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South Africa: Kwazulu-Natal High Court, Pietermaritzburg
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[2011] ZAKZPHC 26
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Fed Trade CC v Estcort Ltd (AR675/10) [2011] ZAKZPHC 26 (10 June 2011)
IN
THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC
OF SOUTH AFRICA
Case
No :AR675/10
In
the matter between :
Fed
Trade CC
…............................................................................................
Appellant
and
Estcort
Limited
…......................................................................................
Respondent
Judgment
Lopes J
[1] This matter comes before us by way
of leave to appeal granted to the appellant on the 21
st
September 2010. The appellant as plaintiff, sued the respondent as
defendant in the court a quo, and had its claim dismissed with
costs
by Nicholson J. I shall refer to them in this judgment as the
plaintiff and the defendant respectively.
[2] The plaintiff’s case
comprised seven different claims for varying amounts. The claims were
all based on contracts allegedly
concluded between the plaintiff and
the defendant for the delivery of meat products. The plaintiff is an
importer of meat products
from around the world. It imports and
distributes these products to manufacturers of processed meat
products, such as the defendant.
[3] At the outset of the trial,
Nicholson J was asked to grant an order separating the issues. He did
so. The two issues which fell
to be considered by him prior to any
other evidence being led were :-
whether agreements were concluded
with regard to certain of the products; and
whether the claims by the plaintiff
against the defendant were thereafter compromised.
[4] In his judgment Nicholson J found
that it was not necessary to decide the first issue because he had
arrived at a firm conclusion
on the second issue – i.e. that
the plaintiff’s claim had been compromised.
[5] In his judgment Nicholson J set
out in brief the history of the relationship between the parties and
it is not necessary for
me to deal with that evidence. The crucial
evidence is that it became clear to the parties that a dispute had
arisen between them
with regard to the nature and extent of the
defendant’s contractual obligations.
[6] A series of emails were exchanged.
Those emails which are relevant appear in Bundle ‘A’ from
pages 6 to 14. On the
8
th
September 2005 the defendant
sent an email to the plaintiff (‘the offer email’)
setting out various proposals clearly
designed to settle the issues
which had arisen between them. To assist with an overstocking
situation which was causing the plaintiff
severe financial
difficulties, the defendant offered to purchase certain products
(including Machine Deboned Meat, or MDM, at a
price of R3,45 per
kilogram) delivered in Estcourt, on a monthly basis, for a specified
period. The email contained various proposals
for different meat
products but significantly ended with the following sentence : ‘The
above arrangement should be seen as
a package and will be conditional
to the MDM proposal price of R3,45.’
[7] The plaintiff replied to the
defendant’s email on the 14
th
September 2005 with an
email (‘the acceptance email’) containing the subject
heading : ‘your proposal on orders
not executed’. After
complaining that the defendant had placed the plaintiff in a dire
financial position because of its
failure to fulfil its commitments,
and after drawing attention to the fact that defendant’s
failure to accept delivery of
the product continued to cause the
plaintiff to incur storage bills, Mr van Rensburg, the CEO of the
plaintiff stated : ‘We
are forced to accept your proposal to
draw this product but reserve our rights.’
[8] The defendant contended that this
email constituted an acceptance by the plaintiff of the defendant’s
offer of compromise.
Mr van Rensburg maintained that the words ‘but
reserve our rights’ at the end of the acceptance email
indicated that
the plaintiff still wished to persist against the
defendant for what it claimed was due to it, and was not compromising
its claim.
[9] In cross-examination by Mr
Bergenthuin
SC for the defendant, Mr van Rensburg conceded
that orders were placed by the defendant in accordance with the offer
of the 8
th
September 2005, deliveries were made by the
plaintiff in accordance with those orders, and the defendant paid the
plaintiff the
amounts due in terms thereof.
[10] The question which remains is
whether the so-called reservation of rights by Mr van Rensburg was
sufficient to negate his acceptance
of Mr Prinsloo’s offer.
