RCOG Propco 1 Limited v Welfit Oddy (Pty) Limited (2906/2020) [2024] ZAECQBHC 8 (30 January 2024)

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[2024] ZAECQBHC 8
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RCOG Propco 1 Limited v Welfit Oddy (Pty) Limited (2906/2020) [2024] ZAECQBHC 8; [2024] 2 All SA 163 (ECP) (30 January 2024)

IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, GQEBERHA
OF
INTEREST
Case
No.:  2906/2020
In
the matter between:
RCOG
PROPCO 1 LIMITED
Plaintiff
(Registration
Number:  RC122476)
and
WELFIT
ODDY (PTY) LIMITED
Defendant
(Registration
Number:  1936/008806/07)
JUDGMENT
EKSTEEN
J:
[1]
This
matter arises from a contractual dispute concerning the validity of
various agreements, and if binding agreements have been
established,
each party claims to have cancelled the agreements as a result of the
other party’s repudiation thereof.
The plaintiff, RCOG
Propco 1 Limited (Propco)
[1]
, a
company situated in Jersey, in the Channel Islands, issued summons in
which it claimed US$2 617 520,00 pursuant to the alleged
breach of
contract.  The defendant, Welfit Oddy (Pty) Ltd (Welfit Oddy), a
company registered in South Africa, entered a claim
in reconvention
in which it claimed payment of US$2 389 750,00.
[2]
Welfit Oddy is a manufacturer of
stainless-steel ISO tank containers and conducts business in
Gqeberha, in the Eastern Cape.
Prior to 2018, it had had a
relationship with GEM Containers Limited (GEM), a company registered
in the United Kingdom, with its
offices in London.  Welfit Oddy
had from time-to-time manufactured tank containers for GEM and had,
for that purpose, entered
into a master container purchase agreement
with GEM in 2013.  The master container purchase agreement had
envisaged future
purchases from time-to-time.  It provided for
individual agreements to be concluded from time-to-time in respect of
each additional
order for containers.  In the course of their
relationship Welfit Oddy had dealt extensively with Ms Heidi
Sommerville, the
chief executive officer of GEM.
[3]
GEM operated throughout as a container
leasing company and had owned its own fleet of containers, which it
had leased out to various
customers.  The ISO tank containers
were designed for conveying liquids by sea, road or rail.  On 24
January 2018 Ms
Sommerville wrote to Welfit Oddy to advise of the
restructuring of GEM’s business.  She said that GEM would
remain the
manager and lessor of the containers, but in the future,
Propco would be the owner of the containers.  She described the
relationship
with Propco as follows:
‘
With
regard to the tank container data plate - it is important that Gem
Containers Limited is shown as the only party to be contacted
in case
of an emergency or for any equipment, operational or legal queries in
the field.  Typically we do not include the
owner details on the
data plate to avoid operators or authorities contacting Gem Propco 1
Limited or any of our other asset owners
directly.
On this basis, I have
shown the same information for the Owner section and the Operator
section in the table below.
The purchaser is
GEM
Propco 1 Limited
.
This may require
amendment to the original Master Container Purchase Agreement signed
in 2013 which defines the purchaser as Gem
Containers Limited.
Also, I have included Bev
in to this communication.  Bev Mason is GEM’s operations
manager and will be responsible for
all operational requirements
relating to the order from confirmation, through production,
acceptance and delivery.
Bev
will provide the GEM frame paint RAL reference and GEM decal
format.’
[2]
[4]
The email received from Ms Sommerville
proceeded to direct that the invoices for purchases of
stainless-steel tank containers should
henceforth be made out to
Propco at their address in St Helier, Jersey, but were to be
forwarded by email to Mr Pat Rocholl, the
chief financial officer of
GEM, and Beverly Mason for onward transmission to Propco.  All
communication was to be with GEM.
[5]
As a result of this email there was no
direct contact or communication between Welfit Oddy and Propco. All
negotiation was conducted
through GEM, who Welfit Oddy perceived to
be Propco’s agent.  Welfit Oddy relied throughout on this
email from Ms Sommerville
dated 24 January 2018.
[6]
Pursuant
to the alleged restructuring of GEM’s business, a new master
container purchase agreement (the MPA) was negotiated
with Ms
Sommerville and forwarded to her.  She presented the document to
the directors of Propco and obtained their signatures
to the MPA.
The MPA is not in dispute, but, as I shall explain later, I am called
upon to consider the interpretation of
various clauses in the
MPA.
[3]
The contentious
provisions are reflected hereafter.
[7]
The introductory portion of the MPA
recorded:
‘
The
VENDOR and the PURCHASER will in future enter into agreements
(hereinafter described as “Each Individual Agreement”)

for the sale and purchase of various UN Portable or IMO 4 or SWAP
Tank Containers (herein described as “the Containers”).
The price, delivery and
specification of these Containers are agreed in writing between the
VENDOR and the PURCHASER at the time
Each Individual Agreement is
made.’
The master container
purchase agreement that had been concluded with GEM in 2013 had
contained an identical provision.
[8]
The MPA stipulated that it would govern all
the other terms and conditions of each individual agreement
including, but not limited
to, acceptance and inspection procedures,
transfer of risk and warranties.
[9]
Paragraph 2 of the MPA provided for the
quantity and the price of the purchases.  It recorded that:
‘
The
VENDOR shall sell and make available for delivery the containers at
prices in accordance with the particulars and details as
set out in
Each Individual Agreement.’
[10]
The acceptance and inspection procedures
referred to earlier were set out in paragraph 3 of the MPA and it
includes the following
provision:
‘
3.4
The Purchaser or his Agent may inspect units at the VENDOR’S
plant after it receives notice
from the Vendor that such units are
available for inspection.  If a unit is rejected by the
PURCHASER or his Agent, the PURCHASER
shall not be deemed to have
accepted such unit and shall be under no obligation to issue clean
receipt until such unit is accepted
by the PURCHASER or his Agent,
after further inspection.  The price for each unit stated in 2
above includes the cost of making
units available for inspection by
the Purchaser including such lifting, handling, etc as may be
necessary.’
[11]
In terms of clause 4 of the MPA delivery of
the containers had to be effected in accordance with the particulars
and details set
out in each individual agreement.  It
stipulated:
‘
4.1
The Containers shall be delivered by the VENDOR in accordance with
particulars and details set
out in Each Individual Agreement.
…
4.4
Notwithstanding the above nor any of the terms recorded in Each
Individual Agreement attached
hereto, the PURCHASER accepts that the
Containers remain the property of the VENDOR until payment has been
made in full.
4.5
Although ownership of each Container will only pass to the PURCHASER
against payment of
the full purchase price, risk will pass to the
PURCHASER against delivery.’
[12]
Finally, the MPA provided for payment of
each tank container to be made, again, ‘in accordance with the
particulars and details
set out in Each Individual Agreement’.
It provided:
‘
5.2
Payment is to be made for the full number of tanks produced and
invoiced each month, irrespective
of the number of tanks
contractually promised and planned for the month.  If however,
the number of tanks built, is in excess
of the contractual amount for
the month, then the tanks in excess will be excluded from the monthly
invoice, unless otherwise requested
by or agreed with the PURCHASER.
5.3
Notwithstanding the above nor any terms recorded in Each Individual
Agreement, the PURCHASER
accepts that Containers may not be released
to the PURCHASER until any overdue invoices had been paid in
full.’
[4]
[13]
Pursuant
to the communication on 24 January 2018,
[5]
as foreshadowed in the MPA, various agreements were negotiated and
concluded between Welfit Oddy and GEM, generally under the guidance

of Ms Sommerville.  The agreements were concluded by an exchange
of emails, and no written contracts signed by the parties
were
entered into at the time.  Welfit Oddy proceeded to manufacture
containers according to the terms agreed upon.
Invoices were
made out to Propco and directed to it through Mr Rocholl and Ms
Mason.  Eight of these individual agreements
gave rise to the
disputes in this matter. I revert to these agreements.
[14]
Initially, all went well and payments were
received from Propco pursuant to the agreements concluded through
GEM, until approximately
October 2018, when the first signs of
financial distress at Propco became apparent.  On 26 October
2018 Welfit Oddy addressed
an email to Ms Mason in which it recorded:
‘…
Up
to this stage we have released 29 Tanks without invoicing.
Our Standard finance
procedure for tanks sold EXWORKS entitles that we invoice on
collection of tanks.
Moving forward I regret
to advise that Finance has instructed that we are unable to release
any further tanks until an agreement
has been made between Welfit
Oddy and Gem regarding the payment terms.’
[15]
Much correspondence followed, extending
over the next year, wherein Ms Sommerville repeatedly requested
extended payment terms and
reported regularly on attempts to obtain
fresh banking facilities for Propco.  Acting on the assurances
given in respect of
future payments, Welfit Oddy permitted the
release of further containers from time-to-time, but the repeated
undertakings in respect
of payments were not honoured.
[16]
During the same period the financial
position at Welfit Oddy deteriorated significantly, largely due to
unfavourable global trading
conditions in the stainless-steel tank
container industry and compounded by the substantial debt owed to it
by Propco.  Thus,
Welfit Oddy sought legal advice, and, on 9
October 2019, Attorney Nurse addressed a letter to GEM demanding
payment of overdue
invoices in the amount of US$4 856 480,00.
This was followed two days later by a letter from Mr Allen, the
managing director
of Welfit Oddy, to Ms Sommerville in which he, too,
affirmed that no further containers would be released until the
overdue payments
had been received.
[17]
As I have said, throughout this period
there had been no contact or communication between Propco and Welfit
Oddy.  All correspondence
and business had been conducted
through GEM, whom Welfit Oddy perceived to be the representatives of
Propco.  However, on
18 October 2019, Mr Ken Richie, a director
and head of fund administration of Propco, responded to Mr Allen.
He recorded:
‘
Further
to your email to Heidi Sommerville on 17 October 2019, please accept
this email as acknowledgement of our receipt.
The board will be
meeting next week to discuss the matter.
In the interim, we are
processing a payment of US$316,800,00 to Welfit Oddy today for the
release of tank containers.’
[18]
Upon receipt of the payment a special
arrangement was indeed made for the release of ten further
containers.
[19]
Matters came to a head on 29 October 2019
when Mr James Bryant, also a director of Propco, responded to the
demand made by Mr Nurse.
He recorded:
‘
Patrick
Rocholl has forwarded your recent correspondence to me as a director
of GEM PropCo1 Limited.  Please note, and kindly
also remind
your client, that none of the persons you have addressed your letter
to are employed by or authorised to represent
GEM PropCo1 Limited.
We have no records of the
orders your client claims payment for.  So to be able to
investigate this matter we would be grateful
if you could provide us
in the first instance with the individual signed contracts supporting
your client’s claim.’
[20]
This letter was followed by a further
communication from Mr Bryant on 1 November 2019 where he recorded:
‘
We
would like to take this opportunity to re-confirm that all purchases
and orders made with you must be approved by GEMPropCo1
in writing
before manufacturing commences.  Only orders signed by at least
one of the directors of GEM Propco1 are binding.
…
We further advise that
going forward we have mandated Mr Patrick Rocholl to exclusively deal
with all negotiations and the logistics
of existing and future
orders, however, any order will not be binding unless confirmed so by
GEM Propco 1 in the manner set out
above.’
[21]
I
shall revert to the issue of individual signed contracts and orders.
Suffice it to say that Welfit Oddy insisted that it
had concluded
eight valid individual agreements and persisted in its claim for
payment of all outstanding amounts.  There
were endeavours to
reach a settlement of the disputes and Propco contended in its
particulars of claim that a binding settlement
had been concluded and
sought to enforce it.  The claim was not persisted with and it
is not necessary to deal further with
the settlement.  Welfit
Oddy, on the other hand, regarded the refusal to honour payment,
coupled with the correspondence from
Mr Bryant, as a repudiation of
the MPA and the individual agreements.  Accordingly, on 13
December 2019, Mr Nurse addressed
a letter to Propco in which he
recorded that Welfit Oddy had ‘elected to enforce the purchase
agreements concluded with GEM
Propco, in terms of which Welfit Oddy
has manufactured 816 tank containers for the aggregate purchase price
of US$18 760 000,00’.
Welfit Oddy expressly reserved its
rights in terms of the purchase agreements.
[6]
[22]
Mr Nurse explained that Welfit Oddy had now
sold and ceded all its rights in terms of the purchase agreements to
its associated
company, Buhold Intermodal BV of the Netherlands, with
effect from 13 December 2019.  Therefore, he advised that all
amounts
payable by GEM Propco to Welfit Oddy in terms of the purchase
agreements would now be payable to Buhold Intermodal.  However,

