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[2016] ZAGPPHC 784
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Right Gold Machinery(Pty)Ltd v Tsholofetso Mining Supplers(Pty)Ltd and Another (50477/2015) [2016] ZAGPPHC 784 (26 August 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION,
PRETORIA)
REPORTABLE
OF
INTEREST TO OTHER JUDGES
Case
No: 50477/2015
DATE:
26/8/2016
In
the matter between:
RIGHT
..
GOLD
..
MACHINERY(PTY)
LTD
..
....................................................
Plaintiff/Applicant
(Registration
No: 20..)
and
TSHOLOFETSO
MINING SUPPLIERS
(PTY)
LTD
….....
1
st
Defendant/1
st
Respondent
WIEKUS
DU TOIT
ATTORNEYS
…..........
2
nd
Defendant/2
nd
Respondent
JUDGMENT
HF
JACOBS, AJ:
I
NTRODUCTION:
[1]The
first and second excipients noted an exception against the
plaintiff's particulars of claim on the basis that the particulars
of
claim fails to sustain a cause of action and that it is vague and
embarrassing. The legal ti
e
between
the plaintiff and the first defendant is a written contract in terms
of which the first defendant secured from a company
known as Lanxess
Chrome Mining (Pty) Ltd ("Lanxess") the right to sell
chrome waste material located in the vicinity
of Rustenburg to the
plaintiff at a price of R60.00 per ton (excluding VAT) and at a
delivery charge of R31.50 per ton (excluding
VAT). The plaintiff
committed itself to purchasing specified quantities of the chrome
waste material and payment thereof had to
be made by the plaintiff in
advance to the second defendant who is a practising attorney by
depositing the purchase price of the
chrome waste material into the
second defendant's trust account whereupon payment would be made
directly by the second defendant
to Lanxess from the funds received
from the plaintiff.
[2]
Many of the grounds of exception stated by the excipients
are stated
in the
alternative
and some of the grounds
of exception are repeated
in
later paragraphs under a separate ground of exception.
Under some of
the grounds of exception it
is stated that the plaintiff's particulars of claim is
"nonsensical"
and
"does not make
linguistic sense".
Instead of
dealing
with
each of the eleven grounds of exception separately I intend referring
to
the
four claims formulated by the plaintiff in its particulars of claim
(Claims A, B,
C
and D) and by measuring those claims against the complaints distilled
from the eleven grounds of
exception.
[3]
The plaintiff's particulars of claim comprise Claim A (based on
misrepresentation against the first defendant only) and Claim
B which
is
an
alternative
to
Claim
A
(also
against
the
first
defendant
only
but
based
on
a
claim for breach of
warranty). Claim C is a claim against the first defendant for breach
of contract. Claim D is a claim against
the second defendant only and
instituted as an
alternative
claim to Claim D.
THE
LEGAL PRINCIPLES: EXCEPTIONS
[4]
An exception that a pleading is vague and embarrassing is a challenge
of the whole cause of action and not only the particular
paragraph or
part of the pleading. An exception that the pleading is vague and
embarrassing strikes at the formulation of the pleading
and not at
the
legal
validity thereof.
[1]
It is for
an excipient to convince the court that he or she
will be
seriously prejudiced if the offending allegations are not struck from
the
pleading.
An
exception
taken
on
this ground
is decided
by applying
the test
conveniently summarised in
Erasmus
[2]
which include the
following:
[4.1]
The first step is to consider
whether
the
pleading
lacks
particularity to such an extent that it can be said that it is vague
in
the
sense that it is meaningless or capable of more than one meaning or,
put differently, leave the reader unable to distil therefrom a
clear, single meaning;
[4.2]
If there is found to be vagueness in the sense aforementioned then
the court is obliged to undertake a quantitative analysis
of the
embarrassment relied upon by an excipient caused by the
vagueness found to exist.
In each case an
ad hoc
ruling must be made by
the court as to whether the
embarrassment is of such a serious nature to cause
prejudice to the excipient
if he or she
is compelled
to
plead to the pleading in the
form it exists.
[4.3]
The ultimate test in this context is whether the excipient is
prejudiced.
[4.4]
The onus to convince a court is on the excipient to show both the
vagueness and the embarrassment and the prejudice resulting
therefrom
and the alleged embarrassment of the excipient must be assessed by
reference to the pleadings alone.
[5]
During a challenge of a pleading at exception stage on the ground
that the pleading does not sustain a cause of action an excipient
has
the onus to
persuade
the court that upon every possible interpretation the pleading in
question and the document on which its claim is based
can
reasonably bear no cause of action (or defence) is disclosed.
[3]
A
"cause
of action"
in
this
context means "...
every
fact which it would be necessary
for the
plaintiff to prove, if traversed, in order to support his right to
judgment of the court. It does not comprise every piece
of evidence
which is necessary
to prove
its fact, but every fact which is necessary to prove".
[4]
[6]
At exception stage a court should, in the event of uncertainty
existing
about
the
meaning
of
the
contract
or
of
its
terms,
be
slow
to
decide questions concerning the interpretation of a contract.
[5]
When
an exception
is
based upon the interpretation of a contract an excipient must show
that
the
contract
is unambiguous.
[6]
A
court's reluctance to decide upon questions
concerning
the interpretation of a contract applies only where its meaning
is
uncertain.
