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[2017] ZAWCHC 51
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Kumkani Cranes CC t/a Kumkani Heavy Haulage v Closetrade 200074 CC t/a Ilcor Engineering Services CC (A160/2016) [2017] ZAWCHC 51 (10 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
Number: A160/2016
RCC/CT
Case No: 1793/2012
786/2013
In
the matter between:
KUMKANI
CRANES CC t/a
KUMKANI
HEAVY
HAULAGE
Appellant
and
CLOSETRADE
200074 CC
t/a
ILCOR ENGINEERING SERVICES
CC
Respondent
Coram:
Saldanha et Boqwana JJ
Delivered:
10 May 2017
JUDGMENT
BOQWANA,
J
Introduction
[1]
This is an appeal against a judgment granted against the
appellant in favour of the respondent in the Cape Town Regional Court
for
payment of the sum of R538 301.07, interest and
costs. The judgment was the outcome of an action which had been
instituted by the respondent against the appellant. In what
follows I shall refer to the appellant and respondent as ‘the
defendant’ and ‘the plaintiff’ respectively.
Facts
[2]
On or about 30 September 2008, the parties entered into an
oral agreement in terms of which the defendant commissioned the
plaintiff
to design and manufacture a six- axle fixed- neck steerable
low bed trailer for abnormal loads (‘six axle trailer’/‘low
bed trailer’/‘trailer’). The plaintiff was
represented by one of its directors Trevor Flynn (‘Flynn’)
and the defendant by Ryan Wall (‘R Wall”) and/or Michael
Wall (‘M Wall’).
[3]
It is common ground that the plaintiff was to design and
manufacture the low bed trailer according to the specifications of
the
defendant to meet the defendant’s peculiar requirements in
respect of the low bed trailer.
[4]
According to the plaintiff, the defendant bore all the risks
and obligations in relation to the registration of the low bed
trailer.
This is disputed by the defendant which contends that the
plaintiff was to be responsible for compliance of the low bed trailer
with all statutory and regulatory requirements, including the
licensing thereof, specifically that it would comply with abnormal
vehicle registration requirements for an 84-ton payload. There
was an issue of whether the payload required was 82 or 84.
Flynn
testified that it was 82 whilst M Wall said it was 84. Nothing much
turns on that, as it shall become clear in the
judgment.
[5]
The plaintiff contends that it complied with its obligations
in terms of the agreement and completed the design and manufacture of
the low bed trailer according to the defendant’s specific
instructions on or about 5 February 2009. It then tendered delivery
of the low bed trailer to the defendant against payment of the
manufacturing costs totalling R 2 135 220.00, inclusive
of
VAT. A number of developments which are discussed below took
place resulting in the reduction of the claim to R538 301.07.
[6]
The plaintiff contends further that the defendant repudiated
the agreement by refusing to take delivery of the low bed trailer. It
rejected such repudiation and tendered delivery of the low bed
trailer to the defendant against the payment of the design and
manufacturing costs.
[7]
The defendant, on the other hand, contends that the plaintiff
failed to deliver the low bed trailer in the terms of the agreed
terms,
in that the low bed trailer was not manufactured in accordance
with the required specifications. Due to that the low bed trailer
was
accordingly not fit for the purpose for which it was commissioned
and/or purchased. It also claimed that the plaintiff charged
the
defendant in excess of the agreed price. This issue as I understand
it, is no longer in contention. The defendant denies
that it
repudiated the agreement and asserts that due to the breach by the
plaintiff of its obligations, the defendant was entitled
to refuse to
take delivery of the trailer.
[8]
At the trial, Flynn and Carl de Villiers (‘de Villiers’)
testified for the plaintiff and M Wall and two other witnesses
testified on behalf of the defendant. The magistrate found that the
plaintiff had proved its claim on the merits and granted judgment
in
its favour. He was very critical of M Wall whom he found not to be a
credible witness.
The
issue
[9]
As appears from the heads of argument of counsel for both
parties, the issue before this Court can be defined as whether a term
existed as part of the oral agreement between the parties that the
plaintiff ‘
would be responsible for compliance of the
six-bed trailer with all statutory and regulatory requirements,
including the licencing
thereof, specifically that it would comply
with the abnormal vehicle registration requirements for an 84-ton
payload.’
[10]
The plaintiff’s case is that the requirement was never
expressly discussed between the parties at the time of contracting.
The defendant’s case is that it was tacitly agreed.
Plaintiff’s
case
[11]
Flynn testified that he was one of the directors of the
plaintiff and has been employed there since 2000. He is a
metallurgist by
profession and has worked in the mining industry with
mechanical equipment. He had been building low bed trailers for 14
years.
He ran the operations in the factory for the plaintiff and was
responsible for making sure that the trailers were built in
accordance
with the general arrangement drawings and requirements of
clients. He also conducted the weighing of the trailers for clients
when
they prepared such for inspections done by the engineers from
the Department of Transport (‘the department’).
[12]
The plaintiff was a designer, manufacturer and repairer of
abnormal trailers. As regards its relationship with the defendant,
the
plaintiff was contracted to manufacture low bed trailers for the
defendant for a number of years prior to the last it built in 2008.
Flynn testified that he dealt with M Wall in his dealings with the
defendant.
[13]
In terms of the process that would normally be followed for
the manufacturing of a trailer, the client would notify the plaintiff
of the trailer that it required and the load it would like to carry.
The plaintiff would then prepare a general arrangement (‘GA’)
drawing based on the information furnished by the client. The client
would normally tell them what payload it would like to carry.
It
sometimes would indicate the size. The GA document is then submitted
to the client together with a letter drawn up explaining
what the GA
values entail. These documents are generally sent by the client to
its consultant. The consultant in turn applies for
a principle
approval with the department. The consultant is a middleman between
the client and the department. To Flynn’s
knowledge, the
consultant is supposed to advise the client on the day to day running
and operations as regards the department.
