LMS ELECTRICAL ENGINEERS (PRIVATE) LIMITED v TASSBURG SCREW INDUSTRIES (PRIVATE) LIMITED 1980 ZLR 130 (G)

Author: Trodat Zimbabwe

LMS ELECTRICAL ENGINEERS (PRIVATE) LIMITED v TASSBURG SCREW INDUSTRIES (PRIVATE) LIMITED 1980 ZLR 130 (G)

1980 ZLR p130

Flynote

Estoppel — party seeking to rely on its own act to ground estoppel — C whether defence of estoppel available.

Headnote

A party to a contract who, by overcharging for goods supplied and work done, induces the other party to overpay him for those goods and services, cannot rely on the fact that the payments were made voluntarily to estop the other party from recovering the overpayment through the condictio indebiti even if the other party had a contractual duty to ensure that all payments were in _D fact due before making them.

Cases cited

Durban Corporation Superannuation Fund v Campbell, 1949 (3) SA 1057 (D.)?

Barclays Bank International Ltd v African Diamond Exporters (Pty) Ltd _E 1977 (1) SA 298 (W).

Case information

M T O’Meara, for the applicant (defendant in the main action).

C L Mercer, for the respondent (plaintiff in the main action).

Judgment

Beck J: In May, 1976, the plaintiff issued and caused to be served on _F the defendant a summons claiming an amount of $5711,26 “being the balance due in respect of work done and materials supplied by plaintiff during 1975 at defendant’s special instance and request”.

In February, 1977, the plaintiff furnished further particulars to its _G claim, from which it emerged that the plaintiff relied on a written memorial (dated February, 1974, and annexed to the further particulars) of a contract between the parties to effect certain electrical installations for the defendant at a quoted price of $21 687,70? as well as on an oral agreement to effect certain extra electrical installations which are specified in the pleadings, with an implied undertaking to pay a fair and _H reasonable remuneration therefor, which reasonable remuneration amounted to $26 560,40, making a final contract sum of $48 248,10, of which total amount the defendant had paid only $42536,84.

1980 ZLR p131

Beck J

In January, 1979, the defendant pleaded to the claim as particularized, _A admitting the agreement as recorded in the writing annexed to the plaintiff’s pleadings, and admitting the further oral agreement with its implied term to pay a fair and reasonable remuneration for the additional work as specified, but alleging that a fair and reasonable remuneration for the extra work did not exceed the amount of $20 849,41 which, together with _B the agreed amount of $21687,70 for the initial contract, made up the total sum of $42 536,84 that the defendant had paid the plaintiff.

As matters then stood, almost three years after the summons was served, the only issue between the parties was whether a fair and reasonable _C remuneration for the extra work admittedly done by the plaintiff was $26 560,40, as contended by plaintiff, or only $20 849,14, as contended by defendant. The terms of the agreements, the nature and extent of the extra work done, and the competence with which all the work was done, were not in dispute. In November, 1979, however, the defendant filed a _D claim in reconvention in which it sought from the plaintiff repayment of an amount of $12 702,89. The claim in reconvention was pleaded as follows:

1.        The parties are referred to as before.

2.        In terms of the original agreement between the parties, Plaintiff performed certain electrical workand provided certain electrical E goods in the construction of the said extension to Defendant’s factory.

3.        It was an express term of the said agreement that Defendant would pay Plaintiff a fair and

reasonable remuneration in respect of such work and the invoice price of the said goods. F

Alternatively: It was an implied term of the said agreement that Defendant would pay Plaintiff a fair and reasonable remuneration for such work and goods.

4.        A fair and reasonable remuneration for the said work and the G invoice price of the Said goods, alternatively, a fair and reasonable remuneration for both to Plaintiff is $29 832,75.

5.        Plaintiff charged Defendant for the said work and goods an amount of $48 247,90 of which amountDefendant has paid to Plaintiff the sum of $42536,84.

6.        Defendant only ascertained after the 26th June, 1979, that a fair and H reasonable charge for the said work plus the invoice prices of the said goods, alternatively, a fair and reasonable charge for both was $29 832,75.

7.        Accordingly, Defendant has overpaid Plaintiff an amount of $12702,89 in the reasonable and bona fide belief that it was due to Plaintiff.”

1980 ZLR p132

Beck J

It is apparent from these allegations that the defendant no longer admitted that the original contract was for an agreed amount of $21687,70, and that only the supplementary contract for extras carried A an implied term that the work that was done thereunder would be fairly and reasonably remunerated. It was now the defendant’s case that all the work that was done, was done in accordance with an express term of the original agreement to the effect that the plaintiff would be paid the invoice price of the goods supplied, and in addition a fair and reasonable _B remuneration for the work done. In the alternative, the defendant alleged that fit was an implied term that a fair and reasonable remuneration would be paid both for the goods provided and for the work done. On either basis, defendant claimed that the plaintiff was only entitled to be paid a total sum of $29 832,75, whereas the plaintiff had in fact _C mistakenly been paid an amount of $42 536,84, and refund of the alleged overpayment of $12 702,89 was sought. In further particulars to its claim in reconvention the defendant alleged that the conduct of the plaintiff in submitting to the defendant accounts and statements totalling $48 247,90 for the work done and the materials supplied, but without _D disclosing to the defendant any invoices or other documents in support of the charges raised, caused or contributed to the defendant’s reasonable mistake in overpaying the plaintiff.

