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[2016] ZAGPJHC 325
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Schneider Electric SA (Pty) Ltd v Jim Fung Industrial Limited (A5058/2015) [2016] ZAGPJHC 325 (8 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE
NO: A5058/2015
REPORTABLE:NO
OF
INTEREST TO OTHERS JUDGES:NO
REVISED
In
the matter between:
SCHNEIDER
ELECTRIC SA (PTY)
LTD
Appellant
And
JIM
FUNG INDUSTRIAL
LIMITED
Respondent
Coram:
MNGQIBISA-THUSI et MAKUME et WEPENER JJJ
Heard:
4 May 2016
Delivered:
8 December 2016
JUDGMENT
MNGQIBISA-THUSI,
J
[1]
This is an appeal against the judgment and
order of the court
a quo
(Francis J) handed down on 18 May 2015. The respondent, Jim
Fung Industrial Limited (‘Jim Fung’) had instituted
claims (A, B, C, D and E) against the appellant, Schneider Electric
SA (Pty) Ltd (‘Schneider’) for payment of certain
amounts
based on its alleged performance in terms of an agreement the parties
concluded in 2004. At the beginning of the
trial, claim A was
settled. The court
a quo
granted an order in terms of which Schneider was ordered to pay Jim
Fung certain amounts relating to three claims (Claims B, C
and D).
The court a quo dismissed Jim Fung’s claim relating to the
storage costs (claim E) incurred between October
2009 and August
2011; and disallowed the qualifying fees of Jim Fung’s expert
witness.
[2]
Jim Fung is cross-appealing the court a
quo’s decision to dismiss its claim for storage costs and the
expert’s qualifying
fees.
[3]
The appeal and cross-appeal are with the
leave of the court a quo.
Factual
background
[4]
In 2004
Clipsal South Africa (Pty) Ltd (‘Clipsal’), represented
by Graham Chick (‘Chick’) and Jim Fung Industrial
Limited
(‘Jim Fung’), represented by Dickie Cheung (‘Cheung’)
and Cordy Lam (who acted as interpreter),
concluded an oral
agreement, which was supplemented by certain drawings and email
communication between the parties. In terms
of the agreement
Jim Fung undertook to manufacture and sell to Clipsal certain
electrical products. During negotiations of
the agreement,
Clipsal had indicated to Jim Fung that it sought a
more
cost-effective product than what it had previously produced locally.
[5]
In 2007 Clipsal was taken over by Schneider
Electric SA (Pty) Ltd (‘Schneider’). Hereinafter I
will refer to the
respondent as Schneider in the place of Clipsal.
[6]
It is
common cause that the electrical products, side by side couplers
fitted with safety shutters, forming the subject-matter of
the
agreement were intended for sale in the South African market.
There was agreement that the electrical products had to
comply with
the standards prescribed by the South African Bureau of Standards
[1]
(‘the SABS’). There is also no dispute that in
order for the electrical products to comply with the SABS standards,
Schneider would communicate the required standards to Jim Fung, which
was not familiar with the South African regulatory system.
It
is furthermore common cause that in order for compliance with the
required standards to be achieved, the following process would
be
followed before Jim Fung would get final approval from Schneider to
manufacture the electrical products in bulk:
[6.1] Schneider would
send Jim Fung the specifications and drawings of the product to be
produced;
[6.2] on receipt of the
drawings, Jim Fung would make its own drawings and build the moulds
for the tooling to be manufactured;
[6.3] the drawings and
the moulds would be sent to Schneider for approval;
[6.4] Jim Fung would then
produce a sample or a prototype of the electrical product in
accordance with the specifications as communicated
to it by
Schneider;
[6.5] the prototype would
be sent to Schneider for approval;
[6.6] on receipt of the
prototype, Schneider would test the prototype for compliance with its
specifications and if it was not satisfied,
it would return the
prototype back to Jim Fung to be re-worked;
[6.7] if Schneider was
satisfied with the sample or prototype, it would send the sample or
prototype to the SABS for approval in
terms of the SABS’s
various standards; and
[6.8] once approved by
the SABS, Schneider would send the approved prototype to Jim Fung and
Jim Fung would be obliged to produce
on a large scale an exact copy
of the prototype.
[7]
The
drawings submitted by Schneider to Jim Fung specified that the
shutters were made of glass-filled nylon or polycarbonate, materials
used by Schneider to produce the products locally. In the
drawings Jim Fung sent to Schneider, reference was made to
acrylonitrile
butadiene styrene (“ABS”). The
drawings by Jim Fung were approved by Connie Eckard (“Mr
Eckard”),
Schneider’s engineering manager, subject to
compliance with the SABS’s standards.
[8]
It
is common cause that during 2004 and 2005 the SABS approved the
samples sent by Schneider for testing. The approved prototype
was sent to Jim Fung with the direction to proceed to reproduce the
approved prototype in accordance with the South African standards.
[9]
Between
2007 and 2008 Jim Fung produced certain electrical products for
Schneider amongst which were the snapper, 1, snapper 3 and
snapper
31. In 2008 after some of the products were delivered to
Schneider and sold locally by Schneider, the NRCS discovered
some
problems with the products and issued a directive that Schneider
should remove and recall the products from the market as
they had
failed what is known as the glow-wire test
[2]
.
As a result, production on these products was stopped and the
products already received by Schneider were no longer sold
on the
South African market and those not yet delivered to Schneider were
held back in China. Schneider refused to accept
delivery on the
products en route to it or to pay for any of the affected products.
[10]
In order to resolve the problem the parties
concluded a compromise agreement in order to deal with the issues
which had arisen as
a result of the NRCS’s directive. In
terms of the agreement, the parties agreed that the affected products
would be
reworked using a different material, with Schneider
reworking the products already in South Africa and Jim Fung reworking
products
still in China. It was also agreed that Jim Fung would
be responsible for the costs of the rework.
[11]
Subsequently, the Regulator issued an instruction
that the affected products should be handed over to it. The
affected products
were stored at Access Freight International (Pty)
Ltd at Jim Fung’s cost. The Regulator also required a
letter from
the regulator in China that the returned products would
be allowed entry into China. When Jim Fung could not obtain the
required
letter from the Chinese authorities, the Regulator
threatened to destroy the products which led to Jim Fung launching an
application
for an interim interdict to stop the Regulator from
destroying the products. A settlement was reached between Jim
Fung and
the Regulator in terms of which Jim Fung was granted an
extended period to arrange for the shipping of the products to China.
[12]
However, in 2010 it was discovered that the SABS
had erroneously issued the directive of non-compliance with the
glow-wire test.
In subsequent tests, the electrical products
passed the glow-wire test. It appears that when the initial
glow-wire test was
done, the SABS’s glow-wire machine was not
properly calibrated. In this appeal Schneider has accepted that
the compromise
agreement had ceased to be an issue.
[13]
In 2009 the products which form the
subject-matter of Jim Fung’s claims failed the heat resistance
test (the oven test) when
tested by the SABS. This fact was
communicated to Jim Fung with an instruction to cease further
production of the products.
