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[2012] ZAGPPHC 178
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New Generation Arms Management (Pty) Ltd v Minister of Defence and Military Veterans and Others (41299/12) [2012] ZAGPPHC 178 (20 August 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE
No. 41299/12
DATE:20/08/2012
In
the matter between:-
NEW
GENERATION ARMS MANAGEMENT (PTY)
LTD
..................................
Applicant
and
MINISTER
OF DEFENCE AND MILITARY VETERANS
….............................
First
Respondent
CHIEF
OF THE SOUTH AFRICAN NATIONAL DEFENCE
FORCE
.................................................................................................................
Second
Respondent
HEAD
: COMMANDER JOINT
OPERATIONS
.................................................
Third
Respondent
COMMANDING
OFFICER : AMMUNITION SUB DEPOT,
NABOOMSPRUIT
.................................................................................................
Fourth
Respondent
COMMANDING
OFFICER : SOUTH AFRICAN SPECIAL
FORCES
SUPPLY UNIT,
WALMANSTAL
.........................................................
Fifth
Respondent
ARMAMENTS
CORPORATION OF SOUTH AFRICA
.....................................
Sixth
Respondent
JUDGMENT
Van
der Byl, AJ:-
[1
] The Applicant in this matter is admittedly the supplier of defence
"materier to the Sixth Respondent, being the Armaments
Corporation of South Africa ("Armsco"), conducting business
as the acquirer of such "materier for the Department
of Defence.
[2]
The Applicant, being the successful tenderer for the supply of such
"materier, and Armsco concluded an agreement in terms
of which
it obtained from an overseas manufacturer, and supplied to the Sixth
Respondent, the "materier set out in Annexure
A to the Notice of
Motion, consisting of, inter alia, a variety of rifle grenades and
ammunition valued at the time at R63 051
167,36, excluding VAT ("the
goods").
[3]
It is the Applicant's case -
(a)
that, upon a proper interpretation of the agreement, read with clause
19.1 of the Sixth Respondent's General Conditions of Contract,
it
retained ownership of the goods until payment of all monies owed by
the Sixth Respondent have been paid;
(b)
that in terms of the agreement the Sixth Respondent is indebted to
it, at a minimum, in the following amounts which have notwithstanding
demand, not been paid, namely -
(i)
an amount of R438 185,94 in respect of customs duty;
(ii)
an amount of R 1 840 352,66 in respect of the variation in the
exchangerates between the US Dollar and the South African Rand;
(iii)
an amount of R5 649 336,59 in respect of the cost of advance payments
that were made to the manufacturers of the goods; and
(iv)
an amount of R23 861,31 in respect of increased factory prices by the
manufacturers of the goods.
[4]
It would appear that the Sixth Respondent denies liability to pay
these amounts with the result that the Applicant is on the
verge of
referring, as provided in clause 37.1 of the General Conditions, the
dispute to arbitration.
[5]
According to the Applicant it received information that the First to
the Fifth Respondents intend to use the goods delivered
to the Sixth
Respondent and supplied by it to the Department of Defence in an
operation in Lesotho by the end of August 2012.
[6]
On having received information that the goods will be so used, the
Applicant, through its attorneys of record, addressed a letter
(record p. 172, Annexure Fb) to each of the six Respondents on 12
July 2012 in which it sought an undertaking that the goods will,
pending the arbitration proceedings, not be used and will be
preserved.
[7]
It received no response to this letter, whereupon, it, so it is
contended, had no option other than to bring this application
which
was eventually launched on 16 July 2012 and set down for 31 July
2012.
[8]
In this application it seeks, in addition to an order of costs, an
order, amongst other incidental relief, that, pending the
finalization of the intended arbitration proceedings, to be
instituted within 21 days as from date of this order, the First to
the Fifth Respondents be -
(a)
restrained and interdicted from -
(i)
deploying, discharging, firing or using the goods or from permitting
the goods to be deployed, discharged, fired or used;
(ii)
damaging, destroying, selling, alienating or otherwise disposing of
the goods;
(iii)
removing the goods from the territory of the Republic of South
Africa.
