Bonnievale Piggery (Pty) Ltd v Van der Merwe (A96/2019) [2020] ZAWCHC 4 (4 February 2020)

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[2020] ZAWCHC 4
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Bonnievale Piggery (Pty) Ltd v Van der Merwe (A96/2019) [2020] ZAWCHC 4 (4 February 2020)

Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No. A 96/2019
Before: The Hon. Mr
Justice Binns-Ward
The
Hon. Mrs Justice Steyn
The
Hon. Mr Justice Sher
Date
of hearing: 27 January 2020
Date
of judgment: 4 February 2020
In
the matter between:
BONNIEVALE
PIGGERY (PTY) LTD
Appellant
and
EUGENE
VAN DER MERWE
Respondent
JUDGMENT
BINNS-WARD J
(STEYN and SHER JJ concurring):
Introduction
[1]
The
appellant, which carries on business in the raising of pigs for
slaughter, instituted action against the respondent for payment
of
the sum of R1 196 868,84.  The amount was made up as
to (i) R1 191 084,94, being the outstanding
balance
allegedly due in respect of the invoiced price of pig carcasses sold
by it to the respondent on various occasions during
January and
February 2013, (ii) an amount of R4 637,95 outstanding in
respect of an invoice rendered prior to 1 January
2013 and
(iii) accrued interest in the sum of R 1 145,95 due in
respect of the late or short payment for purchases
made by the
respondent in the first half of January 2013.
[1]
[2]
The respondent defended the action and
brought claims in reconvention against the appellant.
[3]
The
pleadings, drafted by the parties’ respective attorneys, were
far from a model of clarity, and repeatedly amended.  They

lacked factual and legal coherence in material respects and were
amenable to exception on both sides.  None was taken, however.

In their finally settled form which, for the reasons just mentioned,
was unsatisfactory,
[2]
they
appeared to draw the battle lines broadly as follows: the respondent
alleged that he had been overcharged for the carcasses
that he had
purchased and that he also had a claim for compensation in damages
against the appellant.  In addition, he challenged
the legal
validity of his transactions with the appellant by reason of the
latter’s alleged non-compliance with the requirements
of the
National Credit Act 34 of 2005 (‘the NCA’).  He
sought a stay of judgment in the claim in convention pending
judgment
in his favour in his claims in reconvention.
[4]
The
respondent’s claim in respect of the alleged overcharge was
two-pronged.  He sought (i) a rebate on the amount
charged
in the invoices rendered by the appellant in January and February
2013 and (ii) the repayment of amounts allegedly
overpaid by him
in numerous like transactions over the preceding years.  The
alleged overcharge was predicated on the respondent’s

allegation that the appellant had been contractually obliged to set
the prices that it charged him in a fixed and predetermined

relationship to those that it charged to a related concern, Winelands
Pork (Pty) Ltd,
[3]
but
had failed to do so.
[5]
The respondent’s damages claim was
framed in contract, alternatively in delict.
[6]
In support of his counterclaim for
contractual damages, the respondent alleged that the appellant had
breached a contract between
the parties whereby it was bound to
market all of its produce - save for that sold to its sister company
Winelands Pork - through
the auspices of the respondent.  The
appellant denied that it had been in breach of the contract.  It
alleged that the
agreement had been cancelled in July 2012.
[7]
The respondent’s alternative claim
founded in delict was alleged to have arisen by virtue of the
appellant having used the
respondent’s confidential
information, to which the appellant had had access in terms of a
cession of book debts agreement
entered into in consideration of the
credit facility that the appellant had afforded to the respondent, to
compete unlawfully with
the respondent by poaching the customers to
whom he had historically on-sold the carcasses of the pigs that he
had purchased from
the appellant.  It was common ground that
after July 2012 the appellant did indeed start dealing directly with
many of the
respondent’s customers, but it denied that that had
been unlawful.
[8]
The
respondent also alleged in his finally amended pleadings, delivered
late in the day, more than a month after the commencement
of the
trial, that the contracts of sale were void by virtue of s 89 of
the NCA.
[4]
He
alleged that was so because the appellant had sold the pigs to him on
credit whilst not having been registered as a credit provider,
as
required in terms of s 40(1) of the Act.  Section 89(2)(d)
provides (subject to certain exceptions that did not apply
in the
current case) that a credit agreement is ‘unlawful’ if at
the time it was made ‘
the
credit provider was unregistered and th
[e]
Act
requires that credit provider to be registered
’.
At the relevant time (prior to its amendment in terms of the National
Credit Amendment Act 19 of 2014), s 40(1)
required every credit
provider to which the total principal debt under all outstanding
credit agreements,
other
than incidental credit agreements
,
exceeded R500 000 to apply for registration as a credit
provider.
[9]
The
respondent’s belated invocation of the NCA was at odds with his
counterclaim for contractual damages.  Perhaps conscious
of that
effect, the respondent’s pleading purported to make the alleged
incidence of the Act contingent upon the court’s
acceptance of
the appellant’s allegation that the marketing agreement had
been cancelled.
[5]
The
pleaded contingency made no sense whatsoever, however, because if
there had been an obligation on the appellant to have registered,
it
would have arisen irrespective of whether the original arrangement
between the parties had continued to subsist or not.
That was
so because the trigger for the obligation to register as a credit
provider was the total amount outstanding under all
outstanding
credit agreements.  In the current case it was common ground
that the R500 000 threshold had been surpassed
and that the
appellant was not registered.  It would not matter for the
purposes of the NCA, and its potential effect in the
current matter,
whether that had happened under the business relationship entered
into by the parties in 2005 (which was the respondent’s
case),
or pursuant to sales on credit concluded under an allegedly different
regime post the July 2012 cancellation of the sole
marketing
agreement (which was the appellant’s case).
[10]
The appellant responded to the respondent’s
invocation of the NCA by alleging that the credit extended to the
respondent had
been in terms of an ‘incidental credit
agreement’, and therefore excluded from the ambit of s 40(1).
[11]
At
the hearing of the appeal we were informed by counsel that the NCA
issues were abandoned by the respondent before the court a
quo.
It does not appear from the record, however, when this might have
happened, and there is strangely no mention of it
in the judgment.
Certainly, the respondent only introduced some of the NCA-related
matter in amendments to its pleadings
effected at an advanced stage
of the trial, and his counsel cross-examined one of the appellant’s
witnesses on the issue
of the appellant’s registration status
as a credit provider in terms of the Act.  Whatever the position
in the court
a quo, it was conceded by the respondent’s counsel
before us that there was no merit in any of the points taken by the
respondent
based on the NCA.  The credit agreements that were
involved were unmistakeably ‘incidental credit agreements’
as defined in s 1 of the Act.
[6]
It would have curtailed our preparation time had we been informed of
the concession before the hearing.  In the absence
of the
intimation that we should have been given, we were obliged to prepare
on the NCA issues notwithstanding that they did not
feature in the
notice of appeal and were not subject of a cross-appeal.  They
raised rule of law issues that we were duty
bound to consider
mero
motu
;
cf.
CUSA
v Tao Ying Metal Industries and Others
[2008] ZACC 15
(18 September
[2008] ZACC 15
;
2008); 2009 (1) BCLR 1
(CC);
[2009] 1
BLLR 1
;
2009 (2) SA 204
, at para. 67, and
Minister
of Justice and Correctional Services v Walus
[2017] ZASCA 99
(18 August 2017);
[2017] 4 All SA 1
(SCA);
2017 (2)
SACR 473
(SCA) at para. 23.
[12]
The trial court dismissed the claim in
convention with costs, and, in addition (evidently in respect of the
claims in reconvention),
made an order declaring that ‘[t]
he
defendant has successfully established liability by the plaintiff and
as such the defendant is entitled to claim such damages
as may be
proved in due course
’.  The
court made no determination in respect of either prong of the
respondent’s overcharge claim.  It appears
to have been
overlooked.  But there is no cross-appeal (understandably, as
will appear).
[13]
The appeal to the full court against the
judgment at first instance was brought by leave of the learned judge
in the court a quo.
The
implications of the respondent’s pleaded reliance on rule 22(4)
and the unsatisfactory state of the pleadings
[14]
As
mentioned, the respondent prayed for a stay of the determination of
the appellant’s claim pending judgment on his claims
in
reconvention.  He invoked rule 22(4) of the Uniform Rules for
that purpose.
[7]
[15]
Resort
is ordinarily had to rule 22(4) when a defendant wholly or partly
admits a claim sounding in money, but contends that the
admitted debt
will be extinguished by set-off when it obtains judgment against the
plaintiff in an equal or greater amount on its
accompanying
counterclaim.
[8]
Less
commonly, the subrule is also utilised in situations in which a
defendant denies liability, but contends in the alternative
that the
plaintiff’s claim should be stayed because in the event that
the court dismisses its primary defence, its resultant
liability
would nevertheless be extinguished by set off upon judgment being
granted in its favour in its accompanying claim in
reconvention.
[16]
It
will be evident from the description of the pleadings given in the
introduction to this judgment that in the current matter,
subject to
the effects of the alleged incidence of the NCA, the respondent must
be taken to have admitted his indebtedness to the
appellant in the
amount of the difference between the sum of the appellant’s
claim and the sum in which he alleged that he
had been overcharged
for his January and February 2013 purchases.
[9]
This was not one of those cases in which the scope for set-off to
operate was pleaded by the defendant in the alternative
to a primary
defence of an out and out denial of any liability.
[17]
The
waters were muddied, however, when, in mid-trial, the respondent
delivered his finally amended plea.  In that pleading,
in which
the respondent purported to have amended his plea
consequentially
to an amendment of the appellant’s particulars of claim
effected well before the trial commenced, he erased any reference
to
rule 22(4).  The apparent withdrawal of the plea in terms of
rule 22(4), and thereby also of the admission of at least
part
liability for payment of the appellant’s claim that was
inherent in the erasure, was in point of fact not
consequential
to any amendment of the particulars of claim.  It was therefore
certainly not an amendment that the respondent would have
been
entitled to make in terms of rule 28(8).  On its face it
appeared to involve a gratuitous and unexplained withdrawal
of a
previously made admission.  That impression was underscored by
the inclusion in the amended plea of a blanket denial
of the summary
of transactions in annexure POC 2 to the appellant’s
particulars of claim.
[10]
(Annexure
POC2 itemised the various invoices rendered to the respondent by the
appellant in respect of the sales effected during
January and
February 2013 and described the character of the pig carcasses that
were sold, indicating in each case the applicable
rand per kilogram
basis used for the computation of the invoiced price.)
[18]
That said, those indications of an apparent
withdrawal of the admission in the amended plea were gainsaid by the
admission, in para. 8
of the respondent’s ‘consequential
plea’, that he had received the invoices listed in POC 2, and
by the formulation
of his overcharge defence and related counterclaim
with reference to the amounts due in terms of those invoices.
Of course,
the respondent’s formulation of the overcharge
aspect of his defence and counterclaim would not make any sense if he
had
not been sold the goods subject of the invoices listed in POC 2
at the prices set out therein.  Adding to the confusion,
the
respondent also continued to refer expressly to rule 22(4) and
set-off in his amended claim in reconvention, which, amongst
other
matters, resulted in an inconsistency between the prayers in that
pleading and those in the ‘consequential plea’.
[19]
The
‘consequential plea’, which was delivered well after the
commencement of the first stage hearing and outside the
period
provided in rule 28(8), furthermore included a prayer (apparently
predicated on s 89(5)(b) of the NCA, which had actually
by then
long since been repealed
[11]
)
for an order directing the appellant to repay to the respondent all
the payments that it had received in respect of the sales
effected by
it to the respondent since July 2012.  Technically, a claim for
repayment should have been advanced in a further
amended claim in
reconvention, not in a plea.  The deviation from the technical
rules of pleading might explain how the drafter
of the respondent’s
pleadings overlooked the incompatibility between the NCA based claim
and the overcharge claim that remained
included in the claim in
reconvention.  More fundamentally, it also appears to have been
overlooked that s 89(5)(b) was
declared unconstitutional in
Chevron
SA (Pty) Limited v Wilson t/a Wilson's Transport and Others
[2015] ZACC 15
(5 June
2015); 2015 (10) BCLR 1158
(CC), and that the
claim for repayment was consequently demonstrably bad in law, as
there was not even scope to argue that a right
to claim repayment
under the provision had accrued before its repeal.
[20]
The
resultant muddle, which does not appear to have elicited any
objection by the appellant, as it should have done,
[12]
illustrates
only part of the reason for the complaint about the state of the
pleadings voiced at the outset of this judgment.
[13]
At
the end of the day we are able to deduce what the respondent’s
pleaded case would appear to have been only by ignoring
the denials
in his plea that are contradictory of the positive allegations
advanced in his particulars of claim in reconvention;
and also by
disregarding allegations and claims that were palpably bad in law.
That is the only way in which the pleadings
can be construed
sensibly; the alternative would be irredeemable incoherence.
[21]
If
the pleadings are construed in the manner just indicated, it becomes
evident, despite an initial attempt by the respondent’s
counsel
- advisedly abandoned under pressure of argument - to contend the
contrary, that there was in point of fact no significance
in the
omission of the express reference to rule 22(4) in the
consequentially amended plea.  It is apparent on the pleadings,

