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[2014] ZAFSHC 136
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Transnet Rail Engineering Limited v Courier and Freight Group (Pty) Ltd and Another (3199/2010) [2014] ZAFSHC 136 (4 September 2014)
IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Case No.: 3199/2010
In the matter between:
TRANSNET RAIL
ENGINEERING LIMITED
…..................................................................
Plaintiff
and
THE COURIER AND
FREIGHT GROUP (PTY) LTD
…...........................................
First
Defendant
IMPROVO
TRANSPORT AND TRADING CC
…..................................................
Second
Defendant
CORAM:
LEKALE, J
HEARD ON:
26 & 27 AUGUST 2014
JUDGMENT BY:
LEKALE, J
DELIVERED ON:
4 SEPTEMBER 2014
INTRODUCTION AND BACKGROUND:
[1] On 9 July 2013 the first defendant
(defendant) was ordered by Van Zyl J at the end of a trial on merits
to pay the plaintiff’s
proved or agreed damages arising from
the loss of a turbo- charger for a General Electric diesel- electric
locomotive, which the
plaintiff had entrusted to the defendant for
transportation to Swartkops in Port Elizabeth. The parties
could, however, not
agree on the plaintiff’s quantum of damages
and this is, therefore, the second leg of the action between the
parties for
determination of the plaintiff’s damages.
[2] During or between 27 February 2009
and 3 March 2009 plaintiff entrusted a Namibia 2 turbo XLS charger to
the defendant for transportation
on,
inter alia
, condition
that the latter shall be liable for repairs and/or replacement of the
turbo-charger in the event of it being damaged
or lost. On 3
March 2009 the charger got lost in transit to Swartkops while in the
custody of the defendant and the latter
duly accepted total
responsibility for the loss on 11 March 2009. The parties
could, however, not settle the matter and the
plaintiff, eventually,
instituted action against,
inter alia
, the defendant for
recovery of R444 479.47 in replacement costs together with
interest at the prescribed legal rate from 19
March 2009 to date of
payment. The defendant resists the claim on the ground that the
amount claimed does not represent the
value of the turbo-charger when
it got lost. The plaintiff tendered evidence to prove its
damages while the defendant, on
its part, elected to close its case
without leading any evidence.
DISPUTE
[3] The parties are effectively at
variance on whether or not the amount claimed represents the
plaintiff’s damages with the
defendant contending that it does
not constitute the value of the cargo when it got lost while the
plaintiff maintains that it
represents the fair, just and reasonable
replacement value of the lost charger.
[4] The parties are, further, in dispute
over whether or not interest should be levied on the proved damages
from 19 March 2009
with the defendant contending that same, if
payable, should be charged from the date of judgment on quantum
because that is the
date on which the claim became liquid.
[5] The parties are, furthermore, at
loggerheads over whether or not all the witnesses who testified for
the plaintiff were experts
so as to be entitled, if payable, to
qualifying fees and expenses with the defendant maintaining that only
one of the witnesses
qualified as such in the present proceedings
regard being had to the evidence tendered.
PLAINTIFF’S CASE
[6] In support of the claim the
plaintiff adduced the evidence of three witnesses who collectively
testified that the amount claimed
was reasonable and that the lost
charger had no market value because there is no way to
determine such a value in respect
of a used turbo- charger.
6.1
MR WAYNE
ANDREW RUDMAN
testified that he holds a national diploma in
engineering and is a qualified diesel-electric fitter since 1998.
He is currently
employed at the plaintiff’s Centre of
Excellence at Swartkops Locomotive Depot in Port Elizabeth as
operations manager of
Rotating Machine Business. In 2009 his
unit was tasked with rebuilding and assembling a turbo-charger for a
diesel-electric
locomotive in order to replace a lost one. For
the preceding purpose they sourced parts from their store locally and
used
parts they received from General Electric in the United States
of America (USA). The actual cost price of rebuilding the
charger in question was R354 454.83 but they charged R444 479.47
because they added a 25% mark-up in accordance with their
business
practice as a unit. The relevant turbo-chargers and other spares for
diesel-electric locomotives are sourced from the
USA and it would
have cost them about twice that amount to get a new turbo-charger
from the USA. The turbo rotor used in
the process was sourced
from Bloemfontein and it was the most expensive part at the actual
cost price of R145 888.36.
A turbo-charger has a maximum
lifespan of about 20 years.
