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[2010] ZAGPPHC 27
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Omega Landgoed (Pty) Ltd v Fruitman (Pty) Ltd (57560/08) [2010] ZAGPPHC 27 (1 April 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT - PRETORIA)
CASE
NO. 57560/08
DATE:1/04/2010
In
the matter between:
OMEGA
LANDGOED (PTY) Ltd Plaintiff
and
THE
FRUITMAN (PTY) Ltd Defendant
JUDGMENT
LEGODIJ,
INTRODUCTION
1.
In this matter, the plaintiff claims against the defendant for
payment of R168 561.40 said to be the balance of the minimum
guarantee price for Valencia oranges belonging to the plaintiff.
PLEADINGS
2.
The plaintiff cause of action is based on an alleged agreement of
agency in terms of which the defendant would periodically provide
the
plaintiff with minimum guarantee prices per cartoon for the various
orange size and that the defendant would pay a guarantee
price to the
plaintiff per cartoon and that in the event the defendant was to
manage to sell such oranges for a price which was
higher than the
minimum guarantee price, it would pay the higher price to the
plaintiff.
3.
It is further alleged that the only circumstances in which the
defendant would pay a price lower than the minimum guaranteed
price
to the plaintiff would be in circumstances where the said oranges had
"inherent vice" in which event the defendant
would then be
obliged upon it becoming to its attention that there was inherent
vice, to notify the plaintiff thereof.
4.
During the period 25 June 2008 to 30 July 2008, the plaintiff is said
to have delivered 22 250 cartoons of oranges to the defendant
and
invoiced the defendant in a total amount of Rl 281 100 as a minimum
guaranteed price for the oranges so delivered. The defendant
however,
paid the plaintiff a total amount of Rl 112 538.60 and thus allegedly
leaving a balance of R168 561.40 still owed to the
plaintiff
5.
However, the averments made by the plaintiff in its particulars of
claim are denied by the defendant, specifically the defendant
in
its plea denies that there was a contract of agency. Secondly, with
specific reference to paragraph 6 of the plaintiffs particulars
of
claim, the defendant pleads that, in terms of the agreement, it would
fourth nightly provide the plaintiff with the minimum
guaranteed
price for sound fruit of export quality. In the event the defendant
achieving a higher price than the agreed minimum
guaranteed price,
the plaintiff will receive 50% of the excess achieved. It is further
pleaded that it was a material term of the
agreement that the minimum
guaranteed price would no longer be available to the plaintiff if
there were quality claims on the fruit
exported. In the event of
quality claim, the defendant after having considered all relevant
information, would negotiate the lowest
possible discount with its
buyers. Lastly, that the minimum guaranteed price to the plaintiff
would then be reduced according to
the discounted amount. The
defendant does not agree that the only circumstances in which it
would pay a price lower than the minimum
guaranteed price would be if
the oranges had inherent vice.
OPENING
STATEMENT
6.
Counsel for the plaintiff during an opening statement identified
the issues as per the pleadings to be:
6.1
Whether or not a contract of agency was concluded?
6.2
Secondly, whether quality claims formed part of the agreement between
the parties?
7.
On the other hand counsel for the defendant suggested that there was
a legal question to the plaintiffs alleged contract of
agency. I
understood the suggestion to be that if contract of agency was to be
proved, the next question would be, whether the plaintiff
in law is
entitled to claim anything from, the defendant other than the nett
profit of the sale? Perhaps to put
it differently whether what is
claimed by the plaintiff can be said to be the nett profit of the
sale? It was further suggested
during an opening statement that it
would be part of the defendant's case that the goods were sold and
delivered to the
defendant at an agreed or fixed price.
PLAINTIFFS
CASE
8.