Schneider cancelled all orders it
had made with Jim Fung and refused to take delivery of products
already manufactured on the ground
that Jim Fung had produced
electrical products not in compliance with prescribed safety
standards.
[14]
The
court a quo came to the conclusion that Schneider was liable to pay
the amounts claimed by Jim Fung in relation to claims B,
C and D and
dismissed Jim Fung’s claim E. The court
a
quo
found that it was a term of the agreement between Jim Fung and
Schneider that Jim Fung would manufacture the shutters from ABS
notwithstanding the fact that the ABS shutters failed the 100
0
C
I hour oven test. The court a quo further held that the
products were compliant and the risk of any loss as a result
of
non-compliance with SABS standards rested with Schneider.
Further the court a quo held that Schneider’s cancellation
of
the orders it had made to Jim Fung was unlawful and amounted to a
repudiation of the agreements. With regard to claim
E the court
a
quo
dismissed the claim on the ground that that the respondent had not
proven that the appellant was unjustifiably enriched. The
court
a quo reasoned that since the products made of ABS were useless, they
could not have been kept for the benefit of the appellant.
[15]
Schneider has raised several grounds of
appeal, amongst which are the following:
[15.1] that the
court a quo failed to take into consideration the fact that if ABS
had been agreed upon and used in the shutters
of the prototypes, the
prototypes would not have passed the SABS test;
[15.2] that the
court a quo erred in failing to make a finding that the prototypes
were made of PC and that therefore Jim
Fung had failed to replicate
the prototype;
[15.3] that the
court a quo erred in not finding that Jim Fung failed to present
evidence that he applicable standard was
not done;
[15.4] that the
court a quo erred in not finding that Jim Fung failed to discharge
the onus on a balance of probabilities
that it was expressly agreed
that ABS could be used for the shutters;
[15.5] that the
court a quo erred in placing reliance on the incorrect glow-wire
testing by the SABS as being demonstrative
of the unreliability of
the SABS tests generally, including the 100
0
C oven test;
and
[15.6] that the
court a quo misdirected itself in concluding that the 100
0
C
oven test may not have been performed by the SABS or that it was
inaccurately performed by the SABS.
[16]
It
was submitted on behalf of the appellant that the court erred in
finding that Jim Fung manufactured the electrical products which
were
ordered by Schneider.
[17]
It
was submitted on behalf of Schneider that Jim Fung had breached the
agreement in that in terms of the agreement, Jim Fung was
obliged to
have reproduced the prototype as approved by the SABS. It is
Schneider’s contention that it is improbable,
in view of
Jim Fung’s assertion that it had reproduced the prototype, that
if the prototype was made of ABS that the
SABS would have given it a
pass score. It was further contended on behalf of Schneider
that it is undisputable that the prototype
Jim Fung used to
manufacture the products ordered by Schneider had passed the over
test, therefore it means that the products produced
which have failed
the oven test did not conform to the prototype.
[18]
It was further submitted on behalf of Schneider
that the terms of the agreement provided that once the prototype was
approved by
the SABS, Jim Fung would reproduce the prototype for mass
distribution in the South African market. Inasmuch as Jim
Fung through Mr Cheung alleges that during 2008 the parties had
agreed that Jim Fung could use either ABS or polycarbonate (PC)
in
making the shutters, it is submitted the shutters of the prototype
must have been made with PC since the prototype had passed
the oven
test conducted by the SABS. In view of the fact that the
prototype had passed the oven test, it was argued that
it can be
inferred that in replicating the prototype Jim Fung must have used
ABS and not PC as the products had failed the oven
test.
[19]
It is common cause that Mr Cheung’s
evidence was that he had always used ABS for the shutters except on
the few occasions
when he managed to get PC at a discount.
[20]
On the issue of onus, Schneider’s
contention is Jim Fung, in order to prove that it had performed in
terms of the agreement,
bore the onus of proving that the shutters of
the prototype which passed the oven test were made with ABS. It
was argued
that if the shutters of the prototype were made of ABS as
alleged by Jim Fung, the prototype would have failed the oven test
and
Schneider would not have given approval for the failed prototype
to be mass produced. It was further argued that the logical
conclusion should be that Jim Fung, contrary to the terms of the
agreement, failed to replicate the prototype.
[21]
Finally it
was argued on behalf of Schneider that it was not under any
obligation to pay for Jim Fung’s non-performance
[3]
.
[22]
The
following submissions were made on behalf of Jim Fung. It was
submitted that the issue to be decided is whether the electrical
products manufactured by Jim Fung complied with the terms of the
agreement. It is Jim Fung’s contention that in terms
of
the agreement it was only obliged to comply with specifications
communicated to it by Schneider. It is common cause that
Schneider, through Mr Chick had informed Jim Fung that the products
had to pass the glow-wire test and that Mr Chick did not make
Jim
Fung aware that the oven test was one of the specifications required
by the SABS for the products to get approval. It
is Jim Fung’s
contention that had it been made aware of the fact that the products
had to pass the oven test, it would not
have used ABS in making the
shutters as Mr Cheung, on learning that the products had failed the
oven test, asserted that he was
aware of the fact that products
containing ABS would not pass the oven test. Further it was
contended on behalf of Jim Fung
that because the parties had agreed
that Jim Fung could use either ABS or PC in the manufacture of the
shutters, it therefore follows
that the products which contained ABS
complied with the terms of the agreement.
[23]
It is further Jim Fung’s contention that
even if the prototype had been approved by the SABS because it passed
all the tests,
the products manufactured by Jim Fung subsequent to
the approval by the SABS were compliant with the specifications
communicated
to it by Jim Fung as the parties had subsequently agreed
that the shutters could be made of either ABS or PC.
[24]
It
was further argued that ultimately Jim Fung’s performance
should be measured against the specifications Schneider communicated
to Jim Fung and not against the SABS standards.
It
is Jim Fung’s contention that Schneider carried the obligation
to inform Jim Fung about all the required standards of the
SABS in
the production of the ordered products. Counsel argued that it
could not have been expected for Mr Cheung, who was
not familiar with
the standards required by the SABS to have known and complied with
the required standards. It was further
argued that in terms of
the drawings submitted by Jim Fung to Schneider which were approved
by Mr Eckard on behalf of Schneider,
it was apparent that the
material to be used for making the shutters was ABS.
[25]
Finally
with regard to the oven test conducted on the shutters by the SABS,
it was argued on behalf of Jim Fung that Schneider did
not present
any evidence to prove that the oven test on the prototype was
correctly conducted by the SABS in view of the fact that
the SABS had
previously performed the glow-wire test.
[26]
At the trial the respondent accepted that it bore
the overall onus to prove that it had produced products Schneider had
ordered
in terms of the agreement.
[27]
It is common cause that the products manufactured
by Jim Fung for sale to Schneider did not comply with the SABS
standards in that
because they contained ABS, they failed the heat
resistance test. Mr Cheung has admitted that from the onset Jim
Fung used
ABS for the shutters, inclusive of the prototypes. It
is further not in dispute that the only tests Schneider had informed
Jim Fung about were the glow-wire test, the withdrawal force test and
the probe test.
