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[2021] ZAGPPHC 107
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John Wright Veneers (SA) (Pty) v Komatieland Forests SOC Limited (52088/2018) [2021] ZAGPPHC 107 (16 February 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NO: 52088/2018
16
February 2021
In
the matter between:
JOHN
WRIGHT VENEERS (SA) (PTY)
Plaintiff
And
KOMATIELAND
FORESTS SOC LIMITED
Defendant
JUDGMENT
WANLESS
AJ
Introduction
[1] On
or about the 26
th
of September 2014 and at or near
Pretoria, JOHN WRIGHT VENEERS (SA) (PTY) LIMITED
(“the
Plaintiff”)
and KOMATIELAND FORESTS SOC (PTY) LIMITED
(“the
Defendant”)
entered into a written agreement
(“the
custom cut contract”).
In terms of the custom cut contract
the Plaintiff would process the Defendant’s saw logs and be
remunerated therfor
(“the processing fee”)
by the
Defendant. The custom cut contract was later amended by two
addendums which increased the processing fee.
[2]
A dispute arose between the parties in terms of the custom cut
contract. On or about the 23
rd
of November 2016 this
dispute was settled between the parties. The Plaintiff instituted the
present action on the basis that the
Defendant has failed to fully
comply with that settlement agreement
(“the agreement”).
The
Plaintiff’s case
[3]
It is common cause that the dispute which arose in terms of the
custom cut contract was in respect of
whether the Defendant had
failed to deliver the monthly commitment of logs to the Plaintiff for
processing during or about the
period August 2014 to July 2016. It
was alleged by the Plaintiff that the shortfall in respect thereof
was 13 675 cubic meters.
When calculated in terms of the
provisions of sub-paragraph 3.3 of the custom cut contract this gave
rise to a claim by the Plaintiff
in the sum of R8 287 227.79.
[4]
This claim was discussed and settled, in principle, at a
meeting held between the parties on the 14
th
of November
2016. The contents of the minutes of that meeting are not in dispute.
Following thereon, the very next day (the 15
th
of November
2016), the Plaintiff received an email from Mr Nonyane
(“Nonyane”).
It is alleged by the Plaintiff that in this email Nonyane, the
Defendant’s Custom Cut Manager, authorised by the Defendant
to
do so, undertook that the Defendant would deliver 7 800 cubic
meters of logs to the Plaintiff to process during the months
of
December 2016 and January 2017.
[5]
Premised on the aforegoing, it is the Plaintiff’s case that the
parties then entered into the agreement.
The agreement is as set out
in two letters, dated the 18
th
of November 2016
(“the
first letter”)
and the 22
nd
of November 2016
(“the
second letter”)
,
respectively. In terms thereof the Plaintiff avers that the material
terms and conditions of the agreement were that the Defendant
would
pay to the Plaintiff the sum of R2 500 000.00 and would
produce and supply additional log volumes in December 2016
and
January 2017 to bring the levels of log deliveries to contractually
expected volumes. These log volumes were, according to
the Plaintiff,
those as set out in the email of Nonyane on the 15
th
of November 2016.
[6]
It is common cause that the Defendant complied with the agreement by
paying the Plaintiff the sum of R2 500 000.00.
However, the
Plaintiff avers that the Defendant has failed to comply with its
remaining obligations in terms of the agreement in
that the Defendant
failed to produce and supply additional log volumes in December 2016
and January 2017 to bring the levels of
log deliveries to
contractually expected volumes. In this regard the Plaintiff avers
(and it is common cause) that the Defendant
only delivered 1 574
cubic meters during the relevant period giving rise to a shortfall of
6 226 cubic meters. This shortfall,
at the agreed rate of
R827,97 per cubic meter recovered, gives rise to the Plaintiff’s
claim for damages in the sum of R2 809 442.96.
This
calculation is set out in paragraph 13 of the Plaintiff’s
Particulars of claim. The Plaintiff claims payment of
this
amount, together with interest and costs.
