About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2011
>>
[2011] ZASCA 22
|
|
Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd (2011 (4) SA 276 (SCA); [2011] 3 All SA 362 (SCA)) [2011] ZASCA 22; 20/10 (17 March 2011)
Links to summary
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 20/10
FREDDY
HIRSCH GROUP (PTY) LTD
..................................................
Appellant
and
CHICKENLAND
(PTY) LTD
...............................................................
Respondent
____________________________________________________________
Neutral citation:
Freddy Hirsch Group (Pty) Ltd v Chickenland
(Pty) Ltd
(20/10)
[2011] ZASCA 22
(17 March 2011)
BENCH: HARMS DP, PONNAN, MAYA, SHONGWE and TSHIQI JJA
HEARD: 14 FEBRUARY 2011
DELIVERED: 17 MARCH 2011
SUMMARY:
Purchase and sale – delivery of prohibited foodstuff –
claim
ex contractu
–
whether loss too
remote – claim
ex delicto
–
pure
economic loss – wrongfulness – policy considerations
determining liability considered.
______________________________________________________________________
ORDER
______________________________________________________________________
On
appeal from
:
South Gauteng High Court
(Johannesburg) (Blieden J sitting as court of first instance).
The appeal is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
PONNAN JA (HARMS DP, MAYA, SHONGWE and TSHIQI JJA concurring):
Introduction
[1] Messrs Robert Brozin and Fernando Duarte entertained the vision
of establishing a chain of fast food chicken outlets. In time
they
were joined by Mr Eric Parker, who had expertise in marketing and
brand development and the three of them launched Nando’s,
a
branded fast food franchise chain specialising in grilled Portuguese
chicken. From those relatively humble beginnings in 1991,
the Nando’s
brand rapidly expanded within South Africa, into neighbouring
countries and some 30 countries internationally.
The respondent,
Chickenland (Pty) Ltd (Chickenland), a wholly owned subsidiary of
Nando’s Group Holdings Limited, is the
primary operating entity
within the Nando’s Group.
[2] The business model chosen by Chickenland for the franchise
business is what may loosely be termed a joint venture partnership.
Each new franchise store became a subsidiary of Chickenland.
Typically Chickenland owned 51 percent of that subsidiary and its
joint venture partner, who was the actual operator of the store,
owned 49 percent.
[3] Whilst still in its infancy, Chickenland prepared the chicken in
a central kitchen and delivered them in refrigerated trucks
to the
restaurants of its joint venture partners, where they were sold to
customers. But, as the Nando’s brand expanded it
proved more
convenient for Chickenland to supply its joint venture partners with
marinades, sauces and dressings that were prepared
to its
specifications. In time, it also began to market bottled sauces
initially through its restaurants and thereafter through
leading
supermarket chains, both locally and internationally.
[4] Spices and condiments were important ingredients of Nando’s
sauces and marinades. When Chickenland experienced problems
with its
then supplier of spices, it turned to the appellant, the Freddy
Hirsch Group (Pty) Ltd (Hirsch), whose primary business
was the
manufacture of spices. On 29 August 1994, Chickenland applied in
writing to Hirsch on the latter’s standard credit
application
form for a line of credit. Hirsch approved the application and took
to supplying the latter with spice packs consisting
of a blend of
different spices prepared in accordance with the latter’s
specifications.
[5] The reverse of the Hirsch credit application form that had been
completed by Miss Lesley Smith, who was duly authorised to
do so on
behalf of Chickenland, contained what were termed Standard Conditions
of Sale and Credit. Those included, inter alia,
provisions relating
to payment (which had to be effected with 30 days), interest,
reservation of ownership and delivery. Most importantly
it provided:
‘
4. LIMITED LIABILITY
4.1 The Company shall not be liable for any defect in
the goods by reason of faulty production, workmanship, quality of raw
materials
or otherwise unless:
4.1.1 it is established that the goods were correctly
installed and properly cared for and used, and
4.1.2 the Customer notifies it in writing of the defect
within 7 (SEVEN) days of the delivery of the goods.
4.2 The Company’s liability shall be limited, as
its option, to:
4.2.1 repairing such goods free of charge: or
4.2.2 supplying the Customer with similar replacement
goods free of charge or
4.2.3 passing a credit for the purchase price of the
goods.
provided that the Company shall under no circumstances
whatsoever be responsible for any consequential or other damages
whatsoever.
4.3 Notwithstanding anything to the contrary contained
or implied in these conditions the liability of the Company arising
out of
any defect in the goods shall not exceed the purchase price of
the goods concerned.
4.4 Save as set out herein all conditions, terms,
warranties or representations (express or implied statutory or common
law) as
to quality fitness, performance or otherwise in relation to
the goods are excluded.
4.5 When the Customer purchases the goods for re-sale,
the Customer shall ensure that the purchases of the goods is
appraised of
these conditions so as to ensure that the purchaser’s
claims (if any) against the Company are limited to the extent stated
herein.
4.6 The Customer indemnifies and holds the Company
harmless against all claims, loss, damage, expense or proceedings of
whatsoever
nature against or on the part of the Company arising out
of the sale or distribution of the goods whether defective or not for
any reason whatsoever.’
[6] In signing the application on behalf of Chickenland, Ms Smith
inscribed the words ‘standard conditions not checked’
immediately above her signature and below the following warranty:
‘
I/we warrant and certify that
the above information is true and correct and that I am/we are duly
authorised to sign this application
for credit facilities and I/we
have read the conditions of credit set out on the reverse hereof and
agree to be bound thereby’.
[7] During January 2004 Geoff Bloch, the group technical compliance
officer, who was responsible for all facets of food safety
within the
Nando’s group both locally and globally, was visiting the
United Kingdom when he was informed that the UK health
authority in
Manchester had tested Nando’s extra hot peri-peri sauce and
found it to be positive for Sudan 1 dye. Sudan 1
is a red dye that is
used in colouring solvents, oils, waxes and shoe and floor polishes.
It is considered to be a genotoxic carcinogen
rendering it unfit for
human consumption. It has been banned by the World Health
Organisation and its presence is not permitted
in foodstuff for any
purpose in this country and most others internationally.
[8] Chickenland was obliged by the Food Standards Agency of the UK to
cause newspaper advertisements to be placed in newspapers
in the UK
informing consumers of the Agency’s finding and given 48 hours
to withdraw any contaminated products from all supermarket
shelves in
the UK. Subsequent investigations identified cayenne pepper that had
been sourced in India by Hirsch and supplied to
Chickenland in
certain of the spice packs as the contaminant. A worldwide recall of
Chickenland’s peri-peri sauces followed.
