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[2011] ZAGPJHC 147
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Tecmed (Pty) Ltd and Others v Sojitz Corporation (03/03539) [2011] ZAGPJHC 147 (26 October 2011)
REPORTABLE
IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
(REPUBLIC OF SOUTH AFRICA)
CASE NO: 03/03539
DATE:26/10/2011
In the matter between:
TECMED (PTY) LIMITED
.................................
First
Defendant/First Applicant
MILFORD, MICHAEL VOI HARRY
.............
Second
Defendant/Second Applicant
BEGERE, WERNER
...........................................
Third
Defendant/Third Applicant
HURWITZ, BARNEY
......................................
Fourth
Defendant/Fourth Applicant
PULE,
ADRIEN
......................................................
Fifth
Defendant/Fifth Applicant
and
SOJITZ
CORPORATION
.......................................................
Plaintiff/Respondent
JUDGMENT
WEINER J:
BACKGROUND
This Matter has a long and drawn out history, accompanied by long
delays. The transactions between the parties last occurred in
March
2000. Summons was issued three years later in 2003. Since then there
have been amendments, substitution of parties, appeals
and several
postponements of the trial.
The present notice of amendment was delivered approximately three
weeks before the matter was set down for hearing. The plaintiff
agreed to the postponement of the trial. A new trial date has not yet
been allocated.
The defendants seek to delete the plea and counterclaims and
substitute
them
with two new special pleas,
an amended plea and conditional counterclaims.
The applicant
in the present matter are the
defendants in the main matter . For ease of reference, the applicants
will be referred to as the
‘defendants’ and the
respondent as the ‘plaintiff’.
The plaintiff objected to these amendments. The main grounds of
objection are that:
the defendants have not made out a case in its founding affidavit to
justify the delay in bringing the amendments;
the defendants have not set out facts to show that the amendments
introduce triable issues – as that term is understood in
the
context of
the
amendments to
the
pleadings;
the amendments sought would render the pleadings vague and
embarrassing and/or would fall short of the requirements of Uniform
Rule 18(4) causing prejudice to the plaintiff;
the defendants are attempting to springboard claims; and many, if not
all of the counterclaims have prescribed.
The plaintiff submits that the main effects of the amendment are:
to withdraw admissions previously made in pleadings;
to introduce reliance upon an oral amendment to a written
distributorship agreement, which has never before been relied upon or
even referred to as a source of the defendants’ rights;
to introduce counterclaims in respect of alleged defects in the goods
sold and delivered by the plaintiff more than 10 years ago
that have
never before been relied
up
on; and
to introduce counterclaims that have become extinguished by
prescription.
ORIGINAL
PLEADINGS AND EVENTS TO DATE
This action was instituted during February 2003. The plaintiff seeks
payment for goods sold and delivered. The amount claimed is
USD
3,606,449
.
45 (currently equivalent
to approximately R26,5 million), plus interest and costs.
The action concerns a number of transactions entered into pursuant to
a written distributorship agreement concluded between the
plaintiff
and first defendant on 18 February 1992
(“the
distributorship agreement”).
After preparing a detailed affidavit resisting summary judgment, the
defendants delivered their plea and counterclaim during October
2003.
In the original plea,
t
he
defendant
s
admitted the conclusion
and
express terms
of the distribution agreement
and the transactions entered into pursuant to the distribution
agreement.
The
defence
s
raised
w
ere
that payments were made for
the
goods
and/or that the goods were defective. In respect of the latter, the
defendants rel
ied
on
the
Toshiba
written warranty against
defects in design material and workmanship (‘the warranty’)
.
Relying on this warranty, the defendants plead
ed
that:
the plaintiff failed to deliver eight identified items free from
defects in design, material or workmanship;
despite proper notice these defective products were not repaired or
replaced; and
the items were returned, alternatively
,
are
tendered for return.
The first defendant simultaneously
instituted
a number of counterclaims for damages that are based on alleged
breaches of the warranty.