[14]
The principle approval issued by the department is a document
that gives the plaintiff permission to proceed with the manufacturing
of the required trailer. Once the principle approval had been
granted, the plaintiff would proceed with the process starting with
the design drawing where individual components are itemised and
designed. It would then order the materials and proceed to
manufacture
the trailer. Once the trailer is completed, it would
prepare a set of documents including all the certification from
various suppliers
as required by the then South African Bureau of
Standards (‘SABS’). It prepared the documents for the
homologation
process. The plaintiff would then be given a National
Traffic Information System (‘Natis’) number. The Natis
number
is used in the registration of the trailer which is commonly
referred to as a birth certificate. The plaintiff would register the
number on the system. It would then notify the client that it has
completed building the trailer and that an engineer from the
department may be summoned to measure it. The engineer goes to the
plaintiff’s premises normally to verify the dimensions
that are
on the plaintiff’s GA drawing that had been given in the
principle approval. The consultant for the client normally
organises
the inspector to come to the plaintiff’s premises.
[15]
The engineer from the department requires weighbridge
certificates for his calculations and the plaintiff requires a tare
weight
for its application for homologation. Flynn would also weigh
the trailers for clients as part of his duties. The tare weight is
the weight of the trailer alone with no load on it. Once the
inspection has taken place, the birth certificate together with a
change of ownership is submitted to either the financing authority
that is being used to finance the trailer or to the clients
themselves to do the change of ownership from the plaintiff’s
name to the client’s or the bank’s, whichever might
be the title holder. The trailer then leaves the plaintiff’s
yard. The next time they would see it would be when it is broken.
[16]
The invoice would be submitted together with the change of
ownership paperwork and the birth certificate to either the bank or
the
client for payment. Payment is in accordance with the terms of
agreement and it is normally done on a Cash-on-Delivery (‘COD’)
basis prior to the trailer leaving the plaintiff’s premises.
[17]
According to Flynn, the plaintiff’s and defendant’s
business relationship started in 2006 when M Wall gave him a call
requiring a trailer. He flew down to Cape Town and they discussed a
100-ton trailer. A price and GA were requested from his Springs
company which were sent to the office of Target Cranes, a company
owned by M Wall together with the defendant. Flynn referred to
an
invoice dated 9 November 2006 relating to that transaction. At the
bottom of the invoice the following words are contained:
‘THE
AV WILL LARGELY BE DETERMINED BY THE RATING OF THE HORSE OF CHOICE’.
This means that the choice of truck tractor,
as they call it, would
largely affect the load that can be carried on the trailer by the
position of the fifth wheel which links
onto the kingpin and the
ratings of the front and drive axles as allowed by the department. AV
is the register of Abnormal Vehicles.
When Flynn met M Wall, M Wall
was the owner of a company that had a number of low beds that had
been bought from another manufacturer.
[18]
Between 2006 and 2008 the plaintiff built various and varied
low beds for M Wall upon his requirements. Flynn got the impression
that M Wall knew what he was doing. In 2008, Flynn and M Wall reached
an agreement that Flynn would build a four-axle step deck
trailer. It
was also required of him to design and build on receipt of principle
approval a six-axle trailer to carry a payload
of 82 tons. M Wall
gave him the dimensions of the loading surface for the unit to be
manufactured and the plaintiff supplied a
GA drawing in accordance
with that. Flynn understood the 82-ton requirement to be the payload
that his trailer could carry. The
trailer of this nature was custom
built for the requirements of the client. It was the first trailer of
its kind in South Africa.
Flynn referred to a document sent to M Wall
dated 21 October 2008 relating to trailers that were still to be
built. Both parties
agreed that they would both benefit from the
process.
[19]
As regards the six-axle trailer that Flynn was asked to build,
he asked his designer, Adrian Gray (‘Gray’) to do the
calculations based on the information the plaintiff received from the
axle manufacturer and from the kingpin manufacturers. The
plaintiff
produced the GA drawing that was used to obtain the principle
approval. Flynn was referred to the relevant GA drawing
by Mr
Morrissey, who represented the plaintiff in the
court a quo
from
which he confirmed that the GA drawing sent to the defendant referred
to an 89 millimetre diameter kingpin. Below that there
was reference
to GKM32, which stood for gross kingpin mass 32 000 kilograms.
The kingpin was rated at 32 tons and could sustain
a weight of 32 000
kilograms as limited by the manufacturer. The gross axle unit (‘GAU’)
is a combination of all
six axles, which were calculated at 13 tons
per axle, equalling 78 000 kilograms’ capacity.
[20]
The GVM is the gross vehicle mass which is obtained by the
addition of gross kingpin mass and gross axle unit which gives a
total
of 110 000 kilograms. That is a maximum according to the
manufacturer a trailer may weigh including payload. Payload
being the load imposed on top of the unit. The gross vehicle mass is
a combination of payload and the tare weight of the trailer.
As
appearing in the GA drawing, the payload would be the gross vehicle
mass of 110 000 kg less the tare weight of the trailer.
The tare
weight of the trailer when he took it over the weighbridge was 21 720
kilograms. The result of 110 000 kg minus
21 720 kg equals
88 280. That would be the payload that the plaintiff allows as
manufacturer of the trailer in question.
There is a note in the GA
drawing which states that all tare masses are estimated and payloads
guaranteed dimensions may vary on
final design. This note is there
because there are variations in weight or mass of a trailer that may
occur. The number GF299C
at the bottom of the document represents
revision that may have been done on the axle loading based on
information received from
the axle manufacturers due to the fact that
they were imported. This GA document was sent to the defendant.
Pretoria Vervoer Konsultante
were the defendant’s consultants
followed by Gaffley’s Transport Services, as there was a fall
out between the former
and the defendant.
