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[2018] ZAGPJHC 570
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Petit Board Wholesalers v Livingston Chrichton Attorneys (A3001/2018) [2018] ZAGPJHC 570 (6 September 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
APPEAL
CASE NO
:
A3001/2018
COURT
A QUO
CASE NO
:
3605/2015
DATE
:
6
th
September 2018
In
the matter between:
PETIT
BOARD
WHOLESALERS
Appellant
-
and -
LIVINGSTON
CHRICHTON
ATTORNEYS
Respondent
JUDGMENT
ADAMS
J
:
[1].
Central to this appeal is the question
whether, if regard is had to the common cause facts in the matter,
the surrounding circumstances
and the communications between the
parties, a contract came into existence between the appellant and the
respondent in terms of
which contract the appellant had sold to the
respondent certain goods at an agreed purchase price. A further issue
is what the
terms and conditions of the agreement were between the
parties.
[2].
The appeal is against the judgment and the
order of the Benoni Magistrates Court (Magistrate V P Mweli), handed
down on the 27
th
of September 2017, in terms whereof judgment was granted against the
appellant, who was the defendant in the court
a
quo
, in favour of the respondent, who
was the plaintiff, for payment of the sum of R101 450, together
with interest thereon and
cost of suit.
[3].
It is the respondent’s case that the
appellant, a supplier of wood and related materials, was contracted
to supply to it (the
respondent) wood and other materials which would
have been utilised by a third party, one Ingo Eichner (‘Eichner’),
to fit cabinets and other fixtures to a house, which also doubled as
a home office, at the special instance and request of the
respondent.
Pursuant to this contract the appellant had issued an invoice on the
21
st
of April 2015 addressed to the respondent, confirming that the
appellant would supply to the respondent ‘cabinetry services’
at an agreed price of R101 450. This amount was paid by the
respondent to the appellant by way of an electronic funds transfer
directly into the business banking account of the appellant.
Notwithstanding payment having made by the respondent pursuant to
the
aforesaid agreement, so the respondent alleges, the appellant failed
to deliver the materials ordered, which entitled the respondent
to
cancel the agreement, as it did, and to claim a refund of the amount
of R101 450 from the appellant.
[4].
The appellant defended the action against
it by the respondent for repayment of the said amount on the basis
that there was no agreement
between it (the appellant) and the
respondent. The appellant denies that the invoice was rendered
pursuant to the said agreement
between the parties for the supply of
material.
[5].
It is the appellant’s case that there
was an agreement between the respondent and Eichner, who the
respondent had employed
as a carpenter to provide carpentry services
at the house of the respondent, that the appellant would render an
invoice to the
respondent and that the monies received in respect
thereof would be in reduction of Eichner's account with the
appellant. This
invoice, so we understand the case of the appellant,
was a simulation and did not reflect the true facts of the matter and
the
actual agreement reached between the parties. The fact that the
appellant had no explanation for the manner in which this simulated
transaction was recorded in the books of account of the appellant,
according to the appellant, is of no significance.
[6].
This version is disputed by the respondent,
who claims that the agreement was that Eichner would purchase, on
behalf of the respondent,
the wood and related materials from the
appellant and that the respondent would pay the appellant directly
for the material to
be supplied for the respondent’s project.
It was never the intention of the respondent to pay to the appellant
the said amount
for the benefit and on account of the appellant.
[7].
In this appeal the appellant has, as it did
in the Magistrates Court, raised a number of preliminary points
in
limine.
There is no merit in any of
these legal points. I will deal with those points
in
limine
shortly.
[8].
