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[2011] ZASCA 218
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Ruslyn Mining & Plant Hire (Pty) Ltd v Alexkor Ltd (917/10) [2011] ZASCA 218; [2012] 1 All SA 317 (SCA) (29 November 2011)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 917/10
In the matter between:
RUSLYN MINING &
PLANT HIRE (PTY) LTD
…..........................................
APPELLANT
and
ALEXKOR LIMITED
…...............................................................................
RESPONDENT
Neutral citation
:
Ruslyn Mining & Plant Hire v Alexkor
(917/10)
[2011] ZASCA
218
(29 November 2011)
Coram:
HEHER,
BOSIELO and WALLIS JJA
Heard:
15 November
2011
Delivered:
29
November 2011
Updated:
Summary:
Contract
– misrepresentation – sufficiency of evidence.
Practice –
absolution from instance – at end of plaintiff’s case –
when granted.
Practice – uniform
rule 21 – further particulars for trial – not pleadings –
departure from in evidence
– amendment – when necessary.
____________________________________________________________________________________
ORDER
On appeal from:
Northern Cape High Court
(Kimberley) (Kgomo JP sitting as court of first instance):
1. The appeal succeeds.
2. The orders of the
court a quo are set aside and replaced with the following:
‘
(a) The
application for amendment of the plaintiff’s trial particulars
is refused. In this regard each party is to pay its
own wasted costs.
(b) The application for
absolution from the instance is refused with costs.’
3. The costs of the
appeal are to be borne as follows:
(a) Each party is to bear
its own costs in relation to the application to amend.
(b) Save as aforesaid the
respondent is to pay the costs of the appeal not including the
preparation of that part of the record
containing the application for
amendment of the trial particulars.
4. All costs are to
include the costs of two counsel where such were employed.
5. The matter is referred
back to the court a quo to continue the trial.
__________
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (BOSIELO AND
WALLIS JJA concurring):
[1] This is an appeal
with leave of the trial judge (Kgomo JP) against orders made by him
after the close of the plaintiff’s
case in which he dismissed
with costs an application by the plaintiff (‘Ruslyn’) to
amend its trial particulars and
granted absolution from the instance
with costs in respect of its Claim B.
[2] The respondent
(‘Alexkor’) is a state-controlled entity that carries out
and oversees the mining of diamonds on
land and at sea in the area of
Alexander Bay in the Northern Cape. From May 2001 until June 2003
Ruslyn screened gravel and diamondiferous
overburden from dumps at
various sites under a series of contracts concluded with Alexkor at a
rate per ton of material fed into
the screens. In November 2002 the
latter decided to put out to tender the same activities on a number
of alternative contractual
options, one of which was a
revenue-sharing scheme.
[3] Ruslyn was the
successful tenderer and on 20 June 2003 concluded an infield
screening contract with Alexkor on the basis of
a 71.2:28.8 split of
net revenue in favour of the former. From its point of view, the
profitability of the undertaking depended
in the main on its ability
to recover diamonds from the dumps in sufficient quantity and quality
(by caratage) to cover its costs
of screening, loading, crushing and
transporting diamondiferous sand and gravel sediments from the mining
areas, and, in addition,
leave it with a realistic surplus from its
profit share.
[4] The venture was not a
success. Ruslyn very soon concluded that it could not turn a profit
from the contents of the dumps. About
January 2004 it abandoned the
attempt but was apparently prevented for some months from removing
its earthmoving equipment and
screens by Alexkor’s
intervention.
[5] In August 2004 Ruslyn
issued summons against Alexkor. Of its original three claims, the
first (Claim A) was abandoned before
the trial commenced and the
third (Claim C, for damages based on loss of rental income in respect
of the impounded equipment and
screens) remains unresolved. This
appeal concerns only Claim B in which Ruslyn claimed payment of R15
693 969.74 as damages arising
from various alleged fraudulent or
negligent misrepresentations said to have been made by Alexkor and to
have induced Ruslyn to
enter into the infield screening contract.
[6] As Kgomo JP, in
delivering judgment on the application for absolution, found that the
appellant had ‘failed by a long
way to present evidence on each
essential allegation necessary to establish Claim B’ and had
not made out a prima facie case,
it will be necessary to revisit both
the substance of the claim and the evidence led in support of it.
Before that, however, it
is appropriate to dispose of the appeal in
relation to the refusal of the amendment of Ruslyn’s
particulars for trial.