[28]
In
order to determine the terms of the agreement, one has to take into
account what the respondent pleaded. The issue to be
determined
is whether the prototypes contained ABS or not.
If
the prototype contained ABS, it would invariably not have received
approval from the SABS as it would have failed the oven test.
[29]
In its replication Jim Fung pleaded as follows
with regard to claim B:
‘
1.3 The following are the
express, alternatively tacit, terms of the agreements (in addition to
or in further clarification of those
pleaded in paragraph 12 of the
particulars of claim).
1.3.1 The plaintiff would manufacture
each particular product requested by Clipsal strictly in accordance
with the specifications
communicated by Clipsal, which specifications
were communicated in each case by way of the one or more of a sample;
drawings; and/or
oral or written specifications (the oral
specifications having been communicated by various representatives of
the defendant (including
but not limited to Graham Chick and/or
Connie Eckard and/or Danie Nel and/or Percy Rogers and/or Koos
Visagie and/or Sophie Mabuza)
to Cheung on behalf of the plaintiff
(“the specifications”).
1.3.2 The plaintiff would manufacture
a prototype of each of the electrical products that would be sold and
delivered to Clipsal
in accordance with the specifications.
1.3.3 Clipsal would approve the
prototype and confirm that the plaintiff could proceed with the
manufacturing of the particular
product in accordance with the
prototype.
1.3.4 Once Clipsal had approved a
prototype, the plaintiff would be obliged to ensure that all future
production of the product
would conform to the specifications agreed
and approved by Clipsal, as reflected in the prototype.
1.4 It was not part of the plaintiff’s
obligations in terms of the agreement to ensure compliance with SABS
standards or to
ensure that the products manufactured by the
plaintiff could be sold and distributed in South Africa’.
[30]
The difficulty the parties had was that
when the dispute arose the prototypes were no longer available.
[31]
The dispute between the parties revolves
around whose responsibility it was to make sure that the products
complied with the SABS’s
specifications of the safety
standards. Inasmuch as Jim Fung has conceded that the products
do not comply with the SABS compulsory
standards, it is Jim Fung's
contention that Schneider had the responsibility to ensure that its
specifications complied with the
SABS compulsory standards. On
the other hand, it is Schneider’s contention that in terms of
the agreement Jim Fung
had an obligation to reproduce the prototype
as approved by the SABS.
[32]
Furthermore, it is Jim Fung’s contention
that in terms of the agreement it only had to comply with the
specifications communicated
to it by Schneider in order to perform in
terms of the agreement. That since Schneider had concerns with
the cost of the
material to be used, there was agreement that ABS
could be used interchangeably with PC.
[33]
Jim Fung’s
claim as pleaded, that it had to produce the same products as the
sample or the prototype, is not reconcilable
with its assertion that
the products only had to comply with the specifications communicated
to it by Schneider. Schneider
has denied that it had agreed
that ABS could be used.
In
his testimony, Mr Chick testified that he could not remember if
agreement was reached between himself and Mr Cheung that ABS
could be
used and did not know what the first prototypes were made of.
Even
if there was agreement that ABS could be used, the prototype would
have failed the oven test conducted by the SABS and therefore
Schneider would not have been given Jim Fug the go-ahead to reproduce
the prototype. I am of the view that the court
a
quo
misdirected itself in finding that Jim Fung had produced products
ordered by Schneider. The probable inference is that since
the
prototype received the approval of the SABS, the prototype did not
contain ABS but PC.
[34]
I am of the view that even though the agreement
as pleaded by Jim Fung provides that the products should comply with
specifications
communicated to it by Schneider, the overriding
intention of the parties was that Jim Fung must produce products
which received
the approval of Schneider and the SABS. This is
so in the Jim Fung has pleaded that Schneider would approve the
production
of the products in accordance with the prototype.
One also needs to bear in mind that the parties to the agreement knew
that
the intended products were meant for sale to the South African
market and invariably had to conform to the standards set by the
SABS.
[35]
Nothing
turns on the fact that Jim Fung was not
familiar
with
the South African standards. It is common cause that there was
agreement that Schneider would guide Jim Fung with respect
to the
standards to be complied with. The guidance would be in the
form of the approval of the sample by the SABS.
If the SABS
approved the sample, all what Jim Fung was expected to do was to
reproduce an exact replica of the prototype in terms
of dimensions
and materials used as approved by the SABS.
[36]
The
fact that Jim Fung did not know that the oven test was a requirement
is of no consequence since Jim Fung’s obligation
was to
reproduce the approved prototype.
The onus was on
Jim Fung to prove that it had performed in terms of the agreement.
Performance in terms of the agreement entailed
that Jim Fung had to
reproduce the prototype.
[37]
There is no basis in the assertion made on behalf
of Jim Fung that because the SABS had previously incorrectly done
another test
(the glow-wire test), that it follows that it must have
performed the oven test incorrectly. At the trial the
correctness
of the results of the oven test were not in dispute nor
was there any evidence that the test was not performed correctly.
I am therefore of the view that the court a quo misdirected itself in
concluding that the SABS either performed the oven test incorrectly
or did not perform it at all or performed inaccurately.
[38]
In
conclusion, I am of the view that, taking into account the terms of
the agreement as pleaded by Jim Fung, the only plausible
conclusion
is that, since the prototype had received approval by the SABS, it is
more probable that it did not contain ABS
[4]
.
If the prototype had contained ABS, it would have failed the oven
test when assessed by the SABS. I am also satisfied
that
Schneider had provided Jim Fung with the standards it had to comply
with as the litmus test of compliance was approval by
the SABS.
[39]
I
am satisfied that the appeal by Schneider ought to succeed.
Cross-Appeal
[40]
Jim Fung is appealing against the finding of the
court
a quo
dismissing
its claim E and refusing to grant it the qualifying fees of Mr Gian
Campetti, its expert witness.
[41]
Jim Fung’s claim E relates to storage costs
it incurred after the Regulator had issued a directive on 3 August
2009 that the
products it produced for Schneider which were
erroneously declared to have failed the glow-wire test should be
recalled and removed
from the market, and that they be stored at
Access Freight, either to be shipped back to China or destroyed.
Even though
the products were subsequently proven to have passed the
glow-wire test, it was subsequently discovered that the products were
not compliant with one of the SABS’s standards, that they
failed the heat resistance test. The relevant period during
which the products were stored was 19 October 2009 to 19 August 2011.
[42]
It is Jim Fung’s contention that the
products stored were not only those which fell within the purview of
the Regulator’s
Directive, but included products falling
outside the scope of the Directive but which Schneider had refused to
take delivery of.
Ultimately after some litigation, some
of the products were destroyed on 20 January 2010.
[43]
The court a quo dismissed the claim on the basis
that the stored products were of no use to Schneider and could not
have been held
for its benefit and therefore that Jim Fung had not
proven an unjustified enrichment on the part of Schneider.
[44]
It is Jim Fung’s contention that the court
a quo
erred in
concluding that Schneider was not unjustifiably enriched through the
storage of the products since it did not base its
claim on
unjustified enrichment. It is Jim Fung’s assertion that
its claim is based on the administration of another’s
property
without his consent but in the interests of the owner.
