De Swardt v House of Trucks (Edms) Bpk (143/05) [2006] ZASCA 32; [2006] SCA 33 (RSA) (27 March 2006)

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[2006] ZASCA 32
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De Swardt v House of Trucks (Edms) Bpk (143/05) [2006] ZASCA 32; [2006] SCA 33 (RSA) (27 March 2006)

THE SUPREME COURT OF
APPEAL
OF
SOUTH AFRICA
CASE
NO: 143/05
Not
reportable
In
the matter between
DALEEN
ALTA DE SWARDT Appellant
and
THE
HOUSE OF TRUCKS (EDMS) BPK Respondent
Coram
: SCOTT, CONRADIE, CLOETE, LEWIS, VAN HEERDEN
JJA
Heard:
17
March 2006
Delivered: 27
March 2006
Summary: Oral contract for the manufacture of fuel tankers:
guarantee for a year entitled the plaintiff to damages on breach.
Neutral citation: This case may be cited as
De Swardt v House
of Trucks
[2006] SCA 33 (RSA).
JUDGMENT
LEWIS JA
[1] The appellant in this matter, Mrs Daleen de Swardt, sued the
respondent, The House of Trucks, for consequential damages resulting
from the respondent’s breach of a contract for the manufacture of a
set of fuel tankers for her business, Leeukop Boerdery (‘the
business’). The appellant alleged that the contract had been
concluded orally, over the telephone, between her husband acting
on
her behalf, and a representative of the respondent, Mr Louis van den
Berg.
[2] The
respondent denied the existence of any contract between the parties,
but, in the alternative, relied on a quotation given
to the appellant
in respect of the tankers subsequent to the telephone conversations,
and which expressly excluded liability for
consequential loss. It
pleaded that it had sold the tankers manufactured at the appellant’s
request to a finance house, SA Axle
Finance (Edms) Bpk, trading as
Planet Finance, which had in turn let the tankers to the appellant.
[3] The
trial court (Free State High Court, per Beckley J) agreed at the
outset to determine only the issues whether a contract between
the
parties had come into existence and if so, whether it excluded
liability for consequential loss on the respondent’s breach.
Beckley J found that there had been a contract between the parties as
alleged by the appellant; that the tankers were guaranteed
for a
period of a year, and that it had been in their contemplation that
special damages would be payable in the event of failure
to perform.
However, he granted leave to appeal to the full court. That court
(per Lombard J, Hattingh and Kruger JJ concurring)
upheld the appeal
on the basis that there had been no agreement of sale between the
parties, and ordered that the trial court’s
order be replaced by
one of absolution from the instance. Special leave was granted by
this court to appeal against the decision
of the court below.
[4] The
basis of the claim as alleged in her combined summons is that the
appellant’s husband, Mr de Swardt, acting on her behalf,
had
concluded an oral contract with the respondent on 8 February 2001 to
manufacture two sets of fuel tankers for the appellant’s
business.
The price was agreed at R512 000 plus VAT. The respondent had
undertaken to deliver the first set of tankers on 12 March.
Van den
Berg, for the respondent, had told De Swardt that the tankers would
be under guarantee for a year. It appears, although
the appellant’s
pleadings by no means make this clear, that the transaction was to be
financed by Planet Finance, and that the
purchaser of the tankers
would be Planet Finance, which would in turn let them to the
appellant.
[5] The
agreement between the appellant and Planet Finance, annexed to the
particulars of claim, is termed a ‘lease agreement’.
It was
concluded with the appellant, trading as Leeukop Boerdery, as lessee
on 26 April 2001, after the first set of tankers had
been delivered
to the business. The ‘selling price’ of the tankers is set out in
the lease but no reference is made to the identity
of the seller. The
obvious inference to be drawn from the evidence, however, is that the
respondent sold the goods directly to Planet
Finance, which in turn
let them to the appellant. Indeed, as I have indicated, the
respondent pleaded that it had sold the first
set of tankers to
Planet Finance for R643 585 plus VAT.
[6] The
contract between the parties was subsequently amended, the appellant
alleged, by agreement between De Swardt and Mr Eduan
Naudé of
the respondent, so as to make provision for the installation in the
tankers of meter and hydraulic pump systems.
