Cladall Roofing (Pty) Ltd v SS Profiling (Pty) Ltd (515/08) [2009] ZASCA 92; [2010] 1 All SA 114 (SCA) (14 September 2009)

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[2009] ZASCA 92
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Cladall Roofing (Pty) Ltd v SS Profiling (Pty) Ltd (515/08) [2009] ZASCA 92; [2010] 1 All SA 114 (SCA) (14 September 2009)

THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case no: 515/08
No precedential significance
CLADALL
ROOFING (PTY) LTD
Appellant
and
Respondent
SS
PROFILING (PTY) LTD
______________________________________________________________
Neutral citation:
Cladall
Roofing (Pty) Ltd v SS Profiling (Pty) Ltd
(515/08)
[2009] ZASCA 92
(14 September 2009)
CORAM:
NAVSA,
MTHIYANE, HEHER, VAN HEERDEN JJA and WALLIS AJA
HEARD:
21 August 2009
DELIVERED:
14
September 2009
SUMMARY:
Contract
– standard conditions of agreement – whether seller entitled to
rely on certain clauses as defence to claim for damages
by purchaser
– goods delivered bearing no resemblance to goods ordered – no
performance at all in terms of contract – held
that clauses do not
apply
______________________________________________________________
ORDER
______________________________________________________________
On appeal from
:
The Port Elizabeth High
Court (Erasmus J) sitting as a court of first instance.
1. The appeal is upheld with costs.
2. The order of the court below is set
aside and substituted as follows:
‘
1. The court rules
that the defendant is not entitled to rely on the special conditions
as valid defences against the plaintiff’s
claim for the payment of
damages.
2. The court rules that
the plaintiff is entitled to withhold payment for the goods delivered
on the pleadings as they stand.
3. The remaining issues
in dispute on the pleadings are to be determined at a further
hearing.
4. Costs are to be costs
in the cause.’
______________________________________________________________
JUDGMENT
NAVSA and VAN HEERDEN JJA (MTHIYANE,
HEHER JJA and WALLIS AJA concurring):
Introduction
[1] This is an appeal, with the leave
of this court, against a judgment of the Port Elizabeth High Court
(Erasmus J).
[2] The appellant company, Cladall
Roofing (Pty) Ltd (Cladall), a roofing contractor in the Eastern
Cape, ordered 13 000 square
metres of galvanised IBR roof sheeting
from the respondent company, SS Profiling (Pty) Ltd (SS). The order
gave a precise description
of the required thickness, tensile
strength and production quality of the goods.
1
SS has its head office in Brits. It buys raw material from a steel
producer and then cuts and profiles the steel to customer
requirements.
For present purposes, and on the basis set out in
paragraphs 19 and 20 below, it is accepted that SS delivered IBR
sheeting to
Cladall that was not in accordance with the
specifications as described in the order. On that basis, Cladall,
after the sheeting
had been installed at a particular site,
instituted action against SS, claiming damages comprising the
reasonable cost of reinstating
the roof according to the
specifications. Cladall also refused to pay the outstanding balance
of the purchase price.
[3] In defending the action and
instituting a counterclaim for the balance of the purchase price, SS
relied on its ‘Standard Conditions
of Agreement’, which formed
part of the credit application completed by Cladall and were also
attached to each of its delivery
notes. The clauses relied upon by
SS were, inter alia, the following:
‘
6.4 The Customer
hereby confirms that the goods or services on any Tax invoice issued
duly represent the goods or services ordered
by the Customer at the
prices agreed to by the Customer and, where delivery/performance has
already taken place, that the goods
or services were inspected and
that the Customer is satisfied that these conform in all respects to
the quality and quantity ordered
and are free from any defects.
. . .
7.3 No claim under this
Agreement shall arise unless the Customer has, within 3 days of the
alleged breach or defect occurring,
given SS Profiling 30 days
written notice by prepaid registered post to rectify any defect or
breach of Agreement.
. . .
The Customer has no
right to withhold payment for any reason whatsoever and agrees that
no extension of payment of any nature
shall be extended to the
Customer and any such extension will not be applicable or
enforceable unless agreed to by SS Profiling,
reduced to writing
and signed by the Customer and a duly authorised representative of
SS Profiling.
. . .
18 The Customer agrees
that no indulgence whatsoever by SS Profiling will affect the terms
of this Agreement or any of the rights
of SS Profiling and such
indulgence shall not constitute a waiver by SS Profiling in respect
of any of its rights herein. Under
no circumstances will SS Profiling
be estopped from exercising any of its rights in terms of this
Agreement.’