[9] The directors of Chickenland then met on several occasions with
Freddy Hirsch, the chairman and founder of the Hirsch Group
and his
sons, all directors of Hirsch in the hope that they could persuade
Hirsch to compensate them for their losses, which at
that stage was
assessed to be in the region of R12m. Aside from an undertaking by
Hirsch to extend the credit period first from
30 to 60 days and
thereafter to 90 days, no further agreement could be reached. Hirsch
having referred the claim to its insurers
eventually refused to
engage in any further discussions with representatives of
Chickenland, on the basis, so it was asserted by
them, that
continuing to negotiate had the potential to jeopardise their
insurance claim.
[10] In the meanwhile the extended period of 90 days for repayment
having been exceeded by Chickenland, Hirsch began to agitate
for
payment of the outstanding moneys due to it. Chickenland refused to
pay. Impasse having been reached, Hirsch relying on the
standard
terms and conditions to be found on the reverse of Chickenland’s
credit application, caused summons to be issued
against Chickenland
for payment of the sum of R1 368 861.69 in respect of goods sold and
delivered by it for the period November
2002 to April 2004. That
claim was admitted by Chickenland. But, Chickenland asked that
judgment on Hirsch’s claim be stayed
pending adjudication on
its counterclaims.
[11] Chickenland alleged that the material, express and/or implied
and/or tacit terms of the agreement were that:
(a) each of the spice packs would be fit for human consumption;
(b) each of the spice packs would be subjected to a stringent process
of quality control and testing which would include the detection
and
removal of any foreign matter or substance not fit for human
consumption;
(c) the ingredients in the spice packs would be subjected to
acceptable selection processes to comply with the requirements of
the
Food Standards Agency in the UK and the applicable South African
legislation including the Foodstuffs, Cosmetics and Disinfectants
Act
54 of 1972 and the regulations promulgated thereunder and with the
applicable law in foreign jurisdictions where the spices
were to be
supplied;
(d) the spice packs would be free of any banned substance.
Asserting that those terms had been breached inasmuch as the spice
packs contained Sudan 1, which at all material times was banned
for
use in food products thus rendering them unfit for human consumption,
Chickenland’s counterclaim for damages for breach
of contract
and delict alleged, inter alia, that:
'12 In breach of the terms and warranties applicable to
such transactions however:
12.1 each of the spice packs listed . . . contained a
substance known as Sudan 1 which is and was at all material times:
12.1.1 banned for use in food products in terms of
GNR1008/1996 promulgated under the Foodstuffs, Cosmetics and
Disinfectants Act
54 of 1972 (the Act) . . . ;
12.1.2 a substance which rendered the spice packs unfit
for human consumption and which contaminated the spice packs;
12.1.3 a substance considered by the Food Standard
Agency in the United Kingdom and relevant South African Statutory
Authorities
as being a banned substance in foodstuffs and/or harmful
or potentially harmful to human beings;
12.1.4 an added colourant.
12.2 the spice packs were unfit for human consumption or
for use in products prepared for human consumption;
12.3 the spice packs had not been subjected to a
stringent process of quality control and testing or to a process for
the detection
of and removal of foreign matter;
12.4 the ingredients in the spice packs had not been
subjected to acceptable selection and blending processes;
12.5 the ingredients in the spice packs were not of
German origin and source;
12.6 the plaintiff had not performed such test/s as was
required to detect the presence of an added colourant in the spice
packs
which the plaintiff could have done cost effectively and
without difficulty.
13 In the
bona
fide
and reasonable
but mistaken belief that the spice packs complied with the terms of
the agreements:
13.1 the defendant made payment to the plaintiff of the
total sum of R1 209 632,83 made up as . . . ;
13.2 the defendant utilised such spice packs in the
manufacture and production of various sauces, marinades and bastings
(the defendant’s
sauces);
13.3 the defendant sold and supplied the defendant’s
sauces to Brotrade (Pty) Limited (“Brotrade”):
13.4. Brotrade in turn sold and supplied the defendant’s
sauces to:
13.4.1 the following country-based distributors
(“country-based distributors”):
13.4.1.1 Nando’s Chickenland Inc. (USA);
13.4.1.2 Nando’s Chickenland (Canada) Inc.
(Canada);
13.4.1.3 The Grocery Company Limited (United Kingdom);
13.4.1.4 Nando’s Grocery Australia Pty Limited
(Australia);
13.4.1.5 Patleys (Pty) Limited (South Africa); and
13.4.1.6 Lufil Packaging (Pty) Limited (South Africa);
13.4.2 Nando’s Chickenland Ltd (United Kingdom)
(“Nando’s UK”) a restaurant operation;
13.5 The country-based distributors, in turn, sold and
supplied the defendant’s sauces to retail outlets in the
countries
in which they conduct business.
14 In consequence of the breaches referred to . . .
above;
14.1 the defendant’s sauces were subject to recall
and were recalled from wherever they had been supplied and were
subjected
ultimately to destruction;
14.2 the defendant was obliged to and did replace the
defendant’s sauces that had been supplied to each of Brotrade,
the country-based
distributors and Nando’s UK;
. . .
14.4 the defendant incurred the . . .
wasted expenditure
1
thereby suffering damages in such
amount.’
[12] Save for admitting that it was:
(a) an implied term of the agreement that the spice packs would not
contain any banned substance; and
(b) a tacit term that the spice packs would be fit for human
consumption,
the remainder of Chickenland’s counterclaim was denied by
Hirsch. Hirsch, moreover, relying on the standard conditions, alleged
that:
‘
The plaintiff in any event
pleads that if it is liable for any defect in the spice packs
supplied (which liability is denied), then
in terms of clause 4.2 of
the standard conditions of sale the plaintiff’s liability is
limited at its option to repairing
such goods free of charge,
supplying the defendant with similar replacement goods free of charge
or passing a credit for the purchase
price of the goods. In the event
of any liability on the part of the plaintiff, the plaintiff elects
to supply the defendant with
similar spice packs free of charge.’
Hirsch furthermore sought in terms of clause 4.6 of the Standard
Conditions of Sale an indemnity from Chickenland ‘in respect
of
any claim or proceedings against [it] for, inter alia, damages, such
claims including the claims of the country based distributors,
Nando’s UK and Brotrade which [Chickenland] has acquired by
cession’. It thus joined Chickenland as a third party to
those
proceedings. In response Chickenland filed a replication. To
paraphrase from the replication, Chickenland alleged that:
(a) it had not assented to the standard terms and conditions;
(b) it had made a counter offer to trade with Hirsch on the basis
that the latter’s standard conditions did not apply;
(c) the standard conditions do not bind third parties;
(d) upon a proper construction of the standard terms and conditions
they do not apply to claims of the nature forming the subject
matter
of the counterclaims; and
(e) the provisions of clause 4 are unconscionable and
contra bonos
mores
and accordingly unenforceable.