so read, that the respondent actually continued to rely on the
subrule to avoid judgment being given in the appellant’s favour

in at least the amount of the undisputed indebtedness until he was
able to obtain a judgment sounding in money in respect of his
claims
in reconvention.
[14]
The
respondent’s counsel in essence spelled that out for the court
in the address that he was invited (somewhat unconventionally
[15]
)
to make before the appellant adduced its evidence.  Counsel
stated then with regard to the pig carcasses that were the subject

matter of the invoices identified in the appellant’s
particulars of claim: ‘
So
we
[i.e.
the respondent]
got
them.  We got the benefit thereof. … Which means that
subject to the pricing, which is in dispute at two levels,
we have to
pay for it
’.
[22]
As
the wording of the subrule makes plain,
[16]
the default position where a defendant resorts to rule 22(4) is that
judgment on the plaintiff’s claim is stayed until judgment
is
given on the defendant’s claim in reconvention.  The
underlying principle is that judgment is given pari passu on
the
claims in convention and reconvention so that set-off can operate if
the outcome makes that possible.  It is evident from
the orders
made by the trial court described earlier
[17]
that that did not happen.
The separation
of issues in terms of rule 33(4) and the problems to which it gave
rise
[23]
The action was tried in the court a quo
before Parker J.  At the commencement of the hearing on
13 September 2017,
and at the request of the parties’
counsel, the learned judge made a ruling in terms of rule 33(4) of
the Uniform Rules directing
that there would be a separation of
issues for the purposes of the trial.  The ruling, which
confirmed and amended an earlier
ruling to similar effect made during
the pretrial judicial case management process, was framed as follows:
The issue of quantum
and causation of the defendant’s counterclaim (in the event of
liability being established) is stayed
until the other issues in
dispute between the parties are disposed of.
In formulating the
separation of issues, the judge inserted the words ‘
and
causation
’ into the phrasing of the earlier ruling made on
25 April 2017.
[24]
I proceed now to explain why the separation
of issues was ill considered and conduced to unfortunate results, as
indeed counsel,
somewhat ruefully, conceded in argument before us.
[25]
Three
witnesses gave evidence at the ensuing first stage hearing.
They were the two directors of the appellant company, Messrs
Brent
Burger and David Osborne, and the respondent.  Mr Osborne was
also the chief executive officer of the aforementioned
Number
Two Piggeries (Pty) Ltd
,
[18]
which is apparently a major role-player in the national pork
industry.  The witnesses testified as to the basis upon which

the appellant and the respondent had conducted their business
relationship with each other over the period between 2002 and 2013,

and as to the circumstances in which the appellant had, from July
2012, ceased using the respondent as a sort of middleman and
started
selling its produce directly into the market place, including to some
of the respondent’s established customers.
[26]
I shall discuss the evidence insofar as it
bore on the claims in reconvention in greater detail presently.
Suffice it at this
stage to say that it was clear by the end of the
first stage hearing that there was no substance in the allegation
that the parties
had undertaken vis-à-vis each other that the
prices at which the appellant transacted with the respondent would be
in a
fixed and predetermined relationship to the prices at which it
did business with Winelands Pork.  Indeed, the respondent in
his
testimony expressly conceded as much.
[27]
The result was that the substratum for the
allegation of an overcharge advanced in the respondent’s
pleadings in abatement
of the total purchase price claimed in the
appellant’s claim in convention came apart at the seams.
It followed, in
the context of what we were informed had been the
advised abandonment of the NCA issues, that, subject to the effect of
the stay
brought about consequent upon the respondent’s plea in
terms of rule 22(4), it should have been apparent to the trial court

at the end of the first stage hearing that the appellant was entitled
to judgment in its favour in the full amount that it had
claimed.
Startlingly in the circumstances, apparently overlooking the effect
of rule 22(4), the court a quo, however, made
an order dismissing the
appellant’s claim in convention with costs at the end of the
first stage hearing.
[28]
The
trial judge gave as his reason for arriving at that result the view
that the appellant had not been entitled to claim payment
for the
produce sold while it was in breach of the aforementioned sole
marketing agreement that it had with the respondent, and
which he had
found had not been cancelled in July 2012, as alleged by the
appellant.  The judge’s approach, which was
at odds with
the presentation of the respondent’s case,
[19]
implied that the appellant’s obligations under the sole
marketing agreement were reciprocal to those of the respondent under

the sale of pig carcasses agreements.  The approach of the court
a quo in this regard
[20]
was
misconceived, and understandably the respondent’s counsel did
not try to support it.
[29]
The
marketing agreement was discrete from the sale agreements; and
although they were fundamentally interrelated for the purposes
of the
parties’ business relationship, they were not reciprocal in the
sense that a breach by the appellant of the marketing
agreement would
entitle the respondent to refuse to pay the purchase price for goods
delivered to it in terms of the sales agreements.
[21]
The alleged cancellation of the marketing agreement, which was
contentious, bore only on the respondent’s claim for
damages
for breach of that agreement; it had no relevance to the appellant’s
entitlement to payment for goods that it had
sold and delivered to
the respondent, and which the respondent had appropriated and turned
to account.
[30]
With
regard to the claims in reconvention, the court a quo, as mentioned,
declared that the respondent had ‘
successfully
established liability by the plaintiff and as such …
[was]
entitled
to claim such damages as may be proved in due course
’.
[22]
The learned trial judge did not, however, specify whether the
liability on the appellant’s part that he found to have
been
established was in respect of the respondent’s claim for
contractual damages, or the alternative claim framed in delict.

His reasoning suggests that he considered that the appellant was
liable in respect of both claims, notwithstanding that the one
had
been framed in the alternative to the other.  It was by no means
obvious that the measure of damages that the respondent
could recover
in respect of the alternative heads of claim, if liability were
established, would be indistinguishable; and the
legal and factual
underpinnings for each of them were different.  The judge should
therefore have clearly identified in respect
of which of the
alternative claims he had found the appellant to be liable.
Identification was necessary to establish the
basis upon which the
second stage hearing contemplated by the judge was to proceed.
[31]
Crucially, in making an order dismissing
the appellant’s claim in convention at the end of the first
stage hearing, the trial
judge completely overlooked the implications
of the respondent’s pleaded reliance on rule 22(4), which
required the judgments
on the claim in convention and those in
reconvention to be given pari passu.  I suspect that this
obviously infelicitous result
had as much to do with the
unfortunately framed separation order as the shambolic state of the
pleadings.
[32]
It
has been stressed repeatedly that a ruling in terms of rule 33(4)
should be made only after very careful consideration by the
judge
and
the legal representatives
concerned
of the practical import for the conduct of the trial and the
determination of the action.  As it is on appeal that
the
detrimental effects of an ill-considered separation of issues are
most often painfully exposed, it is not surprising that many
of these
admonishments have emanated from the Supreme Court of Appeal.
[23]
The jurisprudence also emphasises that when a separation is being
considered conscientious attention should be given to how
the ruling
is formulated.  Experience teaches that it is often in the
context of attempting the appropriate formulation of
such rulings
that the flaws in what might at first blush have appeared to be a
convenient basis for separation are shown up.
[33]
The
directive in terms of rule 33(4) in the current matter failed to
identify or particularise ‘the other issues in dispute
between
the parties’ that fell to be disposed of in a first stage
trial.  But having regard to the respondent’s
plea in
terms of rule 22(4), they could hardly allow for an adverse
determination in the first stage of the appellant’s claim
in
convention, at least to the extent of the part of it that was
admitted.  As appears from the preceding discussion, the
only
aspects of the claim in convention that could fall within ‘the
other issues in dispute’ at the first stage hearing
were the
alleged overcharge and the alleged effect on the claim of s 89(5)(a)
of the NCA.  It is manifest, however, that
that must have been
overlooked by the trial judge when he made an order dismissing the
claim in convention with costs at the end
of the first stage hearing
without mentioning the NCA or acknowledging the aforementioned effect
of the evidence in respect of
the overcharge claim.
[24]
The error would have been less likely to have happened had the
separation order identified precisely what was entailed in
‘the
other issues in dispute between the parties’.
[34]
It
is clear then that the trial court materially misapprehended the
character of ‘the other issues in dispute’ and,
in
finding,
en
passant
as it happened,
[25]
that there
had been an agreed fixed and predetermined interrelationship between
the prices the appellant was obliged to charge
the respondent and
those it charged Winelands Pork, it misconstrued the evidence.  Its
misdirection in dismissing the claim
in convention at the end of the
first stage hearing was manifest, as counsel for the respondent
ultimately conceded before us.
I shall come back later to
address the order that should have been made.
[35]
Turning to the second part of the order
made by the court a quo, in terms of which it held that the
respondent had successfully
established the liability of the
appellant to compensate him for such damages as he might prove that
he had sustained.  In
regard to this aspect too, the ruling in
terms of rule 33(4) was intrinsically problematic.  It expressly
contemplated that
the hearing should canvas those matters necessary
to equip the court to make a finding whether the appellant should be
liable in
damages to the respondent, be it in contract or in delict.
Yet at the same time, and inimically to the enablement of that

