IN THE HIGH COURT OF SOTH AFRICA
(WITWATERSRAND LOCAL DIVISION)

								Case No. A5056/05
Date:09/11/2006

In the matter between:

SOLA TECHNOLOGIES (PTY) LTD........................................................Appellant
and
OPTICAL EYES SANDTON CC..................................................First Respondent
FALASE BAY OPTICAL CC..................................................Second Respondent
ANDRE JEAN VAN DER MERWE.............................................Third Respondent
								
								Case No. A5058/05
and in the matter between:
								
SOLA TECHNOLOGIES (PTY) LTD........................................................Appellant
and
EYE SITE GAUTENG INC...........................................................First Respondent
FALSE BAY OPTICAL CC.....................................................Second Respondent
ANDRE JEAN VAN DER MERWE.............................................Third Respondent

PA MEYER, AJ

[1]	  These two matters are appeals against the order made by Khoza AJ, on 10 March 2005, discharging the provisional winding up orders that were issued by Selvan AJ, on 16 November 2004, against the first respondent, Optical Eyes Sandton CC, under case no. A5056/05 (“Optical Eyes”), and against the first respondent, Eye Site Gauteng Inc, under case no. A5058/05 (“Eye Site”).

[2]	Both applications were instituted by the appellant and are similar and related.    They were argued together at the provisional order stage and again on the extended return day.  The issues in both appeals are identical and the appeals were argued together.

[3]	Both appeals, inter alia, raise the issue whether the existence of the debt relied upon by the appellant in each matter is bona fide disputed on reasonable grounds.  (See:  Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (AD) at p 980 A-B).   

[4]	Optical Eyes and Eye Site form part of a larger group of entities that conducted optometric practices and related businesses.  This group of entities has been referred to as the Optical Eyes/Eye Site Group.  The appellant supplied the Optical Eyes/Eye Site Group with spectacle lenses and laboratory services.   In terms of an agreement that was concluded between the appellant and the Optical Eyes/Eye Site Group during January 2003, the entities within the Optical Eyes/Eye Site Group would, if certain conditions were met, become entitled to specific discounts and incentives in connection with the supply of lenses and the rendering of services to them.

[5]	The Stanley and De Kock Optometrists Cape Partnership CC, which has been referred to as “the partnership”, is controlled by essentially the same persons who control the appellant and is considered to be an associate of the appellant.  During 2003, the partnership approached the Optical Eyes/Eye Site Group to buy all the businesses in the Group, and a written agreement to this effect was signed on 17 December 2003.  This agreement was made subject to certain suspensive conditions and the partnership was given possession of the businesses from 3 December 2003.  The agreement failed on 28 December 2003, and the businesses were returned to the Optical Eyes/Eye Site Group on 29 December 2003.  During the period of its possession of the businesses, the partnership traded as the agent of the Optical Eyes/Eye Site Group.

[6]	The appellant, in its founding papers, alleged that it is a creditor of Optical Eyes and of Eye Site for the sums of R129 832.18 and R111 201.08 respectively in respect of the goods sold and delivered and the services rendered to Optical Eyes and to Eye Site at their special instance and request.  The appellant also furnished a breakdown of the amounts which were alleged to be due, owing and payable to it for a period prior to September 2003 until 31 January 2004, and such breakdown included an indebtedness of Optical Eyes in the sum of R17 342.76 and of Eye Site in the sum of R 9 258.60 for the period 03 – 28 December 2003.

[7]	Prior to the extended return day of the provisional winding up orders that had been issued on 16 November 2004, False Bay Optical CC, which is an entity within the Optical Eyes/Eye Site Group and the third respondent in each application, made payment to the appellant of the sums of R110 757,53 and R93 771.19 on 3 December in discharge of the “alleged ‘undisputed’ portion” of the appellant’s claims against Optical Eyes and against Eye Site respectively.  These facts appear from the founding affidavit in the intervention applications of the second and third respondents.  The appellant filed no affidavit in response thereto and the allegation that the undisputed portion of the indebtedness was thereby discharged was not gainsaid.  The appellant also retained the moneys so paid. 

[8]	The unpaid balances on the appellant’s initial claims against Optical Eyes and Eye Site were accordingly R19 074.65 and R17 429.89 respectively.  Adv M du P van der Nest SC, who appeared with Adv PL Carstensen on behalf of the respondents in each matter, submitted that, in addition to the unchallenged statement that the undisputed portions have been discharged, the unpaid portions of the appellant’s claims are bona fide disputed on reasonable grounds, and that such disputes relate particularly to the December 2003 transactions and to the effect of the discounts.  Adv John Peter, who appeared for the appellant in each matter, submitted that the amounts paid were insufficient and did not include mora interest and the liability for costs.
 
[9]	The appellant did not rely on any contractual provision entitling it to interest and its claims did not include any interest. The question of mora interest was not an issue on the papers and accordingly did not have to be dealt with by the respondents or Khoza AJ. The provisional winding up orders were discharged by Khoza AJ and the appellant was ordered to pay the costs of each application.

[10]	The parties were ad idem that the relevant discounts and incentives were governed by the terms of the agreement that had been concluded during January 2003 to which reference was made hereinbefore.  It was further common cause that a document entitled “Negotiation Sheet” and dated 27 January 2003, reflects the material aspects or terms of the agreement. 