The plaintiff led the evidence of one witness, Mr Koekemoer, a
director of the plaintiff. I do not intend dealing with the
evidence
in detail. In a nutshell, Mr Koekermoer's evidence was the following
effect:
8.1
Previously before 2008, the plaintiff and the defendant had a
contractual relationship. The delivery of Valencia oranges to
the
defendant during the period June 2008 to July 2008 was as a result of
an oral agreement concluded during May 2008. Amongst
others, the
material terms of the agreement were:
8.1.1.
that the agreement was that of agency based on a minimum guaranteed
price payable to the plaintiff for its Valencia oranges,
8.1.2
that 30% advance payment was to be made within tw
T
o
weeks upon delivery of the oranges to the defendant in Durban,
8.1.3
that the balance was to be payable within three months of delivery,
8.1.4
that the defendant was exempted from paying less than the minimum
guaranteed price only in the event inherent vice or defect
was to be
found in the fruits and upon due notice thereof having been given to
the plaintiff,
8.2
There is a procedure that has to be followed to ensure that the
quality of goods that are exported to other countries comply
with
acceptable standard. In this regard the Statutory Board that oversees
such goods is involved
8.3
Before the involvement of statutory board, the procedure in the
instant case was that, the plaintiff would on harvest bring
the
fruits to the pack house. The produce would then be selected and
packed according to size and other characteristics of the
produce.
8.4
At the pack house, the produce would be placed in cartoons that are
kept in the pallets. About eighty cartoons in each pallet.
Because
the produce is earmarked to be exported, a sample of two cartoons per
pallet would be caused to be inspected by a statutory
body. Upon been
inspected, either approval for export or refusal thereof would be
issued.
8.5
The produce would then be transported to the exporter and in the
instant case, the defendant. About 11 consignments were delivered
to
the defendant during the harvest period of June to July 2008. Certain
payments were made in respect of the consignments. However,
not all
the minimum guaranteed price was made. Round about 1 October 2008,
the plaintiff was notified that there were quality claims
and that
the produce were therefore sold at a discounted price. Based on this,
the defendant refused to pay the full minimum guaranteed
price. This
was despite the fact that it has never been a term of the contract
that, a lower price would be paid in respect of
quality claims.
According to the plaintiff, only in respect of inherent vice or
defect would the defendant be entitled to pay less
than the minimum
guaranteed price. It was a further term of the contract that in the
event of a profit, the parties would share
such a profit margin on
50% basis. This concluded the evidence for the plaintiff.
DEFENDANTS
EVIDENCE
9.
Three witnesses testified on behalf of the defendant. The witnesses
were Mr A Stanbury, a director and one of the three founding
shareholders of the defendant, Mr Combrink, he was a managing
director of the defendant during 2008 and was involved in the
conclusion
of the agreement being the subject of the dispute and Mr
Julius an official of Perishable Products Export Control Board
(hereinafter
referred to as the Board). In a nutshell, their evidence
was to the following effect:
9.1
The defendant concluded an agreement of sale, which included minimum
guaranteed price with the plaintiff. It was not an agency
agreement
with minimum guaranteed price as alleged by the plaintiff.
9.2
The following were further terms of the agreement:
9.2.1
that minimum guaranteed price as indicated by the defendant from time
to time would be paid to the plaintiff for the Valencia
oranges
delivered by the plaintiff to the defendant in Durban,
9.2.2
that within seven days of delivery of such produce in Durban, the
plaintiff would be paid an initial amount of R30 per carton,
9.2.3
that within three months of delivery of such produce the balance
outstanding on the minimum guaranteed price would be paid
to the
plaintiff.
10.
The defendant as an exporter registered with the Board its
requirements for export regarding perishable goods to Hong Kong.
Such
requirements are contained in a document marked "official
template" for exporter packaging guides. This document
was
admitted as exhibit Al during the evidence of the plaintiff. The
document also sets out minimum standards required for export
to
countries referred to in the document as South East Asia. According
to the defendant South East Asia, includes Hong Kong.
11.
When the inspection is made at the pack house of producer and before
delivery of the produce to the defendants, such standards
as
specified by the defendant in the document marked exhibit Al would be
taken into consideration before giving an approval for
such an
export.
12.
The plaintiff having delivered the produce in Durban, a superficial
inspection of the consignment would be done before shipment
of the
produce. Should there be a delay in the shipment, the approval given
by the Board to export a particular consignment would
lapse after 28
days.
13.
The eleven consignments were targeted for Hong Kong. The defendant
had a representative in the targeted market area to sell
and deliver
the produce to buyers in those foreign countries. The defendant
received a notification that there were quality claims
on some of the
consignments.
14.
As a policy of the defendant, where there is a quality claim the
defendant would first have to decide whether to investigate
such
claims or to offer to the buyers a lesser price. In doing so, it
would consider cost implications of launching such an investigation.