[45]
On behalf of Schneider it was submitted that the
court a quo was correct in dismissing Jim Fung’s claim in that
it had not
stored the products solely for the benefit of Schneider
but in order to protect its own interests. Further, it was
submitted
that Jim Fung could not have stored the products for the
benefit of Schneider since the products ultimately proved to be
useless
and worthless as they could not be sold on the South African
market for lack of compliance with the SABS’s standards.
It is Schneider’s contention that even if it could be found
that Jim Fung had stored the products for its interests, Jim
Fung was
not entitled to the whole amount paid for the storage but to the
extent by which Schneider was enriched.
[46]
The products which Jim Fung had produced and were
stored at Access Freight turned out to be of no value to Schneider in
that they
could not be sold in South Africa. It therefore
cannot be said that Jim Fung had stored the products in the interests
of
Schneider. I am accordingly of the view that the court a quo
did not misdirect itself in dismissing Jim Fung’s claim
for
storage costs.
Expert’s
qualifying fees
[47]
Before the products were retested and passed the
glow-wire test, Schneider had refused to take delivery of the
products. Up
to the stage that it was shown that the SABS had
incorrectly calibrated the glow-wire test machine, in its plea
Schneider relied
also on the products having failed the glow-wire
test. However, on 22 June 2011 Schneider amended its plea and
abandoned
its reliance on the failure of the glow-wire test.
[48]
Jim Fung, however, in its particulars of claim,
claimed for the full qualifying fees of its expert, Mr Campetti who
was set to testify
on the glow-wire test. However in this
appeal, Jim Fung has limited its claim for the expert’s
qualifying fees up to
the period when Schneider informed it of its
intention to abandon reliance on the glow-wire test. Jim Fung
contends that
up to that stage, it incurred costs and expenses in
anticipation of its expert testifying at the trial.
[49]
It is Schneider’s contention that Jim Fung
had failed to qualify its claim for the qualifying fees in that it
claimed for
the full qualifying fees of its expert even though
Schneider had abandoned its reliance on the failure of the glow-wire
test.
[50]
Even though the court a quo has not misdirected
itself in dismissing Jim Fung’s claim for the full qualifying
fees of its
expert, I am of the view that, in fairness, the court a
quo erred in not limiting Jim Fung’s claim to the period up to
the
stage when Schneider abandoned its reliance on the glow-wire
test.
[51]
In the result the following order is made:
1.
The appeal is upheld.
2.
The cross-appeal with regard to claim E is
dismissed.
3.
The order of the court a quo upholding claims B,
C and D is replaced with an order dismissing claims B, C and D.
4.
The order of the court a quo dismissing the claim
for Mr Campetti’s qualifying fees is replaced with an order
upholding the
claim for the expert’s qualifying fees.
5.
All costs incurred to date are to be borne by Jim
Fung, the respondent in the appeal, such costs to be inclusive of the
costs of
two counsel.
_____________________
NP
MNGQIBISA-THUSI
Judge
of the High Court
WEPENER
J (MAKUME J concurring):
[52]
I have had the opportunity to read the judgment of prepared by
Mngqibisa-Thusi J (‘the first judgment”). I am
unfortunately unable to agree with the conclusions reached by the
learned judge in paras 33 to 38, which forms the essence of her
conclusions in relation to claims B, C and D of Jim Fung against
Schneider. I rely on the facts as set out in the first judgment,
save
as amplified herein.
[53]
The approach to a matter on appeal has been authoritively stated in
Rex v
Dhlumayo and Another
[5]
.
The applicable principles include:
‘
1. . . .
2. . . .
3. The trial Judge has advantages -
which the appellate court cannot have - in seeing and hearing the
witnesses and in being steeped
in the atmosphere of the trial. Not
only has he had the opportunity of observing their demeanour, but
also their appearance and
whole personality. This should never be
overlooked.
4. Consequently the appellate court is
very reluctant to upset the findings of the trial Judge.
5. The mere fact that the trial Judge
has not commented on the demeanour of the witnesses can hardly ever
place the appeal court
in as good a position as he was.
6. Even in drawing inferences the
trial Judge may be in a better position than the appellate court, in
that he may be more able
to estimate what is probable or improbable
in relation to the particular people whom he has observed at the
trial.
7. . . .
8. Where there has been no
misdirection on fact by the trial Judge, the presumption is that his
conclusion is correct; the appellate
court will only reverse it where
it is convinced that it is wrong.
9. In such a case, if the appellate
court is merely left in doubt as to the correctness of the
conclusion, then it will uphold it.
10. There may be a misdirection on
fact by the trial Judge where the reasons are either on their face
unsatisfactory or where the
record shows them to be such; there may
be such a misdirection also where, though the reasons as far as they
go are satisfactory,
he is shown to have overlooked other facts or
probabilities.
11. . . . ’
The
only finding in the first judgment regarding the thorough judgment of
Francis J which spans some 153 pages, is that the
‘
court
a quo misdirected itself in concluding that the SABS either performed
the oven test incorrectly or did not perform it at all
or performed
it inaccurately’.
I
cannot agree with this finding as in my view, the learned judge a quo
made such finding as he did
[6]
due to the absence of evidence regarding the test and I will indicate
herein that there was no permissible evidence regarding the
performance of the oven test by the SABS.
[54]
In so far as claim E was dismissed by the court a quo and should be
dismissed in the view of Mngqibisa-Thusi J who upheld that
dismissal,
I am in disagreement with her for the reasons set out herein. I also
agree that Jim Fung’s claim for qualifying
fees of the expert
witness should have been allowed by the court a quo to the extent
that such fees are limited to include the
fees of the witness
Campetti up to and including the time when Schneider informed Jim
Fung of its intention to abandon reliance
on a glow-wire test for
reasons set out in the first judgment.
[7]
[55]
The quantum of the claims is common cause and the amounts which
Francis J ordered the appellant to pay are not in dispute.
[56]
Jim Fung’s claim was initially resisted on the basis that the
products failed a test referred to as the glow-wire test.
As a result
of the fact that the test was shown to be incorrectly performed by
the
South African Bureau of Standards (‘SABS’)
and the products in fact complied with the glow-wire test, Schneider
abandoned
reliance on the defence. After this, Schneider shifted its
defence to an allegation that the products failed to pass a different
test, the heat resistance test, also referred to as the oven test –
a test subjecting the product to a temperature of 100
degrees
centigrade for an hour and which procedure the product should be able
to withstand. But Schneider’s defence was not
so pleaded.
Counsel for Jim Fung objected to this shift as the new issues were
not canvassed at the trial and there was evidence
that could have
been led, that was not because this was not the nub of Schneider’s
case in the court a quo.
[57]
The first observation which I need to make is the obvious shift in
Schneider’s case from the pleadings in the matter
to what it
eventually submitted and promoted in this court. I refer to as it, in
my view, impacts on the veracity of Schneider’s
case. The
dispute on the pleadings was whether Jim Fung was obliged to
manufacture products that complied with all SABS specifications
as
pleaded by Schneider or whether it was obliged to manufacture
products that complied with such specifications that Schneider
(or
its predecessor Clipsal) communicated to it as pleaded by Jim Fung.