The further
particulars for trial
[7] The material
allegations of misrepresentation relied on by the plaintiff included
both positive misrepresentations about the
yields from the dumps and
misrepresentations by non-disclosure of information in Alexkor’s
possession that Ruslyn said it
owed a duty to disclose. In its
particulars of claim these were stated as follows:
’
18.
During the negotiations which preceded the conclusion of the profit
sharing agreement:
18.1
Defendant was aware of the following material facts and circumstances
of which plaintiff was, to Defendant’s knowledge,
unaware:
18.1.1.
Defendant had suffered severe losses pursuant to the agreements
annexed as “A” and “B” hereto, in
that the
net revenue from diamonds recovered from the diamond gravel screened
by Plaintiff in terms of the aforegoing agreements
had been
exceedingly insufficient to cover the amount of Plaintiff’s
remuneration in terms of the agreements annexed hereto
as “A”
and “B”.
18.1.2.
Defendant had knowledge, due to its historic mining activities:
a)
What the net revenue from the diamond yields of the dumps to be mined
by Plaintiff in terms of the profit sharing agreement had
been, and
what it was likely to be in future per ton of material from the
dumps;
b)
What grade, and how many carats of diamonds, had been recovered from
each of its dumps in the past, and what the yield of such
dumps were
likely to be in future;
c)
That it was not possible for Plaintiff to conduct the operations
called for by the profit sharing agreement profitably;
d)
That the written proposal (annexed hereto marked “D”)
furnished by Plaintiff to Defendant during the negotiations
containing a suggested feasibility of the contract for both parties
was exceedingly inaccurate, particularly as it related to the
carats
of diamonds that could reasonably be expected to be recovered per ton
of screened material from the dumps;
e)
That the net effect of the profit sharing agreement would be that
Plaintiff would in effect be bearing the cost of Defendant’s
duty to rehabilitate its mining areas.
18.2
Defendant had a duty to disclose the aforegoing facts and
circumstances to Plaintiff during the course of the aforegoing
negotiations,
but intentionally, alternatively negligently, failed to
do so.
18.3
Defendant further represented to Plaintiff that:
18.3.1.
Defendant had achieved on average a recovery of 950 carats of
diamonds per month at its Noordsif facility from diamond gravel
recovered by Plaintiff from Defendant’s dumps;
18.3.2.
That, in the event that Plaintiff concludes the profit sharing
agreement, it could reasonably expect a recovery of diamonds
at a
similar rate, and that the profit sharing agreement would be
profitable to Plaintiff; and
18.3.3.
That Plaintiff could expect to recover, during the subsistence of the
profit sharing agreement, the number of carats and
screened grade per
mining area set out in the proposal (annexure “D” hereto)
in the rows indicated as “Exp. Screened
grade (cphm
3
)”
and “Expected carats”.
18.4
The aforesaid representations were to the knowledge of the Defendant
false, alternatively the Defendant should have known that
the
representations were false, in that:
18.4.1.
Defendant never recovered 950 carats from its Noordsif facility per
month from gravel mined by Plaintiff;
18.4.2.
The possible yields of the Defendant’s dumps did not allow a
recovery of diamonds in the ratio referred to in paragraph
18.3.1
hereinabove;
18.4.3.
The number of carats and screened grade of diamonds recoverable per
ton of screened material which Defendant had represented
were not
achievable.
19.
The aforesaid misrepresentations were material and were made by
Defendant to induce and entice Plaintiff into concluding the
profit
sharing agreement with Defendant.
20.
Relying upon the truth of the aforegoing misrepresentations Plaintiff
entered into the profit sharing agreement.
21.
Had Plaintiff been aware that the representations were false
Plaintiff would not have concluded the profit sharing agreement.’
[8] Alexkor filed a
lengthy request for further particulars in December 2006. Although
this was said to be in relation to the amended
particulars of claim,
it is apparent that it was intended as a request in terms of uniform
rule 20 and it was answered on that
basis by Ruslyn in April 2007.
The aim of the request was largely to obtain information about the
dates when the positive misrepresentations
were made and the persons
by and to whom they were made. The reply identified a date prior to
13 May 2003 and identified Messrs
Oosthuizen, Meyer and Zihlangu as
the representors and Messrs J I van Loggerenberg, Buthelezi, Opperman
and Truter as the representees.
