REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE NO: 20232/2020
In the matter between:
RAM TRANSPORT (SOUTH AFRICA) PROPRIETARY
LIMITED t/a RAM HAND-TO-HAND COURIERS Applicant
and
DHL SUPPLY CHAIN (SOUTH AFRICA)
PROPRIETARY LIMITED Respondent
LEAVE TO APPEAL - JUDGMENT
MANOIM J:
[1] This is an application for leave to appeal. The applicant is the plaintiff in this
matter. It seeks leave to appeal my decision to dismiss its matter. The matter
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: YES
……… ........... …17/04/2024…
SIGNATURE DATE
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concerns a breach of contract and a claim for damages consequent on the
alleged breach.
[2] I had separated the issue of damages from the merits. The appeal concerns my
finding on the merits. There is no dispute that some form of contract existed
between the plaintiff and the defendant (“the respondent in the application for
leave to appeal”). To succeed with a claim for damages the plaintiff had to prove
that the terms of the contract it contended for , contained the following three
terms:
a. The contract’s duration was for a minimum of two years ( “the contract
period”);
b. The contract was exclusive; and
c. That the contract was only terminable for cause during the contract
period.
[3] The plaintiff alleged that the contract w as to endure for a minimum period of
two years. It is common cause that the parties had implemented some form of
contract for a period of six months , before the defendant terminated it on one
month’s notice. As a finding of fact, I did not find that it was terminated for cause.
[4] The defendant denies that the contract had a two-year duration but was an ad
hoc contract which could be cancelled in the manner that it did without cause.
(An alternative plea that it had been terminated for cause was not persisted
with.)
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[5] The basis for the plaintiff’s claim of a two-year contract was a letter of intent
(“LOI”) that the defendant wrote to it on 30 November 2017 . In that letter the
defendant stated its intention to enter into a contract with the plaintiff . It
mentions that this would be for an “… initial period of 24 months...”. This
sentence is what the plaintiff relies on to prove the alleged duration. (The two
other provisions, exclusivity and cancellation for cause are pleaded as tacit
terms.)
[6] But the LOI also stated in a concluding sentence that:
“The final award will be subject to the successful conclusion of the contract
accordingly.”
[7] The case largely turns on what that sentence meant. It is common cause that
no further contract was entered into. That might suggest that this was a
condition that had to be fulfilled prior to the contract being entered into. But the
parties, notwithstanding this, proceeded to take a number of steps which the
plaintiff alleges meant that the contract had been entered into . Inter alia, the
plaintiff relied on the fact that the defendant had taken steps to terminate its
existing service provider, verified that the plaintiff was compliant with its service
standards, and advised its clients (amongst whom was major hospital group)
that the plaintiff was now its service provider.
[8] It is also common cause that the plaintiff commenced providing the services
contemplated in the contract on an exclusive basis from 26 March 2018 to 30
September 2018. The duration of the service provision was six months.
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[9] What then does the plaintiff make of the condition? The plaintiff suggests
various possibilities. The first was that the condition contemplated no more than
a nuts-and-bolts agreement that detailed the minutiae but had no effect on the
major terms in cluding price and duration which the LOI had regulated. In the
alternative this condition was waived or by virtue of quasi mutual assent the
clause was no longer operative.
[10] The plaintiff, I found, had difficulties getting around the plain language of the
agreement. But the plaintiff sought to rely on context to establish its primary
argument that the condition was of the nuts-and-bolts variety.
What the plaintiff was seeking to rely on as a matter of law was a decision by
Corbett JA in Alsthom1 where he held that the existence of outstanding matters
may not deprive an agreement of contractual force. The matter concerned like
this one with a n acceptance of a contract, but which was subject to further
negotiations which were never completed.
[11] Corbett JA held that t he parties might well have agreed expressly or by
implication, to have left the outstanding matters to later negotiation. Where
these outstanding matters do not get resolved then the original contract might
nevertheless still stand. When might this apply? Corbett JA held that this would
depend on “…their conduct, the terms of the agreement, and the surrounding
circumstances.”2 On the facts of the case Corbett JA held that there had been
a binding contract.
1 Cgee Alsthom Equipments et Enterprises Electriques, South African Division v GKN Sankey (Pty) Ltd
1987 (1) SA 81 (A).
2 Supra, 92 E-F.
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[12] But at the other end of the spectrum was the case also from the SCA which the
defendant relied on , Command Protection Services .3 That case like this one
dealt with a tender that had been awarded subject to a condition. In that case
as well the contract had been implemented before the defendant had
terminated it. Command Protection Services was decided after Alsthom and the
court refers to it. Brand JA explains that disputes of this kind are not novel. He
goes on to say that the case law recognises two possibilities. The first is that
the parties lacked animus contrahendi because there was no consensus on the
outstanding issue. In that case there is no contract to be recognised. The
second is that of the Alsthom situation. Even if they fail to agree on the
outstanding issues the original contact prevails.4
[13] Both parties regard these two cases as authoritative. The issue was whether
on the spectrum of possibilities b etween them, the case more closely
resembled the one, not the other. The plaintiff in its leave to appeal has devoted
an entire table to setting out the differences in fact between the facts in the
present case and that in Command Services. I make no comment on whether
all the differences are as significant as the plaintiff suggests.