6.2
MR CORNELIUS
JACOBUS VILJOEN
testified to the effect that he has been with the
plaintiff for 37 years and is currently customer services manager at
Bloemfontein
and a qualified diesel-electric fitter. In his
capacity as such he received a diesel- electric locomotive in a
running condition
from Trans- Namib Holdings in Namibia for service
and/or refurbishment. The client informed him that the
turbo-charger had
not been overhauled for the past five years and it
was, as such, due for scheduled overhaul. They arranged for the
turbo-
charger, which was also in a running condition, to be
transported to the Centre of Excellence in Port Elizabeth for strip
and quote
and the defendant was tasked with the necessary
transportation. The turbo-charger, however, got lost en route
to Port Elizabeth.
The plaintiff was, therefore, obliged to
replace the lost charger within the limited time period. The
replacement turbo-charger
was sourced in house from the plaintiff’s
Centre of Excellence in Port Elizabeth. No new turbo- chargers
could be bought
in the Republic of South Africa as they come from the
USA where they are manufactured. The value of the turbo charger
at
the time it was lost, could not be determined because it was
neither seen nor received by Port Elizabeth. The value of the
replacement turbo-charger was fair and reasonable as a new charger
would have cost almost twice the price. It was a normal
business practice for Port Elizabeth to mark- up the actual cost
price and in his unit they also employ such a practice.
6.3
MR KEVIN
PROZESKY
testified to,
inter alia
, the effect that he
holds a B.Sc. degree in mechanical engineering and has been
continually associated with railroad locomotive
maintenance since
1975 when he began his career. He is very familiar with the
relevant turbo-charger. A used turbo-charger
has no market
value to his knowledge, because there exists no trade in used
turbo-chargers amongst users. There is, therefore,
no way to
determine a market value for a used charger. The price of a new
turbo-charger for Transnet from General Electric
in the USA would be
in the region of ZAR781 203.82. The price of ZAR444 479.47
is fair insofar as it has already made
provision for the fact that
the replacement turbo-charger was not new.
CONTENTIONS BY THE PARTIES
[7] Mr De Wet, for the plaintiff,
submits that, as ordered by the court, the defendant is obliged to
pay the plaintiff’s proved
damages which relate to the extent
to which the plaintiff was out of pocket as a result of the
replacement of the lost turbo-charger.
It is clear, according
to him, from evidence that the plaintiff was obliged to replace the
lost turbo-charger within constraint
time period. It is,
further, patent that the plaintiff employed the cheapest means to
replace the lost charger, because the
replacement costs paid were
fair and reasonable. There exists no legal basis for the
plaintiff to pay the value of the turbo-charger
as at the time of the
loss. The plaintiff was obliged to find a suitable replacement
and not the exact replacement.
There was no strip and quote
because the cargo was lost before it could reach its destination and,
as such, no assessment could
be made. Port Elizabeth was
entitled to charge profit because it was not responsible for the
loss. The defendant caused
the loss and is responsible for the
same. The three witnesses who testified for the plaintiff were
all experts and were,
as such, entitled to qualifying fees and
reasonable expenses. The claim was, at all times, clear to the
defendant with the
demand for payment having been made as early as 19
March 2009. Generally unliquidated debts as determined by,
inter alia,
the court bear interest which runs from date of service
of a demand or summons whichever is the earlier.
[8] Mr Steenkamp for the defendant,
inter alia
, contends that the defendant should be absolved
from the instance, because no best evidence with regard to the value
of the turbo-charger
when it got lost was presented. The
plaintiff could have adduced the relevant evidence but failed to do
so. No best
evidence was presented with regard to the condition
of the charger as at the time of the loss. In the event of the court
accepting
the replacement costs as payable then and only in that
eventuality the real actual costs of the replacement turbo-charger
are payable
because the 25% mark-up was not supposed to be charged.
The most expensive parts used to rebuild the charger could possibly
not have been used had the charger not been lost because the lifespan
of the charger was 16 to 20 years and it could only be serviced
four
to five times according to Mr Rudman. Only the costs relating
to one expert,
viz.
Mr Rudman, should be ordered because the
other witnesses’ evidence was not relevant to the issue
relating to the value of
the turbo-charger when it got lost.
Interest should be payable from the date of judgment because that is
the date on which
damages or the debt became liquidated.