Mr Nurse wrote that Welfit Oddy’s obligations in terms of the
purchase agreements had not been transferred to Buhold Intermodal
and
remained with Welfit Oddy.  It therefore tendered performance of
its obligations in terms of the purchase agreements ‘against

payment of all amounts owing by GEM Propco to Buhold Intermodal in
terms of the purchase agreements’.
[23]
The indisputable import of Mr Nurse’s
declaration was that Welfit Oddy did not accept the repudiation and
had elected to hold
Propco to its contract.  However, what Mr
Nurse neglected to explain was that Welfit Oddy had in fact also sold
and delivered
all the remaining containers to Buhold Intermodal and
that they had no containers to tender against payment of the
outstanding
amounts to Buhold Intermodal.  Welfit Oddy claimed
that the sale was necessitated by its deteriorating financial
position,
which was, in part, attributed to Propco’s failure to
honour the agreements.
[24]
At
this stage, Welfit Oddy had manufactured 816 tank containers pursuant
to the 8 contested individual agreements and 234 of these
had already
been delivered to Propco.  Propco had made payment in respect of
344 containers, but Welfit Oddy refused to permit
the delivery of any
further containers.  It contended that it was entitled to do so
in terms of clause 5.3 of the MPA
[7]
.
[25]
On
30 July 2020, Jurgens Bekker Attorneys, of Johannesburg, addressed a
letter to Mr Nurse, ironically, on behalf of GEM.
He recorded
that GEM had paid for 344 UN-Portable T11 tank containers and UN-T11
swap tank containers and that Welfit Oddy had
delivered only 234.
Jurgens Bekker enquired how many of the manufactured containers
Welfit Oddy still had in their possession
and demanded delivery of
the remaining 110 containers for which it had paid, alternatively, a
refund of its payment in the amount
of US$2 617 520,00.
[8]
[26]
On 14 August 2020, Mr Nurse reiterated that
Welfit Oddy had in fact sold 816 tank containers of which it had
delivered 234.
He said that Welfit Oddy had retained the amount
of US$2 617 520,00 already paid by Propco in respect of the remaining
containers
on account of the outstanding balance of the purchase
price due by Propco.  He emphasised, again, that Welfit Oddy had
elected
to claim specific performance, however, in respect of the
enquiry as to the number of containers still in possession of Welfit
Oddy, he was silent.
[27]
Accordingly,
on 20 August 2020, Jurgens Bekker noted the election to claim
specific performance and repeated their enquiry in respect
of the
number of containers that were still in Welfit Oddy’s
possession.  Again, Mr Nurse responded, on 8 September
2020,
reaffirming Welfit Oddy’s insistence on specific performance
and they again tendered to perform their obligation under
the
agreements.  Still, Mr Nurse did not respond to the enquiry as
to the number of containers in the possession of Welfit
Oddy.
Thus, Jurgens Bekker issued a demand that Welfit Oddy produce a
notice for the inspection in terms of clause 3.4
[9]
of the agreement for all the containers produced by Welfit Oddy in
terms of the individual agreements, including the 110 containers

already paid for.  Mr Nurse rejected the demand and explained
that Welfit Oddy had previously given notice in compliance with

clause 3.4 and that the containers had in fact been inspected and
approved by independent experts engaged by Propco.  He again

explained that Welfit Oddy had not cancelled the container purchase
agreements pursuant to Propco’s breach and insisted that
they
remained of full force and effect.  This prompted Propco to
issue summons on 25 November 2020.
The
pleadings
Propco’s
Particulars of Claim
[28]
As
I have said the terms of the MPA are not in dispute.  However,
as adumbrated earlier, and explained in the letter from Mr
James
Bryant on 29 October 2019
[10]
,
Propco adopted the stance that nobody at GEM, including Ms
Sommerville, had authority to represent Propco.  Propco
accordingly
denied that the individual agreements had been validly
concluded.
[29]
The crux of Propco’s case is set out
in their particulars of claim (as amended) as follows:
‘
6.
During the period 2018 to 2019, the Plaintiff paid for the total of
344 containers
from the Defendant, amounting to US $7 350 000.00.
The containers were ordered by Heidi Somerville (without the
authority
of Gem Containers Limited and the Plaintiff) alternatively
were ordered by Gem Containers Limited (without the authority of the

Plaintiff) and the purchase of the aforesaid 344 containers was
ratified by the Plaintiff by payment of the Defendant’s
invoices amounting to the aforesaid amount in respect of the said 344
containers.  As a result of the aforesaid ratification,
the
terms of the Master Agreement became applicable to the purchase of
the said 344 containers.
[11]
…
18.
On 8 October 2020, the Plaintiff in writing demanded that the
Defendant furnish to the Plaintiff
a notice for inspection in terms
of clause 3.4 of the Master Agreement for all the containers
allegedly produced by the Defendant
in terms of the Individual
Agreements, inclusive of the outstanding containers, and further
demanded that the Defendant deliver
the outstanding containers
[12]
,
which the Defendant failed and/or refused and/or neglected to do.
19.
The Defendant disputed that it was obliged to do so in terms of the
Master Agreement, which
conduct amounts to an unequivocal intention
not to be bound by the provisions of the Master Agreement and a
repudiation of the
Master Agreement.
20.
The Plaintiff has elected to accept the repudiation and cancelled the
Master Agreement and
the Individual Agreements, insofar as the Court
finds that Heidi Somerville and/or Gem Containers Limited did enter
into the Individual
Agreements on behalf of the Plaintiff, which is
still denied, alternatively, hereby accepts the repudiation and
cancels the Master
Agreement and the Individual Agreements …’
[30]
It accordingly claimed that it was entitled
to the refund of the purchase price of the 110 outstanding
containers.
The
defendant’s case
[31]
As
I have said, Welfit Oddy contended that it had manufactured 816 tank
containers pursuant to 8 individual agreements concluded
between the
parties.  It annexed to its particulars of claim 8 documents,
each headed ‘Individual Agreement’
[13]
and contended that these documents constitute written agreements
concluded between the parties at Port Elizabeth, alternatively

London.  Six of the agreements were signed by Mr Allen, for
Welfit Oddy, on 17 April 2019 and the remaining two on 31 May
2019.
None of the documents have been signed on behalf of Propco but,
Welfit Oddy, nevertheless contended that Propco had
been represented
at the conclusion of the agreements by GEM, ‘in the person of
Ms Heidi Sommerville, both duly authorised.’
[32]
As adumbrated before, Propco persisted in
its position that neither Ms Sommerville nor GEM had been authorised
to act on its behalf.
Thus, in its replication, Welfit Oddy
contended that Propco was estopped from denying the authority of GEM,
in the person of Ms
Sommerville, to conclude the agreements.
The material portions of the estoppel was pleaded as follows:
‘
6.3.1
In the Master Container Purchase Agreement the parties expressly
recorded in its preamble, and the Plaintiff thus
represented to the
Defendant, that the Plaintiff would in the future enter into
Individual Agreements for the purchase of various
tank containers
from the Defendant.
6.3.2  Thereafter,
and while negligently remaining silent throughout concerning the
alleged lack of authority on the part of
Gem Containers Limited to
conclude Individual Agreements on behalf of the Plaintiff:
6.3.2.1
The Plaintiff on 27 July 2018 purchased 100 tank containers from the
Defendant in terms of Individual
Agreement number WO8808,
[14]
an Individual Agreement negotiated by Gem Containers Limited, through
Heidi Sommerville, on behalf of the Plaintiff.  Individual

