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2015
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[2015] ZAKZDHC 23
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Como Oils (Pty) Ltd v Laurmo Oils CC (5655/2013) [2015] ZAKZDHC 23 (17 March 2015)
IN
THE HIGH COURT OF SOUTH AFRICA,
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 5655/2013
In
the matter between:
COMO
OILS (PTY)
LTD
..................................................................................................
PLAINTIFF
and
LAURMO
OILS
CC
.......................................................................................................
DEFENDANT
JUDGMENT
SISHI
J
Introduction
[1]
The plaintiff instituted two claims against the defendant, the first
claim is for the repayment of an amount of R595 967.59,
in respect of
monies lent and advanced by the plaintiff to the defendant. The
second claim is for the payment of the purchase
price of R741 798.00
representing the agreed purchase price of 143.32 metric tons of
neutralised coconut oil at R11 250.00 per
metric ton plus vat.
[2]
The defendant denies liability and bases its defence to each claim on
alleged oral terms agreed between its managing director
and, Johannes
Wilhelmus Swart and the plaintiff’s former director, Uwe Walter
Lanzendorff who passed away on the 2
nd
of July 2012.
[3]
The plaintiff, Como Oils (Pty) Ltd is a company with limited
liability which has its registered office at 8
th
floor, 135 Musgrave Road, Durban, KwaZulu-Natal.
[4]
The defendant, Laurmo Oils CC is a registered close corporation,
having its principal place of business and registered office
at 23D
Blue Street, Isithebe, KwaZulu-Natal.
Common
Cause Facts
[5]
The plaintiff and the defendant are both companies that conducted
business in the coconut oil industry. The defendant is a close
corporation and the plaintiff a closely held company.
[6]
The defendant’s business was to procure copra (coconut flesh)
from growers in Mozambique and to refine it to produce neutralised
coconut oil.
[7]
The plaintiff’s business was to sell neutralised coconut oil to
product manufacturers in South Africa. Neutralised coconut
oil is
used in the manufacture of various food and beauty products.
[8]
The defendant was the plaintiff’s sole supplier. The
plaintiff and the defendant were neighbours – their business
premises were adjacent to each other. The late Mr Lanzendorff
and Mr Swart were friends.
[9]
There was a close commercial relationship between the plaintiff and
the defendant, and also a personal friendship between their
respective manager/directors.
The
Pleadings
[10]
The plaintiff’s claims are set out as follows in the pleadings:
Claim 1
[10.1]
The defendant is indebted to the plaintiff in the amount of R595
967.59 in respect of monies lent and advanced by the plaintiff
to the
defendant.
[10.2]
The loan agreement was concluded between Uwe Walter Lanzendorff
representing the plaintiff and Johannes Wilhelmus Swart representing
the defendant in Isithebe on a date that is unknown to the plaintiff.
[10.3]
The defendant acknowledged its liability in writing on 3 April 2012,
and a copy of the written acknowledgement of liability
is attached
marked “A”
[10.4]
It was an express or tacit term of the agreement that the debt would
be repayable on demand. The plaintiff made written
demand to
the defendant on the 6
th
of March 2013. A copy of the letter of demand is annexed hereto
marked “B”.
Claim
2
[10.5]
During or about February 2012 and at Isithebe, the plaintiff
represented by Uwe Walter Lanzendorff and the defendant represented
by Johannes Wilhelmus Swart concluded an oral agreement for the
supply of neutralised coconut oil that had the following express,
implied or tacit material terms:
10.5.1
“the plaintiff would supply to the defendant 143.32 metric tons
of neutralised coconut oil as and when required by
the defendant for
delivery to the defendant’s customers;
10.5.2
the defendant would collect the oil from the plaintiff’s
premises at 23C Blue Street, Isithebe, KwaZulu-Natal;
10.5.3
the defendant would replace the exact quantity of neutralised coconut
oil taken by it upon demand from the plaintiff, failing
which the
defendant would pay for the coconut oil taken by it at a price of R11
250,00 per metric ton plus Value Added Tax.
[10.6]
Acting in accordance with the agreement, the plaintiff delivered
143.32 metric tons of neutralised coconut oil to the defendant
over
the period March 2012 up to and including 6 June 2012. Copies of each
invoice and delivery note are annexed hereto marked
“C1-C14”.
[10.7]
The plaintiff made demand for delivery of the oil by way of an email
dated 15 June 2012 (which is annexed hereto marked “D”)
which was accepted by the defendant but notwithstanding such
acceptance the defendant has failed to replace a total of 57.84 tons
of neutralised coconut oil, being the consignments of oil reflected
in the plaintiff’s invoices annexures “C11”
and
“C13” hereto.
[10.8]
The defendant has accordingly become liable to pay for the oil taken
by it at the agreed rate, and it accordingly indebted
to the
plaintiff in the total amount of R741 798.00, representing the agreed
purchase price of 143.32 tons of neutralised coconut
oil at R11
250.00 per ton plus Value-Added Tax. Notwithstanding written
demand (annexure “B” hereto) the defendant
has failed to
pay the plaintiff.”