In its plea to this counterclaim the plaintiff admitted paragraphs 2 and 3 of that counterclaim, thereby admitting (inter alia) that it was an _E express term of the agreement “hereunder all the work was done and all the goods supplied that the plaintiff would be paid the invoice price of the goods. The plaintiff went on to deny that the total remuneration to which it was entitled amounted to $29 832,75 only, and denied that it had been benefited and unjustly enriched by any overpayment whatsoever. _F In addition, the plaintiff pleaded that:

   4.      Further, and in any event, Defendant is estopped from averring that it has overpaid plaintiff in that Defendant delivered the said moneys to plaintiff voluntarily in terms of the aforesaid express or implied agreement and thereby misled Plaintiff to believe that the said sum would not be disputed. G    5.      Plaintiff was thereby induced to act to its detriment in that it:

(a)              Continued to expend time and moneys in pursuance of the said agreement?

(b)              Used the said moneys in the course of its business? and H

(c)               Took no steps to protect its position in respect of justifying the reasonableness of its charges.”This plea was filed in March, 1980, and in April of this year the defendant filed an application to strike out paragraphs 4 and 5 of plain­

1980 ZLR p133

Beck J tiff’s plea in reconvention as being contradictory, bad in law and disclosing _A no defence in that:

1.        No facts are alleged by Plaintiff upon which a defence of estoppel may be based.

2.        Plaintiff admits that it charged Defendant an amount of $48 247,90 in respect of the workperformed by it.

3.        Such B admission contradicts Plaintiff’s averment that Defendant paid the said sum voluntarily.

4.        Defendant’s conduct, as alleged by Plaintiff, and Plaintiff’s alleged detriment stem from Plaintiff’s ownadmitted act in raising the said charge. Accordingly Plaintiff is not entitled to rely upon its own act as grounding an estoppel.

5.        There C is not in law, and Plaintiff does not allege, any duty upon Defendant to dispute the reasonableness of the said charge, either at the time it was raised or at any other time.

6.        In the absence of any such duty upon Defendant an omission to dispute the said charge did notamount to a misleading of Plaintiff, or D to an inducement to Plaintiff to act to its detriment.” This application has now been argued before me, four years after action was instituted, and more than four years after defendant had paid the plaintiff in total the amount of $42 536,84. I do not know why the parties have been so extraordinarily lethargic in getting this matter ripe for trial, _E but I have mentioned the snail’s pace at which they have been content to crawl with some degree of irritation at the thought that this Court will in all probability have to make do in consequence with evidence as to what were fair and reasonable charges five years ago, that is inferior to the evidence that could have been made available to the Court had they _F proceeded with reasonable expedition.

I turn to the application to strike out paragraphs 4 and 5 of the plea in reconvention. The first complaint is that the plaintiff’s averment that the defendant paid a total amount of $42 536,84 voluntarily is contradicted by the plaintiff’s admission that it charged the defendant an amount _G of $48 247,90. I do not consider that there is any substance in this complaint. The allegation, in paragraph 4 of the plea, that “the defendant delivered the said moneys to plaintiff voluntarily” means no more, in my view than that the payment in question was made without any reservations about the validity of the liability that the payment was, pro tanto, intended _H to discharge. That assertion in no way contradicts the admission that the plaintiff “charged the defendant an amount of $48 247,90”.

The main complaint is that the plaintiff seeks, in the final analysis, to rely on its own act (in raising the said charge) to ground an estoppel,

1980 ZLR p134

Beck J which it cannot do. It is my view that this complaint is well founded. One must assume for the purposes of this argument that there was in fact an overpayment that was made in justus error which the defendant seeks to _A recover by the condictio indebiti. On that hypothesis the Plaintiff must be taken to have known, actually or constructively, that the charge it raised against the defendant was not in accordance with the terms of their contract ­ in particular that it was not supported by the invoice prices for the goods supplied, which invoice prices were allegedly not disclosed _B to the defendant until long after the alleged overpayment was made. Under these circumstances it would obviously be unconscionable for the plaintiff to seek to raise an estoppel against the defendant? and it would indeed be impossible for the plaintiff to prove that, in the light of its own actual or presumed knowledge of the defendant’s error in making the _C overpayment, it (the plaintiff) was induced by the defendant’s conduct to act to its detriment. I agree, with respect, with the observation of DE WET, J,  at page 1066 of Durban Corporation Superannuation Fund v Campbell, 1949 (3) SA 1057 (D) that:

“. . . normally . . . the defence (of estoppel) would not avail against a claim for a condictio indebiti where the mistaken payment was made to a person D who knew or ought to have known that the money was not owing to him.”

It was contended by Mr Mercer, who appears for the plaintiff, that it it is arguable, if regard is had to the terms of the written memorial of the original contract between the parties, that there was a duty on the _E defendant to ensure that all payments were in fact due before making them. If this submission is correct (as to which I express no opinion) it might deprive the defendant of the relief it seeks under the condictio indebiti, for if the overpayment was made supina aut affectata the degree of the defendant’s negligence in the conduct of its own affairs may serve _F to prevent it from establishing that the overpayment was a justus error (Barclays Bank International Ltd v African Diamond Exporters (Pty.) Ltd., 1977 (1) SA 298 1.) at 304­308). That is a consideration that goes to the onus that the defendant must discharge in order to succeed on the condictio indebiti that it relies on. It is not a consideration that _G goes to support a defence of estoppel sought to be raised by a party who knew, or ought to have known, of the mistaken belief under which his adversary laboured, and who, in addition, may even have contributed to that mistake by his own conduct.

Accordingly the application succeeds with costs and paragraphs 4 and 5 _H of the Plaintiff’s plea to the defendant’s claim in reconvention are struck out as being bad in law and disclosing no defence. H. Shaw, attorney for the plaintiff.

Scanlen & Holderness, attorneys for the defendant.