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[2010] ZASCA 66
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Buffalo Freight Systems (Pty) Ltd v Castleigh Trading (Pty) Ltd and Another (311/09) [2010] ZASCA 66; 2011 (1) SA 8 (SCA) ; [2011] 1 All SA 1 (SCA) (24 May 2010)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 311/09
In the matter between:
BUFFALO FREIGHT SYSTEMS (PTY)
LTD Appellant
and
CRESTLEIGH TRADING (PTY)
LTD First Respondent
MARIA ELIZABETH
BATT Second Respondent
Neutral
citation
:
Buffalo
Freight Systems v Crestleigh Trading
(311/09)
[2010] ZASCA 66
(24 May 2010)
Coram:
HEHER,
SHONGWE, TSHIQI JJA and MAJIEDT and SALDULKER AJJA
Heard:
12
March 2010
Delivered:
24
May 2010
Summary:
Contract
– whether an oral agreement subsequently entered into by the
parties introduces a variation or waiver of the original
written
agreement – Practice – motions – whether genuine
dispute of facts exists – whether the appellant
is entitled to
invoke a right of lien.
________________________________________________________________
ORDER
________________________________________________________________
On
appeal from
:
South Gauteng High Court (Johannesburg) (Boruchowitz J sitting as
court of first instance):
1. The appeal is upheld with costs.
2. The order of the court quo is set
aside and substituted with the following:
‘
1. The application is granted.
2. The lien enjoyed by the applicant
over the containers described in Annexure X to the Notice of Motion
as “File 805.JSG.3995,”
“File 805.JSG.4284,”
“File 804.JSG3865,” “File 804.JSG 3947”, “
File 804.JSI 4015”
is confirmed.
3. The first and second respondents
are ordered, jointly and severally, the one paying the other to be
absolved, to pay to the applicant,
the sum of R600 591. 05 together
with interest thereon at the rate of 15.5% per annum a tempore morae
from 31 May 2008 to date
of payment.
4. Failing such payment the applicant
is authorized to sell the goods referred to in paragraph 2 above to
the extent necessary to
cover any shortfall in the unpaid amount in
paragraph 3 above.
5. The first and
second respondents are ordered to pay the costs of the application
jointly and severally.
6. The counter-application is
dismissed with costs.’
________________________________________________________________
JUDGMENT
________________________________________________________________
SHONGWE JA (HEHER,
TSHIQI JJA and MAJIEDT and SULDULKER AJJA concurring):
[1] This appeal raises the questions
of whether the appellant is entitled to invoke a right of lien over
goods received by it on
behalf of the first respondent in terms of a
facility granted to the first respondent by the appellant and whether
an oral arrangement
subsequently entered into by the parties
disentitled the appellant from relying on certain trading terms and
conditions.
[2] The appellant claimed final relief
in the South Gauteng High Court, Johannesburg, in the following
terms:
2.1 Confirmation of
a lien allegedly enjoyed by it in respect of certain shipping
containers.
2.2 Payment of the
sum of R543 469. 54 together with interest thereon from 31 May 2008
in respect of clearing
and
forwarding services rendered on behalf of the first respondent.
2.3 An order authorising the appellant
to sell all the goods which form the subject matter of the lien.
[3] The first
respondent filed a counter-application in which it sought delivery of
three containers retained by the appellant by
virtue of the alleged
lien.
Boruchowitz
J dismissed the application and granted the counter-application. In
both instances the costs followed the result.
This appeal is with
leave of the court a quo.
[4] At the hearing of this appeal,
counsel for the appellant moved to increase its claim by an amount of
R 57 121.51. This was in
respect of a charge for services rendered
which the appellant had, by oversight, omitted from its claim as
formulated in the application
papers. It was clear from the answering
affidavit that the first respondent admitted that the debt had been
incurred. Counsel for
the first respondent, very properly, did not
oppose the amendment, which is now formally granted.
[5] The appellant carries on business
as a freight forwarding and clearing agent. The first respondent is
a furniture importer
and retailer. The second respondent is sued in
her capacity as a surety in terms of a written deed of suretyship.