[21]
Flynn referred to the application for principle approval dated
17 November 2008 which was addressed to the department. According
to
him, the said document is submitted to the department by the
defendant’s consultant based on the information supplied
by the
plaintiff. The content of the application letter is the same as
contained in the GA document. Flynn also referred to a letter
dated
12 November 2008 addressed by the defendant to the department and
written by R Wall, which accompanied a principle approval
application
on the 82 ton six-axle steerable trailer. The letter contained,
inter
alia
, the following information:
‘
We require
principle approval on the 82 ton 6-axle steerable trailer with a
carrying capacity of 82 tons. (Drawings supplied)
The broadening of our
geographical area of transport has forced us to expand our fleet,
specifically in this weight category. We
have opened a Gauteng branch
on request of our Gauteng based clients and due to the increased
volume of loads to be transported
out of the Gauteng area. We are
also transporting loads onto Zimbabwe, Zambia and the Democratic
Republic of the Congo (DRC), where
restrictions of 8, 5-ton maximum
load per axle are applicable (Zambia).’
[22]
When asked whether he knew when preparing the GA Drawing that
the trailer was going to be used to transport cranes, Flynn’s
response was that the plaintiff was told that the trailer was going
to be used for transport of cranes.
[23]
The principle approval was granted by the department and
communicated by means of a letter dated 21 November 2008. The
values
(calculations) that were stated in the GA drawing appear in
that letter. After receipt of the principle approval in principle,
the plaintiff proceeded with the manufacture, registration of the
birth certificate and completed paperwork for change of ownership
to
the defendant. The manufacturer’s certificate for registration
document dated February 2009 contains the Natis number
and the tare
weight of 21720. When the plaintiff’s office contacted M Wall
informing him that the trailer was ready, no truck
tractor came with
the engineer to measure the trailer.
[24]
M Wall initially indicated that the defendant did not want the
trailer because it was non-conformant and then further down the line
the defendant required it again for a five-year contract at Medupi
Power Station. Some months went by and the plaintiff was again
informed by the defendant that the trailer was no longer required.
Ultimately the plaintiff was left with the trailer. The
plaintiff notified the defendant that it would take legal action
against it, that it would attempt to sell the trailer or modify
it
for sale and would refund the defendant of (any) monies once all
outstanding invoices had been settled. The plaintiff then took
legal
advice from their attorneys of record. It marketed the trailer and
modified it to make it extendable to sell it to Transvaal
Heavy
Transport in 2011. The trailer had to be modified because it was of
no interest to anybody else as it was built specifically
for the
defendant.
[25]
According to Flynn, the plaintiff built the trailer to the
defendant’s requirements and it was capable of carrying the
84-ton
required load and the abnormal vehicle registration had
nothing to do with that. That, according to him, had to be done by
the
defendant through the consultant with the department.
[26]
The defendant paid the deposit of R300 000 to the
plaintiff on 01 October 2009 for the four axle trailer. The defendant
had
been invoiced for this on 3 March 2009. The balance did not
follow and the four axle trailer was sold to Basil Reid with the
defendant’s
blessing. M Wall told him that the R300 000
would be payable back to the plaintiff after the sale to Basil Reid.
Flynn did
not know the defendant’s financial status, but the
plaintiff needed the money. After the defendant told the plaintiff
that
it would not be taking possession of the six axle trailer, the
plaintiff took legal advice and decided to withhold the R300 000.00.
(The amount that was finally claimed by the plaintiff took into
account the manufacturing costs, modifications of the trailer,
proceeds of the sale of the trailer to a third party and the R300 000
paid by the defendant).
[27]
In cross examination, Flynn testified that he sent a letter
dated 20 May 2009 to one Otto van Griethuizen (‘van
Griethuizen’)
because M Wall had told him that he did not want
the trailer because it could not carry the load. He took the
calculations that
he had done plus the tare weight that had been
weighed and the GA drawing to van Griethuizen’s home. Van
Griethuizen did
the calculations for the plaintiff based on that. One
set of calculations was with a bridge formula and one without. Flynn
testified
that the trailer could carry 85 tons. When asked whether he
had achieved an 85-ton payload, he responded by stating that, it was
never loaded and tested. When asked how it helped that 85 tons can be
put on the trailer if it could not carry the 85 tons legally
to
another place, his response was that he read in the TRH11 (guideline
document) that one could get an exemption permit to move
the load. He
did not deal with the TRH11, but with manufacturer’s rating. He
testified that he did not know what the law
and the department said
as the plaintiff never gets feedback as to what the department says
about what loads are allowable on the
trailers. He confirmed that he
saw the letter mentioning that the trailer was needed in order to
load crane on a truck and travel
as far as Zambia although it was not
made clear to him. He confirmed that he saw the letter before the
principle approval (was
made) and knew what M Wall needed the trailer
for. He conceded that the conditions of the agreement only
encompassed South African
law. He stated that the vehicles
manufactured by the plaintiff went on public roads but they have to
travel with permits because
they are abnormal. He knew that the
defendant’s trailer was going to have to take its 82 tons on
the public road, over bridges
and over culverts. According to him,
the plaintiff would have to conform with what the department said
with regard to the manufacturer’s
ratings. The plaintiff could
not just do what they liked.
[28]
Upon being asked about the whereabouts of van Griethuizen’s
calculations confirming this, he testified that he did not tender
the
documents because he did not see the necessity as the documents were
merely confirmation of his calculations. He stated further
that no
documentation existed regarding the state of the trailer prior to
modification. He testified that he was not familiar with
permits and
was not in a position to comment on permits. He was referred to the
plaintiff’s notice in terms of Rule 24 (9)
(b) [of the
Magistrate Court Rules] wherein it was stated that Flynn would
express an opinion on various matters which indicated
that he had
knowledge about abnormal vehicle permits and the TRH11, contrary to
his statement in court. To this he retorted that
he had received this
information from someone else. In view of this, he could not confirm
whether the bridge formula was applied
or not. He confirmed that
according to the summary of evidence of Karl Trouw de Villiers (‘de
Villiers’) provided in
the plaintiff’s expert notice, in
order for the vehicle to operate legally it must be registered on the
abnormal load system.