In the instant case, it decided not to investigate the veracity of
such claims. The amount which is now claimed by the plaintiff,
is the
discounted amount that was offered in the market for the goods in
question. In short, this is the evidence that was tendered
on behalf
of the defendant.
15.
At the conclusion of the evidence and at the start of the
submissions, I requested the parties to set out what they regard as
issues raised by the pleadings and the evidence thereto.
16.
The followings were indentified as issues to be determined in these
proceedings:
16.1
Whether the relationship between the parties, is a contractual
relationship of agency or contractual relationship of independent
contractor or a purchaser and a seller?
16.2
Whether a number of terms were indeed terms of the agreement? For
example,
16.2.1
whether the minimum guaranteed price would no longer be available to
the plaintiff if there were quality claims on the fruits
exported?
16.2.3
whether as a term of a contract, the only circumstances where a lower
price would be payable, would be in case of inherent
vice?
16.2.4
Whether a lower price would also be payable in the case of quality
claims? And if so,
16.2.5
Whether such quality claims have been proved? And if so,
Who
bears the risk for such quality claims?
16.2.6
Whether the defendant was under paid or not? Or to put it
differently, whether the defendant had proved that it had been
under
paid?
DISCUSSIONS,
SUBMISSIONS AND FINDINGS
17.
I find it necessary to deal with the first issue that was raised in
paragraph 16.1 of this judgment
Whether
the relationship between the parties is a contractual relationship of
agency or sale
?
18.
This issue was prompted by the defendant's stance during the opening
statement. This was persisted in the course of the evidence
and also
during final submissions. In his written heads of argument, counsel
for the defendant states the issue as
follows:
"15.1
It had nc\'cr been the business of the defendant to conclude
agreements
on
an agency basis. It always purchased fruit from the producer, the
majority of agreements being minimum guaranteed profit share,
the
rest being fixed price contracts".
Further
in paragraph 16 of the defendant's written heads of argument a
submission is made as follows:
"Mr
Crombrink
who concluded the agreement on behalf of the defendant also
confidence that the defendant never did business as an agent
but only
as a purchaser and that the agreement with the plaintiff was
concluded on that basis".
The
nature of the submission raises another issue:
Whether
an agreement of purchaser and seller relationship was pleaded by the
defendant
?
19.
When I posed this question to counsel for the defendant he referred
me to paragraph 3 of the defendant's plea which paragraph
reads as
follows:
"3.1
The
defendant denies that it was the plaintiffs agent and pleads that the
parties were at all times acting as independent contractors,
3.2
The defendant pleads that it is a fruit exporter which produces fruit
at a minimum guaranteed price, subject to fruit quality
in order to
sell same to buyers in different global markets".
19.1
Firstly, a relationship of independent contractor cannot be that of a
purchaser and seller. Why would the defendant refer to
itself as an
independent contractor, if it really saw itself as a purchaser of the
plaintiffs produce? The plaintiff having alleged
a relationship of
agency, it was incumbent on the defendant to be clearer on its
alleged relationship with the plaintiff.
19.2
Secondly, "procure fruit at a minimum guaranteed price"
cannot, in itself be equivalent to an allegation of buying
fruit from
the defendant at a minimum guaranteed price as contended by counsel
on behalf of the defendant. I therefore find that
a relationship of a
seller and purchaser was not properly pleaded by the defendant and
solely based on this finding, the defence
should be found not to have
been properly placed before the court.
20.
Even if I have to be wrong in finding that an agreement of sale was
not properly pleaded, another issue would still be raised.
Whether
the defendant's "allegation of seller and purchaser"
relationship is more probable?
21.
Mr Combrink who testified on behalf of the defendant is the one who
concluded the agreement with the plaintiff. It was not the
first
harvest that was delivered to the defendant on the basis of a minimum
guaranteed price; plus profit sharing after the defendant's
costs
which have included commission, shall have been deducted. These would
be costs relating to the shipment, storage and other
related costs in
addition to the commission. The nature of the relationship when the
agreement was concluded was never discussed
nor was there any such
discussion thereafter.
22.
Now, in the normal agreement of sale, commission does not become an
issue. Secondly, profit sharing does not become an issue
in sale
agreements. The seller having determined a fixed price, would have
taken into account also his profit margin. In the instant
case, it
was the defendant who determined the minimum guaranteed price, after
having considered all costs applicable to it including
its
commission.