[4] The court below held that Cladall
was unable to ‘get around’ clause 6.4. With reference to clause
7.3, the court stated
that, since it was common cause that Cladall
did not give SS 30 days written notice by prepaid registered post (or
otherwise) to
rectify the defect or breach, Cladall was without any
remedy. In dealing with the question of estoppel, raised by Cladall
in its
replication, Erasmus J held, with reference to clause 18 and
after considering the evidence adduced, that Cladall’s reliance on

estoppel was unfounded.
[5] Thus, the court a quo concluded
that SS was entitled to rely on the special conditions, and in
particular, on clauses 6.4 and
7.3, as valid defences against
Cladall’s claim for damages. It went on to hold (relying on clause
11.1 of the special conditions)
that Cladall was not entitled to
withhold payment for the goods delivered. In the result Erasmus J
dismissed Cladall’s claim
with costs and entered judgment in favour
of SS on its counterclaim, ordering Cladall to pay the balance of the
purchase price,
namely, R254 396.96 with interest calculated from
17 February 2006.
[6] It is against these conclusions
that the present appeal is directed. The main question to be
determined is whether SS was, on
the agreed facts of this case,
entitled to rely on the clauses referred to by the court below. The
short answer is no. The background
and the reasoning are set out
hereafter.
Background
[7] In the early part of 2006, Cladall
successfully tendered to install roofing at a cooling facility in
Addo in the Eastern Cape.
The cooling facility is the property of the
Addo Citrus Corporation and intended for storing oranges in
preparation for export.
[8] The tender requirement was for the
installation of IBR sheeting with a minimum thickness of 0.5 mm. In
addition, the IBR sheeting
was required to be of industrial strength,
described in the industry as ‘full hard’. This was necessary as
the roof trusses
were far apart and the roof was required to be
‘trafficable’. In other words, the roof had to be able to
withstand human traffic
without bending or sagging.
[9] Consequently, on 31 January 2006,
Mr Wessel Lategan, the managing director of Cladall, sent a
telefacsimile (fax) to Mr Craig
Bursey, an authorised representative
of SS stationed in the Eastern Cape, requesting a quote for 13 000
m
2
of IBR sheeting. The request for the quote set out the following
specifications:
‘
0.50 mm IBR FH
Galvanised Z275 spelter as per ISCOR.’
‘
Z275’ indicates the minimum
galvanised content of the IBR sheeting. ‘FH’ is an abbreviation
for ‘Full Hard’. ‘ISCOR’
is the acronym for Iron and Steel
Corporation, which used to be a renowned steel-producing parastatal.
[10] The fax was sent back by Mr
Bursey with a price of R22 per square metre inserted in manuscript.
Subsequently, Mr Bursey attended
at Cladall’s offices and, during a
meeting with Mr Lategan, rewrote the specifications set out at the
end of the preceding paragraph,
namely, 0.50 mm and Z275, in
manuscript on the same fax. However, instead of ‘ISCOR’, Mr
Bursey wrote the words ‘Mittal Material’
on the fax. At a time
unrelated to the present case, ISCOR had been taken over by Mittal
Steel, a commercial company which is one
of the major steel producers
in the world. The purpose of indicating ISCOR or Mittal material was
to denote a particular quality
of material, related to the reputation
of the producer. Mr Bursey signed the fax after having made these
manuscript additions to
it.
[11] It is uncontested that Mr
Bursey’s signed manuscript additions to Cladall’s fax, as set out
in the preceding paragraph,
were made by him for Cladall’s benefit,
to confirm that he was aware of Cladall’s specific requirements in
relation to the
tender and to ensure that Cladall would receive the
correct material.
[12] Cladall then addressed a written
order dated 2 February 2006 to SS. Under the heading ‘Description’,
it was once again
clearly specified that the order was for 13 000 m
2
of ‘0.5mm FH Z275
galvanised IBR roofsheeting ISCOR material’. Delivery was to take
place between 14 and 16 February 2006. A
further specific instruction
on the order was that delivery of the sheeting had to be made with
trucks that had been fitted with
a crane. This was necessary because
the total sheeting ordered approximated 80 tons and, in the absence
of a crane for offloading,
manual labour would be required with
attendant costs.
[13] The first consignment of sheeting
arrived on 17 February 2006 at the installation site in Addo, in a
truck with a malfunctioning
crane. This problem caused Mr Bursey to
contact Mr Lategan who then went out to the site. When he arrived on
site, he saw the roof
sheeting in the rear of the truck packed in
lots. The dimensions of the sheeting appeared to him not to be
uniform. This immediately
aroused his suspicions and he sought
confirmation from Mr Bursey that the sheeting was indeed what he had
ordered, viz that it
was in accordance with Cladall’s express
specifications. It was not possible to ascertain with the naked eye
whether the material
met the specifications, nor to conduct a
physical examination of every sheet forming part of the consignment.