[7]
Those circumstances are, first, where the entire contract is not
before
the court; and secondly where it appears from the contract or the
pleadings
that
"there
may
be
admissible
evidence which,
if
placed
before the court, could influence the court's decision
as
to
the meaning of the contract, provided that this possibility is
something more than
a
notional
or remote
one."
[8]
Judgments
such as
Vreulink
[9]
should
be interpreted subject to
the
principles
applicable to interpretation of written instruments set out in
Endumeni.
[10]
Difficulty
in interpreting a document does not necessarily
imply
that
it is ambiguous.
[11]
Contracts are not considered uncertain because parties thereto
disagree as to their meaning.
[7]
Much of the defendants' complaint against the particulars of claim
turn on the interpretation and general import of clause 6
of the
written agreement. Clause 6 of the contract reads as follows:
"6.
Material quality
Although
the expected quality of the Product ranges from 11% to 25% Cr203, the
Right Gold agrees to purchase the material voetstoots
(as is)."
[8]
In its particulars of claim the plaintiff contends for
specific
interpretation
of
the
contract
(clause
6
thereof
in
particular).
The interpretation the plaintiff alleges appears from paragraph 5.11
and 7 of
the
particulars of claim. Clause 6 commences with the conjunction
"Although".
It
might be, as part of a coordinating conjunction used in English, to
connect two equally
important
sentences,
clauses,
phrases or
other words.
A
conjunction might also be used as a sub-coordinating conjunction
intended to link a main clause of a sentence to a subordinate
one (a
subordinate
clause does
not mean anything on its own - it needs a main clause to complete
the
meaning). Applying that basic rule of English grammar and syntax as I
am
obliged
to
do
on
authority
of
Endumeni,
[12]
one
must
conclude
that
clause
6
has
interpretational difficulties. The contract contains no clause
defining
specific
words.
Clause
1.1.1 seems to refer to
"the
chrome waste material"
as
(the
"Material")
and
reference is also made in the contract to
"waste
material"
and
to
"Product".
The
inconsistency in words used in the
contract
does not contribute to its interpretation and also not to the
interpretation of clause 6. What
clause
6 of the contract
does
not
record is what
its
meaning (and that of the
voetstoots
provision)
would be if the
"quality
of the
Product"
ranges
below 11
%.
That
immediately begs the question namely, would that clause (and its
voetstoots
provision)
apply to
"Product"
with
a quality or content below 11
%?
I
find myself unable to resolve this aspect in the manner required and
have to conclude that the contract and, in particular clause
6
thereof, is ambiguous and should only be interpreted by having regard
to
its
admissible
context
"in
the light
of the
document
as
a whole and
the
circumstances attended upon its coming into existence"
...
"its
apparent
purpose"
and
"the
material known to those responsible for its production",
viewed
objectively and performed as one unitary exercise.
[13]
Under the circumstances that part of the exception turning on an
interpretation of the written contract and clause 6 thereof in
particular should be deferred for adjudication by the Trial Court.
I will
however proceed to deal with the other complaints to the pleading.
[9]
Some of the grounds of exception are based on the
submission that the presence
of a non-variation clause in a contract has the result of excluding
any evidence in support of tacit
or implied terms, evidence relevant
as admissible context and to exclude any evidence of
misrepresentations.
These contentions are without
substance and cannot be
upheld.
THE
PARTICULARS OF CLAIM: THE INTRODUCTORY PARAGRAPHS 4 - 8:
[10]
After
citation of the parties the particulars of claim
[14]
contain
the
following
averments as part of the introductory paragraphs before the rubric
under
which Claim A is pleaded. In the introductory paragraphs of the
pleading the written agreement is alleged, its terms and the
names of
the
individuals
who represented the parties at its conclusion. At the end of
every
averment
in subparagraphs 5.1 to 5.16 where the material express, implied
or
tacit
terms of the agreement are alleged the applicable clause of the
written
agreement
pleaded in paragraph 4 is referred to. Each of the averments tally
with
the clause in colocation. Paragraphs 4 -
8
read as follows:
"4.
On or about 25 February 2015, and at Rustenburg, alternatively
Nigel, the Plaintiff (duly represented by Mr Justin de Villiers) and
the First Defendant (duly represented by Mr Jaco de Jager) entered
into
a
written agreement,
a
copy whereof is annexure
'PoC1"
hereto ('the
agreement').
5.
The material express, implied or tacit terms of the agreement were
as
follows:
'
5.1
the First Defendant undertook to secure chrome
waste material ('material') from
a
company styled
Lanxess Chrome Mining (Pty) Limited
('Lanxess')
in accordance with the agreement, to sell the material to the
Plaintiff, to procure the loading of the material
onto
transport and to deliver the material to the
Plaintiff
(clause
1.1);
5.2
the First Defendant warranted that the premises on
which the material was to be collected was
owned and/or
controlled by
a
supplier who was contractually bound to make
available the material, following
the receipt of
payment by the First Defendant from the Plaintiff (clause 3.