In the plaintiff’s plea to the counterclaims, it admits that
the warranty applied to the products in terms of the distribution
agreement. It relies on the express provision that the warranty would
only be applicable if:
the first defendant gave the plaintiff written notice of any defect;
and satisfactory proof thereof promptly upon discovery of
such
defect, but in no case later than 15 days after expiration of the
applicable warranty period.
The defendants submit that they have, at all times, been bona fide,
that the prejudice (if any), complained of by the plaintiff,
is not
of the kind considered sufficient to refuse leave to amend, that
prescription (despite being denied) is an issue to be determined
at
trial and not in the present application, that its proposed amendment
is not vague and embarrassing
,
that the
proposed
p
lea constitutes an expanded
defence (i.e.
a ‘technical
correction’) and that the amended counterclaims relate to
causes of action already before this court.
It lies within the court’s discretion, exercised judicially, to
grant or refuse an amendment.
1
However, a defendant for an amendment must show:
the application is bona fide;
it introduces a triable issue; and
that there is no prejudice to the plaintiff
,
alternatively
,
the prejudice is not such
that cannot be remedied by an order for costs or postponement.
In Trans-Drakensberg Bank Ltd (under Judicial Management) v Combined
Engineering (Pty) Ltd and Another,
2
which has been referred to with approval in a number of cases
3
,
Caney J said:
“Having already made his case in his pleading, if he wishes to
change or to add to this, he must explain the reason and show
prima
facie that he has something deserving of consideration, a triable
issue; he cannot be allowed to harass his opponent by an
amendment
which has no foundation. He cannot place on the record an issue for
which he has no supporting evidence, where evidence
is required, or,
save perhaps in exceptional circumstances, introduce an amendment
which would make the pleading excipiable...or
deliberately refrain
until a late stage from bringing forward his amendment with the
purpose of catching his opponent unawares,...or
of obtaining a
tactical advantage...or of avoiding a special order as to costs (own
emphasis)
.”
The defendant
contends that:
its
original
p
lea,
dated 28 October 2003, does not reflect the correct factual matrix.
it was only during trial preparation in 2010 that the inadequacy of
the
plea and counterclaims was ascertained.
it
seek
s
to
introduce
the following
:
the first special
p
lea deals with
the
requirement for
Japanese and United States of America
Governmental Approval, which was a suspensive condition of each
individual contract. Such
approvals are alleged to be lacking; and
the second special
p
lea deals with the fact
that the first defendant did not confirm individual orders in
writing, as was required by the distributorship
agreement and that,
therefore, the individual contracts are of no force and/or effect.
allegations that change the procedure for warranty claims created by
the express provisions of the distribut
orship
agreement
,
read with the warranty
(the amended procedure)
.
Defendant
seeks to introduce an oral agreement
(the oral
agreement).
The amended procedure was allegedly agreed upon
orally ‘during the term of the of the [written distribution
agreement] and
more particularly during the period of 1997 to 1999
and at Johannesburg, South Africa and/or Tokyo, Japan.’
The plaintiff denies
that the
amendment
to introduce the oral agreement provides
a ‘triable
issue’, by virtue of the allegation that it is inconsistent
with article 37 of the distributorship agreement.
Article 37.2,
up
on which the plaintiff
relies, reads: “No amendments, modifications, changes,
alterations or supplements to this Agreement
and executed by duly
authorised representatives or officers of the parties hereto.”
Defendant contends that this is meaningless.
Plaintiff sought to argue that the clause is clearly missing certain
words (“unless
reduced to writing and signed” between the
words “Agreement” and “and executed”) and
that such words
should be included to give the clause its clear
meaning.
Defendant contends that these
words cannot simply be read into the agreement and that therefore
that o
ral variations are not precluded and the distributorship
agreement should be read, as varied by the oral agreement.
Defendant contends that
i
f
this ‘oral agreement’ is proved, by means of evidence at
trial, it will establish that the plaintiff failed to fulfill
its
warranty obligations and that it cannot hide behind the fact that the
first defendant did not always make its grievances known
in writing.
