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[2022] ZAECMKHC 63
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Goliath and Another v Chicory SA (Pty) Ltd (3382/2018) [2022] ZAECMKHC 63 (13 September 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, MAKHANDA
CASE
NO. 3382/2018
In
the matter between:
CECIL
GOLIATH
First Plaintiff
EVERGREEN
EVERFRESH (PTY) LTD
Second Plaintiff
and
CHICORY
SA (PTY)
LTD
Defendant
JUDGMENT
LAING
J
[1]
This an action for damages as a result of the failure of a chicory
crop
during the drought experienced in the Alexandria district,
2017-2018.
Background
[2]
The plaintiffs allege that, in or about February 2016, the parties
entered
into a verbal agreement for the production and supply of
chicory. The material terms thereof were that the plaintiffs would
supply
chicory to the defendant at a price of R1,800 per ton, from
which the defendant would be entitled to deduct all fair and
reasonable
expenses incurred by it on behalf of the plaintiffs during
the production process. Furthermore, the defendant would be required
to pay the VAT component of the price directly to the South African
Revenue Service (SARS).
[3]
Over the period of December 2016 to May 2017, the plaintiffs
allegedly
delivered 922,014 kilogrammes of chicory, at a price of
R1,891,973. The defendant duly deducted an amount of R459,930 for
fair
and reasonable expenses but failed to pay the balance.
[4]
The defendant denies the allegations and pleads that the first
plaintiff
(Mr Cecil Goliath) entered into a verbal agreement with the
defendant, represented by a Mr Paul Griffiths, in or about November
2015. To that effect, Mr Goliath would use 44 hectares of identified
farmland over the two growing seasons of 2016-2017 and 2017-2018
for
the cultivation of chicory, which he would deliver to the defendant,
who would pay a rate that was standard for all producers.
The rate
was calculated as R1,800 per ton. Furthermore, the defendant agreed
to cover Mr Goliath’s farming costs and to advance
an amount of
R3,000 per month to him for living expenses, which would be set off
against the amount payable for the chicory delivered.
At the end of
the second growing season, 2017-2018, the defendant would carry out a
reconciliation of accounts and pay to or claim
from Mr Goliath such
surplus or shortfall as was due.
[5]
In or about March 2016, alleges the defendant, Mr Goliath concluded a
lease agreement with a third party lessor for the identified farmland
in question, which was situated in the Kenton-on-Sea area,
falling
within the district of Alexandria. The lease agreement was for the
two growing seasons described above. No rental was payable,
provided
that the farmland was returned to the lessor with pasture having been
planted thereon.
[6]
The defendant alleges that Mr Goliath successfully cultivated the
farmland
during the first growing season. The value of the chicory
produced and delivered was R2,011,835 and the total of Mr Goliath’s
farming costs was R1,451,642. This translated to a profit of
R560,193. However, alleges the defendant, Mr Goliath’s farming
operations were badly affected by drought during the second growing
season. He only earned R281,139 from the chicory produced and
delivered, and incurred farming costs of R1,055,029. This translated
to a loss of R773,890.
[7]
Overall, Mr Goliath suffered a net loss of R213,697. The defendant
alleges
that Mr Goliath failed to pay the amount in question, which
forms the basis for the defendant’s counterclaim. Moreover, the
defendant denies that there was an agreement to pay any amount to
SARS, whether for VAT or otherwise.
[8]
In their replication, the plaintiffs deny that the verbal agreement
was
concluded in or about November 2015, stating that it was
concluded in February or March 2016. Moreover, the parties allegedly
agreed
that Mr Goliath would only be liable for his farming costs in
the event of a successful harvest; this would not be the case in the
event of a failed crop, which had seemed a remote possibility at the
time. The drought that occurred during the second growing
season was
a
vis major
, with the result that the parties’
respective obligations were extinguished, such that Mr Goliath was
not liable for any
farming costs incurred during the period of
2017-2018. Nevertheless, allege the plaintiffs, the defendant
remained liable for payment
in relation to the successful harvest for
the period of 2016-2017.
[9]
The plaintiffs also allege in their replication that there were
separate
verbal agreements for each of the two growing seasons. The
first was for the period of 2016-2017. The second, for 2017-2018, was
contingent upon the success of the earlier harvest and the readiness
of the soil; it was concluded accordingly.
[10]
With regard to the defendant’s counter-claim, the plaintiffs
deny that they are liable.
Issues
to be decided
[11]
The plaintiffs bear the onus to prove the terms and conditions of the
verbal agreement.
The defendant bears the onus in relation to its
counterclaim, which, similarly, hinges on its own version of the
terms and conditions
of the verbal agreement.
[12]
With regard
to the pre-trial minute, the parties were in agreement about the
issues that were common cause and those that remained
in dispute. The
parties agreed that the second plaintiff had no
locus
standi
and that none of the parties was to blame for the drought.
[1]
[13]
The issues to be decided can, essentially, be reduced to exactly what
rights and duties
were created under the verbal agreement; more
specifically: (a) when it commenced; (b) what was its duration; (c)
what was the
legal effect of the drought; (d) what expenses could be
set off by the defendant against any amount owed to Mr Goliath; and
(e)
what amount was owed to Mr Goliath, alternatively to the
defendant.
[14]
By reason of the many disputes of fact that characterise this matter,
it is necessary to
set out in some detail the evidence-in-chief for
the parties, in accordance with the sequence in which the witnesses
appeared.
The
plaintiffs’ evidence
Mr
Cecil Goliath
[15]
The first witness was Mr Goliath himself. He testified that Mr
Griffiths had approached
him on or about 29 February 2016 to say that
he had obtained land for him to farm from a Mr Justin Wilmot,
representing the Bushman’s
Rest Trust, and that it would be
necessary for the parties to enter into a lease agreement. This was
done on or about 3 March 2016.
At the same time, a verbal agreement
was concluded between Mr Goliath and the defendant, represented by Mr
Griffiths, to the effect
that the defendant would provide farming
resources and set off its expenses against the amount owed to Mr
Goliath for the chicory
produced and supplied. He disputed the
defendant’s contention that the verbal agreement had been
concluded in November 2015.
[16]
Mr Goliath said that workers had then proceeded to clear the land and
to plant Napier grass
for windbreaks. The defendant’s tractors
had loosened the soil and planted and sprayed the chicory, which had
sprouted a
week or two later. The tractors were used on other farms,
too, where his team of workers had removed weeds. The harvest for the
first growing season had been in August - September 2016, using
trucks that belonged to the defendant. The parties had not entered
into any agreement in relation to the use of the trucks and the
expenses associated therewith.
[17]
The parties had never talked about the drought, said Mr Goliath,
other than to agree that
if a drought occurred then no-one was to
blame. As it turned out, work started for the second growing season
in or about March
2017 but drought conditions prevailed during the
period of April to December 2017. The defendant, stated Mr Goliath,
had never
requested payment for anything.
[18]
It was Mr Goliath’s testimony that Mr Griffiths had agreed that
the defendant would
pay to the South African Revenue Service (SARS)
the tax amount owed by Mr Goliath from the income generated by the
harvest. SARS
later contacted him to recover the outstanding amount,
which had allegedly never been paid.