[13] The issues of the merits and quantum having been separated the
matter proceeded to trial before Blieden J in South Gauteng
High
Court solely in respect of the former. The judgment of Blieden J is
reported sub nom
Freddy Hirsch Group (Pty) Ltd v Chickenland (Pty)
Ltd
2010 (1) SA 8
(GSJ). Blieden J held in favour of Chickenland.
The learned judge concluded (para 63) that it is entitled to rely on
all four of
its counterclaims and that Hirsch’s claim falls to
be set off against the amounts which are found to be due to
Chickenland
in terms of such counterclaims. The learned judge
accordingly postponed the trial
sine
die
in order for
the issue of the quantum of Chickenland’s counterclaims to be
determined. Hirsch appeals against the whole of
the judgment and
orders of Blieden J with his leave.
[14] In heads of argument filed with this court, Hirsch states that
it does not challenge the finding of the court below that it
was
negligent and that contributory negligence on the part of Chickenland
had not been proved. It is thus contended that only two
issues arise
for determination in this appeal: First, did the respondent discharge
the onus of proving that the terms relied on
by the appellant were
not part of the agreement between the parties? And, second, in the
light of the facts, including the fact
that the delictual claims were
claims for pure economic loss, was Hirsch’s negligent conduct
wrongful vis-a-vis (i) Chickenland,
and (ii) the country-based
distributors?
The Standard Conditions
[15] The first issue for consideration is thus
whether the standard conditions of sale and credit on the reverse of
the credit application
form, formed part of the agreement. It will be
recalled that in signing the application on behalf of Chickenland, Ms
Smith inscribed
the words ‘standard conditions not checked’
immediately above her signature and below the relevant warranty.
According
to Greenberg JA in
Worman v
Hughes & others
2
‘
It must be borne in mind that
in an action on a contract, the rule of interpretation is to
ascertain, not what the parties’
intention was, but what the
language used in the contract means, i.e what their intention was as
expressed in the contract. As
was said by Solomon J in
van
Pletsen v Henning
(1913,
A.D., p 82 at p. 89): “The intention of the parties must be
gathered from their language, not from what either of them
may have
had in mind.”. . . ’
[16] It follows that much of the evidence adduced by the parties on
this aspect of the case was plainly inadmissible. What Ms Smith
subjectively intended to convey when she inscribed those words in
manuscript on the credit application form was irrelevant. The
same
holds true for the evidence of the various Hirsch employees who dealt
with the credit application – what they subjectively
understood
Ms Smith to have conveyed was likewise irrelevant.
[17] Blieden J concluded (para 30) that the warranty was not given.
The warranty contains three distinct components: that the information
furnished is true and correct; that the signatory is authorised; and,
that the conditions on the reverse have been read and are
binding. Ms
Smith merely recorded that she had not checked the standard
conditions. That was a simple statement of fact. It does
not amount
to an intimation from her that she did not agree to be bound by those
standard conditions. In my view it hardly seems
likely that a line of
credit would have been approved absent any agreement at all. It must
therefore be accepted, it seems to me,
despite counsel’s
submission to the contrary, that the application for credit that one
encounters here had to be subject
to conditions of some kind - at the
very least conditions as to payment and delivery. Thus whilst I
incline to a different view
to that of Blieden J, it is unnecessary
that any firm conclusion be reached on this aspect of the case. I
shall accordingly assume
in favour of Hirsch, without deciding, that
Chickenland are bound by the conditions of credit set forth on the
reverse of the credit
application.
[18] I now turn to consider the proper
construction to be placed on the non-liability clause. The approach
to the interpretation
of exemption clauses is well known. See also
Lewis AJA. In
Durban's Water Wonderland
(Pty) Ltd v Botha & another
3
Scott JA, stated:
'Against this background it is
convenient to consider first the proper construction to be placed on
the disclaimer. The correct
approach is well established. If the
language of a disclaimer or exemption clause is such that it exempts
the
proferens
from
liability in express and unambiguous terms, effect must be given to
that meaning. If there is ambiguity, the language must
be construed
against the
proferens.
(See
Government
of the Republic of South Africa v Fibre Spinners & Weavers (Pty)
Ltd
1978
(2) SA 794 (A)
at
804C.) But the alternative meaning upon which reliance is placed to
demonstrate the ambiguity must be one to which the language
is fairly
susceptible; it must not be ''fanciful'' or ''remote” (cf
Canada Steamship
Lines Ltd v Regem
[1952]
1 All ER 305
(PC) at 310C - D).’
[19] According to Freddy Hirsch, when he started the Hirsch group
some 53 years ago, it sold equipment and machinery in addition
to
blended and milled spices. Clause 4.1 obviously dates back to the
days when Hirsch sold machinery and equipment. Clause 4.1.1
thus
refers to installation, proper care and use of those goods, whilst
clause 4.2 limits Hirsch’s liability to repairing
such goods or
supplying replacement goods free of charge. It is thus plainly
inapplicable to the sale and supply of spices.
[20] Moreover clause 4.1 excludes liability by
reason of any defect in the goods. But here one is not dealing with
defect in the
res vendita
.
Rather one is dealing with the delivery to a purchaser of a
res
different to that which had been bargained for.
Chickenland were entitled to delivery of spices free of Sudan 1, that
being what
they had bargained for. Failure by Hirsch to deliver
spices free of that banned contaminant was in effect a failure to
perform
in terms of the contract because what was delivered was
different in substance to that purchased.
4
[21] In
Marais v
Commercial General Agency Limited
5
a seed merchant inadvertently supplied a farmer
with seeds of a character different to that purchased. Mason J said:
‘
Now it seems to me somewhat a
mis-use of terms to say that to supply one article in lieu of another
article which was ordered can
be brought under the term of “latent
defect”
─
that
because a mistake had been made in a matter in which admittedly
mistakes may easily be made, particularly if there is any
carelessness, such a mistake can be called a latent defect. As I
understand the term "latent defect", it means a latent
defect in the thing actually sold and intended to be sold. It seems
to me, therefore, that
Erasmus's
case would not protect the
defendant. If a man undertakes to deliver a particular article then
surely he is bound by his undertaking,
even if it is a matter in
which a mistake may easily be made. If it is such a matter he ought
to protect himself by a special contract
or take very special care
that no such mistake is made.'
[22] It follows in my view that as one is here
dealing with non-performance as opposed to defective performance,
Clause 4.1 does
not avail Hirsch. It was conceded by counsel for
Hirsch that if Clause 4.1 did not find application then Clauses 4.2
to 4.6, which
are linked to and dependent upon Clause 4.1, likewise
could not avail Hirsch. That notwithstanding, it nonetheless remains
to say
something about clauses 4.4 and 4.6. In matters of contract
the parties are taken to have intended their legal rights and
obligations
to be governed by the common law unless they have plainly
and unambiguously indicated the contrary.