23.
Through out the documentation forming part of the consignments, there
has never been any reference to the plaintiff as the seller
and the
defendant as the purchaser.
24.
All of these should be marched against the plaintiffs version. It was
an agreement of agency coupled with a minimum guaranteed
price. It
would also have been entitled to profit sharing. In the consignment
note or "vragbrief" the defendant is referred
to as an
agent. No explanation by the defendant could be offered for this and
why it was never queried. On probability this was
a relationship of
agency. However, I also raised another issue during the discussion.
Whether
it matters if the relationship was that arising from agency or sale
agreement
?
25. The
following factors are common cause:
25.1
that the plaintiff would be paid minimum guaranteed price as
determined by the defendant for his produce,
25.2
that the plaintiff would deliver Valencia oranges in consignments to
the defendant in Durban,
25.3
that upon delivery of each consignment R30 per each carton will be
paid to the plaintiff as an advance,
25.4
that the costs relating to the consignments were to be borne by the
defendant upon delivery thereof to the defendant,
25.5
that in addition to such costs, commission to the defendant would
also be considered by the defendant when the minimum guaranteed
prices are furnished to the plaintiff,
25.6
that in the event of the produce been sold at a higher price with a
profit margin, such a profit would be shared on an equal
basis
between the parties.
26.
All of these common cause factors should in themselves justify a
cause of action irrespective of whether or not the agreement
was that
of sale or agency. In the course of the evidence and also during the
discussions, a suggestion was made on behalf of the
defendant that
the essence of the agreement concluded was that of a minimum
guaranteed price and sale. Similarly, it was suggested
on behalf of
the plaintiff that the agreement was that of an agency with a minimum
guarantee price. I have already found that the
agreement was that of
agency. This finding however, raised two issues that were contended
by counsel on behalf of the defendant.
Before I deal with the two
issues, counsel for the defendant sought to suggest that one cannot
couple an agency agreement with
a minimum guaranteed price. In
holding this view, he sought to rely on what was stated in paragraph
30 of the judgment in Dolce
South Africa (PTY) Ltd v Pieter Beukes
Ltd 2007 (4) SA 577 (C). In this matter, the defendant sought to rely
on an oral agreement
in the face of a clear written agreement of
agency between the parties. In the written agreement it was
specifically stated in
a clear and unambiguous manner that the money
advanced by the plaintiff to the defendant would be a loan repayable
to the plaintiff
should the nett proceeds of the sale of the produce
be less than the amount advanced. The defendant had not read the
agreement
before signing it and stated that he would not have entered
into the agreement if he had been aware of this clause about
advances.
On the facts, the defendant was accordingly bound by the
written agreement.
27.
Now, in paragraph 17 of the defendant's written heads of argument,
and referring to Dole's case of relevance, the following
are stated:
"
The
court considered the evidence relating to the
consignment
deals
and
minimum
guarantee agreements
(par
30)
(My
own emphasis)
28.
Based on what is understood to be the essence of the judgment in
Dole's case in paragraph 18 of the written heads of argument
it is
then concluded as follows:
"18
Upon
application of the aforesaid principles to the evidence above, it is
submitted that the minimum guaranteed price agreement,
concluded
between the parties was a sale and not an agency"
29.
This
submission seems to have been founded on what is alleged was said in
paragraph 30 of the judgment in Dole's case. The principle
being as I
understand the submission, that a minimum guaranteed price does not
apply in agency agreements. I can find no such principle
been stated
in paragraph 30 of the aforesaid judgment, nor is it apparent from
paragraphs 14 to 20 of the judgment. Even if it
was, I would not
agree with such a principle as the parties to an agreement, whether
it being agency or sale, should be entitled
to regulate their
conduct, unless specifically prevented by the operation or existence
of the law.
30.
I now come to deal with the other two issues prompted by the
submissions made on behalf of the defendant.
Whether
if the agreement is that of agency the plaintiff 1 law is entitled to
the amount claimed
.
31.
Counsel for the defendant suggested that in law, where damages are
claimed based on agency agreement, the principal would only
be
entitled to the nett proceeds of the sale facilitated by the agent.