[11]
In response thereto, the defendant has pleaded as follows:
[11.1]
The plaintiff in fact never loaned any money to the defendant;
[11.2]
However, the plaintiff, with the consent of the defendant, created a
book entry in its financial statements suggesting that
money was
loaned by the plaintiff to the defendant, which in fact was not the
case.
[11.3]
The aforesaid book entry created by the plaintiff was done to improve
the plaintiff’s apparent profitability reflected
in its
financial statements.
[11.4]
In order to complete the appearance of a genuine loan the defendant
acknowledged liability, annexure “A”.
Alternatively
[11.5]
If is found that the loan was a genuine loan, which is disputed, the
defendant pleads that as at the date of demand the loan
was
extinguished by set off;
[11.6]
The set off came about as follows:
[11.7]
The defendant provided storage to the plaintiff for its coconut oil;
[11.8]
The value of the storage provided by the defendant to the plaintiff
as at the date of demand amounted to R2 753 700,00;
[11.9]
The defendant pleads that a storage amount, equal to the plaintiff’s
claim, became payable by the plaintiff to the
defendant, when the
plaintiff made its demand on 6 March 2013;
[11.10]
In the premises as at the date of demand, the defendant’s
indebtedness to the plaintiff was extinguished by set off
leaving the
plaintiff indebted to the defendant for the balance of R2 157 733,00;
[11.11]
The balance is payable when both the plaintiff and the defendant sold
their businesses.”
[12]
In the pleadings, the defendant has admitted that the plaintiff would
supply the defendant 143.32 metric tons of neutralised
coconut oil as
and when required by the defendant for the delivery to the
defendant’s customers.
[13]
The defendant has also admitted that, in terms of the agreement, it
would collect oil from the plaintiff’s premises at
23C Blue
Street, Isithebe, KwaZulu-Natal.
[14]
What emerges from the pleadings and the evidence is the following:
[14.1]
The defendant, relying on the evidence of Blackie Swart and his
daughter, disputes its liability to the plaintiff. In respect
of the
loan, Mr Swart alleges that there was never a loan and the four
acknowledgements of liability signed by him in each year
from 2008 to
2012 are incorrect and fraudulent.
[14.2]
In respect of the goods sold and delivered the defendant relies on
alleged oral agreement between Mr Swart and Mr Lanzendorff
that the
defendant would not be liable to pay, but only to replace the
neutralised coconut oil taken by it, and then only when
the defendant
had surplus of neutralised coconut oil.
[14.3]
As an alternative defence, the defendant asserts an alleged claim
against the plaintiff for “the value” of certain
storage
allegedly provided by the defendant for the plaintiff’s coconut
oil.
[15]
The plaintiff submitted, correctly in my view, that as with the two
other defences mentioned above, this claim depends solely
on Mr
Swart’s evidence of an agreement or arrangement concluded
between himself and Mr Lanzendorff. There is no contemporary
record of any such agreement, and no objective evidence of any
storage amount ever being claimed by the defendant or paid for by
the
plaintiff in the ordinary course of business.
[16]
It is clear from the evidence that in respect of both claims, the
Court has been presented with mutually destructive versions.
[17]
The plaintiff submitted, correctly in my view, that the unusual
feature relating to claim 1 is that both of those version emanate
from the same witnesses but at different points in time. The
plaintiff relies on its own contemporaneous records, but also
on an
explanation previously given to an audit clerk by Anne-Marie Viljoen,
a former manager of the plaintiff, and on Mr Swart’s
own signed
statements acknowledging indebtedness.
[18]
Both Ms Viljoen and Mr Swart, in evidence, contradicted their
previous statements. The question is, should they be believed
now, or should their earlier statements be believed.
[19]
The defendant has contended that in evidence it emerged that the loan
was in fact rather an enrichment claim which, according
to the
plaintiff arose when the plaintiff overpaid the defendant for certain
oil purchased from the defendant, this emerged from
the evidence of
the auditor Mr Elsworth.
[20]
In respect of claim 2, the question is whether Monique Snyders, and
or Mr Swart should be believed.
The
Issues
[21]
The issues to be decided in this matter are:
[21.1]
Firstly, whether or not there was a loan between the plaintiff and
the defendant as alleged in the plaintiff’s particulars
of
claim.
[21.2]
Secondly, whether there was an agreement between the parties to
replace the oil or to repay the debt within a reasonable
time.
[21.3]
Thirdly, whether the defence of set-off has been established by the
defendant.
Claim
1 – The Loan
[22]
In the particulars of claim, the plaintiff alleges that the defendant
is indebted to the plaintiff in the amount of R595 967,59
in respect
of monies lent and advanced by the plaintiff to the defendant.