Indeed the shift became so marked that counsel for Schneider
submitted that the case was about Jim Fung’s obligation to
manufacture and supply products which would be identical to a
prototype – including in respects that were not necessary to
comply with if Jim Fung’s version is to be accepted, ie
that it
only had to comply with those specifications communicated to it by
Schneider.
[58]
The plea is replete with references to Jim Fung’s obligation to
comply with SABS standards with reference to several
specific
national standards issued by the SABS. It was pleaded that
‘
the obligation to produce goods
compliant with the said standards was known to . . . Jim Fung at all
material times and it was an
expressed, alternatively implied
alternatively tacit term of the agreements that Jim Fung was to
manufacture and supply the goods
so complying with the SABS
standards’
It
was further pleaded that the goods were defective in that they failed
to comply with the applicable safety standards set out
in the South
African Regulatory Specifications. It is significant that not a word
is said about a prototype in the defendant’s
plea. It is then
pleaded that one of the South African Regulatory Specifications which
governs the goods is an ‘oven test’
and that the products
failed to comply with this test.
[59]
Despite the defences which Schneider pleaded to Jim Fung’s
claim, it was eventually narrowed down to the dispute regarding
the
terms of the agreement between them and, once established, the
consequences thereof having regard to the products which Jim
Fung
delivered to it. To put it differently, did Jim Fung deliver
contractually compliant products to Schneider in order to become
entitled to payment in respect thereof? This was also the thrust of
Schneider’s appeal before this court ie that Jim Fung
did not
deliver products which complied with the agreement between them.
Schneider no longer relied on the fact that Jim Fung undertook
and
was obliged to deliver products compliant with the SABS standards. It
was submitted that the prototype of the product became
the standard,
that the prototype passed the SABS tests and the later products did
not.
[60]
The defence that Jim Fung had to comply with the SABS standards was
abandoned and not pursued on appeal. Before this court
Schneider’s
defence was submitted to be that Jim Fung was obliged to manufacture
and supply products that complied with the
agreement between the
parties – the very same allegation which Jim Fung had made from
the outset. The defence was that it
is to be inferred the products
did not comply with the contractually agreed specifications.
[61]
I need not analyse the evidence in detail. Schneider’s pleaded
case that Jim Fung had to comply with the SABS standards
fell by the
wayside and was not persisted with. This is so as a result of the
overwhelming evidence that the agreement was as alleged
by Jim Fung.
The court a quo found that:
’
72. The agreement between the
parties was therefore oral and informal. Its terms must be gleaned
from the evidence and the contemporaneous
documents, as interpreted
in light of the context at the time. Chick and Dickie testified about
what the terms of the agreement
were. Dickie’s explanation was
that he told Chick that he did not know anything about the standards
applicable to South Africa,
and would have to reply on Clipsal’s
guidance about the standards applicable to South Africa, and would
have to rely on Clipsal’s
guidance and the approval process
that was put in place. He did not read or speak the language of the
standards. He testified that
in Australia, the burden was on Jim Fung
to comply with the standards and the electrical products in Australia
did not have shutters.
All these militate against any possibility
that Jim Fung would have been burdened with an obligation that
Clipsal had the experience,
expertise and relationship with the SABS
to take on without any difficulty.
73. It is clear from the evidence that
was led that the process adopted by Clipsal and Jim Fung in respect
of the development and
manufacture of electrical products for Clipsal
was that the
plaintiff would manufacture each electrical product
in accordance with the specifications communicated by Clipsal to the
plaintiff
which specifications were communicated in each case by
way of one or more of a sample, drawings and/or oral or written
specifications.
The plaintiff would then manufacture prototypes of
each of the electrical products that Clipsal required the plaintiff
to manufacture
for sale to Clipsal. When the prototypes conformed to
Clipsal requirements, Clipsal would submit the samples of the product
to
the SABS for approval. The submission to the SABS for approval
involved the SABS testing the products to ascertain whether they
complied with the applicable SABS standards. Once the SABS approved
the samples, Clipsal would approve the products the product
for
manufacture by Jim Fung in accordance with the approval samples.
After Clipsal had approved the product, Jim Fung would be
obliged to
ensure that all future production would conform to the specifications
agreed and approved by Clipsal as reflected in
the approved samples
.
74. The first project Clipsal
introduced to Jim Fung in early 2004 was the manufacturing of the
side-by-side coupler. Clipsal had
by then been manufacturing its own
range of domestic products locally in South Africa which included the
side-by-side coupler.
During the negotiations Clipsal was represented
by the then technical manufacturing director, Chick. Chick had been
expressly mandated
to explore the opportunities to move the
manufacture of was expensive and Clipsal was becoming uncompetitive.
Jim Fung was represented
by Dickie and Cordy. Dickie had no command
of the English language and Cordy was his interpreter at the time, He
made it clear
to Chick that he was unfamiliar with South African
electrical products and any applicable South African standards. Chick
reassured
Cheung that Clipsal would inform Jim Fung of the
specifications that had to be met, and that Clipsal would attend to
having the
products approved for compliance by the SABS. He also told
Chick that Jim Fung had been producing cables and plugs but not
adaptors
for the Australian market for some years prior to Chick
approaching Dickie. Chick ensured that samples of the side-by-side
coupler
were sent to Jim Fung with drawings and a document headed
“Information for Quotation Purposes” containing only the
basic parameters of Clipsal requirements. Jim Fung would prepare its
own drawings based on the specifications that had been communicated
to it which drawings would be used to manufacture the tooling of the
product. The Clipsal drawings reflected that the material
for the
outer casing of the side-by-side coupler was made of polypropylene
and the T-shutter (for the Snapper 5) was made of glass
filled nylon.
It is clear from the evidence that in truth, although this was not
reflected on the Clipsal drawings, Clipsal was
using a polypropylene
mixture to manufacture the outer casing of all its domestic products,
and PC in its T-shutters. Although
the T-shutter was a common
component in most of the domestic products the drawing had not been
updated to reflect that PC material
was being used to manufacture
this component. Clipsal was using glass filled nylon to manufacture
only one type of shutter, the
rotary shutter, used in the Snapper 31.
Jim Fung produced drawings on the side-by-side coupler. The drawings
were sent to Clipsal
for approval.
75. Chick, who was not familiar with
all the technical detail required to manufacture the product,
including the applicable standards,
referred to Eckard, the
engineering manager, Visagie, the manufacturing manager, and Rodgers,
the quality manager, for advice and
assistance during the initial
phase of product development. Visagie and Eckard were both at the
Brits factory. Rodgers gave evidence
that by 2004 he was no longer
based at the Brits factory and had by then moved to Midrand in his
capacity as certification manager.