The appellant
relies on an agreement which initially incorporated its
standard trading terms and conditions and granted a thirty day credit
line
to the first respondent. In particular the appellant relies on
clause 6 of the conditions. Clause 6 reads:
‘
Unless
specifically agreed otherwise by the Corporation, all disbursements
made by the Corporation on behalf of the customer as
well as all fees
charged to the customer by the Corporation for agency, documentation,
carriage, warehousing, freight, financing
of disbursements or any
other intervention by the Corporation, are payable on presentation of
the account without deduction or
set off. No amount may be deferred
or withheld by reason of any claim or counter-claim. The Corporation
shall have a special and
general lien over all goods as security for
all monies owing by the customer to the Corporation.’
[6] From the series
of invoices forming part of the record it is clear that the
appellant’s standard trading conditions were
applicable
.
They
were invariably referred to at the back of each instruction sheet,
both before and after the revocation of the credit line
and even
after the fallout between the parties in May 2008 to which I shall
allude next.
[7] During the
latter half of 2007 the first respondent experienced financial
difficulties with the result that it breached its
contractual
obligations by failing to pay the appellant within the agreed time
frame and in some instances by not paying at all.
The appellant was
compelled to revoke the credit facilities and deal with the first
respondent on a strictly cash basis. It is
common cause that in
January 2008 an amount of R756 604.40 was owing by the first
respondent. In January 2008 various post-dated
cheques were issued
in an attempt to settle the debt. Two of them were met, but a cheque
for R306 604.40 dated 31 March 2008
was dishonoured by an
instruction to stop payment in April 2008 It was contended on
behalf of the appellant that this revocation
of the credit line did
not evince an intention by the appellant to cancel the agreement.
The invoices continued to incorporate
reference to the standard
trading conditions after the termination of the credit line. It is
clear that they regulated the relationship
between the parties as
before.
[8] Subsequent to
the dishonouring of the cheque the appellant received five containers
on behalf of the first respondent. These
arrived on 18 April 2008,
21 April 2008, 24 April 2008, 11 May 2008 and 27 May 2008. The
appellant incurred further handling
and
storage charges. The first respondent’s indebtedness to the
appellant increased. A meeting was held on 5 May 2008 to
discuss
payment of the first respondent’s indebtedness. The appellant
alleges that the first respondent undertook to effect
payment of the
outstanding debt in full on a weekly basis commencing the following
week. In addition, it is common cause that
the second respondent
signed a deed of suretyship for due payment of the first respondent’s
indebtedness. This is where
a major dispute of fact arises. The
first respondent contends that a suspense account was to be opened in
respect of the arrears
and the amount was to be paid off as and when
the first respondent had money to pay. In support of the first
respondent’s
contention three affidavits of witnesses (namely
Mrs Batt, its manager, Mr Brown a director and Batt’s son,
and Ferreira,
an employee) who were present at the meeting were
produced. In my view, they differ in what the first respondent is
alleged to
have said in respect of a number of matters including when
payment was to be expected. I shall deal with this aspect in detail
later in the judgment.
[9] The first
respondent failed, in the appellant’s view of the agreement, to
effect payment in the week following 5 May 2008.
The appellant
addressed a letter on 13 May 2008 to the first respondent demanding
payment of the sum of R 674 131.82. In this
letter the appellant
referred to the standard conditions which entitled it to declare a
lien and sell the goods to recover the
amount of the indebtedness.
This letter was followed on 27 and 28 May 2008 by a series of e-mails
between the appellant and the
first respondent. The gist of the
e-mails is that the first respondent admitted that the sum of R307
000.00 was overdue and that
it was prepared to pay interest on that
amount. The appellant adopted the stance that it had afforded
respondents extended time
to sort out their finances but, since no
further payment had been effected, it intended exercising its lien.
The first respondent
raised the issue of the credit and cash
accounts. It contended, without referring to the alleged compromise
agreement, that all
monies paid in terms of the cash account had been
paid and therefore the appellant could not exercise the lien which it
enjoyed
in respect of the goods. The appellant raised the issue
of
the stopped cheques and also to the threat to sell the goods and
using the proceeds to settle the indebtedness.