It is, therefore, ‘viable or relevant’
and a triable issue.
The granting of this amendment affects the majority of the other
amendments as they are based upon this oral agreement and amended
procedure.
T
he defendants
seek
further to introduce
implied contractual terms
and
defences which affect the defendant’s indebtedness.
T
h
ese
terms
are
, inter alia, that the products
delivered would accord with the orders, would be functional and free
of defect
s. T
he defences
a
re, inter alia, that the
p
laintiff
failed to credit the
d
efendants for
payments made
.
Finally,
defendants submits that
the
proposed amendment
s
seeks to clarify the
factual circumstances relating to the
c
onditional
c
ounterclaims
. It
contends that the basis for the counterclaims has been set out
in
terms of the original 28 October 2003 document.
The specific objections TO THE AMENDMENTS
The introduction of the special p
leas
and their incorporation in paragraph
5,
8.1, 8.9, 9.1 and 10.1 of the plea
:
Defendant contends that the allegations in the amendments refer
directly to the provisions of the distributorship agreement.
There is merit in
d
efendant’s
argument. There is no prejudice to
p
laintiff
by the introduction of these allegations.
The
p
laintiff has taken issue with the fact
that the
d
efendants
, in
denying knowledge of the plaintiff’s name and particulars
have
withdrawn
t
he admission
to
this effect contained in the original plea.
T
he
d
efendants
submit that they
have adequately explained
this
alleged withdrawal:
when action was instituted, it was by Nissho Iwai Corporation as the
p
laintiff;
the
f
irst
d
efendant
had contractual relations with and, accordingly, was able to admit
the citation and description thereof;
Sojitz Corporation has been substituted for Nissho Iwai Corporation,
for the very reason that Nissho Iwai Corporation has ceased
to exist;
Sojitz Corporation has never traded as Nissho Iwai Corporation (they
are distinct juristic entities), nor has it ever had a contractual
relationship with the
f
irst
d
efendant
that would allow an admission of the particulars pleaded;
accordingly, the
d
efendants are not
withdrawing an admission in relation to the present
p
laintiff
but
only in relation to the former
p
laintiff,
whose particulars are no longer reflected on the pleadings and to
whose particulars the admission related; and
if correct, the present
p
laintiff will
easily prove its particulars and will, accordingly, suffer no
prejudice from the withdrawal of
the alleged
admission
.
The
p
laintiff also takes issue with an
alleged withdrawal of an admission in relation to the order and
supply of products
in paragraph 5 of the original
plea
.
Defendant contends that, w
hilst
goods were ordered and delivered (i.e. the admission still stands),
same has been qualified with the allegation that certain
delivered
goods did not constitute what was ordered, which, in turn,
constitutes a defence to the alleged liability of the
d
efendants
and which is a matter to be determined at trial.
The attempt to introduce the so-called ‘oral variation
agreement’
in
paragraphs 8.6 –
8.7 and 10.2 of the plea
:
This amendment
is challenged
by
plaintiff on the following grounds:
it does not raise a triable issue
according to the
plaintiff
.
the provisions of article 37 properly interpreted permit no doubt as
to the prohibition in article 37.2 against oral amendments
of the
distribution agreement.
there is insufficient particularity as to exactly when the oral
variation was concluded to enable the plaintiff to plead thereto.
Bergere
,
the third
defendant and
a director of the first defendant
states
that during trial preparations in 2010, additional
documents were located that with the information gleaned during
consultations
made it clear that the pleadings did not reflect the
factual situation that forms the subject matter of the dispute, and
that the
same required amendment
.
The plaintiffs argue that this is palpably false if one considers the
defendants’
detailed
affidavit
resisting summary judgment deposed to in 2003.
Plaintiff argues that t
he suggestions that further documents
were discovered in 2010 and that new defences and counterclaims came
to light thereafter should
be rejected. Furthermore, Bergere’s
absence abroad when the discovery affidavit was signed (in 2010) is
no explanation for
seeking to amend a version that was pleaded in
2003.