[23]
The defendant in its plea and in evidence denied that the plaintiff
in fact ever loaned any money to the defendant. The
defendant
in its explanation, stated that the plaintiff with the consent of the
defendant, created the book entry in its financial
statement
suggesting that money was loaned by the plaintiff to the defendant,
which in fact was not the case. The defendant
has alleged that
the book entry created by the plaintiff was done to improve the
plaintiff’s apparent profitability reflected
in its financial
statements.
[24]
There are a number of documents and acknowledgments of debt signed by
Mr Swart of the defendant acknowledging the debt.
There were in
fact four acknowledgments of debt signed by Mr Swart acknowledging
the existence of the debt.
[25]
There is a written acknowledgement of liability dated 3 April 2012,
printed on the letterheads of Laurmo Oils, addressed to
the
plaintiff’s auditor and signed by Mr Swart. It simply states:
“
We,
herewith acknowledge outstanding debt to Como Oils (Pty) Ltd in total
of R595 967,59. As per 29 February 2012.
[26]
Evidence established that this acknowledgment of debt was the last in
its series of such acknowledgment signed by Mr Swart
on 5 April 2012,
the first of such is dated 19 March 2008, the second dated 2 April
2009 and the third dated 5 April 2012.
[27]
The first in this series dated 19 March 2008 is for an amount of R630
232,59 and explains the
causa
for the debt in paragraph 1 thereof. It would be perhaps be
appropriate to set out the full content of this letter.
[28]
This is addressed to the plaintiff’s auditor and it reads:
“
COMO
OILS (PTY) LTD
LOAN
CERTIFICATE: YEAR ENDED 29 FEBRUARY 2009
“
I
hereby certify that I owe the amount as reflected in the books of the
above company amounting to R630 232,59 as at 29 February
2009 is
correct and I further certify that: -
(1)
The aforesaid balance is in respect of the
difference between the amount charged for good, and the contractual
amount agreed upon
with the above company;
(2)
I am satisfied with the method used by the
above company, to determine the aforesaid balance; and
(3)
The above amount will be paid back to the
above company within the next financial year, or twelve consecutive
months subsequent
to year end, or settled in exchange for product.
Yours
faithfully
Blackie
Swart”
The
letter is signed by Blackie Swart on behalf of Laurmo Oils CC.
[29]
This letter not only acknowledges the defendant’s indebtedness
to the plaintiff, and the amount thereof, but also contains
an
undertaking to repay within the next financial year or twelve
consecutive months subsequent to the year-end or settled in exchange
for product.
[30]
Four of these acknowledgments of debts by the defendant were signed
by Mr Swart year after year.
[31]
The defendant has contended that in evidence it, however emerged that
the loan was in fact rather an enrichment claim which
arose,
according to the plaintiff when the plaintiff paid the defendant for
certain oil purchase from the defendant.
[32]
According to the defendant, the allegation that there was an
overpayment is based solely on the manuscript note appearing in
the
ledger of the plaintiff. It is common cause between the parties
that this note originated from a former manager of the
plaintiff, Mrs
Viljoen (she gave the information contained in the note to an audit
clerk who recorded it on the relevant ledger
page).
[33]
Because of the allegation that the acknowledgment of debt relied on
by the plaintiff was a sham, the plaintiff went further
in its
evidence in chief and proved the underlying transaction that was the
causa
for
the debt.
[34]
Mr Elseworth’s evidence established that during the audit
carried out in respect of the 2008 financial year, the audit
clerk
sought and obtained explanations from the management of the plaintiff
regarding how this debt came about.
[35]
A summary of the explanation is contained in the plaintiff’s
bundle (page 39) where the audit clerk noted “
this
amount is as a result of a shortage of oil experienced by the
client’s supplier, Laurmo Oils CC. Because of this shortage,
supplier had to charge client more than the contractually agreed
amount. The difference (net of vat) between the amount charged
and
the contractual amount has been reflected as a current debtor, which
is expected to be recovered”.
[36]
The audit working papers as set out in the plaintiff’s bundle,
identify these specific transactions in issue and verify
the quantum
of the advance.
[37]
It is clear from the evidence and the documents that by agreement the
defendant overcharged the plaintiff for oil. The
plaintiff paid
the inflated price and the defendant undertook to repay the excess.
Plaintiff has submitted correctly that
by the deliberately paying an
amount over and above the true agreed price, the plaintiff made an
advance to the defendant which
defendant undertook to repay.
This clearly amounts to a loan.
[38]
Evidence established that the amount of the loan was increased by an
amount of R39 900,00 being the purchase price of the truck
sold by
Como Oils (Pty) Ltd to Laurmo Oils CC. The purchase price of
R39 900,00 was added to the loan amount.
[39]
As indicated above, the debt was expressly acknowledged by Mr Swart,
year to year on four separate occasions.
[40]
Further corroboration of these facts appears from the defendant’s
sales record. The defendant’s price increased
to coincide
with the advances described above. The explanation for the
increase is that the additional loan amount had to
be added to the
true contract price.