[9] Despite the
references to a number of potential witnesses in its particulars for
trial, Ruslyn called only one witness to testify
as to the events
surrounding the conclusion of the revenue sharing agreement and the
alleged misrepresentations. He was Mr Eustace
Buthelezi who joined
the company in 2003 shortly before the conclusion of agreement. Mr
Truter, referred to in the particulars,
the general manager for
Ruslyn’s operations in Alexander Bay in the first half of 2003,
had apparently been fired in unpleasant
circumstances during June of
that year. He was, unsurprisingly, not exposed to the rigours of
testifying despite the important
role played by him in preparing and
presenting the tender to Alexkor.
[10] Mr Buthelezi
testified that he had made it clear to Mr Truter that he needed him
to get information from Alexkor for the purpose
of preparing Ruslyn’s
response to the invitation to tender. On 9 April 2003 he received a
letter from Mr Truter in the following
terms:
‘
SUBJECT:
ALEXKOR SCREENING
Noordsif
1
at this stage +127% above target
(169 carats above month to date).
Their
budget for April 2003 is 964 carats. They already achieved 779.
Please
see the attached schedule.’
[11] On 22 April 2003,
Alexkor, having received the tender, invited Ruslyn (as well as a
competing tenderer) to do a powerpoint
presentation on its essential
proposals at Alexander Bay on 13 May. A written outline of that
presentation was included in the
exhibits at the trial. The second
page of the document read as follows:
‘
Past
Performance
The
Average Tons of R.O.M.
2
for the past 5 months were 231
000 tons per month.
Year
to date diamonds recovered: 9 324 ct’s.
99.7%
of budget.
Information
The
capacity of Noordsif Plant at present is 20 000m
3
per month of screened product.
The
dumps in the Noordsif Area normally screen out at 10-15% of the Run
of Mine.
Therefore
the Headfeed to the various screening plants need to be 200 000m
3
(360 000 tons) using a screen
factor of 10%.
At
an average grade of 6ct/100m
3
of screening product will result
in a carat production of 1200 carats per month.
The
average stone size of Noordsif Area is 0.90.’
According to Mr
Buthelezi’s testimony the reference to the recovery of 9 324
carats in the year to date must have come from
information obtained
from Alexkor. As he put it, such information was ‘very
relevant’ because ‘we had to evaluate
the different
scenarios and without the production numbers coming through from
Alexkor we would have actually have been in the
dark’. As he
understood it, the production number stated in the document was the
total of the tons screened by Ruslyn. Alexkor
was represented at the
presentation, according to Mr Buthelezi’s recollection by its
CEO, Mr Zihlangu, Mr Johan Oosthuizen,
its production manager, and Mr
Willie Meyer, its mine manager. The production and yield numbers in
the powerpoint presentation
were not queried by the representatives
of Alexkor.
[12] On 14 May 2003
Alexkor notified Ruslyn that, subject to the consent of its board of
directors, it was prepared to enter into
a contract on terms and
conditions to be agreed.
[13] After the suspension
of Mr Truter in early June, the CEO of Ruslyn, Mr Rusty van
Loggerenberg instructed Mr Buthelezi to confirm
that the reports
apparently received from Alexkor through Mr Truter concerning carat
production were ‘authentic’. As
a result Mr Buthelezi and
Mr Eugene van Loggerenberg met with Mr Johan Oosthuizen, whom Mr
Buthelezi described as ‘the production
manager at the time for
the Noordsif plant’ seeking ‘some sort of comfort’.
As to this meeting Mr Buthelezi testified
as follows:
‘
So
actually I think that must have been – I cannot quite remember
the days but very close to the signing, I think actually
the same day
when we actually signed, we spoke to him at length about the
production and everything and he said to us you know
you guys you are
actually very slow, you should have signed this thing a long time ago
and he pulled out a production report which
actually showed us that,
I think it must have been in the second or third week of production
and already think the figures were
running at round about 700 and
something. So to which we said but what do you actually expect
normally you know, from this dumps
you know on average, and he gave
us a number of 950 carats as an average. After that we obviously had
to report back. I must be
quite honest. I mean I think we actually
quite comfortable with that kind of information coming straight from
a production manager
of Alexkor. So we called the CEO Mr Rusty van
Loggerenberg and told him about this. I think he was also excited
about that. So
we said look we believe that we need to sign this
thing, because Alexkor as well, they want to have this matter
concluded so that
they can actually carry on with their work. So he
actually sent us a letter of authority you know, giving both Mr
Eugene van Loggerenberg
and myself authority to sign the contract on
behalf of the company. . . But obviously he [Oosthuizen] knew that we
are actually
asking that information with the view of actually making
a decision on whether to enter into a profit sharing agreement or
not.
. . No, it definitely did persuade us to get into that profit
share agreement.’