The Jim Fung drawings were
considered and analysed and approved by Eckard and Visagie. Although
the Jim Fung drawings proposed
nylon for the outer casing, it was an
expensive material. Clipsal’s brief to Jim Fung was to search
for cheaper materials
which would make the product more competitive
in the South African market. Although Chick and Cheung discussed
various materials,
Rodgers on behalf of Clipsal, disclosed to Jim
Fung the polypropylene mixture used locally by Clipsal SA to
manufacture the domestic
range of products which proved to be the
cheapest option for the outer casing. Steyn, a production manager at
Brits specialising
in plastics, testified that he was not consulted
by anyone on the use of materials in the Jim Fung range of products.
Steyn reported
to Visagie at the time. Rodgers testified that he
obtained the information relating to the polypropylene mixture from
Steyn as
he was not familiar with the properties of the various
plastics. It was agreed between the parties that Jim Fung would use a
similar
propylene mixture (polypropylene with % talc or 40% calcium
carbonate) for the outer casing of the side-by-side coupler which
could
withstand a heat resistance of 750 degrees centigrade.’
(own underlining)
[62]
In essence, the court held that the agreement as alleged by Jim Fung
was supported by the evidence of the witnesses that Schneider
(or
Clipsal) accepted full responsibility to ensure that the products
were compliant with the SABS standards. I agree with this
finding and
can see no reason why it is wrong. Indeed, Schneider’s
submission on appeal did not attack this finding. The
appeal was
based on the argument that the products did not comply with a
prototype that had passed the oven test, contrary to what
Schneider
had pleaded. But the matter goes further. It was Jim Fung’s
case that it used a product referred to as ABS in the
manufacture of
certain shutters of the products. It used ABS interchangeably with
another product referred to as PC. It became
common cause and Jim
Fung accepted that, in terms of the SABS standards, the ABS product
would not pass the SABS approved oven
test or standards in this
country. Such acceptance was not an acceptance of the outcome of the
various SABS test results, which
I refer to below. It became common
cause that the representatives of Jim Fung had no knowledge of these
requirements and were reliant
upon what Schneider advised it in
relation to the products that Schneider required.
[63]
Eventually, the dispute on appeal arose as a result of the fact that
the ABS used in the manufacture of the shutters proved
insufficient
in strength to pass an oven test as required by the SABS. But not
only was Jim Fung not required to manufacture and
supply goods that
complied with the SABS standards as pleaded by the Schneider, there
was direct evidence that Schneider accepted
that the shutters could
be manufactured with ABS. In this regard the court a quo, after
carefully analysing the evidence, concluded
that Schneider in fact
approved the use of ABS for the shutters. If regard is had to the
evidence of Jim Fung’s witness,
Cheung, that the oven test was
not one of the specifications that was communicated to Jim Fung, this
aspect becomes a red herring.
It was common cause that the brief to
Jim Fung was to reduce the costs of manufacturing the products. It
was not disputed that
ABS is a more cost efficient product that PC.
It is for this reason that Jim Fung used PC and ABS interchangeably.
The PC was used
when Jim Fung obtained a batch of the material at a
discounted price but other times ABS was used. But that it was not a
contractual
term that ABS may not be used or that the product must
pass the oven test or that PC must be used is beyond any argument.
Once
it is appreciated that Jim Fung was to manufacture a cheaper
product according to the specifications furnished to it, the nature
of the product supplied by it by interchanging using ABS or PC can be
seen in its proper context. During its initial preparation
of the
product specifications Clipsal furnished Jim Fung with basic
parameters of its product requirements and the drawings by
Jim Fung
furnished to Clipsal, referred to the use of ABS. The evidence of the
person on behalf of Clipsal, who had to approve
the drawings
submitted by Jim Fung, Mr Eckard, confirmed that he checked and
approved the drawing on which ABS was specified as
no one at the
time, was aware that ABS could not be used. The representatives of
Schneider were either unaware of the oven test
or did not regard it
as material and failed to communicate it to Jim Fung – so much
is common cause. Counsel for Schneider
conceded during argument that
it was not Schneider’s case that Jim Fung knew of the oven test
standard. This concession sounded
the death knell of the case as
pleaded by Schneider or as counsel for Jim Fung submitted, that
defence faded into the background.
Jim Fung could not and did not
know of the oven test. Compliance with the oven test was at the risk
of Schneider. It is accordingly
Schneider’s witnesses’
version that ABS was the accepted product to be used in the
manufacture of the shutters. This
evidence puts paid to any argument
that the use of ABS would render the products contractually
non-compliant and is destructive
of the case of Schneider argued on
appeal. Clipsal knew that Jim Fung had no knowledge of the South
African requirements (or the
SABS standards) and solely relied on
what was communicated to it – and this included a requirement
to produce a less expensive
product. Cheung’s uncontroverted
evidence that such a product was ABS, which was successfully used in
Australia and was to
be used in the manufacture of the products for
Schneider, supports this conclusion. There is nothing in the evidence
to suggest
that the evidence of Mr Cheung was improbable or open to
criticism. In fact, the specifications as contained in the drawings
were
approved by Clipsal. The risk of SABS compliance remained with
it.
[64]
Save for the direct agreement between the parties, the
probabilities also favour Jim Fung. These are that the use of
ABS in
the in initial products is corroborated by the contemporaneous
documentation and the evidence of the witnesses. Indeed
Cheung
and his wife’s spontaneous response when first informed of the
requirement of an oven test is indicative of the fact
that they had
no knowledge of such a test; the initial drawings provided by Jim
Fung indicated that the shutters were to be made
of ABS; Jim Fung’s
internal costing sheets show that the costing of the products was
done on the basis that the shutters
were made of ABS; the analysis
schedules prepared by Jim Fung in 2007 demonstrate that all products
manufactured by Jim Fung were
manufactured with an ABS shutter; in
January 2008 Jim Fung sent drawings which demonstrated that the
material used in the
shutters was ABS to representatives of Schneider
without adverse comment from the latter; when Cheung’s wife
presented a
new price offer during April 2008 she attached a costing
which was prepared on the basis that the shutters were manufactured
with
ABS; during a meeting on 22 May 2008 between representatives of
the parties it was discussed that the shutters would be made of
ABS
and alternatively, of PC. Schneider’s case on appeal, simply
put, was that Jim Fung had to replicate a prototype. But
on all the
probabilities, that prototype was indeed manufactured with the ABS
substance and the unproven tests results do not take
the matter
further. The nature of the material was irrelevant provided that it
was suitable to meet the contractual specifications
– the
latter which specifically included the use of ABS. Counsel for
Schneider submitted that the appeal hinges on whether
Schneider
ordered ABS shutters or not. The overwhelming evidence is that it
did. The enquiry really ends there.
[65]
The difficulty in Schneider’s case is further exacerbated by
the evidence of a witness called by Schneider, Mr Steyn,
who
testified that although ABS will always soften at one hundred degrees
Celsius, it may harden again without deforming and therefore
the
product containing ABS shutters may not always fail the test. The
evidence by Dr Roediger that when using ABS the shutters
will
probably fail an oven test does not detract from the evidence of Mr
Steyn. Dr Roediger accepted the general proposition that
ABS will not
pass the oven test. It was not accepted that ABS will fail on every
occasion and ABS will only fail a properly administered
test if
performed on proper equipment.