APPLICABLE LEGAL PRINCIPLES
[9] The parties are correctly and
effectively in agreement that damages payable relate to the extent to
which a party felt the diminishment
or loss of the property involved.
Where the damages relate to loss of property the amount payable, as
damages, is the market value
of such property from any source to
which the aggrieved party might reasonably have gone in order to
replace such property.
(See:
Desmond
Isaacs Agencies (Pty) Ltd v Contemporary Displays
1971(3) SA
286 (T) 287.)
[10] As Mr De Wet correctly and
effectively points out, generally once unliquidated claims have been
determined by the court, they
bear interest from the earlier
event between service of a demand and service of summons
on the debtor unless
the court directs otherwise in the
interests of justice.
(See:
Thoroughbred
Breeders’ Association v Price Waterhouse
2001 (4) SA
551
(SCA) par [81] and sections 2A(1); (2)(a) and (5) of
Prescribed
Rate of Interest Act 55 of 1975
.)
[11] Expert witnesses qualify
themselves, if necessary, to give expert evidence and are generally
entitled to qualifying fees and
reasonable travelling and
accommodation expenses where they were reasonably necessary.
(See:
Donaldson
v Seaward
1958(2) SA 198 (O).)
APPLICATION OF LEGAL PRINCIPLES
AND FINDINGS
[12] The parties are effectively and
basically in dispute over the costs in respect of which the plaintiff
suffered damages insofar
as Mr Steenkamp submits that no evidence was
led as to the value of the turbo- charger when it got lost while Mr
De Wet contends
that the replacement costs of the turbo-charger are
clearly before the court.
[13] It is common cause between the
parties that the turbo-charger was replaced and that time limits were
applicable as to the return
of the diesel- electric locomotive to the
plaintiff’s client in Namibia.
[14] It is, further, not in dispute that
the contract between the parties saddles defendant with the liability
for replacement costs
in the event of loss of the cargo in question.
In my judgment the plaintiff is entitled to damages arising from the
replacement
of the turbo- charge in question because its damages flow
therefrom and not from any diminishment in the value of the
turbo-charger
as at the time of the loss. The plaintiff’s
liability to its client arises from the loss of the charger and not
from
any damage thereto. The plaintiff was obliged to replace
the turbo charger because it had received a running locomotive
inclusive
of a running turbo-charger. Its duty to the client
consisted of restoration of possession of a running locomotive which
includes
a running charger as Mr Viljoen correctly emphasised.
The value of the lost turbo-charger in a case where it was replaced
is not relevant to the issue as Mr De Wet correctly points out.
The question is whether or not the replacement costs were
reasonable
in the sense that the plaintiff employed reasonable or cheaper means
to make the replacement.
[15] I am persuaded by the evidence
before me that the replacement costs were just and reasonable.
In this regard I can only
point out that Mr De Wet is correct in his
submission that no evidence was presented to show that the plaintiff
could have reasonably
employed other cheaper means to replace the
charger. In my view, on available evidence the plaintiff could not
have mitigated its
damages other than by avoiding the costs of a new
turbo-charger. I am, further, persuaded by available evidence that
the plaintiff’s
Centre of Excellence was justified to make
profit because the rebuilding and assembling of the turbo-charger in
question was a
normal business transaction
[16] I am, further, satisfied, as Mr De
Wet submitted, that the witnesses called were all relevant expert
witnesses insofar as they
testified about the need and means to
replace the charger in question and their evidence in that regard was
necessary.
[17] The defendant became aware of the
damages claimed long before the trial date and, in law, such damages
bear interest from the
date of demand and not from date of judgment.
No evidence whatsoever was presented to justify a departure from the
applicable general
rule.
ORDER
[18] In the result the claim is upheld.
[19] The first defendant shall pay the
plaintiff an amount of R444 479.47 together with interest at the
prescribed legal rate
calculated from 19 March 2009 to the date of
final payment.
[20] First defendant shall further pay
plaintiff’s costs together with the reasonable qualifying fees
and expenses of Messrs
Rudman, Viljoen and Prozesky.
______________
L. J.
LEKALE, J
On behalf of plaintiff: Adv P.J.T. de
Wet SC
Instructed by:
Rossouws Attorneys
BLOEMFONTEIN
On behalf of respondents: Adv M.D.J.
Steenkamp
Instructed by:
Matsepes Inc
BLOEMFONTEIN