C.of A.
(CIV) No. 5 of 1981

IN THE
LESOTH COURT OF APPEAL

In the
Appeal of :

PITSO
PHAKISA MAKHOZA Appellant

v

BARLOWS
O.F,S. LIMITED Respondent

HELD AT
MASERU

Coram:

MAISELS,
P.

VAN
WINSEN, J.A.

STEYN,
A.J.A.

JUDGMENT

Van
Winsen, A.J.

Respondent
sued appellant for payment of the sum of M69,2l4.00 being the balance
owing in respect of the purchase price of a Wright
140C Motor Grader
sold to appellant under a hire-purchase agreement entered into
between the parties on the 18th of August 1980.
Alternatively it
claimed a return of the grader plus payment of R43,809.28 being
arrears owing under the afore-mentioned hire-purchase
agreement.
Appellant entered appearance to defend and respondent applied for
summary judgment on the claim. An affidavit was filed
by Mr. de Beer
on behalf of respondent verifying the latter's claim and stating that
deponent believed that appellant had no hona
fide defence to the
latter claim. While admitting that he had entered into the
hire-purchase agreement in question appellant averred
in an affidavit
that the agreement had been cancelled or varied by a subsequent
agreement dated the 16th of March 1981, a copy
of which was annexed
to the affidavit. The appellant claimed that by virtue of this
latter, agreement he had been given an extension
of time to pay and
that in view of this he was not in arrears with his payments in terms
of the hire-purchase agreement. This

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alleged
amending agreement is a document in the form of a letter dated 16th
March 1981 addressed by respondent to appellant in which
the former
offered to afford the latter an extension of two months within which
to perform his obligations. At the foot of the
letter provision is
made for the parties to append their signatures to the amending
agreement should they choose to adhere to it.
Neither party signed
the document.

In
addition appellant attached to his affidavit a copy of a letter
addressed by him to respondent in which it is stated that he
refused
to accept respondent's offer to extend his obligation by two months
but desired a four month extension,,

Rooney J
in the Court a quo granted summary judgment in the sum of M69,214.00,
alternatively the return of the grader and costs
of action. Appeal
was noted against this Judgment, Respondent's counsel informed the
Court that the alternative order for a return
of the grader had not
been sought in the High Court and he abandoned that order as his
client's behalf. A number of reasons were
advanced by appellant's
counsel in support of his contention that the learned Judge in the
Court a quo was wrong in granting summary
judgment. Amongst these was
numbered the contention that respondent had failed to comply with a
peremptory requirement of Rule
of Court 28(2). This sub-rule required
respondent to annex to the affidavit in support of the application
for summary judgment
a copy of a liquid document on which the claim
is founded viz in this case the hire-purchase agreement. This
agreement, so appellant's
counsel contended, is a liquid document.

It
appears that this document was in fact before the Court a quo but how
it got there is not plain. No reference is made to it in
appellant's
affidavit. The document in question does not appear to me to partake
of the nature of a liquid document. It is an essential
element of a
liquid document that the acknowledgement of indebtedness set out
therein must sound in money, the amount of which
is fixed and
definite upon the face of the document. If extrinsic evidence is
required to prove the quantum of the debtor's indebtedness
the
document is not regarded as being liquid

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(see
Civil Practice of the Magistrate's Court in South Africa 7th Ed. at
p.98 et seq and the cases there quoted and Union Share
Agency v.
Spain 1928 A.D. 74). Clause 2 of the hire-purchase agreement in
question provides that the buyer shall, in addition to
the sums
stipulated as instalments of the purchase price,

"pay all costs disbursements and charges including attorney and
client costs which are recoverable in law and which the seller
in his
sole discretion may incur as a result of the buyer's default".

It
appears from a further clause in the agreement that a variation in
the minimum bank overdraft rate by the seller's bank would
result in
an increase or a decrease in the sums payable by the buyer under the
agreement. Evidence would thus clearly be necessary
to determine the
amount in money due by the debtor under the agreement which would
effectively destroy whatever claim it might
otherwise have to being a
liquid document. That being so. there was no obligation upon
respondent to annex the agreement to his
affidavit.

The only
defence specifically raised in the Court a quo by appellant upon
which he sought to rely in order to defeat the application
for
summary judgment was that he was

"not in arrears with the instalments (payable under the
agreement) due to the fact that the original hire-purchase agreement

was extended when it transpired that the alleged Wright 140C Motor
Grader (the "merx") had a factory fault and was not
working
until the 6th of March 1981".

He
claimed that to meet this contingency the agreement sued upon

"was cancelled and varied by a subsequent agreement dated 16th
March 1981 copy of which is hereto attached marked annexure
H".

It is
apparent from what is said earlier in the judgment that the so-called
"subsequent agreement" had never in fact been
entered into
between the parties. It appears from appellant's letter of the 31st
of March 1981 addressed to respondent that he
was not prepared to
accept the offer by respondent to postpone for a period of two months
his obligations to pay instalments under
the agreement. The
respondent was in turn not prepared to accept the counter-proposal by
appellant for an extension of four months
as indicated by its
subsequent

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issue of
summonss on the 21st of April 1981. It is clear from this that the
only defence upon which appellant overtly sought to
rely to defeat
the application of summary judgment did not constitute a good defence
to that application.