[14] The problem faced both parties, in a case where the conduct of the parties was
a central issue, was the number of dramatis personae who had been players in
the dispute. Each placed more reliance on the testimony or absence thereof of
the other side’s witnesses.
3 Command Services (Gauteng) v SA Post Office Ltd 2013(2) SA 133.
4 Supra, at paragraph 12.
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[15] The plaintiff seeks to rely on the fact that the defendant had failed to call two
available witnesses. One was Margareutte Van Der Merwe, who at the relevant
time was the general manager of DHL Supply Chain in South Africa. She was
the author of the LOI and the person who had authorised the termination of the
other service provider and gave an instruction that the change in service
provider be communicated to the hospital group client. A lesser player who was
also not called although available was Lindi Smith . She was the client liais on
person who had authored the email to the hospital group on the instruction of
Van der Merwe.
[16] The plaintiff urged me to draw an adverse inference from the failure to call these
witnesses when they were known to be available to testify. Although I did so in
my decision, it would appear that the plaintiff considers that this inference
should have gone further. In the view of plaintiff’s counsel during argument “…
had they been called they would have sunk the defendant’s case”.
[17] I noted in my decision that up until this point in the narration the context
favoured the plaintiff’s version. What changed was when during the
implementation stage, the plaintiff’s in-house legal counsel, Alan Da Costa, who
was also one of its directors , sought to taken up the pen and draft a contract
between the parties. He is the plaintiff’s witness whose conduct the defendant
seeks to rely on to make its case.
[18] Da Costa’s attempt to conclude a contract went through several iterations but
ultimately was never finalised. During the drafting process Da Costa had not
confined himself to ‘nuts and bolts’ but had dealt with the three key issues the
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plaintiff now seeks to rely on: duration, exclusivity, and termination for cause.
What was perplexing was that in various drafts he never sought to rely on the
LOI, but even proposed terms at variance with it. Also, during this period , a
collateral dispute over insurance of goods in transit had led the plaintiff’s
managing director to assert that until this was resolved the plaintiff would
operate in terms of is standard terms and con ditions. This did not include any
of the terms that the plaintiff now relies on.
[19] It was based on Da Costa’s conduct that I considered that the context had
changed and that it now favoured the version of the defendant. While I agreed
at least with the plaintiff , that the defendant had not succeeded in proving its
version of an alternative contract , I nevertheless agreed with defendant’s
counsel’s proposition, that it was not for the defendant to prove its candidate for
the contract. It only had to establish that the plaintiff had not established its
candidate.
[20] What the plaintiff seeks to argue in the leave to appeal turns on two aspects
that another court might consider differently. First , is the adverse inference to
be drawn from the failure to testify being more consequential than I had
regarded it. The second is that the evidence of Da Costa should have not been
considered in the treatment of subsequent context. The argument here was that
he was not involved in the initial contract negotiations leading to the LOI and
had arrived late when the contract implementation had already taken place. The
plaintiff argues that his views of the contract were subjective not objective, and
I erred in having regard to them. Whilst I do not agree with this view , I accept
that these two issues are of sufficient probative value, that another court might
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consider the issues differently. Thus, if another court made more of the adverse
inference in respect of the defendant’s witnesses who did not testify, and made
nothing of the conduct of Da Costa, because it would be considered no more
than manifestations of his subjective intent, the outcome of the case would have
been different, and the plaintiff would have prevailed.
[21] I therefore consider the pla intiff should be give n leave to appeal. I do not
consider the case should be appealed to the Supreme Court of Appeal as the
plaintiff sought in its notice of appeal. There is , as I earlier noted, no legal
dispute on the principles to be applied. Rather what the case turns on is the ir
application. For this reason , an appeal to a full bench of this division would
suffice.
[22] The plaintiff sought to rely on several other issues for the appeal. I did not , it
argued, consider its alternatives, namely waiver and quasi mutual assent. It is
correct that I did not. But as the factual underpinning for these cases is the
same as the plaintiff’s principal argument based on Alsthom, I did not consider
they took the case any further. I do not consider they had any merit and I have
therefore not needed to consider them given my conclusion on the two main
issues.
ORDER:-
[23] In the result the following order is made:
1. Leave to appeal to a full bench of this division is granted.
2. Costs to be costs in the appeal.
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_ ___________
N. MANOIM
JUDGE OF THE HIGH COURT
GAUTENG DIVISION
JOHNANNESBURG
Date of hearing: 08 March 2024
Date of Judgment: 17 April 2024
Appearances:
Counsel for the Applicant: Adv MM Antonie SC
Adv AB Berkowitz
Instructed by. Werksman Attorneys
Counsel for the Respondent: Adv JPV Mc Nally SC
Adv JM Heher
Instructed by: Eversheds Sutherland