The
Defendant’s case
[7] In terms of the
Defendant’s Plea (as amended) the Defendant has raised a number
of defences (no less than five) to the
claim for damages by the
Plaintiff. These are: -
7.1
Nonyane was not authorised by the Defendant to agree to
deliver the volume of logs to the Plaintiff
during December 2016 and
January 2017 as alleged by the Plaintiff;
7.2
in the alternative to 7.1 and in the event of it being held that
Nonyane was so authorised, that
this is in fact inconsequential due
to the agreement which was subsequently entered into between the
parties on 22 November 2016
which settled all disputes relating to
the log delivery shortfalls;
7.3 in
terms of the Interim Transport Agreement
(“the transport
agreement”)
entered into between the parties and which came
into effect on 16 January 2017 the Defendant’s obligations to
make log deliveries
to the Plaintiff ceased;
7.4
in terms of sub-paragraph 3.1 of the custom cut contract, no log
deliveries were expected or due
in the period from approximately the
middle of December to the middle of January
(“the shut down
period”)
;
7.5
the Plaintiff failed to comply with the provisions of sub-paragraph
3.3 of the custom cut contract.
This defence was added to the
Defendant’s defences when the Defendant, during the course of
the trial, after the testimony
of Human and during the evidence in
chief of Gouws, amended its Plea to introduce same. There was no
objection thereto by the Plaintiff.
Issues
[8]
All of the aforegoing defences, as pleaded by the Defendant, amount
to a denial that it was a material term
of the agreement that the
Defendant would produce and supply additional log volumes in December
2016 and January 2017 to bring
the levels of log deliveries to
contractually expected volumes. It is the Defendant’s case that
this was agreed in terms
of the custom cut contract. In the premises,
the main issue for this court to decide is whether the agreement
reached by the parties
on the 23
rd
of November 2016
included the term that the Defendant would produce and supply
additional log volumes in December 2016 and January
2017 to bring the
levels of log deliveries to contractually expected volumes which had
already been determined by the Defendant.
Common cause
facts
[9]
Whilst some of the facts which were common cause have
already been set out above, it is nevertheless
expedient, at this
stage, to deal specifically therewith. The relevant facts in deciding
this matter and which were common cause
are the following:-
9.1
the material terms and conditions of the custom cut
contract and the two addendums thereto;
9.2
it was a material term of the agreement that the Defendant would pay
to the Plaintiff the sum of R2 500 000.00;
9.3 the
Defendant complied with the agreement by paying to the Plaintiff the
sum of R2 500 000.00;
9.4
the Defendant supplied 1 574 logs to the Plaintiff during the
months of December 2016 and January 2017;
9.5 the
manner in which the Plaintiff’s quantum of damages has been
calculated and the amount
of damages the Plaintiff has suffered in
the event of the Plaintiff proving that the Defendant is liable to
compensate the Plaintiff
in respect of same.
The law
[10]
A compromise or settlement
(transactio)
is a contract the
purpose of which is to prevent or avoid or put an end to litigation.
Whether embodied in an order of court or
not, it has the effect of
res iudicata ( Gollach & Gomperts (1967) (Pty) Ltd v Universal
Mills & Produce Co (Pty) Ltd 1978 (1) SA 914 (AD); Georgias
v
Standard Chartered Finance Zimbabwe Ltd
2000 (1) SA 126
(ZS) at
138-139).
[11]
A compromise is a substantive contract which exists independently of
the cause that gave rise to the
compromise. Being a contract the
general rules of pleading; proving and interpreting the terms of a
contract apply
(Natal Joint Municipal Pension Fund Endumeni
Municipality
2012 (4) SA 593
(SCA) at paragraph 18).
[12]
In the absence of a reservation of the right to proceed on the
original cause of action the compromise agreement
bars any
proceedings based on the original cause. Not only can the original
contract not be relied upon but the parties are also
not entitled to
go behind the compromise and raise defences to the original cause of
action when sued on the compromise
(Van Zyl v Niemann
1964 (4) SA
662
(AD)).
The evidence
[13] The
Plaintiff called three witnesses, namely Messrs Human;
Gouws
and Murovhi, whilst the Defendant called one witness, namely Nonyane.