Abnormal load exemption permits will be used
based on guidelines specified on the TRH11 guidelines for conveyance
of abnormal vehicles
and loads. He conceded that according to the
notice, TRH11 would apply. He testified that the plaintiff created
vehicles that could
travel legally on the roads and none of its
vehicles have ever been returned. He maintained that the plaintiff
did not get involved
in the TRH 11 requirements as those are directed
at the client and its consultant and not at the plaintiff. This is
because the
plaintiff does not operate the vehicle on the road, it
merely builds it. According to him, TRH 11 is post manufacture. He
conceded
that the defendant’s low bed trailer had to carry
loads in public roads and would have to go over bridges. He did not
know
if the bridge formula applied in this instance and could not
dispute it if someone were to contend that it did.
[29]
De Villiers testified that the TRH11 is a policy document that
provides guidelines for the transport of abnormal vehicles on public
roads in South Africa. An abnormal vehicle is one of which the
dimensions or masses exceed the limits laid down in the National
Road
Traffic Regulations (‘the Regulations’). An abnormal load
is when the mass exceed the limitations imposed by the
Regulations.
A permit for road usage to convey abnormal load is issued by
authorities situate in the various provinces. Such
authorities have a
right to refuse a permit or modify the conditions. One would need a
truck tractor or other type of prime mover
for use of a trailer on a
public road. The combination of the vehicles would be evaluated
separately. In order to operate on the
road the vehicle must be
registered and a permit be obtained. The six axle trailer in question
could carry a load of 88 280
kilograms within the manufacturer’s
limits. The carrying capacity of the tyres was 77 256 kilograms
which was lower
than the manufacturer’s rating and that was a
limiting factor. Hooked up to a FH6 Volvo FH60 truck, the net
carrying capacity
of the trailer was approximately 86 000
kilograms. According to him, the manufacturer’s ratings
are legally allowable.
[30]
In cross examination de Villiers testified that the principle
approval is strictly speaking not a compulsory document. The TRH11
states that it is recommended that the principle approval be obtained
before the vehicle is built. He would not express an opinion
on
whether if one would ever get a permit, if the maximum payload in
terms of the AV registration number is exceeded.
Defendant’s
case
[31]
The defendant’s first witness was Jose Heredia, a chief
engineer responsible for abnormal registration, loads and loaded
vehicles
and granting exemptions in the department. He testified that
he was familiar with the principle approval letter dated 21 November
2008 relating to the trailer which is the subject of these
proceedings. He specifically confirmed the portion of the letter that
‘
in order for the vehicle to operate legally, it must be
registered on the Abnormal Vehicles/Load system. Abnormal Loads
exemption
permits will be issued based on the guidelines as specified
on the TRH 11, Guidelines for the Conveyance of Abnormal Vehicles
Loads’
. He testified further that the bridge formula would
be applicable in this kind of case.
[32]
A second witness Leon de Beer, a mechanical engineer who had
worked with abnormal load vehicles for 41 years in various
capacities,
testified that he was familiar with the TRH11 document.
According to him, the TRH11 guidelines and bridge formula were of
prime
importance in all the relevant work he did involving such
(abnormal load vehicles). He was taken aback by the contention that
the
department required no strict compliance. He confirmed that
Chapter 3 of the TRH11 document required seven factors to be taken
into account when a permit is sought to operate an abnormal vehicle
on the road. He confirmed the seven factors stated in de Villiers’
summary of evidence to include: the capacity as rated by the
manufacturer; the load which may be carried by the tyres; the
damaging
effect on pavements; the structural capacity on bridges and
culverts; the power of the prime mover(s) and the load imposed by the
steering axles. He agreed with de Villiers’ conclusion
that in the present matter, ‘
[a]pplying the bridge formula
restricts, the semi-trailer axle unit to 59 113 kilograms, the
total combination mass is reduced
to 99 946 kilograms, resulting
in an allowable payload of
67 606 kilograms
.’
[33]
He further testified that the TRH11 limitations have always
been applied by the department to abnormal load vehicles. The clause
making reference to the TRH11 guidelines is contained in all
principle approvals. Payload in his understanding was what the
vehicle
could carry on the public roads and that is applicable to
abnormal load vehicles. The AV registration is what provides for the
allowable payload.
[34]
He disputed a notion that the trailer in this case could carry
82 tons on the public roads. According to him, whilst structurally
the trailer could carry 85 or 82 tons because it is an abnormal
vehicle and also being a trailer, it first has to be combined with
a
truck tractor to ultimately work out the payload, but one could get
an indication of the actual allowable payload by also just
considering the trailer. This would be done by taking the structural
capacity of the trailer being a manufacturer’s rating
and then
looking at the wheel configuration as to what will be an allowance in
terms of the bridges and the equivalent single wheel
massload
(‘ESWM’). ESWM is a method of calculating the damage to a
pavement caused by a vehicle and is determined by
its tyre pressure,
the magnitude of the individual wheel loads and the spacing between
the wheels. One could get an indication
of what the payload on the
trailer is but ultimately one has to combine it with a truck tractor
to get the correct figure.
[35]
In cross examination, he testified that in his experience, if
he went to a manufacturer and asked for an 85-ton trailer, the
manufacturer
would prepare a document in terms of the TRH11 for him.
The manufacturer’s rating is one of the elements [considered].
The
ultimate product is to be used on public roads and it has to
comply with that. In his experience when he went to the manufacturer
for specified vehicles, the manufacturer actually requested the TRH11
and designed the vehicles around that. He gave examples of
manufacturers who designed the trailer around the payloads that could
be carried on the public roads. He conceded that the truck
tractor
involved may vary and if one did not know what the truck tractor was,
they would not necessarily know what the payload
is. In his
interactions with the department he was not made aware of any
relaxation of the requirements in the TRH11.
[36]
M Wall testified that Flynn knew that the defendant was
transporting in Africa and the whole of South Africa and therefore
the trailer
had to comply with the TRH11. He ordered a four-axle
trailer with a payload of 55 tons and that was built 100% to his
specifications.