Ms
Thembeka Antonie
[19]
The second witness for the plaintiffs was a farm worker, Ms Thembeka
Antonie. She testified
that, in March 2016, she had worked for Mr
Goliath at Mr Wilmot’s farm. This had entailed cutting down
bushes and clearing
the land so that the tractors could operate.
[20]
That concluded her evidence.
Mrs
Barbara Goliath
[21]
The first plaintiff’s wife, Mrs Barbara Goliath, followed as
the third witness. She
stated that she had assisted Mr Goliath in the
running of his business after he had been assaulted and hospitalised.
This had been
in March 2017. In that regard, she had worked closely
with both Mr Griffiths and Mr Elliott and had been responsible for
supervising
the workers, which had entailed keeping a record of their
hours, referring same to the defendant, and ensuring that the workers
were paid. Mr Griffiths and Mr Elliott would visit and inspect the
farm and issue instructions where necessary.
[22]
Mrs Goliath also indicated that she had taken workers to Mr Wilmot’s
farm at Kasouga,
under Mr Griffiths’ supervision. She went on
to describe how Mr Goliath’s
bakkie
had broken down and
how Mr Griffiths had arranged for it to be repaired and how he had
given her R6,000 for payment to the mechanic.
[23]
It was her evidence that Mr Griffiths and Mr Elliott had mostly
worked with her, rather
than Mr Goliath, at that time. They would
make arrangements with her about spraying the chicory or the weeds.
She testified that
they had told her that the drought had affected
the crop; however, Mr Elliott had said that no-one was to blame.
[24]
After the failure of the crop, Mr Goliath had found land in the
Peddie district. He and
Mrs Goliath had requested Mr Griffiths and Mr
Elliot to assist them in planting a new crop on the land. They had
subsequently approached
provincial and local government but their
efforts had been hampered by Mr Goliath’s inability to obtain a
clearance certificate
from SARS. This was because of an outstanding
tax liability in the amount of approximately R246,000. Mrs Goliath
confirmed that
Mr Elliott had later provided copies of the receipts
needed to deal with the tax problem.
The
defendant’s evidence
Mr
Paul Griffiths
[25]
The first witness for the defendant was Mr Griffiths. He testified
that he had been employed
by the defendant as an agricultural manager
to,
inter alia
, locate producers, negotiate prices, and carry
out an advisory role.
[26]
Mr Griffiths originally met Mr Goliath in or around 2002, when the
latter had managed a
large crop on behalf of a Mr Colin Stirk.
Consequently, Mr Griffiths had encountered Mr Goliath in June 2015
and had arranged for
him to farm land that belonged to the Bushman’s
Rest Trust. This was because the defendant had been short of chicory
and
had needed producers; the directors for the defendant had trusted
Mr Goliath and had known that he would be able to produce the
crop
and to pay back the input costs. The land in question was
unproductive, so Mr Griffiths had persuaded Mr Wilmot, representing
the trust, to allow Mr Goliath to clear it and to use it for the
cultivation of chicory, after which the land would be returned
with
Rhodes grass having been established thereon for grazing purposes.
The arrangement was made in late October 2015.
[27]
The land, said Mr Griffiths, was prepared in mid-November 2015 by AJ
Pote Contracting,
after which Mr Goliath had employed a team of
workers to plant Napier grass for windbreaks. This was important
because chicory
was susceptible to wind damage; the land itself was
exposed and situated at the top of a hill. The windbreaks had to be
planted
in time to permit the planting of the chicory in February
2016. Accordingly, it had been vital for the parties to have reached
agreement on the way forward without delay, including the defendant’s
acceptance that it would fund the project and for Mr
Goliath to have
commenced with the clearing of the land and planting of the
windbreaks as soon as possible.
[28]
Mr Griffiths testified that the defendant had no similar arrangements
in place with anyone
else; it had never adopted such an approach
previously. Nevertheless, Mr Griffiths had persuaded its board of
directors to take
on the risk and to place its trust in Mr Goliath’s
capabilities.
[29]
Broadly speaking, stated Mr Griffiths, the verbal agreement with Mr
Goliath was to the
effect that the defendant would fund the project,
which entailed the supply of equipment and materials at cost, and any
profit
made at the end of the project would be paid to Mr Goliath. He
indicated that the rate of R1,800 per ton was used for all farmers,
a
standard price was applied.
[30]
With regard to the lease agreement, Mr Griffiths stated that this had
only been signed
on 3 March 2016 after he had urged the parties to
formalise their arrangement. He confirmed that the lease agreement
had been for
two years. This was because the cost of preparing the
land was expensive; it would not have been economical to have leased
the
land for one growing season. In practice, two growing seasons
were preferred, after which crop rotation would be implemented for
four or five years to protect the soil.
[31]
The defendant would have paid the amount owed to Mr Goliath on 31 May
2018, at the conclusion
of two growing seasons. When asked what would
have happened in the event that Mr Goliath never made a profit, Mr
Griffiths said
that the defendant had not anticipated that anything
would go wrong in the second growing season; Mr Goliath had been
recognised
as the best dry-land chicory producer in the Eastern Cape.
The drought had never been expected.
[32]
With regard to the allegation that the defendant had undertaken to
pay VAT to SARS on behalf
of the plaintiffs, Mr Griffiths stated that
he had no knowledge of this. Producers usually attended to their own
tax affairs.
Mr
Justin Wilmot
[33]
The second witness for the defendant was Mr Wilmot. He testified that
the Bushman’s
Rest Trust owned the farming property that formed
the subject of these proceedings. In October 2015, said Mr Wilmot, he
had met
with Mr Griffiths and Mr Goliath and had agreed that they
would prepare the land, cultivate chicory for two consecutive growing
seasons, and then return it after having established Rhodes grass
thereon. He stated that the land itself had been overgrown with
grass
at the time, it had not been used for many years. Consequently, AJ
Pote Contracting had prepared the land and windbreaks
had been
planted; this had happened in November-December 2015.
[34]
The lease agreement was only signed on 3 March 2016 because Mr Wilmot
knew Mr Griffiths
and had dealt with the defendant for a long time.
Moreover, the Bushman’s Rest Trust had nothing to lose,
provided that the
lease agreement was signed before the chicory was
planted; if not, then Mr Wilmot would simply have planted the grass
himself on
the cleared land.
[35]
He explained that the reference to fencing in the lease agreement
pertained to a first
draft thereof to the effect that the Bushman’s
Rest Trust had to ensure that there was sufficient fencing. Mr Wilmot
had
not wished to incur the additional cost and had conveyed this to
Mr Griffiths in February 2016. The first draft was revised and
the
resulting second draft was signed at the beginning of the next month.
At that stage, the land had been ready for planting.
Mr
Craig Elliott
[36]
The third witness was Mr Elliott, who had worked for the defendant as
an agricultural manager
since 2015. He stated that he was responsible
for contracting work, whereby the defendant undertook farming
activities on behalf
of farmers; he also advised farmers in general.
[37]
With regard to what constituted chicory farming expenses, Mr Elliott
stated that these
included the costs for agricultural machinery,
labour, fertiliser, seed, chemicals, and transport. He explained the
nature and
details of the expenses listed in the spreadsheets
attached to the defendant’s plea; he further explained how the
costs associated
with the use of tractors had been calculated, saying
that they had been required for soil preparation prior to the
planting of
the chicory.