Agreement number WO8808 is signed by the Plaintiff;
6.3.2.2
The Plaintiff subsequently paid to the Defendant the invoices
addressed to the Plaintiff by the Defendant
and presented to the
Plaintiff by Gem Containers Limited in respect of Individual
Agreement number W08808;
6.3.2.3
The Plaintiff concluded with the Defendant the three Individual
Agreements relied upon by it in its Particulars
of Claim, being
annexures “A1”, “A4” and “A6” to
the Defendant’s Plea, which Individual
Agreements were
negotiated by Gem Containers Limited, through Heidi Sommerville, on
behalf of the Plaintiff;
[15]
6.3.2.4
The Plaintiff subsequently paid to the Defendant, in part, the
invoices addressed to the Plaintiff by
the Defendant and presented to
the Plaintiff by Gem Containers in respect of the Individual
Agreements “A1”, “A4”
and “A6”;
6.3.2.5
The Plaintiff concluded a further Individual Agreement with the
Defendant, being Individual Agreement
“A3” to the
Defendant’s Plea, which was negotiated by Gem Containers
Limited, through Heidi Sommerville, on behalf
of the Plaintiff;
6.3.2.6
The Plaintiff subsequently paid to the Defendant in full the invoices
addressed to the Plaintiff by the
Defendant and presented to the
Plaintiff by Gem Containers Limited in respect of Individual
Agreement “A3”;
6.3.2.7
The Plaintiff accepted without demur the invoices addressed to the
Plaintiff by the Defendant and presented
to the Plaintiff by Gem
Containers in respect of all eight Individual Agreements, as and when
presented, all of which were negotiated
by Gem Containers Limited,
through Heidi Sommerville, on behalf of the Plaintiff;
…
6.4
By virtue of its conduct, the Plaintiff represented to the Defendant
that Gem Containers
Limited, through the person of Heidi Sommerville,
was authorised to represent it in concluding the eight Individual
Agreements.’
[33]
Welfit Oddy contended that it had been
entitled to retain the 110 containers that Propco had already paid
for until Propco had paid
all overdue invoices in full.  They
pleaded thus:
‘
5.8
Despite its obligation to do so:
5.8.1
the Plaintiff has refused to pay the sum of US$11 366 000,00;
and
5.8.2
against such payment, to take delivery of the remaining 582 tank
containers purchased by it.
5.8A
The invoices previously issued by the Defendant to the Plaintiff, in
respect of the sum of US$11 366
000,00, are accordingly overdue as
contemplated by the Master Agreement.  The Defendant was
accordingly entitled to retain
all tank containers manufactured by it
until payment of the overdue invoices is made by the Plaintiff to
it.’
[34]
As I have explained, Welfit Oddy did not
accept Propco’s alleged repudiation, and in its repeated
demands Mr Nurse explicitly
recorded that the defendant had made an
election to keep the various individual agreements alive and hence
demanded compliance.
Welfit Oddy contended that Propco had
invalidly purported to cancel the MPA and the individual agreements.
It persisted,
in its claim in reconvention, to compel the specific
performance of the agreements.  However, it later, during the
course
of the litigation, amended its plea to allege:
‘
5.9.3
By resisting the Defendant’s claim for specific performance,
the Plaintiff has not repented of its repudiation
despite having had
every opportunity to do so at all time subsequent to the formal
demands for specific performance having been
made …
5.9.4
The Defendant is in law entitled to change its election and
accordingly it has now accepted the Plaintiff’s
repudiation and
has on 26 March 2021 cancelled the Master Agreement and the
Individual Agreements, alternatively, it hereby cancels
them.’
Welfit Oddy claimed that
they had suffered financial loss as a direct result of Propco’s
repudiation which was the basis for
its claim in reconvention.
[35]
Finally, Welfit Oddy denied that it had
repudiated the agreements.  It contended:
’
10.2
The Defendant was not obliged to comply with either demand because:
10.2.1   The
Plaintiff had previously inspected and approved the tank containers
manufactured by the Defendant in terms
of the Individual Agreements;
and
10.2.2   The
Defendant is entitled to retain the 110 containers until payment of
the full outstanding balance of US$11
366 000,00 to the Defendant.
10.3
The Defendant denies that it has repudiated the Master Agreement and
the Individual Agreements.
10.4
…  The Defendant has now cancelled those agreements ….’
The
plaintiff’s replication to the defendant’s plea
[36]
Propco denied that Annexures A1 – A8
to the particulars of the defendant’s claim in reconvention
constituted written
agreements entered into by it and accordingly
persisted in its denial of any binding agreement with Welfit Oddy
.
[37]
In
respect of paragraph 5.8 and 5.8A, which I have quoted earlier,
[16]
Propco pleaded:
‘
4.2
When the Plaintiff demanded the release of the outstanding 110
outstanding containers on
8 October 2020, no invoices from the
Defendant were overdue;
4.3
Upon the sale of the containers to Buhold on 11 December 2019, any
invoices that were
allegedly due to the Defendant, were no longer due
by the Plaintiff as the Defendant was not in a position to tender
delivery of
the 582 containers to the Plaintiff, as alleged.
4.4
In amplification of the aforesaid, the Plaintiff specifically pleads
clause 5.2 of
the master agreement, which states as follows:
4.4.1
“
Payment is to be made for the full number of tanks produced
and invoiced each month.  Irrespective of the number of tanks
contractually
promised and planned for the month …”
4.5
Accordingly, payment by the Plaintiff was only due in terms of the
master agreement
up until latest 11 December 2019, the Defendant was
not entitled to retain the 110 outstanding containers paid for by the
Plaintiff
and such conduct amounted to a repudiation of the master
agreement and individual agreements, which repudiation was accepted
by
the Plaintiff and the master and the individual agreements were
accordingly cancelled.’
Thus, Propco persisted
that it had lawfully accepted Welfit Oddy’s repudiation of the
agreement, all be it on a different
ground to that relied upon at the
time.
The
issues
[38]
The matter raises a number of complex
issues of law and of fact.  Broadly, they relate, firstly, to
the question of whether
any binding individual agreements were
concluded and, secondly, if agreements were concluded, whether the
conduct of either party,
or both, constituted a repudiation of the
MPA, or any of the individual agreements, and if so, what
consequences flowed from that.
Finally, in the event that
Welfit Oddy is successful in its claim in reconvention, there remains
the quantification of their claim.
During the pre-trial
procedures it was agreed that Welfit Oddy would commence by
presenting its evidence first, notwithstanding
that it was the
defendant in the main claim.  After it had done so Propco closed
its case without leading evidence.
[39]
The contentions of the respective parties
and the material terms of the MPA that require interpretation have
been recorded earlier.
A number of issues turn on the
construction of the MPA and, accordingly, it is convenient to
consider the construction of the MPA
at the outset.
The
construction of the MPA
[40]
As
I have said, the conclusion of the MPA and its terms are not in
dispute, but the parties disagree on the proper interpretation

thereof.  Before I turn to the provisions of the MPA it is
instructive to have regard to the legal principles applicable to
the
interpretation of contracts.  In
Natal-Joint
Municipal Pension Fund v Endumeni Municipality
[17]
the Supreme Court of Appeal considered the approach to be adopted in
respect of the interpretation of documents.  They concluded:
“
The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given
to the language used in the light of the
ordinary rules of grammar
and syntax; the context in which the provision appears; the apparent
purpose to which it is directed
and the material known to those
responsible for its production. Where more than one meaning is
possible each possibility must be
weighed in the light of all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred
to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert
to, and guard against, the temptation to substitute
what they regard as reasonable, sensible or businesslike for the
words actually
used. To do so in regard to a statute or statutory
instrument is to cross the divide between interpretation and
legislation;
in a contractual context it is to make a contract for
the parties other than the one they in fact made. The 'inevitable
point of
departure is the language of the provision itself', -
read in context and having regard to the purpose of the provision and

the background to the preparation and production of the
document.”
[41]
It
is appropriate to emphasise the precautionary guideline of the
Supreme Court of Appeal in
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
[18]
where
they held:
‘
First,
the integration (or parol evidence) rule remains part of our law.
However, it is frequently ignored by practitioners and
seldom
enforced by trial courts. If a document was intended to provide a
complete memorial of a jural act
[19]
,
extrinsic evidence may not contradict, add to or modify its
meaning (
Johnson
v Leal
1980
(3) SA 927
(A)
at
943B). Second, interpretation is a matter of law and not of fact and,
accordingly, interpretation is a matter for the court and
not for
witnesses (or, as said in common-law jurisprudence, it is not a jury
question: Hodge M Malek (ed)
Phipson
on Evidence
(16
ed 2005) paras 33 - 64).  Third, the rules about
admissibility of evidence in this regard do not depend on the
nature
of the document, whether statute, contract or patent (
Johnson
& Johnson (Pty) Ltd v Kimberly-Clark Corporation and
Kimberly-Clark of South Africa (Pty) Ltd
1985
BP 126 (A) ([1985] ZASCA 132 (at www.saflii.org.za)). Fourth, to the
extent that evidence  may be admissible
to contextualise
the document (since 'context is everything') to establish its factual
matrix or purpose or for purposes of identification,
'one must use it
as conservatively as possible' (
Delmas
Milling Co Ltd v Du Plessis
1955
(3) SA 447
(A)
at
455B - C).’
[42]
Evidence of
witnesses as to their perception of the meaning of the document and
the obligations of the various parties arising from
it is accordingly
inadmissible and irrelevant.  However, evidence that is directed
at establishing the factual matrix or purpose,
or for purposes of
identification, is admissible but should be used sparingly.
[43]
Mr
Kairinos, on behalf of PROPCO, submitted that evidence of what passed
between the parties during the precontractual negotiation
is
inadmissible.  In support of this proposition he relied on
Tshwane,
City of v Blair Atholl Homeowners Association
[20]
and the authorities set out therein.  However, in
University
of Johannesburg v Auckland Park Theological Seminary and Another
[21]
the Constitutional Court endorsed the approach set out in
Endumeni
and
they confirmed that it is one, unitary exercise of interpretation
that requires a holistic approach, considering text, context,
and
purpose simultaneously.
[22]
Against this background the Constitutional Court said:
‘…
(P)
arties
will invariably have to adduce evidence to establish the context and
purpose of the relevant contractual provisions. That
evidence could
include the pre-contractual exchanges between the parties leading up
to the conclusion of the contract and evidence
of the context in
which a contract was concluded. As the Supreme Court of Appeal held
in
Novartis
:
“
This
court has consistently held, for many decades, that the
interpretative process is one of ascertaining the intention of the

parties — what they meant to achieve. And in doing that, the
court must consider all the circumstances surrounding the contract
to
determine what their intention was in concluding it. . . . A court
must examine all the facts — the context — in
order to
determine what the parties intended. And it must do that whether or
not the words of the contract are ambiguous or lack
clarity. Words
without context mean nothing.”
[68]
Let me clarify that what I say here does not mean that extrinsic
evidence is
always
admissible. It is true that a
court's recourse to extrinsic evidence is not limitless because
“interpretation is a matter
of law and not of fact and,
accordingly, interpretation is a matter for the court and not for
witnesses”.  It is also
true that 'to the extent that
evidence may be admissible to contextualise the document (since
''context is everything'') to establish
its factual matrix or purpose
or for purposes of identification, one must use it as conservatively
as possible'.  I must,
however, make it clear that this does not
detract from the injunction on courts to consider evidence of context
and purpose. Where,
in a given case, reasonable people may disagree
on the admissibility of the contextual evidence in question, the
unitary approach
to contractual interpretation enjoins a court to err
on the side of admitting the evidence. There would, of course, still
be sufficient
checks against any undue reach of such evidence because
the court dealing with the evidence could still disregard it on the
basis
that it lacks weight. When dealing with evidence in this
context, it is important not to conflate admissibility and weight.’
[44]
Evidence of
what passed between Ms Sommerville of GEM and Mr Allen of Welfit Oddy
prior to the conclusion of the MPA is, in my view,
admissible to
establish the factual matrix or purpose of the MPA.
[45]
I
turn to the content of the MPA.  The first enquiry is whether it
required the individual agreements to be in writing and
signed by the
parties before they would have any binding contractual force. The MPA
envisaged that the parties would enter into
agreements from time to
time for the sale and purchase of various types of containers
stipulated in the agreement.  As I have
said, it provided that
the ‘price, delivery and specification of these containers are
agreed in writing between the VENDOR
and the PURCHASER at the time
Each Individual Agreement is made’.  Mr Bryant’s
initial position
[23]
was that
a written document reflecting agreement on these issues and signed by
the parties was required before a contractual obligation
could
arise.  The position was persisted with during the trial.
[46]
There
are other indications in the MPA that it did envisage the preparation
of a formal document.
[24]
However, whether a written deed of sale signed by the parties was a
requisite for a binding agreement to arise by virtue
of the
provisions of the MPA is a matter dependent upon the proper
construction of the agreement.  Generally, where the parties

decide for themselves that their contract should be reduced to
writing, as in this case, it  is merely to serve as proof of
the
terms of their agreement, and not to give contractual force to it,
unless there is clear evidence to the contrary.
[25]
[47]
In
Goldblatt
v Fremantle
[26]
Innes CJ said:
‘
Subject
to certain exceptions, mostly statutory, any contract may be verbally
entered into; writing is not essential to contractual
validity. And
if during negotiations mention is made of a written document, the
Court will assume that the object was merely to
afford facility of
proof of the verbal agreement, unless it is clear that the parties
intended that the writing should embody the
contract.(
Grotius
3.14.26 etc.). At the same time it is
always open to the parties to agree that their contract shall be a
written one (see
Voet
5.1.73
.
V. Leeuwen
4.2., sec. 2
,
Decker’s note
); and in that case
there would be no binding obligation until the terms have been
reduced to writing and signed.  The question
is in each case one
of construction
.’
[48]
In
Pillay
and Another v Shaik and Others
[27]
the Supreme Court of Appeal referred with approval to
Goldblatt
.
Farlam JA noted
[28]
C
W
Decker’s
annotation of Van Leeuwen’s Commentaries on Roman Dutch Law
where
he had referred to an observation by Samuel Strykuis (
Modern
Pandect
2.14.7)
as follows:
‘
(W)e
must regard the
written
contracts
as distinct, insofar as we should bear in mind that although the
writing does not constitute the essentiality of
the contract, which
is contained in the mutual consent of the parties, they may
nevertheless agree that their verbal agreement shall
be of no
effect until reduced to writing, in which case the agreement cannot
before signature have any binding force, although
there exists mutual
consent; and it cannot be said that the writing served not in
perfecting the transaction, but only as proof
thereof , since here it
is agreed that the consent should not operate without the writing,
which must be observed as a legitimate
condition.’
[49]
Accordingly,
in
Woods
v Walters
[29]
it was held that:
‘
It
follows of course that where the parties are shown to have been
ad
idem
as to the material conditions of
the contract, the onus of proving an agreement that legal validity
should be postponed until the
due execution of the written document,
lies upon the party who alleges it.’
[50]
The MPA
contains no express provision that an individual agreement would have
no force or effect until reduced to writing and signed.
The
question that arises is whether, on a proper construction of the
agreement, it can be inferred.  PROPCO is hamstrung in
its
attempt to discharge the onus which rested on it by its decision to
call no evidence at all.
[51]
In
support of the argument that the MPA envisaged duly signed written
agreements as a prerequisite for the validity of the agreements,
Mr
Kairinos referred to various correspondence between the parties after
the conclusion of the MPA seeking signed documents.
The first
series of emails stretching from 18 January 2018 to 18 October 2018
relates to the signature of the master purchase agreement
and the
individual agreement WO8808.
[30]
The
latter related to the purchase of 100 26 CBM T11 Odessey designed
containers purchased by GEM on behalf of Propco.  A GEM
document
marked ‘Purchase Order’ was delivered for the purchase of
these containers on 24 January 2018 signed by Ms
Sommerville and Mr
Rocholl, both employees of GEM.  The purchase order reflected
the quantity, the description and the price
of the containers to be
purchased under the agreement.  It made no mention of the terms
of payment or of the delivery of the
containers and it recorded that
they were to be ‘manufactured to approved specification’.
No further particulars
are contained in the order.  However, in
the initial email relied upon, dated 18 January 2018, Ms Sommerville
indicated that
GEM anticipated delivery during April and May 2018.
Pursuant to this order, Welfit Oddy proceeded to manufacture the said