1);
5.3
the
First
Defendant
further
warranted
that it
had concluded an agreement with
a
supplier and/or
its agents, entitling the First Defendant to procure the
material for delivery to the Plaintiff and to access
and
use the premises for the duration of the agreement for the purposes
contemplated therein, including other related activities
(clause
3.2);
5.4
the parties agreed to
a
purchase price of R60
per tonne (excluding VAT) for the material, and
further
agreed to
a
price for the delivery of the material to
a
location specified by the Plaintiff at R31,50 per tonne (excluding
VAT) (clause
4.1);
5.5
the Plaintiff would secure its supply by making
an advance payment, equal to the value of the
material
which it wishes to acquire, into the trust account of
the
Second Defendant, particulars of which were provided in the
agreement (clause 4.2);
5.6
the First Defendant undertook to provide an invoice to
the Plaintiff for the amount of material ordered
(clause
4.3);
5.7
upon receipt of written confirmation from the Second Defendant
that sufficient funds are held on its trust account for payment of
the volume of material to be loaded, the First Defendant would
provide the Plaintiff with
a
document authorising collection of the material reflected on
the invoice (clause
4.4);
5.8
payment for the material would be made directly to Lanxess by the
Second Defendant from the funds received from the Plaintiff
(clause
4.5);
5.9
the Plaintiff committed itself to purchasing the
following
quantities of
material:
5.9.1
for the month of March 2015: 15 000 tonnes,
which
would be acquired in four
separate
weekly
transactions of 3 750 tonnes each, delivery of the material by the
First
Defendant to commence on 9 March
2015;
5.9.2
for the period April to June 2015: between
15
000 and 25 000 tonnes, which would
be
acquired
in four separate weekly transactions
of 3 750 to 6 250 tonnes
each;
5.9.3
from July 2015, and until 1 million tonnes of material
had been delivered: 50 000 to
75
000 tonnes,
which
would
be
acquired
in
four separate
weekly
transactions
of
12 500
to 18 715 tonnes each (clause
4.6);
5.10
it was recorded that the invoices on which
payment
would be based
for
the quantity
of
the material collected relied
on an estimation provided
by the supplier to the First Defendant. Therefore:
5.10.1
all material loaded onto the Plaintiff's
vehicles
would be weighed on both the Plaintiff's
and the First
Defendant's weigh
bridges;
5.10.2
a
representative of the Plaintiff would sign
a
delivery/collection
voucher,
setting
out the weight
of
the
material
and
the
date
of collection;
5.10.3
save for manifest errors, the signed delivery/ collection
vouchers
would
constitute prima
facie
proof
of
the
weight
of
the
material
supplied;
5.10.4
the Plaintiff
would deliver
a
tally
of
weigh bridge receipts to the Defendant on Friday
of each week;
5.10.5
the difference between the quantity of
material
invoiced for and the quantity collected, if any,
would be adjusted
accordingly to reflect the debit or credit in the following week's
invoice (clause 5);
although
the
expected quality of
material
was recorded to range from 11% to
25%
chromium (Ill)
oxide (CR203) content,
the
Plaintiff
agreed to purchase the material 'voetstoots (as is)' (clause
6);
5.12
in
the
event
that
either
party
to
the agreement breached
any provisions of the agreement, the
other of them
('the aggrieved party )
was
entitled to give the defaulting
party seven days' written notice (or
such longer period
of time
as
the aggrieved party may specify in the notice) to
remedy the breach. If
the defaulting party failed to
comply with the notice,
the aggrieved party was
entitled
to:
5.12..1
claim immediate payment and/or performance by the defaulting party
of all the defaulting party's obligations that are due for
performance;
or
5.12..2
cancel the agreement upon written notice to the defaulting party
where the
breach constitutes
a
material
breach;
in either event, without prejudice to the
aggrieved party's right to claim damages or to exercise any other
rights that the aggrieved
party may have under the agreement or in
law
5.13
any cancellation would be without prejudice to any claim that
a
party may have in respect of any
breach of the terms and
conditions of the agreement by the other party arising prior to the
date of
cancellation (clause
7.3);
5.14
notwithstanding any of the terms agreed upon in the agreement, either
party would be entitled to cancel the agreement by giving
one month's
written notification;
5.15
the parties undertook to do everything reasonable in their
power
necessary
for,
or
incidental
to,
the effectiveness
and
performance
of
the
agreement (clause 8.4);
5.16
the parties unconditionally consented and submitted
to the non-exclusive jurisdiction of the above
Honourable Court
in
regard
to
all
matters
arising
from
the agreement (clause
11).
6.
It was
a
tacit or implied term of the agreement,
alternatively
it was at all
relevant times agreed and understood by
the Plaintiff
and the First Defendant, and the agreement
was entered
into
between
them on the
basis
and
common understanding and
assumption that:
6.1
the Plaintiff purchased the material for
the
purpose of producing
a
chromium (Ill) concentrate, in order to
enhance the chromium (Ill) oxide
content thereof;
6.2
the material would therefore at least have to
contain
11% chromium (Ill) oxide to render it financially
viable
for the Plaintiff to produce
a
chromium
(Ill)
concentrate.
7.
Upon
a
proper construction of
clause 6 of the agreement (paragraph 5.11 above), whilst both parties
intended
a
sale and purchase
of material containing generally between 11% and 25% chromium (Ill)
oxide, the Plaintiff was prepared to accept
material even if it did
not strictly fall within the said range, provided that the material
was still generally fit for the purpose
for which it was purchased
and intended, namely as set out in paragraph 6 above.
8.
Upon
a
proper construction of clause 4.2 of the
agreement (paragraph
5.5
above), the advance payment to be
made by the Plaintiff to secure its supply would equate to the value
of the material which the Plaintiff wished to acquire during
a
particular month, as set out in clause 4.6 of the
agreement (paragraph 5.9 above)."