Various documents were admitted into evidence by consent.
[14] This
judgment will not be burdened unnecessarily by setting out, in
detail, the evidence that was placed before
this court at
trial, whether same was the
viva voce
evidence of the various
witnesses or evidence of a documentary nature. Rather, same will be
referred to herein where appropriate.
Was it a term
of the agreement that the Defendant was obliged to produce and supply
7 800 cubic meters of logs to the Plaintiff
during December 2016
and January 2017 ?
[15]
Human, Gouws and Nonyane (who all testified at the trial) were
present at the meeting held between the Plaintiff
and the Defendant
on 14 November 2016. The purpose of this meeting was to attempt to
settle the Plaintiff’s claim in respect
of the short supply of
logs by the Defendant to the Plaintiff in terms of the custom cut
contract. As noted earlier in this judgment
the parties agreed that
what was contained in the minutes of that meeting
(MEETING MINUTES
FOR JOHN WRIGHT VENEERS LOG UNDERSUPPLY CLAIM at pages 74 and 75 of
Volume 1 of the Trial Bundle)
was a true recordal of what took
place at that meeting.
[16] Mr
Theron (a representative of the Defendant) requested that the
plantations produce and supply enough volume for
the December
holidays. Theron also stated that a proposal for settling the claim
would be communicated on 18 November. He further
requested that
Messrs Mokobane and Themba (representatives of the Defendant) draft a
proposal for supplying the Plaintiff logs
for the next four months
and include plans for supplying additional volume in December. Theron
did not testify at the trial.
[17] Mokobane
(a representative of the Defendant who also did not testify at trial)
was of the opinion that the plantations
could stagger their holidays
to make up for the increased demand. He further stated that Gouws
should write up a proposal for settlement
of the claim in line with
what had been agreed at the meeting.
[18] As
also noted earlier in this judgment the day following that of the
meeting (the 15
th
of November 2016) the Plaintiff received
an email from Nonyane
(annexure “POC 4” to the
Plaintiff’s Particulars of Claim at page 65 of Volume 1 of the
Trial Bundle).
It is noted that Nonyane proposed the volumes of
logs to be supplied to the Plaintiff and not Mokobane and Themba as
requested by
Theron at the meeting. This, however, makes sense, since
it is common cause that Nonyane was in charge of the custom cut
contract
on behalf of the Defendant.
[19] On the
18th of November 2016 the Defendant addressed the first letter to the
Plaintiff
(annexure “POC 5” to the Plaintiff’s
Particulars of Claim)
. This letter bears the heading “SHORT
SUPPLY OF LOGS-KOMATIELAND FORESTS SOC LIMITED SETTLEMENT PROPOSAL”
and was signed
by Theron.
[20]
Paragraph 1 of the first letter reads as follows:-
“
We refer
to the John Wright Veneers (SA) (Pty) Ltd.’s (“
JWV
”)
claim on the log-undersupply as received by Komatiland Forests
SOC Limited (“
KLF”/Company
”)
on Tuesday, 25 October 2016 (“
the
claim
”)
and particularly the subsequent meeting held on Monday, 14 November
2016 wherein, amongst others, the claim was extensively
discussed
with a view of finding a settlement of all matters in dispute.”
[21]
In paragraph 2, it is stated:-
“
As agreed
during the abovementioned meeting, KLF hereby makes an offer in full
and final settlement of all disputes and the claim
(“
Offer
”)
as follows:
2.1 KLF
shall make payment to JWV on or before 25 November 2016 of the total
sum of R2,200,000 (Two Million Two Hundred
Thousand Rands only) in
full and final settlement (of) the claim as received on Tuesday, 25
October 2016; and
2.2
KLF undertakes to produce and supply additional volumes in December
2016 to JMV in an effort to bring the
levels of log delivery to
contractually expected volumes.”
[22]
Paragraph 3 reads:-
“
KLF makes
the foregoing Offer in order to re-establish its longstanding
relationship with JMV and to enable both parties to achieve,
within
the remaining period, the targets set out in (the) agreement as
entered into in August 2014.”