[38]
In relation to the condition of the land itself, Mr Elliott testified
that it had been
‘run down’ and covered in grass and bush
and numerous trees. For chicory to have been planted, it would have
been necessary
to have cleared the vegetation and to have prepared
the soil by ‘ripping’ and ‘disking’; it would
also
have been necessary to have planted windbreaks. He indicated
that it would have taken a considerable length of time to have
prepared
the land for planting. All the organic matter would have had
to be burned or worked into the ground and allowed to decompose
before
planting could have commenced. Mr Elliott stated that it would
have been impossible for Mr Goliath to have started preparing the
land after 3 March 2016 and to have been ready to sow two weeks
later.
[39]
Mr Elliott indicated that he had become involved with the project in
December 2015, which
is when the first invoice had been issued. He
confirmed that the income and expenditure amounts on the spreadsheet
for the first
growing season were correct. In relation to the second
growing season, Mr Elliott stated that it had been very dry; there
had been
no reserve moisture in the soil because the crop had been
harvested in December 2016 and no rain had fallen over that time.
Planting
had commenced in February 2017 but the first crop had been a
failure. Consequently, Mr Goliath had insisted that the crop be
replanted,
which is what happened. The second crop was also
unsuccessful. There was nothing much that could have been done to
have saved the
crop, said Mr Elliott, the farmer was at the mercy of
the elements. Mr Goliath managed to produce some chicory but,
ultimately,
it was a very poor growing season.
Mr
Tony Swift
[40]
The fourth and final witness was Mr Tony Swift, who had been General
Manager for the defendant
since approximately 2002. He testified that
Mr Goliath was well-known as a successful chicory farmer and that Mr
Griffith had contacted
him because the defendant had been short of
produce. Pursuant to discussions between the two individuals, the
defendant had agreed
to fund a two-year contract in terms of which
credit was extended to Mr Goliath, repayable at the end of the
project; the defendant
would not participate in the proceeds. Mr
Swift confirmed that he had approved the arrangement. His role,
subsequently, had been
to monitor the costs incurred.
[41]
There had been pressure at the commencement of the project, said Mr
Swift, to ensure that
the parties reached agreement. It was essential
for the seed to have been planted in March, so as to allow for a
seven-month growing
period, after which the crop would have been
harvested in October-November 2016. He denied that the contract had
been limited to
the 2016-2017 season, saying that projects ran
according to a two-year cycle by reason of the high land preparation
costs entailed.
[42]
Mr Swift went on to state that Mr Goliath had kept records for
purposes of the defendant’s
payment of wages to the workers
involved. In that regard, he confirmed that the defendant had made
payment on 17 December 2015.
Moreover, he indicated that the price of
R1,800 per ton, agreed with Mr Goliath, was identical to what was
paid to other producers.
The price was set at the beginning of the
season.
[43]
He testified that Mr Goliath’s profit or loss was calculated as
the aggregate for
two seasons. This approach also informed the basis
upon which the defendant’s counterclaim had been determined. Mr
Swift
stated further that, in the event of a failed harvest, Mr
Goliath would have been expected to have compensated the defendant
for
any credit shortfall. He denied that the defendant had ever been
involved in making VAT payments to SARS on behalf of a producer.
[44]
Mr Swift indicated that the defendant had never taken steps to
recover the credit shortfall
from Mr Goliath. Its stance had changed,
however, upon receipt of the summons.
Legal
framework
[45]
As a starting point, it is useful to reiterate a basic principle that
applies in civil
matters such as the present. In Schwikkard PJ (et
al),
Principles of Evidence
, the learned writer observed that:
‘
In civil cases the
burden of proof is discharged as a matter of probability. The
standard is often expressed as requiring proof
on a “balance of
probabilities” but that should not be understood as requiring
that the probabilities should do no
more than favour one party in
preference to the other. What is required is that the probabilities
in the case be such that, on
a preponderance, it is probable that the
particular state of affairs existed.’
[2]
[46]
The parties, here, bear the onus of discharging the burden of proof
with regard to the
claim and counterclaim respectively. The subject
of onus was addressed in this division in the case of
National
Employers’ General Insurance Co Ltd v Jagers
[1984] 4 All
SA 622
(E), where Eksteen AJP, for a full bench, held as follows, at
624-5:
‘…
in any
civil case, as in any criminal case, the onus can ordinarily only be
discharged by adducing credible evidence to support
the case of the
party on whom the onus rests. In a civil case the onus is obviously
not as heavy as in a criminal case, but nevertheless
where the onus
rests on the plaintiff as in the present case, and where there are
two mutually destructive stories, he can only
succeed if he satisfies
the Court on a preponderance of probabilities that his version is
true and accurate and therefore acceptable,
and that the other
version advanced by the defendant is therefore false or mistaken and
falls to be rejected. In deciding whether
that evidence is true or
not the Court will weigh up and test the plaintiff’s
allegations against the general probabilities.
The estimate of the
credibility of a witness will therefore be inextricably bound up with
a consideration of the probabilities
of the case and, if the balance
of probabilities favours the plaintiff, then the Court will accept
his version as being probably
true. If, however the probabilities are
evenly balanced in the sense that they do not favour the plaintiff’s
case any more
than they do the defendant’s, the plaintiff can
only succeed if the Court nevertheless believes him and is satisfied
that
his evidence is true and that the defendant’s version is
false.’
[47]
The proper approach to be adopted in a civil matter where there are
factual disputes, especially
with regard to the evaluation of a
witness, was set out in
Stellenbosch Farmers’ Winery Group
Ltd and another v Martell et cie and others
2003 (1) SA 11
, where
Nienaber JA held, at [5], that:
‘…
The
technique generally employed by courts in resolving factual disputes
of this nature may conveniently be summarised as follows.
To come to
a conclusion on the disputed issues a court must make findings on (a)
the credibility of the various factual witnesses;
(b) their
reliability; and (c) the probabilities. As to (a), the court’s
finding on the credibility of a particular witness
will depend on its
impression about the veracity of the witness. That in turn will
depend on a variety of subsidiary factors, not
necessarily in order
of importance, such as (i) the witness’ candour and demeanour
in the witness-box, (ii) his bias, latent
and blatant, (iii) internal
contradictions in his evidence, (iv) external contradictions with
what was pleaded or put on his behalf,
or with established fact or
with his own extracurial statements or actions, (v) the probability
of improbability of particular
aspects of his version, (vi) the
calibre and cogency of his performance to that of other witnesses
testifying about the same incident
or events. As to (b), a witness’
reliability will depend, apart from the factors mentioned under
(a)(ii), (iv) and (v) above,
on (i) the opportunities he had to
experience or observe the event in question and (ii) the quality,
integrity and independence
of his recall thereof. As to (c), this
necessitates an analysis and evaluation of the probability or
improbability of each party’s
version on each of the disputed
issues. In the light of its assessment of (a), (b) and (c) the court
will then, as a final step,
determine whether the party burdened with
the onus of proof has succeeded in discharging it. The hard case,
which will doubtless
be the rare one, occurs when a court’s
credibility findings compel it in one direction and its evaluation of
the general
probabilities in another. The more convincing the former,
the less convincing will be the latter. But when all factors are
equipoised
probabilities prevail.’
[48]
The above
decisions are useful for purposes of setting out the manner in which
this court will be required to decide whether the
parties have
discharged their respective burdens of proof and how to resolve the
disputes of fact that have arisen.