Moreover, to determine
the galvanisation content and tensile strength
of the sheeting, laboratory tests would be required. On Mr Lategan’s
request,
Mr Bursey telephoned the SS head office in Brits, to
ascertain from a senior manager there whether they had despatched the
correct,
specified sheeting. During a lengthy conversation with the
said manager, Mr Bursey was reassured that the correct material had
indeed been despatched and he was told to convince Mr Lategan of
this. Taking the manager at her word, he, in turn, reassured Mr

Lategan that the material was ‘the correct material ordered’,
that it was ‘the right thickness and [that] it was full hard

material, as he had asked for’.
[14] On the same day, after he
returned to his office, Mr Lategan spoke telephonically to the same
manager that Mr Bursey had spoken
to earlier and was once again
reassured that the sheeting that had been delivered was in accordance
with specifications.
[15] Later that same day, Mr Lategan
addressed an e-mail to the SS manager, sending her photographs of the
sheeting that had been
delivered and threatening to return it.
However, after speaking to Mr Bursey once more, and yet again
obtaining an assurance that
the sheeting that had been delivered was
in accordance with Cladall’s specifications, he relented and
accepted the consignment.
[16] After SS had delivered all the
sheeting, Cladall proceeded to install the roof, the extent of which
was, as indicated above,
13 000 square metres. It was estimated that
it would take approximately six weeks to complete the task. Within
two weeks of the
commencement of the installation, workmen reported
that the roof was beginning to show indentations after it had been
walked on.
Mr Lategan and his roofing team deduced that this was
because the tensile strength of the sheeting did not meet the agreed
specifications.
[17] Mr Bursey was called out to
examine the roof. After he had done so, he realised that there was a
major problem and that the
sheeting that had been delivered was not
as had been specified by Mr Lategan. In particular, it was not of
industrial strength.
At that stage Cladall had paid the greater part
of the purchase price. After discussing the matter with Cladall’s
attorney, Mr
Lategan decided to withhold the balance of the purchase
price. This was followed by an exchange of correspondence and
telephonic
communications with Mr Duvenage, the managing director of
SS. Disputes arose concerning the thickness of the sheeting and
whether
the raw material had in fact been sourced from Mittal Steel.
[18] Mittal Steel representatives were
called out to inspect samples cut from the sheeting. Mr Lategan also
arranged for other tests
to be conducted on samples of the sheeting.
The latter tests revealed considerable variations in the sheeting,
heightening Mr Lategan’s
suspicions. Mr Duvenage insisted on
payment of the balance of the price and the matter remained
unresolved.
[19] Cladall decided to institute
action against SS as described above. At the commencement of the
trial the parties agreed in writing,
in terms of Uniform rule 33(4),
to separate certain issues for determination, namely whether:
(a) SS was entitled to rely on the
special conditions and in particular the sub-clauses relied upon in
its plea as a valid defence
against Cladall’s claim for the payment
of damages;
(b) Cladall, in the event of the court
finding that the defendant was entitled to rely on the sub-clauses,
had established estoppel
as pleaded in its replication;
(c) Cladall was entitled to withhold
payment for the goods delivered.
[20] For purposes of deciding the
separated issues, it was assumed by the parties that SS supplied
material that did not comply
with the required specifications as
pleaded by Cladall in its particulars of claim, more particularly,
that the bulk of the material
supplied had not been galvanised
according to the Z275 specification; had not been manufactured and
produced according to Mittal
standards; was not ‘full hard’ and
was also not the required thickness.
[21] It was agreed between the parties
that, should the court find in favour of SS on issues (a) and/or (b),
the plaintiff’s claim
stood to be dismissed and further, that
should the court find that SS was excused from delivering materials
not according to specifications
by virtue of the special conditions,
SS would be entitled to judgment in terms of its counterclaim.
However, in the event of the
court finding in favour of Cladall that
SS was not entitled to rely on the relevant subclauses in the special
conditions as a defence
or was estopped from relying on such clauses,
the remaining issues in dispute on the pleadings would be finally
determined by the
court below at a further hearing.
[22] The court below made an order in
terms of the agreement between the parties and proceeded to hear
evidence on the separated
issues. The result was as recorded earlier
in this judgment.