The facts in this matter are as follows: On
the 21
st
of April 2015 the respondent and Eichner entered into an agreement in
terms of which Eichner would provide carpentry and joinery
services
to respondent, represented by Mr Crichton (‘Crichton’), a
partner in the respondent, for the manufacture of
cabinetry and
similar items in the kitchen, bar and wine cellar at the residence of
Crichton. It was suggested by Eichner that
the respondent purchase
the necessary wood and related materials for the project directly
from the respondent. After receiving
payment on the invoice from the
respondent, the appellant allocated the funds received to Eichner's
account and thereafter refused
to deliver any wood and related
material or to refund the monies received to the respondent.
[9].
The respondent’s case is based to a
large extent on the fact that an invoice was issued to it for the
amount of R101 450
and the evidence of Crichton that his
understanding was that the respondent was buying the material from
the appellant directly.
[10].
The case of the appellant was based on the
evidence of its owner and that of Eichner, which was to the effect
that the understanding
between all concerned was that the amount paid
to the appellant was in fact paid by the respondent to the appellant
on behalf of
Eichner. In other words, so it is alleged by the
appellant, when it received payment of the R101 450, it acted as
agent for
Eichner, who in the normal course of business would have
received that amount as part of the deposit payable in terms of his
contract
with the respondent. This is the crux of the dispute between
the parties.
[11].
The first point
in
limine
raised by the appellant was that
the respondent has failed to prove that it has the necessary
locus
standi in iudicio
to bring this action
against the appellant. The evidence of Mr Crichton was that he is the
senior partner of the respondent. At
all material times he was the
only equity partner of the firm. He has one ‘salaried partner’
and he also described
her as his junior partner. On the evidence, we
are persuaded that the respondent has been proven to exist and that
it has the necessary
standing to have instituted the proceedings in
the Magistrates Court. Therefore, this legal point stands to be
rejected.
[12].
The second point is that, according to the
appellant, there was no contract concluded between the appellant and
the respondent.
The basis for this assertion by the appellant is the
fact that Crichton was not able to say with certainty, as is the
requirement
in the context of a purchase and sale agreement, exactly
what goods the respondent had purchased from the appellant. This
point,
we assume, relates to the element that in a purchase and sale
agreement the
merx
needs to be identified.
In casu
,
so the argument goes on behalf of the appellant, that was not done
and therefore no purchase and sale agreement came into existence.
The
fallacy in this argument is apparent. The ‘thing’ which
was being bought by the respondent was the wood and other
material
which would be required for the project which had been clearly
identified in the plans prepared by Eichner and which is
capable of
being objectively identified. This preliminary point therefore also
stands to be rejected.
[13].
As regards the main dispute between the
parties, that being whether there was an agreement between the
respondent and the appellant
for the supply of material, this would
be a matter of interpretation based on the factual matrix in the
matter.
[14].
Crichton’s evidence was that Eichner
had suggested to him that he buys the material for the project
directly from the appellant.
The reason for that being that this
would have entitled the respondent to a reduction in the purchase
price due to the respondent
ultimately receiving a benefit as a VAT
Vendor. Additionally, so the evidence went on behalf the respondent,
Eichner owed the appellant
such a large sum of money that any
payments from him (Eichner) would be ‘swallowed up’ by
his historical debt to the
appellant. This, so Crichton’s
evidence went, was the rationale behind the contract between the
appellant and the respondent.
There is no doubt in my mind that this
was Crichton’s understanding of the arrangement, and this was
probably also the understanding
between the respondent and Eichner.
The question is whether that understanding was communicated to the
respondent by Eichner in
his dealings with the appellant, bearing in
mind that at no stage did the respondent have any direct
communication with the appellant.
[15].
Eichner himself gave evidence on behalf of
the appellant and testified that he required a deposit from the
respondent equal to fifty
percent of the contract price. A portion of
the deposit, that being the R101 450, Eichner required to be
paid to the appellant
and the balance of R126 152.50 was to be
paid to him personally. The evidence of Eichner was to the effect
that his understanding
of the arrangement was that the amount of the
R101 450 was to be paid to him (Eichner) via the agency of the
appellant. Eichner
was somewhat equivocal when giving evidence as to
whether he had expressly spelt it out to Crichton that, when making
payment of
the said amount, he would in fact be paying it on behalf
of Eichner. Eichner furthermore testified that he did not attend at
the
store of the appellant to purchase the requisite material for and
on behalf of the respondent.
