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[2018] ZAWCHC 165
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Gelvenor Consolidated Fabrics (Pty) Ltd v Winelands Textiles (Pty) Ltd (5010/2018) [2018] ZAWCHC 165 (6 December 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
no: 5010/2018
In
the matter between:
GELVENOR
CONSOLIDATED FABRICS
(PTY)
LTD
Plaintiff/Respondent
and
WINELANDS
TEXTILES (PTY)
LTD Defendant/Excipient
Date
of hearing: 31 October 2018
Date
of judgment: 6 November 2108
JUDGMENT
SAVAGE
J
:
[1]
The defendant,
Winelands Textiles (Pty) Ltd, has raised an exception to the
particulars of claim of the plaintiff, Gelvenor Consolidated
Fabrics
(Pty) Ltd, on the grounds that such particulars fail to disclose a
cause of action.
[2]
On 11 January
2017 the plaintiff and defendant entered into a written master sale
agreement incorporating a number of conditions
of sale (‘the
master sale agreement’). The material terms of the master sale
agreement are pleaded
inter
alia
as
follows:
2.1.
the plaintiff was entitled to place orders
with the defendant in writing or verbally, provided that any order
placed verbally shall
be confirmed in writing by the plaintiff not
later than seven days after the verbal order has been placed;
2.2.
the defendant shall at any time, in its
sole discretion and on written notice to the plaintiff be entitled to
restrict, limit or
cancel any credit arrangements or facilities
granted to the plaintiff in relation to the purchase of goods,
including to reduce
the plaintiff’s credit limit;
2.3.
on receipt of an order, the defendant shall
confirm the purchase price of the goods relating to such order, in
writing;
2.4.
the defendant reserves the right on written
notice to the plaintiff to suspend or reduce manufacture of the
plaintiff’s orders
if the plaintiff has reached its credit
limit, the plaintiff’s financial position has deteriorated, or
the defendant no longer
considers the plaintiff creditworthy;
2.5.
each order placed by the plaintiff,
irrespective of whether in the case of a verbal order the order has
been confirmed in writing
or not, shall constitute an irrevocable
offer by the plaintiff to conclude a contract with the defendant on
the terms contained
in the order;
2.6.
every order for goods placed with the
defendant by the plaintiff, whether verbally or in writing, shall be
subject to the terms
and conditions set out in the agreement, which
shall be deemed to be specifically incorporated into the order; and
2.7.
the defendant shall be entitled, in its
sole discretion, to accept, in whole, or in part, or to decline, any
order placed by the
plaintiff.
[3]
It is averred
further in the particulars of claim that:
‘…
5.
On 6 February 2017 the defendant gave the plaintiff written notice
that its credit limit was approved in the amount of R7 200 000,00…;
6. On 27 October
2017 a telephonic order (‘the verbal order’) was placed
by the plaintiff to the defendant, for the
supply of 23 000
metres of white satin weave fire retardant material (‘the
goods’);
7. The verbal
order was not reduced to writing by the plaintiff.
8.
For the reasons pleaded in sub-paragraph 4.6 above
[1]
the verbal order was subject to the terms and conditions set out in
[the master sale agreement] which are deemed to be specifically
incorporated into the verbal order.
9.
In respect of the verbal order the defendant was therefore obliged,
for the reasons set out in sub-paragraph 4.3 above
[2]
to confirm the purchase price of the goods relating to such order, in
writing.
10. The
defendant failed to perform its aforementioned obligation to the
plaintiff.
11. The
defendant did not decline the verbal order.
12. The
defendant did not limit or cancel the plaintiff’s credit limit.
13. The
defendant did not suspend the plaintiff’s verbal order.
14. The
defendant was therefore obliged to confirm the purchase price of the
goods relating to such order, in writing and proceed
to manufacture
and deliver the goods to the plaintiff in the absence of it disputing
the price.
15. Instead the
defendant proceeded to sell the goods that the plaintiff had placed
an order for in terms of the verbal order to
a third party.
16. The
defendant’s conduct demonstrated a deliberate and unequivocal
intention not to be bound by the terms of [the master
sale agreement]
and constituted a repudiation thereof.
17. The
plaintiff elected to accept the defendant’s repudiation,
terminated [the master sale agreement] and informed the defendant
of
its election and termination thereof.
18. Arising from
the defendant’s repudiation, the plaintiff was unable to meet
its obligations to its customers and suffered
damages in the amount
of R6 646 627,50.
19. The
defendant is obliged in law to compensate the plaintiff for its
damages.’
