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[2016] ZAGPPHC 191
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Onderberg Verwerkings Kooperasie Beperk v Chamotte Holdings (A 341/11) [2016] ZAGPPHC 191 (22 March 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: A 341/11
DATE:
22 MARCH 2016
In
the matter between:
DIE ONDERBERG
VERWERKINGS
KOOPERASIE
BEPERK
..........................................................................
Appellant(Defendant
a quo)
Versus
CHAMOTTE
HOLDINGS (PTY)
LTD
..................................................
Respondent(Plaintiff
a quo;)
JUDGMENT
MATOJANE
J
Introduction
[1]
This
is an appeal, with leave of the Supreme Court of Appeal, to the full
Bench of this court against that portion of the judgment
and orders
of the Honourable Legodi J in terms whereof he granted judgment on a
Claim A in favour of the respondent in the sum
of R 753 810.00 plus
interest at 15.5% per year from the date of the summons to date of
payment. The trial court granted absolution
from the instance on
Claim B and ordered each party to pay its own costs.
[2]
There
is no appeal or any cross-appeal against any of the other orders that
were made by the trial court.
[3]
The
respondent instituted an action for damages suffered as a consequence
of loss of income resulting from the alleged breach of
an agreement
for the dumping of wet citrus peel at a waste disposal site of the
respondent. The loss was calculated at an agreed
dumping fee of R
15.00 per ton on 50,254 tons of wet citrus peel which tonnage the
appellant was allegedly obliged to dump at the
waste disposal site
during 2003-2005 seasons but did not do so.
[4]
Before
the court a quo appellant denied that the verbal agreement relied
upon by the respondent was concluded early in 2001 as pleaded.
The
appellant argued that the agreement was entered into on a different
occasion, namely October 2001 under another agreement.
Appellant also
disputed the terms of the later agreement.
[5]
The
trial court found that the respondent's version of the terms and
conditions of the agreement was more probable than the appellant's
version and granted judgment in favour of the respondent.
Factual
background
[6]
The
appellant is a cooperative which conducts a juice processing
operation, processing some 60,000.00 tons of citrus per season
which
generates some 30,000.00 tons of wet peel and pulp per season
depending on whether it was a bad or good export season. Since
1997
appellant had an arrangement with another company for the dumping of
wet citrus peel on its land. This arrangement was summarily
terminated. The appellant needed a waste disposal site but could not
obtain the necessary statutory authorisation.
[7]
The
respondent mines for minerals including magnesite, in the same area
where the appellant conducts its agricultural cooperative.
The
respondent was under an obligation to rehabilitate the mined- out
surface in its mining area for the purposes of which it could
use the
wet citrus peel.
[8]
During
the 1997 season, the respondent allowed the appellant to dump its
peel to a designated site on respondent's property for
an agreed sum
of R15,00 excluding VAT per ton of orange peel dumped. The respondent
composted the surplus orange peel for its own
benefit.
[9]
The
whole venture was about benefiting both parties, with the appellant
to get a disposal site and the respondent to get compost
for
rehabilitation and for some sales.
[10]
During the 1997 season appellant dumped 31 788 tons of wet
peel on respondent's premises which were duly paid for. At the
commencement
of the 1998 season the use of the site was prohibited by
the department of Water Affairs and Forestry in terms of the Section
20(1)
of the Environmental Conservation Act, Act 73 of 1989 as
amended. In the 1998 season appellant dumped only 66 tons of orange
peel.
[11]
The appellant obtained a temporary permit from the Minister
for 1999 and 2000 seasons and appointed consultants to apply for a
permanent
permit and or exemption therefrom. The appellant was
unsuccessful in obtaining the required permit and/or exemption.
[12]
The appellant requested respondent to take over the process to
obtain authorisation for and to construct a waste disposal site.
Pleadings
[13]
In its original Particulars of Claim, respondent claimed
R810,000.00 from appellant as compensation for damages as a result of
an
alleged breach of another verbal agreement, the material, express
alternatively implied terms which were pleaded as follows: -
"8.1
The plaintiff will proceed with an application on behalf of the
defendant for the necessary permit and comply with any
of the
requirements or conditions imposed by the said minister for the
obtaining of a permit or alternatively for being exempted
from the
need of obtaining such a permit.
8.2
The defendant will deliver
all its orange peels not being less than 30 000.00 tons per season of
wet peel for three consecutive
seasons following the granting of the
permit.
8.3
The parties had within their
contemplation that the agreement would continue for at least another
two years and it is at the specific
request of the defendant that the
plaintiff applied for an exemption on the site for five years. The
parties thus agreed that the
price per ton would continue at R15,00
per ton excluding VAT for the first three seasons but that this
figure will be adjusted
upwards after the three consecutive seasons
for the next two seasons as overhead costs would warrant such
adjustment.