[10] Only on 3 June 2008 did attorneys
representing the first respondent raise, for the first time, the
existence of the settlement
agreement. But the letter does not
include the alleged accord relating to the release of the containers
paid for in cash which
the respondent’s witnesses state have
been agreed on 5 May 2008. It refers neither to the alleged
limitation on the terms
of the suretyship (ie to existing
indebtedness only) nor to the alleged undertaking by Mrs Batt to
destroy it on satisfaction of
that indebtedness. As these were all
matters that Mrs Batt and later Brown said they regarded as material
to the agreement, the
omissions are strange. The appellant commenced
proceedings on 4 June 2008.In the interim the first respondent had
addressed a
letter dated 3 June 2008 to the appellant demanding the
release of the three containers already paid for. The
counter-application
followed when the demand was ignored.
[11] The appellant contends that the
sum of R543 469.54 is due and payable by the first respondent and
that at the time of the application
it had received five containers
on behalf of the first respondent, against which it was exercising a
lien. It contended further
that it had cleared three containers
which were in storage and that the remaining two containers had been
placed in bond, but had
to be cleared by customs with resultant
further disbursements. Costs were said to be increasing on a daily
basis and amounted
to R130 726.55 at the time of the application.
[12] The respondent on the other hand
contended that in terms of the January 2008 agreement all further
freight services by the
appellant would be on a strictly cash basis
and that on 5 May 2008 the parties entered into an oral agreement in
terms whereof
the first respondent could pay the outstanding R306
604.40 as and when money became available, on condition that the
second respondent
signed a personal deed of suretyship in favour of
the appellant. It further contended that the sum of R306 604.40 was
to be transferred
to a suspense account and in addition it was
contended, the appellant undertook to release the three containers in
its possession
which were paid for in cash.
[13] As I have already said, it is
plain that the parties conducted their business on the basis of the
standard trading conditions
in respect of transactions material to
the present matter. Counsel for the first respondent argued but
faintly to the contrary.
The revocation of the credit line, in my
view, simply closed down the credit facility but did not affect the
trading conditions.
[14] The purpose of
the meeting on 5 May 2008 was to seek payment of the outstanding
amount, or at least assurance that it would
be paid on conditions
acceptable to the appellant, and the time frame within which it could
be paid. The dispute is on when and
how the debt would be paid. The
appellant contends that the agreement was that payment would be made
on a weekly basis commencing
the following week, whereas the first
respondent’s version was that payment would be effected as and
when money was available.
The latter version is inherently
improbable to a high degree. A few examples will suffice; it is
unlikely that the first respondent
would have moved from a position
of relative certainty to one of extreme uncertainty. It was in
possession of a dishonoured cheque
and it had clear contractual
rights. There was also no dispute as to the indebtedness. To
strengthen the appellant’s position
it requested additional
security by requiring a signed suretyship. Of what value would the
suretyship have been if the first respondent
would pay as and when
money was available? And of what value would an undertaking not to
rely on the suretyship have been to it
as the second respondent
averred? The subsequent conduct of the respondents is at odds with
any bona fide belief in the minds
of its representatives that
agreement had been reached on the terms later alleged by
them.
[15] As I mentioned earlier to
illustrate the contradictions, the respondent’s witnesses,
Batt, Brown and Ferreira put forward
versions different as between
themselves and at odds with that of Mrs Wolff (a representative of
the appellant). In essence their
story was that Wolff wanted to be
paid weekly, but Batt told her that she was not prepared to give
undertakings which she might
not be able to keep. A compromise was
reached. In order to reflect the flavour of their case accurately I
prefer to set out the
contents of their respective statements (which
they included in the answering papers).
[16] Mrs Batt
stated as follows
:
‘
I
had a meeting with Margrit Wolff from Buffalo Freight on the 5
th
May, 2008 regarding the outstanding amount of R306 604.40. The
meeting was to make some arrangements to pay this amount off. She
did
say that there will be interest charged on this amount to which I
agreed. I took Jacques Brown and Rita Ferreira with me so
that
whatever was said between us I had witnesses. Margrit called Sally
from their accounts department to sit in for this meeting.
Margrit
asked me if I can promise her that there will be a weekly payment for
the outstanding amount. My answer to her was ”Margrit
I will
never, ever make a promise that I cannot keep. I will make payments
to you as I get money.” Then Margrit asked me
to sign surety
for this amount. She said she will not use it, and will destroy it
when the money was paid to her. I signed it.
Margrit then told
Sally that she must bring this amount into the current month and on
this amount I will have to pay interest.
