About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2011
>>
[2011] ZAKZDHC 82
|
|
Flying Time Carriers CC v Monier Roofing SA (Pty) Ltd (3051/2009) [2011] ZAKZDHC 82 (14 December 2011)
IN THE KWAZULU-NATAL HIGH
COURT, DURBAN
REPUBLIC OF SOUTH AFRICA
CASE
NO 3051/2009
In
the matter between:
FLYING
TIME CARRIERS CC
…...................................................................
PLAINTIFF
and
MONIER
ROOFING SA (PTY) LTD
….......................................................
DEFENDANT
JUDGMENT
Date: 14 December 2011
PLOOS VAN AMSTEL J
[1] The plaintiff is a
transport operator and the defendant a manufacturer of blocks, bricks
and roof tiles. The action arises out
of a contract between them for
the transportation of crushed stone from a quarry in Hluhluwe to the
defendant’s factory in
Richards Bay. The plaintiff’s
claim is for damages arising out an alleged breach of the agreement
by the defendant, pursuant
to which the plaintiff cancelled the
agreement.
[2] The case is somewhat
unusual in the sense that both parties seek rectification of the
agreement, but in different respects.
At the commencement of the
trial I made an order in terms of rule 33 (4), by consent, that the
issues be separated and that the
following issues be decided first:
What were the terms of the agreement
between the parties?
Whether on the terms of the agreement
determined by the court:
(i) the defendant breached the
agreement; or
(ii) the defendant is excused from
performance by supervening impossibility of performance.
In the event of it being held that
the defendant breached the agreement, was the plaintiff entitled to
cancel the agreement and
did the plaintiff validly do so?
[3] The issue relating to
the terms of the agreement included the issue whether the agreement
should be rectified in any of the
respects referred to in the
pleadings.
[4] The background is
briefly as follows. The plaintiff had been conveying blocks, bricks
and roof tiles for the defendant for a
number of years. These
products were manufactured by the defendant at its factory in
Richards Bay and transported and delivered
to its customers by the
plaintiff. It was not the only transporter to do so.
[5] In the latter half of
2007 the defendant’s production manager in Richards Bay, Mr
Mynhardt, enquired from the majority
member of the plaintiff, Mr
Fernandes, whether the plaintiff would be interested in transporting
crushed stone from a quarry in
Hluhluwe to the defendant’s
factory in Richards Bay. Fernandes testified that Mynhardt mentioned
three loads a day for a
period of three years. Fernandes said he was
interested but would have to acquire a specialised trailer to do the
work. He needed
a tri-axle side tipper trailer. He told Mynhardt that
he required a written commitment to the volumes if he had to incur
the expense
of acquiring a specialised trailer. It would also be
easier to obtain finance from a bank if he had a written contract.
Mynhardt
told him that he had no authority to conclude a written
contract and referred him to Graham Whittock, the defendant’s
operational
manager in Durban, and Mynhardt’s superior.
[6] It was not disputed
that a meeting took place in Mynhardt’s office in Richards Bay,
which was attended by Fernandes, Mynhardt
and Whittock. Fernandes
testified that he had the draft agreement with him and that they
discussed it. The other two disputed this.
They said the purpose of
the meeting was simply for Whittock to meet Fernandes. Be that as it
may, it was common cause that on
4 October 2007 Fernandes faxed an
unsigned agreement to Whittock for his signature. Whittock telephoned
Mynhardt and told him about
the agreement. Mynhardt said he knew
about it, that it was required by the bank in connection with the
application for finance,
and that he could sign it. He signed the
agreement on behalf of the defendant and faxed it to Fernandes, who
also signed it. This
is the agreement which both parties seek to
rectify.
[7] Fernandes testified
that the agreement was drafted by one of the members of the
defendant, Bheki Ngcobo, who adapted other transportation
agreements
which they had. This probably explains some of the clauses in the
agreement which are clearly more suited to a contract
for the
transportation of finished products, for example those which provide
for deliveries to the defendant’s customers.