containers and delivery commenced during May 2018 and extended to 29
June 2018.  In a weekly progress report, submitted to
GEM,
Welfit Oddy recorded on 12 July 2018 that contract WO8808 had been
completed and all containers had been shipped.  On
18 July 2018
Ms Sommerville addressed an email to Mr Gardner of Welfit Oddy in
which she requested the outstanding documentation,
duly signed.
She recorded that payment had been delayed on account of her not
having submitted the requisition in time, and
she undertook to attend
thereto.  The individual agreement in respect of WO8808 was
signed by Propco on 27 July 2018, simultaneously
with the MPA, and by
Welfit Oddy on 11 October 2018, long after the contract had acquired
contractual force, and in this instance
after it had been fully
executed.  Whilst it is true that the correspondence does
demonstrate that the parties did require
a signed agreement it is
equally apparent that the parties did not envisage that the written
document would give contractual force
to their agreement.  The
conduct of the parties in respect of this agreement reflects a
practice known to the parties at the
conclusion of the MPA.
[52]
The
second series of emails seeking signed documentation upon which
reliance is placed relates to agreements WO8830 (A1), 8842 (A3),
8872
(A5), 8872b (A6) and 8872B (A7)
[31]
.
The correspondence commenced with an email from Mr Gardner to GEM on
10 April 2019 to which he had attached the draft individual

agreements.  It is of significance that, as of 10 April 2019,
delivery of completed containers in respect of contract WO8830
and
WO8842 had already commenced and the manufacturing process in respect
of WO8872 was well underway.  Payments had already
been received
from Propco in respect of the delivery of containers under WO8842.
Again, the practice adopted was similar
to that which they had
applied in respect of agreement WO8808, to reduce their agreement to
writing, long after it had acquired
contractual force and when all
the ancillary detail had been agreed.
[53]
Finally,
I was referred to a series of correspondence relating to agreements
WO8830b (A2) and 8881 (A8)
[32]
.
This correspondence commences with an email from Mr Gardner to GEM on
15 August 2019, in which he had forwarded signed copies
of WO8830b
and 8881 to GEM to request that they obtain the signature of Propco.
Once again, in respect of WO8830b the manufacture
of the containers
had already commenced. The conduct of the parties in respect of these
individual agreements reflect their own
understanding of the
provision in the MPA.
[33]
[54]
On
a proper consideration of the conduct of the parties, both before
[34]
and after the conclusion of the MPA, it exhibits a practice of
preparing a document reflecting the terms of their individual
agreements
long after a binding contract between the parties had come
into force, and sometimes after the execution thereof.  I do not

lose sight of the fact that Propco denied that the agreements had
been concluded on their behalf.  I shall revert to that
issue.
However, on its own admission, at best for Propco, they had ratified
the purchase of 344 containers for which they
had paid.  It is
common cause that these containers for which Propco had paid relate
to agreements A1 (WO8830), A3 (WO8842),
A4 (WO8842B) and A6
(WO8872b).  Welfit Oddy had released 134 of these containers to
them on receipt of payment but, as I have
said, retained 110
containers in respect of these contracts for which Propco had already
paid.  In respect of WO8842 Propco
had paid in full and accepted
delivery of all the containers under the agreement, without demur.
[55]
In
respect of agreement A1, Propco contended that it had ratified the
purchase of 24 of the 100 containers contracted for.
Mr
Kairinos was constrained to acknowledge during his argument,
correctly, that it is not open to a party to ratify a portion of
an
agreement.
[35]
Ratification occurs when a purported agent, without express or
implied authority, enters into a transaction on behalf of
a
principal.  If, after a full disclosure of all the facts, the
principal wishes to adopt the contract, he may ratify the

transaction.
[36]
The
effect of a valid ratification is to cloak the agent’s
unauthorised acts with authority, retrospectively establishing
the
relationship of principal and agent after the fact, with the usual
consequences of agency.  Accordingly, the effect of
Propco’s
admitted ratification is that it had, with full knowledge of all the
interaction between Welfit Oddy and GEM, clothed
the said agreements
with validity.  This, as I have said, can occur only after a
full disclosure, and it must be accepted
that by ratifying the
agreements Propco was aware that GEM had concluded various agreements
on its behalf that had not been reduced
to writing and had not been
signed by it.  They proceeded to pay the agreed purchase price
and to take delivery of the containers,
purchased in this manner,
without demur.  Mr Allen said that no-one had advised Welfit
Oddy of any ratification and they laboured
under the continued
impression that GEM and Ms Sommerville had been duly authorised.
[56]
That
brings me back to the provisions contained in the MPA relating to the
agreement in writing.  As I have said, the MPA did
envisage the
preparation of a written memorandum of agreement for each individual
agreement. In
Meter
Motors (Pty) Limited v Cohen
[37]
Snyman J interpreted
Goldblatt
as contemplating three types of writing:
(a)
a memorandum which facilitates proof of an
oral agreement;
(b)
a writing which embodies an agreement of the
parties, although not signed; and
(c)
a written document which is to be the
agreement, and must be signed.
[38]
An
analysis of the correspondence relating to the signature of
documents, to which I have referred earlier, militates strongly in

favour of (a).  In particular, the signature of WO8808, which
occurred on the same day as the signature of the MPA, lends
strong
support to the conclusion that the MPA envisaged the preparation of
the written memorandum for purposes of facilitating
proof of an
earlier binding agreement.
[57]
The
interpretation accords, in my view, with the facts known to the
parties at the time of the conclusion of the MPA
[39]
and the particular context in which the agreement was concluded. Mr
Allen explained that the vast majority of the sales of
stainless-steel
containers manufactured by Welfit Oddy are sold on
the international market in Europe or the United States of America.
They
are manufactured from stainless-steel which has an extremely
volatile price, fixed on a daily basis.  Mr Allen explained that

the price quoted for the purchase of stainless-steel in the market
remains valid for only seven days.  Once he had obtained
a price
for the stainless-steel required, Welfit Oddy had to quote a purchase
price for the containers which are sold in US dollars.
The
exchange rate of the rand to the US dollar is equally volatile.
Thus, he said that he could only fix the dollar price
on the day that
he placed his order. When the order had been placed, Welfit Oddy
would immediately hedge the currency and purchase
the
stainless-steel.  The currency was hedged by a forward exchange
contract entered into with their bankers, which ensured
that they
would, when the containers are eventually delivered, receive the
exchange rate that had applied on the day that order
was placed.
Signature, as demonstrated by the exchange of emails to which I have
referred earlier, may often take weeks or
even months to finalise.
An agreement that required signature before it could require
contractual force would, in the context
of this industry, give rise
to an unworkable result.  As adumbrated earlier, what the MPA
envisaged was the preparation of
a memorandum in writing that would,
when made, facilitate proof of earlier agreements, which may be oral
or in writing.
[58]
I
turn to consider clause 3.4 and 5.3 of the MPA.
[40]
There is no major dispute between the parties in respect of the
interpretation of clause 3.4.  The dispute lies in the

application.  The general scheme of the MPA is as follows:
Once the parties had reached agreement in respect of the
price, the
nature and the quantity of the containers to be purchased, Welfit
Oddy was required to manufacture them to the required
specification.
When manufacture had been completed, Propco, or its agent, was
entitled to inspect the manufactured containers
and, if acceptable
upon inspection, Welfit Oddy was entitled to issue an invoice.
Propco was required to pay the invoice
within the time period agreed
upon and was entitled to take delivery of the containers in
accordance with the delivery schedule
which had been agreed to in
each individual agreement.  In the event that delivery occurs
prior to the payment date the container
would remain the property of
Welfit Oddy until payment is received.
[41]
[59]
Two
significant features emerge from the formulation of clause 3.4 which
find application to the disputes relating to the alleged

repudiation.  First, Welfit Oddy could only issue invoices once
the specified containers had been fully manufactured and inspected.

This flows from clause 5.2 of the MPA which provides for payment to
be made for the full number of tanks produced and invoiced
each
month.  Thus, payment could never be due before the container in
issue was ready for delivery. Secondly, the costs occasioned
by the
inspection by Propco are included in the purchase price of the
containers.  It follows from this provision that the
costs
occasioned by such an inspection  are for the account of Welfit
Oddy.  This leads ineluctably to the conclusion
that, save where
a particular container has been rejected upon the first inspection,
the MPA does not provide for multiple inspections
at the expense of
Welfit Oddy, all to be recouped from the purchase price.
[60]
Clause
5.3 of the MPA must be considered in the context of the overall
scheme of the agreement.
[42]
The clause entitled Welfit Oddy to withhold delivery of completed
containers until all overdue invoices have been paid in
full.
As I have explained, Welfit Oddy withheld delivery of 110 containers
already paid for by Propco in respect of agreements
8830 (A1), 8842B
(A4) and 8872b (A6).  It contended that it was entitled to do so
in terms of clause 5.3 of the MPA.
[61]
Propco, on the
other hand, argued that on a proper construction of clause 5.3 Welfit
Oddy was entitled to retain only the specific
containers which have
not been paid for.  I am not persuaded that either
interpretation correctly reflects the import of the
clause.
[62]
The MPA
envisaged that numerous separate, distinct, agreements for the sale
and purchase of containers would be concluded.
Each would have
its own terms in respect of price, delivery and specification and
would further be governed by the terms of the
MPA.  Each
individual agreement provided for its own delivery schedule and terms
of payment and, as I have said, the scheme
of the agreement provided
for an invoice to be issued after the inspection of the individual
containers and the acceptance thereof.
The MPA postulated that
such an inspection would occur before the date of delivery agreed
upon.  Depending upon the date of
delivery and the period
provided for payment in the particular individual agreement, delivery
could occur prior to payment being
made.  If delivery occurred
before payment, the containers remained the property of Welfit Oddy,
in terms of clause 4.4 and
4.5 of the MPA, until payment has been
made.  However, notwithstanding the security provided by clause
4.4 and 4.5, or anything
contained in the individual agreement
concerned, if Welfit Oddy had delivered containers under a particular
individual agreement
before payment had been made, it would not be
obliged to deliver further containers in terms of that individual
agreement until
all the overdue payments under that agreement have
been made.  There is, however, nothing in the MPA to suggest
that containers
that have been fully paid for under one individual
agreement may be retained as security for overdue payments under a
different
agreement.  The issues in dispute between the parties
should be considered in the context of this construction of the MPA.
Was
GEM or Ms Sommerville duly authorised to conclude the agreements on
behalf of Propco?
[63]
As
adumbrated earlier, Welfit Oddy’s pleaded case relied primarily
on actual authority conferred upon GEM, in the person of
Ms
Sommerville, to conclude the agreements.  Mr Rorke, on behalf of
Welfit Oddy, acknowledged at the conclusion of the trial
that Welfit
Oddy had failed to establish actual authority and he abandoned any
reliance thereon.  However, he argued that
Propco was estopped
from denying the authority of GEM, in the person of Ms Sommerville,
to conclude any agreement pursuant to the
MPA on its behalf.
[43]
An estoppel arises when a person (the representor) has by words or
conduct made a representation to another person (the representee)
and
the latter, believing the representation to be true, acted thereon
and would suffer prejudice if the representor were permitted
to deny
the truth of the representation made by him.  Where this occurs,
the representor may be precluded (or estopped) from
denying the truth
of the representation.
[44]
The party raising an estoppel bears the onus of proving the
essentials thereof.
[45]
[64]
The essentials
to establish an estoppel are:
(a)
A
representation by words or conduct of a certain factual position
[46]
;
(b)
that
the representee relied and acted on the correctness of the facts as
represented
[47]
’
(c)
that
the representee acted, or failed to act, to his or her detriment;
[48]
(d)
that
representation was made negligently;
[49]
and
(e)
the
representor could bind the defendant by means of the
representation.
[50]
[65]
As
I have said, there was no communication between Propco and Welfit
Oddy before October 2019, when Mr Bryant denied knowledge of
the
existence of the disputed individual agreements.
[51]
There was accordingly no suggestion of any express representation
made in words by Propco or anyone who could bind Propco.