[14] Despite the fact
that Mr Buthelezi’s evidence relating to the meeting with Mr
Oosthuizen and its inducing effect on the
conclusion of the contract
had not been foreshadowed in Ruslyn’s particulars for trial, no
objection was taken to the leading
of such evidence then or
thereafter at the trial. That such a meeting had taken place was not
disputed and in fact Mr Buthelezi
was extensively cross-examined with
the object of demonstrating that the figures supplied by Mr
Oosthuizen had been correct, the
justification for the exercise being
expressed by counsel for Alexkor as follows:
‘
Seeing
that it is an essential issue of the case as to whether Mr John
Oosthuizen gave correct information, it is going to be necessary
to
examine whether if that was the request to Mr Oosthuizen, whether in
fact the answer he [Buthelezi] received was correct.’
[15] After Mr Buthelezi
completed his testimony Ruslyn called two expert witnesses before
closing its case. Counsel for Alexkor
applied for absolution from the
instance. According to the judgment what occurred thereafter was as
follows:
‘
After
Mr Gess, for Alexkor, had completed his absolution address and when
Mr Beyers, for Ruslyn, was at the tail-end of his argument
in
opposition of the absolution Mr Beyers intimated that he was unable
to complete his argument before seeking certain amendments
to sustain
his argument. As the proposed amendments were substantial and were
not going to go through unopposed, the case was postponed
for this
reason for a substantive application.’
[16] A
substantive application was indeed brought and refused by the court a
quo. The appellant sought to amend its answers to the
requests that I
have specified above. It is unnecessary to set out the details of the
changes. Suffice it to say that the only
proposed amendments of
substance are those which seek to place the misrepresentations relied
on in paras 18.3.1 and 18.3.2 at a
time
after
,
instead of
before
the
drafting of the mine plan, Annexure “D” to the
particulars of claim, and confining its contentions by saying that
Mr
Oosthuizen and no one else was the representor on each occasion. This
was, as I have earlier noted, consistent with the substance
of the
evidence which had been led by Ruslyn without objection.
[17] The learned judge
president refused the application to amend because:
(1) he regarded the
explanation for the failure to become aware of the fact and
significance of the new evidence as unacceptable
and, perhaps,
unworthy of credence;
(2) he censured the delay
in applying for the amendment until November 2009, after the close of
the plaintiff’s case, pointing
out that notice could have been
given at the second pre-trial conference held on 4 February 2009;
(3) he was of the view
that the grant of the amendment would have the effect of enabling the
plaintiff to present a fresh case at
a late stage, a case that the
defendant had not come to court to meet;
(4) he found
that allowing the amendment would conflict with established
principle, referring particularly to dicta in
Greyling
v Nieuwoudt
1951 (1) SA 88
(O) at 91H,
Zarug
v Parvathie NO
1962 (3) SA 872
(D) at 876C-E
and
Trans-Drakensberg Bank Ltd (under judicial
management) v Combined Engineering (Pty) Ltd and Another
1967 (3) SA 637
(D) at 640H.
[18] To deal first with
the principle, the cases cited by the learned judge all deal with
applications to amend pleadings. Further
particulars for trial are
not pleadings. The opportunity to request them arises after the close
of pleadings: uniform rule 21(2).
They are limited to obtaining
information that is strictly necessary to prepare for trial. They do
not set up a cause of action
or defence by which a party is, in the
absence of amendment or tacit concurrence, bound and by which the
limits of his evidence
are circumscribed. Nor can they change an
existing cause of action or create a new one (as the trial judge
appears to have believed).
The purpose of particulars for trial is to
limit waste of time and costs by providing the other party with
additional insight into
the case which has been pleaded, thus
avoiding, where possible, delays or postponements to seek evidence to
meet a case. See for
example,
Thompson v Barclays Bank DCO
1965
(1) SA 365
(W) at 369D-E. Such particulars are only required if and
when the other party asks for them and what will be furnished is to a
large extent dependent on the skill and foresight adopted in the
formulation of the request. Because they are not pleadings, they
do
not limit the scope of the case being made by the party that supplies
them. A party has a right to rely on all and any evidence
that is
admissible and relevant to his pleaded cause or defence and, save
within the parameters set by the purpose of such particulars
in so
far as ensuring a fair trial is concerned, no stultification of that
right should be permitted. Thus, unless there is clear
evidence of
bad faith in the furnishing of the original further particulars or in
the withholding of the intention to change the
thrust of the evidence
or irremediable prejudice to the other party caused by reliance on
incorrect or insufficient particulars
furnished by his opponent,
relevant evidence which goes beyond the terms of particulars for
trial should be admitted subject to
a postponement, if necessary and
an appropriate award of costs to cure the element of surprise.