[41]
The defendant in its own financial statements, recorded this loan as
a debt owing by the defendant to the plaintiff.
[42]
Mr Swart’s evidence was that the recordal of the loan owing by
the defendant to the plaintiff was an entirely ficticious
entry in
the books and the records of the plaintiff. He stated that the
purpose behind this was to inflate the plaintiff’s
profitability in order to make it more attractive to a possible
buyer.
[43]
Mr Swart accepted in cross examination that during 2008 and over the
subsequent period, he and Mr Lanzendorf had in mind to
sell their
businesses jointly to a single buyer. He had no explanation for
the proportion that if the loan was indeed a sham,
it would have no
beneficial effect on the profitability of the two companies jointly.
It would have no net effect, because
the debt owing to the plaintiff
corresponds exactly to an equal debt owing by the defendant.
The plaintiff submitted, correctly
in my view, that the reason
proffered by Mr Swart for the sham was therefore implausible and
unconvincing.
[44]
Furthermore, if the plaintiff’s business was to have been sold
alone, the sham would have been discoverable immediately
by a
purchaser of the plaintiff’s business.
[45]
The purchaser would then have been entitled to cancel the sale
agreement because of the material misrepresentation inducing
the
contract or they would have been entitled to sue for damages of or
performance of warrantees.
[46]
The plaintiff submitted that in cross examination Mr Swart could
offer no explanation for the ineptitude of the attempted fraud
that
he alleged. For his version to be believed, the Court would
have to accept that the late Mr Lanzendorff took steps towards
the
perpetration of a serious fraud that was deemed to be a failure from
the onset because it would be easily discovered.
[47]
The defendant submitted that the plaintiff has not produced any
evidence whatsoever to contradict Ms Viljoen’s evidence.
The plaintiff’s case, however, is that the Court should accept
that which Mrs Viljoen noted in the plaintiff’s ledger
“at
page 39 of the plaintiff’s bundle” and reject Mrs
Viljoen’s evidence on oath and in Court that the
note was
designed to mask the losses which the plaintiff suffered when the
relevant sales took place during October 2007 to February
2008.
[48]
The defendant submitted that Mrs Viljoen was an excellent witness.
That, far from rejecting her evidence as false, this
Court should
accept it. Mrs Viljoen was candid enough to make an admission
against self-interest, namely that Mr Lanzendorff
and herself
manipulated the plaintiff’s financial statements by hiding
losses which the plaintiff suffered during October
2007 to October
2008. These book entries were done to improve the apparent
profitability of her employer’s business
at the time when her
employer was attempting to sell the business.
[49]
In short then, the two contradictory versions are whether there were
overpayments or whether there were losses suffered.
The actual
sales figures and calculations done by Mrs Viljoen are consistent
with either of the above two versions. Both
versions however
come from Mrs Viljoen. It is not clear on what basis the
Plaintiff wants this Honourable Court to accept
the one version
rather than the other. It is reiterated that both versions come
from Mrs Viljoen. Mrs Viljoen however
in Court and on oath
explained that the version in the papers was a fabrication.
Defendant submitted that there is no reason
to reject this
explanation. There is absolutely no evidence whatsoever to
contradict that which Mrs Viljoen testified as
to the reason why the
false note was made and what those entries intended to achieve.
The probabilities favour Mrs Viljoen’s
evidence in court.
It is common cause between the parties that Mr Lanzendorff was
attempting to sell the plaintiff’s
business. Therefore a
trade profit was always going to look much better than a loss.
[50]
The defendant submitted that ultimately the version given by Mrs
Viljoen in Court is supported by the direct evidence given
by Mr
Swart. Mr Swart testified that there were never any
overpayments. That the prices which the plaintiff was charged
were in fact lower than the general market price at the time.
He pointed out that during the relevant period the defendant
sold oil
to the plaintiff at R6 500,00 per unit which was lower than the price
the plaintiff was paying for palm kernel oil which
was purchased for
R8 280,00 per unit.
[51]
Defendant further submitted that even if it is however assumed that
there was a genuine overpayment by the plaintiff to the
defendant,
there was no evidence whatsoever that Mr Lanzendorff and Mr Swart had
agreed that this overpayment would constitute
a loan or that this
debt would be repaid by the defendant.
[52]
The only evidence of any discussion between Mr Lanzendorff and Mr
Swart on this issue came from Mr Swart. And his evidence
was
that the auditor required the acknowledgment of debt. The
undisputed evidence of Mr Swart was that Mr Lanzendorff never
in fact
claimed that there was any overpayment or that the plaintiff required
any amount to be repaid by the defendant.
[53]
I have already indicated earlier on in this judgment that this Court
has been presented with mutually destructive versions.
There
are material disputes of facts in this matter.