However, representation may be made in any manner by which one person
conveys thoughts to, or creates an impression or image in
the mind of
another, either in words, whether oral or in writing, or by acts of
conduct, including silence or inaction.
[52]
The impression created by the conduct of one party on the mind of the
other is, in the context of estoppel, the test for
a representation,
and the conduct must create a reasonable impression.
[53]
Thus, a person may be bound by a representation constituted by
conduct if the representor should reasonably have expected
that the
representee might be misled by his conduct and, in addition, the
representee acted reasonably in construing their representation
in
the sense in which the representee did.
[54]
[66]
As alluded to
earlier, Welfit Oddy had had a relationship with GEM before the
conclusion of the MPA.  Propco and GEM were associated

companies, with GEM leasing out containers that belonged to Propco.
The MPA recorded that it had been ‘made the 21
st
day of June, 2018’.  Although it did not specifically
provide for retrospective operation, clause 10 of the MPA recorded

that the agreement ‘shall be the entire and sole agreement and
understanding between the parties with respect to the sale
and
purchase of containers and shall supercede any express or implied
agreement between the parties subsisting at the date hereof’.

The parties accordingly agreed that the provisions of the MPA  would
apply in respect of any pre-existing contracts which
may have been in
the process of execution at the time.  The MPA was signed by Mr
Richie and Mr Bryant, both directors of Propco,
on 27 July 2018 and
by Mr Allen, on behalf of Welfit Oddy, in October 2018.  As I
have explained earlier, contract WO8808
had been forwarded to Propco
by Ms Sommerville together with the MPA.  It is not in dispute
that contract WO8808 had been
negotiated by GEMS on behalf of Propco,
through the medium of Ms Sommerville, without reference to Propco.
The written individual
agreement recorded that it had been confirmed
in writing per email on 22 January 2018.  As adumbrated earlier,
a purchase
order generated by GEM and signed by Ms Sommerville and Mr
Rocholl had been completed on
24
January 2018 and no
written contract had been prepared at the time.  Both the MPA
and the written individual agreement in respect
of contract WO8808
were negotiated and prepared, in consultation with Ms Sommerville,
forwarded by Mr Allen to Ms Sommerville,
and presented to the
directors of Propco by Ms Sommerville.  Thus, the unsigned
written individual agreement was prepared
in respect of a fully
executed contract, negotiated and administered by Ms Sommerville, on
behalf of Propco, months earlier, and
Mr Richie and Mr Bryant signed
both documents, simultaneously, without demur.
[67]
The
introductory portion of the MPA records an intention by the parties
to enter into future agreements for the purchase and sale
of
containers.  This, of course, is not a representation of fact
but merely a statement of future intention.
[55]
However, it cannot be gainsaid that, at the time of the signature of
the MPA and the written individual agreement WO8808,
both Mr Richie
and Mr Bryant had every reason to believe that further agreements
would be concluded.  By the signature of
the written agreement
WO8808 they had created the impression that GEM had had the authority
to bind them in the conclusion of the
agreement and the
administration thereof, and that the written memorandum of agreement
was not intended to give contractual force
to the agreement with
Welfit Oddy.
[68]
At the time of
the signature of these documents, and reliant, no doubt, on the
existing business practice, Welfit Oddy had already
committed to the
individual agreement WO8830 (A1).  On 3 May 2018, Ms Sommerville
had confirmed in writing the placement of
the order in respect of
this individual agreement.  In accordance with Mr Allen’s
evidence in respect of the volatility
of the price of stainless-steel
and the rand exchange rate, the necessary material had been purchased
and insurance had been acquired
to hedge the exchange rate of the
rand. On 12 June 2018, Ms Sommerville had presented a formal purchase
order, generated by GEM
and signed by herself and Mr Rocholl.
Negotiations in respect of individual agreements WO8842 (A3) and
8842B (A4) were underway
at the time of the signature of the MPA as
evidenced by email exchanges with Ms Sommerville on 11 June 2018.
[69]
The signature
of the written individual agreement WO8808, which had been
negotiated, concluded and administrated by GEM, without
demur from
Propco, constituted a representation which would reasonably have
created the impression that GEM had been duly authorised
to do so on
behalf of Propco.  Mr Rorke contended that the silence of Propco
in these circumstances was negligent and that
Welfit Oddy acted
reasonably in construing their representation, as it did, to confirm
the authority of GEM to conclude a contract.
[70]
Silence
might constitute a representation where there is a legal duty to
speak or to act.
[56]
Generally, the duty to speak or to act arises if it is considered
reasonable in the circumstances that the person concerned
should
speak or act in order to avoid the other person acting to his
detriment.
[57]
The test
as to when the duty arises corresponds with the test applied in the
case of a delictual omission.
[58]
[71]
The evidence
of Mr Allen demonstrates that Welfit Oddy accepted the authority of
Ms Sommerville as a result of the negotiation,
through her, of the
MPA and of the individual agreement WO8808, in the face of the
silence by Propco and its directors.  As
I have said, these were
signed without demur and Welfit Oddy proceeded to contract through
GEM in respect of WO8830b (A2), 8842
(A3), 8842B (A4), 8872 (A5),
8872b (A6), 8872B (A7) and 8881 (A8) and performed these contracts
reliant on the impression negligently
created by Mr Richie and Mr
Bryant through the silence.  As directors they were in the
position to bind Propco.  I consider
that if Ms Sommerville, or
GEM were not authorised to represent Propco there had been a duty on
the directors to say so.
Ms Sommerville continued to contract
on their behalf and, although they ratified four of these agreements,
there was still no word
to Welfit Oddy.  For these reasons I
think that the estoppel must be upheld.
Were
valid individual agreements concluded?
[72]
As
I have said, Welfit Oddy contended that eight individual agreements
had been concluded in writing and annexed copies of the alleged