object, it excluded causation from the issues to be canvassed in the
first stage hearing.
[36]
It
is impossible to conceive how liability to compensate could sensibly
be attached to anyone without proof that their acts or omissions
had
been
causal
of the allegedly compensable loss.  In the current matter, it
should also have been evident, having regard to the nature of
the
respondent’s alternative claim founded in delict, that legal
causation – a legal policy based concept that inextricably

intertwines considerations related to factual causation and the
quantification of compensable loss
[26]
–
was
likely to feature materially in any determination of the delictual
damages he was claiming.  This should have shone an
especially
bright light on the impracticability of separating causation and
quantum.  For these reasons, which in essence
are closely
congruent with those recently articulated in comparable circumstances
by the appeal court in
Government
of the Western Cape: Department of Social Development v C B and
Others
supra loc cit,
[27]
the
final formulation of the already too loosely worded original rule
33(4) directive by the exclusion of causation as an issue
in the
first stage hearing was confounding.
[37]
It
is clear that the ruling was devised without proper consideration.
Indeed, had the relevant questions been given the attention
they
required, I think it is unlikely (with the arguable exception of the
NCA-related questions, which were not yet pleaded when
the ruling was
made) that it would have been found that the case lent itself to a
convenient separation of issues at all. The parties’
legal
representatives, who would have been more steeped in the matter than
the trial judge could be at the outset of the hearing,
must shoulder
a substantial part of the blame for the unfortunate course that the
matter consequently took.
[28]
[38]
In
the circumstances it is only fortuitously that the record on appeal
has put us in a position to be able to make a determinative
judgment
in respect of the claims in reconvention, and, as it happens, on the
claim in convention.
[29]
This was because, notwithstanding the exclusion of ‘causation’
as an issue to be traversed in the first stage
hearing, some evidence
on factual causation was nevertheless adduced and there was enough
material to determine whether the damages
claims had any merit.
In the circumstances I do not consider that it would be appropriate,
or fair to the parties, for us
to remit the action for trial afresh
before a differently constituted court, as we might otherwise have
had to do.
[30]
For the
reasons that will follow, I have concluded that the respondent did
not establish either that the appellant caused
him to suffer damages
by breach of contract, or that he enjoyed a claim in delict founded
on unlawful competition.  In the
circumstances there was no
basis for the claims in reconvention to proceed to a second stage
hearing.  The judge was in a
position at the end of the first
stage to have pronounced judgment on both the claim and counterclaim
then and there in the manner
contemplated by rule 22(4).
The nature of
the parties’ multifaceted contractual relationship
[39]
In its original particulars of claim, the
appellant alleged that the sale of pig carcasses in issue had taken
place in terms of
a contractual arrangement allegedly entered into
between it and the respondent in 2005.  The evidence on both
sides, while
not altogether consistent in all respects, broadly
confirmed the existence of the alleged arrangement and testified to
its multi-faceted
character, constructed, as it was, from a series of
interlinking agreements.  These included an oral agreement that
the respondent
would purchase carcasses exclusively from the
appellant and take all of the appellant’s pigs except those
that the appellant
disposed of weekly or fortnightly to Winelands
Pork.  The carcasses purchased by the respondent would be
marketed by it under
its own brand and sold to customers to be found
by the respondent in the Western Cape outside the area in which
Winelands Pork
marketed its product.
[40]
The respondent would act for its own
account in disposing of the slaughtered pigs acquired from the
appellant, and not as the latter’s
agent.  It was evident,
however, that the arrangement created something in the nature of a
symbiotic relationship between
the parties’ respective
businesses, it being implied that the respondent would be able to
sell on the carcasses at margins
that would allow it to conduct a
viable business.  This carried the obvious concomitant that the
prices at which the appellant
would sell the pigs to the respondent
would be fixed with due regard to the conditions prevailing from time
to time in the relevant
marketplace.  The implication did not,
however, exclude the possibility that the respondent might have to
bear losses in tough
market conditions that it might try to recoup in
good times.  Indeed, the respondent admitted that this had
occasionally happened.
There was therefore nothing in the
evidence that would justify the conclusion that the parties’
business arrangement was
ordered to guarantee the respondent a profit
on the turnover from every single one of its transactions with the
appellant.
The appellant was not there to subsidise the
respondent.
[41]
It was apparent from the oral evidence,
which was supported by the contemporaneous correspondence between the
parties, that the
governing prices applicable from time to time were
determined by negotiation on a regular basis.  It was plainly in
the respondent’s
interest to buy from the appellant at the
lowest possible prices, for that would maximise its opportunity to
profit from the on-selling
of the purchased produce.  But at the
same time, he also needed the appellant to remain viable as his
supplier, so he could
not sensibly seek to drive the prices so low as
to imperil the viability of the appellant’s business as his
sole supplier.
The appellant in turn would naturally also wish
to maximise
its
own profit margins.  This infused the business relationship with
an element of inherent tension.  That the parties should

approach their price negotiations with their mutually competing
interests in mind would not in the circumstances, of itself, be

indicative of bad faith.  It is apparent that the respondent
frequently requested the appellant to reduce its prices.  He

motivated these requests with reference to prevailing market
conditions and the prices charged by other suppliers.  The
appellant
sometimes acceded to the requests and sometimes declined
them based on its own assessment of the market.
[42]
The prices were changed several times in
the course of every year, and a regular seasonal trend, related to
the changing levels
of end-consumer demand for pork, was
discernible.  They were determined per kilogram of the weight of
the carcasses after
the pigs had gone through the abattoir.
Different prices applied depending on whether the pig was of smaller
size (which
consisted of categories respectively called ‘porkers’
and ‘baconers’) or in the heavy weight league (divided

between those of 76 to 100 kg weight and those over 100 kg),
with the heavier pigs generally realising relatively lower
prices per
kilogram.  The porkers and baconers were pigs that were sent for
slaughter after being kept for fattening in the
appellant’s
pens for a shorter period than those that stayed there longer growing
in size and weight all the while.
A downturn in end-consumer
demand, something that happened during the winter months, tended to
slow up the turnover of pigs from
the pens and lead to a build-up in
the proportion of pigs in the heavier categories at the appellant’s
piggery.  This
could give rise to problems, as the demand by the
respondent’s customers was predominantly for carcasses in the
smaller categories
because they made for leaner meat.  The
result was a seasonal mismatch between supply and demand.  It
was a recurrent
situation that, in the words of the respondent, was
something that had to be ‘managed’ between the appellant
and himself.
Moving the oversupply of heavyweight pigs was
achieved by lowering prices.  That was done by negotiation
between the principals.
[43]
There was no provision for a deadlock
breaking mechanism in the event that the appellant and the respondent
might not be able to
agree on price.  The absence of a deadlock
breaking mechanism highlighted how pivotal it was to the continuing
subsistence
of the parties’ business relationship for them to
be able, when necessary, to find each other on the prices at which
the
sales would take place.  The practicalities of the
arrangement were such that if agreement could not be reached, the
relationship
would inevitably founder.  The business
relationship endured for several years because, until mid-2012, in
circumstances to
be described presently, that situation did not
eventuate.
[44]
The interlocking agreements on which the
parties’ relationship was based included (i) an exclusive
supply agreement,
(ii) regularly concluded contracts of sale
concluded on the basis of periodically agreed prices and (iii) a
sole marketing
agreement.  It was axiomatic that the contracts
just identified as (i) and (iii) were intrinsically dependent for
their operation
on transactions being effected between the parties
pursuant to the periodic conclusion of the agreements identified as
(ii).
The structure of the parties’ trading relationship
was such that if they were unable to conclude the sale agreements by
reason
of an inability to achieve
consensus
ad idem
on pricing, the supply and
marketing agreements just could not work.
[45]
The
respondent’s counsel’s argument that there was actually
no scope for deadlock because a market related price was
capable of
objective ascertainment was bereft of any merit.  The very
concept of a market
related
price conjures one that is identifiable as falling within an
objectively ascertainable range.  The word ‘related’

connotes a degree of connection; it does not imply a precisely
determinable price.  There is nothing exceptionable about
parties to a contract of sale agreeing that the price be fixed with
reference to what Corbett JA in
Westinghouse
Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986 (2) SA 555
(A) at 574 D-E called an ‘external standard’.
But an external standard would not serve its purpose of giving
certainty if it could not render a precisely ascertainable price.
[31]
The evidence in
fact pointed up that there was a range of prices charged by the
players in the marketplace and that the discrepancy
between the
prices charged by the various suppliers contributed to the
competitiveness that characterised the industry.  The
argument
in any event went against the import of the respondent’s
evidence, which was that the prices had to be negotiated.
[46]
The
parties’ business relationship was also regulated by an
agreement in terms of which the respondent was afforded 14 days’