[11]
I find nothing vague about the quoted paragraphs. They do not
comprise
a cause of action
(or claim)
on their own and have to
be read with
the
balance of the allegations of the particulars of claim.
[12]
The introductory paragraphs are followed by Claim A of which the
rubric indicates to the reader that
it is a claim against the first defendant and
suggests
that what follows refer to a misrepresentation. The paragraphs
read
as
follows:
"
CLAIM A : Against the First Defendant:
Misrepresentation
9.
At all relevant times prior to and during the
negotiation
and conclusion of the agreement, the First
Defendant (represented by Mr Jaco de Jager and/or Mr Nardus
van
den Berg)
represented
to
the
Plaintiff
(represented
by Mr Francesco
lndiveri,
Mr
Guo
Yu Min
and/or
Mr
Vernon Newman) orally and/or in writing
that:
9.1
the material to be loaded for delivery to
the
Plaintiff would be taken from the waste dumps on
the
Lanxess site which were reasonably
expected
to
contain a chromium
(Ill) oxide content of between 11%
and 25%;
9.2
the First Defendant was entitled to freely access
and
use the premises of Lanxess, inter alia to select
those
dumps on the Lanxess premises from which
material which
could
reasonably
be
expected
to
contain between 11%
and 25% chromium (Ill) oxide would
be loaded for
delivery to the
Plaintiff;
9.3
Lanxess was directly or indirectly contractually bound to make
material
available to the First
Defendant
which
could
reasonably
be
expected
to
contain between 11%
and 25% chromium (Ill) oxide.
10.
The written parts of the representations are contained
in
the following
documents:
'
10.1
an 'exclusive off-take agreement' concluded
between
a
company styled Aamtude (Pty) Limited and the
First
Defendant dated
5
February 2015 (which
was exhibited to the Plaintiff) in which the material to be
sourced
from
the Lanxess
site
was described
as
'chrome
waste
material
containing
LG6
and
LGs (lower group) chrome ore typically ranging from
a
CR203 content of 11% to 25%'.
A copy of the said
agreement
is annexure
'PoC2'
hereto;
10.2
a
further 'exclusivity off-take agreement' concluded between
a
company styled ldada Mining and
Civil Construction,
Aamtude
(Pfy) Limited and the First Defendant
dated
5
December
2014
(which
was similarly exhibited to the Plaintiff)
in which the
material
was
described in similar terms. A copy of the said agreement is annexure
'PoC3'
hereto;
10.3
an email from the First Defendant represented by
Mr
De Jager (a copy whereof is annexure
'PoC4'
hereto)
dated 10 February 2015, in which he inter a/ia
advised
the Second Defendant, whilst copying the
Plaintiff:
10.3.1
with reference to testing of the material that had
allegedly been done, that if the
material constantly
contained more than
25% chromium (Ill) oxide, the price for
the
material would have to be increased;
10.3.2
that
Lanxess
had
agreed
that
the First Defendant
could
use its
roads
and
weigh
bridges
whilst the First Defendant established itself on site;
10.3.3
that the First Defendant had already paid
Lanxess
for the
material.
11.
The said representations were however false, in
that:
11.1
the waste dumps on the Lanxess site which
were
designated
to
the
First
Defendant,
from
which
material
would
be
loaded
for
delivery
to
the
Plaintiff,
contained
an
insignificant
percentage of
chromium
(Ill) oxide
(not
even
approximating
11%)
being substantially
below
the percentage required in order to render
it financially
viable
for
the
Plaintiff
to
produce
a
chromium
(Ill)
concentrate;
11.2
the First Defendant was not entitled to freely access
and
use the premises
of Lanxess,
in
that
the First
Defendant
was designated
particular dumps
on
the
Lanxess premises which contained such
insignificant
percentage
of chromium
(Ill) oxide content as described in paragraph 11.1 above;
11.3
Lanxess was not, either directly or
indirectly,
contractually bound to make material available to
the
First Defendant which could reasonably be
expected
to contain between 11% and 25% chromium (Ill)
oxide;
11.4
accordingly, to the knowledge of the First
Defendant, the material which would be supplied to the
Plaintiff were to be taken from waste dumps on the
Lanxess site which:
11.4.1
was
not
generally
expected
to
contain
a
sufficient percentage
of chromium (Ill) oxide
to render it financially viable
for the Plaintiff
to produce
a
chromium (Ill)
concentrate;
11.4.2
comprised of material which was
completely
unsuitable for the Plaintiff's purposes, namely to produce
a
chromium (Ill)
concentrate.
12.
The First Defendant, represented as aforesaid, made
the said misrepresentations intentionally, whilst being aware
of the falsity thereof,
alternatively
negligently.
13.
The said representations were material, and were
intended to induce the Plaintiff to enter into the agreement.
The
said representations did, in fact, induce
the conclusion of
the agreement.
14.
As
a
result of the First Defendant's
misrepresentations,
the Plaintiff has cancelled the
agreement,
alternatively
cancels
the same herewith.
15.
As
a
further
result
of the said
misrepresentations,
the
Plaintiff has suffered
damages, calculated as set out
in paragraph 28
below."
