About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2020
>>
[2020] ZAGPPHC 18
|
|
Mivani Construction CC v Extreme Lifestyle Centre (Pty) Ltd (15864/2012) [2020] ZAGPPHC 18 (25 February 2020)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
(1)
REPORTABLE:
NO
(2)
OF INTEREST
TO OTHER JUDGES: YES
(3)
REVISED
CASE
NO: 15864/2012
25/2/2020
In
the matter between:
MIVAMI
CONSTRUCTION CC
PLAINTIFF
and
EXTREME
LIFESTYLE CENTRE (PTY) LTD
DEFENDANT
J
U D G M E N T
VAN OOSTEN J:
Introduction
[1]
This matter in essence turns upon the question whether or not a
binding agreement in respect of the purchase and sale of seven
Powerstar tipper trucks in 2008, came into existence between the
parties, on the terms alleged by the plaintiff. It is the defendant’s
case that no agreement whatsoever was entered into with the
plaintiff.
[2]
The plaintiff issued the summons in this action against the defendant
on 19 March 2012. In the amended particulars of claim
the plaintiff
claims, in claim 1, cancellation of the agreement that allegedly was
entered into with the defendant, and in claim
2, payment of the
amount of R7 940 100-00, being the purchase price paid in
respect of the seven trucks. The main cause
of action is based on an
oral agreement entered into between the parties to which several
alternatives were added in the subsequent
amendment of the
particulars of claim. For present purposes, I do not consider it
necessary to refer in any detail to the amendments.
Separation
of issues
[3]
At the commencement of the trial before me, and in terms of an
agreement between the parties, I ordered a separation of the
issue
whether an agreement as relied upon by the plaintiff, on the terms
pleaded, was entered into between the parties, from the
remainder of
the issues and the trial proceeded on the separated issue only. The
issue is set out in the pleadings, and the separation
order refers to
the specific paragraphs in the pleadings that are relevant to the
determination of the separated issue.
Factual
background
[4]
The plaintiff conducted business in civil construction, for which it
utilised construction equipment, colloquially referred
to as yellow
machines, and a fleet of heavy haulage tipper trucks. The
plaintiff is a registered close corporation of which
Mr Ruby Mphalele
(Mphalele) is one of its two members. Mphalele was the only witness
called to testify at the trial. His evidence
was not challenged
either as to its contents or credibility.
[5]
The defendant is a registered company, which conducted business in
Kempton Park, operating a workshop in Elandsfontein, as part
of the
Super Group and at the time, as an authorised dealer in and
distributor of new Powerstar tipper trucks, which are the subject
matter of this case. The trucks are of Chinese origin and assembled
in Pietermaritzburg, from where they were distributed to the
various
Super Group’s dealerships, including one which has some
relevance for present purposes, known as Zululand Commercial
Vehicles, a close corporation, presently in voluntary liquidation, of
which Mark Christopher Beukes (Beukes) was and still is a
member.
Beukes moreover, at times, as will become apparent, also represented
the defendant and the Super Group in writing emails
to Mphalele,
concerning the trucks purchased by the plaintiff.
[6]
Towards the end of 2008, the plaintiff became interested to expand
its fleet of mainly Fiat and Ford trucks in order to meet
the demands
of construction works contracts it had been awarded, relating to the
upcoming World Soccer Cup event, which was to
take place in 2010.
During October/November 2008 a meeting took place at the plaintiff’s
business premises, in Bredell, Kempton
Park, between Mphahele,
Ndelele (also a member of the plaintiff), and Gordon Randall (the
plaintiff’s financial and business
advisor), on the one side,
and Beukes on the other.
[7]
Beukes introduced himself as a senior official or general manager of
the Super Group, holding an interest in Zululand Commercial
Vehicles,
which he said was a dealership of Super Group in Natal. Beukes then
embarked upon an extensive showcasing of the Superpower
trucks, of
which Mphalele had no knowledge. Beukes with the usual sales
repertoire and puffery, lauded the many exemplary qualities
and
capabilities of the trucks with the added benefit of extensive
warranty cover, of course, to apply, one may assume he probably
added, only in the unlikely event of problems being encountered. But,
when Beukes assured them that the Superstar trucks were,
in reality,
‘another version of the Mercedes Benz trucks’ with in
addition a bigger load capacity than Mercedes Benz
trucks, Mphalele’s
indecision in purchasing the newcomer trucks crumbled into oblivion.
[8]
The parties then and there agreed that the plaintiff would buy
altogether ten Superstar tipper trucks from Zululand Commercial
Vehicles, for the total purchase price of R10 203 000-00.