credit for the payment of the prices of the pigs purchased from the
appellant.  This followed on the grant by the appellant
of a
written application for credit by the respondent.  The terms of
credit required the respondent to pay the appellant within
14 days of
date of invoice and rendered him liable to pay interest at two
percent above prime should he fail to do so.  The
respondent
ceded its book debt to the appellant to provide security for the
discharge of its obligations under the credit facility.
[32]
The
cession agreement, which was recorded in a discrete deed of contract,
required the respondent to regularly furnish the appellant
with
particulars of its transactions with its customers.  The
information supplied would apprise the appellant of the identity
of
the customers, the volume of the respondent’s transactions with
them and the prices at which sales were made to them.
This was
the allegedly confidential information that the respondent claimed
was misappropriated by the appellant to ‘hijack’
the
respondent’s business by selling directly to its established
customers.
[47]
The business relationship was accordingly
regulated by five identifiably separate, but practically closely
interlinked, agreements.
It is by no means unique for business
arrangements to be governed by means of a structure of interrelated
agreements rather than
a single contract.  Whether such
agreements are mutually interdependent in any given case; and if they
are, the extent to
which any of them can continue in effect if any of
the others fails, depends on the evident intention of the contracting
parties.
In essence, it is a matter of construction;
cf. e.g.
Wynn’s Car Care
Products (Pty) Ltd. v First National Industrial Bank Ltd.
[1991] ZASCA 34
(26 March
1991); 1991 (2) SA 754
(A).
[48]
In
the current matter I think that the structure of the parties’
business relationship imposed a duty on them to use their
best
endeavours to successfully negotiate the periodic pricing agreements
that were an essential component for its continuance.
[33]
The allegation pleaded by the respondent that the appellant had been
obliged to give reasons in writing in the event of it
nevertheless
being unable to reach agreement with the respondent on the price at
any time was not sustained by the evidence, and,
in the absence of
any contractually agreed binding review mechanism, it is in any event
difficult to conceive what practical purpose
any such requirement
would have served.  Assuming (without deciding) that the duty to
negotiate in good faith gave rise to
an enforceable obligation in
this case,
[34]
I shall address
the question whether the appellant acted in good faith in
endeavouring to negotiate the prices in July 2012 presently.
The
respondent’s counterclaim based on contract
[49]
That part of the respondent’s claim
in reconvention that was founded on an alleged breach of contract was
premised on the
allegation that the appellant had acted in breach of
the parties’ contract by selling those of its pigs that were
not purchased
by Winelands Pork to third parties instead of
exclusively to the respondent.  When confronted with the
respondent’s
counterclaim predicated on an alleged breach of
contract, the appellant amended its particulars of claim to allege
that some of
the agreements that it had alleged had been concluded in
2005 (viz. those that I identified earlier as agreements (i),
(ii)
and (iii)) had actually been cancelled in July 2012 after it and
the respondent had been unable to reach agreement on the price
for a
large number of pigs in the heavy weight categories that needed to be
disposed of from the appellant’s piggery.
The
cancellation was allegedly effected to give the appellant a free hand
to sell its pigs directly to other customers.  It
was alleged to
have followed on a breach by the respondent of its obligation to
acquire pigs exclusively from the appellant.
In that regard, it
was common ground that at the time of the impasse with the appellant
over the disposal of the surplus of heavy
pigs the respondent had
bought some pigs from another supplier based in the Free State called
Huntersvlei.  He had done so
without informing the appellant of
his action.  The appellant alleged in its amended particulars of
claim that the sales it
had made to the respondent subsequent to the
aforementioned cancellation had been on an ad hoc basis, but still on
the previously
determined terms as to credit, secured by the
respondent’s cession of book debts.
[50]
The first stage hearing, insofar as it
concerned the respondent’s claim based on breach of contract,
proceeded on the premise
that the outcome turned on whether the
originally established business relationship between the parties had
still been extant when
the appellant embarked on selling to third
parties, or whether the agreements under which the appellant was
bound to sell exclusively
to the respondent, and the latter given
sole marketing rights, had been cancelled.  That was the only
relevance of the cancellation
issue.  As already pointed out, it
did not bear on the appellant’s claim for payment.  It did
not matter for the
purposes of the claim in convention whether the
produce had been sold under the auspices of the alleged 2005 business
arrangement,
as contended by the respondent, or in terms of post-July
2012 ad hoc agreements, as alleged by the appellant.  The
respondent
was liable to pay the purchase price in either context.
The alleged cancellation was relevant to the counterclaim for
contractual
damages, however, because such a claim obviously would
have no foundation if the sole marketing agreement had been
cancelled, or
otherwise come to an end.
[51]
The appellant’s witnesses testified
that the agreement had been cancelled and that the respondent had
been informed at the
time that he could continue to make purchases
from the appellant on a non-exclusive basis on the existing terms of
credit.
The logical implication in what was allegedly
communicated to the respondent was that it was the exclusive supply
and marketing
agreements that were being cancelled.  The
respondent denied that the contracts had been cancelled.
[52]
It
does not appear to have been in seriously in issue that the appellant
would have been entitled to cancel the contracts on account
of the
respondent’s purchases of supplies from Huntersvlei; the matter
in contention was whether the cancellation had been
communicated to
the respondent.  It is trite that the cancellation of a contract
is effective only once it is communicated
to the counterparty.
[35]
[53]
The
respondent did contend in the course of his evidence that he had been
within his rights to purchase produce from other suppliers,
but his
almost apologetic attitude about having treated with Huntersvlei and
the emphasis he placed on the fact that he had done
so only in
extremis was inconsistent with that claim.  His claim to have
been contractually entitled to act in that manner
was also
inconsistent with the allegations pleaded in his amended particulars
of claim in reconvention, dated 26 September
2016.
[36]
The notion that the respondent would have been at liberty to source
his pigs from competitors of the appellant would have
been completely
at odds with commercial sense in the context of the parties’
business relationship.  Furthermore, had
the respondent indeed
been entitled to make purchases from the appellant’s
competitors, the probability is that he would
have maximised on the
leverage that would have given him in price negotiations with the
appellant and would have promoted the fact
that he was obtaining his
supplies more cheaply from another source when the negotiations with
the appellant appeared to be approaching
an impasse, rather than
keeping it quiet.  The respondent’s endeavour to suggest
that his transaction with Huntersvlei
was an isolated event with very
limited potential to harm the appellant’s interest was also
unconvincing in the light of
his admitted (unsuccessful) application
to that entity to do business with it on credit.  The
respondent’s weak attempts
to deny having acted in breach
detracted from his credibility.
[54]
In my judgment, however, the cancellation
question was a red herring.  I consider that the parties’
inability to reach
a meeting of minds on pricing brought with it a
concomitant failure of the business relationship that had
contemplated that the
one would supply exclusively to the other and
the latter would purchase its produce exclusively from the former.
As discussed
earlier, if the parties could not agree on price the
whole scheme would necessarily fall through.
[55]
I
would be prepared to allow that the respondent might arguably have
been entitled to some contractual redress (probably only by
way of
damages) if he had been able to show that the inability to achieve
agreement on price was the result of wilful intent by
the appellant
to render the interlinked agreements unworkable.
[37]
But it is not necessary to go into that because any suggestion of bad
faith on the part of the appellant was not supported
by the evidence.
[56]
On
the contrary, it was evident that the price negotiations were indeed
taken seriously by the appellant.  It held a meeting
with the
respondent to try to bridge the gap.  The meeting was held in a
coffee shop in Bonnievale on 18 July 2012.
The attendees
were Messrs Burger, von Memerty and Botha, representing the
appellant, and the respondent in person.  Mr von
Memerty was a
director of Number Two Piggeries (Pty) Ltd, the 50% shareholder in
the appellant company.  Mr Botha was
the appellant’s
farm manager.  Also present was the owner of the Bonnievale
Abattoir, which was the business where the
pigs supplied to the
respondent by the appellant were slaughtered.  It was common
ground that the slaughtering fee, which
was also charged per
kilogram, was a factor that was built into the prices at which the
appellant’s produce was sold to the
respondent.  Both the
appellant and the abattoir owner were prepared to make reductions in
their prices to help bridge the
gap in the prevailing difficult
market conditions.  The respondent, however, found himself
unable to compromise his position
sufficiently for an accord to be
achieved.  I do not suggest that it was the respondent’s
fault that agreement could
not be reached despite the other parties’
best endeavours,
[38]
but the
evidence does make it clear that it was not for want of trying on the
part of the appellant and the abattoir owner that
the negotiations
failed.
[57]
In the given circumstances, in which the
parties’ contractual scheme failed not through the fault of
either of them, but because
of the practical effect of an inherent
vulnerability to failure in its structuring, the respondent did not
enjoy a right to contractual
damages.  Cancellation did not come
into the picture.
[58]
But, even in the event that I were wrong in my
approach, and the matter did turn on whether or not the sole