Submissions
of the parties
[4]
The defendant,
as excipient, takes issue with the particulars of claim on the basis
that a binding agreement between the parties
is presupposed, when
properly construed no agreement existed since the plaintiff had not
confirmed the verbal order in writing
and the defendant was not
obliged to confirm the purchase price of the goods. Since in terms of
clause 1.10 of the master sale
agreement an “
Order
”
is defined as one placed “
by
the
[plaintiff]
with
the
[defendant]
for
the supply of Goods from time to time, which, when accepted by the
[defendant],
shall
constitute a Contract
”,
and there had been no acceptance by the defendant, it was submitted
for the defendant that from the case pleaded no contract
relating to
the supply of goods existed. The defendant, in terms of clause 3.7,
was entitled to accept or decline any order placed
by the plaintiff
and, since the order was not accepted by the defendant, no contract
of sale was concluded and there was no obligation
on the defendant to
manufacture or deliver the goods to the plaintiff. The defendant did
not therefore repudiate any agreement
and was entitled to sell the
goods to a third party.
[5]
It was
submitted further that no damages are therefore recoverable from the
defendant, more so when in terms of clause 14 of the
master sale
agreement the defendant is not liable for “
any
loss of profits, indirect or consequential loss suffered by the
[plaintiff]
of
whatsoever nature and howsoever arising
”.
With no cause of action disclosed, the defendant seeks that the
exception raised to the particulars of claim succeed with
costs.
[6]
In opposing
the exception, counsel for the plaintiff argued that in terms of
clause 3.6 of the master sale agreement every order
constitutes an
irrevocable offer by the customer to conclude a contract with the
supplier on the terms contained in the order,
irrespective of whether
it has been confirmed in writing or not. On a reasonable
interpretation of the agreement there was therefore
no need for the
verbal order to be confirmed in writing by the plaintiff as customer
and any interpretational issues which exist
between the parties in
this regard can be cleared up through evidence at trial.
[7]
The
defendant’s failure to adhere to its obligation to confirm in
writing the purchase price of the goods and proceed to manufacture
and deliver the goods to the plaintiff,
demonstrated
a deliberate and unequivocal intention not to be bound by the terms
of the master sale agreement. This constituted
a repudiation of the
master sale agreement, which repudiation the plaintiff elected to
accept, to terminate the agreement and claim
damages. For these
reasons,
it was
submitted that the defendant has not discharged the onus to prove
that no cause of action has been disclosed and the exception
falls to
be dismissed with costs.
Discussion
[8]
An
excipient is required to persuade the Court that on every
interpretation which the particulars can reasonably bear no cause of
action is disclosed,
[3]
with the correctness of the facts averred in the particulars of claim
to be assumed for purposes of determination of the exception.
[4]
[9]
Clause 1.10 of the
master sale agreement provides that an order when placed and accepted
by the defendant “
shall
constitute a Contract
”.
In terms of clause 3.1 the plaintiff is –
“
entitled
to place orders with the
[defendant]
in
writing or verbally, provided that any Order placed verbally shall be
confirmed in writing by the
[plaintiff]
to
the
[defendant]
not
later than 7 (seven) days after the verbal Order concerned has been
placed
”.
[10]
The plaintiff pleads
that it placed a verbal order with the defendant on 27 October 2017,
but that this order was not reduced to
writing.
[11]
Clause 3.3 provides
that –
“
upon
receipt of an order, the
[defendant]
shall
confirm the purchase price of the Goods relating to such Order to the
[plaintiff],
which
confirmation shall be communicated by the
[defendant]
to
the
[plaintiff]
in
writing, including by way of the
[defendant]
inserting
the details of the purchase price into the relevant Order form and
transmitting same to the Customer by telefax or electronic
mail”.
[12]
Clause 3.6 states that every order placed
by the plaintiff –
“
irrespective
of whether, in the case of a verbal Order, the Order has been
confirmed in writing or not, shall constitute an irrevocable
offer by
the
[plaintiff]
to
conclude a Contract with the
[defendant]
on the terms contained in the Order”.
[13]
The defendant, in terms of clause 3.7,
shall be entitled, “
in its sole
discretion, to accept, in whole, or in part, or to decline, any Order
placed by the
[plaintiff]”. The
plaintiff pleads that the defendant did not
confirm
the purchase price of the goods relating to such order in writing,
n
or did it decline the order.
[14]
Clause 3.9 provides that:
“
Each
Order accepted by the
[defendant]
shall
constitute a separate and distinct contract concluded between the
[defendant]
and
the
[plaintiff],
which
contract shall be subject to the terms and conditions contained in
this Agreement.