In confirmation thereof, a printed order under the name
of the
plaintiff and containing its particulars, was made out and signed,
with the date 8 December 2008 inserted, addressed to
Zululand
Commercial Vehicles, for 10 Powerstar, 4035K, 15 cube tipper trucks,
at a unit price of R895 000-00 each, excluding
VAT, and a total
purchase price of R10 203 000-00, inclusive of VAT.
[9]
The date of delivery was not yet agreed on as the annual builder’s
recess was on hand and Mphalele decided to stand this
over to early
the next year. In early 2009 he decided to obtain finance from
Wesbank for and to purchase only 7 of the Powerstar
trucks originally
ordered. A master instalment sale agreement between the plaintiff and
Wesbank had been in existence since 14
September 2006. The
plaintiff’s application for finance was approved, but Wesbank
informed Mphalele that the risk would have
to be spread and shared
with another finance company, known as Capital Acceptances Ltd
(Capital). In consequence, written lease
agreements were concluded on
13 February 2009 between the plaintiff and Capital in respect of four
trucks and on 16 February 2009,
instalment sale agreements between
the plaintiff and Wesbank (each specifically incorporating the terms
and conditions of the 2006
Master Instalment Sale Agreement), in
respect of the remaining three trucks. In respect of each truck
financed, the defendant rendered
a New Vehicle Tax Invoice, made out
to the particular finance company, containing a full description of
the truck, the purchase
price and reflecting that the truck would be
delivered to the plaintiff.
[10]
In terms of the lease and instalment sale agreements, the trucks were
delivered to the plaintiff by the defendant on behalf
of the finance
company, as the seller thereof, and the finance company was and
remained the owner thereof until final payment of
all amounts due in
terms of the agreement, had been effected by the plaintiff. All the
agreements moreover, contain a
voetstoots
clause in favour of
the finance company (collectively referred to as ‘the finance
agreements’).
[11]
On 6 March 2009 the plaintiff duly paid the amount of R150 000-00
into the bank account of Zululand Commercial Vehicles,
which was the
deposit required in respect of the purchase of the said trucks.
[12]
Soon after delivery of the trucks to the plaintiff and while
operating on construction sites in Polokwane, mechanical problems
and
deficiencies emerged. Then followed a long line of negotiations and
correspondence in which the defendant sought to honour
what it
perceived to be its obligations under a standard written warranty
issued with the sale of each truck, a copy of which,
containing all
the terms and conditions thereof, was left in the cubby hole of each
truck when delivered. Mphalele testified that
he was never made aware
of the warranty terms and conditions and only discovered that the
document existed during a visit some
eight months later, to the
defendant’s premises in Elandsfontein, where the trucks were
and still to this day, are parked.
[13]
Just to conclude the narrative, the plaintiff having endured the poor
mechanical performance of the trucks and according to
him, the
inefficient manner in which the repairs were performed by and on
behalf of the defendant over many months, in May 2009
cancelled the
agreement of sale. The defendant on the other hand, contended that
the trucks had, albeit eventually, all been properly
repaired and the
trucks were offered ready for collection by the plaintiff from 26 May
2009 onwards. The plaintiff however, refused
to take delivery and
issued summons for confirmation of its cancellation of the sale
agreement and a refund of the purchase price
paid. In the meanwhile
the plaintiff continued with the payments in terms of the finance
agreements, which by 2014 were all fully
paid.
Discussion
[14]
Against this background, a legal construction needs to be placed on
the facts, in order to determine the contractual relationship
between
the parties. The point of departure is to consider the initial
negotiations between the parties and the result thereof.
It is trite
that a contract of sale becomes
perfecta
when agreement is
reached on two essential elements: first, the thing sold and second,
the price, to which must be added that the
contract must not be
subject to a suspensive condition. These principles were recently
re-affirmed by the Supreme Court of Appeal
in
Starways Trading v
Pearl Island Trading
(232/2018)
[2018] ZASCA 177
(3 December
2018); 2019 (2) SA 650
(SCA) para [9].
[15]
Applied to the facts of the present matter, these elements are both
clearly satisfied. The trucks were duly and properly identified
and
the price agreed upon. An order confirming the agreement was signed
and executed. As was held in
Starways
, the fact that the date
of delivery was not specified at that stage does not alter the
position.
[16]
The defendant’s bare denial that any agreement whatsoever was
concluded with the plaintiff, accordingly cannot stand.