[66]
Schneider’s case on appeal is that Jim Fung manufactured a
prototype with PC material and not ABS and later changed the
products
to contain ABS. This case is on the probabilities and the proved
facts, as found by the court a quo, baseless. I agree
that it is a
rather fanciful argument which is contrary to the established
facts.
[67]
Having regard to the terms of the agreement and the approval of
Schneider of the ABS product, the finding of the court a quo
is
unassailable:
‘
It is my finding therefore that
it was a term of the agreement between Jim Fung and Schneider that
Jim Fung could manufacture the
shutters from ABS notwithstanding the
fact that the SABS shutters failed the hundred degree centigrade one
hour oven test.’
The
reason for this is, in my view, clear. These witnesses who testified
on behalf of Schneider did not know the significance of
the
difference between ABS and PC. They did not specify PC as preferred
to ABS. In fact, they never referred to PC as a requirement
despite
Jim Fung having specified the use of ABS in its communications to
Schneider. There was no different approach by the parties
as
communication by Schneider to Jim Fung and the initial discussions
and connections were conducted on the basis that ABS be utilised.
By
accepting the evidence of Jim Fung, there is little doubt that it did
not know of the so-called oven test and the risk relating
to that
test was never conveyed to Jim Fung. It could not and did not render
the products contractually non-compliant.
[68]
The case for Schneider eventually centred around the fact that the
initial shutters supplied by Jim Fung, which were sent to
the SABS,
passed the SABS oven test and that later products did not. The
statement in itself is problematic. There can be no doubt
that the
SABS was required to conduct specialised tests. These tests resulted
in the SABS issuing reports containing conclusions.
These reports
were submitted by Schneider into evidence in order to support its
case that the shutters did not comply with the
SABS standards in the
sense that the original shutters did pass the SABS test and the later
shutters not, resulting in the fact
that Jim Fung, by inference,
later supplied shutters which did not accord with the initial
prototype which passed the SABS test.
In so far as Jim Fung accepted
that the shutters in dispute would not pass the SABS standards, it
must be borne in mind that Jim
Fung did not accept that the initial
tests referred by the SABS were properly and correctly done. The
status of the reports in
general but in particular, the reports
emanating from the SABS that passed the initial prototype goes to the
heart of the matter.
The contents of the SABS reports (as submitted
by Jim Fung) are not admissible in evidence and that the case of
Schneider that
the prototype was compliant with SABS standards has no
basis. In fact, Jim Fung submitted that the inferential reasoning of
Schneider
must fail because it is based on unproven suppositions
regarding tests carried out but the SABS. It was submitted that there
is
no evidence that the heat resistance test was carried out at all
let alone that it was executed correctly and that there was
consequently
no base or primary facts to support the inferences
sought to be drawn by Schneider. The argument has merit.
[69]
Counsel for Schneider submitted that it was agreed that the SABS
reports were admissible in evidence but that is not correct.
The
agreement was that the documents would be what they purport to be and
that the truth and correctness of the contents thereof
were not
admitted. This was confirmed by counsel for Schneider during argument
before us. That being so, the only evidential value
of the reports,
and particular the initial reports, is the fact that the reports
emanated from the SABS. Counsel for Schneider
submitted that the
reports emanated from the SABS and that there is no reason for the
SABS technicians to do their jobs badly and
that the SABS performed a
statutory function. That is not the test for admissibility of expert
evidence. The contents of an expert
report do not become admissible
because there is other evidence tending to support it and this
argument cannot be upheld. Unless
the contents of the reports are
accepted by Jim Fung, which it did not, all the facts upon which the
expert conducting the prototype
tests relied must be ordinarily
established with evidence during a trial. In
Coopers
[8]
,
Wessels JA said:
‘
As I see it, an expert's
opinion represents his reasoned conclusion based on certain facts on
data, which are either common cause,
or established by his own
evidence or that of some other competent witness.’
In
S v
Naik
[9]
Miller J held as follows:
[10]
‘
If the court, on the evidence
before it, were to come to that conclusion, it would be making an
assumption rather than drawing an
inference, for the facts necessary
for the drawing of an inference are lacking. As Lord WRIGHT observed
in
Caswell v Powell Duffryn Associated Collieries Ltd
.,
(1939)
3 All E.R. 722
at p. 733:
“
Inference must be carefully
distinguished from conjecture or speculation. There can be no
inference unless there are objective facts
from which to infer the
other facts which it is sought to establish . . .. But if there are
no positive proved facts from which
the inference can be made, the
method of inference fails and what is left is mere speculation or
conjecture.”’
[70]
In the absence of the primary facts in relation to the prototype
tests or admissible evidence in relation thereto
[11]
it would be impermissible to rely on the SABS tests. In the
circumstances I am of the view that the production of reports did not
render the contents thereof admissible. The danger of relying on
hearsay reports is underlined by what happened in this case. This
dispute between the parties arose pursuant to a test result of the
SABS, wrongly as it turned out, that the products failed the
glow-wire test. It was however, conceded that the SABS glow-wire test
was wrongly and incorrectly administered. The glow-wire test
was
incorrect for two reasons, on two separate occasions. Firstly,
because the machine was not properly calibrated and secondly,
because
the test was conducted improperly. These human errors occurred at the
SABS testing and led to the commencement of the litigation
between
the parties. Francis J had regard to this failure. The learned judge
found that the evidence may be relied on to place
a question mark
over the unproven oven test results which Schneider introduced. This
was rightly done. It goes to show why the
facts underlying reports
should be proved before the results can be accepted as proven. This
conclusion renders Schneider’s
argument that the later products
did not comply with the prototype, baseless. Although the later
products did not pass the oven
test, the latter which was not a term
of the contract, there is no permissible evidence from which an
inference can be drawn that
the earlier products or prototype did
pass that test. Once that inference which Schneider wishes to draw
and rely on as the entire
basis of its new case fails, Schneider’s
defence on appeal should fail, as its defence on the merits failed in
the court
a quo.
[71]
The error in Schneider’s argument can be gleaned from the
submission made by its counsel to this court. On a question
of the
presiding judge whether the onus was on Jim Fung to show that the
oven test was done incorrectly and not for Schneider to
show that the
test was done correctly, counsel for Schneider wholeheartedly
subscribed to the proposition. It is clearly wrong.
The test results
were not introduced by Schneider. It alleged that the products did
not comply with the oven test. It failed to
prove the initial oven
test with permissible evidence – both that it was carried out
and what its result was. Insofar as
Jim Fung proved its contract, it
is not in dispute that Jim Fung delivered contractual compliant
products. It had no onus regarding
the oven test.
[72]
Counsel for Schneider was at pains to attempt to justify the
reception of the reports into evidence. The final argument was
that
the content of the reports could be proved by other means. Should
this proposition be correct, and I doubt that it is, the
‘other
means’ would be the evidence to be relied upon and not the
hearsay reports.
[73]
The prototype argument suffers from another deficiency. The agreement
is clear: the prototype could either certain ABS or PC.