”
[15]
The plaintiff’s cause of action is
not one based on the conclusion of a separate and distinct contract
between the parties,
but on the alleged repudiation of the master
sales agreement. The plaintiff avers that it made
an
irrevocable offer, in response to which the defendant did not decline
or suspend the order, which was the subject of this offer,
nor did
t
he defendant limit or cancel the
plaintiff’s credit limit. It is the plaintiff’s pleaded
case that the defendant was
obliged in the circumstances to confirm
the purchase price of the goods relating to the plaintiff’s
order, in writing, and
proceed to manufacture and deliver the goods
to the plaintiff in the absence of it disputing the price; and that
the failure to
do so demonstrated a deliberate and unequivocal
intention not to be bound by the terms of the master sale agreement,
which constituted
a repudiation of such agreement. Since the
plaintiff elected to accept the defendant’s repudiation and
terminated the agreement,
it claims
damages
suffered by it in the amount of R6 646 627,50 from the
defendant.
[16]
Courts
are reluctant to decide an exception which concerns the
interpretation of a contract since an exception is generally not
the
appropriate procedure to settle questions of interpretation when
evidence may be admissible at the trial stage relating to
surrounding
circumstances, which may clear up the difficulties.
[5]
This is precisely such a case.
[17]
In
Trustees,
Bus Industry Restructuring Fund v Break Through Investments CC &
others
[6]
it was made clear that it is for the excipient to show that the
plaintiff’s claim is (not may be) bad in law. The defendant
has
not succeeded in showing this to be so, nor has it shown that on
every
interpretation which the particulars can reasonably bear no cause of
action is disclosed.
[18]
A trial court will be best placed to
interpret the relevant provisions of the master sales agreement
entered into between the parties.
These provisions include, but are
not limited to, the effect of the failure on the part of the
plaintiff to confirm its verbal
order in writing; and the failure on
the part of the defendant to accept in writing,
decline
or suspend the plaintiff’s order, or
limit
or cancel the plaintiff’s credit limit. The trial court will
furthermore, on an evaluation of any evidence before it,
be able to
determine
whether the defendant was obliged
to confirm the purchase price of the goods relating to the
plaintiff’s order, in writing,
and proceed to manufacture and
deliver the goods to the plaintiff in the absence of it disputing the
price; whether a deliberate
and unequivocal intention on the part of
the defendant not to be bound by the terms of the master sale
agreement has been shown
to exist; and whether a repudiation of the
master sales agreement by the defendant has been proved or not.
[19]
Since I am satisfied that a cause of action
has been disclosed by the plaintiff in its particulars of claim, the
exception raised
cannot succeed. There is no reason why costs should
not follow the result.
Order
[20]
In the result, the following order is made:
1.
The defendant’s exception raised to
the plaintiff’s particulars of claim is dismissed with costs.
__________________________
K
M SAVAGE
Judge
of the High Court
Appearances
:
For
the plaintiff: S K Dayal SC
Instructed
by Maharaj Attorneys
For
the defendant: M J Fitzgerald SC
Instructed
by Bowmans Inc.
[1]
In
sub-paragraph 4.6 it was pleaded t
hat
it is a term of the master sale agreement that every order for goods
placed with the defendant by the plaintiff, whether such
order is
placed verbally or in writing, shall be subject to the terms and
conditions set out in the master sale agreement, which
shall be
deemed to be specifically incorporated into the order.
[2]
In
sub-paragraph 4.3 it was pleaded that it is a term of the master
sale that upon receipt of an order the defendant shall confirm
the
purchase price of the goods relating to such order, in writing.
[3]
Picbel
Groep Voorsorgfonds (in liquidation) v Somerville and other related
matters
[2013]
ZASCA 24
;
2013 (2) All SA 692
(SCA) at para 7 with reference to
Lewis
v Oneanate (Pty) Ltd
&
another
[1992]
ZASCA 174
;
1992
(4) SA 811
(A)
at 817F-G).
[4]
Trustees
for the Time Being of the Two Oceans Aquarium Trust v Kantey &
Templer (Pty) Ltd
[2005]
ZASCA 109
;
2006 (3) SA 138
(SCA) at paras 3-10;
Francis
v Sharp
2004
(3) SA 230
(C) at 237D;
First
National Bank of Southern Africa Ltd v Perry N.O
.
2001 (3) SA 960
(SCA) at 963C-D.
[5]
Murray
and Roberts Construction Ltd v Finat Properties (Pty) Ltd
1991
(1) SA 508
(A);
Sun
Packaging v Vreulink
1996 (4) SA 176 (SCA).
[6]
2008
(1) SA 67
(SCA) at para 11.