[16].
It is clear that no matter what the
arrangement was between the appellant and Eichner, the respondent and
Crichton would probably
not have been aware of such an arrangement.
There can also be very little doubt that the respondent would have
been misled by the
issue of the invoice by the appellant and by the
request that the respondent pays the invoice amount directly to the
appellant.
[17].
The question is this: on the probabilities
was an agreement concluded between the respondent and the appellant
as contended for
by the respondent? This is a finding that can be
made only if the evidence of Eichner on this point is rejected
outright. That
is a factual issue which the Magistrates Court was
required to adjudicate. The Magistrate found in favour of the
respondent on
this factual issue.
[18].
Wessels JA in
South
African Railways & Harbours v National Bank of South Africa Ltd
,
1924 AD 704
at 715 – 16 said this:
‘
Although
the minds of the parties come together, courts of law can only judge
from external facts whether this has or has not occurred.
In
practice, therefore, it is the manifestation of their wills and not
the unexpressed will which is of importance...
…
.
the law does not concern itself with the working of the minds of the
parties to a contract but with the external manifestations
of their
minds ..... if by their acts their minds seem to have met, the law
will, where fraud is not alleged, look to their acts
and assume their
minds did meet and that they contracted in accordance with what the
parties purport to accept as a record of their
agreement.’
[19].
This pronouncement by the AD is a helpful
guide in resolving conflicts of evidence on the existence or the
terms of a contract.
As was stated by the author of
Christies:
The Law of Contract in South Africa, 6
th
Ed, by RH Christie:
‘
...
in order to decide whether a contract exists one looks first for the
true agreement of two or more parties and because such
agreement can
only be revealed by external manifestations one's approach must of
necessity be generally objective’.
[20].
I find myself in agreement with this
enunciation of the applicable legal principles. The point is this:
notwithstanding the evidence
to the contrary on behalf of the
appellant, the objective facts seem to support the claim by the
respondent that a contract for
the purchase and sale of material was
concluded between it (the respondent) and the appellant for an agreed
purchase price of R101 450.
How else, I ask rhetorically, does
one explain the invoice from the appellant to the respondent for that
amount. Also, why else
would the respondent pay such a large amount
of money to the appellant, and most importantly why would the
respondent pay to the
appellant an amount of money on behalf of
Eichner, with whom it had no relationship until shortly before they
concluded their agreement.
[21].
It was also submitted by Ms Gray, Counsel
for the respondent, that a contract may be formed between two persons
by virtue of their
conduct without any communication in language,
where such conduct leads to the necessary inference that they are
legally bound
to each other by a contractual obligation. In that
regard she referred us to:
Charles
Velkes Mail Order 1973 (Pty) Ltd v Commissioner for Inland Revenue
,
1987 (3) SA 345
(A) at 357 – 358. So for example, Ms Gray
contended, a contract of sale may be concluded where one person sends
to another,
goods on approval and the latter uses them or keeps them
for an unreasonable amount of time without communicating to the
sender.
We find ourselves in agreement with these submissions and on
the basis of this principle alone, the respondent has, in our
judgment,
proven the agreement for the purchase and sale of the
material between it and the appellant.
[22].
The appellant’s conduct in issuing
the invoice to the respondent would have created in the mind of the
respondent a belief
that there was an agreement between Eichner and
the respondent that Eichner had purchased the wood and related
material for the
project on behalf of the respondent and that Eichner
had arranged that payment would be made by the respondent to
appellant pursuant
to that contract. The objective facts in the
matter and the external manifestations portrayed by the appellant and
Eichner to the
respondent was to that effect. There came into
existence an agreement between the respondent and the appellant for
the purchase
and sale of wood to be specified and described by
Eichner.