agreements to the particulars of its claim in reconvention.
Welfit Oddy contended that these agreements had been concluded
on 17
April 2019 and 31 May 2019
[59]
at Port Elizabeth, alternatively London.  It asserted that
Propco had been represented at the time by GEM, in the person of
Ms
Heidi Sommerville, both duly authorised.  However, although Mr
Allen had signed these agreements on behalf of Welfit Oddy
none of
the documents had been signed on behalf of Propco.
[73]
The
suggestion that these documents constitute written agreements needs
only be stated to be rejected.  A written contract
comes into
existence when it is signed by all the parties thereto.
[60]
Where a party seeks to rely on a written agreement, he must not only
prove that the defendant signed the document, but also
that he signed
the document in its completed form.
[61]
In this case, the documents bear no signature at all on behalf of
Propco and it has not been alleged that the acceptance
of the
contract was contained in a different document.  Nor that it has
been tacitly accepted.
[62]
However, Welfit Oddy’s case was conducted through the
introduction of volumes of email and WhatsApp correspondence
and
letters that had passed between the parties and which Mr Allen and Mr
Gardner contended constituted agreements.  Mr Kairinos
did not
object to the introduction of this evidence and conducted a thorough
cross-examination of both Mr Allen and of Mr Gardner
in respect of
all the correspondence.
[74]
As
I have said, the case pleaded relied on written agreements, and the
position ought to have been regularised by an amendment to
Welfit
Oddy’s pleadings.  However, all the evidence that is
relevant to determining whether or not the individual agreements
were
concluded has been placed before the court and thoroughly tested,
without demur.  In this regard, in
Shill
v Milner,
[63]
De Villiers JA said:
‘
The
importance of pleadings should not be unduly magnified.  “The
object of pleading is to define the issue; and parties
will be kept
strictly to their pleas where any departure would cause prejudice or
would prevent full inquiry.  But within
those limits the Court
has wide discretion.  For pleadings are made for the Court, not
the Court for pleadings.  Where
a party had had every facility
to place all the facts before the trial Court and the investigation
into all the circumstances has
been as thorough and as patient as in
this instance, there is no justification for interference by an
appellate tribunal merely
because the pleading of the opponent has
not been as explicit as it might have been.”
Robinson
v Randfontein Estates G.M. Co. Ltd.
(1925, A.D.198).’
[75]
In
similar vein, in
Collen
v Rietfontein Engineering Works
[64]
Centlivres JA found a contract which had not been relied upon in the
pleadings to have been established.  He said:
‘
But
in this case, where the contractual relationship between the parties
arose partly through the interchange of letters and partly
through
their conduct, all the material letters (excepting one in respect of
which secondary evidence, which was rightly accepted
by the
magistrate, was led) were produced in evidence and the conduct of the
parties was examined in
viva
voce
evidence.
This Court, therefore, has before it all the materials on which it is
able to form an opinion, and this being the
position it would be idle
for it not to determine the real issue which emerged during the
course of the trial.’
[65]
[76]
This
is such a case and Mr Kairinos, fairly in my view, acknowledged that
the manner in which the trial had been conducted had the
effect of
expanding the enquiry to determine the real dispute between the
parties, being whether the individual agreements contended
for have
been proved through the evidence and the correspondence.  In
embarking on this enquiry I am mindful of the caution
expressed by
Lord Cairns LC in
Brogden
v Metropolitan Railway Co
.
[66]
that ‘
…
there
are no cases whereupon difference of opinion may more readily be
entertained, or which are always more embarrassing to dispose
of,
than cases where the court has to decide whether or not, having
regard to letters and documents which have not assumed the
complete
and formal shape of executed and solemn agreements, a contract has
been constituted between the partners’.
[77]
In the present
case the position is compounded by the somewhat awkward pleadings to
which I have referred.
[78]
I have earlier
concluded that on a proper construction of the MPA, an informal
agreement of purchase and sale concluded between
the parties would
suffice to bind the parties and that the reduction to writing was
intended merely to facilitate proof of the
terms of a preceding
agreement.  Nevertheless, Welfit Oddy bore the onus to establish
such an agreement in each case.
[79]
It
is convenient to consider first agreements WO8830, 8842, 8842B and
8872b.  As adumbrated earlier, it is Propco’s case
that it
had ratified the purchase of 344 containers that it had paid
for.
[67]
It had paid for
all the containers in respect of WO8842, WO8842B and WO8872b and for
24 of the 100 containers ordered under
WO8830.  They had taken
delivery of all the containers ordered under WO8842, 4 containers
under WO8842B and 10 under WO8872b.
Welfit Oddy had retained
the 24 containers paid for under WO8830, 76 of those paid for under
WO8842B and 10 under WO8872B.
[80]
Propco
tendered no evidence in support of the alleged ratification, and it
cannot be determined from the evidence when, how or by
whom these
contracts were ratified.  However, at best for Propco, its
pleadings constitute an admission that it chose to be
bound by these
agreements after a full disclosure of the conclusion of the
agreements and their terms.  Accordingly, it is
not necessary to
consider these agreements further.  Suffice it to record that
the nature and quantity of tanks purchased
and the price agreed to
under these agreements are not in dispute.
[81]
In respect of
WO8830b (A2) Mr Allen testified to an email sent to him on 24 April
2019 by one Havenga, in the employ of Welfit Oddy.
Mr Havenga
recorded:
‘
Heidi
phoned you on the 5
th
of March to confirm the order for 60 tanks (terms agreed between the
2 of you) for US$ 35 365.00 per tank, delivered Rotterdam.
…
I
phoned on 18
th
/19
th
March with our offer for
100 tanks averaged at US$ 34 500.00.  I followed up with her on
the 20
th
of March.
On
the 20
th
of March Heidi confirmed additional 40 tanks with
an average price (100 tanks) of US$ 34 500.00 per tank, delivered
Rotterdam.
…’
[82]
Included in
the email were copies of correspondence between Mr Havenga and Ms
Sommerville.  The first was an email from Mr
Havenga to Ms
Sommerville in which he recorded,
inter
alia
:
‘
We
would still need to secure the currency in order to achieve the
reduced price of US$ 34 500.00 per tank, averaged for the total
of
100 units.  I am sure that it will be fine if you cannot commit
to them as an actual order confirmation, however would
need to have
verbal approval at least to secure the currency.’
[83]
Mr Havenga
wrote that Ms Sommerville had responded by WhatsApp sent on 20 March
2019 at 6:14pm in which she recorded as follows:
‘
Please
accept this as confirmation to proceed with the additional 40
swapbody units in accordance with the terms noted – I
will be
in contact to finalise.’
[84]
Mr Allen
confirmed that he had discussed an order for 60 tanks with Ms
Sommerville and that the additional 40 tanks added thereto
account
for the total of 100 tanks reflected under WO8830b.  The
correspondence, together with the evidence of Mr Allen, reflects
an
express agreement to purchase 100 tanks at the price quoted, namely
US$34 500,00, and to be bound by the agreement.
[85]
Neither
Mr Havenga nor Ms Sommerville testified.  However, there was no
objection to the evidence, either at the time when
it was tendered or
in argument.
[68]
The
authenticity of the WhatsApp was not challenged and the parties had
agreed at the pre-trial proceedings that the documents
had been sent
and received according to their tenor. Whereas Propco presented no
evidence, there is no contrary version and it
must be viewed in
conjunction with the evidence of Mr Allen that weekly progress
reports were sent to GEM throughout the period
of construction
reflecting the number and description of tanks together with the
production progress thereof.  No objection
was raised by GEM
throughout the production period either to the existence of the
agreement or the number of tanks being produced.
[86]
The evidence
in respect of order WO8872 (A5) consists of an email chain on 13 and
14 September 2018 in which one Nocwaka, of GEM,
enquired whether
Welfit Oddy would be able to add an additional 100 tanks to the
previous purchase made.  The previous purchase
was not
identified.  Mr Havenga responded on 14 September in which he
recorded:
‘
We
were able to get extension on last week’s S/S (stainless-steel)
price which is lower than today’s new steel price.
We
would need to inform Columbus by 3pm today should you be in a
position to place an order for the 100 standard tanks.’
[87]
Thereafter an
email from Ms Sommerville was directed to Mr Havenga at 10:59am on 14
September in which she recorded as follows:
‘
I
write to confirm that I will be placing the order for the additional
100 x 26 cbm T11 tank containers with full walkway and hand
rail at
USD 16,000 per unit. …
For
now, I want to confirm the order so that we can secure the pricing.
Formalities
to follow. …’
Again,
the email from Ms Sommerville reflects an unequivocal acceptance of
Welfit Oddy’s offer and a contractual commitment
to purchase
100 containers at a price of US$16 000,00.
[88]
It is
convenient to consider the correspondence in respect of order
WO8872b, 8872B and 8881 together.  As I have said, WO8872b
(A6)
has been ratified, but its negotiation was closely aligned to WO8872B
(A7) which is in dispute.  On 10 December 2018,
Mr Havenga
forwarded an email to Ms Sommerville, copied to Mr Allen under the
subject line ‘offer for 200x26 000L standard
tanks (as per job
8872)’.  He recorded:
‘
We
are pleased to be able to offer a quotation for the supply of 200 off
new 26 000L standard tank containers to the same specification
as
your current new order, to be built under our reference, 8872.
For
this new enquiry, we are able to calculate using stock steel which is
priced lower than today’s new price.  Of the
200 tanks,
180 tanks worth of material are calculated at 0.4mm corrosion
allowance and the remaining 20 tanks with 0.2mm corrosion
allowance.
..
Based
on the above, we are pleased to offer a price of US$ 16 000.00 per
tank, ex works Welfit Oddy.’
[89]
Hence, Mr
Allen and Mr Gardner explained that there was a slight specification
change from the original order, WO8872, which required
a spilt
between the 20 and the 180 tanks referred to in the email by Mr
Havenga.  The 20 tanks with 0.2mm corrosion allowance

constituted order 8872b (A6) (which was ratified) while the remaining
180 tanks constituted 8872B (A7).
[90]
On
17 December 2018, Mr Havenga addressed a further email to Ms
Sommerville (copied to Mr Allen) containing a further offer in
respect of WO8881 (A8).  He recorded:
‘
As
per our discussion last week, we are pleased to offer 16 off new
24,000L electrical heated tanks.
The
specification is attached to this email …
Price
– US$ 37 000.00 each net, ex works Welfit Oddy.
Ex
works delivery for these units can start in October through to
December 2019.’
[91]
Ms Sommerville
did not respond to Mr Havenga, in respect of these quotations, but
responded to Mr Allen on 18 December 2018, after
attending a visit to
Welfit Oddy’s factory in Gqeberha.  She recorded her
gratitude to Mr Allen for his hospitality
during her visit and then
she said:
‘
On
that note, I am delighted to have committed to the additional 200
units (thank you for your offer) and will end with confirmation
that
we would also like to purchase the 16 electrically heated units too …
formalities
to follow.’
[92]
Notwithstanding
Ms Sommerville’s commitment, in writing, to these purchases, Mr
Havenga, on 6 February 2019, again addressed
Ms Sommerville in which
he recorded that he had not received confirmation in writing in
respect of the orders for the 200 additional
26 000L standard tanks
or for the 16 electrically heated tanks.  He wrote:
‘
(P)lease
can you acknowledge that the below is correct?
Order
received from Gem on the 11
th
of December 2018 for 200
additional 26 000L standard tanks – WO ref 8872/B.
Price
US$ 15 840.00 per tank ex works Welfit Oddy.
Order
confirmed from Gem on the 18
th
December 2018 for 16 x 24
000L electrical tanks - WO ref 8881.
Price:
US$ 37 000.00 per tank, ex works Welfit Oddy.
I
did receive a Whatsapp message from you for the electrical tanks, but
no confirmation on email.’
There
is no evidence as to any response to this email but, it is apparent
from this email that Ms Sommerville’s acceptance
of the offer
in respect of the 200 containers was at a reduced price of US$15
840,00 per tank.  As I have said, production
commenced in
respect of each order and detailed weekly progress reports were
forwarded to GEM and met with no objection.
[93]
The
alleged agreements that emerge from this correspondence constitute
contracts of purchase and sale.  The essential elements
for a
valid agreement of purchase and sale
[69]
are that there must be:
(a)
A buyer and a
seller – parties capable of entering into an agreement of sale;
(b)
a
Merx, being the thing or the things, which form the subject matter of
the agreement of sale
[70]
;
(c)
a
fixed price, in money, or which is readily ascertainable in terms of
money
[71]
; and
(d)
consensus of
the contracting parties to these issues.
[94]
Generally,
whether the parties intended to prepare an agreement in writing, or
otherwise, an agreement of sale becomes binding on
the parties when
they are agreed, not only on the elements of the contract, but on all
outstanding subsidiary modalities in the
absence of which they would
not have bound themselves.
[72]
But this is not always so.  The position was authoritatively
explained in
CGEE
Alsthom Equipments
[73]
where Corbett JA said
:
‘
There
is no doubt that, where in the course of negotiating a contract the
parties reach an agreement by offer and acceptance, the
fact that
there are still a number of outstanding matters material to the
contract upon which the parties have not yet agreed
may well prevent
the agreement from having contractual force. A good example of this
kind of situation is provided by the case
of
OK
Bazaars v Bloch ….
Where the law denies such an agreement contractual force it is
because the evidence shows that the parties contemplated
that
consensus
on
the outstanding matters would have to be reached before a binding
contract could come into existence …. The existence
of such
outstanding matters does not, however, necessarily deprive an
agreement of contractual force. The parties may well intend
by their
agreement to conclude a binding contract, while agreeing, either
expressly or by implication, to leave the outstanding
matters to
future negotiation with a view to a comprehensive contract. In the
event of agreement being reached on all outstanding
matters the
comprehensive contract would incorporate and supersede the original
agreement. If, however, the parties should fail
to reach agreement on
the outstanding matters, then the original contract would stand.
… Whether in a particular case
the initial agreement acquires
contractual force or not depends upon the intention of the parties,
which is to be gathered from
their conduct, the terms of the
agreement and the surrounding circumstances.’
[95]
I have dealt earlier with the
interpretation of the MPA.  Mr Kairinos has placed considerable
reliance on Mr Allen’s
evidence that he understood the MPA to
require there to be an agreement in writing in respect of price and
terms of payment, delivery
schedules and specification of
containers.  But, as I have explained, the understanding of a
particular witness of the interpretation
of the contract is
immaterial.  It is a matter of law.  What does emerge
unequivocally from the evidence of Mr Allen
and from numerous
correspondence from Ms Sommerville is the urgent need to commit
firmly upfront in order to secure a quoted purchase
price for
stainless-steel and to arrange hedging against the volatility of the
rand exchange rate.  It was urgent because
Welfit Oddy had to
purchase stainless-steel immediately in order to secure the price.
The evidence shows that considerable
correspondence occurred after
the conclusion of a binding agreement in respect of the
specifications of containers, which was varied
from time to time.
Mr Kairinos emphasised the correspondence from Ms Sommerville in
which she had repeatedly concluded with
the words ‘Formalities
to follow’.  I do not consider that these detract from the
clear intention of the parties
to be bound by the agreement once the
order is confirmed in response to a quoted price.  Accordingly,
I am satisfied that
Welfit Oddy has established the binding
individual agreements
.
Repudiation
[96]
I
turn to the alleged repudiation and cancellation of the agreements.
Repudiation, or anticipatory breach, as it is sometimes
called,
occurs when one contracting party, through its conduct exhibits,
objectively, a deliberate and unequivocal intention not
to be bound
by the contract.  It is an intimation by or on behalf of the
repudiating party, by word or conduct and without
lawful excuse, that
all or some of the obligations arising from the agreement will not be
performed according to their tenor.
[74]
It is not a matter of intention, and often a repudiating party may
have the
bona
fide
belief that their interpretation of the contract is correct and may,
subjectively, intend to be bound by it.  However, the
test that
must be applied is whether they acted in such a way as to lead a
reasonable person to the conclusion that they did not
intend to
fulfill their part of the contract.
[75]
[97]
Propco’s alleged repudiation must be
considered on the strength of these principles.  As adumbrated
earlier, in the face
of mounting pressure on Propco to make payment
of outstanding invoices, on 29 October 2019, Mr Bryant denied any
knowledge of the
conclusion of the individual agreements and demanded
signed individual contracts from Welfit Oddy.  As I have
explained, the
conduct of the parties before this, as demonstrated by
order WO8808, had been to draw up a document long after a binding
contract
had been concluded.  The document did not create the
contract between the parties and only came into existence after they
had already performed, or started performing their obligations under
the contract.  On 1 November 2019, he followed up by alleging