The defendant did not take delivery of that trailer
because Flynn was approached by Basil Reed who showed interest in it.
The work
on the defendant’s side had slowed down and so they
agreed to the selling of the trailer to Basil Reed. The defendant had
paid a deposit of R300 000 to the plaintiff and once the trailer
was sold; the money was to be returned back to the defendant.
There
was never an agreement that the deposit could be retained for
whatever reason.
[37]
As regards the six-axle trailer, the parties agreed that Flynn
would build a trailer that would carry 84 tons specifically. His
400-ton crane had to be carried on this trailer. It would be carried
into African countries such as Zambia and the Congo. The defendant
wanted Flynn to build a trailer that could carry the tons mentioned.
No specifics were mentioned as to the size of the amount of
axles or
lengths or widths because that is Flynn’s job. Flynn designs
and builds trailers. The other part of the agreement
was that the
trailer to be built would be with a new design. Flynn had copied it
from the trailers the defendant had brought into
the country from
Europe and therefore he would charge the cost plus 10% for building
the trailer.
[38]
The plaintiff did not deliver what the defendant commissioned
it to do. M Wall testified that he held discussions with Flynn a
number
of times concerning the six-axle trailer. He asked Flynn when
would the plaintiff get the AV correct and up to the 84-ton mark
because the plaintiff was struggling. Flynn kept promising that he
would get to the 84-ton payload and that he was in discussion
with
Heredia and van Griethuizen. According to M Wall, the plaintiff could
never achieve the payload required because from his
recollection,
Flynn told him that 72 tons was the maximum they could get on the
trailer. According to him, the responsibility
of the trailer to
get the 84-ton payload lied with Flynn or the plaintiff. The
plaintiff or Flynn took the responsibility to deal
with the
consultants in getting the principle approvals and ultimately
achieving the 84-ton payload. What every trailer was going
to be used
for was discussed with Flynn. He did not deal with the paperwork,
that was all Flynn’s work. He would not have
known at the time
that it was impossible for the trailer to in fact achieve an 84-ton
payload as he did not design and build trailers.
[39]
The defendant bought and ordered trailers from the plaintiff
because they were their sole providers in South Africa and they had
never let them down in the past. Flynn assured him that he would
build a trailer that could carry 84-ton mobile crane. These steerable
trailers were the first to be built in South Africa. M Wall testified
that he did not know the rules and laws surrounding steerable
trailers. He told Flynn every time he went to Johannesburg that
he wanted an 84-ton trailer so that the trailer would not
be
obsolete. He disputed that the plaintiff built a trailer that could
take an 84-ton payload. According to him, the plaintiff
built a
trailer that could carry 84 tons; he did not build a trailer that
could carry an 84 payload on a public road under a permit
or special
condition permit. It therefore did not fulfil its obligation. In his
view, payload is the load that would be imposed
on the trailer and
transported from one point to the other across public roads, bridges,
culverts in the Republic and across the
border of Africa. He
testified that Flynn had built numerous trailers for the defendant in
the past worth tens of millions of rands
and each time the payloads
were achieved. In the case of the six-axle trailer the payload was
never achieved. Whenever the defendant
purchased a trailer or any
piece of equipment, it has special requirements otherwise it would
not be purchasing the equipment from
the supplier. The defendant
needed the equipment to achieve payloads or lift capacities. The
agreement was cancelled,
inter alia
, because the payload was
not achieved. He testified that the trailer had never belonged to the
defendant and it never took possession
of it.
[40]
In cross examination, with reference to the letter dated 20
April 2009, he could not say whether the trailer was complete or not
complete. He testified that he did not order a trailer to carry a
load on manufacturer’s ratings. He seemed to be conceding
that
it was the duty of the defendant to arrange for inspection of the
trailer when completed but yet suggesting that, that would
not be the
case in respect of the six-axle trailer. According to him, the
agreement was that all paper work pertaining to the six-axle
trailer
would be done by Flynn. He met with Flynn every second week in
Johannesburg. Flynn was not achieving the 84-ton payload
but told M
Wall that he would get there.
Analysis
[41]
The defendant contends that it was a tacit term of agreement
between the parties that the trailer would be able to convey the load
on South African public roads legally. Its case is that
although the plaintiff did not concede an express term, the facts
which are common cause between the parties indicate that the
existence of the term contended for by the defendant would be
necessary
to establish the business efficacy of the agreement in the
sense postured in
Reigate v Union Manufacturing Co (Ramsbottom)
[1918] (1) KB 592
at 605.
[42]
A
tacit
term was described by Corbett AJA in
Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration
[1974] 3 All SA 497
,
1974 (3) SA 506
(A) 531-2 as ‘
an
unexpressed provision of the contract which derives from the common
intention of the parties, as inferred by the Court from the
express
terms of the contract and the surrounding circumstances. In supplying
such an implied term the Court, in truth, declares
the whole contract
entered into by the parties.’
[43]
According to Corbett AJA, it was important to distinguish
between those unexpressed terms implied by law and tacit terms which
must
be found, if at all, in the unexpressed intention of the
parties. Importantly, he went on to state that:
‘
The Court does not
readily import a tacit term. It cannot make contracts for people; nor
can it supplement the agreement of the
parties merely because it
might be reasonable to do so. Before it can imply a tacit term the
Court must be satisfied, upon a consideration
in
a reasonable and businesslike manner
of the terms of the contract and the admissible evidence of
surrounding circumstances,
that
an
implication
necessarily arises that the parties intended to contract on the basis
of the suggested term
.’
(See
Alfred
McAlpine
supra at 532 G – 583) (Own emphasis)
[44]
Referring to the bystander test, the Court in
Alfred
McAlpine
supra at 533B echoed with approval the famous quote
derived from the decision of
Reigate v Union Manufacturing Co
.
supra
at 483, where Scrutton, LJ said:
‘
You must only
imply a term if it is necessary in the
business
sense to give efficacy
to the contract; that is, if it is such a term that you can be
confident that if at the time the contract was being negotiated
someone had said to the parties: ‘What will happen in such a
case?’ they would have both replied: ‘Of course,
so-and-so. We did not trouble to say that; it is too clear.’