6
Here clause 4.4 purports to go further - the
assemblage of words includes statutory law. But such an exclusion if
it is enforced
would necessarily result in a contravention or tend to
induce a contravention of statutory law. The following postulation
illustrates
the point: The relevant statute here not only prohibits
the delivery of foodstuff that contains a prohibited substance, but
also
makes it an offence for one to do so. That notwithstanding, can
Hirsch nonetheless adopt the stance that it can because the contract
permits it do so? The answer has to be ‘surely not’.
[23] In
Johannesburg
Country Club v Stott & another
7
Harms JA observed:
‘
The conduct sought to be
exempted from liability may involve criminal liability, however, and
the question is whether a contractual
regime that permits such
exemption is compatible with constitutional values, and whether
growth of the common law consistently
with the spirit, purport and
objects of the Bill of Rights requires its adaptation.’
but thought it unnecessary, in the light of the proper reading of the
contractual exclusion encountered there, to determine it.
Of clause 4.6, Blieden J said:
8
‘
this is not a limitation of
liability clause, it is an indemnity by the “Customer”
for any claims by third parties which
may be lodged against the
“Company” for losses suffered because of the company’s
fault or ‘for any reason
whatsoever”. Counsel for the
defendant referred to this clause as “Draconian”. I would
say this is an understatement.’
In my view the provision is so gratuitously harsh
and oppressive that public policy could not tolerate it.
9
Or, in the language of the majority judgment in
Sasfin v Beukes
,
10
it is '... clearly inimical to the interests of
the community, . . . or run[s] counter to social or economic
expedience...' Blieden
J added:
11
‘
It further seems to me that
the words “for any reason whatsoever” in clause 4.6 . . .
cannot be interpreted to mean
that the plaintiff does not have to
perform in terms of the contract, and that any loss resulting from
such failure would justify
the indemnity claimed.’
Those conclusions by Blieden J were not challenged
on appeal. Nor, could they be. For, on the view that I take of the
matter, it
was plainly improper and unconscionable for Hirsch to
purport to contract out of liability in that fashion. Against that
backdrop
I turn to consider Chickenland’s counterclaims.
Claim 1
[24] Claim 1 alleges that:
‘
15 The payments by the
defendant, pleaded in paragraph 13.1 above were accordingly not due
and/or are liable to be refunded by the
plaintiff.
16 In the circumstances the plaintiff is liable to the
defendant in the sum of R1 209 632,83.’
It is a claim for the refund of the purchase price
paid to Hirsch for the contaminated goods. It presents no difficulty.
Section
2(1) of the Act makes it an offence for any person to sell,
manufacture or import for sale any foodstuff which contains or has
been treated with a prohibited substance. It is common cause in this
case that the contractual performance undertaken by Hirsch
was
illegal. In
Schierhout v Minister of
Justice
12
Innes CJ said:
‘
It is a fundament principle of
our law that a thing done contrary to the direct prohibition of the
law is void and of no effect
. . . (
Code
1.14.5). So that what is done
contrary to the prohibition of the law is not only of no effect, but
must be regarded as never having
been done — and that whether
the lawgiver
has
expressly so decreed or not; the mere prohibition operates to nullify
the act.’
Chickenland having performed under the agreement by paying the
purchase price to Hirsch, is entitled to its return. It follows
that
there can be no warrant for Hirsch to retain those moneys and that
sum must accordingly be restored to Chickenland.
Claims 2 and 4
[25] Claim 2 alleges:
‘
17 In consequence of the
defendant having incurred the wasted expenditure referred to in
paragraph 14.4 above and having suffered
damages accordingly, the
plaintiff is further liable to the defendant in the sum of R1 779
545,96 . . . .’.
And, claim 4 alleges:
‘
24 At all material times
hereto-
24.1 the plaintiff was aware of the matters set out in
paragraph 13.2 above;
24.2 the plaintiff was aware that should there be any
breach of the nature pleaded in paragraph 12 above, there would or
could reasonably
be consequences of the nature set out in paragraph
14 above;
24.3 the plaintiff accordingly owed the defendant a
legal duty to comply with the terms and warranties pleaded in
paragraph 4.2
of the defendant’s plea and to avoid any breach
of the nature identified in paragraph 12 above.
25 The breaches identified in paragraph 12 above were
occasioned by the negligent acts or omissions on the part of the
plaintiff
on the grounds detailed in paragraph 19 above.
26 In consequence of the plaintiff’s
aforesaid wrongful and negligent conduct, the defendant suffered
damages
13
for which the plaintiff is
accordingly liable in the amount of R6 424 402.04, . . . .’
Claims 2 and 4 are claims for damages for breach of contract. Claim 2
is for the wasted expenditure incurred by Chickenland in
having to
recall the affected product, whilst claim 4 is for the wasted
expenditure incurred by Chickenland in having to replace
the affected
product that had been recalled. It is thus convenient that they be
considered together. The issue that arises for
decision on this
aspect of the case is whether it can be accepted that the breach of
contract proved caused the losses sustained
by Chickenland. Hirsch
contends that the loss suffered by Chickenland, having regard to the
test for causation in a claim for damages
for breach of contract, is
too remote. Factual causation is not in issue. What is, is whether
the loss was not too remote.
[26] According to Trollip JA in
Novick
v Benjamin
:
14
‘
A fundamental principle of our
law is that for a breach of contract the sufferer should be placed by
an award of damages in the
same position as he would have occupied
had the contract been performed, so far as that can be done by the
payment of money, provided
(
a
)
that the sufferer is obliged to mitigate his loss or damage as far as
he reasonably can, and (
b
)
that the parties, when contracting, contemplated (actually or
presumptively) that that loss or damage would probably result from
such a breach of contract (see
Victoria
Falls & Transvaal Power Co. Ltd v. Consolidated Langlaagte Mines,
Ltd
.,
1915 A.D. 1
at p. 22;
Lavery &
Co. Ltd. v. Jungheinrich,
1931
A.D. 156).
’
15
[27] And in
Thoroughbred
Breeders’ Association v Price Waterhouse
16
Nienaber JA stated:
‘
The traditional approach for
determining remoteness in a contractual context was restated in 1977
by Corbett JA in
Holmdene
Brickworks (Pty) Ltd v Roberts Construction Co Ltd
1977 (3) SA 670
(A) at
687D-688A in the following terms:
“
To ensure that undue hardship
is not imposed on the defaulting party . . . the defaulting party’s
liability is limited in
terms of broad principles of causation and
remoteness, to (
a
)
those damages that flow naturally and generally from the kind of
breach of contract in question and which the law presumes the
parties
contemplated as a probable result of the breach, and (
b
)
those damages that, although caused by the breach of contract, are
ordinarily regarded in law as being too remote to be recoverable
unless, in the special circumstances attending the conclusion of the
contract, the parties actually or presumptively contemplated
that
they would probably result from its breach (
Shatz
Investments (Pty) Ltd v Kalovyrnas
1976 (2) SA 545
(A) at 550).