[17]
The more pertinent issue arising for determination, is the effect
that must be given to the lease and instalment sale agreements
on the
initial contract concluded between the parties. The answer, in my
view, is to consider whether a novation of the original
contract had
occurred by the conclusion of the finance agreements. Neither party
approached the matter in the pleadings or in argument
before me, on
this basis. Counsel for the defendant, however, conceded that
novation was central to the determination.
[18]
The principles underlying novation have crystallised in many reported
judgments to these. In
Acasia Mines Ltd v Boshoff
1958 (4) SA
330
(AD) 337, Beyers JA held:
‘…
novation is essentially
a question of intention: when parties novate they intend to replace a
valid contract by another valid contract.’
In
the present case there is no evidence that the parties expressly
agreed to replace the initial agreement with the finance agreements.
Whether a novation did in fact take place, can only be determined by
way of inference. The intention to effect a novation cannot
be held
to exist except by way of necessary inference from all the
circumstances of the case (See
Electric Process Engraving and
Stereo Co v Irwin
1940 AD 220
at 226/7). The circumstances of the
case, the then Appellate Division held, in
French v Sterling
Finance Corporation
1961 (4) SA 732
(A) 736 H, ‘of course
include the conduct of the parties’.
(See
also:
Rodel Financial Service v Naidoo and Another
2013 (3) SA
151
(KZP) para 13;
Barclays National Bank v Smith
1975 (4) SA
675
(D);
Plett Building Supplies
CC
t/a
Plett
Build It v Mgobo
(2906/2013) [2016] ZAECPEHC 60 (22 September
2016) para [18] – [20];
Scania Finance SA v Kaknis
(1271/2010) [2010] ZAECPEHC (15 August 2010) para [7]; and
Gondwana
Marketing v Birch
(A903/2011) [2014] ZAGPPHC 125 (12 March 2014))
[19]
The conduct of the parties, subsequent to the conclusion of the
finance agreements, can be gleaned from the extensive correspondence
that was exchanged between them over a period of some eight months
after the conclusion of the finance agreements. As a starting
point
and before delving any deeper into the correspondence, it is of
significance that although demands were made and challenges
arose in
regard to the after sales warranty on the trucks, not one single
reference to, let alone reliance on, the terms of the
finance
agreements was made. To the contrary, the parties conducted
themselves throughout as if the initial agreement was the one
and
only agreement between them.
[20]
The defendant, at all times, assumed the position of the
seller/dealer of the trucks. In the welcoming letter of the defendant
to the plaintiff, dated 3 March 2009, when the finance agreements had
already been negotiated and concluded, the plaintiff is given
the
promise that it is the defendant’s and its dealerships’
intention to ‘exceed customers’ expectations
in all
of our business with you’. When the plaintiff’s
experienced mechanical difficulties with the trucks, those were
brought to the defendant’s notice, resulting in a ‘full
inspection of the trucks purchased’ by the defendant
to ‘ensure
that all problems will be solved’. Once again the plaintiff was
reminded of their commitment to ‘our
customers at all times’.
Reference was made to ‘our manufacturer’s warranty terms
and conditions’ which
‘the selling dealer should have, at
the time of the hand over, explained’.
[21]
On 2008 Mphalele wrote to the defendant informing them ‘that
Mivani Construction has cancelled the deal of the seven
trucks bought
from Super Group due to endless problems experienced by Mivami since
delivery’. In an email dated 5 June
2009, the defendant
in summarising the situation, states that ‘The customer, Mivami
Construction, purchased 7 X 40.35 Powerstar
trucks from Zululand
Commercial Vehicle Sales in February 2009’. Although the
email meticulously recounts the history
of the matter, no mention at
all is made of the finance agreements. Everything said in the email,
in all respects, is consistent
with the position that would have
prevailed, absent the finance agreements. As late as on 9 October
2009, Beukes, writing on behalf
of the Super Group, reiterated that
the trucks were still available for collection, and that ‘the
vehicles remain legally
yours’. He even offered his assistance
to sell the trucks and added that he had already referred a potential
buyer to the
plaintiff.
[22]
I conclude that in the absence of any conduct by the parties showing
an intention to replace the initial agreement with the
finance
agreements, I hold that a novation has not occurred with the result
that the initial agreement is still valid and binding
between the
parties (the agreement).
[23]
Should I be wrong in the conclusion I have arrived at, an alternative
basis for holding the defendant liable requires consideration,
with
reference to the English case,
Brown v Sheen and Richmond Car
Sales Ltd
[1950] All ER 1102
(KB). There the car dealer was held
liable, in respect of a breach of a warranty as to the condition of
the vehicle at the date
of the sale, notwithstanding the sale of the
vehicle by the dealer to the finance company in terms of a hire
purchase agreement,
which it was held, constituted a collateral
agreement. Although not yet known in our law of contact, I agree with
AJ Kerr, Principles
of the law of contract (6
th
ed) that
there is no reason for not incorporating this principle into our law
of contract.