(Own emphasis)
[45]
The test of business efficacy has been applied in many cases
by the courts but its meaning has not necessarily been defined. In
Rapp and Maister v Aronovsky
1943 WLD 68
at 74-75 the court
observed that:
‘
It has often been
pointed out that it is not sufficient to show that the term would be
highly reasonable or convenient to one or
other or even both of the
parties. The cases show that the Court has to be continually on its
guard against being persuaded to
introduce a term which, on analysis
of the argument, appears to be no more than a term which would make
the carrying out of the
contract more convenient to one of the
parties or both of the parties and might have been included if the
parties had thought of
it and if they had both been reasonable. You
are not to imply the term merely because if one of the parties or a
bystander has
suggested it, you think only an unreasonable person
would have disagreed. You have to be satisfied that both parties did
agree.
It is quite a different proposition, if in the hypothetical
case Scrutton LJ puts in, you feel the parties might say: ‘
You
have called our minds to something we have not thought of and what
you say is not unreasonable, let us discuss it.’ If
that is all
that the Court feels might have happened then the Court is not
entitled to imply the term.
’
(Own emphasis)
[46]
In importing a tacit term the Court is giving effect to the
common, although unexpressed, intention of the parties. The term to
be imported must be necessary to give effect to the contract. If the
contract would be effective without the term, it makes no sense
to
import it. In
Wilkins No v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) at
137B-D, Nienaber JA said:
‘
Since one may
assume that the parties to a commercial contract are intent on
concluding a contract which functions efficiently,
a
term will readily be imported into a contract if it is necessary to
ensure its business efficacy
;
conversely, it is unlikely that the parties would have been unanimous
on both the need for and the content of a term, not expressed,
when
such a term is not necessary to render the contract fully
functional
.’
(‘Own emphasis’)
[47]
The defendant must satisfy the Court on a preponderance of
probabilities, conduct and circumstances which are so unequivocal
that
the parties to the agreement must have been satisfied that they
are in agreement on the tacit term. In its importation of
a
tacit term the Court draws an inference as to what both parties must
or would have necessarily agreed to but for some reason
left the term
unexpressed. (See
City of Cape Town (CMC Administration) v
Bourbon-Leftley And Another
2006 (3) SA 488
(SCA) at para [19].
It has been held that not only the surrounding circumstances but the
subsequent conduct of the parties may
be an indication of whether the
contract contained the tacit term. (See
Richard Ellis South Africa
(Pty) Ltd v Miller
1990 (1) SA 453
(T) at 460 D-E cited in
Christie’s The law of contract in South Africa
, RH
Christie & GB Bradfield, 6
th
Edition, LexisNexis at
page 178)
[48]
With these principles in mind, I now turn to the present
agreement. It is common cause that the defendant required the
plaintiff
to build a trailer that would carry 82 or 84-ton payload.
Flynn conceded that the trailer had to carry loads in public roads
and
that it would have to go over the bridges and culverts. It is
also common cause that the plaintiff would design and manufacture
a
trailer which met the defendant’s particular requirements. The
parties differ as to what those requirements were with the
plaintiff
limiting those to only designing and manufacturing a six-axle trailer
that could carry 84 tons. Flynn was adamant that
the trailer was
capable of carrying 84 tons. The defendant on the other hand is of
the view that in fulfilling the defendant’s
requirements, the
plaintiff had to ensure that the trailer complied with the law by
making it capable of legally conveying an 82
or 84 ton over the South
African public roads.
[49]
Flynn states that it was not the plaintiff’s
responsibility to arrange for the AV registration, that is done by a
client.
According to him, the plaintiff was only required to build on
its manufacturer’s rating. Flynn’s assertion is flawed
in
a number of respects, in my view. Firstly, his version on whether the
payload was a term of agreement vacillated at different
times of his
evidence. At first, he testified in chief that ‘
[it] was
also required of me to design and build on the seat of principle
approval we build a six-axle trailer
to carry a payload of
82 tons
.’ He was then asked by Mr Morrissey: ‘
What
did you understand the 82-ton requirement to be
?’ His
answer was: ‘
To be the
payload that my trailer
could carry Your Worship
’. He later stated in his
evidence ‘
I know of 82 ton payload that was required to be
carried
.’ However when asked by Mr Morrissey towards the
end of his evidence ‘
As far as payloads were concerned what
was the term of the agreement?
’ his answer was ‘
The
term was to carry 82 tons Your Worship
’. I highlight this
issue because when asked whether he had achieved an 85-ton payload,
he kept stating that the trailer could
carry 85 tons. The distinction
between a ‘load’ and ‘a payload’ is important
because as stated by all the
witnesses, including Flynn, payload is
when the trailer can travel with the load on public roads.
[50]
It is clear from the evidence that the required 82 or 84
payload was not achieved. That much is evident not only from the
defendant’s
witnesses but from Flynn’s evidence as well.
In order to achieve the payload one had to comply with the TRH11
guidelines.
Flynn avoided this issue by stating that, that was not
his responsibility and that he was not an expert in TRH11. It seems
contradictory,
in my view, for Flynn to accept on the one hand that
he was required to build a trailer to carry a payload of 82 tons but
yet state
that he was only required to focus only on the
manufacturer’s ratings of 82 tons. Flynn disavowed the notice
made by the
plaintiff suggesting that he was an expert on TRH11 by
stating that he got the information from someone else and was in fact
not
an expert on this issue.