[23] In
paragraph 6 it is stated:-
“
By
acceptance of this Offer, this document will serve as evidence of a
full and final settlement of both the claim and all other
existing
disputes between the JMV and the Company.”
[24] The offer
as set out in the first letter was made open for acceptance until the
22
nd
of November 2016. It is common cause that this offer
was not accepted by the Plaintiff. Instead, on the 20
th
of
November 2016, Human, on behalf of the Plaintiff, addressed a letter
to Theron of the Defendant. This letter bears the heading
“SHORT
SUPPLY OF LOGS-KOMATILAND FORESZTS (PTY) LTD SETTLEMENT COUNTER
PROPOSAL”. The significance of this letter
is that it deals
only with a monetary settlement. No mention is made therein of the
supply by the Defendant to the Plaintiff of
additional volumes
of logs during the months of December 2016 and January 2017.
[25] On
the 22nd of November 2016 the Defendant addressed the second letter
to the Plaintiff
(annexure “POC 6” to the Plaintiff’s
Particulars of Claim)
. This letter bears the heading “SHORT
SUPPLY OF LOGS-FULL AND FINAL SETTLEMENT OFFER BY KOMATILAND FORESTS
SOC LIMITED”
and was once again drafted by Gouws and signed by
Theron.
[26] The
relevant paragraphs in the second letter are 3, 4 and 7, which read
as follows:-
“
3. As
a measure of goodwill and in an endeavour to amicably settle all
existing disputes, particularly the
claim as received by KLF on
Tuesday, 25 October 2016, the Company hereby makes an improved full
and final offer of settlement (“
Improved
Final Offer
”)
of payment to JWV of the total sum of
R2,5000,00
(Two Million Five Hundred Thousand Rands only)
on or before
Friday,
25 November 2016.
4.
Please take note that the foregoing Improved Final Offer is open for
your acceptance within the same terms
and conditions stated in KLF’s
offer of settlement made on Friday, 18 November 2016 to JWV (“
Initial
Offer
”).
7.
Further take note that unless specifically mentioned and/or
amended herein, all the terms and conditions of
the Initial Offer as
pertaining to the acceptance and the binding nature of such, shall
apply mutatis mutandis to this Improved
Final Offer that is made
herein.”
[27] The
offer, as encapsulated in the second letter, was accepted by the
Plaintiff. In this regard, Human signed same
on the 23
rd
of November 2016.
[28]
Human, Gouws and Nonyane were all credible witnesses. The evidence of
the only other witness who testified
before this court, namely
Murovhi (like Gouws, an employee of the Defendant who was subpoenaed
by the Plaintiff to give evidence
on the Plaintiff’s behalf),
took the matter no further. He was called in relation to the alleged
failure of the Defendant
to discover certain documentation allegedly
in the Defendant’s possession. Whilst Human testified that it
was a material
term of the agreement that the Defendant would produce
and supply additional log volumes in December 2016 and January 2017
to bring
the levels of log deliveries to contractually expected
volumes which had already been determined by the Defendant, Gouws and
Nonyane
testified that this was not the case. In the premises, faced
with two irreconcilable versions, it falls upon this court to decide
this matter on the probabilities in order to determine whether the
Plaintiff has discharged the onus incumbent upon it to prove
that the
aforesaid term was a material term of the agreement
(Stellenbosch
Farmers' Winery Group Ltd and Another v Martell Et Cie and Others
2003 (1) SA 11
(SCA) ).
[29]
The minutes of the meeting held on the 14
th
of November
2021, insofar as those minutes may have provided objective
evidence as to what was discussed, shed little light
on what was (or
was not) agreed at the meeting in order to settle the Plaintiff’s
claim. Rather, the two letters, together
with certain correspondence
entered into during negotiations and subsequent to the agreement
being accepted by the Plaintiff, are
of assistance in determining
whether, on a balance of probabilities, the agreement included a term
in relation to the production
and supply of logs.
[30] No
discussion about payment of a sum of money in settlement of the
Plaintiff’s claim, is recorded in the minutes
of the meeting.