The two limbs, (
a
)
and (
b
),
of the above-stated limitation upon the defaulting party’s
liability for damages correspond closely to the well-known two
rules
in the English case of
Hadley
v Baxendale
156
ER 145
, which reads as follows (at 151):
‘
Where two parties have made a
contract which one of them has broken, the damages which the other
party ought to receive in respect
of such breach of contract should
be such as may fairly and reasonably be considered either arising
naturally, ie, according to
the usual course of things, from such
breach of contract itself, or such as may reasonably be supposed to
have been in the contemplation
of both parties, at the time they made
the contract, as the probable result of the breach of it.’
As was pointed out in the
Victoria
Falls
case
supra
,
the laws of Holland and England are in substantial agreement on this
point. The damages described in limb (
a
)
and the first rule in
Hadley v Baxendale
are often labelled ‘general’ or ‘intrinsic’
damages, while those described in limb (
b
)
and the second rule
in Hadley v Baxendale
are called ‘special’ or ‘extrinsic’
damages.” ’
[28] The facts show that Hirsch was well aware of Chickenland’s
business model. Mr Bloch testified that he had liaised closely
with
Hirsch’s employess, in particular John Morris. Morris, who was
possessed of a BSc Degree and had vast experience in
the spice
manufacturing industry, knew that the product was required for export
purposes. There were ongoing discussions between
them as to the need
for appropriate quality controls and in particular a need for the
existence of a suitably equipped laboratory
that was capable of
testing spices to the relevant international standards applicable to
the spice industry. As the Nando’s
international footprint grew
they had to comply with the labelling legislation of each of the
foreign destinations to which their
product was to be exported. Both
of them thus made a point of staying abreast of the changing industry
standards and legislative
developments nationally and
internationally. They specifically discussed the propensity of some
unscrupulous suppliers to use artificial
colourants in their spices.
Moreover, Morris assured Bloch that appropriate checks were in place
and that raw materials would only
be sourced from reputable
suppliers. Morris knew that Nando’s products were marketed as
colourant free. Bloch was asked:
‘
So from 1994 to the period
2003/3004 what was the state of awareness in the industry about
colourants?’
He replied:
‘
As far as I was concerned and
where we were, that everybody — we applied our minds to making
sure that we met the standards
on every consignment we exported to
our international jurisdictions. We made sure that our products were
colourant free and that
would have been indicated on any
documentation that we would have received from Freddy Hirsch to do
with the actual spice packs
that we received from them because that
would have — or we did not add any colourants at all to any of
our products. I mean
that was something that we did not do,
specifically at the time to any of restaurant base products, our
peri-peri sauces, our basting
sauces and our chicken marinade, there
was no colourants added whatsoever.’
Bloch’s evidence was not disputed. The evidence thus
established that Hirsch knew that the spice packs would be used for
a
specific purpose and that they would be distributed worldwide and had
to comply with the legislative and other industry requirements
of the
destination country. In that regard Bloch testified:
‘
Normally when one exports
anything outside of the country, one is obliged to send with the
product to the country that is receiving
the product, a product
specification and a port health document which is signed off to make
sure that the product is fit for human
consumption and that is a
requirement of most receiving countries from a customer in their port
health authorities.’
[29] In terms of the Act colourants are prohibited generally unless
specifically permitted. Sudan 1 is not a permitted colourant.
Furthermore, no colourants are permitted in respect of certain
foodstuff. Spice is one such foodstuff. At all material times Sudan
1
was a banned substance not just in this country but also in the
European Union, United Kingdom, Australia and the United States.
The
World Health Organisation regards it as a banned substance. There is
thus zero tolerance for its presence in foodstuff. Its
presence is
thus plainly illegal.
[30] The commodity, it must be added, was not readily procurable
elsewhere. Chickenland, quite clearly relied on Hirsch’s
skill
and expertise – it, after all, was an expert supplier of
foodstuff intended for public consumption. Hirsch was clearly
guilty
of negligence in the discharge of its contractual obligation. That
has now been admitted by it. What was delivered by Hirsch
was not
simply an inferior or defective product but one not fit for human
consumption and more fundamentally, dangerous and, indeed,
illegal.
Chickenland relied on Hirsch to ensure that the product purchased
would be fit for human consumption. Once it emerged
that it was not,
Chickenland had no choice in the matter – it was obliged to
give effect to a mandatory recall of all of
the contaminated product.
And, what was more, it was given just 48 hours by the UK Food
Standards Agency within which to do so.
[31] From the commonly known circumstances
mentioned above it can thus reasonably be supposed (
Shatz
Investments (Pty) Ltd v Kalovyrnas)
17
that the parties contemplated when they contracted
that, if the spice packs were delivered by Hirsch with an illegal
contaminant,
Chickenland would be obliged to recall and replace all
of the products affected by that contaminant that it, in turn, had
supplied
to its distributors and that Hirsch would be taken to have
assumed liability for all such costs directly linked to that recall
and replacement. It follows that Chickenland has established Hirsch’s
liability for those special damages.
Claim 3
[32] That leaves claim 3, which alleges:
‘
18 At all times material
hereto:
18.1 the plaintiff was aware of the matters set out in
paragraphs 13.2 to 13.5 above and that this was the usual manner in
which
the defendant conducted its business;
18.2 the plaintiff was aware that should there be any
breach of the nature pleaded in paragraph 12 above, there would or
could reasonably
be consequences of the nature set out in paragraph
14 above;
18.3 the plaintiff accordingly owed each of the
country-based distributors and Nando’s UK and Brotrade a legal
duty to comply
with the terms and warranties pleaded in . . . the
defendant’s plea and to avoid any breach of the nature
identified in paragraph
12 above.
19 The breaches identified in paragraph 12 above were
occasioned by the negligent acts or omissions on the part of the
plaintiff
in that:
19.1 the plaintiff failed to subject the spice packs to
any, alternatively to adequate and/or proper quality control and
testing
or to a process for the detection of and removal of foreign
matter or Sudan 1 being a substance not fit for human consumption
and/or
for use in products to be prepared for human consumption, when
this could and should reasonable have been done;
19.2 the plaintiff unreasonably failed to subject the
spice packs or the ingredients to acceptable selection and blending
processes
or to ensure that they complied with requirements or
specifications of any of the Food Standards Agency, United Kingdom,
South
African law or the applicable statutory law in foreign
jurisdictions into which the spice packs or products in which the
spice
packs are used were to be supplied;
19.3 the plaintiff failed to establish that the
ingredients were all of German origin and source when this ought
reasonably to have
been established;
19.4 the plaintiff sourced the ingredients from inter
alia India, through the medium of agents without knowledge or concern
as to
the origin or source of supply;
19.5 the plaintiff knew, alternatively ought reasonably
to have known of the prevalent usage of Sudan 1 in the ingredients
sourced
by it from India alternatively of an appreciable risk being
attached to the ingredients sourced by it from India and the
appreciable
risk of such ingredients containing added colourants.