that only the orders signed by a director of Propco would be
binding.  Mr Allen said that he understood this to be a clear

communication that Propco did not intend to honour its obligations
under the MPA or the individual agreements.
[98]
Propco’s case, as pleaded, is that it
had already ratified the agreements A1, A3, A4 and A6, at that stage
by making payment
in respect of containers purchased under these
agreements.  In respect of A3, the contract had been fully
executed, all invoices
had been paid and the containers had been
delivered.  Propco had met all its obligations under the
individual agreements A4
and A6, made payment in full in respect of
all the containers that were subject to these agreements, and was
endeavouring to take
delivery of the containers manufactured under
these individual agreements.  It was Welfit Oddy who refused to
deliver.
Mr Bryant’s communication could not reasonably
have been perceived to be a repudiation of these agreements.
Propco
had made payment in respect of 24 of the 100 containers under
agreement A1 and, for the reasons set out earlier, the effect of
their admitted ratification is that they were bound by the entire
individual agreement and, on their own version, were required
to make
payment for the remaining 76 containers and to take delivery
thereof.  Because there were invoices overdue in respect
of
containers under this agreement, Welfit Oddy was entitled to withhold
delivery until the overdue invoices had been paid.
[99]
Thus, the position adopted by Mr Bryant
conveyed unequivocally a deliberate intention not to be bound by the
individual agreements
A1, A2, A5, A7 and A8.  The repudiation
arises from the claim that Ms Sommerville, or GEM, had not been
authorised to conclude
individual agreements binding Propco.  I
do not think that it necessarily constituted a repudiation of the
MPA, which had
been signed by the directors of Propco itself, but
nothing turns on that.
[100]
The
effect of the repudiation by Mr Bryant was to place Welfit Oddy
before an election to decide whether to reject the repudiation,
and
thereby hold Propco to the individual agreements concluded, or to
accept the repudiation, cancel the agreements and claim damages.
[76]
They were not obliged to make their election immediately and were
entitled to a reasonable time to assess their position
before making
their election.  When an innocent party has elected to reject
the repudiation and to hold the repudiating party
to the contract
they may nevertheless, at a later stage, change their election and
cancel the contract in the event that the repudiating
party persists
in its stance.
[77]
However,
where they have made an election to hold the repudiating party to the
contract, the contract remains in existence,
unscathed, and the
relationship between the parties remains as it was prior to the
repudiation,
[78]
save that the
obligations of the innocent party are suspended for as long as the
repudiating party persists in its repudiation.
[79]
Their obligations are not extinguished, but merely temporarily
suspended, and they must be in a position to perform their
part of
the contract in the event that the repudiating party does reconsider
its position.  So, by electing to keep the contract
alive they
keep it alive for the benefit of both parties.  In the event
that the repudiating party does repent and tender
performance of its
obligations, the innocent party, too, must be ready to perform its
obligations.  It would not be open to
it then to say: ‘But
you repudiated’. Thus, while the repudiation endures, it
relieves the innocent party from the
obligation to perform or to
tender performance, provided that it remains, to the knowledge of the
party repudiating, willing and
able to perform.
[80]
[101]
As I have said, Welfit Oddy elected to
reject the repudiation and to hold Propco to the individual
agreements.  It persisted
in its stance until after the issue of
summons, before, in 2021, it purported to change its election,
alleging that Propco had
persisted in its breach by resisting its
claim for specific performance and thereby conveying an unequivocal
intention not to remedy
the breach.  Hence its current claim for
damages.
[102]
However,
in the interim, Propco contended that Welfit Oddy had itself
repudiated the agreement.
[81]
As I have explained, on a proper interpretation of the MPA, Welfit
Oddy was obliged to provide one inspection
of the completed
containers and the costs of the inspection were included in the
purchase price of the containers.  Mr Allen’s
evidence,
which was uncontradicted, established that Welfit Oddy had complied
with its obligation in this respect and that the
containers had in
fact been inspected and approved by Propco’s agent appointed by
GEM.  Nevertheless, for the reasons
set out earlier, Welfit Oddy
was not entitled to withhold containers under the individual
agreements A4 or A6, in respect of which
Propco had complied with all
its contractual obligations, save to take delivery of the containers,
which Welfit Oddy resisted.
Welfit Oddy was entitled to
withhold delivery of the 24 containers that had been fully paid under
agreement A1 until the overdue
invoices in respect of this individual
agreement had been paid.  It follows that Welfit Oddy’s
refusal to deliver the
containers purchased under agreements A4 and
A6, in circumstances where Propco had complied fully with its
obligations did constitute
a repudiation of the agreements in issue,
which Propco accepted in its particulars of claim.  In respect
of A1 Welfit Oddy
was obliged to hold the containers ready for
delivery against payment of the overdue invoices under that
agreement, as Mr Nurse
had tendered to do on 13 December 2019.
[103]
So, to summarise, Propco’s conduct
constituted a repudiation of all the individual agreements save for
A3, A4 and A6.
A3 has been fully executed by both parties and
is not material to the outcome of the current dispute.  Welfit
Oddy’s
refusal to deliver the containers fully paid for under
A4 and A6 amounted to a repudiation of these individual agreements
which
Propco was entitled to accept, as it did.
[104]
The
enquiry does not, however, end there.  Although Propco relied
only on the repudiation to which I have referred, in its
particulars
of claim, it did, in its replication, raise a further ground for its
alleged cancellation of all the individual agreements.
[82]
As I have explained, it was argued that once Welfit Oddy had sold the
containers to Buhold they were no longer in a position
to tender
delivery of the 582 containers to the plaintiff, against payment.
This, Mr Kairinos argued, constituted a repudiation
of its own, which
Propco was entitled to accept.  Whilst this ground was not
raised in the particulars of claim it is open
to a party who has
advanced unsustainable grounds for a cancellation of an agreement to
rely, later, on any other valid  grounds
for cancellation,
provided that it existed at the time of the cancellation.
[83]
As adumbrated earlier, in electing to hold Propco to its contract, Mr
Nurse astutely avoided disclosing that
Welfit Oddy no longer had any
containers that it could deliver against payment of the purchase
price.  It was common cause
that when the containers had been
sold to Buhold, they had onsold the containers in the open market and
it was accordingly not
possible to retrieve the containers for
delivery to Propco upon payment being made.  Mr Rorke argued,
and Mr Allen testified,
that Welfit Oddy would have been required to
manufacture new containers of the same quality and the same
specification if Propco
had reconsidered its position.  Thus, it
was contended that Welfit Oddy was able to perform, albeit not
in
forma specifica
.
[105]
I dealt earlier with the construction of
the MPA and the scheme thereof.  The purchase price of every
individual container
is determined by the prevailing cost of
stainless-steel and the rand/dollar exchange rate at the time that
the order was placed.
Thereafter, the history of the
relationship revealed that the manufacture of the containers in issue
required a lead time of three
to nine months.  In terms of the
MPA, payment of the purchase price was due after the completion of
the manufacture and the
inspection of the specific containers
earmarked for delivery.  It did not envisage payment upfront
before the commencement
of the manufacture or the lengthy delay
thereafter before delivery.
[106]
I
shall accept, for purposes of this judgment, the
bona
fides
of
Welfit Oddy.  However, the reasoning in
Metalmil
[84]
is apposite in this instance where the SCA explained:
‘
It
is probably correct to say that respondent was
bona
fide
in its interpretation of the
agreement and that subjectively it intended to be bound by the
agreement and not to repudiate
it. This fact does not, however,
preclude the conclusion that its conduct constituted repudiation in
law. Respondent was not
manifesting any intention to conduct its
relations with appellant and to discharge its duties to appellant in
accordance with what
it was obliged to do on an objective
interpretation of the agreement. In effect, it was insisting on a
different contract, however
bona
fide
it might have been in its
belief that it was not.’
[107]
The
argument advanced by Mr Rorke essentially sought to set up a
different contract.  That he cannot do.  Once Welfit
had
sold the containers, they had disabled themselves from carrying out
their part of the contract because they could not deliver
in
compliance with the contract, and they could therefore not sue for
damages.
[85]
Thus, in
Geldenhuys
and Neethling v Beuthin
[86]
Solomon
JA said:
‘
No
doubt, had the plaintiff been willing to accept the repudiation, he
would have been entitled forthwith and before he had performed
his
own obligation under the deed of sale to sue the defendants for
damages for breach of contract.  But as he refused to
accept the
repudiation and insisted upon the contract being kept alive, he
remains subject to all his obligations and liabilities
under it, and
is bound to perform his part before he can claim that the defendants
should perform theirs.’
[87]
[108]
In the
circumstances, although Propco had repudiated the individual
agreements A1, A2, A5, A7 and A8, once Welfit Oddy sold the

containers, while still insisting to hold Propco to the contracts, it
could no longer claim damages and its own conduct was an
unequivocal
intimation that it did not intend to honour its obligations under any
of the individual agreements. When, in 2021,
Welfit Oddy purported to
alter its election, which it is ordinarily entitled to do in law, its
own repudiation of the agreement
had already been accepted and the
individual agreements cancelled.  Accordingly, the plaintiff has
established that it is
entitled to repayment of the amount of US$2
617 520,00 together with interest
a
tempore morae
thereon.
[109]
In the result,
the following order is made:
1.
The defendant
is ordered to pay to the plaintiff the amount of US$2 617 520,00
together with interest on the aforestated amount
calculated
a
tempore morae
at the prescribed rate of interest from the date of summons.
2.
The defendant
is ordered to pay the plaintiff’s costs of the main action.
3.
The
defendant’s claim in reconvention is dismissed with costs.
J
W EKSTEEN
JUDGE
OF THE HIGH COURT
Appearances:
For
Plaintiff:
Adv
G Kairinos SC instructed by Jurgens Bekker Attorneys, Johannesburg
c/o BLC Attorneys, Gqeberha
For
Defendant:
Adv
S C Rorke SC instructed by Mike Nurse Attorneys, Gqeberha
Date
Heard:
24
August 2023
Date
Delivered:
30
January 2024
[1]
At
the time of the issue of summons plaintiff was known as GEM Propco 1
Limited and has subsequently changed its name.
[2]
The
relationship described between GEM and Propco appears to foreshadow
the conduct of the container leasing business as an anonymous

partnership.
[3]
The
MPA was signed by Welfit Oddy on 11 October 2018 and the signatures
by the directors of Propco reflect no date.  However,
on the
introductory page of the agreement it records: ‘A master
agreement made this 21
st
day of June 2018’.  On the pleadings and in the conduct
of the trial the parties were agreed that the MPA was concluded
on
21 June 2018.
[4]
The
terms of the MPA are materially similar to those contained in the
earlier master container purchase agreement concluded with
GEM’s.
[5]
Para
3 above.
[6]
Prior
to this unequivocal election Mr Nurse had, on 19 November 2019,
demanded that Propco perform its obligations under the agreements.
[7]
See
para 12 above.
[8]
It
is common cause that the value of the 110 containers for which
Propco had paid, but not received, was