Nevertheless, it is common cause that in terms of paragraph 3 of the
second letter the initial offer by the Defendant
to the Plaintiff was
increased from R2 200 000,00 to R2 500 000,00.
The wording of this paragraph, as set out
earlier in this judgment,
is important. It is stated therein that payment of that sum is to
“….settle
all
existing disputes,
particularly
the claim as received by KLF on Tuesday,
25 October 2016”. The conclusion that can be made therefrom is
that the said payment
settled all disputes, particularly the claim of
the Plaintiff arising from a short supply of logs in terms of the
custom cut contract.
In other words, simply put, once that payment
was made, this brought finality in respect of the dispute. There was
nothing more
the Defendant had to do. It was not incumbent upon the
Defendant to produce and supply additional log volumes. Moreover, it
is
probable that had the Defendant been obliged to pay the sum of
R2 500 000,00
and
also supply an additional volume
of logs during December 2016 and January 2017, then this paragraph
would have said so and/or the
Plaintiff would have insisted that this
be clearly recorded in the second letter. The fact that the second
letter, which constitutes
the revised offer of the Defendant, is
silent in respect of the production and supply of logs, supports the
probability that same
was not a term of the agreement.
[31] Further
in this regard, it is correct (as pointed out by the Plaintiff) that
paragraph 4 of the second letter (as set
out above) states that the
improved and final offer of the Defendant is open for the Plaintiff’s
acceptance “…
.within the same terms and conditions”
as stated in the first letter
(the
Initial Offer)
. In
that regard, it is the finding of this court that this incorporation
of terms and conditions as contained in the first letter
into the
second letter did not include sub-paragraph 2.2 thereof (the
production and supply of additional volumes of logs). This
finding is
based on the fact that, once again, it is far more probable that such
an important clause would have either been included
in the second
letter, alternatively, would have been specifically referred to in
the second letter.
[32] It
is, however, paragraph 3 of the first letter (also set out above)
which illustrates above all else, that on
a balance of probabilities
the agreement that the Defendant would produce and supply additional
log volumes to the Plaintiff was
not a material term of the agreement
but was related to the custom cut contract. To understand why this is
so and the true import
of paragraph 3 of the first letter, it is
necessary to deal with the provisions of sub-paragraph 3.3 of the
custom cut contract.
This sub-paragraph reads as follows:
“
Should
the volume delivered by KLF fall short of the monthly commitment in
any consecutive three months for reasons other than force
majeure,
KLF shall be obliged to place the Contractor in the same financial
position it would have been had KLF supplied the monthly
commitment”.
[33] It is
common cause that the Defendant
(“KLF”)
had fallen
short of the monthly commitment in terms of the custom cut contract
in respect of its obligation to produce and supply
to the Plaintiff
(“the Contractor”)
monthly volumes that would
equate to 50 000 cubic meters of logs in a calendar year
(sub-paragraph 3.1 of the custom cut contract
). Further, it is
common cause that the custom cut contract would be coming to an end
on the 31
st
of July 2017. In light thereof, the Defendant
had at least eight (8) months to ensure that, by increasing the
monthly volumes of
production and supply of logs to the Plaintiff, it
would, by the time the custom cut contract came to an end, have fully
complied
with the obligation to have produced and supplied the
required volume of logs to the Plaintiff as more fully set out in
sub-paragraph
3.1 thereof. Should the Defendant fail to do so the
Plaintiff would then be entitled (as it had done in terms of its
claim against
the Defendant which was settled) to claim damages in
terms of,
inter alia
, sub-paragraph 3.3 of the custom cut
agreement.
[34] This
reasoning finds support in the clear and unambiguous wording of
paragraph 3 of the first letter. This paragraph
has been set out
above. Nevertheless, it deserves further attention at this stage.
Once again, it reads as follows:-
“
KLF makes
the foregoing Offer in order to re-establish its longstanding
relationship with JMV
and
to enable both parties to achieve, within the remaining period, the
targets set out in (the) agreement as entered into in August
2014.”