19.6 the plaintiff failed to detect the presence of
Sudan 1 in the spice packs, when it ought reasonably to have done so.
20 In consequence of the plaintiff’s aforesaid
wrongful and negligent breach each of the country-based distributors
and Nando’s
UK suffered damages for which the plaintiff is
accordingly liable, as follows . . .
21 Alternatively to paragraph 20
above, Brotade suffered damages for which the plaintiff is
accordingly liable in the amount of
R7 555 679.80
18
as a result of the plaintiff’s
wrongful and negligent conduct . . .
22 The defendant has acquired by cession each of the
claims which the country-based distributors, Nando’s UK and
Brotrade
has against the plaintiff as particularised in paragraphs 20
and 21 above, . . .
23 Alternatively to paragraphs 18 to 22 above, the
defendant itself sustained damages in the amount of R7 555 679.80
reasonably
incurred in mitigating greater loss than the defendant
would otherwise have suffered and for which the plaintiff is
accordingly
liable.’
[33] It is clear that the same facts may give rise
to a claim for damages both ex contractu and ex delicto.
19
But the breach of a contractual duty is not per se
wrongful for the purposes of Aquilian liability. Admittedly there is
an important
factor present in contract and absent in delict - that
is the competence of the parties to regulate, limit or expand by
arrangement
among themselves the consequences of any prospective
breach (
Thoroughbred Breeders
Association
(para 52)). A contract, it
has been said, is the ‘ultimate limiting device’,
moreover the duty in question is not imposed
on the defendant by
operation of law – it is one that the defendant was prepared to
voluntarily assume.
20
[34] Blieden J described claim 3 as a products
liability claim. But as Professor Boberg
21
suggests ‘products liability in our law has
perhaps been puffed up a little beyond its true importance’. He
thus contends
that:
‘
The reason for regarding it as
a special form of Aquilian liability requiring its own dogmatic
framework is not readily apparent.
Wrongfulness is hardly a problem.
As we have seen (above 31), wrongfulness is not a function of an act
alone; it is a function
of an act plus its consequences. To harm
others physically or financially by producing or distributing a
defective article is so
socially undesirable (or objectively
unreasonable, if you will) that the law should have no difficulty in
branding it wrongful.
There is therefore a duty to take reasonable
care to avoid doing so (or, if you prefer it, to do so is an invasion
of the injured
party’s rights).’
[35] In
Wagener v
Pharmacare Ltd; Cuttings v Pharmacare Ltd
22
this court, after surveying the academic writings
on the subject and acknowledging that those writings had ‘appreciably
assisted
in shaping and determining the debate’ (para 8),
reaffirmed that: (a) our common law has sufficient flexibility ‘which
allows sound incremental development as society’s circumstances
change’ (para 30); (b) the Aquilian remedy is presently
adequate to protect a claimant’s right to bodily integrity; and
(c) if strict liability is to be imposed, it is the legislature
that
must do it (para 38).
[36] Claim 3 is asserted amongst others by Brotrade and various
country-based distributors, each of whom alleged that they were
owed
a legal duty by Hirsch. Various claims have been alleged in the
alternative by Chickenland, to whom those claims were ceded.
It
suffices for present purposes to consider just the one - the claim
emanating from Brotrade. The action is Aquilian. Its ordinary
requirements must thus be satisfied. A wrongful act is constituted in
this case by the production by Hirsch of a defective article
that
causes physical or purely economic damage to Brotrade. The fault
requirement will be satisfied by showing that Brotrade’s
damage
was reasonably foreseeable, that a reasonable person would have
guarded against it, and that Hirsch failed to do so.
[37] Brotrade’s claim is one for pure economic loss. As Prof
Burchell makes plain:
‘
It is a well-established rule
that the negligent causing of
physical
injury or tangible property damage
can give rise to a presumption
of liability, but the negligent causing of
pure
economic loss
.
. . requires that the court will not simply jump to the rescue of the
plaintiff on proof of negligent conduct causing harm but
will require
policy factors in favour of imposing liability on the defendant.’
23
As explained by Harms JA in
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authorit
y:
24
‘ “
Pure economic loss”
in this context connotes loss that does not arise directly from
damage to the plaintiff’s person
or property but rather in
consequence of the negligent act itself, such as a loss of profit,
being put to extra expenses or the
diminution in the value of
property.’
It does not, I daresay, encompass within its scope
the loss, through theft, of a tangible asset such as a motor vehicle
as held
in
Viv’s Tippers (Pty) Ltd
v Pha
Phama Staff Services (Pty)
Ltd.
25
[38] According to Brand JA in
Fourway
Haulage SA (Pty) Ltd v SA National Roads Agency Ltd
:
26
‘
Recognition that we are
dealing with a claim for pure economic loss brings in its wake a
different approach to the element of wrongfulness.
This results from
the principles which have been formulated by this court so many times
in the recent past that I believe they
can by now be regarded as
trite. These principles proceed from the premise that negligent
conduct which manifests itself in the
form of a positive act causing
physical damage to the property or person of another is prima facie
wrongful. By contrast, negligent
causation of pure economic loss is
not regarded as prima facie wrongful. Its wrongfulness depends on the
existence of a legal duty.
The imposition of this legal duty is a
matter for judicial determination involving criteria of public or
legal policy consistent
with constitutional norms. In the result,
conduct causing pure economic loss will only be regarded as wrongful
and therefore actionable
if public or legal policy considerations
require that such conduct, if negligent, should attract legal
liability for the resulting
damages (see eg
Minister
of Safety and Security v Van Duivenboden
2002
(6) SA 431 (SCA)
([2002]
3 All SA 741)
paras 12 and 22;
Gouda
Boerdery BK v Transnet
2005
(5) SA 490
(SCA)
([2004]
4 All SA 500)
para 12;
Telematrix
(supra) paras 13 -
14;
Trustees, Two
Oceans Aquarium Trust
(supra)
paras 10 - 12).’
[39] The enquiry here is whether as a matter of policy Hirsch should
be held liable for the pure economic loss suffered Brotrade.
That,
according to Brand JA in
Fourways Haulage
para 16 and 17:
‘
raises a
question which is logically
anterior: what are the considerations of policy that should be taken
into account for purposes of the
enquiry? In accordance with what
criteria should the relevant considerations of policy be identified?
Must we accept that policy
considerations are by their very nature
incapable of predetermination and that the identification of the
policy considerations
that should find application in a particular
case is to be left to the discretion of the individual judge? Does
this mean that
in the context of pure economic loss the imposition of
liability will depend on what every individual judge regards as fair
and
reasonable? I believe the answer to the last two questions must
be 'no'. Liability cannot depend on the idiosyncratic views of an
individual
judge.