(b)
ordered to protect, preserve and, at all times, to safely and
securely store the
goods.
[9]
on 31 July 2012 Mothle J issued an order postponing the application
to 14 August 2012 providing for the filing of answering
and replying
affidavits and indicating that the First to the Fifth Respondents
have undertaken"not to use, deploy or otherwise
dispose of the
goods listed in Appendix A ... before the end of the motion week
commencing on 14 August 2012".
[10]
As appears from the First to the Fifth Respondents' answering
affidavit, deposed to by the Fifth Respondent, it is their case
-
(a)
in limine -
(i)
that the Applicant failed, upon a proper interpretation of clause
19.1 of the General Conditions, to prove that it became the
owner of
the goods;
(ii)
that, regard being had to the Applicant's claim in its statement of
claim prepared in its envisaged arbitration proceedings
(record pp.
124 tot 169, Annexure E), the Applicant has made an election to claim
specific performance and not cancellation of
the agreement and return
of the goods and, therefore, cannot approbate and reprobate, so that
the goods cannot and do not afford
any security to the Applicant and
that the Applicant, therefore, has no rights to ownership that are
being threatened due to the
risk of the goods being destroyed through
the use thereof by the First to the Fifth Respondents;
(b)
on the merits of the matter -
(i)
that the Special Forces will indeed participate in a military
exercise to be held in Lesotho during August 2012, but that it
is not
correct that it is the intention to use the goods in the exercise or
to transport the goods to Lesotho
(ii)
that the goods to be used will be supplied by 4 Special Forces
Regiment and 5 Special Forces Regiment;
(iii)
that the goods in question are in store at Special Forces Supply Unit
at 91 Ammunition Depot.
[11]
In relation to the allegation that the Respondents failed to respond
to the letter of 12 July 2012, it is contended that the
Respondents
were between 12 July 2012 and 16 July 2012 not afforded a reasonable
opportunity to respond to that letter prior to
the launching of the
application.
[12]
The Respondents in any event, through the State Attorney, addressed a
letter (record p, 261, Annexure RM1) on 3 August 2012
to the
Applicant's attorneys of record in which it is indicated that the
First to the Fifth Respondents never intended to use any
of the goods
in the exercise in Lesotho and to transfer any of the goods to
Lesotho and, furthermore, furnished an undertaking
to that effect.
[13]
The Sixth Respondent is not opposing the application and in an
affidavit filed by its attorney of record, apart from explaining
why
no answering affidavit is filed, it is indicated that the Sixth
Respondent is in agreement with the content of the opposing
affidavit
of the First to the Fifth Respondents.
[14]
In its replying affidavit, the Applicant -
(a)
reiterates that before the goods were delivered to it, it indeed paid
the supplier for the goods in full;
(b)
referring to a letter, Annexure R2, record p. 284), signed by the
deponent to the First to Fifth Respondents during October
2008 and
the Sixth Respondent's tender for the supply of goods, contends that
the Respondents have no other weapons and ammunition
to use in the
envisaged exercise;
(c)
that, relying on a transcription of submissions made by counsel who
appeared on behalf of the Respondents in previous proceedings
between
the parties in Case No. 14561/12 (record p. 311, Annexure R3), it was
conceded that the Applicant is the owner of the goods
and from which
it appears that it is not allowed for explosives to be stored at
Special Forces Supply Unit, denies that the goods
can be stored, as
alleged, at that Unit and that the goods are in fact stored at 91
Ammunition Depot, Naboomspruit.
[15]
In a supplementary replying affidavit, the Applicant submitted proof
of having paid its supplier.
[16]
Various submissions were made by counsel on both sides on various
issues.
[17]
I do not mean any disrespect to counsel if I do not deal with all the
points mentioned in the very able and articulate submissions
before
me.
[18]
I, sitting in the urgent court where I am swamped by various other
urgent applications, am in any event unable to deal in particular
detail with all the allegations contained in the papers and the
submissions made in relation to those allegations on behalf of
the
parties, except to say that I have read and considered all the
allegations and submissions made by and on behalf of the parties
on
both sides.