marketing contract was
cancelled, as would appear to have been the
view of the court a quo, then the answer would depend on which of the
conflicting versions
of the facts the trial court could accept.
The approach that is adopted by courts faced with mutually
destructive versions
of the facts is well established in principle.
[59]
The summary of the considerations that are
generally weighed in the process of determining which version to
accept set out in
Stellenbosch Farmers'
Winery Group Ltd and another v Martell et Cie SA and others
[2002] ZASCA 98
(6 September
2002); 2003 (1) SA 11
(SCA) at para. 5
by Nienaber JA is the most frequently cited authority in this
regard.  Factors bearing on the court’s
impression of the
witnesses’ credibility and reliability fall to be assessed in
the context of the incidence of the probabilities,
in regard to which
the effect of the ‘objective’ evidence, such as the
common cause facts and contemporaneous records,
plays a weighty
role.  The process is an integrated one, and it falls to be
undertaken mindful that in a civil case the key
to the outcome is
whether the evidence in favour of the party that bears the onus has
established the factual basis for the claim
on a balance of
probability.  The onus was on the respondent to prove all of the
elements of its contractual damages claim,
including the subsistence
of the contract.
[60]
The court a quo concluded that the contract
had not been cancelled.  It found that Brent Burger, who was the
director of the
appellant’s company who averred that he had
communicated the cancellation to the respondent, was not a credible
witness.
Apart from its expressed scepticism about the late
pleading of the cancellation, the trial court did not clearly reason
its preference
for the respondent’s version over that of
Burger.  There is little sign in the judge’s reasoning,
despite his
reference to the judgment, that he undertook the sort of
exercise described in
Martell et Cie
loc. cit. supra in making his determination to prefer the
respondent’s version.  The judge’s focus on the
features
of the amendment of the appellant’s pleadings, whilst
paying no heed at all to the endeavours by the respondent in his
amended
pleadings to ineptly try to avoid his admitted contractual
liabilities by means of baseless resort to the NCA was less than
even-handed.
It is also not apparent on a reading of the record
how the respondent might have impressed more favourably as a witness
than Burger.
Burger gave his answers in a straightforward and
unambiguous manner, whilst the respondent constantly had to be urged,
by both
the judge and the appellant’s counsel, to deal with the
question and answer what had been put to him.  In preferring
the
evidence of the respondent over that of Burger, the judge gave
little, if any, attention to the objective weight of the
probabilities.
[61]
As
a rule of practice an appellate court does not readily go against the
credibility and factual findings of a trial court.
But it will
not render the appeal procedure illusory by holding back from doing
so in a situation in which the findings go against
the probabilities
as established by the evidence, or where the trial court’s
reasons for accepting or preferring a witness’s
testimony,
despite its import being against the probabilities, have not been
cogently or persuasively explained.
[39]
The rationale for the practice is that an appellate court,
which in an appeal from a primary court ordinarily deals with
the
case exclusively on the basis of the printed record of proceedings in
the latter forum, does not enjoy the advantage of the
trial judge in
being able to observe the demeanour of the witnesses and absorb the
atmosphere in which the oral evidence is given.
[62]
Demeanour
and atmosphere, being factors that are ‘vague and
undefinable’
[40]
in the
estimation of a witness’s credibility, will, by themselves, be
cogent determinative considerations extremely rarely,
however, for
that would postulate a case unattended by inherent or incidental
probabilities; a situation very difficult to conceive
of in reality.
It has long been acknowledged that demeanour can be a tricky horse to
ride.
[41]
Any finding by
a trial court based on witness demeanour alone, without reference to
the wider probabilities, will usually
be a misdirection.  That
was vividly illustrated by Nugent JA in
Medscheme
Holdings
,
[42]
where, in the course of explaining his rejection of the credibility
findings of the trial court, the learned judge of appeal stated
‘
It
has been said by this court before, but it bears repeating, that an
assessment of evidence on the basis of demeanour –
the
application of what has been referred to disparagingly as the
“Pinocchio theory” – without regard for the
wider
probabilities, constitutes a misdirection.  Without a careful
evaluation of the evidence that was given (as opposed
to the manner
in which it was delivered) against the underlying probabilities,
which was absent in this case, little weight can
be attached to the
credibility findings of the court a quo. Indeed, on many issues, the
broad credibility findings, undifferentiated
as they were in relation
to the various issues, were clearly incorrect when viewed against the
probabilities.
’
[43]
Atkins LJ (later Lord Atkins) put the role of demeanour in
adjudication into some perspective when he remarked
‘
an
ounce of intrinsic merit or demerit in the evidence, that is to say
the value of the comparison of evidence with known facts,
is worth
pounds of demeanour
’.
[44]
[63]
A
trial court is not ordinarily in any better position than the
appellate tribunal to assess the incidence of the probabilities,
for
that is determined by the evidence, not by demeanour or atmosphere
(although I accept that the court’s perception of
a witness’s
character may affect its interpretation of his or her evidence, in
which case it behoves it to explain that in
its judgment).  The
limitations to the proper application of the rule of practice are
therefore obvious, as borne out by observations
recorded in any
number of authoritative decisions.
[45]
Their effect, and the ‘loose and flexible’
[46]
character of the rule of practice, no doubt underpinned the
observation by the Constitutional Court that ‘[t]
he
deference which a court of appeal ought properly to accord
credibility findings made by a trial court based directly or
indirectly
on the demeanour of witnesses who have testified orally
before it, is not a matter of easy or simple formulation’
.
[47]
[64]
In
R
v Dhlumayo
1948 (2) SA 677
(A);
[1948] 2 All SA 566
, which is the locus
classicus,
[48]
Davis AJA
emphasised (at 698-700 (SALR)) that the practice by appellate courts
to ordinarily show due deference to the factual
and credibility
findings of trial courts should not negate their duty to give
meaningful effect to the object of an appeal, which
is to afford
‘
a rehearing
’
on the record (supplemented, only in exceptional cases, by additional
evidence that the appeal court might admit).
More recently, the
Constitutional Court remarked in
Bernert
v ABSA Bank Ltd
[2010] ZACC 28
(9 December
2010); 2011 (3) SA 92
(CC);
2011 (4) BCLR
329
at para. 106 that ‘
The
principle that an appellate court will not ordinarily interfere with
a factual finding by a trial court is not an inflexible
rule. It is a
recognition of the advantages that the trial court enjoys which the
appellate court does not. These advantages flow
from observing and
hearing witnesses as opposed to reading “the cold printed
word.” The main advantage being the opportunity
to observe the
demeanour of the witnesses. But this rule of practice should not be
used to “tie the hands of appellate courts”.
It should be
used to assist, and not to hamper, an appellate court to do justice
to the case before it. Thus, where there is a
misdirection on the
facts by the trial court, the appellate court is entitled to
disregard the findings on facts and come to its
own conclusion on the
facts as they appear on the record. Similarly, where the appellate
court is convinced that the conclusion
reached by the trial court is
clearly wrong, it will reverse it
.’
(footnotes omitted).  And in
Makate
v Vodacom (Pty) Ltd
[2016] ZACC 13
(26 April
2016); 2016 (4) SA 121
(CC);
2016 (6) BCLR
709
, at para. 40, the Court (again) cautioned that ‘…
the
deference afforded to a trial court’s credibility findings must
not be overstated.  If it emerges from the record
that the trial
court misdirected itself on the facts or that it came to a wrong
conclusion, the appellate court is duty-bound to
overrule factual
findings of the trial court so as to do justice to the case
’.
[49]
[65]
The
remarks in
Bernert
quoted
above point up the close practical association between the practice
of relative deference by appellate courts and the discharge
by trial
courts of their constitutional duty to provide adequate reasons for
the findings made in their judgments.
[50]
One might reasonably expect to find a proportionate correspondence
between the cogency and persuasiveness of the reasons
given by the
primary court for its factual and credibility findings and the degree
of deference shown by the appellate court.
That view finds
support, I think, in the third principle identified by Lord
Thankerton in his speech in
Watt
or Thomas v Watt
[1947] AC 484
;
[1947] 1 All ER 582
(HL) (which was extensively
referred to in the Appellate Division’s judgments in
Dhlumayo
);
viz. that where the reasons given by the trial judge are not
satisfactory, or because it unmistakably so appears from the
evidence
that he or she has not taken proper advantage of having seen and
heard the witnesses, the matter will then become at large
for the
appellate court.
[51]
[66]
I have dealt with the rule of appellate
practice at perhaps greater length than strictly necessary because of
the assertion in the
respondent’s counsel’s heads of
argument that we were bound by the trial court’s factual and
credibility findings;
although it should be said the argument was not
pressed with any force in oral argument.
[67]
Burger’s evidence in regard to the
amendment of the appellant’s particulars of claim to allege a
cancellation does not
suggest any attempt by him to avoid
responsibility.  He admitted that the original pleading had been
drawn in accordance with
his instructions, and he did so without
prevarication.  Having regard to the fact that the claim was for
payment for goods
sold in terms of various sale agreements, to which
the credit facility and cession of debt agreements executed in
February 2005
related, but the sole supply and marketing agreements
did not, it is objectively understandable how it came about that the
effect
of his instructions was that the transactions occurred in
terms of an arrangement put in place in 2005.  The date 2005
would
have been taken from the respondent’s application for
credit and the cession of book debts agreement, which were the only