[8] The agreement records
that the contractor was ‘presently transporting crushed stone
on behalf of the client’ and
that the parties wished to
formalize the arrangement. In terms of clause 3 the agreement would
continue for a period of three years
unless terminated earlier and in
terms of clause 5.1 the defendant agreed to provide the plaintiff
with three loads of crushed
stone for delivery per working day.
[9] Clauses 3 and 5.1
were the subject of the main dispute between the parties. The other
matters in respect of which rectification
was sought are really
ancillary to the main dispute, although one must have regard to the
whole of the agreement in assessing the
evidence and the
probabilities and not consider any of the issues in isolation.
[10] I deal firstly with
clauses 3 and 5.1. The starting point is the written agreement. The
approach in our law to the interpretation
of a written contract is to
determine the intention of the contracting parties by looking at the
words which they used and giving
those words their ordinary meaning.
In cases of ambiguity there are rules of interpretation which are
employed in an endeavour
to determine the intention of the parties
and save the contract from being void for vagueness.
[11] A party is
ordinarily not allowed to give evidence as to what the parties
intended, or to aver that the agreement is different
from what is
recorded in the written memorial of it. Such evidence is precluded by
the parol evidence rule. An exception is when
a party to the contract
seeks rectification thereof on the basis that due to a mistake common
to the parties it does not reflect
their true agreement. The emphasis
is on the fact that the mistake must have been common to the parties.
It is not enough, in a
case for rectification, for a party to say
that now that he has read the contract properly he realises that it
reflects something
that he had not intended to agree to. In the
absence of a common mistake he is bound by what he has signed, unless
of course he
can void the contract on the basis of fraud or iustus
error.
[12] The defendant’s
case is that there was an oral agreement between the parties, which
Fernandes said he wanted reduced
to writing to help him obtain
finance for the trailer. It says the plaintiff drafted the agreement
and Fernandes got Whittock to
sign it. It however does not reflect
what had been agreed. The defendant contends that this is due to an
intentional act on the
part of Fernandes, alternatively mutual errors
on the part of the plaintiff and the defendant. The defendant bears
the onus to
prove this, as the plaintiff bears the onus with regard
to the rectification which it seeks.
[13] Although Mynhardt
confirmed that a period of three years had been agreed, he was
adamant that he had not agreed to commit the
defendant to three loads
per day. He said he did not guarantee any quantity per day. Fernandes
was equally adamant that Mynhardt
had agreed to three loads per day,
and referred him to Whittock when he said he wanted a commitment in
writing. Mynhardt admitted
that Fernandes asked him for a written
agreement and that he said it was required by the bank. When Whittock
received the unsigned
agreement from Fernandes he looked at some of
the provisions, but did not read all of it. He saw the agreement was
for a period
of three years, and he saw the provision that the
defendant would provide the plaintiff with three loads of crushed
stone per day.
He testified that he was willing to commit to three
loads per day because the defendant was doing very well at the time.
He did
not then foresee the downturn in the economy which occurred
later. Whittock and Mynhardt testified that when Whittock telephoned
Mynhardt about the contract they did not discuss any of the contents
of it. I think that is improbable. It is more likely that
the
provisions relating to a three year period and three loads per day
would have been mentioned during that conversation. Mynhardt
gave
Whittock the go-ahead and he signed the agreement.
[14] The probabilities
seem to me to fit in with Whittock’s evidence that he was
willing to commit to three loads per day
for a three year period, and
that he signed the agreement on that basis.
[15] Mynhardt could only
have thought that the agreement would assist in obtaining finance if
it provided for a commitment by the
defendant with regard to volumes
and the duration of the contract. A contract which allowed the
defendant to say it did not need
any more stone at any time would
have provided neither Fernandes nor the bank with any comfort.
[16] Mynhardt testified
that Fernandes kept reminding him that he had a contract with
Whittock for three loads per day. He said
he contacted Whittock, who
confirmed that Fernandes had a contract. He first said he had to go
along with it, but later tried to
retract this by saying that he did
not ask Whittock whether the contract was for three loads per day.
Why then did he phone Whittock?