[13]
Paragraph 9 sets out the names of who allegedly represented the
parties during negotiations preceding the conclusion of the
written
contract and those the plaintiff alleges made certain representations
to it and that the representations were made orally
and in writing.
Subparagraphs 9.1 to 9.3 record the misrepresentations followed by
paragraph 10 which records where the plaintiff
alleges the written
representations are contained.
[14]
In paragraphs 12 and 13 of the pleading the plaintiff informs
its adversary
of
its
intention
to
rely
at
trial
on
an
intentional
misrepresentation
alternatively,
a negligent
one and that the misrepresentation induced
the plaintiff to conclude the
contract.
The
defendants' challenge of Claim
A
is
based
on the
''voetstoots clause"
contained
in clause 6 of the written
contract to which I have
referred above on two grounds namely (1) that the
plaintiff failed
to
allege
fraud
or
conduct
dolo malo
on
the
part of the first
defendant
and
(2) that the
voetstoots
clause
protect the first defendant from any negligent misrepresentation on
authority of Meads.
[15]
The
first ground
of
objection can be dealt with as follows:
In
civil law context and in particular
in
the
law of contract misrepresentation can take place innocently,
negligently and intentionally
{fraudulently).
The
averments in paragraphs 12 and 13 of the pleading, in my view,
indicate with the required measure of clarity that it is the
plaintiff's case that those who represented the first defendant
acted fraudulently (with the
required intention
"whilst being aware of the falsity"
of the
misrepresentations). In my
opinion
there
can be no doubt
in the
mind of
the reader of
Claim A that the plaintiff intends relying on a fraudulent
misrepresentation which would, if proven at trial, deny
the first
defendant immunity that might be afforded by the
voetstoots
clause. The complaint against the negligent misrepresentation
should at exception stage, be judged as follows: the
voetstoots
clause is not altogether clear and certainly not exemplary and in
my view capable of more than one possible interpretation. I have
mentioned its grammatical shortcomings. Clause 6 may be interpreted
by the trial Judge, as suggested by the defendants, that it
is a
voetstoots
clause protecting the first defendant from all
possible non-fraudulent misrepresentations (including negligent
misrepresentation).
However, the clause may also be capable of
another interpretation limiting its effect and import to waste
material of which the
chromium (Ill} content did not dwindle below
the 11% - 25% window stipulated by the written contract. It may,
therefore, be held
by the trial Judge that the
voetstoots
clause
did not apply in respect of material with chromium (Ill) content
below 11% in which event the first defendant might be held
liable for
the negligent misrepresentation alleged by the plaintiff as an
alternative to the intentional misrepresentation
referred
to earlier. I am not convinced that clause 6 (and therefore the
contract) is unambiguous.
[16]
That
aspect of the dispute should, as
mentioned
above,
at best for the defendants, be deferred for adjudication by the trial
Judge.
[15]
The defendants complain that paragraph 6 - 21 of the
particulars
of claim are at variance with the written contract and further that
the
terms
pleaded by the plaintiff in those paragraphs are alleged to exist
"in
addition"
to
what is contained in the contract.
Paragraph 6
of the particulars of
claim
contains the firm allegation that the terms pleaded there are
"tacit
or
implied
terms"
of
the contract.
An implied
term arises by operation of law whilst
the tacit
term is an unexpressed provision of the contract, derived from
the common
intention of the parties which is inferred from the express terms of
the
contract and from the surrounding circumstances.
[17]
At
the
exception
stage the test is whether the tacit term could reasonably be
implied.
[18]
The
question, therefore, is at this stage of the proceedings whether the
implied and tacit terms relied on by the plaintiff can
"reasonably
be implied".
In
my view they can.
[16]
There is nothing that, objectively speaking, exclude that
possibility. In my opinion the complaint against Claim A cannot be
upheld.
[17]
Claim B is formulated as follows:
"Alternatively
to Claim A:
Claim
B : Against the First Defendant : Breach of Warranty
16.
The
First
Defendant
furnished the
warranties
in the agreement
as set out in paragraphs 5.2 and 5.3
above.
17.
The said
warranties
were,
however,
false
and without
substance, for reasons set out in paragraphs 11.1 to
11.4
above.
18.
The Plaintiff entered into the agreement on the
strength
and basis of the said warranties having been
furnished by
the First Defendant.
Had the
First Defendant not furnished
the said warranties, the
Plaintiff would not have entered into the agreement with
it.
19.
As
a
direct result of the said warranties being
false and without substance:
19.1
the
First
Defendant
and/or
its
supplier
was
only allowed by Lanxess to take material from those
waste
dumps which:
19.1.1
did
not
contain
a
sufficient
percentage
of chromium
(Ill) oxide to render
it financially viable for
the Plaintiff to produce
a
chromium (Ill) concentrate;
19.1.2
comprised
material
which
was
completely unsuitable for the Plaintiff's
purposes;
19.2
Lanxess
was not contractually
bound
to the First Defendant's supplier to make
available material
from waste dumps which contained
a
sufficient
percentage
of chromium (Ill) oxide,
nor had the First Defendant concluded an agreement with
a
supplier or its agents, entitling the First Defendant to
procure such material for delivery to the Plaintiff;
19.3
the First Defendant did not have
access
to, or
the
use of,
Lanxess'
premises
for
the
duration of
the
agreement for the purposes contemplated therein, nor for other
related activities,
as a
result whereof it
was
precluded
from:
19.3.1
establishing
itself
on
the
Lanxess
site or having proper
access
thereto
by means of
a
road;
19.3.2
exercising any control over the selection of
the
waste dumps from which the material would be taken for delivery to
the
Plaintiff.