[19]
In my view the gist of this matter lies in the question whether, as
was vigorously argued on both sides, the Applicant at all
relevant
times retained ownership of the goods.
[20]
If one assumes that the Applicant has, on the allegations made in the
replying and supplementary replying affidavits, made
out a case that
it became the owner of the goods, the question remains whether it
retained ownership on having delivered the goods
to the Sixth
Respondent.
[21]
For its contention that it retained ownership, it relies on the
provisions of clause 19.1 of Armscor's General Conditions which
reads
as follows:
"All
rights in respect of material, equipment or special moulds, jigs and
tools purchased by the contractor (being, in this
case, the
Applicant) as deliverable supplies in terms of the order/contract and
paid for by Armscor for the purposes of and in
terms of the
order/contract, shall upon delivery to the contractor and payment by
Armscor immediately vest in Armscor".
[22]
In my view, applying all principles relating to the interpretation of
contracts, this clause deals with the circumstances under
which
ownership of the material referred to in the clause will vest in
Armscor and is applicable to a situation where the material
concerned
has been delivered to the contractor by its supplier and Armscor had,
before delivery to it, already paid for the material.
It is under
these circumstances that all rights in respect of the material will
vest in Armscor despite the fact that delivery
to it had not yet
taken place. The purpose of the clause is clearly to safegauard
Armscor's interest in the goods and not to retain
ownership in favour
of the Applicant.
[23]
There is in my view no indication in the clause that the contractor
need in the circumstances to be the owner of the material,
but even
if the contractor is the owner the intention is that ownership
should, in the event of the goods having been delivered
to the
Applicant by its supplier and Armscor having paid for the material,
pass to Armscor.
[24]
If those are the facts there is no possibility that the Applicant can
or could have retained ownership.
[25]
It, however, appears, if regard is had to the dispute between the
Applicant and Armscor, that Armscor had not yet paid or at
least had
not yet paid the Applicant in full at the time the goods were
delivered to Armscor.
[26]
In these circumstances it does not appear to me that clause 19.1 can
be of any assistance to the Applicant to prove that it
was the owner
of the goods and, if so, that it retained ownership of the goods.
[27]
The question is whether, applying South African law, the Applicant in
the circumstances otherwise retained ownership of the
goods.
[28]
As was held in Eriksen Motors (Welkom) Ltd v Protea Motors, Warrenton
1973 (3) SA 685
(A) at 694A the general rule as regards the passing
of ownership is that-
(a)
in a sale for cash, ownership does not pass until the price is paid,
even if delivery has meantime being given;
(b)
in a sale on credit, ownership passes on delivery.
[29]
In so far as the sale in questions appears to have been a sale on
credit, ownership must have passed to Armscor on the delivery
of the
goods.
[30]
In the premises I am not satisfied that the Applicant has on the
probabilities shown that it retained ownership of the goods.
[31]
It cannot accordingly claim, as is doen in its Notice of Motion, that
the goods be preserved until such time as the arbitration
proceedings
to be instituted are finalized.
[32]
In the result the following order is made:
The
Application is dismissed with costs, including the costs attendant
upon the employment of two counsel.
P
C VAN DER BYL
ACTING
JUDGE OF THE HIGH COURT
ON
BEHALF OF THE APPLICANT: ADV D A PREIS SC
ADV
C A C KORF
On
the instructions of: WEIDEMAN ATTORNEYS
608
Reitz Street Sunnyside PRETORIA Ref: EW Tel : 012 343 8390
ON
BEHALF OF THE FIRST TO FIFTH
RESPONDENTS:
ADV D E VAN LOGGERENBERG SC
ADV
L MMUSI
On
the instructions of:THE STATE ATTORNEY
SALU
Building 255 Andries Street PRETORIA Ref: 590/2012/Z79
DATE
OF HEARING: 14 August 2012
JUDGMENT
DELIVERED ON: 20 August 2012