The
plaintiff submitted further that
defendants
have not shown that they have something deserving of consideration.
The reasons for the amendment are vague in the extreme,
particularly
when one considers that:
the documents that were allegedly discovered are not identified;
there is no proper explanation why such documents give rise to
further defences and/or counterclaims;
there is no detail of the alleged witness interviews that gave rise
to the further defences and/or counterclaims; and
there is no detail of the proposed evidence that will be introduced
to support the amended version relating to the alleged oral
variation
agreement.
It is inconceivable that the oral variation agreement concerning
litigation of this magnitude was only discovered more than a decade
later through the perusal of documents and trial preparations
.
The prejudice created by the proposed amendment will be enormous.
Such amendments, if granted,
will
give rise
to requests for discovery of documents relating to transactions which
occurred more than 10 years ago. To the extent that
such documents
still exist, conducting a search will be extremely time consuming and
costly.
Witnesses become unavailable and documents are destroyed after a
certain period of time.
Defendants have countered this by submitting that:
it does not suffice to suggest, as the
p
laintiff
does, that “[w]itnesses become unavailable and documents are
destroyed after a certain period of time”, in
light of the fact
that such documents would relate to causes of action in terms of the
original papers
. The amendments relate to the
exact transactions contained in the original plea. The same documents
already discovered would therefore
be relevant;
to the extent that the
p
laintiff may have
to expend resources on locating relevant documents, such is a case
that the
p
laintiff is not barred from
making
claims
to the
T
axing
Master;
addressing the point that witnesses may (not have) become
unavailable, the
d
efendant repeats the
point that
they
are dealing with the same
witnesses (that are required to prove facts on the original
pleadings
) and that the
p
laintiff
has not actually alleged that such witnesses are, in fact,
unavailable;
prejudice should be proved: not alleged on a speculative basis.
In regard to t
he alleged new defects and
additional
payments
raised
in paragraphs 9.3 to 9.6 and 10.1 of the plea
,
plaintiff states that t
hese alleged defects and credit
payments are
used
by the defendants as a
springboard for the new counterclaims
(
that
have prescribed
)
.
AD THE CONDITIONAL COUNTERCLAIMS
Ad the conditional counterclaims generally
The plaintiff:
r
elies on the
non-variation clause
in
distribution
agreement properly interpreted
. This relates to
both the procedure and the
implied or tacit ter
ms
which defendant seeks to introduce.
c
ontends that the
defendant’s proposed amendments are
vague and
embarrassing, and do not comply with rule 18(4), because the
defendants have failed to state
the
date of
shipment from which the warranty would run and which of the equipment
is alleged to be defective .
contends that t
he defendants propose to
withdraw a reference to a specific date
in several
of the amended paragraphs and
replace
same
with a vague reference (‘in and during the period 1999 to 2000’
or ‘ in 2000’
)
. Plaintiff
submits that this
does not comply with rule 18(4) in that the
amendment would render the counterclaim vague and embarrassing.
Generally, the plaintiff’s complaints are
that t
he defendants seek to introduce damages claims that have
not previously been raised. Given the considerable lapse of time,
plaintiff submits that
the defendants are
required to give full particulars regarding these damages claims.
Their failure to do so renders the particulars
vague and
embarrassing, and suggests there is no triable issue.
Plaintiff
counters this by submitting that i
f this amendment is granted
and the Plaintiff is required to plead to it, it is permitted,
thereafter, to request further particulars
for the purposes of trial.
Plaintiff also submits that several of the damages
claims have prescribed
.
Defendant
submits
that this is not an issue
for an
interlocutory Court
4
and that no new claims are, in any event, being
introduced.
Prescription should be
raised by means of a
s
pecial
p
lea,
in the trial action.