8.4
It was at all material times
the understanding that plaintiff would compost the peel for its own
benefit and that the composting
business would contribute to the
creation of jobs for the local community in terms of the plaintiff's
BEE policy."
[14]
The appellant denies that the verbal agreement relied upon by
the respondent was entered into in early 2001.The appellant pleaded
that the terms of the aforesaid October agreement were as follows:
*11.1
The respondent would at his own costs and responsibility, prepare and
construct a waste disposal site for wet citrus peel;
11.2
That from the date of
completion of the waste disposal site the defendant would be entitled
to dump wet citrus peel at the site
at a dumping fee of R15.00 (VAT
excluded)
11.3
That the aforesaid dumping
fee would be reviewed at the end of 3 seasons from the date of
completion of the waste disposal site:
and
11.4
That the defendant would,
from the date of completion of the waste disposal site and for the
following 3 seasons consecutively,
be obliged to dump such a volume
of wet peel at the waste disposal site as would enable the plaintiff
to recover its capital costs
for the construction of the waste
disposal site".
[15]
In its amended particulars of claim, plaintiff now claims a
total amount of R4 850,376.00 as compensation for damages as a result
of the alleged breaches of the same alleged verbal agreement of early
2001. The respondent still relied on the terms mention in
8.1 and 8.2
above. The respondent now pleaded for the first time additional terms
of the aforesaid agreement as follows: -
"8.3
The parties had within their contemplation that the agreement would
continue for at least another two years and it is
at the the specific
request of the defendant that the plaintiff applied for an exemption
on the site for five years. The parties
thus agreed that the price
per ton would continue at R15.00 per ton excluding VAT for the first
three seasons but that this figure
would be adjusted upwards after
the three consecutive seasons for the next two seasons as overhead
costs would warrant such adjustment."
8.4
It was at ail material times
the understanding that the Plaintiff would compost the peel for its
own benefit and that the composting
business would contribute to the
creation of jobs for the local community in terms of the plaintiff's
BEE policy.
8.5
Plaintiff has at his own
cost and for his own benefit developed an organic compost called
'Biomix' the surplus of which to the knowledge
of defendant was sold
to farmers for R89.00 per ton.
[16]
In claim A respondent claimed payment of the sum of R710
000.00 for loss of income of the dumping fee of R15.00 per ton for 47
376
tons. The respondent introduced a further claim (as Claim B)
claiming payment of the value to the plaintiff of 47 376 tons of peel
from which 23 688 tons of compost could have been manufactured at the
profit of R49.00 per ton of compost.
[17]
In Claim C(a) respondent claimed of an amount of R1 140 000.00
as the increased amount at R19 per ton for 60 000 tons for the 2006
and 2007 seasons. In Claim C(b) respondent claimed an amount of R1
470 000.00 as payment for the loss of 30 000.00 tons of compost
which
could have been manufactured from the aforesaid 60 000 tons of orange
peel. In the new claim D respondent claims payment
of R370 000.00
being the cost of rehabilitation of the dumping site.
[18]
In the course of his judgment Legodi J stated:
"Secondly, the
defendant's version should be matched against that of the plaintiff.
The latter developed the dumping site at
a huge cost. It could not
have been expected of it that it could develop such a site only to
recover its costs and the end, so
it was contended by the plaintiff.
The plaintiff is a business entity, doing business in mining. When
the idea of a relationship
with the defendant was mooted, especially
for the period starting in 2003, its financial manager, who is an
accountant by profession,
was asked to do a feasibility study on the
project. It was felt it would make business sense to conclude such an
agreement with
the defendant. For example, there would be a payment
of R15.00 per ton of peels. There would also be a compost project
derived
from wet peels and sold at a profit to the public and farmers
in the surrounding areas."
[19]
Despite explanation that Fourie could not be called to testify
as he had received cancer treatment and did not want to go through
the rigours of a trial, the trial court stated:
"The defendant
with regard to what was agreed upon, failed to lead evidence of the
person who had dealings with the plaintiff.
Mr Greaves, the
plaintiff's Managing Director, was the person who negotiated for the
establishment of the dumping site. Effectively
therefore, the
defendant for its term of the agreement, relies on documentation and
or circumstantial evidence. This evidence must
be measured against
the viva voce evidence of Mr Greaves and other factors".
[20]
The learned judge concluded:
"...it would
not have made any business sense for the respondent to conduct its
affairs in this matter. For example, to erect
the dumping site for
the defendant, incur huge costs and only thereafter content itself in
recovering the costs."