[51]
It seems to me, the legal requirement that the trailer must be
capable of operating on South African public roads as an abnormal
vehicle cannot be divorced from or was intertwined with the
achievement of the payload required to be achieved. That much is
clear
from the principle approval granted by the department. The
principle approval states unequivocally that: ‘
In order for
the vehicle to operate legally, it must be registered on the Abnormal
Vehicles/Loads system. Abnormal Loads exemption
permits will be
issued based on the guidelines as specified on the TRH11, Guidelines
for the Conveyance of Abnormal Vehicle Loads
.’
[52]
It was manifest in the evidence, particularly that of the
experts, that the TRH11 and bridge formula are of prime importance in
the operation of abnormal vehicles. Whether the responsibility to
apply for the permit lay with the defendant was in my view, not
the
core issue because that would be a step taken after the manufacturing
has been completed. In other words, in building the trailer
it seems
logical to me that the manufacturer has to build the object with the
view to achieving the factors and formula in the
TRH11. De Beers
testified that, this is the approach followed by the manufacturers he
has dealt with. They manufactured the trailer
around the TRH11.
The purpose of the inspection by the engineer from the department
post manufacture is to check whether
there is compliance with TRH11,
amongst others. M Wall’s contention that it would be
illogical for the defendant to
order a trailer simply for it to carry
tons and remain in the yard, makes sense to me. The whole
purpose of purchasing the
trailer was to carry the load in South
African public roads. It is therefore unhelpful for Flynn to suggest
that obtaining the
exemption permit was not his function. That is not
the point; the point is that when the application for the permit is
sought,
the trailer must be found to be legally compliant. In simple
terms, it must be found to be capable of conveying an 82 (84) payload
on South African public roads. The GA drawing done in order to get
the principle approval is not the end of the process. The payload
needed to be achieved and therefore the bridge formula,
inter
alia
, had to be applied in order for the defendant to get the
payload and eventually permission to do what the trailer was required
for, which was to carry payloads on South African roads, through
bridges and culverts, amongst others. The plaintiff knew that that
was the purpose. It is instructive that the TRH11 as stated by de
Villiers recommends that a principle approval be obtained prior
to
building the vehicle. The principle approval itself as a standard
specifically refers to compliance with the TRH11 guidelines.
[53]
The argument advanced by Mr van Eeden appearing with Mr
Myburgh for the defendant that in order to give business efficacy to
the
agreement the trailer had to comply with all the requirements
which would make it capable of legally conveying an 82 or 84-ton
payload over the South African public roads is sensible.
[54]
If at the time of entering into the agreement parties were
asked whether the trailer should be designed and built to legally
convey
an 82 or 84-ton payload over the South African public roads,
they would have agreed. They would also have agreed that if it was
not built in that way, it was not compliant and therefore could not
achieve the purpose for which it was built. Dealing with
the
question of whether or not an implied condition existed that the
goods sold were reasonably fit for the purpose for which they
had
been sold, the Court in
Kroomer v Hess & Co
1919 AD 204
at
p 206 held the following:
‘
Even, therefore,
if we assume that the words “in good sound order and condition”
do not form part of the contract, the
plaintiffs were entitled to
reject nuts which did not satisfy the implied condition that they
should be reasonably fit for the
purpose for which they had been
sold, viz., for human consumption. That would have been so, even if
there had been no stipulation
that they should be of “fair
average quality of the season’s crop.” But the addition
of these words strengthen
the plaintiff’s case, for it is
difficult to conceive that nuts which are sold for human consumption
and which are unfit
for that purpose can be said to be a fair average
quality of this or any other season’s crop. It follows,
therefore, that
even if we assume that the words “in good sound
order and condition” do not form part of the contract between
the parties,
the defendant had failed to carry out his contract, and
was therefore liable in damages for its breach. The application must,
therefore,
be refused, with costs.'
[55]
So too, in the case of
Minister van Landbou Tegniese
Dienste v Scholtz
1971 (3) SA 188
(A) at 200G to 201H the Court
found that the fact that the bull in that case was bought for
breeding purposes (which was common
cause), and the non-attainment of
that purpose by the delivery a bull that was infertile amounted to a
breach of the contract.
[56]
Therefore, even if legal compliance was not expressed, the
purpose for which the trailer was required was known and common cause
between the parties in this present matter. It was necessary for the
business of the defendant for the trailer to be legally compliant
for
it to carry loads on South African business roads.
[57]
It is noteworthy that the plaintiff was a designer,
manufacturer and repairer of abnormal trailers, whilst for the
purposes of manufacturing
of trailers the defendant appears to be
lay. It has not been proven that the consultant was employed to
advise the defendant on
the TRH11 or to pick up that the payload had
not been achieved. Even if the consultant had that expertise the
responsibility to
ensure that it was achieved was that of the
plaintiff, in my view. Flynn further knew that the defendant is a
company that transported
goods by road for business. The plaintiff
had built various trailers for the defendant before worth tens of
millions of rands according
to M Wall between 2006 and 2008. All
these were designed and manufactured with no difficulty. Furthermore
it was alleged that in
2008 the plaintiff built a four-axle trailer
to the requirements of the defendant. It bears mentioning that
compliance with the
manufacturer’s specifications contained in
the GA cannot be said to constitute the ‘defendant’s
particular requirements’.
Flynn’s insistence that the
manufacturer’s ratings was the only requirement the plaintiff
had to consider appears to
be contrary to the averment by the
plaintiff in its particulars of claim that it had to comply with the
defendant’s requirements.
[58]
The magistrate found M Wall not to be a credible witness.
Whilst M Wall’s evidence was not entirely satisfactory, his
evidence
was not altogether wanting on the core issue of whether it
was a term of agreement for the trailer to be legally compliant as
outlined
above. Even if he were shaky on other aspects of his
evidence, particularly on the defendant’s conduct after the
plaintiff
invited it to take delivery of the trailer, his evidence on
the defendant’s specific requirements carried through.
[59]
I accept that the plaintiff advised the defendant that the
trailer was complete and ready for inspection on 26 February 2009. On
31 March 2009, the defendant addressed correspondence to the
plaintiff that the trailer was ‘
pending payout
’
and could only be released once work had been completed on other
trailers of the defendant purchased from the plaintiff.