[19] Applications to
amend particulars for trial seem to me to be largely inappropriate
and unnecessary, particularly once the trial
has got under way. It
should be sufficient for counsel to notify his opponent at an early
stage when he becomes aware that his
evidence may depart materially
from the information in the particulars for trial. The latter can
then take the matter up with the
trial court if necessary. In
appropriate circumstances (where the contemplated evidence involves
great complexity, for example)
the court may consider it fair to
order the party proposing to lead such evidence to reduce particulars
of the changes to writing
but that is not a rule.
[20] The present case is
an example in point. Counsel for Ruslyn should have drawn attention
to his proposed departure from the
particulars on record before he
led evidence having that effect. However at an early stage of the
trial (11 February 2009) when
the evidence of Buthelezi exceeded the
bounds of those particulars, counsel for Alexkor remained
unprotesting, this despite the
inference to be drawn from his
cross-examination that he appreciated the importance of the evidence.
Thereafter he had ample time
to consider his client’s position
and prepare his case to meet the varied thrust of the evidence. It
seems to me that by
the time that the plaintiff closed its case the
horse had long bolted and an application to amend had become
superfluous. The learned
judge could either have refused to grant an
amendment
for that reason
or declined to make an order to that
end.
[21] The application
being unnecessary, the wasted costs generated by it should have been
held to the account of Ruslyn. These however
should not include
Alexkor’s costs of opposition, as it had precipitated the
application by its contention that Ruslyn’s
case was restricted
by the trial particulars and this was aggravated by its determined
resistance to the amendment, which not only
served no purpose in the
circumstances but was predicated upon principles that related to
amendment of pleadings.
The application for
absolution from the instance.
[22] The test is clear:
the plaintiff must make out a prima facie case in the sense that
there is evidence relating to all the elements
of a claim on the
strength of which the court could or might find for the plaintiff at
the end of the case. See
Gordon Lloyd Page & Associates v
Rivera
2001 (1) SA 88
(SCA) at 92E-93A. The plaintiff is at this
stage entitled to rely on any reasonable inference drawn from its
evidence (ibid at
92 H).
[23] It was sufficient to
defeat the application that one basis relied on by the plaintiff in
support of claim B might succeed at
the end of the case. In
revisiting the sufficiency of the evidence my failure to deal with
any allegation either in the form of
a positive misrepresentation or
an omission coupled with a duty to disclose should not be regarded as
an expression of opinion
for or against the plaintiff’s case in
that respect. Nor should anything in this judgment be taken as
indicating that the
claim should succeed. It is confined to the
question whether there is evidence upon which the trial court might
find for the plaintiff
on its pleaded case, whether based on
misrepresentations by omission or of a positive nature. In my view
there was such evidence
and the application for absolution should
have been refused.
[24] In relation to the
case depending upon omissions to disclose on the part of Alexkor the
learned judge was of the opinion that
a tenderer who failed
adequately to acquaint itself with the information required to
prepare its tender created its own risk of
failure. He adopted the
principle stated in
Felton Skead & Grant v Port Elizabeth
Municipality
1964 (4) SA 422
(E) at 425E-G:
‘
It
seems to follow that it is for the tenderer to satisfy himself as to
the nature and extent of the work to be done regardless
of the cost
and inconvenience involved in thus satisfying himself.
It
therefore affords the applicants in this case no argument to say that
for them to have had to make an independent and exhaustive
investigation into the extent of the work involved for the purposes
of submitting a tender would have entailed considerable time,
expense
and effort. The question is whether they were in this case entitled
to rely on the information supplied by the respondent
for the purpose
of tender without independent enquiry so as to satisfy themselves as
to the nature and extent of the work involved.
On the authorities
which I have mentioned I hold that they were not. But even if they
were their attention was expressly drawn
to the distinction between
“assessments” on the one hand and “properties”
on the other, and the agreement
expressly provides that:
“
The
tenderer, by tendering, shall be deemed to have satisfied himself as
to all the conditions and circumstances affecting the tender.”’
But that was a very
different case from the present. The applicant had tendered to
prepare a property valuation record of all properties
in the
municipality for a fixed price. In the application it sought a
declarator that it was entitled to additional remuneration.