[3]
Assessment
of the witnesses
[49]
Mr Goliath was a reliable witness inasmuch as he had been intimately
involved in the project
from the very beginning. He had negotiated
the terms of the verbal agreement with Mr Griffith, he had employed a
team of workers
to prepare the land, he had (with his son’s
assistance) entered into the lease agreement with the Bushman’s
Rest Trust,
and he had planted, cultivated and harvested the crop
itself during the first growing season. Whereas his involvement in
the project
during the second growing season had been compromised by
the injuries that he had sustained during his assault, he was,
nevertheless,
still actively engaged in farming activities.
[50]
It cannot be said, however, that Mr Goliath’s credibility as a
witness was beyond
reproach. Besides having a clear interest in
presenting a version of events that advanced his case, he was vague
about the precise
terms of the verbal agreement and evasive when
confronted with the unlikelihood of his assertions in relation to its
commencement
date and duration, the fair and reasonable expenses that
could have been deducted, and his liability for the losses incurred.
[51]
Counsel for Mr Goliath referred to
President of the RSA and others
v SARFU and others
1999 (10) BCLR 1059
(CC) to caution against
attaching too much weight to the demeanour of a witness when
assessing the truthfulness of his or her evidence.
Differences in
culture, race or gender may prevent the court’s proper
interpretation of the witness’s behaviour. Consequently,
the
court cannot rely on demeanour alone for purposes of its assessment.
[52]
Notwithstanding, Mr Goliath’s testimony under cross-examination
gave rise to a number
of key contradictions in relation to what he
had pleaded. The first was his admission that the duration of the
verbal agreement
was two growing seasons, there had not been a
separate agreement for each; the second was his concession that if he
had made a
loss at the end of the project then he would have had to
compensate the defendant; and the third was his assertion that weeds
had
been the cause of the failure of the crop, rather than a drought.
[53]
Counsel
drew the court’s attention to
Santam
Bpk v Biddulph
[2004] 2 All SA 23
(SCA), where Zulman JA observed, at [10], that the
proper test for the assessment of a witness’s evidence was not
whether
he or she was truthful or reliable in all that he or she
said. Rather, the test was whether, on a balance of probabilities,
the
essential features of his or her story were true. A court should
not reject a witness’s evidence because of discrepancies
in
minor points of detail.
[4]
[54]
The difficulty for Mr Goliath remains, nevertheless, that the
discrepancies between his
pleadings and his testimony cannot be
described as minor points of detail. They pertain to essential
features of his case and have
a direct impact on his credibility.
[55]
In contrast, Mrs Goliath was a more credible witness. Although the
possibility of bias
in her testimony by reason of her relationship to
the first plaintiff cannot be excluded, her evidence was, on the
whole, cogent
and logical. She explained how she had taken over the
administration of the project after Mr Goliath’s assault, how
she had
managed the team of workers required for farming activities,
and how she had interacted with Mr Griffiths and Mr Elliott. She was
adamant that drought had been the cause of the failure of the crop
during the second growing season. With regard to the tax question,
Mrs Goliath clearly narrated the history of the parties’
engagement with each other and with SARS but was vague about the
defendant’s alleged obligation to pay VAT on behalf of Mr
Goliath and the extent to which this had anything to do with SARS’s
claim for an outstanding amount owed by the first plaintiff.
[56]
The limitations to Mrs Goliath’s evidence are most apparent,
however, in relation
to the terms of the verbal agreement. She could
not testify on the details thereof because she had not been involved
with the project
at the time that it had commenced. She had only
become involved in March 2017, after Mr Goliath’s assault. For
obvious reasons,
she was simply not a reliable witness in that
regard.
[57]
The remaining witness for the plaintiffs was Ms Antonie. The court is
unable to make any
findings on credibility by reason of the brevity
of her testimony. To the extent that the value of her evidence to the
plaintiffs
pertains to the issue of when the verbal agreement
commenced, any further assessment must be deferred until the
probabilities of
the evidence are evaluated.
[58]
Mr Griffiths was Mr Goliath’s counterpart, both in the trial
proceedings and the
project itself. He was responsible for the
protection of the defendant’s interests and this on its own has
the implication
that the court is obliged to be conscious of
potential bias in his evidence. On the whole, however, he was a
credible witness.
His testimony was not contradictory and his
performance in the stand was of a better calibre than that of Mr
Goliath.
[59]
Counsel for the plaintiffs cited
Katz and another v Katz and
others
[2004] 4 All SA 545
(C) as authority for the approach that
little weight should be attached to the evidence of a witness who is
emotional, dogmatic
and irrational. This was especially so where he
or she had allowed his or her judgment and objectivity to be clouded
by emotion,
to the extent that he or she was unwilling to make
concessions, even when objective facts demanded this.
[60]
The court is most reluctant to describe Mr Griffiths in these terms.
Whereas he had refused
to consider the possibility that he was
mistaken with regard to the commencement of the verbal agreement,
this may simply have
been because it had indeed been his
understanding in light of the discussions that he had had at the
time, as well as his knowledge
and experience of chicory farming in
general. He did, in fact, make several concessions. He could not
dispute that Mr Elliott had
requested Mr Goliath to mend fencing on a
neighbouring farm; he admitted that he had not discussed liability
for the cost of transport
with Mr Goliath; and he conceded that the
parties had never anticipated a drought and that no-one was to blame
for it. This has
the effect of enhancing his credibility as a
witness, rather than detracting from it.
[61]
It was clear from the testimony of Mr Griffiths that he had respected
Mr Goliath’s
reputation as a chicory farmer and had enjoyed a
close relationship with him. The two individuals were primarily
responsible for
the inception and execution of the project and had
remained involved for the duration thereof, save to the extent that
Mr Goliath
had been affected by his assault. Mr Griffiths was able to
testify in detail about what had happened. The quality and integrity
of his recollection of events cannot seriously be challenged and
consequently the court is willing to regard him as a reliable
witness.
[62]
Insofar as Mr Griffiths was accused of having ‘coached’ a
witness for the defendant
during trial proceedings, the court is of
the view that he merely assisted the witness in question (Mr Wilmot)
spontaneously, when
the latter was unable to remember the term,
‘windbreak’. Although Mr Griffiths’ conduct may
have been inappropriate,
it was clearly a spur-of-the-moment incident
and most certainly does not give rise to the accusation made against
him; it undermines
neither his credibility nor his reliability.
[63]
Mr Wilmot was a reliable witness in relation to the circumstances
that had existed at the
time that the lease agreement had been
concluded. He had engaged directly with both Mr Goliath and the
defendant, represented by
Mr Griffiths. He was able to testify about
the overgrown and unproductive nature of the land that was used for
the project. He
was also able to explain why the lease agreement had
only been signed a few months after the commencement of the verbal
agreement.
[64]
There was no indication that Mr Wilmot’s evidence was
contradictory; it served to
support the defendant’s case with
regard to when the project commenced. Insofar as Mr Wilmot had dealt
with the defendant
previously and had known Mr Griffiths for a long
time, the court recognises the potential lack of impartiality in his
testimony.
Nevertheless, he was, on the face of it, an independent
witness and there was little basis upon which to doubt his
credibility.
