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[2009] ZAGPJHC 96
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SA Metal & Machinery Co (Pty) Ltd v Spanjaard Ltd and Another (26092/07) [2009] ZAGPJHC 96 (16 April 2009)
NOT
REPORTABLE
IN
THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE
NO; 26092/07
DATE:
16/04/2009
In
the matter between
SA
METAL & MACHINERY CO. (PTY)
LTD
............................................................
APPLICANT
and
SPANJAARD
LTD
…....................................................................................
1st
RESPONDENT
COPPERMET
SA (PTY) LTD
….................................................................
2nd
RESPONDENT
JUDGMENT
WILLIS
J: The plaintiff claims damages for breach of contract. The breach is
alleged to consist of an unlawful repudiation by the
second defendant
of a contract which, it is common cause, was entered into between the
parties on or about 13 April 2007. At the
commencement of the hearing
the issues had been considerably narrowed. It was accepted that the
claim was to proceed against the
second defendant only. The plaintiff
had joined the first defendant as a precautionary measure, by reason
of the fact that it was
not sure that there may be a defence that it
had been the wrong plaintiff who had been sued.
The
first defendant is a public company and the second defendant is a
wholly owned subsidiary of the first defendant. The leading
actors
for the second defendant throughout were persons who were directors
of the first defendant and bear the same surname as
appears in the
rubric of the first defendant namely Spanjaard. Furthermore, certain
of the correspondence from the second defendant
carried on it the
logo of the first defendant. I shall deal later in more detail with
this aspect, when it comes to the question
of costs.
The
plaintiff is a family business, having existed for some 90 years. It
is based in Cape Town, but has branches elsewhere including
Johannesburg. It is the largest dealer in scrap metal in the Western
Cape, dealing in approximately four to five thousand tons
of scrap
metal every month. It is also one of the largest scrap metal dealers
in the whole of the Republic of South Africa.
It
is common cause that during April 2007 the second defendant had
secured what appeared to be a lucrative opportunity with a German
manufacturer of brake pads for which the German manufacturer required
copper parts. In order to secure its lines of supply, the
second
defendant approached the plaintiff with whom it had had dealings over
a number of years, in order to ascertain whether it
could arrange for
it to be given a secure line of supplies of copper.
This
is altered in the agreement, which was partly oral and partly
written, relating to the sale of copper scrap. On 13 April 2007
Mr
Paul Solomons who was the head metals trader for the plaintiff, sent
Mr Anthony Spanjaard the son of Mr Robert Spanjaard, the
chairman and
it appears founder of both the first and second defendant, an email
in which he confirmed that there would be a supply
of approximately
26 metric tons per month, delivered by the plaintiff to the second
defendant from April 2007 to December 2007.
Included
in that email was an advice that a payment was to be within 30 days
from date of invoice and secured by a bank guarantee
to the value of
R5 million. Mr Anthony Spanjaard replied on 16 April 2007, via email
and confirmed the agreement stating that there
was "no problem
from our side, with regard to the bank guarantee." Later it
transpired that the question of the bank
guarantee presented
difficulties and indeed objections were made on the part of the
second defendant and the payment terms were
varied twice in
consequence thereof. Initially it was agreed that the account limit
would be R700 000.00 and that any amount in
excess of that was to be
paid within one working day of receipt of invoice, later this was
changed to R1 million.
The
plaintiff originally claimed the sum of R624 958.02. This amount, on
the morning of the trial, was revised downwards to R593
537.15. There
is no dispute as to the computation of the quantum of damages. It may
be recorded that the quantum was calculated
by reference to the
agreed price between the parties in the contract between them and the
price that the plaintiff was able to
sell the copper for when the
second defendant repudiated the agreement.
It
is common cause that in April 2007 the defendant had taken delivery
of some 26 metric tons of copper in terms of the agreement.
In May
2007 the plaintiff tendered delivery of a further 26 metric tons but
the second defendant took delivery only of 10 metric
tons and refused
to take delivery of the balance. In each of June, July, August and
September of 2007, the plaintiff, once again,
in terms of the
agreement tendered delivery to the defendant of a further 26 metric
tons of copper but the defendant refused to
take delivery of any of
it.
At
the commencement of the trial, counsel for both sides agreed that the
whole case turned on the narrow issue of whether it was
a term of the
agreement that the second defendant would be entitled to cancel the
agreement upon 30 days notice to the plaintiff.
The first witness to
testify for the plaintiff was a Paul Solomons, who was the head
metals trader of the plaintiff. He was an
impressive witness. He gave
evidence in a calm manner and if I may say so with considerable
confidence for a person of his age.
