This
is an application for confirmation of a provisional order granted by
the court on 13 December 2013. In terms of the order, the Sheriff, as
second respondent, was interdicted from carrying out instructions
from the first respondent, Taonga Mukonoweshuro, to execute on a
certain agreement without a valid court order.
What
is now sought is a confirmation of the order together with costs on a
higher scale.
The
context giving rise to the provisional order was this. The first
respondent obtained a summary judgement against the applicant under
HC4559/13 for payment of the sum of US$67,416=90. Interest was also
ordered on the capital debt of US$67,416=90 and was calculated at the
rate of 5% per annum from 24 November 2012 to date of payment in
full. Costs of suit were also ordered on a legal practitioner client
scale.
The
first respondent caused a writ of execution to be issued by the court
against the applicant's property. Following the service of Notice
of Seizure and Attachment, the applicant sought to negotiate with the
first respondent, through his legal practitioners, for suspension of
the execution and to be given time to pay. An agreement was then
entered into in terms of which the execution would be stayed on the
basis of an altered arrangement. This centred on fixed instalment
payments; a higher interest rate on the capital amount which was now
fixed at 20% per annum; furthermore, legal costs of US$4,000= were
agreed on; in addition, collection commission. The agreement was also
such that any payments made would go first towards the first
respondent's collection commission and interest, at 20%, and costs.
However,
once the applicant had made payments to the tune of the capital debt
of US67,416=90 and interest at the rate of 5% per annum, as per the
court order, he reneged on the agreement arguing that the agreement
was illegal, usurious, and, moreover, that it had been brought on by
due pressure.
It
was on the basis of failure to satisfy the balance of the amount due
that the first respondent had sought to proceed with the execution in
satisfaction of its debt outstanding using the court order that had
been granted to it. The applicant had thus obtained a provisional
order for an interdict and stay of execution on the basis that the
existing court order could not be the basis of execution as the debt
therein had been settled….,.
The
applicant also argues that even if the agreement is enforceable then
its primary argument is that whatever remains owing is outside the
original court order and cannot be paid without a valid court order
for the outstanding amount. In its view, the agreement introduces a
new cause of action.
The
first respondent's position is that he agreed to suspend execution
of judgment to allow the same to be paid in instalments on condition
that the applicant first paid collection commission, costs and
interest at the rate of 20% per annum as opposed to 5% per annum….,.
More
significantly, the gist of the first respondent's argument is that
it correctly, in terms of its agreement, appropriated amounts
representing 20% interest, agreed costs and collection commission
from what was paid. He stresses that this was not done in terms of
the court order but in terms of the agreement. He says that what
remains is thus the capital debt since the agreement is clear on
collection commission, interest and costs which are not in the court
order but were to be satisfied first in terms of any payment made in
accordance with the court order.
He
also emphasises that the applicant accepts the agreement in so as far
as it allowed him to pay in instalments but disputes those parts
where he is required to pay collection commission.
Counsel
for the first respondent…, referred the court to the case of
Gollach
& Gomperts
1967
(Pvt)
Ltd v Universal Meals
1978
(1) SA 914 which describes a transactio
as
“an agreement between two or more persons to end litigation or
prevent litigation resulting from their differences. This points out
that such an arrangement is equivalent to a consent judgment. In
Benefeld
v West 2011 (2) SA 379
a compromise is defined in the following terms:
“A
compromise is a settlement of litigation or envisaged litigation, it
is a substantive contract that exists independently of the original
cause.”
The
first respondent also drew on the case of Van
Zyl v Nieman
1964
(4) SA 661
which
is to the effect that a settlement between the parties has the same
effect as res
judicata,
and,
accordingly, excludes an action on the original cause unless the
parties have expressly agreed to fall back on the original right of
action in the event of non-compliance.
Notably,
in the case before me, a court order was already in place when the
parties entered in to their modified agreement. Litigation had
already been taken to final judgment when the agreement between the
parties was entered into. The court order was extant.
The
parties were therefore not entering into a compromise agreement to
stem any litigation.
What
gave rise to the agreement was the pending execution of a final
judgment in favour of the first respondent. The parties intended to
modify the payment terms to accommodate the applicant who was unable
to pay the full amount owed at the time. In the face of an existing
order, and having agreed to staggered payments, they thus
incorporated new terms with regard to an increased interest rate and
collection costs in recognition in relation to those instalment
payments that were put in place.
Crucially,
the parties where not abandoning the judgment nor were they novating
the agreement since, with novation, it must be apparent that the
parties intended to extinguish, as opposed to merely modifying, an
original agreement. They simply built an agreement on an existing
order of the court to incorporate accommodative arrangements. That
they were working at all times with the court order in mind is
evident from the modified agreement which reads, in its introductory
paragraph, as follows:
“Whereas
the creditor obtained judgment against the debtor under HC No.4559/13
in the sum of US67,416=90 and costs on a legal practitioner and
client scale:
And
whereas the creditor intends to execute the judgment to recover the
debt and costs;
And
whereas the debtor has requested that the execution be suspended to
save the debtor from collapsing;
Now
therefore the parties agree as follows…,.”
It
is clear from the preamble that the parties were not in any way
intending to extinguish the order that had been obtained. They sought
to find ways to give effect to it in light of challenges faced by the
debtor in meeting his obligations. The agreement contained the terms
of variation upon which the amount owing was to be paid. It is indeed
clear from the agreement that the payments were to be appropriated;
(i)
Firstly, in reduction of collection commission;
(ii)
Secondly, in reduction of agreed costs;
(iii)
Thirdly, in reduction of interest; and
(iv)
Finally, in reduction of capital.
Significantly,
however, because a judgment of the court was already in place, any
attempt at using the existing order for execution could only be done
if the actual amounts stipulated therein remained unsatisfied. Any
amounts sought as owing, arising from the parties' own
modifications, over and above what was stipulated in the court order,
must, of necessity, be the subject matter of a separate order of the
court. It matters not, in my view, that the first respondent worded
the agreement in such a way as to first settle the terms of their
modifications. Given that the amount stated in the order of the court
has been settled, in order to execute further a new order must be
sought for any balance from the agreement. The final order is
accordingly altered to reflect this reality more succinctly….,.
Accordingly,
the provisional order is confirmed as follows:
It
is ordered that the Provisional Order granted by the Honourable Mr
Justice HUNGWE, on 13 December 2013, be and is hereby confirmed under
the following terms:-
1.
For any balance owing arising from the parties' modified agreement,
the second
respondent
is hereby interdicted from carrying out instructions to execute from
first
respondent
without a valid court order.
2.
The first respondent
is to pay costs on an ordinary scale.