5
Defendant submits that
there are issues
that may defeat a plea of prescription, which the
d
efendants
may wish to raise in reply, such as, inter alia, the English
Limitations Act of 1980
(as the contract is to be
interpreted according to English Law)
and the applicability of
the
Prescription Act 68 of 1969
, which, again, is an issue that is
for a
t
rial
c
ourt
to decide.
The plaintiff claims prejudice in opposing the amendment as a further
delay has occurred. That basis of opposition is not relevant
at this
juncture. No trial date has yet been allocated. The amendments and
consequential pleadings can be filed prior to the new
trial date
which will be allocated. This basis of opposition could rather have
been raised by the plaintiff when opposing the postponement
which the
defendant sought in order to amend its pleadings.
The delay in seeking these amendments is taken
into account as well as the explanation tendered by the defendant.
It
is an established principle, that a refusal of an amendment should
not be used to punish a
d
efendant
6
.
In addition, the delay is not fatal to the application, if adequately
explained.
“.......delay, however protracted, is not in itself a bar to
the amendment of a pleading provided that it is satisfactorily
explained, that there is good faith, and that there is no prejudice
which cannot be compensated for by a postponement and appropriate
order for costs.”
7
CONCLUSION
Without obtaining rectification of Clause 37 of the distributorship
agreement, the plaintiff is unable to claim that same contains
a
valid non-variation clause. Defendants’ amendment in relation
to the oral agreement, although arising very late in the
proceedings,
does therefore raise a triable issue.
The amendments which follow upon this are accordingly also triable
issues;
If particulars are vague and embarrassing, the plaintiff can seek
further particulars;
The conditional counterclaims are based upon the supply of the same
goods referred to in the original pleadings;
The issue of prescription should be dealt with by the trial court;
The implied and/or tacit terms are not so unlikely in a contract as
to be excluded;
The balance of the amendments relate to factual issues which the
defendant will in due course have to prove.
It is not for this court to pronounce on the probability of such
defences and counterclaims being factually correct. This court
only
has to take into account:
Explanation for the delay;
Whether there are triable issues;
Can the plaintiff’s prejudice be dealt with by an order for
costs.
The defendant has provided an explanation for the
delay; the amendments do contain triable issues and the plaintiff’s
prejudice
can be cured by a costs order.
T
he plaintiff’s
opposition has
however been
reasonable and
is
not
frivolous.
In the result, t
he
following order is granted:
The defendants are granted leave to amend their
plea and the first defendant’s counterclai
ms
as set out in the Notice of Intention to Amend dated 7 February 2011.
the defendants
are
ordered to pay the
plaintiff’s costs of this application
,
jointly and severally, the one paying the others to be absolved.
DATED AT JOHANNESBURG THIS 26th DAY OF OCTOBER 2011
___________________
Weiner J
Date of hearing: 20 September 2011
Date of judgment: 26 October 2011
Counsel for the plaintiff: SW Burger
Attorneys for the plaintiff: Bowman Gilfillan
Counsel for the defendant: M Nowitz and D Mahon
Attorneys for the defendant: Schindlers Attorneys
1
See
Ciba-Geigy
(Pty) Ltd v Lushof Farms (Pty) Ltd en ‘n Andere
2002
(2)
SA 447
(SCA) at 462 para 33
2
1967(3)
SA 632 (D) at 641A-B
3
Including
Ciba-Geigy
(supra)
,
Caxton
Limited and Others v Reeva Forman (Pty) Ltd and Another
[1990] ZASCA 47
;
1990
(3)
SA 547
(A) at 565G
4
Blaauwberg
Meat Wholesalers CC v Anglo Dutch
Meats (Exports) Ltd
2004 (3) SA 160
(SCA)
.
5
Ibid
.
6
Commercial
Union Insurance Co Ltd v Waymark NO
1995
(2) SA 73
(TK) at 77B (Authorities Bundle, page 295).
7
GMF
Kontrakteurs (EDMS) Bpk v Pretoria City Council
1978 (2) SA 219
(T) at 224G-H (Authorities Bundle, page 158).