Specifically suggesting that, the plaintiffs action should
fail,
because the plaintiff had failed to prove its damages, and in
particular the nett proceeds of sale of the Valencia oranges
in the
targeted market, that is, sale of the oranges in Hong Kong. I find
this to be on fishing expedition.
32.
The plaintiff plays no role in this identification of the buyers in
the outside market. It plays no role in the fixing of prices
that
must be offered to those buyers. It bears no knowledge of the
identities of the buyers to whom the oranges were offered. The
defendant having sold the oranges at whatever price, kept the rest
after having paid what it says was obliged to pay to the plaintiff.
Everything since delivery of the produce to the defendant and until
sale of such produce in the outside market, was within the
knowledge
of the defendant. Assuming therefore that the plaintiff was entitled
to the nett proceeds as contended by the defendant,
the defendant
would have been obliged to disclose more facts than just mere denying
liability.
33.
However, the relationship between the parties should be seen in
context. The common cause factors stated earlier in paragraph
25 of
this judgment should serve as an overall in determining the intention
of the parties and the extent of their respective obligations
to
sustain liability. For example, in the instant case the defendant was
obliged to pay to the plaintiff a minimum guaranteed price
offered to
plaintiff by the defendant and accepted by the plaintiff as displayed
by delivery of the produce to the defendant. The
terms of such
payment were agreed upon as indicated earlier in this judgment. To
insist on another form of liability and mode of
payment in the light
of this, would in my view, offend against the intention of the
parties. I therefore find that the contention
of nett proceeds cannot
be sustained. I now turn to deal with the second issue.
Whether
the plaintiff as a principal, continued to bear the risk up to the
end?
34.
This question has a bearing to the other issues already identified in
paragraph 16 of this judgment. For example, the issues
raised in
paragraphs 16.2.5,16.2.4,16.2.3,16.2.2 and 16.2.1
35.
The keeping and transportation of the produce until up to the
delivery thereof in Durban, appears to be common cause that it
was
the responsibility of the plaintiff. However, it was contended on
behalf of the defendant, that if the court was to find that
the
nature of the relationship is that of agency, then the plaintiff
should be found to have carried the risk. In fact, the issue
of risk
was raised on two grounds. Firstly, that the plaintiff bears the risk
of quality claims and secondly, that such a risk
operate against the
plaintiff in the light of principal and agent relationship. That is,
if the produce were found to be of poor
quality, the plaintiff as the
principal was responsible thereto.
36.
Starting with the risk created by virtue of the relationship, I think
this again should not be considered in isolation. It was
the
defendant who was to incur storage costs. It was the defendant who
had to identify the buyers. It was the defendant who had
to decide
when to ship the consignments. It was the defendant who was to be
paid by the buyers. Having paid the plaintiff the minimum
guaranteed
price, it was the defendant who was to determine whether there was
amount remaining for the profit sharing or not. If
a lower price had
to be offered to the buyers in those countries, it was the defendant
who had to make a decision without consulting
the plaintiff. All of
these should be seen to do away with a general rule that the
principal is liable or responsible for everything.
The parties agreed
and it was their understanding that this would be the case. I
therefore find that the plaintiff is not liable
or did not bear the
risk by virtue of agency relationship.
37.
I now turn to deal with the other ground of risk raised by the
defendant. Before I do that, I find it necessary to deal with
the
other issues identified earlier in paragraphs 16.2.3 and 16.2.4 of
this judgment.
Whether
a lower price would also be payable in case of quality claims
?
38.
Remember, the amount that is claimed by the plaintiff is the
discounted amount which the defendant says it was entitled to do
due
to the alleged quality claims that were made by the buyers in Hong
Kong, in respect of the Valencia oranges. These claims are
said to
have revolved around the blemish on the oranges, the quality of the
colour of the oranges and the skin is apparently said
to have not
been smooth. It was common cause that these are the things that could
be observed with one's naked eyes. That is, one
did not need
scientific observation to detect these signs on the oranges.
39.
Just to recap, what the defendant did was, having allegedly received
the alleged quality claims, it decided not to launch an
investigation
into the claims. Instead, it decided to offer a discount without
having told the plaintiff. Only late in September-October
2008, was
the plaintiff informed of the quality claims as the basis why it
would not be paid the minimum guaranteed price. This
kind of an
arrangement as alleged to have been agreed upon, is disputed by the
plaintiff.
40.