I regard this part of his evidence as
untruthful. Whittock’s evidence under cross-examination was
that when Mynhardt phoned
him he confirmed that Fernandes had a
contract for three loads per day. It is also worth noting that
according to Mynhardt it was
he who was responsible for ordering the
crushed stone, which was stockpiled. He said at one stage there were
76 loads on the stockpile,
although they only used two per day. This
tends to suggest that Mynhardt accepted at that stage that he could
not simply stop the
plaintiff’s deliveries of stone.
[17] In May 2008 Mynhardt
wrote to the plaintiff and said the defendant was forced to stop the
deliveries ‘for now’.
The tone of the letter is
apologetic and explanatory. It includes the following statement: ’The
economic situation and Eskom
load shedding was not a foreseen matter
when the contract was discussed in 2007. Monier Roofing is in the
process of installing
a bigger block manufacturing plan
that will
cope with the delivery’s (sic) from Flying Time Carriers’
.
(My underlining). It is difficult to reconcile this letter with
Mynhardt’s suggestion that the oral contract allowed the
defendant to stop the delivery of stone whenever it suited it to do
so.
[18] On 9 May 2008 the
plaintiff’s attorney wrote to the defendant, recorded the
defendant’s obligation to make three
loads available per
working day and suggested an interim arrangement until such time as
the contract could be put back on a proper
footing. Whittock handed
this letter, together with the written agreement, to the defendant’s
attorney and instructed him
to reply. The reply, dated 17 June 2008,
includes the following:
‘
It
is
correct that Flying Time Carriers entered into an agreement with your
(sic) clients, and that Lafarge Roofing was the client
(client in the
matter).
It is further correct that certain
clauses of the agreement have not been complied with which resulted
and was dictated by the present
state of the economy
as reported
and proposed by the government of the country (sic).
Having said that the possibility does
exist that after July that sector of the economy will pick up and our
client will then again
be in the position to engage your client
in
more work and particularly to the extent that the original intention
was.’
(My underlining).
[19] On 8 September 2008
the plaintiff’s attorney wrote to the defendant again, with a
copy to its attorney. The letter records
that in terms of clause 5.1
the defendant was obliged to provide the plaintiff with three loads
of crushed stone for delivery per
working day and that the defendant
was in breach of that obligation. It contains a notice requiring the
breach to be remedied within
fourteen days, failing which the
plaintiff would be entitled to cancel the agreement. The reply from
the defendant’s attorney,
dated 10 September 2008, merely
enquired whether the plaintiff was interested in trying to resolve
the matter without referring
it to litigation. In a further letter,
dated 19 September 2008, the defendant’s attorney said the
following:
‘
Your client
was very well aware of the risk involved in this matter.
However should your
client wish to proceed by way of litigation then of course it is his
own free choice but he should consider
whether this situation arose
as a result of our client’s actions or that of the powers to be
who then stopped all development
in the area and was not prepared to
carry on with the projects as had been proposed and upon which the
whole agreement was entered
into.’
[20] There is no letter
from either the defendant or its attorney in which it was contended
that the real agreement between the
parties did not oblige the
defendant to provide the plaintiff with three loads per working day.
The inference is inescapable that
when the defendant’s attorney
was instructed to reply to the letters from the plaintiff’s
attorney he was not told
that the written agreement did not correctly
reflect the agreement between the parties.
[21] In the light of the
evidence to which I have referred, and the probabilities, I conclude
that the defendant failed to make
a case for the rectification of
clauses 3 and 5.1. I will return to the other respects in which it
seeks rectification.
[22] The plaintiff
contends that the agreement should be rectified in the following
respects:
The document which appears at page 18
of the pleadings should form part of the agreement, being the
document referred to as annexure
A in clause 7;
The rate of escalation in clause 7.3
should be 10%;
The word ‘client’ in
clause 5.2 should be ‘contractor’;
The word ‘customer’ where
it first appears in clause 6.4 should read ‘contractor’
and where it appears
for the second time should read ‘client’.
[23] Not much was said in
the evidence about annexure A. Fernandes said he could not recall
whether he had shown it to either Mynhardt
or Whittock. The fact that
such a document is referred to in clause 7 and should have been
attached to the agreement is not a basis
for rectifying the agreement
by attaching it. There is no evidence that the contents of the
document had been agreed or that Whittock
even knew that clause 7
referred to an annexure. I do not consider that the plaintiff proved
that the agreement should be rectified
in this respect.
