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[2010] ZASCA 93
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Combined Business Solutions CC v Courier & Freight Group (Pty) Ltd (325/09) [2010] ZASCA 93; [2011] 1 All SA 10 (SCA) (19 July 2010)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 325/09
No precedential value
COMBINED DISTRIBUTION SOLUTIONS
CC
...............................
Appellant
and
THE COURIER & FREIGHT GROUP
(PTY) LTD
t/a XPS
...............................................................................................
Respondent
Neutral citation:
Combined
Distribution Solutions v Courier & Freight Group (325/09)
[2010]
ZASCA 93
(19 July 2010)
Coram:
NUGENT, HEHER,
MLAMBO and MALAN JJA and MAJIEDT AJA
Heard:
12 MAY 2010
Delivered: 19 JULY
2010
Summary: Oral agreement –
whether established – whether damages sustained in consequence
of breach
ORDER
On appeal from: North Gauteng
High Court (Botha J sitting as court of first instance).
The appeal is dismissed with
costs.
JUDGMENT
NUGENT JA (HEHER, MLAMBO and
MALAN JJA and MAJIEDT AJA concurring).
[1] This is an appeal against an
order of the High Court at Pretoria (Botha J) dismissing a claim for
damages for breach of contract.
The appeal is before us with the
leave of that court.
[2] The appellant is a close
corporation of which Ms Oosthuizen is the sole member. It conducts
business as a broker in the courier
industry. In the ordinary course
the appellant will negotiate tariffs for the provision of courier
services by a service provider.
It will then contract with persons
who make use of those services. It will place its customer’s
business with the service
provider, making its profit from the
mark-up that it charges its customer. At the end of each month the
service provider will invoice
the appellant and provide it with a
detailed report for the services that it has provided.
[3] This case arises from an
attempt by the appellant to secure the business of a company referred
to in the evidence as Elster
Kent Metering. Elster Kent manufactured
water meters and used the services of a courier to deliver the meters
to its customers.
Such was the volume of its business that it needed
to have a person permanently on its premises to complete the relevant
documentation
and to arrange for its goods to be despatched daily.
[4] Ms Oosthuizen was introduced
to one of the directors of Elster Kent with a view to securing its
business. At that time Elster
Kent was being served by a company that
was referred to as RTT but Elster Kent was willing to allow the
appellant the opportunity
to take over its business. The respondent
was Ms Oosthuizen’s preferred service provider and was at that
time being used
by her to provide services to other customers. As
will appear later in this judgment the state of the appellant’s
account
with the respondent became an important element in the
dispute that arose between them.
[5] In view of the volume of the
business the appellant would need to install at the premises of
Elster Kent what was called an
‘in-house’ computer system
– also referred to at times as a ‘full-house’
system. This was a computer
system, linked to the system of the
respondent, which would record all parcels despatched, and would
enable their whereabouts to
be tracked. The components of the system
comprise a computer, a modem, a telephony line, appropriate software,
and a specialised
litho printer (also referred to as a Zebra
printer).
[6] It is not necessary to relate
all the negotiations that took place with a view to securing the
business of Elster Kent. It is
sufficient to say that at the outset
Ms Oosthuizen visited the premises of Elster Kent in the company of
the operations manager
of the respondent, Mr Permal, to enable him to
evaluate what would be involved in providing the service. Mr Permal
was impressed
with the volume of business that would be generated and
apparently reported back to the respondent that an ‘in-house’
system should be installed as soon as possible so that the business
could be secured. That is corroborated by a letter written
to Ms
Oosthuizen after that visit, by Ms Venter, a sales representative of
the respondent, in which she recorded the following:
‘
Desmond
[Permal] seems to think that we must get the in-house going as
quickly as possible, because we will pick up the business
once they
see we can handle the volumes … Let me have the client’s
details so that I can start organizing the software
with the
[information technology] department …’
[7] At that stage the appellant
was already providing Elster Kent with a service for its smaller
parcels. The idea was that it would
install the in-house system on
the premises and demonstrate to Elster Kent that it could deal with
the volume of its entire business.
If Elster Kent was satisfied that
the appellant could fulfil its requirements then it would terminate
the services of its existing
provider and appoint the appellant to
handle all its business.
[8] Meanwhile a meeting took
place on Wednesday 11 February 2004 between Ms Oosthuizen, Ms Venter,
and Mr Hendricks, the managing
director of the respondent, to discuss
the proposed business. At the meeting Ms Oosthuizen told Mr Hendricks
that Elster Kent required
an in-house system to be installed by 20
February 2004. Elster Kent had agreed that it would provide the
computer, the modem and
the telephony line. What the appellant
required from the respondent was that it should supply the necessary
software and the litho
printer. Ms Oosthuizen said that Mr Hendricks
agreed to do so.
[9]
Ms
Oosthuizen’s
account of what occurred at the meeting was
denied by Mr Hendricks and Ms Venter. According to their evidence the
respondent would
consider installing an in-house system only after
evaluating the volume of work that would be generated.