[11] Mr
Rowan
SC, who appeared
for the appellant submitted that one needs to pay close attention to
the words contained in both the offer made
by the defendant and its
alleged acceptance by the plaintiff. In this regard he pointed to :-
(a) the fact that in the offer email
there was no resolution of the issue of the supply of pork cutting
fat. This had been raised
in previous emails. In the offer email, Mr
Prinsloo recorded that Mr van Rensburg had promised to provide him
with figures regarding
the historical provision of that product. Mr
Rowan
SC submitted that because this was only referred to, but
not dealt with, that was clearly one of the aspects with regard to
which
Mr van Rensburg reserved his rights. In my view this could not
have been intended by Mr van Rensburg because :-
(i) the day after the acceptance email
was sent the defendant placed orders with the plaintiff which did not
include any provision
for pork cutting fat;
(ii) those orders were filled by the
plaintiff;
the defendant paid for the goods
delivered, and in the case of the MDM, paid the compromise price;
(iv) no further correspondence was
referred to during the trial alluding to a continuing dispute
regarding the pork cutting fat,
or any further request that Mr
Prinsloo take delivery of it;
in his evidence-in-chief and
cross-examination Mr van Rensburg made no reference to any further
discussions regarding the pork
cutting fat; and
had Mr van Rensburg entertained
reservations in his offer with regard to this item, he would
undoubtedly have dealt with it both
in correspondence, and in his
evidence;
(b) Mr
Rowan
SC referred to the
words ‘We are forced to accept your proposal to draw this
product …’. He submitted that this
indicated that the
only acceptance of the offer made by Mr Prinsloo, was an acceptance
of the agreement to accept delivery of the
MDM product until the end
of January 2006. However, :-
(i) from the further conduct of the
parties this was not the only part of the offer which was accepted by
Mr van Rensburg. This
is evident from the orders which the defendant
placed thereafter and which were accepted. They not only included MDM
but also rinds
and pork bellies;
(ii) the wording of the offer email
makes it absolutely clear that Mr van Rensburg was to view the offer
‘as a package’
and that it was conditional upon Mr van
Rensburg accepting the MDM proposal price of R3,45;
(iii) that he did so is clear from the
orders placed the day after the acceptance email. The MDM product was
reflected at R3,45
per kilogram, which was delivered by the
plaintiff, and paid for by the defendant, at that price; and
(iv) had the plaintiff wished to
refuse the offer, Mr van Rensburg should have said so in clear terms.
It was not open to him to
accept only part of the offer. See
Turgin
v Atlantic Clothing Manufacturers
1954 (3) SA 527
(T) at 532 A.
[12] A reservation of rights of its
own has no magic. It cannot be seen to convert what was otherwise an
express agreement into
a partial agreement by the plaintiff, and a
partial reservation of its right not to agree and to dispute the
defendant’s
contentions.
See
:
Paterson Exhibitions
CC v Knights Advertising & Marketing CC
1991 (3) SA 523
(A)
at 529 B – D
[13] In the last sentence of the offer
email Mr Prinsloo clearly set out that all the conditions in its
email were to be seen as
a package which was conditional upon
acceptance by the plaintiff of the MDM proposal price of R3,45 per
kilogram. Not only was
this accepted by the plaintiff but it acted
upon it by accepting the orders, delivering the product and accepting
payment of the
purchase price.
[14] In establishing a defence of
compromise, the onus is on the party alleging the compromise to prove
it.
See
The Torch Moderne Binnehuis Vervaardiging Venn.
(Edm.) Bpk v Husserl
1946 CPD 548
at 550 – 551. I also
accept that an offer of compromise should be strictly interpreted in
accordance with the ordinary requirements
for proving a contract.
See
Be Bop a Lula
Manufacturing and Printing CC v Kingtex Marketing (Pty) Ltd
2006
(6) SA 379
(C), paras 18 to 25.
It is also important in determining
whether a compromise has been established to have regard to the
evidence and the conduct of
the parties concerned. Whether or not the
compromise has been established will depend upon the facts of each
case – see
Hubbard v Mostert
2010 (2) SA 391
(WCC), para
11.
[15] Having regard to the evidence
which was led and the documents concerned, there can be no doubt that
an offer was made by Mr
Prinsloo in clear and unambiguous terms. That
offer was understood and accepted by Mr van Rensburg. The fact that
he added the
rider ‘but reserve our rights’ cannot assist
him. It is clear from the tone of the emails that Mr van Rensburg
found
himself and the plaintiff under tremendous pressure to reach a
compromise with the defendant. Given his circumstances it comes as
no
surprise that he did so, and his continued conduct after the
acceptance email confirms his intention in accepting the offer
of Mr
Prinsloo.
[16] In those circumstances, Nicholson
J was correct in his analysis of the issues and the conclusion which
he arrived at dismissing
the plaintiff’s claim with costs.
[17] In the circumstances I would
dismiss the appeal with costs.
________________
Lopes J
_________________
Roberts AJ I agree.
_________________
D Pillay J I agree and it is so
ordered.
Date of hearing : 8
th
June
2011
Date of judgment : 10
th
June 2011
Counsel for the Appellant : P Rowan SC
(instructed by Grundlingh Attorneys)
Counsel for the Respondent : J G
Bergenthuin SC (instructed by van der Merwe du Toit Inc)