That would cloud the outcome of every case in uncertainty. In matters
of contract, for example, this court has turned its
face against the
notion that judges can refuse to enforce a contractual provision
purely on the basis that it offends their personal
sense of fairness
and equity. Because, so it was said, that notion will give rise to
legal and commercial uncertainty (see eg
Brisley
v Drotsky
2002
(4) SA 1
(SCA)
(2002 (12) BCLR 1229)
paras 21 - 25;
South
African Forestry Co Ltd v York Timbers Ltd
2005
(3) SA 323 (SCA)
([2004]
4 All SA 168)
para 27). I can see no
reason why the same principle should not apply with equal force in
matters of delict. A legal system in
which the outcome of litigation
cannot be predicted with some measure of certainty would fail in its
purpose. As pointed out by
Lord Scott of Foscote in
Lagden
v O'Connor
[2004] 1
AC 1067
(HL) para 86:
“
One of the main functions of
the law of obligations, contractual or tortious, is to provide, or
attempt to provide, a set of yardsticks
for determining whether a
legal injury has been inflicted on a person (the claimant) by another
person (the defendant) and, if
so, for determining the amount of the
damages that the defendant must pay by way of reparation. If the two
parties are unable to
agree, an answer can be found by recourse to
litigation. But the cost of litigation, often excessive both in
absolute terms and
in relation to the amount in dispute, and the
inevitable delay, worry and anxiety that accompany court proceedings
provide impelling
reasons why the yardsticks by means of which legal
liability is to be measured should be kept as simple and
uncomplicated as practicable.”
We therefore strive for certainty.
The question is how can that be achieved in an area directed by
considerations of public or legal
policy? I believe we must accept at
the outset that absolute certainty is unattainable. The moment this
court took the first-tier
policy decision - in
Administrateur,
Natal v Trust Bank van Afrika Bpk
1979
(3) SA 824 (A)
- to abolish the absolute exclusion of liability
for pure economic loss, it abandoned the bright line of absolute
certainty. The
second-tier policy decision as to when liability
should be imposed must of necessity be accompanied by some degree of
uncertainty,
at least at the early stages of development in this area
of the law. That much was recognised and predicted by Rumpff CJ in
Administrateur,
Natal
itself (see
831B). This measure of resulting uncertainty also seems to be an
experience shared by those jurisdictions where the
same first-tier
policy decision has been taken. Thus it was stated, for example, by
Gaudron J in the Australian High Court, in
Perre
v Apand Pty Ltd
[1999] HCA 36
;
(1999)
198 CLR 180
(HC of A) para 25:
“
The law as to liability for
economic loss is a 'comparatively new and developing area of the law
of negligence'. It has not yet
developed to a stage where there has
been enunciated a governing principle applicable in all cases.
Perhaps it never will.”
’
[40] What then are the considerations of policy that are of
particular relevance in this case? First, as always in claims of this
kind, is the spectre of the imposition of liability in an
indeterminate amount for an indeterminate time to an indeterminate
class
(
Perre v Apand
para 32). For, as Prof Burchell observes:
‘Problems of limiting the scope of potential indeterminate
liability are undoubtedly
the stuff of which delictual cases are
made.’ According to Mark Radomsky, a director of Chickenland,
Brotrade (Pty) was formed
in 1997. The thinking within the group was
that the retail business had to be separated from the restaurant
business. With that
in mind Brotrade was formed, which was to operate
as the logistics and distribution entity within the Nando’s
group. The
evidence clearly establishes that Hirsch was aware not
just of the existence of Brotrade, but also of the pivotal role that
it
played in the distribution of Chickenland’s products.
Indeed, as Bloch testified and the correspondence exchanged between
Hirsch and Chickenland confirmed, not only was Hirsch aware of the
various countries internationally to which Chickenland’s
products were being supplied but it was also well aware that Brotrade
was the vehicle employed for such distribution. The loss
claimed here
is therefore by a single identifiable plaintiff. The claim by
Brotrade is not likely to bring in its wake a multiplicity
of
actions. It is accordingly finite in its extent.
[41] Second, there is no privity of contract
between Brotrade and Hirsch. The former was thus unable to protect
itself by contract
or by any other means that I can conceive of.
Brotrade could therefore not itself have taken any steps to guard
against the harm.
Third, the imposition of liability imposes no
additional burden on Hirsch than that already imposed by law and good
practice internationally
in the industry. Hirsch’s commercial
freedom is thus not further impaired in any way. Accordingly, as Van
den Heever JA made
plain in
Herschel v
Mrupe
:
27
‘
By putting into circulation
potentially harmful things . . . the manufacturer is not merely
exercising a legal right but encroaching
upon the rights of others to
be exposed, when going about their lawful occasions and when
accepting the implied general invitation
to acquire and use such
commodities, to danger without warning and without their having a
reasonable opportunity to become aware
of such danger before use. In
other words, it is an encroachment upon the rights of others to set
hidden snares for them in the
exercise of their own rights. To
refrain from doing so is a duty owning to the world at large.’
(See also
Ciba-Geigy (Pty) Ltd v Lushof Farms
(Pty) Ltd & ‘n ander.
)
28
[42] Fourth, as van der Merwe and De Jager
29
observe:
‘
In accordance with the
guide-lines provided by our case law, it is submitted that a
manufacturer has a
general
duty
to
take reasonable steps to ensure that defective products do not reach
the market or, if they do, to withdraw them from the market
or to
take other steps to ensure that no harm ensues from the presence of
the product on the market. The criterion of reasonableness
coupled
with the community’s concept of what behaviour is reasonable in
given circumstances is flexible enough to take into
account such
factors as the type of product, the nature of the manufacturer’s
business enterprise, the customs and practices
prevailing in a
particular trade or industry, the amount of knowledge and expertise
of potential purchasers and users of the product,
abnormal use, and
the specific stage in the production process during which a defect
originated. The last-mentioned factor may
influence the duties of a
manufacturer in different ways. At the stage of planning or design
the manufacturer must take into account
the most recent knowledge
available in its field. When the product is actually manufactured the
manufacturer has a duty to inspect
and to control; when it is
released on the market he has the duty to provide potential users
with directions for use and to warn
them adequately against dangers
inherent in the product. Should a defect be detected after a product
has been released, the general
duty to act reasonably in order to
prevent damage could well be concretized in a duty to withdraw the
product from the market.’
I agree that on the facts here present, Hirsch did indeed have a duty
to withdraw the contaminated product from the market. That
Chickenland and Brotrade, who were the innocent victims of Hirsch’s
illegal conduct, did so to mitigate their loss, hardly
serves to
exonerate Hirsch from that duty.