The argument
that, because the first prototype passed the oven test (if the
evidence would be permissible) therefore the later
products
containing ABS did not comply with the prototype, is a fallacy. It
was agreed that the products could contain ABS. If
it did, it
conformed to what was ordered by Schneider. The terms of the
agreement, in my view, destroys the prototype argument
in its
entirety.
[74]
There are consequently several reasons why the claim of Jim Fung is
unassailable. It proved its agreement that existed between
the
parties; Schneider did not advance its pleaded version of the
agreement; Jim Fung proved that it manufactured products in
compliance with the specifications communicated to it –
including the use of ABS as an alternative to PC and that it
delivered
products which complied with the agreed specifications.
Having complied with its contractual obligations, Jim Fung became
entitled
to payment.
[75]
Schneider’s pleaded defence that Jim Fung had to comply with
the SABS specifications was, in the circumstances, a red
herring. The
products were manufactured of the agreed material and the fact that
it failed (if it did) an SABS test was at the
risk of Schneider.
[76]
Jim Fung’s claim for storage fees of the goods about which the
parties were in dispute was dismissed by the court a quo
and the
first judgment upheld that dismissal. This claim was based on
enrichment, or more particularly, on the negotiorum gestio.
Jim Fung
alleged that it incurred expenses to store the products already sold
and delivered to Schneider. Once there is a finding
that the goods
were contractually compliant, Schneider was duty bound to receive it.
Schneider refused to take the products into
possession despite the
fact that technically, delivery had already occurred to it. A party
who in such circumstances stores goods
which it had sold and
delivered, in my view, stores it for the benefit of the party who is
contractually bound to take physical
possession thereof.
[77]
Jim Fung based its claim on the principle of negotiorum gestio –
a person who manages the affairs of another is entitled
to
re-imbursement. The requirements to succeed in such a claim are:
managing the affairs of another; doing so reasonably; with
the
intention to be reimbursed whilst the dominus (Schneider) was
ignorant of its affairs being managed.
[78]
Although the finding that Jim Fung supplied contractually complaint
goods goes a long way towards proving the claim by a gestor
in that
it stored the goods which belonged to Schneider, the other elements
of the claim need to be proved. There is no dispute
that the storage
costs were reasonably incurred. The question remains whether Jim Fung
proved that the other two elements ie that
Schneider being ignorant
of its affairs being managed and an intention by Jim Fung to manage
the affairs of Schneider. Jim Fung
at all times asserted that the
goods belonged to Schneider. There can be no doubt that it intended
to store the goods for the eventual
benefit of Schneider and to claim
the costs incurred therefore. The attitude of Schneider was that Jim
Fung could do with the products
whatever it wanted to as Schneider
accepted no responsibility in respect of the goods. That in my view
is a statement of a dominus
who is aware of the management of his
affairs and authorising such tacitly even against his wishes or
whilst he protests.
[12]
The
court a quo found that because the goods were non-compliant with the
oven test and therefore useless, it could not be stored
for the
benefit of Schneider. I respectfully disagree. Once the goods are
contractually complaint, the oven test issue is irrelevant
and
Schneider was compelled to accept the goods ordered by it. It refused
to accept its goods and Jim Fung stored them for Schneider’s
benefit. This is in accordance with the finding of the court a
quo:
[13]
‘
The
products were contractually compliant and the risk of any loss as a
result of non-compliance with the SABS standards rested
with
Schneider.’
[79]
Jim Fung as gestor voluntarily managed the affairs of Schneider by
causing the safekeeping of Schneider’s products without
Schneider’s consent. It has been shown that it is entitled to
recover the storage costs incurred on behalf of the owner of
the
goods, Schneider. In my view, claim E should have succeeded in the
court a quo.
[80]
In all the circumstances, the appeal falls to be dismissed. Although
the court a quo ordered the interest to run ‘a tempore
morae’,
I need say nothing regarding the applicable dates as the parties have
advised that they are in agreement as to the
mora dates that apply to
the interest which the court a quo ordered Schneider to pay. The
following order is issued:
1)
The appeal is dismissed with costs including the
costs of two counsel;
2)
The cross-appeal is upheld with costs, including
the costs of two counsel and the orders of the court a quo at
paragraphs 119.4
and 119.6 are replaced with an order in the
following terms:
‘
119.4 The
defendant is ordered to pay the plaintiff the sums of R35 794.00
and U$ 96 540.45 in respect of claim E.’
‘
119.6 The
defendant is to pay the costs of the action on a party and party
scale, including the costs of two counsel, and including
the
qualifying fees of the expert Gian Campetti incurred up to 19
February 2014’.
________________
W.L.
WEPENER
Judge
of the High Court
I
agree.
__________________
M.A.
MAKUME
Judge
of the High Court
Appearances:
For
Appellant: Adv L. Morrison SC assisted by Adv B.M. Gilbert
Instructed
by: Weber Wentzel
For
Respondent: Adv P. McNally SC assisted by Adv A. Lamplough
Instructed
by: Edward Nathan Sonnenbergs
[1]
In
terms of the Standards Act 29 of 1993 (subsequently replaced and
substituted by the
Standards Act 8 of 2008
) the SABS (whose functions
are now performed by the National Regulator of Compulsory
Specifications (“the NRCS”)) is
empowered to issue
national standards that apply to products sold in South Africa.
[2]
Also known as the flame-retardant test.
[3]
With
regard to the conclusion that Jim Fung’s actions amount to
non-performance see
Freddie
Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd
2011 (4) SA 276
(SCA).
[4]
Govan
v Skidmore
1952
(1) SA 732
(N) where the court stated at 734 C-D that: ‘.
. . in finding facts and making inferences, in a civil case, it
seems
to me that one may, as Wigmore conveys in his work on
Evidence
(3rd
ed., para. 32), by balancing probabilities select a conclusion which
seems to be the more natural, or plausible, conclusion
from amongst
several conceivable ones, even though that conclusion be not the
only reasonable one’.
[5]
1948 (2) SA 677
(A) at 705-706.
[6]
The
judge a quo put it thus at para 81 of his judgment: “It is not
clear why the SABS passed the initial shutters made of
ABS or
whether it had conducted the correct test on it. The 100
degree centigrade 1 hour test may not have been performed
or may
have been (performed) inaccurately, or as Chick mentioned, the
shutters may have been supported by the mould in such a
way that
although the shutters may have softened during the test, they may
have hardened in such a manner that they did not deform.
[7]
Paras 47 and 48 above.
[8]
Coopers
(South Africa) (Pty) Ltd v Deutsche Gesellschast Für
Schadlingsbekämpfung MBH
1976 (3) SA 352
(A) at 371G.
[9]
1969 (2) SA 231
(N).
[10]
At 234C-D.
[11]
Reckitt
& Colman SA (Pty) Ltd v SC Johnson and Son SA (Pty) Ltd
1993 (2) SA 307
(A) at 351E;
Lornadawn
Investments (Pty) Minister van Landbou
1977 (3) SA 618
(T) at 623;
Holtzhauzen
v Roodt
1997 (4) SA 766
(W) at 772.
[12]
Standard
Bank Financial Services Ltd v Taylam (Pty) Ltd
1979 (2) SA 386
(C) at 388F and 395A.
[13]
Para 115.