After we agreed to the
above arrangements, I then asked Margrit about the container that was
with them. I asked Margrit if she
will release the container. She
agreed to this. The invoice for this container was R108 705.30. I
paid this amount on May 08,
2008. When I phoned they said Margrit
will still not release the container. Then I got another invoice for
R61 192.02 and a second
invoice for R64 651.65 I added them up and
got to a total of R125 843.67. I then wrote a cheque for the amount
of R139 874.06
on the 16
th
May 2008. That was R14 030.39 more than the invoices that was given
to me by Buffalo Freight. Then the next thing I know all
these
invoices were given to me with all these costs. I really thought we
could work this out, but I am not sure. In the containers
are orders
where clients have paid a deposit and were going to pay in full when
we delivered the goods to them. Now that we have
not received the
goods and can’t supply the clients we have to pay them back.
Given the above how does Margrit expect us
to make more regular
payments.’
[17] Brown described events as
follows:
‘
Myself and Mrs
Batt explained our situation to Mrs Wolff and we asked her for help.
Mrs Wolff then said that she would help us
and the following
agreement was made. Mrs Wolff said that the money will be placed in
a holding account and that we could pay
the amount off. We then told
her that we could not say how much we are capable of paying every
month but that we will pay it off
as soon as we possibly can. There
was no specific amount or time limit given to us. Further more we
made arrangements with the
containers held by Buffalo Freights and we
agreed to pay them in full then they would be released to Crestleigh
Trading. Mrs Wolff
gave a letter to Mrs Batt to sign for surety and
said that she would not use the letter and that it would be destroyed
once the
account was settled. To my knowledge payment was made in
full on container at Buffalo Freight and none of the containers
released
yet. Payment made exceeded the amount due on containers.
And we took it that the balance was paid on holding account. So in
short we are trying to comply with the agreement.’
[18] Ferreira stated that:
‘
Mrs Batt explained
to Margrit that she has a problem to pay the outstanding amount and
asked her if she could pay it off as the
money comes in, she will try
and pay it off as quick as what she can, Margrit asked her if she can
promise her a payment every
week, where Mrs Batt told her she will
never make a promise where she is not 100% that she can keep to that.
At one stage Margrit
asked Mrs Batt to sign a surety letter, Margrit
still said she will not use it and will destroy it as soon as the
amount was settled.
At that stage I told
Margrit that I was caught with the same type of letter and the same
promises. She then said she will not use
it we got her word, and
that we can be there when she destroy if Mrs Batt did sign the
letter.
Margrit told Sally to
take the amount of R306 604.40 out of the period it was in and bring
it in as a current account.
Only after this was
agreed on Mrs Batt asked Margrit if she will release the container
that was with them, Margrit said if she get
the payment for the
container she will do so. Mrs Batt told me she has paid Margrit for
that container but she still don’t
want to release the
container. Mrs Batt also told me that she got two more invoices from
two more containers, she has paid the
two invoices and with a little
extra so that the amount can come off, even if it is little by
little.’
[19] The court a
quo approached the matter on the basis that the facts pertaining to
the agreement
of
5 May 2008 were in dispute and that there had been no request by the
appellant that the matter be referred for evidence or trial.
It then
applied the principle in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634 E-F (where it was held that the court must
deal with the matter on the basis of the respondent’s version
coupled
with the admitted facts in applicant’s papers) However,
in
Truth
Verification Testing Centre CC v AE Truth Detection
CC
1998 (2) SA 689
(W) at 698 H-J , Eloff AJ said:
‘
I am also mindful
of the fact the so-called robust common-sense, approach’ which
adopted in cases such as Soffiantini v Mould
1956 (4) SA 150
(E) in
relation to the resolution of disputed issues on paper usually
relates to situations where a respondent contents himself
with bald
and hollow denials of factual matter confronting him. There is,
however, no reason in logic why it should not be applied
in assessing
a detailed version which is wholly fanciful and untenable.’
I respectfully
agree. The court should be prepared to undertake an objective
analysis of such disputes when required to do so. In
J
W Wightman (Pty) Ltd v Headfour (Pty) Ltd
[2008] ZASCA 6
;
2008 (3) SA 371(SCA)
, it was suggested how that might be done in
appropriate circumstances. The present case calls for a similar
analysis.