documentary underpinnings for the parties’ business
relationship, and were agreements that remained germane to the sales

transactions in issue in the claim in convention.  It should
have been appreciated that Burger is a pig farmer, not a lawyer.

He would have had no reason when he gave his original instructions to
think that the cancellation of the sole marketing agreement
might be
relevant to the appellant’s claim for goods sold and delivered,
and he quite likely therefore would not have had
it in mind.
[68]
It is clear from the correspondence
exchanged between the parties subsequent to July 2012, when the
alleged cancellation was effected,
that the respondent was aware of,
and apparently acquiescent in, the appellant’s decision to
henceforth market its produce
directly, rather than through the
respondent.  Notwithstanding such knowledge, the respondent had
not challenged the appellant’s
right to act in that manner.
Despite the pressure under which the appellant’s actions had
placed his business, the
respondent had not sought to enforce the
sole marketing agreement or threatened the appellant with a claim for
damages.  He
had instead continued to treat with the appellant
by purchasing its produce in terms of the credit facility, albeit in
considerably
reduced quantities, while plaintively proposing a new
arrangement in lieu of the erstwhile sole supply and marketing
agreements.
His actions and the tenor of his correspondence
were consistent not only with knowledge, but also acceptance, that
those agreements
had been terminated.
[69]
In those circumstances, Burger cannot
fairly be criticised as untruthful for not having initially told his
attorney about the cancellation.
On the contrary, it is
entirely understandable that it was only when,
inconsistently
with his aforementioned conduct prior to the litigation
,
the respondent counterclaimed for damages arising out of an alleged
breach of the sole marketing agreement, that the cancellation
of that
component of the originally established business relationship would
have become a pertinent consideration.  The trial
court’s
judgment gives no indication that these considerations were taken
into account when Burger’s evidence was stigmatised
as
dishonest and unreliable.
[70]
The trial judge also erred in my opinion by
rejecting as ‘
highly improbable,
if not downright ludicrous
’ the
assertion in Burger’s evidence that the agreements as to terms
of credit and cession of book debts had survived
the termination of
the sole marketing agreement and continued to apply in respect of its
sales to the respondent after July 2012.
There is nothing
farfetched or improbable about that at all.  On the contrary, it
was clear from the respondent’s own
evidence that he was unable
to conduct business at all except upon terms of credit such as those
that he enjoyed from the appellant.
It was implicit in his
evidence that he managed the cashflow in his business by applying the
receipts from the sales of his produce
to settle the expenses he
incurred in obtaining the goods that he sold.  The small amount
of arrear interest that he owed
when he closed his business at the
end of February 2013 is testimony to the fact that he had continued
to do business with the
appellant on the established terms of credit
between July 2012 and February 2013, all the while knowing and
accepting during that
period of more than seven months that the sole
marketing agreement was no longer in operation.  By his own
account, it was
his inability to obtain terms of credit from
Huntersvlei or any other alternative supplier that left him wholly
reliant on the
appellant and unable to find an alternative source of
supply to keep his business going.
[71]
In my judgment, the evidence established as
a matter of probability that the sole marketing agreement was indeed
effectively cancelled
by the appellant.  It is clear on his own
account of events that the respondent knew that the agreement had
been terminated
by 24 or 25 July 2012, and it is plain that in the
period leading up to that date after the coffee shop meeting he did
not transact
with the appellant because of their inability to find
each other on pricing.  He therefore could not have sustained
any losses
in the short interval before he learned of the
cancellation.  It was of no practical consequence in the
circumstances whether
the respondent learned of the cancellation when
he telephoned Burger after receiving a report from his employee that
Burger had
been seen at the premises of one of his customers (as
contended in the respondent’s case), or when Burger, of his own
initiative,
telephoned the respondent (which was the appellant’s
case).  It does not matter how the affected contracting party
comes
to learn of the cancellation, whether directly from the mouth
of the cancelling party or from a third party, or even from
observation
of the unambiguous implications of the conduct of the
cancelling party.  It also does not matter whether the party
entitled
to cancel the contract does so giving a wrong reason,
provided only that a good reason to have done so was actually
available at
the time; see
Datacolor
International (Pty) Ltd. v Intamerket (Pty) Ltd
[2000] ZASCA 81
(30 November
2000); 2001 (2) SA 284
(SCA);
[2001] 1
All SA 581
(A), at paras. 28-30.
[72]
In reaching this conclusion, I have
assessed the conflicting versions with reference to what I consider
to be the telling effect
of the objective evidence and the common
cause facts; being matters in respect of which the trial court
enjoyed no greater advantage
than this court, and to which, in my
respectful opinion, it paid no or insufficient regard.  There
was consequently no basis
upon which the appellant could be liable in
contractual damages to the respondent, as alleged in the claim in
reconvention.
The
respondent’s counterclaim in delict
[73]
Turning to the alternative claim founded in
delict.  The principles by which the concept of unlawful
competition is defined
under the extended Aquilian action were
summarised in the Constitutional Court’s judgment in
Masstores
(Pty) Limited v Pick n Pay Retailers (Pty) Limited
[2016] ZACC 42
(25 November
2016); 2017 (1) SA 613
(CC);
2017
(2) BCLR 152
, at paras. 29-30:
[29]
Much development in our law has taken place since then [i.e. the
judgment in
Matthews v Young
1922 AD 492], but for present purposes we need only go to this
Court’s own jurisprudence that brings these common law

principles in line with our constitutional framework.
In
Phumelela
[
Phumelela
Gaming and Leisure Limited v Gründlingh
[2006] ZACC 6
; 2007 SA (6) 350 (CC
[2006] ZACC 6
; ;
2006 (8) BCLR 883]
Langa CJ
stated:
“
The
delict of unlawful competition is based on the Aquilian action and,
in order to succeed, an applicant must prove wrongfulness.
This
is always determined on a case by case basis and follows a process of
weighing up relevant factors, in terms of the
boni
mores
[of
the community] now to be understood in terms of the values of the
Constitution.
Any
form of competition will pose a threat to a rival business.  However,
not all competition or interference with property
interests will
constitute unlawful competition.  It is accordingly accepted
that it is only when the competition is wrongful
that it becomes
actionable.  The role of the common law in the field of unlawful
competition is therefore to determine the
limits of lawful
competition.  This determination, which takes account of many
factors, necessitates a process of weighing
up interests that may in
the circumstances be in conflict.  Fundamental to a
determination of whether competition is unlawful
is the
boni
mores
or
reasonableness criterion.  This is a test for wrongfulness which
has evolved over the years.
The
Bill of Rights protects the right to property, and also promotes and
protects other freedoms, notably in this case, the right
to freedom
of trade.  The consequence of the right to freedom of trade is
competition.
The
question is whether, according to the legal convictions of the
community, the competition or the infringement on the goodwill
is
reasonable or fair when seen through the prism of the spirit, purport
and objects of the Bill of Rights.  Several factors
are relevant
and must be taken into account and evaluated.  These factors
include the honesty and fairness of the conduct
involved, the morals
of the trade sector involved, the protection that positive law
already affords, the importance of competition
in our economic
system, the question whether the parties are competitors, conventions
with other countries and the motive of the
actor.” [In para.
31.]
“
In
its judgment, the Supreme Court of Appeal noted that goodwill is a
valuable asset in the sphere of competition.  The Bill
of Rights
does not expressly promote competition principles, but the right to
freedom of trade, enshrined in section 22 of the
Constitution is, in
my view, consistent with a competitive regime in matters of trade and
the recognition of the protection of
competition as being in the
public welfare.” [In para. 40.]
[30]
The development of the law of unlawful competition must thus be
accomplished in terms of the general principles of Aquilian

liability.  In general this involves conduct in the form of an
unlawful and culpable act or omission that causes damage in
the form
of economic loss to another.  It is not the conduct itself that
establishes unlawfulness, but its harmful result.
…
There
is no general right not to be caused pure economic loss,
but
in unlawful competition cases, … our courts have recognised
that the loss may lie in the infringement of a right to goodwill
or
in the legal duty to respect the right to goodwill.
[74]
There is no closed list of instances of
conduct that are acknowledged to constitute unlawful competition, but
the dishonest use
of a third party’s confidential information
to gain an unfair competitive advantage is a well-recognised
example.  Honesty
and fairness, which are relevant criteria when
it comes to weighing whether any competitive conduct falls foul of
the community’s
sense of
boni
mores
, have been acknowledged to be
elastic and imprecisely defined concepts, so that any conclusion
whether they are present or absent
is always heavily influenced by
the peculiar circumstances of the given case.
[75]
For information to qualify as
‘confidential’ in the sense that would be relevant for
the purposes of competition it
needs to be secret (i.e. not in the
public domain) and of commercial value.  There can be no basis
for a complaint of unlawful
competition on the basis of the use by a
competitor of allegedly proprietary information that does not have at
least those two
characteristics.
[76]
The information that the respondent relied
on in the current matter was that pertaining to the identity of its
customers and the
prices at which it sold pig carcasses to them.
The appellant had some access to this information because the
provisions of
the cession of book debts agreement entitled it to
periodic confirmation of the information that it would need in the
event of
it ever having to exercise its contingent right under the
agreement to exact payment from the respondent’s trade
debtors.
The evidence did not support the judge’s finding
that the appellant had had access to the respondent’s price
lists
and discount structures.  Knowledge of the prices being
realised by the respondent at any particular time would in any event

be of little value to intending competitors because of the volatility
of prices generally in the market.
[77]
The evidence did not support the attachment
of confidentiality to the information concerned.  On the
contrary, it made it apparent
that information about customer
connections and pricing was exchanged quite freely within the
industry.  It was the very availability
of that sort of
information that informed the regular negotiations between the
respondent and the appellant in tracking whether
the latter’s
prices were in line with the market trends.  Indeed, it could
reasonably be inferred that it was the liberal
availability of that
information that contributed to the undisputed ‘fiercely
competitive’ character of the industry.
It was also not
established that it would not be easy for anyone in the industry to
identify the significant purchasers of pork
products in the
marketplace.  They would obviously be foodstuff retailers.
It is apparent from the evidence that customers
were not shy of
indicating to suppliers how they might obtain supplies elsewhere at
lower prices.
[78]
The statement in the judgment of the court
a quo that Burger had acknowledged in a contract signed by him on the
appellant’s
behalf that the appellant would have ‘
access
to confidential information that is of substantial value to the
[respondent]
and in respect of which the
[respondent]
is entitled to protection
’
was not sustained by the evidence.  The only deed of agreement
that was executed between the parties was the cession
of book debts
agreement.  It did not contain any acknowledgement of the nature
referred to by the court a quo.
[79]
There
was no evidence to suggest that by trading with the respondent’s
established customers the appellant had induced any
of them to breach
any subsisting contracts between the customers and the respondent.
Subject to it not dishonestly abusing
the information that it
obtained by reason of the cession of debts agreement, there was
nothing in law to prevent the appellant
trading with the respondent’s
former customers or actively soliciting their custom once the
business relationship between
the parties had come to an end.
The trial court’s implication of the principles applicable in
respect of covenants
in restraints of trade was misplaced.  The
principles could have no application to the appellant’s freedom
of trade
because there was no restraint of trade agreement between
the parties.  The public policy considerations that inform the
enforceability
of restraint of trade agreements frequently fall to be
applied in the context of agreements that are directed at prohibiting
competition
that, but for the agreed restraint, might otherwise be
quite legitimate.  They are materially affected by the principle
of
pacta
sunt servanda
,
which plays no role in the objective determination of whether it
would be reasonable to stigmatise any particular competitive

behaviour as unlawful for the purposes of the extended Aquilian
action.
The endeavour by the
court
a quo to equate the sole marketing agreement with a restraint of
trade agreement was also misconceived.  The sole marketing

agreement regulated the conduct of the parties during the subsistence
of the business arrangement of which it was a component feature,

whereas a restraint of trade agreement by its character is directed
at regulating the covenantor’s freedom of trade for a
period
after the primary contractual relationship between covenantor and
covenantee has ended.
[80]
On the facts it was quite clear that the
respondent’s business failed, not because the appellant started
dealing with his
customers, but instead because he was unable to find
a suitable substitute for the appellant as a source from which to be
able
to supply his customers.  The evidence also suggested that
the respondent had maintained at least part of his customer base