According to the plaintiff, it was obliged to provide or deliver to
the defendant in Durban "sound export quality fruit,
in mutually
agreed quality and on initially agreed times and dates". This
sentence was added to paragraph 3 of the plaintiffs
particulars of
claim late during the hearing of this matter and was not objected to
by the defendant.
41.
As I understood the plaintiff, it was never part of the agreement
that quality claims made when the goods are in the market
on foreign
countries, would be the responsibility of the plaintiff. In making
the submission to this effect, I understood the plaintiff
to be
relying on the following set of facts:
41.1
Just before the agreement was concluded in 2008, Mr Combrick from the
defendant investigated the orchards and in his own words
expressed
satisfaction. He expressed no concerns about blemishes, colour or
skin problem,
41.2
After the oranges were taken to the plaintiffs pack house, an
official from the Board inspected them. Having done the inspection
an
approval to export the produce was given. It was common cause that in
doing the inspection, the official concerned would have
utilised
Exhibit Al, which document was registered with the Board. It contains
the minimum standards for specific items or factors
and also those of
the defendant in respect of the targeted market. According to the
official from the Board and called as witness
on behalf of the
defendant, when inspection made and there is document like Exhibit
Al, registered with the Board, such investigation
would take into
account the standard set out by the exporter.
41.3
When a consignment does not comply with the registered standard, no
approval would be given for export. For example, on the
28 July 2008,
the Board refused to give an approval of a consignment under pallet
537 345 049 306. This appears on page 62 of Exhibit
A and it was
referred to during the evidence of the witness for the plaintiff.
Once there is a rejection such a consignment would
not even be
delivered to the defendant.
41.4
The approval of the produce for export is seen by the plaintiff as a
proof of sound export quality fruit envisaged by the parties.
In
doing the investigation, the board would require a sample of about
two cartons from each consignment. Remember, each consignment
is a
pallet consisting of 80 cartons. This is said to be an acceptable
standard of investigation as it is not practical to check
each and
every orange or to check each and every
7
pallet
or carton.
41.5
Upon delivery and before shipment of the consignment by the
defendant, the defendant will do superficial investigation. Again,
it
is accepted that it would not be practical to investigate everything.
In this regard, one must accept that the defendant would
not ship a
consignment if something wrong is observed. Once the consignment
leaves the port without any complaint by the defendant,
the plaintiff
cannot be held liable for the quality problems that are discovered
thereafter.
42.
All of these factors and submissions made, in my view, make sense.
Remember, one is dealing here with perishable goods. Secondly,
one is
dealing with quality problems that do not need a scientific
observation. Time is of essence in the disposal of these kind
of
produce. The condition under which they are kept, is also important.
Right climate and temperature is important. The keeping
of the
produce is also important. For example, were they kept in an open
area where they could easily be damaged by external factors?
Or were
they exposed to any unfavourable condition? Of necessity, all of
these would be the responsibility of the one who keeps
them. In this
case, the defendant as from the date on which each consignment was
delivered.
43.
Now, eleven consignments were delivered to the defendant. Not
particularly in one and the same date. These consignments were
kept
in Durban under the care of the defendant before shipment. The
conditions and exact places where they were kept before shipment
was
not properly explained by the defendant. When each of the consignment
was dispatched and delivered to the targeted market and
under what
conditions could only have been within the defendant's knowledge. The
defendant failed to lead evidence around these
aspects. When the
quality problems were discovered and in respect of which consignment,
is also not known and no reason has been
given as to why evidence in
this regard was not adduced. The nature of the relationship and the
manner in which the parties conducted
themselves, make it evidently
clear where and when the respective risks lie. The plaintiff could
not have carried the risk beyond
delivery of the consignments in
Durban. More so that the quality claims alleged to have been lodged
by the buyers in Hong Kong
with the defendant via its agent, or
representative, were not problems observed by Mr Combrick when he
inspected the orchards.
The problems were not observed by the
plaintiff when preparing the consignments and where not observed and
noted by an official
of the board before approval for export. Lastly,
such quality problems not observed or noted by the defendant when
doing superficial
inspection. I am therefore unable to find that the
defendant was entitled to pay the plaintiff less than the minimum
guaranteed
price, based on the alleged quality problems that were
allegedly discovered after delivery and after shipment of the
consignments.