[10] There is some support for Ms
Oosthuizen’s version of events in the correspondence that
followed the meeting. On the evening
of 11 February 2004 Ms
Oosthuizen wrote to Ms Venter, with copies to Mr Permal and Mr
Hendricks, in which she asked Ms Venter to
‘please give me a
date and time for next week when the in-house will be implemented.’
In reply Ms Venter wrote on 13
February 2004 that ‘this will
take 7 days. They have to get the software set up for the in-house,
please give me the client’s
details, address, contact numbers,
contact person, what type of line they have for us to use’. On
the evening of Sunday 15
February 2004 Ms Oosthuizen wrote to Ms
Venter asking her ‘wanneer kan ek sê sal [die respondent]
by Elster opdaag
vir installasie?’ The following morning Ms
Venter replied to Ms Oosthuizen in the following terms: ‘You
and I must
get together as you must sign a form for the in-house
installation, then I have to give it to Kenny from [information
technology]
department who will then process the instruction.’
That afternoon they met and the relevant document was signed.
[11] But things took a different
turn on Wednesday 18 February 2004 when Ms Venter wrote to Ms
Oosthuizen as follows:
‘
I
do not have good news regarding Elster in-house. I have just spoken
to Victor [Hendricks], he says sorry, but we can not supply
a new
Zebra printer at the moment. If one becomes available soon from an
in-house closing, we will advise you and get the request
for an
in-house at Elster in motion.
A new printer is
going to cost us R20 000.00 and we can not be sure the client’s
spend at this moment in time will justify
us spending this amount of
money.’
[12] Meanwhile, another
difficulty had developed for the appellant. In order to conduct
business the appellant required credit to
be extended by the
respondent. By agreement between them credit had been granted to the
appellant up to a limit of R50 000.
The written agreement
between the parties regulating the terms on which they would do
business recorded that
‘
credit
facilities granted by [the respondent] … shall be in the sole
discretion of [the respondent] which may at any time
terminate or
vary such facilities’.
[13] On 9 February 2004 the
credit manager of the respondent, Mr Sotyato, wrote to the appellant
advising that the sum of R137 312
was outstanding on her
account, and that if the amount was not paid the appellant would have
‘no option but to suspend your
account’. Ms Oosthuizen
replied on 15 February 2004 advising that she had reviewed the
account and had come across numerous
discrepancies that needed to be
resolved. Again on 17 February 2004 she wrote a long letter to Mr
Sotyato raising numerous concerns
about the account. But Mr Sotyato
was unrelenting and he advised Ms Oosthuizen that payment of the full
amount claimed was required
by 20 February 2004, and that in the
absence of a response by 19 February 2004 the account would be ‘put
on hold’ until
payment had been made.
[14] There is no dispute that at
that time the appellant owed the respondent the sum of at least
R90 524. On 20 February the
appellant’s attorney wrote to
Mr Sotyato as follows:
‘
We
have been informed by our client that you have frozen her account
with [the respondent] and that she is currently in no position
to
conduct her day to day business.
We confirm that our
client has [on] numerous occasions requested you to provide her with
the correct statements of her account reflecting
the outstanding
amount due and owing to yourselves.
Furthermore we would
like to bring to your attention that our client indicated that she is
trying to reach an agreement with yourselves
today, the 20
th
February 2004, in order to try and resolve this matter.
Our client indicated that she is an amount of R90 524,22
indebted to
yourselves.
We confirm that our
client has paid this amount into our trust account with instructions
to pay this amount to yourselves as soon
as you give attention to her
requests …’
[15] By 23 February 2004 it seems
that the respondent was contending that the amount outstanding was
far more than the amount originally
claimed. On that day Mr Sotyato
wrote to Ms Oosthuizen, with reference to the letter from her
attorney, disputing that the relevant
statements had not been
provided, and saying the following:
‘
I
have lifted the suspension on your account and thereby request
compliance to the following conditions:
I will accept
payment of no less than R100 000 two days from receipt of this
faxed copy of this letter.
An additional
payment of R100 000 is expected in two weeks from receipt fax
copy of this letter
The account will
then have to be paid in 30 days and you will also be required to
comply with the approved credit limits.
Full compliance with
our terms and conditions of trade should be maintained from today
onwards.
Failure to comply
with any of the above conditions will result in the immediate
suspension of the account.’
[16] It is common cause that no
moneys were paid to the respondent. The account was duly suspended
and no further business was capable
of being done by the appellant
with the respondent.
[17] Relying upon the alleged
oral agreement by the respondent to provide a printer for the
in-house system that was to be installed
at the premises of Elster
Kent, and its failure to do so, the appellant sued the respondent.
The appellant alleged that had the
respondent not breached the
agreement the appellant would have secured the business of Elster
Kent, which would have earned it
a profit of R696 428 during the
period March 2004 to October 2005, and damages were claimed in that
amount. Apart from denying
the claim the respondent counterclaimed
for payment of the sum of R281 466,11 that was alleged to be
owing by the appellant
for services that had been provided.