because of the customers’ preference for the appellant’s
produce.  That there was a direct connection between
the
appellant as the original source of supply and the respondent’s
customers was borne out by the undisputed evidence that
the
respondent’s customers occasionally contacted Burger directly
to discuss produce related issues.
[81]
It was therefore clear by the end of the
first stage hearing that there was no proper foundation to the
alternative claim in reconvention
based in delict.
Conclusion on
the merits of the appeal
[82]
In the circumstances, where the trial court
was in a position at the end of the first stage hearing to be able to
discern that there
was no merit in the claims in reconvention, it
should have recognised that no point would be served by a second
stage trial.
For the reasons provided above, the trial judge
should therefore have upheld the money claim in convention and
dismissed the claims
in reconvention.  The terms of credit
provided by the appellant to the respondent provided that late
payment would be subject
to ‘interest at the then current
maximum bank overdraft rate plus 2%’.  That does not make
sense.  I think
it would be fair to construe it to have been
intended to mean ‘2% above the prevailing prime rate of
interest charged by
the plaintiff’s bankers’.  The
appellant also claimed various directions concerning its rights under
the cession
of debts agreement, but no evidence was adduced to
support the necessity for such relief and the appellant did not in
fact need
it to be able to exercise its rights as cessionary.
Application
for condonation
[83]
The record filed by the appellant’s
attorneys was deficient in a number of respects.  It did not
contain a complete set
of the pleadings and some of the documentary
exhibits referred to in the course of the evidence were also
omitted.  In several
instances the cross-referenced page numbers
in the record to various of the exhibits were incorrect or omitted
altogether.
As may be imagined, this caused us inconvenience
and annoyance.  The appellant belatedly supplemented the record
with some
of the omitted pleadings and, as foreshadowed in its
counsel’s heads of argument, applied for condonation.  Its
application
for condonation, which was not opposed, did not, however,
address the other shortcomings in the record.
[84]
Having
regard to the merits of the appeal, we have concluded that it would
be in the interests of justice to grant the application
for
condonation.  The shortcomings in the record, which suggest that
it was not properly perused by the appellant’s
attorneys,
before or after its delivery, should, however, not be allowed to go
unnoticed.  The importance of the conscientious
discharge by an
appellant’s attorney of the duty to prepare the record on
appeal has been remarked on in a number of reported
judgments.
[52]
The courts have on occasion marked their displeasure when attorneys
have failed in their duty in this respect by depriving
them of their
perusal fee.
[53]
I
consider that it would be appropriate to do so in this matter.
Order
[85]
In the result the following orders are
made:
1.
The appellant’s application for
condonation in respect of the deficient record lodged on appeal is
granted, with no order
as to costs.
2.
The appeal is upheld with costs, save that
any fee charged by the appellant’s attorneys for the perusal of
the record on appeal
is disallowed;
3.
The order made by the court a quo is set
aside and replaced with an order in the following terms:
(a)
Judgment is granted against the
defendant in favour of the plaintiff in respect of the claim in
convention for payment in the sum
of R1 196 868,84,
together with interest on the capital debt component thereof at 2%
above the prevailing prime rate
of interest charged by the
plaintiff’s bankers as provided in the application for credit
facilities, dated 17 February
2005 (annexure POC 1 to the
plaintiff’s amended particulars of claim);
(b)
The claims in reconvention are
dismissed with costs;
(c)
The defendant in convention is
ordered to pay the plaintiff’s costs of suit in respect of both
the claim in convention and
the claims in reconvention.
A.G. BINNS-WARD
Judge of the High
Court
E.T. STEYN
Judge of the High
Court
M.L. SHER
Judge
of the High Court
APPEARANCES
Appellant’s
counsel:

A. Beyleveld SC
Appellant’s
attorneys:

Wheeldon Rushmer & Cole Inc
Makhanda
(Grahamstown)
De
Klerk & Van Gend Inc
Cape
Town
Respondent’s
counsel:

R.S. Van Riet SC
Respondent’s
attorneys:

Dirk Kotze Attorneys
Bellville
E
Rowan Attorneys
Cape
Town
[1]
Prayer
(a) of the plaintiff’s amended particulars of claim read with
annexure POC 2.
[2]
See
also paragraphs [9], [17]-[20]
below.
[3]
The
appellant and Winelands Pork (Pty) Ltd were both partly owned
subsidiaries of Number Two Piggeries (Pty) Ltd, a company based
in
Komani (Queenstown) in the Eastern Cape.
[4]
‘
Defendant’s
Consequential Plea to Plaintiff’s Amended Particulars of
Claim’.
[5]
Para.
10.1 of the respondent’s ‘Consequential Plea to
Plaintiff’s Amended Particulars of Claim’.
[6]
See
JMV Textiles
(Pty) Ltd v De Chalain Spareinvest 14 CC and Others
[2010]
ZAKZDHC 34 (20 August
2010); 2010 (6) SA 173
(KZD);
[2011] 1
All SA 318
, followed in this Division in
Collotype
Labels RSA (Pty) Ltd v Prinspark CC and Others
[2016] ZAWCHC 159
(9 November 2016).
[7]
Rule
22(4) provides: ‘If by reason of any claim in reconvention,
the defendant claims that on the giving of judgment on
such claim,
the plaintiff’s claim will be extinguished either in whole or
in part, the defendant may in his plea refer
to the fact of such
claim in reconvention and request that
judgment
in respect of the claim or any portion thereof which would be
extinguished by such claim in reconvention, be postponed
until
judgment on the claim in reconvention. Judgment on the claim shall,
either in whole or in part, thereupon be so postponed
unless the court, upon the application of any person interested,
otherwise orders, but the court, if no other defence has been

raised, may give judgment for such part of the claim as would not be
extinguished, as if the defendant were in default of filing
a plea
in respect thereof, or may, on the application of either party, make
such order as to it seems meet.’  (Italicisation
for
emphasis.)
[8]
Cf.
e.g.
Consol
Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and Another
[2002] 1 All SA 517
,
2002 (2) SA 580
(C), at para 20.
[9]
Apparently
in the capital sum of R1 127 379,38 (R1 191 084,94
- R63 705,56).
[10]
Para.
7 of the amended particulars of claim read with para. 9 of the
‘consequential plea’.
[11]
In
terms of s 27(b) of the National Credit Amendment
Act
19 of 2014, with effect from 13 March 2015.
[12]
The
need for the respondent to deliver a consequentially amended plea to
the appellant’s amended particulars of claim was
made evident
during the appellant’s counsel’s opening address.
The judge was informed by the respondent’s
counsel at that
time that he had discussed the import of the intended amendment with
the appellant’s counsel, who was content
for the hearing to
commence and for the amended plea to be delivered later.  The
judge was ill-advised to have acquiesced
in that arrangement.
As the judge was not himself enlightened as to the intended
formulation of the intended plea, he could
not know how it might
affect the delineation of the issues and impact on the conduct of
the trial.  It is not possible for
a judge to effectively
fulfil his or her role in managing the proceedings if he or she is
not fully cognisant of the pleadings.
The muddled state of the
pleadings that ensued upon the eventual delivery of the
consequentially amended plea could have been
avoided had the judge
insisted, as he should have done, on the amended pleading being
produced before the determination of the
application for a
separation order in terms of rule 33(4) (discussed below) and the
hearing of any evidence.  Had the plea
been delivered when it
should have been, it would in all likelihood have elicited an
exception, and even if it did not, it would
have provided reason to
put the judge on enquiry before allowing the hearing to proceed on
an obviously ill-defined basis, as
discussed further in the body of
this judgment.
[13]
In
paragraph [3].
[14]
In
his claim in reconvention the respondent in point of fact prayed for
an order that set-off should apply.  That was inept,
for
set-off operates automatically by operation of law to cancel out the
debts on both sides to the extent that the amounts thereof
are equal
to each other.  An order of court is not required.  The
prayer does, however, serve to confirm that, on a
sensible
construction of the respondent’s pleadings, he admitted the
appellant’s claim, subject to his alleged entitlement
to an
abatement for the overcharge.
[15]
The
conduct of trials in the High Court is regulated in terms of rule 39
of the Uniform Rules.  Rule 39(5) read with rule
39(9) provides
that before any evidence is adduced an opening address may be made
by counsel for the party who bears the duty
to begin (usually the
plaintiff).  The opposing party’s counsel’s
opportunity to make an address is provided
for in rule 39(7) read
with rule 39(9).  It arises only after the firstmentioned party
has closed its case.  The procedure
adopted in the court a quo
appears to have been inspired by rule 29(3) of the Magistrates’
Court Rules, which provides:
‘
Before
proceeding to hear evidence, the court may require the parties to
state shortly the issues of fact or question of law in
dispute. The
court may record the issues of fact or questions of law thus
stated
’.
[16]
See
footnote 7
above,
especially the italicised wording.
[17]
At
paragraph [12].
[18]
See
footnote 3
above.
[19]
See
the quotation from the respondent’s counsel’s address in
para. [21]
above.
[20]
Which
was manifest in an extensive discussion in the judgment of the
exceptio
non adimpleti contractus
notwithstanding that such a defence had, unsurprisingly in the
circumstances, not been pleaded.
[21]
Indeed,
even if the various agreements in terms of which the parties
transacted their business fell to be characterised as integral

components of a single contract, it would not necessarily follow
that all of their mutual rights and obligations arising under
such
contract would be reciprocal in nature; cf.
ESE
Financial Services (Pty) Ltd v Cramer
1973 (2) SA 805
(C),
[1973] 3 All SA 199
(C).
[22]
‘
Recover’
would probably have been a more accurate word to use than ‘claim’.
[23]
See
e.g.
Denel
(Edms) Bpk v Vorster
[2004] ZASCA 4
(5 March
2004), 2004 (4) SA 481
(SCA),
[2005] 4
BLLR 313
, at para. 3;
Absa
Bank Ltd v Bernert
[2010] ZASCA 36
(29 March
2010), 2011 (3) SA 74
(SCA), at para.
21;
Adlem
and another v Arlow
[2012] ZASCA 164
;
[2013] 1 All SA 1
(SCA),
2013 (3) SA 1
, at
para. 5;
Road
Accident Fund v Mohohlo
[2017] ZASCA 155
(24 November
2017), 2018 (2) SA 65
(SCA), at paras.
2-3;
First
National Bank v Clear Creek Trading 12 (Pty) Ltd and Another
[2015] ZASCA 6
(9 March 2015); 2018 (5) SA 300 (SCA) at paras.
8-14 and
Government
of the Western Cape: Department of Social Development v C B and
Others
[2018] ZASCA 166
(30 November
2018); 2019 (3) SA 235
(SCA),
at paras. 19-25.
[24]
See
paragraphs [26]
and
[27]
above.
[25]
Because it did not determine the overcharge claim as one of ‘the
other issues in dispute’.
[26]
Cf.
International
Shipping Co (Pty) Ltd v Bentley
1990
(1) SA 680
(A);
[1990] 1 All SA 498
at 700E-701G (SALR) and the
other authorities discussed there.
[27]
Footnote
23
above.
[28]
In
motivating the amendment of the originally made ruling in terms of
rule 33(4) to include ‘and causation’, the respondent’s