[65]
The possibility of bias in relation to Mr Elliott’s evidence
must be acknowledged.
As an agricultural manager for the defendant,
he would have had an interest in presenting a version of events that
suited his employer.
His testimony was, however, compelling and his
performance in the stand was satisfactory, his having admitted that
Mr Goliath had
repaired fencing on a neighbouring farm and that none
of the parties had anticipated or foreseen the drought. There were no
obvious
contradictions in his evidence, which was consistent with the
defendant’s case. He was a credible witness.
[66]
Moreover, Mr Elliott’s close involvement in the project and the
quality and integrity
of his description with regard to what had been
required in November-December 2015 to prepare the land for planting,
his recollection
of how the various expenses had been calculated, and
the circumstances at the time that the crop had failed during the
second growing
season, underscored the reliability of his evidence.
It must nevertheless be accepted that he was not directly involved in
the
negotiation of the terms of the verbal agreement.
[67]
In contrast, Mr Swift had indeed been involved in the above
negotiation. He had discussed
and approved the terms with Mr
Griffiths before the verbal agreement with Mr Goliath had been
concluded. He had subsequently monitored
the costs incurred. He had,
however, not played any part in the farming activities. Consequently,
the reliability of his evidence
must be confined to the nature and
extent of the terms of the verbal agreement rather than what happened
during the implementation
thereof. Besides the potential lack of
neutrality in his testimony, there was nothing to suggest that Mr
Swift’s credibility
should be questioned.
[68]
At this point, the probabilities of the matter must be considered.
This will be undertaken
with specific regard to the issues to be
decided.
When
the project commenced and its duration
[69]
The most important issue for immediate purposes is when the project
commenced. The answer
to that will decide, to a great extent, what
expenses could have been set off by the defendant against any amount
owed to Mr Goliath.
[70]
It is
highly improbable that the parties only entered into the verbal
agreement in February 2016, as Mr Goliath contends. For he
and Mr
Griffiths to have found suitable land, negotiated a lease agreement
with Mr Wilmot, obtained approval from the defendant
to commence a
project based on an untested business model,
[5]
employed AJ Pote Contracting to ‘rip’ and ‘disk’
44 hectares of overgrown and unproductive land, burned
or worked the
uprooted trees and bushes and vegetation back into the ground to
decompose, and then planted Napier grass windbreaks,
within the space
of two to three weeks, is simply not plausible. Pertinently, the
defendant’s witnesses were consistent in
their evidence to the
effect that extensive preparation of the land had been required prior
to planting. Mr Elliott went so far
as to state, bluntly, that it
would have been impossible for the work to have been done within the
time period asserted by Mr Goliath.
[71]
The evidence of Ms Antonie does not assist the plaintiffs. She merely
testified that she
had worked for Mr Goliath at Mr Wilmot’s
farm in March 2016, cutting down bushes and clearing the land. She
did not testify
about any period prior to such date. Her evidence
does not exclude the possibility that preparation of the land,
covering an area
of 44 hectares, had commenced before March 2016 and
that it had continued right up until the time of planting. Her
evidence does
not persuade the court that it was anything but highly
improbable that the parties only entered into the verbal agreement in
February
2016.
[72]
Counsel for the plaintiffs argued strenuously that the defendant’s
plea contradicted
the evidence of its witnesses in relation to when
the project commenced. The relevant portion reads as follows:
‘
6.1. In or about
March 2016 the first plaintiff, trading as the second plaintiff, and
represented by his son, concluded a lease
agreement in respect of 44
hectares of farmland (“the farmland”) in the
Kenton-on-Sea area. A copy of the written lease
agreement is attached
hereto marked “
P1
”.
6.2.
At the
time
, the first plaintiff
had
been in discussions with the
defendant in regards the farming and cultivation of chicory which he
indicated he intended to do on
the farmland.’
[Emphasis
added.]
[73]
Whereas the interpretation favoured by counsel for the plaintiffs can
certainly not be
discounted entirely, the phrase in question (‘at
the time’) is vague. It can be interpreted either narrowly or
widely.
The auxiliary verb (‘had’) that follows the
phrase suggests that discussions had already been concluded when the
lease
agreement was signed. If there had been any doubt about the
correct interpretation, however, then this would have been dispelled
by the clear allegation made subsequently to the following effect:
‘
7.
In or about November 2015
and at Alexandria, alternatively,
Kenton-on-Sea, the First Plaintiff in person and the Defendant duly
represented by Paul Griffiths,
concluded an oral agreement (“the
agreement”).’
[Emphasis
added.]
[74]
This, together with the unequivocal testimony of Mr Griffiths to the
effect that he had
agreed with Mr Goliath on the terms of the verbal
agreement in October-November 2015, supported by the testimony of Mr
Elliott
and Mr Swift, indicate that the interpretation advanced by
counsel for the plaintiffs cannot be accepted.
[75]
Moreover, the evidence of Mr Wilmot must be taken into account. As an
independent witness,
he testified that he had met with both Mr
Griffiths and Mr Goliath in October 2015 and had agreed that the
identified land could
be used for the cultivation of chicory over two
consecutive growing seasons. He stated that the land was consequently
prepared
and windbreaks were planted in November-December 2015. No
work would have been permitted on the land without there having been
an agreement in place, said Mr Wilmot. This was indeed the case and
it gave rise to the written lease agreement a few months later.
Mr
Wilmot attributed the delay to the fact that he knew Mr Griffiths,
had dealt with the defendant for a long time, and had nothing
to lose
from the preparation of the land, provided that the lease agreement
was signed prior to the planting of the chicory. All
of this
presupposes that there must have already been a verbal agreement in
place between Mr Goliath and the defendant.
[76]
In the circumstances, the court finds that, on a balance of
probabilities, the parties
entered a verbal agreement well before
March 2016. The evidence supports the contention that the project
commenced in October-November
2015 and not as Mr Goliath has
contended.
[77]
The plaintiffs did not pursue the allegation that there had been a
separate verbal agreement
for each of the growing seasons. It was
clear from the testimony of Mr Goliath that there had been a single
verbal agreement. This
was consistent with the evidence of the
defendant’s witnesses and the provisions of the lease
agreement.
Legal
effect of the drought and the expenses that can be deducted
[78]
In his replication, Mr Goliath pleaded that he would only had been
liable for farming costs
in the event of a successful harvest, not in
the event that the crop failed, which had seemed a remote possibility
at the time.
He pleaded further that the drought that occurred during
the second growing season had been a
vis major
, giving rise to
a supervening impossibility as a result of which the parties’
respective obligations had been extinguished.
[79]
The supervening impossibility argument lies, to a great extent, at
the heart of the plaintiffs’
case. If it succeeds, then Mr
Goliath would have a basis upon which to claim the unpaid profit
earned for the growing season; if
not, then there is a basis for the
defendant’s counterclaim.
[80]
Counsel for
the plaintiffs has helpfully summarised much of the case law
pertaining to supervening impossibility. The basic principle
is that
when it becomes impossible for a debtor to render the performance
which is due in terms of an obligation, the obligation
is
extinguished.
[6]
To that effect,
however, the obligation is only extinguished when the impossibility
is absolute or objective.