Whether
the quality claims have been proved
?
44.
Assuming that I was to be wrong in finding that, the defendant was
not entitled to pay less amounts than the minimum guaranteed
price
there is another problem the defendant is confronted with. The issue
of quality claims is based on hear-say evidence. Firstly,
the
defendant got a report from its agent. The agent did not testify.
Secondly, the defendant decided not to investigate the claims,
and
the people who made the claims did not testify. Therefore even the
report that was made to the defendant's agent about the
quality
claims is based on an unreliable evidence.
45.
It is the defendant who is making allegations of quality claims. He
must therefore prove the allegations. It has dismally failed
to do
so. Just on this alone, the defendant should be found not to have
been entitled to pay the lower amounts. I find it necessary
to deal
with another issue which is somewhat related to the defendant's
failure to be open and to lead necessary evidence. The
issue was
raised earlier in paragraph 16.2.6 as follows:
Whether
the defendant was underpaid or not? Or to put it differently, whether
the defendant had proved that it had been underpaid
?
46.
The defendant alleges that he had to make some adjustments to the
price that he had put on the produce in respect of which quality
claims were made. He however, decided not to give more information.
For example, what price he had previously contemplated? What
costs
were involved including its commission? What loss was made as against
what was initially projected?
47.
All of these are not immaterial aspects of the case. For example, did
the defendant get paid less than the costs and commission?
If not, on
what basis did the defendant then decide to pay less than the
guaranteed minimum price? Lack of evidence around all
of these should
be found to weaken the defendant's defence. I turn to deal with
another issue raised earlier in paragraph 16.2.2
of this judgment.
Whether
as a term of a contract, the only circumstance was where a lower
price would be payable, would be in a case of inherent
vice
?
48.
This issue was first raised in the pleadings. Secondly, it was raised
during evidence and when counsels made submissions. It
was the
plaintiff's contention that, the only circumstances under which the
defendant was entitled to pay less than the minimum
guaranteed price,
was in the case of "inherent vice". That is, defects or
poor quality in the fruits that cannot be easily
observed with one's
naked eye. This could be poor quality that existed even whilst the
oranges were still on the trees, but something
which could not easily
be observed. For example, the fruit could be of poor quality
depending on how the crop was treated before
taken off the trees.
49.
It makes sense to me, to make such a condition to exist through out.
For example, such poor quality could be discovered when
the fruits
are used or eaten. The level of sugar or water could be found at a
very late stage to be wanting. For this reason, it
is important that
the producer should bear the risk up to the end insofar as it relates
to the "inherent vice".
50.
I did not understand counsel for the defendant to argue vigorously
that the poor quality allegedly complained of, were inherent
vice. In
the plea it was suggested that in addition to inherent vice, the
plaintiff was said to be also bearing the risk in respect
of quality
claims. In this case, the blemish, colour and skin allegedly
complained of, are things that can be observed from the
outside look.
I have already made a finding that in the circumstances of the case,
the plaintiff was not responsible upon delivery
of the produce to the
defendant in Durban and upon shipment thereto.
51.
The interpretation or what is meant by inherent vice, in my view, is
not particularly essential in this case. More so that it
is common
cause that claims made on the quality were alleged to have been based
on factors that could be detected from the outlook
of the produce.
Although attempts were made to suggest that blemish is part of
inherent vice. I do not think this is material if
it is something
that could have been observed with one's naked eyes. It did not
appear that the amount as discounted and now been
claimed by the
plaintiff is in dispute.
CONCLUSION
52.
In conclusion, the following order is made:
52.1
Judgment is hereby granted against the defendant in the sum of R168
561.45
52.2
Interest of the aforesaid amount at 15,5% per annum
a
tempore morac
to
date of final payment
52.3
Costs of the suit.
M
F LEGODI
JUDGE
OF THE HIGH COURT
WEAVIND
& WEAVIND
ATTORNEYS
FOR THE PLAINTIFF 573 Fehrsen Street, New Muckleneuk PRETORIA
Ref:
Dr Manley/MS/K36034 Tel: 012 346 3098
GROSSKOPF
ATTORNEYS
FOR
THE DEFENDANT
PGC
House
6
th
Floorr,
273
Paul Kruger Street, PRETORIA
Ref:
T7/RC/MW
Tel:
012 305 7550