Another
letter was sent on 20 April 2009 that due to unresolved matters, the
defendant was cancelling all orders not yet taken
into delivery and
this would include the six axle and the four axle not yet completed.
It is not clear why the four axle was included
in that letter as M
Wall stated it had been completed to the defendant’s
requirements. R Wall unfortunately did not testify
to clear this up
and M Wall was not a good witness in clarifying this issue. As to the
correspondence of 31 March 2009, Mr Morrissey
placed emphasis on the
latter part of the letter and the lack of clarity as to what ‘
pending
payout
’ meant. The magistrate also took issue with
the fact that the correspondence from the defendant made no mention
of
the alleged non-compliance with statutory requirements.
[60]
M Wall testified that he had been having ongoing discussions
with Flynn about achieving the 84-ton payload and Flynn confirmed
that
he will get there. Flynn’s allegations that he did not
know that M Wall refused to take delivery of the trailer because of
the alleged non-compliance with the legal requirements does not
conform to his evidence that whilst initially nothing was
forthcoming,
at some point the defendant indicated that it did not
want the trailer because it was non-conformant.
[61]
Flynn once again repeated in cross examination that M Wall
told him that he did not want the trailer because it could not
achieve
the payload. Based on this he took the calculations done by
the plaintiff plus tare weight and the GA drawing to van Griethuizen
and asked him to do calculations for him, with and without the bridge
formula. This does not sound like a person who did not know
that
there was a dispute.
[62]
Assuming in the plaintiff’s favour that there was some
murkiness regarding the communication on the non-achievement of the
payload from the defendant, in so far as the documentation is
concerned, one can however not ignore Flynn’s evidence
regarding
a call he made to van Griethuizen and the letter he
addressed to him dated 20 May 2009 where he advised van Griethuizen
that
the plaintiff would like to achieve ‘
the design
payload of 85 000kg’
and furnishing van
Griethuizen with information about the trailer in order to make
calculations. Calculations from van Griethuizen
indicated that
the trailer could achieve a payload of 67.3 tons with the application
of the bridge formula and without the bridge
formula 87.5 tons. Flynn
confirmed the documents discovered by the defendant containing the
calculations as being the documents
containing calculations he
received from van Griethuizen.
[63]
In a letter dated 25 May 2008 (sic) the plaintiff stated that
the trailer awaited final certification from the department which
appears to be an AV registration. This is so, even though the
plaintiff had earlier stated that the trailer was complete. This
places doubt on the assertion that the plaintiff had no duty to
ensure that the trailer was legally compliant. It is rather curious
that van Griethuizen’s calculations were not passed onto the
defendant so as to prove or disprove the plaintiff’s contention
that the tons or payload required were achieved.
[64]
Whilst M Wall’s answers were not satisfactory in some
respects the magistrate erred in not analysing the common cause
issues
and in not finding that Flynn’s evidence was also
wanting on several aspects including his explanation on the filing of
a
notice on behalf of the plaintiff where it was indicated that he
was an expert on TRH11 guidelines. That notice did not appear to
have
been withdrawn by the plaintiff’s attorneys. It only turned out
in cross examination that in fact Flynn was not an expert
and he
denied any first-hand knowledge of TRH11 guidelines. The expert
summary described at length how the TRH11 guidelines were
applied by
the department during the period 2008 and 2009. This, the trial court
should have given it a more careful look.
[65]
It seems that the magistrate dismissed the defendant’s
version mainly based on M Wall’s credibility and did not place
much weight on the evidence of the expert witnesses, which evidence
was, in my view, crucial to the key issue before the court.
[66]
It seems to me Flynn decided to maintain a line that he was
only required to consider the manufacturer’s ratings to the
exclusion
of other requirements which he said were not his
responsibility. This, together with his failure to report to the
defendant what
van Griethuizen found, gives an impression that he was
avoiding at all costs, to admit that the requirement of 82 or 84
payload
was not achieved. For those reasons, it is unavoidable to
find that the design and manufacture of the trailer was not done in
accordance
with the requirements agreed to between the parties.
The defendant was accordingly entitled not to take delivery. This I
say being aware of the seeming ambivalence and mixed messages sent by
the defendant as to whether it would take delivery of the
trailer
between 2009 and 2010. The core issue, however, in my opinion, was
whether the trailer complied with the requirements as
per the
agreement between the parties. Whether the defendant kept changing
its mind regarding the delivery or not of the trailer
after the
manufacturing, is not as germane to the main question.
[67]
My view, therefore, is that the defendant has been able to
show that it was a
tacit
term of the agreement that the
trailer be manufactured to carry an 82 or 84-ton payload, i.e. the
trailer designed and manufactured
had to be able to legally convey
load on the public roads of the Republic of South Africa.
Whilst the decision to grant a
permit lies with the department, in
its design and manufacturing of the trailer, the plaintiff had to
ensure that the payload as
provided in the TRH11 guidelines was
achieved. The appeal should therefore succeed.
[68]
As to costs, the defendant’s counsel contended that
whilst the issue to be determined by the Court seemed narrow, it was
not
uncomplicated; it therefore warranted employment of two counsel
in the matter. The plaintiff’s counsel did not seem to have
any
quarrel with that submission.
[69]
In the result, I would make the following order:
1. The appeal succeeds
with costs including costs of two counsel.
2. The order of the court
a quo
is set aside and replaced with the following order:
1.
The action is dismissed with costs.
____________________
N
P BOQWANA
Judge
of the High Court
I
agree and it is so ordered.
___________________
V
C SALDANHA
Judge
of the High Court
APPEARANCES
For
the Appellant: Adv. P A Van Eeden
(SC) with Adv. P A Myburgh
Instructed
by: Tinkler
Incorporated, Claremont
For
the Respondent: Adv. A Morrissey
Instructed
by: Norton
Rose Fulbright South Africa
Inc, Cape Town