[7]
In
Unibank
Savings and Loans Ltd (formerly Community Bank) v ABSA Bank Ltd
2000 (4) SA 191
, Flemming DJP held, at 198B-D, that:
‘
A contract is,
however, terminated only by objective impossibility (which always or
normally has to be total). Subjective impossibility
to receive or
make performance at most justifies the other party in exercising an
election to cancel the contract… Impossibility
is furthermore
not implicit in a change of financial strength or in commercial
circumstances which cause compliance with the contractual
obligations
to be difficult, expensive or unaffordable. Deteriorations of that
nature are foreseeable in the business world at
the time when the
contract is concluded.’
[81]
The above
findings rest on well-established case law; it has long been accepted
in our jurisprudence that mere difficulty of performance
is
insufficient to release a debtor from his or her obligation.
[8]
Recently, the Supreme Court of Appeal dealt with supervening
impossibility in
Post
Office Retirement Fund v South African Post Office SOC Ltd and others
[2022] 2 All SA 71
(SCA), where Plasket JA held, at [80]:
‘
In order to
establish impossibility of performance, whether initial or
supervening, four requirements must be met by the party relying
on
this defence. They have been set out by Bradfield as follows:
“
First, the
impossibility must be absolute as opposed to probable. The mere
likelihood that performance will prove impossible is
not sufficient
to destroy the contract. Second, the impossibility must be absolute
as opposed to relative. If I promise to do something
which, in
general, can be done, but which I cannot do, I am liable on the
contract. Third, the impossibility must not be the fault
of either
party. A party who has caused the impossibility cannot take advantage
of it and so will be liable on the contract. Fourth,
the principle
must give way to the contrary common intention of the parties. This
intention may be expressed, as when, for example,
a seller expressly
represents or guarantees that the goods sold exist.”’
[9]
[82]
In the present matter, it is common cause that the essential terms of
the verbal agreement
between the parties were that Mr Goliath would
cultivate chicory on a portion of Mr Wilmot’s farm and supply
the crop to
the defendant, which would in turn fund the production
thereof and deduct certain expenses or farming costs from the
delivery price
of R1,800 per ton. As counsel for the defendant has
convincingly argued, however, the drought never prevented Mr Goliath
from cultivating
and supplying chicory during the second growing
season; he had simply failed to achieve the volumes that he had
achieved during
the first growing season, with the result that the
accompanying farming costs far exceeded any income that he had
derived from
the initial harvest. Mr Goliath had clearly experienced
difficulty with regard to the production of the crop at the time but
the
climatic conditions had not prevented him, absolutely, from
rendering performance. It cannot be said that the drought was an
intervening
impossibility.
[83]
The first plaintiff’s argument is further undermined by his own
testimony. During
cross-examination he made the following admission:
‘
MR BROWN:
Sorry, Mr Goliath, I’m nearly done here but I just want to
clear that
up. So it wasn’t the drought, is that what you’re
saying, it was because they didn’t come to your farm fast
enough
to remove the weeds?
MR GOLIATH:
That chicory should have been a success if we removed those weeds at
the right
time as theirs.’
[84]
Later, in re-examination, Mr Goliath emphasised that the drought had
not, in fact, been
the problem. The cause of the failure of his crop
had been weeds, which had not been removed in time. This appears from
the exchange
below:
‘
MR
NGUTA:
Then, Mr Goliath, I just want you to clear up your evidence,
to
explain because you spoke about two things, you spoke about weeds and
then the drought. Can you just explain whether there was
drought in
the second year in 2017?
MR GOLIATH:
It was not the drought that can kill everything. It was just a little
drought.
You must look at this, the other farmers, they planted
chicory and the others who are near my farm. Why is this drought just
on
my chicory, it affected my chicory? What happened is that at my
chicory they didn’t have the care for my chicory because my
chicory was already dirty and they said that we must go and remove
the weeds at their chicory. If at that stage we arrived at my
chicory
and they said that we must organise people to remove those weeds,
that chicory, meaning that my chicory, should have been
a success.
MR NGUTA:
I just want you to give just a straight answer, was there
a drought
or not in 2017? Just, just explain.
MR GOLIATH:
There was no drought because the other farms with chicory had the
chicory.’
[85]
The parties
were in agreement, at the commencement of trial proceedings, that
there had indeed been a drought during the second
growing season.
There was also agreement that ‘none of the parties were [sic]
to blame for the 2017 drought’.
[10]
Quite what that statement meant, however, never fully emerged during
the course of the trial. Insofar as counsel for the plaintiffs
sought
to place reliance thereon to bolster the supervening impossibility
argument, further buttressed by the admissions made by
Mr Griffiths
and Mr Elliott that none of the parties had anticipated the drought,
the undisputed fact is that Mr Goliath had managed
to cultivate and
supply chicory during the second growing season, as had been his
obligation. This is sufficient evidence on its
own to refute the
argument. Once Mr Goliath’s own testimony is taken into
consideration, the argument collapses.
[86]
Consequently, it cannot be said that it was impossible for Mr Goliath
to have rendered
performance in terms of the verbal agreement. He did
so, albeit not as successfully or effectively as during the first
growing
season. The resulting loss wiped out the profit that he had
made previously.
[87]
To the extent that the first plaintiff’s case rested on the
assertion that Mr Goliath
would only have been liable for the farming
costs in the event of a successful harvest, this must be rejected as
nothing less than
improbable. It is simply not plausible that a
commercial entity such as the defendant would have been prepared to
extend substantial
amounts of credit to an individual farmer and then
absorb, without further ado, any losses that were sustained, whether
by reason
of drought or otherwise. The defendant would have gained
nothing from such an arrangement; it would have carried all the risk.
The more probable version is that a two-year growing cycle had been
envisaged, as contemplated under the lease agreement and as
conceded
by Mr Goliath under cross-examination; the defendant would have taken
delivery of whatever was produced, paid the agreed
price, and the
resulting profit or loss would have been accrued to Mr Goliath. The
difference between Mr Goliath and the next producer,
however, was
that his farming activities had been funded entirely by the
defendant. This is common cause. He had had no working
capital to pay
for the costs of labour, the use of tractors and other machinery,
fuel, repairs and maintenance, seed, fertilizers,
herbicides, and so
forth. This had extended even to the cost of repairs carried out on
his
bakkie
; the defendant had funded the expenses involved.
The plaintiffs admit in their particulars of claim that the defendant
had been
entitled to the deduction of fair and reasonable expenses
from the price payable. However, it is improbable for the principle
to
have applied only when there was a successful harvest, when
fortune favoured Mr Goliath.
[88]
On the
basis of the findings made in relation to the commencement date and
duration of the project, as well as the legal effect
of the drought,
it follows that the defendant is entitled to claim at least the
following farming costs: those incurred prior to
3 March 2016, as
listed in the schedule that was marked “
P2
”
(attached to the amended plea); those incurred after the above date
until 31 December 2016 inasmuch as they were not disputed
by the
plaintiffs, save for the costs of transport which will be discussed
further below;
[11]
and the farming costs of the second growing season, as listed in the
schedule marked “
P3
”.
There was also no dispute that the defendants were entitled to
recover monthly payments of R3,000 that had been made to
Mr Goliath
to cover a portion of his living expenses.
[89]
The question of liability for transport costs remains.
Transport
costs
[90]
It is common cause that liability for transport costs was never
discussed specifically.