[54]
On the approach to be adopted in resolving factual disputes,
plaintiff has referred to
Stellenbosch
Farmers Winery Group Limited v Martell and Cie
[1]
The
Court held that the technic generally employed by Courts in resolving
factual disputes of this nature, may conveniently summarised
as
follows:
“
To
come to the conclusion on the disputed issues:
(1)
The Court must make findings on:
a.
Credibility of the various witnesses;
b.
Their reliability; and
c.
The probabilities.
(2)
In assessing credibility, a court will have
regard to a wide range of factors including:
i)
The witness’ candour and demeanor in
the witness box;
ii)
His bias, latent and blatant;
iii)
Internal contradictions in his evidence;
iv)
External contradictions with what was
pleaded or put on his behalf, or with established fact or with his
own extracurial statements
or actions;
v)
The probability or improbability of various
aspects of his version;
vi)
The calibre and cogency of his performance
compared to that of other witnesses testifying about the same
incidents or events.
[55]
In this case the SCA emphasised that when all factors are equipoised,
the probabilities prevail.
[56]
It was stated in National Employers General Insurance Limited v
Jagers
[2]
that an estimation of
the credibility of witnesses is inextricably bound up with the
probabilities. If one version is clearly
more probable than the
other then that is the version that must be accepted. It is
only if the probabilities are equally
balanced that a court has to
fall back on credibility and reliability as decided factors.
[57]
From the evaluation of all the evidential material placed before
Court, it is clear that all the objective evidence is in fact
in
favour of the plaintiff’s version of events.
[58]
The evidence consists of contemporaneous business records, statements
made to the plaintiff’s auditors by Ann-Marie Viljoen
at a time
when repayment was not being actively enforced and the
acknowledgements of debt signed by Mr Swart on behalf of the first
defendant.
[59]
I have already indicated earlier on in this judgment that in the
letter dated 19 March 2008, signed by Blackie Swart on behalf
of the
defendant, he not only acknowledges the indebtedness of the defendant
to the plaintiff in the amount of R630 222 59,00 in
paragraph 1 of
the said letter, he also states the cause for the debt, and in
paragraph 2, he confirms the correctness of
the method used in the
determination of the aforesaid amount and in the last paragraph, he
undertakes that the amount will be paid
to the plaintiff within the
next financial year or twelve consecutive months subsequent to a
year-end or settled in exchange for
product.
[60]
The plaintiff submitted that the transaction contended for makes
sense in the context of the parties’ business relationship.
The plaintiff assisted the defendant’s cash flow by advancing
it funds. The plaintiff did not require immediate repayment.
It also did not charge interest, and perhaps that can be attributed
to the friendship between Messrs Lanzendorf and Swart.
But the
advance was not a gift, and the defendant was required to repay, and
undertook to do so.
[61]
The plaintiff assisted its neighbour, but it also protected its own
interests by assisting its sole supplier to continue in
business.
[62]
The probabilities also favour the plaintiff’s version in this
matter.
[63]
Against this, the defendant has no objective evidence in its favour.
It relies on the say-so of Mr Swart and his daughter,
Anna-Marie
Viljoen. There is no external corroboration of their evidence.
[64]
Their version is inherently improbable.
[65]
It is improbable that any businessman, even if friendly with a
business associate, would unconditionally acknowledge a debt
purely
because his friend asked him to do so.
[66]
It is improbable Mr Lanzendorff would have perpetrated the fraud
alleged because:
a.
fraud is not inferred lightly;
b.
the alleged fraud would not have achieved its alleged purpose;
c.
the fraud would have been discovered easily and immediately by a
purchaser of the plaintiff’s business, and would have
led to
serious negative consequences for the plaintiff.
[67]
On their own version, the evidence of the two witnesses called by the
defendant cannot be taken at face value and believed
unless it can be
corroborated externally, or constitutes a statement against interest.
[68]
If what they said in the witness box is true, then they previously
made false statements deliberately in order to perpetrate
a fraud.
They should both be found to be unreliable and to lack credibility.
[69]
The plaintiff’s version is supported by the probabilities, by
objective evidence and by Mr Swart’s acknowledgement
of
liability contrary to his interests.
[70]
It is entirely incorrect as the defendant submitted that the
probability favour Mrs Viljoen’s evidence in Court.
[71]
I have already indicated earlier on in this judgment that this was a
perpetration of fraud which could be easily detected by
the new
purchaser of the business.
[72]
Mr Swart testified that there were never any overpayments. That
the prices which the plaintiff was charged were in fact
lower than
the general market price at the time. He pointed out that
during that relevant period the defendant sold oil to
the plaintiff
at R6 500,00 per unit which was lower than the price the plaintiff
was paying for palm kennel oil which was purchased
for
R8 280,00 per unit.
[73]
This submission loses sight of the fact that there is a difference
between neutral coconut oil and palm kennel oil which is
more
expensive than the neutral coconut oil.
[74]
The defendant submitted that even if it is however seemed that there
was a genuine overpayment by the plaintiff to the defendant,
there
was no evidence whatsoever that Mr Lanzendorff and Mr Swart had
agreed that this overpayment would constitute a loan or that
this
debt would be repaid.