Conclusions
[23] In the course of his judgment,
Erasmus J reasoned as follows:
‘
Counsel for the
plaintiff contends that what was delivered by the defendant was not
the merx contracted for by the parties, but
something else;
consequently the delivery was not in terms of the contract and the
defendant therefore cannot rely on the special
conditions to escape
liability for damages flowing from that delivery. The specifications
were clearly of critical importance to
the plaintiff. The fact that
the bulk of the sheeting supplied by the defendant did not conform to
those specifications did not
however alter the essential nature of
the material. What the plaintiff ordered and what the defendant
delivered was IBR galvanised
iron sheeting. It was accepted by the
plaintiff as being such. It was installed and used for the purpose
for what it was purchased,
namely the erection of a roof – albeit
one below specification. The agreement in any event caters for and
thereby contemplates
the possibility that the material delivered by
the defendant might not comply with contractual specifications (see
subclauses 6.4
and 7.3 . . .). Non-compliance with those
specifications in a particular delivery is dealt with contractually
and the delivery
therefore falls within the ambit of the contract.
The defendant’s non-compliance with the contractual specifications
may give
rise to issues of damages, but does not place the material
outside the contract. Counsel’s contention therefore does not
hold.’
[24] We do not agree with this
reasoning. In our view, it is clear from the evidence that Cladall
required, and ordered, a very
specific product and SS agreed to
provide
that
product – IBR roofsheeting with a thickness of 0.5 mm, full hard
industrial strength, galvanised according to a specification
of Z275
and manufactured according to Mittal standards. For the purposes of
deciding the separated issues agreed upon by the parties,
it is
common cause that the bulk of the product delivered by SS, while it
was indeed IBR roofsheeting, was
not
of the required thickness; was
not
full hard industrial strength; had
not
been galvanised according to a Z275 specification, and had
not
been manufactured and
produced according to Mittal standards. Not one of the specific
attributes of the roofsheeting agreed upon
between the parties as
forming the subject of the agreement had thus been met; in fact, the
roofsheeting delivered by SS bore no
relation to the goods ordered,
but was an entirely different (and inferior) product. None of the
minimum threshold requirements
set by Cladall and agreed to by SS had
been met by the latter. The contract could not be performed by
delivering IBR sheeting,
irrespective of its specification. It could
only be performed by delivering IBR sheeting of the required
specification.
[25] Properly interpreted, clauses 6.4
and 7.3 of the standard conditions of agreement (set out in paragraph
3 above) can only govern
the situation where
defective
goods are delivered by SS to its customer in terms of the contract.
They do not apply to a situation where the goods delivered
by SS are
an entirely different product to the goods ordered by the customer
and bear no resemblance to what had been agreed between
the parties.
This was conceded by counsel for SS during argument before us.
[26] For the purposes of the separated
issues, SS accepted that it did not deliver the goods that it was
obliged to deliver in terms
of the contract. It therefore failed to
establish that it had performed at all in terms of the contract and
its reliance on, inter
alia, clauses 6.4 and 7.3 of the standard
conditions was misplaced. Moreover, although SS relied in its plea on
clause 5.4 of the
standard conditions, which gives it the right to
deliver alternative goods to those ordered in certain circumstances,
SS did not
lead any evidence in this regard and, in our view, this
clause does not take the matter any further and thus cannot be
invoked
by it.
[27] Bearing in mind that this case
was decided on the agreed facts (set out in paragraph 20 above),
neither clauses 6.4 and 7.3,
nor any of the other clauses relied upon
by SS in its plea, afford it a valid defence against Cladall’s
claim for the payment
of damages. This being so, the question of
estoppel does not arise. As regards the further question whether
Cladall was entitled
to withhold payment for the goods delivered,
clause 11.1 (as set out in paragraph 3 above) clearly cannot apply to
a situation
in which there has been no performance at all (as opposed
to defective performance) in terms of the agreement. It follows that
this question must be answered in Cladall’s favour.
[28] The following order is made:
1. The appeal is upheld with costs.
2. The order of the court below is set
aside and substituted as follows:
‘
1. The court rules
that the defendant is not entitled to rely on the special conditions
as valid defences against the plaintiff’s
claim for the payment of
damages.
2. The court rules that
the plaintiff is entitled to withhold payment for the goods delivered
on the pleadings as they stand.
3. The remaining issues
in dispute on the pleadings are to be determined at a further
hearing.
4. Costs are to be costs
in the cause.’
_________________
M S NAVSA
JUDGE OF APPEAL
_________________
B J VAN HEERDEN
JUDGE OF APPEAL
Appearances:
For the Appellant: A Beyleveld
Instructed by: Friedman Scheckter
Port Elizabeth
Matsepes Inc
Bloemfontein
For the Respondent: G Jacobs
Instructed by: Goldberg & Victor
Port Elizabeth
L J Van Coppenhagen Inc
Bloemfontein
1
The
exact description of the goods in the order form is set out in
paragraph 12 below.