Subsequent to the
amendment, a written quotation was sent to the appellant on 28
February 2001. Although the respondent denies that
there is a
contract between it and the appellant, it claims in the alternative
that the terms of such an agreement are to be found
in the written
quotation rather than in any oral agreement. The quotation expressly
excludes liability for consequential loss or
damage.
[7] After
the sets of tankers were delivered to the business they immediately
manifested defects. Many unsuccessful attempts to repair
them were
made by the respondent. De Swardt also obtained a report to the
effect that they did not conform with SABS specifications.
De Swardt
thus, on behalf of the appellant, cancelled the contract. The lease
agreement was also cancelled and the tankers returned
to the
respondent. We are not concerned with the issue whether the tankers
were indeed defective, or whether cancellation was justified,
because
of the separation of issues by the trial court.
[8] The
first issue to be determined then is whether there was a contractual
relationship between the parties. The evidence of De
Swardt, the only
witness called in the case, was that he had decided to commence a
petrol business on behalf of the appellant and
needed fuel tankers
for that purpose. He had telephoned Mr van den Berg of the respondent
on 5 February 2001 and made enquiries about
acquiring a set of
Interlink tankers. He had asked about the price and Van den Berg had
replied that it would be in the region of
R600 000, and he would
revert to him with a quotation. De Swardt had also indicated that he
wanted the tankers urgently, preferably
by the beginning of March in
order to fulfil contracts that he had already concluded for the
supply of petrol. Van den Berg had suggested
that if he needed
finance he should approach Planet Finance. De Swardt had followed up
on the suggestion and had formally applied
for financing on 9
February 2001.
[9] On 8
February Van den Berg phoned De Swardt (who noted the call in his
diary) and said that the respondent could deliver the first
tankers
on 12 March and the second set a week later. Van den Berg also quoted
a price of R512 000 plus VAT. The tankers were originally
to be
‘bottom-drop’ without any meter system. That specification was
changed by agreement with Naudé. Van den Berg had
stated at
the outset that the tankers would be guaranteed for a year. The
first set of tankers was then manufactured by the respondent
but
delivery took place later than promised, on 7 April. The second set
was delivered on 19 April. The tankers, testified De Swardt,
had been
unfit for use from the time of delivery.
[10] De
Swardt’s evidence was in no way controverted by the respondent.
Although in cross-examination some attempt was made to suggest
that
no finality had been reached as to the terms of the contract during
the course of the various telephone calls made, no evidence
was led
to gainsay it, and the very fact that the respondent commenced with
the manufacture of the tankers soon after 8 February
indicates that
the contract for the manufacture of the tankers with the
specifications discussed telephonically was indeed concluded
orally.
The respondent did not pursue the contention in this court that there
was no contract at all, nor that the written quotation
had embodied
the terms of the contract. The evidence that the respondent had
undertaken to guarantee the tankers for a period of
a year was also
not controverted.
[11] This
brings me to the second question. Was the respondent liable for what
the parties termed ‘consequential loss’? The evidence
of De
Swardt shows that the guarantee given by the respondent for a year
was not simply a guarantee for the repair of the tankers.
It would
cover any loss caused by the breach of the respondent. Although it
was argued for the appellant that there was also an
agreement that
‘consequential damages’ would be recoverable, because the
respondent knew that the tankers were needed to fulfil
contracts for
the transport of fuel at the time when the contract was concluded, in
my view it is not necessary to show that any
special damages were
foreseeable or in the contemplation of the parties. The kind of loss
alleged to have been suffered by the business
is that which flows
directly from the breach of the guarantee. Ordinary damages include
loss of profits flowing from a breach. And
since the guarantee was
proved by the appellant she is entitled to claim any damages that she
can prove resulted from its breach.
[12] Accordingly
the appeal is upheld with costs. The order of the court below is
replaced with the following:
‘It is
declared that there was a contract between the parties in terms of
which the defendant would manufacture for the plaintiff
two sets of
fuel tankers, which would be under guarantee for a year. The
plaintiff is entitled to claim any damages that flow from
the breach
of the guarantee.’
____________
C H Lewis
Judge of
Appeal
Concur:
Scott JA
Conradie
JA
Cloete JA
Van
Heerden JA