counsel informed the trial judge that he and the appellant’s
counsel ‘
had
a long discussion on that this morning and we separately last night
came to the conclusion that in this particular case there’s

such an overlap between causation and quantum that it’s going
to be very difficult.  So we’ve agreed, subject
of course
to Your Lordship’s agreement, that we also allow causation to
stand over.
’
Counsel’s appreciation of the inherent overlap was perceptive
but, having regard to the fact that there cannot
be liability
without proof of causation, it should have alerted them, and the
judge, to the fact that the proposed separation
(whether in
originally determined or amended form) would in point of fact very
clearly
not
be convenient.
[29]
For
an example of a case in which an ineptly determined separation of
issues resulted in the appellate court being unable to determine
the
case on its merits on appeal and consequently constrained to make an
order setting aside the judgment of the court a quo
and remitting
the case for trial afresh before a different judge, see
Silatsha
v Minister of Correctional Services
[2018] ZASCA 145
(2 October 2018).
[30]
Cf.
Road
Accident Fund v Mohohlo
supra,
at para. 3.
[31]
The remark by Grosskopf JA in
Stead
v Conradie en Andere
[1994] ZASCA 147
;
1995
(2) SA 111
(A) at 123 that ‘[m]
arkwaarde
van ’n eiendom is na my mening iets wat objektief vasstelbaar
is
’,
on which counsel for the respondent sought to rely, was made in
circumstances quite distinguishable from those that presented
in the
current matter.  In
Stead
it fell to one of the parties to a contract of sale to make a market
value determination for the purpose of fixing the purchase
price.
The effect of the learned judge of appeal’s remark was that
the fact that the determination fell to be made
within objectively
ascertainable parameters took the matter outside of the situation in
which fixing the price was in the absolute
discretion of one the
parties, which would have rendered the agreement invalid.
Certainty was obtainable in
Stead
because the contract nominated a person whose determination of the
price with reference to the market would be definitive.
All
that the parties in the current matter did was to agree to negotiate
on the determination of a market related price.
[32]
I
obviously use the term ‘credit facility’ in its ordinary
sense, as distinct from the technical concept provided
for in
s 8(3)
of the
National Credit Act.
[33
]
Cf.
Everfresh
Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
[2011] ZACC 30
(17 November 2011) 2012 (1) SA 256 (CC); 2012 (3)
BCLR 219.
[34]
Cf.
Premier,
Free State, and Others v Firechem Free State (Pty) Ltd
2000 (4) SA 413
(SCA) at para. 35 and
Southernport
Developments (Pty) Ltd v Transnet Ltd
[2004] ZASCA 94
(29 September 2004);
[2005] 2 All SA 16
(SCA), at
paras. 11-16.
[35]
The
trial judge was of the opinion that another step was required.
He held that a cancellation could be effected only after
the
appellant had given the respondent notice to cure its breach.
He mentioned the concept of
mora
.
But
mora
is concerned with the failure of a debtor to perform his contractual
obligations timeously, in other words a default.  The
concept
is not engaged when a party to a contract violates it by doing
something positive in material breach of his obligations.
Quite
how a breach of the nature involved could be cured is in any event
problematic.  The judge appears to have had in mind,
although
this is by no means clear, something like an undertaking by the
guilty party not to do it again.
[36]
In
para. 20, the respondent had pleaded that ‘… in order
to sell and deliver the pork products required by its (
sic
)
…customers, and to survive business-wise, [he] was
accordingly enjoined (
sic
)
to mitigate its (
sic
)
losses, on two occasions, to purchase pork products during the
period approximately end June 2012 from an entity known as Hunters

Vlei’.
[37]
The
decisions in
Roazar
CC v Falls Supermarket CC
[2017] ZASCA 166
(29 November 2017);
[2018] 1 All SA 438
(SCA);
2018
(3) SA 76
and
Trustees
for the time being of
Oregon
Trust v Beadica 231 CC and Others
[2019] ZASCA 29
(28 March
2019); 2019 (4) SA 517
(SCA) serve to
demonstrate the difficulties that might confront any such claim.
[38]
The
respondent’s inability to reach agreement with the appellant
on the prices certainly did not constitute a repudiation,
as the
appellant alleged in its pleadings.
[39]
Cf.
e.g.
Santam
Bpk. v Biddulph
[2004] ZASCA 11
(23 March 2004);
[2004] 2 All SA 23
(SCA);
2004 (5)
SA 586
, at para. 5, and
Medscheme
Holdings (Pty) Ltd and Another v Bhamjee
[2005]
4 All SA 16
(SCA);
2005 (5) SA 339
at para. 14.
[40]
Per
Horwitz AJ in
R
v Lekaota
1947
(4) SA 258
(O) at 263.
[41]
The
‘homely metaphor’ first used in that context, to the
best of my knowledge, in
S
v Kelly
1980 (3) SA 301
(A) at 308B (per Diemont JA).
[42]
At
the place cited in footnote 39
above.
[43]
(Footnotes
omitted.)  The ‘Pinocchio theory’ is explained in
footnote 2 to the judgment as the theory ‘“
…
according
to which dishonesty on the part of a witness manifests itself in a
fashion that does not appear on the record but is
readily
discernible by anyone physically present . . .
”
see A M Gleeson QC ‘
Judging
the Judges
’
53 Australian LJ 338 at 344, quoted in Tom Bingham
The
Business of Judging: Selected Essays and Speeches
(2000)
Oxford University Press at 10.
[44]
Société
d’avances Commerciales (Société Anomyne
Egyptienne) v Merchants’ Marine Insurance
Co. (‘The
Palitana’)
(1924) 20 Lloyds Rep 140
at 152.
[45]
In
Arter
v Burt
1922 AD 301
at 306, Innes CJ stated, ‘[t]
he
advantage enjoyed by a Trial Court of observing the manner and
demeanour of the witnesses is very great and a resulting conclusion

will not lightly be disturbed. But a finding baldly based on
demeanour alone is not satisfactory. The reason
[s]
should
indicate that the general probabilities and the broader aspects of
the case have not been overlooked
’.
To similar effect see also, for example,
Protea
Assurance Co Ltd v Casey
1970 (2) SA 643
(A);
1970]
3 All SA 44
, at 648-650 (SALR),
Body
Corporate of Dumbarton Oaks v Faiga
[1998] ZASCA 101
(26 November
[1998] ZASCA 101
;
1998); 1999 (1) SA 975
(SCA);
[1999] 1
All SA 229
, at 979-980 (SALR),
President
of the RSA and Others v South African Rugby Football Union and
Others
[1999] ZACC 11
(10 September
1999); 1999 (10) BCLR 1059
(CC);
2000 (1) SA 1
at paras. 78-80,
Allie
v Foodworld Stores Distribution Centre (Pty) Ltd and Others
[2003] ZASCA 151
(2 December 2003);
[2004] 1 All SA 369
(SCA) at
paras. 35-42.
[46]
R
v Dhlumayo
1948 (2) SA 677
(A);
[1948] 2 All SA 566
,
at
695 (SALR).
[47]
In
President
of the RSA & Ors v SARFU & Ors
supra,
at para. 78.
[48]
The
pertinent propositions listed more than 70 years ago in
Dhlumayo
at 705-706 (SALR) have stood the test of time.  It is in their
application that one finds differences of emphasis in the
reported
cases.
[49]
In
Australia, where the judicial appellate system is closely similar in
form and history to our own, the High Court (per Gleeson
CJ, Gummow
J and Kirby J) has noted, with regard to credibility findings
premised on the trial judge’s assessment
of witness demeanour
and the practice of appellate court deference to them, that ‘…
in
recent years, judges have become more aware of scientific research
that has cast doubt on the ability of judges (or anyone
else) to
tell truth from falsehood accurately on the basis of such
appearances. Considerations such as these have encouraged
judges,
both at trial and on appeal, to limit their reliance on the
appearances of witnesses and to reason to their conclusions,
as far
as possible, on the basis of contemporary materials, objectively
established facts and the apparent logic of events
’.
The judgment concluded in this regard ‘[t]
his
does not eliminate the established principles about witness
credibility; but it tends to reduce the occasions where those

principles are seen as critical
’.
Fox
v Percy
[2003] HCA 22
(30 April
[2003] HCA 22
;
2003); 214 CLR 118
;
197 ALR 201
;
77 ALJR
989
, at para. 31.
[50]
Cf.
Mphahlele
v First National Bank of South Africa Ltd
[1999] ZACC 1
(1 March
[1999] ZACC 1
;
1999); 1999 (2) SA 667
(CC);
1999 (3) BCLR
253
, at para. 12, where Goldstone J stressed the furnishing of
adequate reasons for judgment as fundamental to judicial
accountability
(in terms of the founding value in s 1 of the
Constitution) and highlighted their essential role in assisting ‘
the
appeal court to decide whether or not the order of the lower court
is correct
’
.
[51]
At
587 (All ER).  I have not overlooked the difficulties that
Davies AJA expressed in
Dhlumayo
with
the formulation of the so-called third principle by Lord Thankerton
and have taken into account the learned acting judge
of appeal’s
exposition of how it should be understood.  The remarks in the
Bernert
judgment quoted above do seem to me, however, to be in accord with
the unadulterated tenor of Lord Thankerton’s expression
of the
principle.
[52]
See
e.g.
Senator
Versekeringsmaatskappy Bpk v Lawrence
1982 (3) SA 136
(A);
[1982]
4 All SA 314
, at 144-145 (SALR) and the judgments cited in footnote
5353.
[53]
See
e.g.
Rennie
NO v Gordon and Another NNO
1988 (1) SA 1
(A);
[1988]
1 All SA 296
and
Minister
of Health and Another v Maliszewski and Others
[2000] ZASCA 29
(30 May
2000); 2000 (3) SA 1062
(SCA);
[2000] 3 All
SA 160.