The dispute
[21]
Before these arguments are considered, it is necessary to
place the dispute in its proper context. Essentially the respondent
alleges
that the appellant was obliged to dump at the waste disposal
site it constructed at least 30 000 tons on peel for a minimum of
three seasons commencing 2003 in terms of the verbal agreement.
[22]
The appellant on the other hand avers that an oral agreement
was entered into or or about October 2001 between appellant
represented
by its then manager, Johan Fourie and the respondent
represented by its then manager, Jan Maritz. Appellant alleges that
in terms
of the said agreement, it only had to dump enough peel to
enable the respondent to recover its capital costs for the
construction
of the dump site and that by dumping at least 39.100
tons the respondent received R586,500.00 which was sufficient to
cover the
respondent's capital outlay of R525,000.00.
[23]
These
two versions are mutually destructive in the sense that the
acceptance of the one must necessarily lead to the rejection of
the
other. Eksteen AJP in National Employers 'General Insurance v
Jagers
[1]
set out the approach to be followed where there are mutually
destructive versions. He stated at 440 D-G
"It seems to
me, with respect, that 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 it is 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"
[24]
As my judgment will show, the trial court erred in not making
proper factual findings in the manner set out by Eksteen AJP in
Jagers
(supra). The court a quo found that the versions of the
appellant and the respondent are mutually destructive and decided the
matter
on the version of the respondent. The court gave no reasons
why it preferred this version and did not have regard to the
probabilities
or the credibility of main witness for the respondent.
Its failure to test respondent's allegations against the general
probabilities
is a misdirection entitling this court to reassess the
evidence and determine the probabilities. I will hereafter show how
the
trial judge erred in his approach.
[25]
Mr Greaves, respondent's Managing Director, testified on
behalf of the respondent that he requested Fourie, who was acting on
behalf
of the appellant, in October 2001 that the parties enter into
a formal written agreement that appellant agree to make exclusive
use
of the waste disposal site of the respondent. Fourie refused to sign
the agreement saying he will not be able to get approval
from the
board of the appellant. Greaves testified that by early 2003 there
was still a need to "formalise our agreement and
what it
entailed".
[26]
On this evidence, respondent knew beforehand that Fourie
lacked the necessary authority to bind the appellant to this specific
agreement
in terms of which appellant would be bound to exclusively
dump all its orange peels not being less than 30 000 tons per season
at the waste site of the respondent.
[27]
The trial court did not consider this evidence at ail despite
the fact that the respondent relied on it for its cause of action.
In
my view, the trial court should have found that the said agreement
was invalid and unenforceable and should have dismissed all
the
claims on this ground alone.
[28]
Counsel
for the respondent submitted in his heads of argument that
appellant's argument on appeal that Fourie lacked authority was
never
pleaded and to raise this issue on appeal is unfair to the
respondent. I disagree, the unfairness will not arise in the present
matter as the issue was fully canvassed at the trial. In any event,
the court has a duty to determine the real issues between the
parties, and provided no possible prejudice can be caused, to decide
the case on those real issues
[2]
.
[29]
Greaves gave vague and contradictory versions as to when and
how the alleged agreement came into existence. He testified that
early
in 2001 Fourie approached him with a request that the plaintiff
proceed to take over the application for the necessary permit for
a
waste disposal site. He does not mention any terms agreed upon by the
parties at that stage. In his letter of 19 March 2003,
Greaves
recorded the request to proceed with the obtaining of the site permit
as being in October 2001. The date of October 2001
is also confirmed
in the letter of demand addressed to the appellant on the 13 August
2004.
[30]
When asked by the court when was the agreement concluded,
Greaves testified that it was in the early part, just before the
season
of 2003 (between January and March). When asked to explain why
in the pleadings he said the agreement took place early in 2001,
he
was driven to assert that the contract developed or evolved over time
from early 2001 up to and including the first quarter
of 2003. Under
cross examination he testified that respondent does not rely on an
agreement concluded in 2001 but on an agreement
with evolved over
time between 2001 and 2003. The difficulty with the latter version is
that the pleadings as amended expressly
states that "During the
early part of 2001 the parties represented as aforesaid entered into
another verbai agreement".
[31]
The trial court did not deal with the issue as to whether the
respondent has proven the existence of the specific agreement upon
which it relied as pleaded in its amended particulars of claim for
its cause of action. In my view, the trial court should have
found
that the respondent has failed to discharge the onus of proving the
existence of the specific agreement upon which it relied
for its
cause of action.