It did
not rely on negligent misrepresentation, but on a
quantum meruit
(at 424H-425A):
‘
The
gravamen of their complaint . . . was that information for the
purposes of tender was inadequate in that it failed to disclose
and
failed to warn that in most wards there were large numbers of vacant
sites in privately owned proclaimed townships to which
municipal
services had not been extended which were lumped together as single
units under the item vacant sites. . . The submission
then was as I
understood it, that these large numbers of vacant sites to which
municipal services had not been extended were therefore
not included
in the contract for which a property valuation record had to be
compiled and that because the respondent insisted
that they were to
be included the applicants are entitled to additional remuneration
based on a
quantum
meruit
.’
The
claim of the present appellant was based on misrepresentation. The
law in this regard has long been established:
Sampson
v Union and Rhodesia Wholesale Ltd
(
in
liquidation
)
1929 AD 468
at
479-80, (quoting first Jessel MR in
Redgrave
v Hurd
1881, 20 Ch D 1
at
13):
‘‘‘
If
a man is induced to enter into a contract by a false representation
it is not sufficient answer to him to say ‘if you had
used due
diligence you would have found out that the statement was untrue’.”
It makes no difference according to our
law whether the person who
induced the contract knew at the time when he made the representation
that it was false. The defendant
is entitled to succeed if he can
establish that the representation of the plaintiff was a material one
and that he entered into
the contract on the faith of such
representation –
Viljoen
v Hillier
(1904
TS 312).
’
[25] Alexkor invited
Ruslyn to submit a tender on inter alia the basis of a
‘revenue-split’ agreement and the contract
was awarded on
that basis. (There is some indication in the evidence that a ‘revenue
split’ was the only form of agreement
that Alexkor was
interested in despite the invitation to tender on a fixed price per
ton basis.) Prima facie such a proposed arrangement
is capable of
being construed as a holding out to the tenderer that the invitor
contemplates the making of a profit which will
be shared between the
contracting parties. Indeed it was referred to in the evidence as a
‘profit-sharing agreement’.
However the evidence adduced
by Ruslyn in the form of official reports of Alexkor and from expert
analysis of its historical records
tended to show that the latter had
no reasonable grounds for representing the proposed ‘revenue-split’
arrangement
as one likely to turn (or perhaps even capable of
producing) a profit for the parties and, particularly, the appellant.
That this
was so is derived from reasonable inferences drawn from
evidence to the effect that:
1) during the two ‘rate
per ton’ contracts between the parties Alexkor had either
failed to make a profit or such profit
as it had made was not such as
to render the continuation of those arrangements acceptable to it;
2) the number and grade
of diamonds recovered during those contracts had decreased and was
likely to continue in that trend;
3) the reason for
inviting a revenue split tender (and concluding the agreement on that
basis) was to release the substantial risk
of the dump clearance
operation from the shoulders of Alexkor and transfer it to the
successful tenderer.
[26] Alexkor did not
inform Ruslyn of any of these matters. It is a potentially reasonable
conclusion from the evidence that
1) knowledge of such
matters was peculiarly within the knowledge of Alexkor;
2) the appellant did not
have access to information necessary to make an informed decision as
to the content and viability of a
proposed tender on a revenue split
basis without the co-operation of the respondent; Mr Fourie testified
as follows:
‘
My
Lord, the only way a contractor could actually assess the
effectiveness of the selective mining would be on a very regular
basis
to receive feedback as to how many diamonds were recovered
during this so-called selective mining process. If one were to carry
on and not receive this feedback regularly, one will actually never
know how successful you are.
.
. . as a result determination of the potential profitability of a
screening operation in respect of dumps would almost exclusively
rely
upon past data in terms of carats yielded per 100 cubic metres
screened and of course also the volume of material so screened.
Without knowing how many diamonds you get when you screen the head
feed, it is impossible to determine whether this will be a profitable
operation or not.
.
. .
And
a prospective tenderer in respect of a screening operation similar to
the profit sharing agreement that we are talking about,
with this
usually being entirely dependent on the mine owner in respect of such
information, without which of course the tenderer
would not be able
to determine the profitability of the profit sharing agreement unless
it would allow, as I said earlier on, to
determine on its own what
would be the profitability of such a venture by doing some
exploration or sampling upfront.’
3) that some attempt was
made by Ruslyn to garner relevant information but what was furnished
only tended towards showing the attractiveness
or potential
profitability of the venture as for example Exh 166B (the schedule
attached to Mr Truter’s letter of 9 April
2003, referred to in
para 10 above) and Mr Oosthuizen’s response to Mr Buthelezi’s
enquiry.