20.
As
a
further
result
of the said
warranties having
been
breached,
and
being
false
and
without
substance, the
Plaintiff has cancelled the agreement,
alternatively
cancels
same
herewith.
21.
As
a
further
result of the
warranties having
been
thus
breached, the Plaintiff has suffered damages, calculated
as
set out more fully in paragraph 28
below."
[18]
Claim B is that the first defendant warranted certain contractual
rights it acquired from Lanxess to exist. It alleges that
those
contractual rights, which had been guaranteed, did not exist and that
its non-existence
constitutes a
breach of the warranties under discussion. At exception
stage
the
factual averments must be assumed as correct. The breach
pleaded
constitutes
a claim for breach of warranty and the complaints against it
cannot be
upheld.
[19]
Claim C is formulated as
follows:
"CLAIM
C.
Against the First Defendant :
Breach
of Contract
In
the event of it being found that
a
valid agreement had been entered into, and further that such
agreement had not been validly cancelled (which is denied), the
Plaintiff
avers as set out herein below.
22.
In anticipation of the conclusion of the agreement, the
First Defendant
rendered
an
invoice
to
the
Plaintiff
on
17 February
2015 for payment in
advance of the sum of Rt 026 000 (VAT inclusive), being in respect of
the first 15 000 tonnes of material for
the month of March
2015,
which was to be delivered
to the Plaintiff as from
the beginning of March
2015.
23.
The Plaintiff paid the amount of the said invoice in
full on 26 February 2015, by making payment thereof into the
trust account of the Second
Defendant.
24.
Subsequent to the conclusion of the agreement on 25
February
2015:
24.1
the Plaintiff further paid (in addition to the abovementioned
payment of R1 026
000) the following sums in respect
of the removal
and
delivery costs for the
material:
24.1.1
on 20 March 2015,
a
payment of R35
910,
relating to the first 1 000 tonnes of material
to be
delivered;
24.1.2
a
further payment in the amount of
R31
318,08, which was paid on 21 April 2014
relating
to the further approximately 1 000
tonnes
of material to be delivered;
24.2
the Second Defendant confirmed to the
First
Defendant and to the Plaintiff that he had received the said amount
in his trust account, and that,
therefore:
24.2.1
1 the First Defendant could proceed to issue
the
invoice for the purchase of the material
by
the
Plaintiff; and
24.2.2
the First Defendant was authorised to collect the material,
which was stated to take place
as from 9 March 2015
onwards;
24.2.3
the material was available for collection, and that he would
proceed to make payment of
the amount owed directly to
Lanxess;
24.3
the(sic), however, failed to commence delivering
the
15 000 tonnes of material from the beginning of
March
2015, or from 9 March
2015;
24.4
despite
the
First
Defendant
having
breached
its obligations
under the agreement, the
Second Defendant nevertheless
paid the amount
of R1 026 000 from its trust account over to
the First Defendant, alternatively to Lanxess or to
a
supplier
on the First Defendant's behalf in order to secure
the
supply of material from the month of March
2015;
24.5
commencing from 9 April 2015 and during May
2015,
the First Defendant delivered
a
total of 13 loads
of
waste, comprising approximately 260 to 390 tonnes, to the Plaintiff;
24.6
the First Defendant remained in default of delivery of 3 750
tonnes of material per week, or 15 000
tonnes of
material for the month of March 2015, which it
was
obliged to
deliver;
24.7
the waste that was delivered to the First
Defendant
did not comprise
the material as contemplated in the
agreement, in that it failed to contain
between 11
%
and 25% chromium (Ill) oxide or any
percentage even
approximating 11
%,
nor did it have
a
chromium (Ill)
oxide content which was suitable for the purpose for which it was
purchased and intended,
namely
to produce
a
chromium
(Ill) concentrate.
In
particular, samples of the waste which was received by the Plaintiff
were tested and
found
only to contain
a chromium (Ill) oxide content ranging between
5.
11
%
and 5.95%;
24.8
by reason of the wholly defective nature of the
waste
delivered to it, the Plaintiff refused to accept
further
deliveries thereof, and insisted on material of
a
proper
quality to be delivered to it, as the Plaintiff was in
the
circumstances entitled to
do;
24.9
on 13 May 2015, the First Defendant (represented
by
the Second Defendant) repudiated the agreement in writing by means of
a
letter
(a copy of which
is
annexure
'PoC5'
hereto). In this
letter:
24.9.1
the dates for delivery of the material, and
the
various tonnages as set out in the
agreement, were in
conflict with the express terms of the agreement;
24.9.2
the First Defendant demanded payment for
the
months of March, April and May 2015 (up
to the date of
the letter) of R3 420
000:
24.9.2.1
which, similarly, was in conflict
with the terms
of the agreement;
24.9.2.2
despite no material as contemplated
in
the
agreement had been delivered to the
Plaintiff, and
a
total of approximately 260
to
390 tonnes of valueless waste had
been delivered during April and
May 2015;
24.9.3
the First Defendant falsely alleged that
the
Plaintiff had refused or neglected to remove the
'material';
24.9.4
the Plaintiff was granted seven days within which to pay the
aforementioned amount
of R3 420 000, coupled with
a
threat that,
failing such payment, the Plaintiff
would be liable
for immediate payment and/or
performance of
all its obligations under the agreement,
that the agreement
might
be
cancelled
and/or
that damages
might
be
claimed,
in
addition
to which legal costs on the scale as
between attorney and client and consequential damages would be
claimed from the Plaintiff.