[43] In my view these are all strong policy
considerations why Hirsch should be held liable. For, as Howie P
stated in
Wagener v Pharmacare Ltd;
Cuttings v Pharmacare Ltd,
30
a case where harm was caused to patients by a
defective local anaesthetic, Regibloc:
‘
In deciding the issues raised
by the appeal it must be accepted, as regards the facts, that the
Regibloc in question was manufactured
by the respondent, that it was
defective when it left the respondent’s control, that it was
administered in accordance with
the respondent’s accompanying
instructions, that it was its defective condition which caused the
alleged harm and that such
harm was reasonably foreseeable. It must
also be accepted, as far as the law is concerned, indeed it was not
disputed, first, that
the respondent, as manufacturer, although under
no contractual obligation to the appellant, was under a legal duty in
delictual
law to avoid reasonably foreseeable harm resulting from
defectively manufactured Regibloc being administered to the first
appellant
and, secondly, that the duty was breached. In the situation
pleaded there would therefore clearly have been unlawful conduct on
the part of the respondent:
Ciba-Geigy
(Pty) Ltd v Lushof Farms (Pty) Ltd en ‘n Ander.
’
31
[44] Having decided wrongfulness in Brotrade’s
favour there remains causation. Factual causation can hardly be in
issue. On
the common cause facts, but for Hirsch’s negligence
(which as I have already indicated is now admitted) Brotrade would
not
have suffered loss. That leaves legal causation. The question to
be answered once again being whether the loss claimed by Brotrade
is
too remote. A court should be flexible in its approach to this
enquiry (
Fourway Haulage
para
35). In my view, on the facts of this case, on either the direct
consequences test or the foreseeability test the conclusion
that one
arrives at is the same. Applying the former - it is clear that the
loss followed directly from Hirsch’s wrongful
and negligent
conduct. Applying the latter - it was reasonably foreseeable that
because Sudan 1 was a proscribed substance, its
presence would (not
just could) have as its consequence a recall leading ineluctably to
loss by Brotrade.
Conclusion
[45] It follows that Blieden J was correct in upholding each of
Chickenland’s counterclaims. In the result the appeal must
fail
and it is accordingly dismissed with costs, such costs to include
those consequent upon the employment of two counsel.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: M J Fitzgerald SC
J
Butler SC
Instructed
by:
Deneys
Reitz Inc
Cape
Town
Webbers
Bloemfontein
For
Respondent: A Subel SC
J
Blou SC
Instructed
by:
Werksmans
Sandton
Symington
& De Kok
Bloemfontein
1
The
alleged wasted expenditure incurred was inter alia in respect of the
following: Microbiological testing of the affected products
by
forensic laboratories and the Department of Health to
establish/confirm the presence of Sudan 1 and costs associated
therewith,
costs of the preparation of advertisements for the recall
and press releases relating thereto, additional
labour
costs incurred pursuant to the employment of temporary personnel to
attend to various aspects of the recall of affected products,
truck-hire to facilitate
upliftment
of
affected products and transport to central warehouse, costs of
destruction of affected products and provision of certificates
of
destruction, incremental overtime
labour
costs incurred in relation to the manufacture of replacement
products, transportation costs for delivery of replacement products
to retailers, additional insurance premiums incurred as a direct
result of the product recall.
2
1948
(3) SA 495
(A) at 505.
3
1999
(1) SA 982 (SCA)
at 989 G-I.
4
Roff
and Co. Ltd v Mosely
1925 TPD 101
at 105;
Naran & another
v Pillai NO
1974 (1) SA 283
(D) at 285G-H;
Ornelas v Andrew’s
Cafe & another
1980 (1) SA 378
(W) at 389A-G;
Cladall
Roofing (Pty) Ltd v SS Profiling (Pty) Ltd
[2010] 1 All SA 114
(SCA).
5
1922
TPD 440
at 443-444.
6
First
National Bank of SA Ltd v Rosenblum & another
2001 (4) SA
189
(SCA) para 6.
7
2004
(5) SA 511
(SCA) para 12.
8
Para
34.3.
9
Botha
(now Griesel) & another v Finanscredit
(Pty)
Ltd
1989 (3) SA 773
(A) at 782.
10
Sasfin
(Pty) Ltd v Beukes
1989 (1) SA 1
(A) at 8C-D.
11
Para
42.
12
1926
AD 99
at 109.
13
Those
included inter alia the cost: to Chickenland of the replacement
product, of airfreighting replacement stock; of microbiological
testing of affected products by forensic laboratories and Department
of Health to establish/confirm the presence of Sudan 1;
of
preparation of advertisements of recall and press releases relating
thereto; of additional
labour
costs
incurred pursuant to the employment of temporary personnel to attend
to various aspects of recall of affected products;
of truck-hire to
facilitate
upliftment
of affected products
and transport to central warehouse; of the destruction of affected
products and provision of certificates
of destruction; of
incremental overtime
labour
costs incurred
in relation to the manufacture of replacement products; of
transportation costs for delivery of replacement products
to
retailers; of additional insurance premiums incurred as a direct
result of the product recall; of additional packaging material
used
for replacement products.
14
1972
(2) SA (A) 842 at 860A-B.
15
In
Lavery & Co Ltd v Jungheinrich
(at 169), Curlewis JA put it thus:
‘
The question whether damage
claimed in an action for breach of contract is or is not too remote
depends in our view on whether
at the time when the contract was
made, such damage can fairly be said to have been in the actual
contemplation of the parties
or may reasonably be supposed to have
been in their contemplation, as a probable consequence of a breach
of the contract.’
16
2001
(4) SA 551
(SCA) para 46.
17
1976
(2) SA 545
(A) at 555 G-H.
18
Those
included inter alia the costs associated with the recall and
replacement of the affected products (including the costs of
recall,
labour, storage and destruction of the affected product).
19
Holtzhausen
v Absa Bank Ltd
2008 (5) SA 630
(SCA).
20
MM
Loubser ‘Concurrence of Contract and Delict’ 1997
Stell
LR
113 at 124.
21
P
Q R Boberg
The Law of Delict Vol 1
Aquilian Liability
(1984) p 194.
22
2003
(4) SA 285
(SCA) at 291.
23
Jonathan
Burchell ‘The odyssey of pure economic loss’ 2000
Acta
Juridica
99.
24
2006
(1) SA 461
(SCA)
[2006] 1 All SA 6
para 1.
25
2010
(4) SA 455
(SCA) para 5.
26
[2008] ZASCA 134
;
2009
(2) SA
150
(SCA) para 12.
27
1954
(3) SA 464
(A) at 486F.
28
2002
(2) SA 447
(SCA).
29
Schalk
van der Merwe & Frederick de Jager ‘Products Liability: A
recent unreported case’
1980
SALJ
83.
30
2003
(4) SA 285
(SCA) at 291.
31
2002
(2) SA 447
(SCA).