[27] Further, a
reasonable inference may possibly be drawn from the matters referred
to in the preceding paragraph that the non-disclosure
constituted a
material misrepresentation and if the correct information had been
disclosed it would have provided reason for Ruslyn
not to tender on a
revenue-split basis or not to conclude the contract in June 2003. In
my view the evidence at the end of the
plaintiff’s case was
such as to render the remarks of Hoexter JA in
Hulett and Others v
Hulett
[1992] ZASCA 111
;
1992 (4) SA 291
(A) at 310H-311C
mutatis mutandis
potentially applicable (bearing in mind, of course, that even
prima facie proof of reliance on an innocent representation was
sufficient
for the appellant to surmount absolution).
‘
In
the present case a material representation was made which was
calculated to induce the appellants to enter into the contract.
There
is evidence, which appears to be entirely credible, that the
appellants were so induced. It seems to me that in these
circumstances
there arises a fair inference that this is in fact what
happened. Mr
Gordon
who,
with Mr
Hewitt
,
appeared for the appellants, called our attention to one of the
judgments delivered by the High Court of Australia in s
Gould
and Another v Vaggelas and Others
[1985]
LRC (Comm) 497.
The following remarks in the judgment of Wilson J (at
517
d-f
)
appear to me to indicate the proper approach to the situation here
under consideration:
“
Where
a plaintiff shows that a defendant has made false statements to him
intending thereby to induce him to enter into a contract
and those
statements are of such a nature as would be likely to provide such
inducement and the plaintiff did in fact enter into
that contract and
thereby suffered damage and nothing more appears, common sense would
demand the conclusion that the false representations
played at least
some part in inducing the plaintiff to enter into the contract.
However, it is open to the defendant to obstruct
the drawing of that
natural inference of fact by showing that there were other relevant
circumstances. Examples commonly given
of such circumstances are that
the plaintiff not only actually knew the true facts but knew them to
be the truth or that the plaintiff
either by his words or conduct
disavowed any reliance on the fraudulent representations.”
Here
the defendant elected to adduce no rebutting evidence and, in my
view, there is nothing before us which tends to displace the
natural
deduction that the appellants in fact relied upon the fraudulent
misrepresentation, as JH and Townsend said that they had
done.’
[28] In the circumstances
the general principles enunciated by Van Zyl J in
McCann v Goodall
Group Operations (Pty) Ltd
1995 (2) SA 718
(C) at 722F-725G and
by Conradie JA in
Absa Bank Ltd v Fouche
2003 (1) SA 176
(SCA)
at paras 4, 5 and 9, relating to the establishing of a legal duty to
act positively to prevent a loss, could properly be
regarded as
relevant to the final decision of the plaintiff’s claim, and
the failure of Alexkor to make disclosure sufficient
to enable Ruslyn
to reach an informed decision about whether it should enter into the
new contract with Alexkor might fairly be
regarded as an actionable
non-disclosure.
[29] The learned judge
also concluded that the appellant had not made a case on the ground
of the alleged positive representations.
In what follows I shall
consider his reasons for so finding.
[30] The court
interpreted counsel’s attitude to any refusal of the proposed
amendment as ‘an ineluctable but unexpressed
capitulation on
the part of the plaintiff that absent the amendment its case is as
good as dead in the water’. That led him,
I think, to a failure
to give full weight to all the evidence presented to him.
[31] The court considered
that the failure or inability of appellant to call witnesses such as
Messrs Truter, Taljaard and Mr Rusty
van Loggerenberg left unbridged
gaps in the proof of even a prima facie case. I do not agree. The
evidence of Mr Buthelezi taken
at face value provided proof that the
mine plan that accompanied and supported the tender was produced by
Mr Truter with input
from Mr Taljaard. The plan was a detailed
projection on a dump by dump basis of what Ruslyn expected to recover
during the duration
of the contract. While Truter may have possessed
certain inside knowledge derived from his recent employment at
Alexkor, Mr Fourie
testified that it was unlikely that he could have
retained the breadth of detail necessary to prepare the plan. It is
at least
a reasonable inference that he had resort to and obtained
from Alexkor information in relation to such matters as the caratage
and yield of diamonds from the respective dumps. It is reasonably
clear that the projected figures for diamond recovery far exceed
either Alexkor’s historic records for Ruslyn’s operations
or its expectations for the future. If information furnished
by
Alexkor did provide the basis of the mine plan that information was
either misinterpreted by Mr Taljaard and Mr Truter or must
have been
severely misleading. At this stage it is sufficient that the second
is a reasonable possibility.