Consequently, argued counsel for the
plaintiffs, an onus was placed on the defendant to prove that it had
been a tacit term of
the verbal agreement that Mr Goliath had been
liable for the expenses incurred in the defendant’s collection
of the crop
from the land and delivery to the factory. The court’s
attention was drawn to
City of Cape Town (CMC Administration) v
Bourbon-Leftley NO and another
[2006] 1 All SA 561
(SCA), where
Brand JA discusses the legal principles pertaining to tacit terms at
[19]:
‘…
a tacit
term is based on an inference of what both parties must or
necessarily would have agreed to, but which, for some reason
or other
remained unexpressed. Like all other inferences, acceptance of the
proposed tacit term is entirely dependent on the facts.
But, as also
appears from the cases referred to, a tacit term is not easily
inferred by the courts. The reason for this reluctance
is closely
linked to the postulate that the courts can neither make contracts
for people, nor supplement their agreements merely
because it appears
reasonable or convenient to do so… It follows that a term
cannot be inferred because it would, on the
application of the
well-known “officious bystander” test, have been
unreasonable of one of the parties not to agree
to it upon the
bystander’s suggestion. Nor can it be inferred because it would
be convenient and might therefore very well
have been incorporated in
the contract if the parties had thought about it at the time. A
proposed tacit term can only be imported
into a contract if the court
is satisfied that the parties would
necessarily
have agreed
upon such a term if it had been suggested to them at the time…
If the inference is that the response by one
of the parties to the
bystander’s question might have been that he would first like
to discuss and consider the suggested
term, the importation of the
term would not be justified.’
[91]
Counsel for the plaintiffs argued that Mr Goliath would never have
agreed to pay the defendant’s
business expense. He would have
wished to have made a profit from the project and not to have
rewarded the defendant with an undeserved
windfall without at least
having negotiated a
quid pro quo
.
[92]
The argument ignores the fact that Mr Goliath had no transport of his
own for delivery
of the crop to the defendant’s factory, he had
relied on the defendant to do so. As Mr Griffiths testified, the crop
was
worth nothing while it remained on the land. If the defendant had
not arranged for transport, then Mr Goliath would have had to
rely on
a third party to have taken the crop to the factory; it was an
undisputed term of the verbal agreement that the first plaintiff
would produce
and supply
chicory to the defendant. He remained
liable for the expenses involved. The cost of transportation was a
cost of production.
[93]
Counsel for the defendant pointed out, too, that Mr Goliath himself
had acknowledged this
during his testimony. The following exchange is
pertinent:
‘
MR
NGUTA:
…Okay, so let us, Mr Goliath, in your evidence you…
spoke about expenses to be deducted from the money as you put in…
What were these expenses? Can you explain to the, to the
Court?
MR GOLIATH:
The expenditures for the people who were removing those weeds at the
chicory,
even the tractors which were planting, the lorries or the
trucks which were loading this chicory or transporting the chicory.
That
is all.’
[94]
Further examples were provided of where Mr Goliath had admitted that
the costs of transportation
were to have been deducted from the price
payable for the crop.
[95]
It is clear
from the above that, with reference to the principles discussed in
Bourbon-Leftley
NO
, the
parties would necessarily have agreed that Mr Goliath was liable for
the expenses incurred in the defendant’s collection
of the crop
from the land and delivery to the factory. The fact that Mr Goliath
had no transport of his own is sufficient for the
tacit term to be
inferred. It was essential for purposes of lending business efficacy
to the verbal agreement.
[12]
[96]
With regard to the argument that the tacit term was contrary to
public policy, counsel
for the plaintiffs cited the seminal decision
in
Sasfin (Pty) Ltd v Beukes
[1988] ZASCA 95
;
[1989] 1 All SA 347
(A), which
dealt with the terms of a deed of cession between a financier (the
appellant) and a specialist anaesthetist (the respondent).
In that
regard, Smalberger JA held as follows, at 356-7:
‘
The effect of what
I conceive to be the proper interpretation of clause 3.4 and 3.14 was
to put Sasfin, from the time the deed of
cession was executed, and at
all times thereafter, in immediate and effective control of all
Beukes’ earnings as a specialist
anaesthetist… As a
result, Beukes could effectively be deprived of his income and means
of support for himself and his family.
He would, to that extent,
virtually be relegated to the position of a slave, working for the
benefit of Sasfin (or, for that matter,
any of the other creditors).
What is more, this situation could, in terms of clause 3.14, have
continued indefinitely at the pleasure
of Sasfin (or the other
creditors).
Beukes was powerless to
bring it to an end, as clause 3.14 specifically provides that “this
cession shall be and continue
to be of full force and effect until
terminated by all the creditors”. Neither an absence of
indebtedness, nor reasonable
notice to terminate by Beukes in those
circumstances would, according to the wording of clause 3.14, have
sufficed to bring the
deed of cession to an end. An agreement having
this effect is clearly unconscionable and incompatible with the
public interest,
and therefore contrary to public policy.’
[97]
The facts in the present matter bear little or no resemblance to
those in
Sasfin
, which concerned a clause in a deed of cession
that was unambiguously one-sided and draconian. Here, the question is
merely whether
a tacit term, to the effect that Mr Goliath was liable
for the costs of transport supplied by the defendant, was contrary to
public
policy. This cannot be so. Reliance on
Sasfin
, for
present purposes, is misplaced.
[98]
Counsel for
the plaintiffs also referred to the ground-breaking decision in
Beadica
231 CC and others v Trustees for the Time Being of the Oregon trust
and others
2020 (9) BCLR 1098
(CC) as authority for an enjoinder to this court
to adopt an approach based on transformative adjudication. It was
asserted that
this court should not hesitate to take public policy
considerations into account when deciding the enforceability of a
contract,
especially when there was unequal bargaining power on the
part of Mr Goliath and the defendant.
[13]
[99]
In that regard, the decision in
Beadica
must be treated with
great care. Whereas constitutional principles have a direct influence
on the determination of whether a contractual
term is contrary to
public policy, a court’s interference with the principles of
pacta sunt servanda
must be properly reasoned and must be
based on the facts placed before it. To that extent, Theron J
observed as follows, at [76]:
‘
Indeed, this court
has recognised the necessity of infusing our law of contract with
constitutional values. This requires courts
to exercise both
resourcefulness and restraint. In line with this Court’s
repeated warnings against overzealous judicial
reform, the power held
by the courts to develop the common law must be exercised in an
incremental fashion as the facts of each
case require. The
development of new doctrines must also be capable of finding certain,
generalised application beyond the particular
factual matrix of the
case in which a court is called upon to develop the common law. While
abstract values provide a normative
basis for the development of new
doctrines, prudent and disciplined reasoning is required to ensure
certainty of the law.’
[100]
The facts of this case do not call for transformative adjudicative,
as counsel for the plaintiffs would
have it. There is no evidence
that the relative situations of the contracting parties were so
unequal that the court is required
to interfere. On the contrary, it
is clear from the testimony of Mr Griffiths, who represented the
defendant when the verbal agreement
was negotiated, that he had held
Mr Goliath in high esteem and that he had engaged with him at the
same level. The parties had
viewed the verbal agreement as the first
of its kind and each had been just as anxious as the other to ensure
that the project
was a success, notwithstanding alleged scepticism on
the part of other local farmers. There was no evidence whatsoever to
the effect
that Mr Goliath had been prevented from using a third
party to supply the necessary transport or that he had been coerced
into
relying solely on the defendant for transport or that the
transport costs had been exorbitant. Instead, it is apparent that
transport
costs had only become an issue when the defendant filed its
counterclaim, bringing to light the real impact of the crop failure
during the second growing season, not only on Mr Goliath but also the
defendant.