[11]	On the respondents’ version, Optical Eyes and Eye Site were entitled to a volume discount of 20%, payment discounts of 2,5% for payment within 60 days and 5% for payment within 30 days, a 5% marketing contribution calculated at 5% of the gross turnover, and a R22 000 incentive where turnover achieved R2 million.  It is alleged that the appellant failed to take these deductions into account in the calculation of its claims and that amounts of R25 966,44 and R22 240,22 in respect of the 20% volume discount, R6 491,61 and R5 560,05 in respect of the 5% marketing allowance, and R4 335,81 and R5 882,40 in respect of the turnover incentives were to be deducted from the appellant’s claims against Optical Eyes and Eye Site respectively.  These discounts and allowances were calculated on the amounts which the appellant alleged were payable in respect of goods supplied.

[12]	On the appellant’s version, a 25% discount was applied only if payment was made within 30 days from date of statement, 22.5% if payment was made after 30 days but within 60 days, 20% if payment was made within 90 days, and the discount was lost if payment was made after 90 days.  The appellant’s version on this issue seems to accord with the negotiation sheet.        

[13]	The 5% marketing allowance could, on the respondents’ version, either be paid by the appellant or be deducted from the indebtedness owed to the appellant.  The appellant’s version is that the 5% marketing allowance was only payable quarterly in arrears and a deduction or set-off could only be made where the appellant had been paid and failed to have paid the marketing allowance.  The turnover incentive is also subject to dispute.  On the appellant’s version it constituted a contribution for staff training overseas in Australia and did not become due since none of the staff of the Optical Eyes/Eye Site Group went overseas for such training and the Group in any event had stopped purchasing the appellant’s products after January 2004.    

[14]	Optical Eyes and Eye Site also alleged various breaches on the part of the partnership of the 17 December 2003 agreement, and particularly relating to the period when the partnership was in possession of the businesses and traded as the agent of the Optical Eyes/Eye Site Group.  The appellant divided its claims into different periods, as indicated hereinbefore, inter alia because of the dispute that had arisen in connection with the indebtedness that arose during this period.

[15]	It is not necessary to analyze the disputes relating to the 5% marketing allowance, the turnover incentive and the December 2003 indebtedness in any further detail.  Suffice it to say that the facts alleged on behalf of Optical Eyes and Eye Site in respect of the 5% marketing allowance, the turnover incentive and the December 2003 indebtedness would, in my view, constitute good defences to claims made against them by the appellant for such amounts. 

[16]	The respondents do not to have show that Optical Eyes and Eye Site are not indebted to the appellant to the extent of its unpaid claims or that Optical Eyes and Eye Site will, as a matter of fact, succeed in any action which might be brought against them by the appellant to enforce the unpaid parts of its claims.  They also do not have to prove the defences of Optical Eyes and Eye Site in any such proceedings and they do not need to adduce the actual evidence on which they would rely at such a trial.  (See: Hũlse-Reuter v HEG Consulting Enterprises (Pty) Ltd 1998 (2) SA 208 (CPD) at pp 219F – 220A).  The onus upon the respondents is merely to show that the indebtedness in respect of the unpaid balances is bona fide disputed on reasonable grounds. (See:  Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (AD) at p 980 A-B).  

[17]	The grounds on which the unpaid parts of the appellant’s claims are disputed on the basis that the claims are to be reduced by amounts equivalent to the 5% marketing allowance, the turnover incentive and the December 2003 indebtedness, are, in my view, reasonable.  It can also not be said that such part of the indebtedness is not bona fide disputed.  These disputes represent the amounts of R28 169.57 in the case of Optical Eyes and R20 701.05 in the case of Eye Site and accordingly exceed the unpaid balances of R19 074,65, and of R17 429,89.  I have excluded the appellant’s claims for the period 3 to 28 December 2003 as the respondents allege that they are not aware of what goods were purchased, what payments were made and what credits granted whilst the partnership was running the businesses.  The appellant, despite being requested to do so, has failed to furnish the respondents with all documentation substantiating its claim.  These two amounts of R17 342.76 and R 9 258.60 cannot be considered as part of the appellant’s legitimate claims and they are bona fide disputed on reasonable grounds.     

[18]	Adv van der Nest SC submitted that the appeals should be dismissed with costs, including the costs of two counsel.  It was, in my view, prudent for the respondents to engage the services of two counsel.  The payments that were made to the appellant on 3 December 2005, however, averted the confirmation of the provisional winding up orders.  The first respondent in each application should accordingly pay the appellant’s costs incurred until such payments were made.    In the result the following order is made:
  
1.	Save as set out in 2 hereunder, the appeals under case numbers A5056/05 and A5058/05 are dismissed with costs, including the costs of two counsel.

2.	The costs orders made by Khoza AJ in the court a quo on 10 March 2005 in the applications under case numbers A5056/05 and A5058/05 are set aside and substituted with the following order:

The first respondent in each application is ordered to pay the applicant’s costs up to and including the 3rd December 2005, and the applicant in each application is ordered to pay the respondents’ costs as from the 4th December 2005. 

MEYER, AJ
ACTING JUDGE OF THE HIGH COURT
 
I agree.

GOLDBLATT, J
JUDGE OF THE HIGH COURT

I agree.

JAJBHAY, J
JUDGE OF THE HIGH COURT