[32]
Greaves testified that appellant was obliged to use
respondent's waste disposal site exclusively to dump all its wet
peels. In a
letter of the 12 September 2002 that Greaves wrote when
he found out that appellant had applied for approval of its own
wasted
disposal site he never reminded appellant of the exclusivity
of the arrangement, all that he was concerned with was that the
parallel
application will detract from the urgency of the permit that
respondent was trying to get. The conduct of the appellant in
pursuing
a parallel application for its own disposal site without any
demur from respondent is not consistent with the version of the
respondent
that appellant was obliged to dump all of its wet peels at
the respondent's site.
[33]
Greaves in his evidence contradicted the respondent's plea
that the compost would be produced for respondent's own benefit and
only
the surplus was to be sold to farmers. He testified that the
great majority had to be sold and that only "a little bit' of
the compost was used, this is despite the permit prescribing that the
compost must primarily be used for rehabilitation.
[34]
A letter written on 19 March 2003 by Greaves, with the express
purpose to record the previous discussions and agreement is a clear
admission of the appellant's version of the content of the agreement
between the parties. Greaves wrote:
"Johan - Citrus
peel compost site: Thank you for seeing us today, and I write this
letter to record our previous discussions
and agreement. For your
internal reasons you do not want a formal signed agreement and this
letter records the understanding between
us.
In October 2001 you
requested us to proceed with obtaining the necessary site permit, as
you had been unsuccessful, due possibly
to a clash with personalities
with the Department of Water affairs personnel. We have proceeded and
have reached the final stages
of obtaining the site permit. The costs
to date, attached to our letter 22 January 2003 is R526 500.00. It is
agreed that Onderberg
will deliver wet peel to the mine site for
three years and pay R15.00 per ton. This price will remain fixed for
this period in
order to recover the costs above, the price can then
be renegotiated. Onderberg will no longer add magnesium oxide or
lime
to correct the ph of the peel, this will be done by the mine. I trust
that this
records
everything and that this long and painful process has been put behind
us"
[35]
From the respondent's own correspondence it is clear that:
(a)
the
specific agreement was to endure for a period of three years contrary
to the evidence of Greaves that the duration of the agreement
between
the parties was for five (5) years.
(b)
during
the said 3 years the appellant was entitled to dump peels at the
respondent's site;
(c)
the price of R 15.00 per ton will remain fixed for 3 years in
order to recover the costs of building the waste disposal site where
after it can be renegotiated. Respondent understood that costs were
to be recovered from the dumping fee, in its letter of demand
on 13
August 2004 respondent demanded payment of the outstanding balance of
the costs of building the site not yet recouped. The
letter mentioned
the total site costs to be R 526,500,00 in respect of which payment
of a proportionate amount, calculated as a
portion of the site costs
not yet recovered, was demanded.
(d)
during
the said 3 years the appellant was entitled to dump a minimum volume
of peels at the respondent's site such as would allow
for the
recovery of the respondents costs of building the dumping site.
(d) both parties
contemplated that after those 3 years the business relationship
between the parties will continue, albeit on future
terms and
conditions to be negotiated for a further or separate agreement;
[36]
Respondent first pleaded that defendant would deliver all of
its orange peels not being less that 30 000 tons per season of wet
peel for three consecutive seasons following the grant of the permit
and then amended its case to a contract with a duration of
five
years. Greaves testified that Fourie wanted a 5-year term from the
outset and changed his evidence to say that the request
for five-year
term came later. When confronted with his pleading that says
appellant will deliver peels for three consecutive seasons,
he agreed
that it was for three years and he changed his evidence back to a
request from Fourie for a 5-year term, blaming the
contradiction with
the original Particulars of Claim on him not providing his lawyers
with sufficient information.
[37]
In my view, the trial court should have found that the
appellant's version of the terms and conditions of the agreement are
on a
preponderance of probabilities true and accurate and therefore
acceptable, and that the version advanced by the respondent is
therefore
false or mistaken and falls to be rejected.
[38]
The respondent's version is, on the objective facts and
probabilities, false and not sustainable. The respondent accordingly
failed
to discharge the onus of proof. In these circumstances, the
court below erred in its conclusion when it found that the
respondent's
version of the terms and conditions of the agreement was
more probable than the appellant's version. It follows that the
respondent's
claim A should have been dismissed. The appeal has to
succeed.
[39]
In the result the following order is made:
1.
The appeal is upheld
2.
The order of the court below is set aside and in its stead is
substituted the following order:
Claim
A is dismissed with costs.
KE
Matojane J
G
Webster J
I
agree, it is so ordered
S
Naidoo AJ
[1]
1984 (4) 437 (E) at
[2]
Spearhead Property Holdings Ltd v First Rand bank Ltd
2010 (2) SA 1
(SCA) para [42}