[18] By agreement between the
parties the court below ordered that the respondent’s
‘liability’ for the claim
would be determined initially,
and that the ‘quantum’ of the claim, and the
counterclaim, would stand over for later
determination. Once again,
as is so often the case when issues are separated, counsel for the
respective parties differed on the
meaning of that order.
[19] Counsel for the appellant
submitted that the effect of the order was that the court was called
upon to decide only whether
there was an oral agreement and whether
it was breached. Counsel for the respondent, on the other hand,
submitted that, in addition,
the court was called upon to decide
whether the appellant had sustained damages in consequence of the
alleged breach.
[20] In its ordinary meaning the
‘quantum’ of a claim refers to the monetary amount of a
claim. That being the only
issue that was left over for later
determination I think the court below must be taken to have meant by
its order that the enquiry
would extend to the question whether the
appellant sustained damages in consequence of the alleged breach.
Indeed, I think it is
apparent from the findings that were made by
the court below that that is what it intended its order to mean. I
might add that
the facts in that regard were fully canvassed in the
evidence.
[21] The court below found that
the parties indeed concluded the oral agreement alleged by the
appellant and that the respondent
breached the agreement by failing
to supply the printer but it dismissed the claim on other grounds.
The respondent has purported
to conditionally ‘cross appeal’
against that finding but I think that that was misconceived. It is
trite that an appeal
lies against the order that is made by a court
rather than against the reasons for the order. The order in this case
was made in
favour of the respondent and it was open to the
respondent to support that order on whatever grounds were appropriate
without noting
a ‘cross appeal’.
[22] In view of the conclusion to
which I have come it is not necessary to consider whether the finding
of the court below that
I have referred to was correct. I will assume
for present purposes that an oral agreement was indeed concluded, and
breached, as
alleged by the appellant. I will also assume –
though in my view it is by no means clear – that had the
agreement been
fulfilled the appellant would have secured the
business of Elster Kent.
[23] The court below went on to
find that it had not been established that the appellant would have
earned the moneys that it claimed
to have lost. On the contrary, it
found that had the business of Elster Kent been secured, the
appellant would not have been able
to execute the work, because the
respondent had suspended its account and would thus not have provided
the necessary services.
[24] Whether loss has been
sustained in consequence of a breach of contract is a factual
enquiry. The proper enquiry in such a case
is what would have
occurred had the contract been fulfilled. I think it is abundantly
clear that if the in-house system had been
installed the appellant
would not have been capable of executing any resultant contract with
Elster King because the respondent
had refused to provide further
services until the appellant paid the moneys that were claimed to be
owing. Counsel for the appellant
submitted that although the account
was at first suspended the suspension was lifted on 23 February 2004.
While that is indeed
so, the suspension was lifted only
conditionally. It is common cause that the conditions were not met
and that the suspension took
effect once more on 25 February 2004.
[25] In heads of argument that
were submitted on behalf of the appellant after the hearing of the
appeal it was submitted that the
appellant was entitled at least to
damages for loss sustained over a period of four working days from
the time the agreement was
allegedly repudiated on 18 February 2004
until the account was finally suspended on 25 February 2004. (Of
course the respondent’s
obligation was to install the printer
by no later than 20 February 2004 – leaving only two working
days before the account
was finally suspended.) I do not think the
submission can be sustained. This claim was not about the recovery of
loss sustained
over two (or four) days. Indeed, the claim in the
pleadings was for loss alleged to have been sustained only from 1
March 2004
and it is not open to the appellant to claim damages for
an earlier period. But that apart, the evidence does not establish
that
if the printer had been installed the appellant would
immediately have commenced to do business and there is no reason
simply to
assume that that would have occurred.
[26] It was also submitted on
behalf of the appellant that the respondent had not established that
money was indeed owing by the
appellant and that it was entitled to
impose the suspension. I referred earlier to the written agreement
between the parties, which
entitled the respondent to terminate the
appellant’s credit at any time. Whether or not money was owing
by the appellant
seems to me in the circumstances to be immaterial.
But that notwithstanding, it is common cause that at least R90 524
was
owing by the appellant. It is true, as pointed out by the
appellant’s counsel, that the appellant paid that sum into her
attorney's trust account, to be paid to the respondent if certain
conditions were met. It is trite that that did not constitute
payment
of what was owing, nor even a tender of payment. On any basis, then,
the respondent was entitled to suspend the account,
as it did, and
the appellant would not have been capable of doing business. In those
circumstances the finding of the court below
cannot be faulted and
the appeal ought to be dismissed. While the respondent might have
been justified in employing two counsel
I do not think that the
appeal was such that the cost thereof should be borne by the
appellant.
[27] The appeal is dismissed with
costs.
___________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES:
For
appellant: F W Botes
Instructed
by:
Couzyn,
Hertzog & Horak Inc, Pretoria
Schoeman
Maree Inc, Bloemfontein
For
respondent: J Both SC
P
G Seleka
Instructed
by:
Madhlopa
Inc, Pretoria
McIntyre
& Van der Post, Bloemfontein