[20] A court must
always be cautious about deciding probabilities in the face of
conflicts of facts in affidavits. Affidavits are
settled by legal
advisers with varying degrees of experience, skill and diligence and
a litigant should not pay the price for an
adviser’s
shortcomings. Judgment on the credibility of the deponent, absent
direct and obvious contradictions, should be
left open. Nevertheless
the courts have recognised reasons to take a stronger line to avoid
injustice. In
Da
Matta v Otto
1972 (3) SA 858
(A) at 689 D-E, the following was said:
‘
In
regard to the appellant ‘s sworn statements alleging the oral
agreement, it does not follow that because these allegations
were not
contradicted – the witness who could have disputed them had
died – they should be taken as proof of the facts
involved.
Wigmore on Evidence, 3
rd
ed., vol. VII, p.260, states that the mere assertion of any witness
does not of itself need to be believed, even though he is unimpeached
in any manner, because to require such belief would be to give a
quantative and impersonal measure to testimony. The learned author
in
this connection at p. 262 cites the following passage from a decision
quoted:
“
it is not
infrequently supposed that a sworn statement is necessary proof, and
that, if uncontradicted, it established the fact
involved. Such is by
no means the law. Testimony, regardless of the amount of it, which is
contrary to all reasonable probabilities
or conceded facts-testimony
which no sensible man can believe-goes for nothing; while the
evidence of a single witness to a fact,
there being nothing to throw
discredit, cannot be disregarded.”
Also in
Siffman v Kriel
,
1909 T.S. 538
, INNES, C.J.
,
at
p 543 says:
“
It does not
follow, because evidence is uncontradicted, that therefore it is true
… The story told by the person on whom
the onus rests may be
so improbable as not to discharge it.”
[21] I am satisfied
that the court a quo should have adopted this approach when
considering the first respondent’s defence
and version of what
happened at the meeting of 5 May 2008. If it had done so, it must
have concluded that no genuine factual dispute
existed and that the
version propounded by the respondents was fanciful and wholly
untenable. In the premises I find that no compromise
agreement had
been reached on 5 May 2008 as contended for by the respondents. The
appellant’s contention to the contrary
ought to have been
upheld by the court below. It should have come to the conclusion
that the standard trading terms and conditions
alluded to in the
preceding paragraphs had in fact remained extant.
[22] I am
constrained to disagree with the finding of the court a quo that the
quantification of the applicant’s claim could
not be
ascertained from its affidavits. An examination of the statements
and tax invoices shows clearly how the sum of R543 469.54
was arrived
at. They cover all debits and credits. As referred to earlier the
amount of R57 121.51 has been added to the claim
by reason of the
amendment.
The
first respondent is therefore entitled to judgment for R600 591.05.
[23] There was no dispute that if the
appellant was entitled to enforce its claim against the first
respondent at the time that
it purported to exercise its lien over
the three containers, it was also lawfully entitled to the security
which the lien provided.
It follows that the counter-application
should have been dismissed.
[24] In the result:
1. The appeal is upheld with costs.
2. The order of the court quo is set
aside and substituted with the following:
‘
1. The application is granted.
2. The lien enjoyed by the applicant
over the containers described in Annexure X to the Notice of Motion
as “File 805.JSG.3995,”
“File 805.JSG.4284,”
“File 804.JSG3865,” “File 804.JSG 3947”, “
File 804.JSI 4015”
is confirmed.
3. The first and second respondents
are ordered, jointly and severally, the one paying the other to be
absolved, to pay to the applicant,
the sum of R600 591. 05 together
with interest thereon at the rate of 15.5% per annum a tempore morae
from 31 May 2008 to date
of payment.
4. Failing such payment the applicant
is authorized to sell the goods referred to in paragraph 2 above to
the extent necessary to
cover any shortfall in the unpaid amount in
paragraph 3 above.
5. The first and second respondents
are ordered to pay the costs of the application.
6. The counter-application is
dismissed with costs.’
________________
J SHONGWE
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: M Nowitz
Instructed by:
Nowitz
Attorneys, Johannesburg
Honey
Attorneys, Bloemfontein
For
1
st
Respondent: D J Joubert
Instructed by:
Schickerling
Bowen & Hesselink Inc, Johannesburg
Matsepe
Inc, Bloemfontein