[32] There is some
measure of support both for the derivation of the figures from
Alexkor and the proper interpretation of such
figures. First there
are Exhs 166A and 166B. The latter seems to have the stamp of
authority as a document emanating from Alexkor.
The former is Mr
Truter’s summary of that document (quoted in para 10 above).
The information seems to bear out a caratage
of about 950 for the
month of April 2003 (after leaving diamonds perhaps attributable to
Equilibrium and Gully Diamonds out of
account). Second there is Mr
Buthelezi’s evidence of the meeting with Mr Oosthuizen, who,
having been informed that the purpose
was to enable appellant to
decide whether to enter into the revenue split agreement with Alexkor
expressed surprise that appellant
had taken so long in deciding to do
so and confirmed that the yield of diamonds from appellant’s
operation during the most
recent mining period had been in the region
of 950 carats per month.
[33] The learned judge
was of the view that only Ruslyn’s chief executive, as its
deciding mind, could testify to the reliance
placed by it on
information obtained from Alexkor; as he was not called a lacuna was
left in its case. There was, however, direct
evidence that, after
doubts arose as to the integrity of Mr Truter early in June, Ruslyn’s
CEO, Mr Rusty van Loggerenberg,
instructed Mr Buthelezi to seek
confirmation from Alexkor that the yield on which Mr Truter had based
his calculations was ‘authentic’.
Only after confirmation
was obtained from Mr Oosthuizen did Mr Van Loggerenberg direct Mr
Buthelezi to conclude the contract. The
learned judge found that Mr
Van Loggerenberg had committed the appellant to heavy expenditure on
the presumed assurance that Alexkor
would award it the contract
before
the Oosthuizen meeting. The judge inferred from this
that the die had already been cast in favour of the contract whatever
Mr Oosthuizen
might say. However an equally tenable and perhaps, at
the end of the case, more probable, explanation is that the fall-out
with
Mr Truter persuaded Mr Van Loggerenberg of the need for caution.
That he wished to be satisfied about the data used by Mr Truter
before finally committing the appellant was understandable and
reasonable in the circumstances. As Mr Buthelezi emphasized the
appellant could not have concluded the contract on the prospect of a
substantially lower yield such as 575 carats per month. Reliance
on a
representation apparently emanating from Alexkor whether at the time
of preparing the tender or before signature was thus
proved as a
reasonably possible inference from the evidence.
[34] There was also
sufficient in the evidence to justify the conclusion that the
representation of an average yield of about 950
carats per month had
no foundation in truth. The historical monthly yields for the
previous two contracts from the appellant’s
operations were
about 575 and 429 carats respectively.
[35] To sum up-
1. The application to
amend the particulars for trial was strictly unnecessary and for that
reason should not have been granted.
Alexkor provoked and then
opposed the application, but did so on fallacious grounds. In the
appeal, time and paper were wasted
on the same wrangling. In my
opinion it would be fair to order each party to bear its own costs
arising from the application at
the trial and in the appeal save that
the appellant should not be entitled to recover the costs of
preparing the record in so far
as such bears on the application to
amend.
2. The learned judge
should not have granted absolution at the end of the plaintiff’s
case. The costs of the argument for
absolution in the trial should be
paid by the respondent. As the appellant has achieved success on this
issue in the appeal it
should, subject to what I have said earlier in
this paragraph, have its costs.
[36] The following order
is made:
1. The appeal succeeds.
2. The orders of the
court a quo are set aside and replaced with the following:
‘
(a) The
application for amendment of the plaintiff’s trial particulars
is refused. In this regard each party is to pay its
own wasted costs.
(b) The application for
absolution from the instance is refused with costs.’
3. The costs of the
appeal are to be borne as follows:
(a) Each party is to bear
its own costs in relation to the application to amend.
(b) Save as aforesaid the
respondent is to pay the costs of the appeal not including the
preparation of that part of the record
containing the application for
amendment of the trial particulars.
4. All costs are to
include the costs of two counsel where such were employed.
5. The matter is referred
back to the court a quo to continue the trial.
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANT: J W Jonker
Van de Wall &
Partners, Kimberley
Honey & Partners,
Bloemfontein
RESPONDENT: D W Gess
Webber Wentzel Attorneys,
Cape Town
Lovius Block,
Bloemfontein
1
Noordsif
was Alexkor’s diamond recovery plant at which all material
sifted by Ruslyn and other contractors was treated.
2
Run
of the Mine ie the gravel etc after sifting.