[24] It was common cause
that Fernandes and Mynhardt agreed the rate of R9.36 per kilometre.
Whittock said that was Mynhardt’s
responsibility. Fernandes
said they also agreed an escalation rate of 10%, but this is denied
by Mynhardt. It is unlikely that
they would not have discussed
escalation if they were talking about a three year contract. The
escalation related to increases
in salaries, overheads and so on.
Increases in the price of diesel were catered for elsewhere. Mynhardt
did not suggest in his
evidence that 10% was too high or suggest any
other reason why he would not have agreed to it. I am satisfied that
the rate of
10% was agreed and that the omission thereof in clause
7.3 was due to a mistake common to the parties. Clause 7.3 must
therefore
be rectified.
[25] It was not disputed
in the evidence before me that the word ‘client’ in
clause 5.2 was an error and should have
read ‘contractor’.
This clause must therefore be rectified.
[26] It was also not
disputed that clause 6.4 should have referred to payment by the
client to the contractor and delivery to the
client, not a customer.
This clause must therefore also be rectified.
[27] Before I deal with
the other clauses in respect of which the defendant seeks
rectification I should say that the agreement
was a sloppy product of
an attempt to adjust an existing contract to the circumstances of the
transportation of the crushed stone.
It does not follow that every
clause which is incorrectly worded or inappropriate to the
circumstances should be rectified. The
test remains whether the
particular clause reflects the true agreement between the parties,
and if not, whether that is a result
of a mistake common to them.
[28] The defendant seeks
rectification of the agreement in the following respects:
The first relates to the
preamble under the heading ‘Records’. This seems to me
to be uncontroversial. The preamble
suggested by the defendant
accords with the agreement between the parties, while the reference
in the written agreement to addresses
in Hluhluwe is an obvious
error. I propose to allow this rectification.
Clause 1.3 defines a
‘customer’ as customers of the client, to whom delivery
is to be effected in terms of the agreement.
Mynhardt’s
evidence made it clear that delivery of the crushed stone was only
ever contemplated at its factory in Richards
Bay. That was where it
used the stone to manufacture the finished products. There would
never be a need to deliver crushed stone
to a customer of the
defendant. I do not accept Fernandes’ evidence that he was
told it might be required. I find that
inherently improbable. The
rectification sought by the defendant is the deletion of clause 1.3
in its entirety, and I propose
to allow it.
Clause 1.4 defines
‘Working day’ as ‘Monday to Friday’. The
defendant says public holidays and builders’
holidays should
be excluded. I think that was obviously what was intended and I
propose to allow this rectification.
The rectification of
clause 2 sought by the defendant cannot be granted. The defendant
did not prove that the proposed rectification
reflects the true
agreement between the parties, for the same reasons which I
mentioned in relation to clause 5.1. Clause 2 is
incorrect in that
it refers to deliveries to the defendant’s customers. The
plaintiff however did not seek its rectification
and the
rectification sought by the defendant has not been proved. The
clause must therefore stand with its imperfections.
The rectification of
clause 3 cannot be granted, for the same reasons as applied to
clause 5.1.
The proposed
rectification of clause 4.1 seeks to reflect the agreement that the
crushed stone would be delivered to the defendant
and not to its
customers. I propose to allow this rectification, for the same
reasons as applied to clause 1.3.
The proposed
rectification relating to clause 4.4 is in the same category as
clause 1.3 and I propose to allow it.
The same applies to
clause 4.6 and I propose to allow the rectification.
I have already dealt
with clause 5.1.
Clause 5.2 is the only
clause in respect of which the parties seek the same rectification,
and I have already dealt with it.
I propose to allow the
rectification of clause 5.3, for the same reasons as clauses 1.3 and
4.1.
I am satisfied that
clauses 5.5, 5.6, 5.7 and 5.8 were inserted by mistake and should be
deleted.