However,
his counsel at the hearing of the appeal before this Court sought to
extract from the papers a defence which he contended
was a good and
bona fide one. Appellant's counsel referred us to his client's letter
addressed to respondent on the 31st March,
1981 which reads as
follows:

"Dear
Sir,

I am
referring to your letters, dated 16.3.81 and 9th March 1981, were by
Argument, I have refuse . to except your offer to extend
H.P.
Contract by 2 months and my argument was that the contract must be
extended by 4 months. Reason being that the Grader has
not produced
any Production since it was bought in August 1980, because of factory
fault. Which first state on Hydrolic Pump which
has taken your
Company 3 weeks to repair. In November same year Grader was broken
down up to December 15.12.80. Again in January
1981, Grader was
broken down again up to 6.3.81. This is the time when your Company
decided to sent Technician to check the fault
on this grader, and
fault was found. The Engine top Cylinder was burnt then was replaced
by new cylinder head, by your company
as this grader was still under
your warranty. Therefore I could not except to be debited. So we must
come to conclusion, the contract
must state new order to avoid
argument".

One of
the letters referred to in the above quoted letter addressed by
respondent to appellant viz that of the 16th March 1981 is
amongst
the papers. The other letter of the 9th of March 1981 is not before
the Court, After setting out the aggregate of the sums
owing by
appellant to respondent under the agreement, viz R69,2l4.00, the
letter of the 16th March goes on as follows :

"We understand that you have experienced service difficulties
and as a result have had a loss of revenue. The compensate you,
we
will extend the existing contract by two months".

Appellant's
counsel contended in this Court that the offer by respondent to
extend the contract evidences an acknowledgement by
it of the
existence of a latent defect in the "merx" which would
afford appellant a counter-claim against respondent
and which should
have been held by the

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Court a
quo to bar the granting of the summary judgment application.

Now
appellant did not, in terms, raise this defence on the papers before
the High Court. The question is whether it can be said
that the
nature and grounds of this defence fully emerge from the papers
before the Court as well as the material facts on which
it is
founded. This disclosure of the defence and supporting facts must
appear from an affidavit. In appellant's affidavit it is
stated that
the "merx" had a factory fault and was not working until
the 6th of March. Furthermore appellant attached
the letter of the
13st March 1981 quoted above to his opposing affidavit in order to
indicate why the original agreement "had
to be changed" but
it nonetheless included material showing, if the allegations are
true, that the merx was to some extent
defective.

I shall
assume in appellant's favour – without deciding the issue -
that despite his failure to raise specifically the defence
that the
"merx" was infected with a latent defect it can
nevertheless now be treated as though it had been raised. It

accordingly becomes necessary to determine whether it would
constitute a good defence to respondent's claim. The hire-purchase

contract between the parties provides, inter alia as follows %

6(a) No warranty on the part of the seller (respondent) as to the
condition state or quantity of the goods or as to their fitness
for
any purpose has been or is given or implied. The seller shall not be
liable for any defects in the goods, whether latent or
patent.

7(a) Relaxation. No relaxation or indulgence which the seller may
concede to the buyer (appellant) shall in any way prejudice or
be
deemed to be a waiver of the seller's rights nor a novation of this
agreement or any, part of it.

There is
nothing in the papers before this Court to indicate that these
clauses of the agreement sued upon are not fully effective
and that
any claim advanced by appellant which is founded upon the fact that
the "merx" suffered from, a latent defect
would not be met
by respondent replying on the above-gubfed clauses to defeat such a
claim.

It was
also argued before this Court that summary

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judgment
proceedings are not appropriate in cases where the granting of the
order prayed would have the effect of enforcing a penalty
against the
defending party and might require a determination of the question of
whether the penalty is out of proportion to the
prejudice suffered by
the party affected by the penalty. From this proposition I would not
be disposed to differ.

This
raises the question of whether, in enforcing the agreement as it
sought to do by applying for summary judgment on the contract,

respondent was in fact exacting a penalty. Clause 5 of the
hire-purchase agreement relative to the acceleration of payment in
case of default under the agreement by appellant reads as follows:

"5. Acceleration of Payment and Termination

Should the Buyer(appellant) commit any breach of the terms of the
agreement or fail to pay any amount due thereunder on due date.......

the Seller(respondent) shall have the right .......to recover
forthwith the total amount of the balance of the purchase price of

the said goods and any other sum payable by the Buyer hereunder and
all such payments as are due or to become due shall be deemed
to have
become due and recoverable forthwith........ or to terminate this
Agreement without notice to the Buyer".

The
Agreement stipulates that the cash price for the "merx" is
R92,000 and the finance charges R6,213.92. In calculating
the sum
claimed to be due and sued for,viz, M69,2l4.60 respondent made an
allowance for the sums already paid by appellant both
by way of
deposit (R22,000.00 as well as instalments (M7,000.00) and claimed
the balance due which is represented by the balance
of the purchase
price and a sum in respect of finance changes of M6,214. When summary
{Judgment was granted on the sum claimed
it included the sum for
finance charges. The contract was intended t6 run for 12 months as
from the 14th of August. Judgment was
granted on the 24th of August,
1981 by which time the agreement had run its contemplated course.

The
finance charges represented the cost to the respondent of the credit
granted to appellant who had paid a cash price for the
"merx"
but who was by the agreement afforded 12 months within which finally
to liquidate the totality of his obligation
in respect of the
purchase price.

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Accordingly
no advantage was gained by respondent over appellant when the former
was accorded judgment after the full period of
the agreement had
lapsed. There is thus no room for the conclusion that appellant was
penalized by the order made against him.

That
being so I am unable to find that any good and bona fide defence,
whether specifically raised or appearing from the papers,
has been
established by appellant. The appeal accordingly fails and is
dismissed with costs.

L.De V. van Winsen

Signed :

L. DE V. VAN WINSEN

Judge of Appeal

L. De V. Van Winsen

for I.A. Maisels

I agree Signed:

I.A. MAISELS

President

J.H. Steyn

I agree
Signed:........................

J.H. STEYN

Acting Judge of Appeal

Delivered
this 3rd day of June 1982 at MASERU

For
Appellant : Mr. Maqutu

For
Respondent: Mr. Viljoen