[35] As
testified to by Gouws and Nonyane, the aforegoing lends considerable
support for the probability that it was
not a term of the agreement
that the Defendant would produce cand supply additional log volumes
to the Plaintiff for the months
of December 2016 and January 2017 as
determined by Nonyane on behalf of the Defendant. It is improbable
that the Defendant would
agree, as part of the agreement to settle a
dispute pertaining to the short supply of logs, to supply additional
logs over a period
of two months when a dispute may never arise as to
whether or not the Defendant was in breach of sub-paragraph 3.3 of
the custom
cut contract during the existence of that contract or upon
the termination thereof. Undertaking to attempt to begin to produce
and supply additional volumes of logs, in principle and in order to
give some assurance to the Plaintiff that the Defendant wanted
to try
to fulfil its commitments in terms of the custom cut contract, is
quite different to settling a dispute on that basis. This
is
particularly so when viewed in the context of the other facts as
dealt with above and, in particular, the fact that compensation
in
the sum of R2 500 000.00 had been agreed upon.
[36] The
events which took place pursuant to the parties entering into the
agreement also support the fact that it is
more probable that it was
not a material term of the agreement that the Defendant would produce
and supply additional log volumes
to the Plaintiff for the months of
December 2016 and January 2017. In this regard, during the period 22
November 2016 (when the
Plaintiff accepted the settlement proposal of
the Defendant) to the 6
th
of February 2017 (the date of
the Plaintiff’s letter of demand), no correspondence was
entered into evidence where it is
indicated, by either party, that
the aforesaid term was part of the agreement. In fact, in the
Plaintiff’s letter of demand
the following is stated by Human:-
“
The
absence of logs during the month of December 2016 to the latter part
of January 2017 resulted in losses incurred by JMV
which
was not provided for in the settlement reached on 22 November 2016”.
This paragraph
clearly shows that the agreement did not provide for logs to be
supplied by the Defendant to the Plaintiff during
December 2016.
[37] Another fact
which supports the probability that the agreement did not include a
term involving the production and supply of
logs as averred by the
Plaintiff is that the schedule prepared by Nonyane on the 15
th
of November 2016 sets out log deliveries for the months of December
2016; January 2017; February 2017 and March 2017. Had the agreement
incorporated the term that additional log volumes were to be produced
and supplied for two months (December 2016 and January 2017)
it is
improbable that Nonyane would have gone to the effort of working out
additional log volumes for a total of four months. The
fact that he
did, supports the Defendant’s version (and the probabilities)
as set out above.
[38] Finally, the
fact that the first letter refers to an undertaking by the Defendant
to produce and supply an additional volume
of logs in December 2016
only (in an effort to bring the levels of log delivery to
contractually expected volumes)
and does not include January
2017, whilst the Plaintiff claims for a shortfall of logs over two
months (December 2016 and January
2017) is indicative of the fact
that the Plaintiff’s claim, if any, is a claim in terms of
sub-paragraph 3.3 of the custom
cut contract and not in terms of the
agreement.
[39] In the
premises, taking all of the aforegoing into account, it is held that
the Plaintiff has failed to prove, on a balance
of probabilities,
that it was a material term of the agreement that the Defendant would
produce and supply to the Plaintiff 7 800
cubic meters of logs
during December 2016 and January 2017. Following thereon, it is
unnecessary for this court to consider whether
the Defendant breached
the agreement and, if so, the amount of damages payable to the
Plaintiff in respect thereof. Moreover,
it is unnecessary for
this court to consider the defences raised by the Defendant and as
set out,
inter alia
, in sub-paragraphs 7.1; 7.3 and 7.4 of
this judgment.
Order
[40]
This court makes the following order:
“
The
Plaintiff’s claim is dismissed with costs”.
BC WANLESS
ACTING
JUDGE OF THE GAUTENG DIVISION, PRETORIA
Heard on
:
13 November 2020
For
the Plaintiff :
Adv
AJ Schoeman
Instructed
by
:
Kruse Attorneys Inc
For
the Defendant
:
Adv Madima SC
Instructed
by
:
Fasken (incorporated in South Africa as Bell Dewar Inc)
Date
of Judgment
:
16 February 2021