The rectification of
clause 6 cannot be granted in the form sought by the defendant, for
the same reasons as applied to clause
5.1. The plaintiff only sought
rectification of clause 6.4, and I have dealt with that. The rest of
clause 6 will have to stand,
with its imperfections. Clauses 6.2 and
6.3 are in any event academic because the events contemplated in
them never happened
and the agreement is no longer in force.
The proposed
rectification of clause 7 cannot be granted, for the reasons which I
mentioned when I dealt with the rectification
of this clause sought
by the plaintiff.
The rectification of the
heading of clause 8 cannot be granted, for the reasons which applied
to clause 5.1.
The rectification of
clause 8.1 seeks to remove the reference to a delivery to a
customer. For reasons already discussed, I propose
to allow this
rectification.
The rectification of
clause 8.2 cannot be granted in the form sought by the defendant,
for the reasons which applied to clause
5.1.
The rectification of
clause 9.2 sought by the defendant cannot be granted, for the same
reasons.
[29] It was not seriously
disputed that if clauses 3 and 5.1 remain as they are then the
defendant breached the agreement by failing
to provide the plaintiff
with three loads of crushed stone per day. No evidence was led to
justify the defence of supervening impossibility
of performance. The
plaintiff gave notice of the breach as was required in terms of
clause 9, the breach was not remedied and it
validly cancelled the
agreement. It follows that the defendant is liable to the plaintiff
for damages arising out of the breach
of the agreement.
[30] Although the
defendant has not counterclaimed for rectification, it has pleaded
rectification as a defence. The parties have
asked me to determine
the terms of the agreement in the light of the rectification pleaded
by both parties. Those terms may conceivably
be relevant in the
determination of the damages. I therefore propose to incorporate them
in the order which I intend to make.
[31] I make the following
order:
It is declared that the
terms of the agreement between the parties are those set out in the
written agreement which is annexed
to the particulars of claim,
subject to the rectification thereof in the following respects:
The whole of the
preamble, under the heading ‘Records’ is deleted and
replaced with the following: ‘That whereas
the client deals in
crushed stone and whereas the contractor is willing and able to
transport crushed stone on behalf of the
client from the place of
its manufacture, namely Lancaster Quarries whose address is in the
Hluhluwe area and the parties wish
to formalise the arrangement’.
Clause 1.3 is deleted.
The following words are
added to clause 1.4: ‘excluding public holidays and builder’s
holidays’.
In clause 4.1 the words
‘Client’s customers’ are deleted and replaced with
the word ‘client’.
Clause 4.4 is deleted.
The contents of clause
4.6 are deleted and replaced with the following: ‘To furnish
the client with documentary proof of
its acceptance of a delivery of
crushed stone from the place of its manufacture in Hluhluwe.’
In clause 5.2 the word
‘Client’ is deleted and replaced with the word
‘contractor’.
The contents of clause
5.3 are deleted and replaced with the following: ‘To furnish
the contractor with documentary proof
of its delivery of crushed
stone to the client in Richards Bay.’
Clauses 5.5, 5.6, 5.7
and 5.8 are deleted.
The contents of clause
6.4 are deleted and replaced with the following: ‘Payment
shall be made by the client to the contractor
not later than the
last day of the month following that in which delivery to the client
takes place.’
The escalation rate in
clause 7.3 shall be 10%.
The contents of clause
8.1 are deleted and replaced with the following: ‘In the event
of the contractor being unable to
accept delivery of a load of
crushed stone for delivery to the client then the client shall be
able to employ another transport
company to deliver the said load of
crushed stone.’
It is declared that the
defendant breached the agreement by failing to provide the plaintiff
with three loads of crushed stone
for delivery per working day, that
pursuant to such breach the plaintiff validly cancelled the
agreement and that the defendant
is liable to compensate the
plaintiff for such damages as it is able to prove resulted from the
breach and cancellation of the
agreement.
The question of costs is
reserved.
_______________________
PLOOS VAN AMSTEL J
Appearances:
For
the Plaintiff :
Mr. H. A De Beer SC
Instructed
by :
McClung Mustard
Durban
For
the Defendant :
Mr. J .E Hewitt S C
Instructed
by
:
Du Toit Havemann & Lloyd
Durban
Date
of Hearing :
9 November 2011
Date
of Judgment :
14 December 2011