US$2 617 520,00.
[9]
See
para 10 above.
[10]
See
para 19 above.
[11]
At
the start of the trial on 14 November 2022 the plaintiff’s
pleaded case was that three of the agreements contended for
in
defendant’s particulars of claim had been properly concluded
in July 2023.
[12]
The
110 containers for which Propco had paid but had not been received.
[13]
The
documents are annexed to the particulars of claim as Annexures A1-A8
and were referred to during the trial by these numbers.
Each
‘Individual Agreement’ was however allocated a separate
contract number by Welfit Oddy to coincide with the
number of each
individual order allegedly placed.  I shall refer to these
documents as Annexures A1 to A8 and to the underlying
agreements
simply as A1 to A8.
[14]
The
individual agreement referred to does not form part of the 8
individual agreements relied upon for the relief sought.
[15]
In
its initial particulars of claim, which were amended during the
course of the trial, the plaintiff had relied on the due conclusion

of these Agreements.  The amended particulars of claim deny the
conclusion of these Agreements and contend for the ratification
of a
number of individual containers.  See para 29 above.
[16]
Para
33 above.
[17]
2012
(4) SA 593
(SCA) para 18; [2012] 2 All SA 262 (SCA); [2012] ZASCA
13.
[18]
2009
(4) SA 399
(SCA) para 39;
[2009] 2 All SA 523.
[19]
Clause
10 of the MPA provides: ‘This agreement shall be the entire
and sole agreement and understanding between the parties
with
respect to the sale and purchase of containers …’.
[20]
2019
(3) SA 398 (SCA); [2019] 1 All SA 291 (SCA);  [2018] ZASCA 176
(SCA).
[21]
2021
(6) SA 1 (CC); [2012] ZACC 13; 2021 (8) BCLR 807 (CC).
[22]
University
of Johannesburg
para
65.
[23]
Para
19.
[24]
Clause
2 of the written agreement provides that the vendor shall sell the
containers ‘at prices in accordance with the particulars
and
details as
set
out in
each individual agreement’;  clause 4.4 provides that,
‘notwithstanding the above nor any of the terms
recorded
in
each
induvial agreement, the purchaser accepts that the containers remain
the property of the vendor until payment has been made
in full;
clause 5.3 provides that ‘notwithstanding … any terms
recorded
in
each
individual agreement, the purchaser accepts that the containers may
not be released to the purchaser until any overdue invoices
have
been paid in full’.
[25]
Grotius
3.14.26 and
Christie’s
Law of Contract in South Africa
(8
th
ed) p. 136.
[26]
Goldblatt
v Fremantle
1920 AD 123
at 128-129.
[27]
Pillay
and Another v Shaik and Others
2009 (4) SA 74 (SCA); [2009] 2 All SA 435 (SCA); [2008] ZASCA 159.
[28]
Para
50.
[29]
1921
AD 34
at 305.
[30]
The
individual agreement
WO8808
was relied on by Welfit Oddy in its replication (para 32 above) and
is not one of the contested agreements.
[31]
The
alleged terms of these agreements are reflected in Welfit Oddy’s
claim in reconvention as annexures A1, A3, A5, A6 and
A7.
[32]
Annexures
A2 and A8 to Welfit Oddy’s particulars of its counterclaim.
[33]
University
of Johannesburg
para
43.
[34]
As
evidenced by agreement WO8808.
[35]
See
Theron
v Leon
1928 TPD 719.
[36]
Legg
and Co. v Premier Tabacco Co.
1926
AD 132.
[37]
1966
(2) SA 735
(T) 736-7, [1966] 2 All SA 406 (T).
[38]
It
is doubtful whether
Goldblatt
envisaged the possibility set out in (b).  See
Christie’s
Law of Contract in South Africa
(8
th
ed) p. 138.
[39]
In
particular the practice exhibited by agreement WO8808.
[40]
Quoted
para 10 and 12 above.
[41]
Clause
4 of the MPA, quoted in para 11 hereof.
[42]
Quoted
in para 12 above.
[43]
The
estoppel is set out in para 32 above.
[44]
Aris
Enterprises (Finance)(Pty) Limited v Protea Assurance Co. Limited
[1981] 4 All SA 238
(A);
1981 (3) SA 274
(A) 291D-E;
Sodo
v Chairman, African National Congress, Umtata Region
[1998] 1 All SA 45
(Tk) at 51.
[45]
Blackie
Swart Argitekte v Van Heerden
[1985] ZASCA 107
;
[1986] 1 All SA 373
(A),
1986 (1) SA 249
(A) at 260; and
Absa
Bank Limited v I W Blumberg and Wilkinson
[1997] 2 All SA 307 (A), 1997 (3) SA 669 (SCA).
[46]
Universal
Stores Limited v OK Bazaars (1929) Limited
[1973]
4 All SA 611
(A),
1973 (4) SA 747
(A) at 761
;
Road Accident Fund v Mothupi
[2000]
3 All SA 181
(A),
2000 (4) SA 38
(SCA); and
Northern
Metropolitan Local Council v The Company Unique Finance (Pty)
Limited and Others
[2012]
3 All SA 498 (SCA), 2012 (5) SA 323 (SCA).
[47]
Standard
Bank of SA Limited v Stama (Pty) Ltd
[1975]
2 All SA 206
(A),
1975 (1) SA 730
(A) at 743;
Stellenbosch
Farmers Winery Limited v Vlachos t/a Liquor Den
[2001] 3 All SA 577
(A),
2001 (3) SA 597
(SCA).
[48]
Per
i-
Urban
Areas Health Board v Breedt NO
[1955] 2 All SA 186
(T),
1958 (3) SA 783
(T) at 790;
Absa
Bank Limited v De Klerk
[1998] 4 All SA 674 (W), 1999 (1) SA 861 (W).
[49]
Info
Plus v Scheelke
[1998] ZASCA 21
;
[1998] 2 All SA 509
(A),
1998 (3) SA 184
(SCA);
Caldeira
v Ruthenberg
[1999] 1 All SA 519 (A), 1999 (4) SA 37 (SCA).
[50]
NBS
Bank Limited v Cape Produce Co. (Pty) Ltd
[2002] 2 All SA 262
(SCA),
2002 (1) SA 396
(SCA);
Glofincor
v Absa Bank Limited t/a United Bank
2002
(6) SA 470 (SCA).
[51]
Para
19 above.
[52]
Service
Motor Supplies (1956) (Pty) Limited v Hyper Investments (Pty)
Limited
[1961]
4 All SA 464
(A),
1961 (4) SA 842
(A);
Resisto
Dairy (Pty) Limited v Auto Protection Insurance Co. Limited
[1963] 2 All SA 45
(A),
1963 (1) SA 632
(A) 642;
Universal
Stores Limited v Ok Bazaars (1929) (Pty) Limited
[1973] 4 All SA 611
(A);
1973 (4) SA 747
(A) 761B-C.
[53]
Road
Accident Fund v Mothupi
para 29.
[54]
Concor
Holdings (Pty) Limited t/a Concor Technicrete v Potgieter
2004 (6) SA 491
(SCA) at 495A-C; and
Leeuw
v First National Bank
2010 (3) SA 140 (SCA).
[55]
See
Simpson
v Selfmed Medical Scheme and Another
[1992] 3 All SA 504
(C);
1992 (1) SA 855
(C) at 866D and
Hauptfleisch
v Caledon Divisional Council
1963 (4) SA 53
(C) at 57A-B.
[56]
Martin
v De Kock
[1948] 2 All SA 545 (A); 1948 (2) SA 719 (A) 735.
[57]
Universal
Stores Limited v OK Bazaars
at 761G-H.
[58]
Saridakis
t/a Auto Nest v Lamont
[1993] 1 All SA 431
(C);
1993 (2) SA 164
(C) at 172I-173B.
[59]
Para
31 above.
[60]
Christie’s
Law of Contract in South Africa
(8
th
ed) p. 138.
[61]
Da
Silva v Janowski
1982
(3) SA 205 (A); [1982] 1 All SA 43 (A).
[62]
See
Clegg
v Groenewald
1970 (3) SA 90
(C).
[63]
1937
AD 101
at 105.
[64]
1948
(1) SA 413 (A).
[65]
Collen
at
433.
[66]
(1877)
2 App Cas 666
at 672, quoted in
Seeff
Commercial and Industrial Properties (Pty) Ltd v Silberman
2001
(3) SA 952
(SCA) at 954B;
2001 (3) SA 952
(SCA);
[2001] 3 All SA 133
(SCA).
[67]
Para
29 above.
[68]
Compare
s 3
of the
Law
of Evidence Amendment Act, 45 of 1988
.
[69]
See
Johnston
v Leal
1980 (3) SA 927
(A) 937H;
[1980] 2 All SA 366
(A);
Norman’s
Law of Purchase and Sale in South Africa
(6
th
ed) p. 2.
[70]
See
for example
Kriel
and Another v Le Roux
[2000] 2 All SA 65 (SCA).
[71]
See
Lubbe
2000 Annual Survey of South African Law
pp 213-221.
[72]
Norman’s
Law of Purchase and Sale
at
3.
[73]
CGEE
Alsthom Equipments Et Enterprises (Electriques, South African
Division) v GKN Sankey (Pty) Ltd
1987 (1) SA 81
(A) at 92A-F; [1987] 3 All SA 619 (AD).
[74]
Street
v Dublin
1961 (2) SA 4
(W) 10;
Van
Rooyen v Minister van Openbare Werke en Gemeenskapsbou
1978 (2) SA 835
(A) at 845A-B;
Culverwell
and Another v Brown
1988 (2) SA 468
(C) at 475C;
Christie
at 646 and
Van
der Merwe, Van Huyssteen, Reinecke and Lubbe:  Contract,
General Principles
(4
th
ed) at 311.
[75]
Van
Rooyen at 845H-846A
;
and
Metalmil
(Pty) Limited v AECI Explosives and Chemicals Limited
[1994] ZASCA 96
;
1994 (3) SA 673
(A) at 685E-G.
[76]
De
Wet and Van Wyk:  Kontraktereg en Handelsreg
(5
th
ed) vol. 1 at 170.
[77]
Sandown
Travel (Pty) Limited v Cricket South Africa
2013 (2) SA 502
(GSJ) para 39;
Primat
Constructin CC v Nelson Mandela Bay Metropolitan Municipality
2017
(5) SA 420
(SCA).
[78]
De
Wet and Van Wyk at 170.
[79]
Erasmus
v Pienaar
1984 (4) SA 9
(T) at 27B-C.
[80]
Moodley
v Moodley
[1990] 3 All SA 1099
,
1990 (1) SA 427
(D);
GNH
Office Automation CC v The Provincial Tender Board, Eastern Cape
1998
(3) SA 45
(A) at 51F.
[81]
Para
29 and 37 above.
[82]
Para
37 above.
[83]
See
Contract
General Principles
346.
[84]
684J-685A.
[85]
Berman
and Berzack v Finlay Holt & Co. Limited
1932
TPD 142
at 145.
[86]
1918
AD 426
at 444.
[87]
In
Erasmus
Ackerman J accepted the correctness of this decision on the facts,
but held that it was not authority for the proposition that
the
obligations of the innocent party were not suspended for the
duration of the repudiation.