[101]
Importantly, however, the alleged unenforceability of the tacit term
by reason of public policy considerations
was never pleaded. The
subject seems to have come to the fore only during pre-trial
proceedings when the parties agreed that the
question of whether the
defendant was entitled to have deducted transport costs in the amount
of R111,208 was identified as an
issue in dispute, nothing more.
Payment
of VAT
[102]
The remaining issue still to be addressed is Mr Goliath’s
allegation that the defendant was obligated
to pay VAT on his behalf
to SARS in relation to the price paid for the chicory produced and
supplied. This is a most puzzling aspect
of the first plaintiff’s
case; its bearing on Mr Goliath’s claim, at the end of trial,
is still far from clear. As
counsel for the defendant has argued, Mr
Goliath has alleged that it was a material term of the verbal
agreement that the defendant,
not Mr Goliath, would pay VAT to SARS
on the contract price by reason of the latter’s alleged
financial illiteracy; however,
Mr Goliath has sought payment of an
amount that
includes
VAT. The contradiction is obvious.
[103]
Furthermore, the evidence indicates that although the defendant may
well have assisted Mr Goliath in collating
the necessary source
documents to deal with SARS’s claim for outstanding tax, quite
what the demand related to is simply
not apparent. It may have been
for income tax, it may have been for VAT; it may have been in
relation to the first growing season,
it may have been for a
different tax period altogether. Moreover, the amount claimed by Mr
Goliath for VAT (R232,348) differs from
the amount mentioned by Mrs
Goliath in her testimony as the amount claimed by SARS (R246,000).
She also admitted that she and Mr
Goliath had never submitted a tax
return, which would undoubtedly have assisted in demonstrating Mr
Goliath’s tax status
at the time.
[104]
For its part, the defendant strongly denies any obligation to have
paid VAT on behalf of the first plaintiff.
It had not been a term of
the verbal agreement and both Mr Griffiths and Mr Swift testified
that the defendant never became involved
in making VAT payments to
SARS on behalf of a producer; this was something for the producer and
his or her accountants.
[105]
In the end, nothing seems to turn on this aspect and the court is
persuaded that, on a balance of probabilities,
the parties never
reached any agreement to that effect.
Relief
and costs
[106]
It is necessary, at this stage, to decide whether Mr Goliath has
succeeded in discharging the onus in relation
to his claim. Upon the
basis of the evidence presented, the court is not persuaded that Mr
Goliath has proved the terms of the
verbal agreement, as pleaded. On
the contrary, the evidence presented and the concessions made by Mr
Goliath demonstrate the following:
the verbal agreement had commenced
in or about October 2015 (not February 2016); it had been for a
duration of two years, to coincide
with consecutive growing seasons;
the drought had not amounted to a supervening impossibility; and the
defendant had been entitled
to deduct the expenses listed in
schedules ‘
P2
’ and ‘
P3
’,
attached to its plea, including transport costs.
[107]
This is a matter where the best intentions of the parties were
frustrated by the weather. As Mr Griffiths
remarked during his
testimony, farming is a gamble. Here, the weather dealt Mr Goliath a
good hand for the first growing season
but a bad hand for the second
growing season. Notwithstanding his skills and abilities as a chicory
farmer, Mr Goliath was unable
to accommodate the change in fortune.
The matter would undoubtedly have turned out differently had there
been no drought. Nevertheless,
the drought cannot be used, in these
circumstances, as a basis upon which to relieve the parties of their
respective rights and
duties.
[108]
Consequently, the court is satisfied that the first plaintiff has not
proved his claim. The court is satisfied,
however, that the defendant
has successfully proved its counterclaim. It is entitled to payment
of the sum indicated as well as
interest thereon.
[109]
In relation to costs, there is no reason why these should not follow
the result.
Order
[110]
The following order is made:
(a)
the plaintiffs’ claim is dismissed with costs, to be borne by
the plaintiffs jointly
and severally; and
(b)
the defendant’s counterclaim succeeds, with the effect that the
first plaintiff is
ordered to pay to the defendant:
(i)
the sum of R213,697.12;
(ii)
interest on the above sum at the prescribed rate, calculated from the
date of service
of the counterclaim until the date of payment; and
(iii)
costs.
JGA
LAING
JUDGE
OF THE HIGH COURT
APPEARANCE
For the
plaintiffs:
Adv Nguta with Adv Mzamo, instructed by Mgangatho Attorneys,
Makhanda.
For
the defendant:
Adv Brown, instructed by De Jager & Lordan Attorneys, Makhanda.
Dates
of hearing:
14 – 18 February 2022 and 23 – 24 June 2022
Date
of delivery of judgment: 13 September
2022
[1]
The pre-trial minute recorded that ‘[n]one of the parties were
[sic] to blame for the 2017 drought.’ This seemingly
obvious
statement ultimately constituted a significant component of the
plaintiffs’ case, as shall be demonstrated.
[2]
4
th
Ed, 2016, ch32-p 628.
[3]
Both the above cases were cited with cited with approval by Brand JA
in
Dreyer
NO and another v AXZS Industries (Pty) Ltd
[2006] 3 All SA 219
(SCA), at [30].
[4]
See,
too,
Rex
v Kristusamy
1945 AD 549
, at 555.
[5]
The business model entailed the defendant’s funding of the
necessary farming expenses, in the absence of Mr Goliath’s
access to working capital. The defendant effectively granted
unsecured credit to Mr Goliath purely on the strength of his
reputation
as a chicory farmer.
[6]
Harms
LTC, ‘Obligations’, in
LAWSA
(Vol 31, 3ed, LexisNexis, 2022), at 250. See, too,
Peters
Flamman & Co v Kokstad Municipality
1919 AD 427
and more recently
Kudu
Granite Operations (Pty) Ltd v Caterna Ltd
[2003] 3 All SA 1 (SCA).
[7]
Ibid.
[8]
Ibid.
See, too, Voet 22 1 29,
Ward
v Francis
(1896) 8 HCG 82,
Yodaiken
v Angehrn & Piel
1914 TPD 254
, and
Hersman
v Shapiro & Co
1926 TPD 367.
[9]
See Bradfield GB,
Christie’s
Law of Contract in South Africa
(7ed) (2016), at 549.
[10]
Paragraph 2.5, pre-trial minute, 27 October 2021.
[11]
This only emerged, clearly, during the actual trial proceedings,
when counsel for the plaintiffs confirmed that Mr Goliath did
not
dispute the farming costs incurred between 3 March and 31 December
2016. The costs of transport, however, remained in dispute
for the
period in question.
[12]
See
City
of Tshwane Metropolitan Municipality v Brooklyn Edge (Pty) Ltd and
another
[2022] 2 All SA 334
(SCA), at [16].
[13]
Counsel for the plaintiffs referred to
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (7) BCLR 691
(CC), where Ngcobo J confirmed, at [59], that the
relative situation of the contracting parties is a relevant
consideration in
determining whether a contractual term is contrary
to public policy.