25.
The First Defendant's conduct, as set out in paragraphs
24.3,
24.5,
24.6,
24.7
and
24.9
above
constitute
a
repudiation of the agreement,
alternatively
a
material
breach of the agreement, going to the root
thereof.
26.
The First Defendant, represented by the Second
Defendant, further purported to cancel the agreement by means
of
a
letter
dated 28 May
2015,
a
copy
whereof is
annexure
'PoC6'
hereto. Whilst the said letter fails to constitute
a
valid cancellation of
the
agreement,
it
does
constitute
a
repudiation
thereof, which the Plaintiff became entitled to accept.
27.
As
a
result
of the First
Defendant's
aforesaid
repudiation,
alternativel
y
breach,
the
Plaintiff
cancelled
the
agreement
by
means
of
a
letter dated 25
June
2015,
(a
copy
of
which
is
annexure
'PoC7'
hereto),
alternatively
cancels the same
herewith,
as
it was and is entitled to do in the
circumstances.
28.
As
a
further result of the First Defendant's
said
repudiation,
alternatively
breach,
and the resultant cancellation
thereof,
the
Plaintiff has suffered damages. The Plaintiff's
damages,
which were foreseeable and within the contemplation of the
parties,
comprise:
28.1
the
amount
of
R1 026 000
which
the
Plaintiff
paid
to the First Defendant (by
making payment thereof into the Second Defendant's trust account) in
respect of material which was not
delivered to it;
28.2
the amount of R35 910 which was paid on 20
March
2015 and the amount of R31 318,08 which was paid
on 21
April 2015 in respect of the removal
and
delivery costs
for material, which was wasted in
that
no
material
as
contemplated in the agreement was
delivered
to the Plaintiff.
29.
The
Plaintiff is excused from tendering the return of
the
valueless waste which the First Defendant had delivered
to
it, by reason thereof that it has no value, and the costs
of
return would exceed any value which it might have."
[20]
In paragraphs 23 to 24.3 - 24.9 of the particulars of claim the
plaintiff alleges a repudiation of the written contract
alternatively
a material
breach thereof
which justified cancellation. The breach alleged relate to failure to
perform (by only delivering 420 tonnes) and
by delivering
"material"
other than what was contemplated by the agreement. As I
understand the first defendant's complaint in this regard it expected
from
the plaintiff to plead further grounds or particulars or
breaches of the contract. Part of the breach was that no material was
delivered at all during March 2015 and it was suggested on behalf of
the first defendant that the balance of the material was not
delivered because the plaintiff failed to instruct and/or nominate
transport for the loading of the material. Those aspects can,
in my
view, not be raised at exception stage and should be raised in a plea
at the appropriate time.
[21]
A
further
complaint
was
that
the
plaintiff
was
obliged
to
give
the first defendant notice to
remedy its breach before lawful cancellation of
the contract could take
place. Clause 7 of the agreement provided that
an aggrieved party
"may"
give notice to the defaulting party.
The contract did
not
make notice a prerequisite for cancellation of the agreement.
Notice
was discretionary.
In the event of anticipatory
breach of a contract notice is not a requirement for cancellation
based on repudiation.
I
am of the view that
the
first defendant's complaint in this regard cannot be upheld.
[22]
Claim D is an
alternative
claim
against the second defendant only. It reads as
follows:
"Alternatively to
Claim
C
above:
Claim
D : Against the Second Defendant
30.
During the course of negotiations regarding the
conclusion
of the
agreement,
the
Second Defendant, represented
by Mr Leon Doyer,
by means of an email dated 10 February 2015 (a copy of which is
annexure
'PoC8'
hereto), informed the First
Defendant and the Plaintiff
that:
30.1
the Plaintiff and the First Defendant
were
protected against the provisions of the
agreement
through the protection
offered by the
Second
Defendant's trust
account;
30.2
the
Second
Defendant
would be
involved
in
the
agreement by monitoring compliance by the
Plaintiff and
the First Defendant with their
respective contractual
obligations;
30.3
payment by the Plaintiff would 'trigger activities on
the part of the
Supplier';
30.4
the Second Defendant would only release the
funds paid into its trust account by the Plaintiff once the
Second Defendant was
satisfied
that
the
First Defendant had met its
obligations;
30.5
the Second Defendant (and not the First Defendant)
would decide when payment
was due to the First
Defendant;
30.6
the agreement accordingly contained 'built in
checks and balances to mitigate the risk inherent
herein'.
31.
In the result, the Second Defendant
was
in the
position of
a
stakeholder, who undertook to hold the
funds paid by the Plaintiff in its trust account on behalf of both
parties in terms of
a
tacit agreement concluded between the
Plaintiff,
the First
Defendant
and
the
Second
Defendant
('the
tacit agreement')
32.
