to the Legal Practitioner’s Act and when collection commission is to be demanded from him.  His financial distress renders him helpless.   More often than not such acknowledgement of debts are drafted by lawyers.  The debtor who is a layman is not represented. 

 

[9]                   In the circumstances, public policy dictates that such unlevelled bargaining forums must be addressed by courts of law in their mandate to administer and discharge justice.  I appreciate the school of thought advocating for the autonomy of contract (pacta suntt servanda - agreements must be honoured).   

 

[10]                 Ngcobo J [4]  had this to say on the autonomy of contracts:

                       

                          “I do not understand the Supreme Court of Appeal as suggesting that the principle of contract pacta sunt servanda is a sacred cow that should triumph all other consideration”.

 

[11]                 Madlanga J [5]  hit the nail on the head on the issue at hand by espousing;

 

“Under common law the principle of freedom of contract (often expressed in the maxim (pacta sunt servanda) has never been absolute.  Rather, it has always been subject to limiting rules intrinsic to the law of contract.”

 

[12]                 In his footnote, the learned Judge of the Constitutional Court then expands and refers to Christie, “Illegality and  Unenforceability - The Law of Contract,” 6th Ed at 361 as follows:

 

Well established common law rules render certain contractual provisions unenforceable even when contained in an otherwise valid and binding contract, including provisions that tend to produce forced labour, oust the jurisdiction of the courts, provide for excessive attorney’s fees or witnesses expenses, permit pirate execute (right of a creditor to execute without a court order) of unmovable property.”

 

[13]                 In other words, to order a party to pay both costs of suit together with collection commission would result in double jeopardy.   No doubt to allow a party to claim costs of suit together with collection commission based on the other party’s mora arising from a single transaction would result in the language of  Christie’s  (supra) in “excessive attorney’s fees” which the law cannot countenance.  At any rate, the purpose of ordering the losing party to pay legal fees is to reimburse the winning party of losses incurred as a result of the unwarranted legal process at the hands of the losing party.   Our courts have emphasised time and again that an order for costs of suit is not meant for the winning party to make profit.

 

[14]                 On the scale of costs of suit, the plaintiff asserted that the defendant had under oath deposed that he had discharged the obligation in full in terms of the deed.  Browsing through the defendant’s pleading, it is correct that defendant so deposed.  However, on the question of whether he lied, the court is not in a position to agree with the plaintiff.    I say this mindful that the plaintiff’s submission is based on the fact that when the matter was called, the defendant’s attorney conceded that there were in mora contrary to what it averred in its answering affidavit. 

 

[15]                 However, it would grossly be injustice to conclude that defendant lied under oath without an iota of evidence establishing so.   The plaintiff ought to have submitted evidence under oath to that effect and not from the bar.   The reason is simple, defendant is a legal persona in business.  It could for instance be likely that he mistook the present transaction with the defendant for another which he had discharged.  These eventualities cannot be ruled out without evidence adduced.  In this regard, I am not prepared to accept that defendant lied under oath and therefore must be mulcted with costs at punitive scale.

 

                        Costs

[16]               Defendant argued that plaintiff was entitled to costs at ordinary scale.  I agree with the defendant as I have demonstrated above.  However, following that defendant’s application for costs at punitive scale and collection commission stands to be dismissed, it must be so dismissed with costs in favour of plaintiff.  The short of it, is that, each party must be ordered to pay its own costs of suit. 

 

[17]                 In the above, I enter the following orders:

 

  1. Plaintiff’s application that defendant be ordered to pay costs at primitive scale together with collection commission is hereby dismissed;

 

  1. Each party to bear its own costs of suit, 

 

 

 

 

___________________________

M. DLAMINI J

 

For the Plaintiff        :           M.T. Ndlovu of  MTM Ndlovu Attorneys                     

For the Defendant    :           B. Tengbech of  S.V. Mdladla Attorneys

 

 

 

 

                       

 

[1] Chiedza Chikomo v Yisrael Yehudah HC 5731/2010 – Zimbabwe)

 

[2] Scotfin Ltd v Ngomahuru (Prty) Ltd 1997 (2) 2LR 567 at 582B)

[3] June Mckenzie V Sera Ncongwane and another Civil Case No. 1751/2012 at pg. 7

[4] Barend Petrus  Barkhuizen v Ronald Stuart Napier 72/05 [2007] ZACC 5 at para 5

[5] Andre’Francois Paulsen & Another v Slip Knot investments 777 (Pty) Ltd 61/14 [2015] ZACC 5 at para 71)