[75]
This submission flies in the face of the content of the letter dated
19 March 2008, which has already been referred to earlier
on in this
judgment, acknowledging the debt, the cause and thereof and that the
debt would be repaid within the next financial
year or twelve
consecutive months subsequent to year end or settled in exchange for
product. This submission therefore, cannot
be true.
[76]
Considering all the evidence in this matter, I am satisfied that the
defendant’s evidence given in Court is to be rejected
as
improbable and untrue and the plaintiff’s version should be
accepted as true.
[77]
In my judgment, the plaintiff should succeed in the first claim and
that judgment should be granted in its favour.
Claim
2 – Payment of the Purchase Price
[78]
In Claim 2 the plaintiff pleaded that an agreement was entered into
between the respective parties represented respectively
by Mr
Lanzendorff and Swart the relevant terms of which were that the
plaintiff would furnish the defendant with 143,32 metric
tons of
coconut oil; that the defendant would replace the aforesaid
quantity of oil upon demand from the plaintiff, failing
which the
defendant would pay for the coconut oil at a price of R11 250,00 per
metric ton, (excluding VAT).
[79]
It is common cause that the plaintiff delivered 143,32 metric tons of
oil to the defendant, and that the defendant subsequently
returned
85,48 metric tons of oil and still owes 57,84 metric tons of oil.
[80]
Monique Snyders testified on behalf of the plaintiff, her evidence
was that the oil either had to be replaced upon demand failing
which
the defendant was to pay for the oil at the going rate of R11 250,00
per metric ton. She has direct recollection of
agreement being
concluded in terms of which the defendant would either replace
neutralised coconut oil or would pay for it.
[81]
Mrs Snyder’s evidence was contradicted by the evidence of both
Mrs Viljoen and Mr Swart. Both these witnesses testified
that
it was always understood that only the oil had to be replaced.
There was never an agreement that the oil would be paid
for.
Mrs Viljoen testified that paying for the oil made no sense simply
because it would have meant that the defendant would
pay the
plaintiff money whereafter the plaintiff would immediately order oil
with money. Her evidence was that the plaintiff
required oil to
sell to its customers and not money.
[82]
The agreement described by Mrs Snyders did not have a specified date
upon which replacement or payment would have to take place.
[83]
Prior evidence was that the plaintiff required oil to sell to its
customers and not the money.
[84]
The defendant further submitted that Mrs Snyder’s evidence was
also contradicted by the only written document on record
emanating
from Mr Lanzendorff. On 15 June 2012, Mr Lanzendorff sent an
email to Mr Swart in which he requested to return
oil starting a week
after 15 June 2012. The defendant submitted that it is
significant that Mr Lanzendorff makes no reference
whatsoever to the
payment of the oil. He plainly understood the agreement exactly
the same way as the defendant’s witnesses
testifying namely,
that the oil simply had to be replaced. Although Blakkie Swart
made an undertaking that they will start
replacing one load per week
from the following week, this never happened.
[85]
There is another email from Monique Snyders on behalf of Como Oils,
dated 25 July 2012, which refers to Blakkie’s email
dated 15
June 2012, which reads as follows:
“
The
agreement was 143.32 metric tons neutralised CNO, that was bought
from us by Laumo Oils and sold to Unilever would be replaced
before
Laurmo Oils enters into a new order with the Unilever.
Laurmo
Oils has agreed to supply Uniliver with another 132 tons starting in
July/August
.
We
are out of oil and we have not received any payment for the oil from
Laurmo Oils, who owes Como Oils R1 838 79,00 (Invoices 18
May 2012 –
06 June 2012) …”
[86]
It is entirely untrue that the email 5 June 2012 Lanzendorff sent to
Mr Swart requesting the return of the oil is the only
written
document on record emanating from Mr Lanzendorff. There is this
document referred to above dated 25 July 2012, wherein
the plaintiff
stated that they have never received the oil nor payment. This
document supports the evidence of Mrs Snyders
that the terms of the
agreement were that oil had to be returned failing which it had to be
paid for.
[87]
Ms Snyders’s recollection of the meeting during which the
agreement was concluded was precise and specific. By
contrast,
Mr Swart did not seem to have a clear and specific recollection of
the meeting when the agreement was concluded.
[88]
But the issue turns on the probabilities. Ms Snyders describes
a businesslike transaction in terms of which the plaintiff
was
entitled to require the defendant to settle its debt on demand within
a reasonable time, if not by replacement, then by payment
of money.
This is supported by contemporaneous invoices that fixed the price.
[89]
The defendant’s version leaves the determination of the due
date entirely in the hands of the debtor. This is inherently
unlikely. It is inherently improbable that the plaintiff would
have agreed with the defendant that the defendant could replace
oil
effectively whenever Mr Swart felt like it. Once one accepts
that whether or not the defendant had a surplus was entirely
up to Mr
Swart, it becomes clear that it could never have been agreed that
coconut oil would be replaced only when a surplus arose.