In terms of the tacit agreement,
the
Second
Defendant would:
32.1
receive the payments which were received
from
the Plaintiff in its trust account
as a
stakeholder;
32.2
monitor
compliance
by
the
Plaintiff
and
the
First
Defendant
with
their
respective
contractual obligations;
32.3
only release the funds paid into its trust account by
the Plaintiff once the Second Defendant
was
satisfied
that the First Defendant had met its
contractual
obligations, inter alia to supply material
as
contemplated
in the agreement to the Plaintiff in
the quantities and
on the dates
as
provided for in
the agreement.
33.
In breach of its obligations under the tacit agreement,
the Second Defendant paid all the moneys which it
received from the Plaintiff prematurely over to the First
Defendant
(as
set out in paragraphs 22, 23 and 24.1
above, totalling Rt 093 228,08), in circumstances where the Second
Defendant:
33.1
had failed to monitor compliance by the First Defendant with its
contractual obligations;
33.2
had no or insufficient reason to be satisfied that the First
Defendant had met its contractual obligations, inter alia to supply
material as contemplated in the agreement to the Plaintiff in the
quantities and on the dates as provided for in the agreement.
34.
As
a
result of the Second Defendant's breach of
the tacit agreement, the Plaintiff suffered damages in the total sum
of R1 093 228,08
by reason of the Second Defendant having paid
the
said
moneys
prematurely
over
to
the
First Defendant
in circumstances where it should not have
done so,
and
where it
should
have
offered
the
Plaintiff
protection against the mal-performance, or the defective
performance, by the First Defendant of its contractual
obligations.
35.
Had the Second Defendant complied with its obligations
as stakeholder, the said amount would not have been paid over,
but would have been retained in the trust account
and
ultimately returned
to the Plaintiff by virtue of the
First Defendant's breach,
alternatively
repudiation
of
the agreement.
36.
In the result, the Second Defendant is liable towards
the Plaintiff for payment of the total amount of R1093
228,08,
plus interest thereon
a
tempore
morae."
[23]
The written contract was only concluded between two parties. The
second defendant featured in the contractual relationship
as
recipient of moneys due by the plaintiff to the first defendant (in
advance). It is the plaintiff's case that on the facts alleged
by it
there came into existence a tacit contract between the plaintiff and
the second defendant. For a plaintiff to plead a tacit
contract it is
necessary to allege unequivocal conduct that the parties intended to
and did in fact contract on the terms alleged.
Consensus must be
alleged and proved and factual allegations are aimed at convincing a
Court,
objectively considered, that the conduct of both parties (in this
instance the plaintiff and the second defendant) concluded
an
agreement.
[19]
[24]
The unequivocal conduct in this respect must be catalogued and
circumstances
from
which the tacit contract is to be deduced
must
be pleaded.
[20]
The
allegations made on behalf of the plaintiff in paragraph 30 of
the
particulars of claim adequately catalogue and allege unequivocal
conduct and circumstances on which the trial Judge might find
that a
tacit contract exists.
The terms
of the alleged contract are further adequately set out
in
paragraph 32 of the particulars of claim and so is the breach of the
tacit contract
alleged
with the
necessary
particularity
in the
last
paragraphs of the pleading. In my view the exception is without any
merit.
[25]
The exception is dismissed with costs.
_____________________
H
F JACOBS
ACTING
JUDGE OF THE HIGH COURT
PRETORIA
Date:
26 August 2016
RIGHT
GOLD MACHINERY V TSHOLOFETSO MINING SUPPLIERS· JUDGMENT
[1]
Trope v South African Reserve Bank
[1993] ZASCA 54
;
1993 (3) SA 264
(A) at 269.
[2]
Erasmus, Superior Court Practice (2"" Ed) p D1-303.
[3]
Theunissen v Transvaa/se Lewende Hawe Koop Beperk
1988 (2) SA 493
(A).
[4]
McKenzie v Farmers' Co-operative Meat Industries Ltd
1922 AD 16
at
23.
[5]
Sun Packaging (Ply) Ltd v Vreulink
[1996] ZASCA 73
;
1996 (4) SA 176
(A) at 184-187.
[6]
Michael v Caroline's Frozen Yoghurt Parlour (Ply) Ltd 1999 (1) SA
624 (W).
[7]
Dettmann v Goldfain & Another
1975 (3) SA 385
(A) at 400A.
[8]
Picbel Groep Voorsorgfonds (in liquidation) v Somerville, and
related matters
2013 (5) SA 496
SCA at [39].
[9]
See footnote 5 supra.
[10]
Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4)
SA 593 (SCA).
[11]
Standard Building Society v Cartoulis
1939 AD 510
at 516.
[12]
See footnote 10 above.
[13]
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4)
SA 593
(SCA) at[18] - [20].
[14]
Paragraphs 4 - 8.
[15]
Van der Merwe v Meads 1991 (2) SA 1 (A).
[16]
See paragraphs [5] and [6] above.
[17]
Alfred McA/pine & Son (Ply) Ltd v Transvaal Provincial
Administration 1977 (4) SA 310 (T).
[18]
Lanificio Varam SA v Masure/Fils (Ply) Ltd
1952 (40 SA 655
(A) at
660; Pete's Warehousing and Sale CC v Bowsink Investments CC
2000
(3) SA 833
(E).
[19]
Northern Estate and Trust Administrators (Pty) Ltd v Agricultural
and Rural Development Corporation
[2014] 1 All SA 655
SCA.
[20]
Roberts Construction Co Ltd v Dominion Earthworks (Pty) Ltd
1968 (3)
SA 255
(A).