The
warranty terms and conditions
[24]
One final issue requires determination. It is this: do the
defendant's standard warranty terms and conditions (a copy of which
is annexed to the plaintiff’s particulars of claim as annexure
‘A’) form part of the agreement?
[25]
The application of well-entrenched basic principles relating to tacit
terms of an agreement, readily provides the answer.
In
Visagie
& Associates CC & Another v Small Enterprise Finance Agency
Ltd
(262/2018)
[2019] ZASCA 32
(28 March 2019), these principles
were reiterated as follows:
‘
It is well established that a
tacit term is ‘an unexpressed provision of the contract which
derives from the intention of
the parties, as inferred by the court
from the express terms of the contract and the surrounding
circumstances (
Alfred
McAlpine & Son v Transvaal Provincial Administration
1974
(3) SA 506
(A) 531H). A court will be slow to import a tacit term
into a written contract (
Wilkins
NO v Voges
[1994] ZASCA 53
;
1994 (3) SA 130
(A) 136-7). In
Wilkins
this
court said:
‘
A tacit term, one so
self-evident as to go without saying, can be actual or imputed. It is
actual if both parties thought about
a matter which is pertinent but
did not bother to declare their assent. It is imputed if they would
have assented about such a
matter if only they had thought about it -
which they did not do because they overlooked a present fact or
failed to anticipate
a future one. Being unspoken a tacit term is
invariably a matter of inference. It is an inference as to what both
parties must
and would have had in mind. The inference must be a
necessary one: after all, if several conceivable terms are all
equally plausible,
none of them can be said to be axiomatic. The
inference can be drawn from the express terms and from admissible
evidence of surrounding
circumstances. The onus to prove the material
from which the inference is to be drawn rests on the party seeking to
rely on the
tacit term. The practical test for determining what the
parties would necessarily have agreed on the issue in dispute is the
celebrated
bystander test. Since one may assume that the parties to a
commercial contract are intent on concluding a contract which
functions
efficiently, a term will readily be imported into a
contract if it is necessary to ensure its business efficacy;
conversely, it
is unlikely that the parties would have been unanimous
on both the need for and the content of a term, not expressed, when
such
a term is not necessary to render the contract fully functional.
The above propositions, all in point, are established by or follow
from numerous decisions of our courts.’
[26]
The warranty contains standard terms and conditions. It applied to
all new Superstar trucks that were sold by the defendant
irrespective
of whether the purchaser agreed to it or not. For that reason a copy
of the booklet containing the terms and conditions
of the warranty
was simply left in the cubby hole of each new truck at the time of
delivery, for the benefit of the purchaser.
No acceptance thereof by
the purchaser was either required or necessary. The terms and
conditions of warranties of this kind, in
the new vehicle sales
industry, are not negotiable as they are standard and factory
underwritten. The plaintiff was at all times
alive to the fact that a
warranty applied and indeed demanded performance in terms thereof
although not being aware of its exact
terms until after its
cancellation of the agreement. I have no doubt that had the bystander
test been applied, both parties would
at any time have been unanimous
that the defendant’s standard warranty did apply. Importation
of the warranty by way of a
tacit term to the agreement promotes and
ensures business efficacy and in my view, is fully warranted in the
circumstances of this
case.
Order
[27]
In the result I make the following order:
1.
It is
declared that the parties concluded an agreement as referred to in
paragraphs 4, 5 and 6 of the plaintiff’s particulars
of claim.
2.
The
defendant’s warranty, a copy of which is annexed as annexure
‘A’ to the plaintiff’s particulars of claim,
is
imported as a tacit term of the agreement referred to in paragraph 1
above.
3.
The
defendant is to pay the plaintiff’s costs of the action, such
costs to include the costs consequent upon the employment
of senior
counsel.
FHD
VAN OOSTEN
JUDGE
OF THE HIGH COURT
COUNSEL
FOR PLAINTIFF
ADV AJ LOUW SC
PLAINTIFF’S
ATTORNEYS
DE BRUYN & SMIT INC
COUNSEL
FOR DEFENDANT
ADV I MILTZ SC
DEFENDANT’S
ATTORNEYS
FLUXMAN
INC
DATES
OF HEARING
18 & 19 FEBRUARY
2020
DATE
OF JUDGMENT
25 FEBRUARY 2020