[90]
That being so, Mr Swart’s evidence on this point falls to be
rejected as false, and Ms Snyders’ evidence which
is in
accordance with the contemporaneous documents and the probabilities,
should be accepted.
[91]
It follows that by 6 March 2013 at the latest the defendant was in
default of its obligation to replace on demand, and the
plaintiff was
entitled to insist on payment as agreed. The agreement
described by Ms Snyders provided that if replacement
did not occur
then the plaintiff would be entitled to receive payment. Once
this right to payment had crystallised then this
was the only way for
the defendant to discharge the debt, and it follows that the
purported tender of replacement oil in August
2013 was an invalid
tender that did not absolve the defendant from its obligation to pay.
[92]
In my judgment, the plaintiff has succeeded in proving claim 2.
[93]
Having considered all the above, I am satisfied that the plaintiff is
entitled to judgment in its favour on claim 2.
Set-off
[94]
The defendant pleaded a set-off as a defence to the plaintiff’s
first claim. This defence was pleaded in the alternative
to the
denial that a genuine loan was agreed upon.
Defendant’s
submissions
[95]
In this regard, the defendant made the following submissions:
[95.1]
The set-off defence is based solely on the undisputed fact that the
defendant provided storage to the plaintiff for the plaintiff’s
coconut oil. The undisputed evidence of Mr Swart was that the
defendant in fact built the oil tanks in question for the sole
purpose of assisting the plaintiff with its storage requirements.
That they had agreed that the value of the storage would
be
calculated and reconciled when the businesses of both the plaintiff
and defendant were sold.
[95.2]
There is support for Mr Swart’s evidence in a letter of the
plaintiff’s auditor to Mr Swart, dated 5 November
2012, in
which the auditor pointed out that once the plaintiff had been
“wrapped up” then the various amounts due between
the
plaintiff and the defendant would be sorted out.
[95.3]
The value of the storage for purposes of the set-off was testified to
be the amount of R2 753 700,00. Mr Swart testified
that this
amount was based on documents received from the plaintiff reflecting
the extent to which the tanks were used.
[95.4]
It was submitted that since it cannot be disputed that:
1)
the plaintiff utilised the defendant’s tanks for storage;
2)
the undisputed amount claimed by the defendant for such storage, the
defence of set-off must be upheld.
[96]
It was further submitted that trite law set-off comes into operation
when two parties are mutually indebted to each other and
both debts
are liquidated and fully due.
[97]
Although Mr Swart testified that the parties had agreed that the
debts owed by the one entity to the other would be settled
once both
businesses were sold, the plaintiff’s debt to the defendant
became due when the plaintiff in fact sold its business
and “wrapped
up” its business as the auditor had pointed out.
[98]
It was common cause that the plaintiff had sold its business during
2012 at which time the debt owing to the defendant became
due, owing
and payable. Set-off therefore operated automatically from at
least 2012 to extinguish the alleged debt owed by
the defendant to
the plaintiff.
Plaintiff’s
Submissions
[99]
The following submissions were made on behalf of the plaintiff:
[99.1]
The defendant pleads a counterclaim, but only as a defence, based on
the assertion that set-off applies.
[99.2]
The applicable principle was stated in
Schierhout
v Union Government
[3]
where the following was said, “When two parties are mutually
indebted to each other, both debts being liquidated and fully
due,
then the doctrine of compensation comes into operation. The one
debt extinguishes the other
pro
tanto
as effectually as if payment has been made”.
[99.3]
The critical point for the present purposes is that for set-off to
operate the two debts must both be liquidated.
[99.4]
“Liquidated” in this context means capable of easy and
speedy proof, calculable by way of an arithmetic calculation.
See:
Mahomed
v Nagdee
[4]
,
See also:
Treasurer
– General v van Vuuren
[5]
Fatti’s
Engineering Company (Pty) Ltd v Vendick Spares (Pty) Ltd
[6]
[99.5] It has been
held that an untaxed bill of costs is an example of an unliquidated
debt.
See:
Blakes
Maphanga Inc v Outsource Insurance Company Ltd
[7]
[99.6] A claim for
payment of the price of goods and charges where those amounts are in
dispute has been held not to be a liquidated
claim.
See:
Faure
Brothers v Clayton
[8]
[99.7]
The defendant describes its claim for rental of storage tanks as a
claim for the “value of the rental” (not for
the payment
of an agreed price).
[99.8]
This evokes a type of enrichment claim which by its nature is not a
liquidated claim because it requires an estimation of
value, not mere
arithmetic calculation.
[99.9]
Mr Swart’s evidence did not establish any binding agreement for
the payment of any amount of storage. At best
his evidence was
that he and Mr Lanzendorff had agreed that this would all have to be
sorted out at some point in the future.