[23].
Another approach to be adopted in the adjudication of the dispute
between the parties is one based on the rules relating to
the
interpretation of documents. In the matter of
G4S Cash Solutions
(SA) (Pty) Ltd v Zandspruit Cash & Carry (Pty) Ltd and Another,
2017(2) SA 24 (SCA), the following principle is enunciated at par
[12]:
‘
Whilst
the starting point is the words of the agreements, it has to be borne
in mind, as emphasised by Lewis JA in
Novartis
SA (Pty) Ltd v Maphil Trading (Pty) Ltd
,
[2015] ZASCA 111
;
2016 (1) SA 518
(SCA) para 27, that this court has
consistently held that the interpretative process is one of
ascertaining the intention of the
parties ─ in this case, what
they meant to achieve by incorporating clause 9.9 in the agreements.
To this end the court has
to examine all the circumstances
surrounding the conclusion of the agreements, ie the factual matrix
or context, including any
relevant subsequent conduct of the
parties.’
[24].
Also, in
Novartis SA v (Pty) Ltd v Maphil Trading (Pty) Ltd,
2016(1) SA 518 (SCA), the court has this to say relative to the
issue as to whether parties intended to bind themselves
contractually:
‘
[35]
The argument that the words of the document, signed by Van Jaarsveld
and Van der Spuy on 14 October 2004, must be examined
only
linguistically, and that the genesis of the document, subsequent
conduct and other facts relevant to the conclusion of the
contract be
ignored, is directly contrary to the decisions of this court cited
above, and many others. But, as I have said, the
issue here is not
what the parties intended their contract to mean, but whether they
intended to bind themselves contractually.
That inevitably requires
an examination of the factual matrix – all the facts proven
that show what their intention was in
respect of entering into a
contract: the contemporaneous documents, their conduct in negotiating
and communicating with each other,
and, importantly, the steps taken
to implement the contract.’
[25].
Applying these principles
in
casu
, we find ourselves in agreement
with the submissions on behalf of the respondent that the balance of
probabilities favours the
case of the respondent. In addition, the
applicable legal principles support the conclusion that the contract
was concluded as
averred by the respondent.
[26].
The Magistrates Court was therefore, in our
view correct in its conclusion that the agreement was concluded
between the appellant
and the respondent as alleged by the
respondent.
[27].
In the view we take of the claim by the
respondent based on contract, it is not necessary for us to deal with
the claim based on
enrichment, which was the respondent’s
alternative cause of action.
[28].
For these reasons, I am of the view that
the court
a quo
was correct in granting judgment in favour of the respondent against
the appellant.
[29].
Accordingly, the appeal stands to be
dismissed.
Cost
[30].
The general rule in matters of costs is
that the successful party should be given his costs, and this rule
should not be departed
from except where there be good grounds for
doing so, such as misconduct on the part of the successful party or
other exceptional
circumstances. See:
Myers
v Abramson
, 1951(3) SA 438 (C) at 455.
[31].
I can think of no reason why I should
deviate from this general rule. The respondent should therefore be
awarded the cost of the
appeal.
Order
Accordingly,
I make the following order:-
1.
The appellant’s appeal is dismissed
with costs.
________________________________
L R ADAMS J
Judge of the High Court of South
Africa
Gauteng Local Division,
Johannesburg
I
agree,
__________________________
P H MALUNGANA AJ
Acting Judge of the High Court of
South Africa
Gauteng Local Division,
Johannesburg
HEARD
ON:
11
th
June 2018
JUDGMENT
DATE:
6
th
September 2018
FOR
THE APPELLANT
Adv
A P Bruwer
INSTRUCTED
BY:
Schalk
Britz Incorporated
FOR
THE RESPONDENT:
Adv
H Gray
INSTRUCTED
BY:
Livingston
Crichton Attorneys