Even if this evidence
could be accepted and taken at face value, it fails to establish an
enforceable agreement, much less a liquidated
claim.
[99.10]
Evidence should be approached with caution for the reasons already
stated. Mr Swart conceded that the defendant benefited
by
allowing the plaintiff to see its storage tanks because this enabled
the defendant to deliver oil to the plaintiff and to invoice
and
receive payment that would otherwise have been deferred.
[99.11]
In keeping with his approach to evidence throughout the matter, the
defendant caused a whole series of back dated invoices
to be
generated purely in preparation for the trial, in order to attempt to
demonstrate the claim for storage costs.
[99.12]
These are patently fictitious and fake invoice. Ms Snyders
evidence is that they were not sent to the plaintiff.
The
plaintiff has no record of any ongoing liability for tank storage.
They were generated purely for use at trial.
They exist solely
in the defendant’s accounting system. They refer to all
the defendant’s storage tanks, whereas
the plaintiff did not
use all of them.
[99.13]
The amounts claimed are massively exaggerated and are not based on
any agreement as to price or any market valuation.
Ms Snyders
evidence was that her new employer, Vida Oils (Pty) Ltd, pays an
amount of approximately R15 000, 00 a month for tank
storage. The
back dated invoices formulated by the defendant are for an amount of
R114 000,00 per month.
[100]
I am in agreement with the submissions made on behalf of the
plaintiff in refuting the allegations of an alleged set-off.
[101]
The defendant’s claim for rental of storage is indeed not a
liquidated claim.
[102]
The invoices in support of the set-off claim are backdated invoices
generated purely in preparation for the trial. These
were never
sent to the plaintiff. The amounts claimed are exaggerated.
The plaintiff has no record of any on-going
liability for tank
storage.
[103]
The defendant’s evidence, even taken at face value, fails to
establish any enforceable contractual claim for payment
of these
amounts. There is no evidence that it was agreed that a
reasonable amount would be paid, and no evidence that the
amount
claimed is a reasonable amount in any event. In the
circumstances, the defendant’s attempt to rely on set-off
is
clearly misconceived and invalid.
[104]
In the evaluation of the two versions, based on the evidence
tendered, in my view, the version of the plaintiff is more probable
than the version of the defendant on this issue. The defendant
has failed to establish the existence of the se-off to extinguish
its
debt to the plaintiff. The defendant’s claim in this regard
should fail.
[105]
Considering the totality of the evidence tendered, the submissions
and the authorities made on behalf of both parties, it
is my judgment
that the plaintiff has succeeded in proving both claims on the
balance of probabilities and that judgment should
be granted in
favour of the plaintiff in respect of both claims.
[106]
On the issue of costs, the plaintiff has argued that the defendant
should be ordered to pay the costs of suit. The defendant
on
the other hand has argued that the plaintiff’s claim should be
dismissed with costs.
[107]
In my view, there is no reason why the costs in this matter should
not follow the result.
The
order
[108]
In the result, the following order is made;
[108.1]
Judgment is granted against the defendant for payment to the
plaintiff of R595 967,59, together with interest thereon at
15,5%
from 6 March 2013 to 31 July 2014 at 15,5% per annum, and thereafter
at 9% per annum until date of payment;
[108.2]
Judgment is granted against the defendant for payment to the
plaintiff of R741 798.00 together with interest thereof at
15,5% from
6 March 2013 to 31 July 2014 at 15,5% per annum, and thereafter at 9%
per annum until final date of payment.
[108.3]
The defendant is ordered to pay the plaintiff’s costs of suit.
____________
SISHI
J
APPEARANCES
Date
of Hearing:23 September 2014
Date
of Judgment: 17 March 2015
Plaintiff’s
Counsel :
A LAMPROUGH
Instructed
by : De Villiers, Evans & Petit
626
Musgrave Road
DURBAN,
4001
Tel:
031 207 1515
Fax:
031 208 372
Ref:
P Combrink/oj/01C019003
Defendant’s
Counsel :
A De Wet
Instructed
by : Hay and Scott Attorneys
2
nd
floor, Alexander Forbes Wing
3
Highgate Drive,
George
Macfarlane Lane
Redlands
Estate,
PIETERMARITZBURG
Tel:
033 342 4800
Fax:
033 342 4900
Ref:
ABL Scott/tb/12L100001
Locally
Represented by
GAVIN
PRICE ATTORNEYS
Suite
2, Villa Libra 199/201
Percy
Osborn Road
MORNINGSIDE
Tel:
031 3039255
Fax:
031 3037337
Ref:
R Whitehorn/JDK
[1]
2003 (1) SA 11 (SCA)
[2]
1984 (4) SA 437
E at 440 to H
[3]
1926 AD 286
at 289 to 290
[4]
1952 (2) SA 410
A at 416 H
[5]
1905 TS 582
[6]
1961 (1) SA 736
(T) 738 F to G.
[7]
2010(3) SA 383 (SCA) para 17.
[8]
1906 TS 205