He appeared to me to be a young
man in his early thirties. It is quite clear that he was thoroughly
familiar with his trade. He
was adamant that there was no agreement
that the contract could be cancelled upon 30 days notice and he said
that it would make
no sense whatsoever for such an agreement for such
a term to be included in the agreement.
The
next and last witness for the plaintiff was a Clifford Barnett. He is
a director of the plaintiff. He too, although he was not
directly
involved with the conclusion of the agreement between the plaintiff
and the second defendant, was adamant that there could
never have
been such an agreement, precisely because it would not have made any
sense. In essence, his evidence was to this effect:
that to use a
colloquial expression the second defendant would want to have its
cake and eat it at the same time. In other words,
the second
defendant would wish to have a secure line of supply of copper but
would be free if it ran into any difficulties to
vary the
arrangement.
It
has to be borne in mind that the plaintiff itself in order to be able
to give the first defendant a secure line of supply of
copper, would
itself have had to secure its supplies in order to be able to meet
its obligations to the second defendant. It should
at this stage be
pointed out, before dealing with the evidence of the defendant, that
the second defendant has certain difficulties
in as much as its
version has not been consistent. In its plea it contended that there
had been no agreement concluded between
the parties by reason of the
fact that the agreement had been made conditional upon the furnishing
by it of a guarantee which guarantee
had not been so furnished.
The
difficulty however for the second defendant is that the record quite
clearly shows, that although it was originally a term that
a
guarantee would have to be provided, the parties clearly agreed to
vary this particular term. The second defendant, during the
course of
the trial abandoned this defence set out in the plea and relied on
its alternative defence namely the right to cancel
within 30 days.
The
first witness to testify for the second defendant was Mr Anthony
Spanjaard, who as I have already indicated was the son of the
chairman of the second defendant. It emerged that during May the
German company which it had contracted in relation to the supply
of
copper was "not playing ball." This is what led to the
difficulties namely the second defendant not taking delivery
of the
supply of copper as had been agreed between the plaintiff and the
second defendant.
Mr
Anthony Spanjaard said that in the negotiations between himself and
Mr Paul Solomons, it had been agreed that there would be
a 30 day
notice period, which would enable the second defendant to give notice
that it no longer wish to proceed with the transaction.
There are a
number of difficulties that he faced when giving evidence: he could
not explain why if this aspect had it been agreed,
he had not alluded
to it in any of his emails to the plaintiff in response to the
plaintiff having recorded the terms of the agreements.
There
were three opportunities: the first was when the plaintiff originally
sent an email on 13 April and then a further two when
the agreement
was varied with regard to the terms of the guarantee. He also could
not explain why he had not, if this was a term
of the agreement, when
he realised that there were difficulties with the German company,
with which the second defendant had contracted,
immediately informed
the plaintiff that there were difficulties and accordingly it would
have to rely on the clause which allowed
it not to proceed with the
agreement.
Furthermore
it is common cause that relations became strained between the
plaintiff and the second defendant, as a result of the
second
defendant failing to take delivery of the copper There were emails,
there were meetings and there was indeed even correspondence.
On
12 July 2007 Mr Robert Spanjaard, the chairman of the second
defendant and the father of Anthony Spanjaard, sent a letter to
Mr
Clifford Barnett, in which he records inter alia the follawing-"I
came to see you, June 14 at 10:30 at your office in Epping.
I told
you then that the deal that Anthony had negotiated was no longer
appropriate but it was several phone calls later that you
finally
accepted that state of affairs despite this, Paul keeps sending
emails with RCP prices and the various percentages thereof."
On
13 July 2007 Mr Graham Barnett the brother of Mr Clifford Barnett who
is also a director of the plaintiff immediately send an
email to the
second defendant marked for the attention of Mr Robert Spanjaard in
which the second defendant was in no uncertain
terms called upon to
comply with its agreement. Mr Anthony Spanjaard accepted that at no
stage until after 13 July had he ever
raised with his father this so
called agreement, that the contract could be cancelled upon 30 days
written notice.
It
is also not without significance that the second defendants did not
on 12 July 2007 purported to rely on any such clause relating
to the
opportunity or relating to the right to cancel the agreement on 30
days notice. Mr Robert Spanjaard testified. His evidence
I am afraid
to say, was singularly unhelpful to the second defendant and was
inconsistent with that of his son.
This
probably explains why counsel for the plaintiff did not even bother
to cross-examine him. His version was that the problem
would take
care of itself, in other words if the second defendant did not put up
the guarantee well then there was no agreement
and therefore there
was nothing to worry about, alternatively he said, well if the second
defendant did not offer to pay, then
there was no obligation on it to
take delivery. Before going onto another occasion he said he thought
it was a "self-liquidating
problem."
On
another occasion he accepted that there was indeed a contract between
the parties but he had never expected that the plaintiff
would seek
to enforce it, by reason of the very friendly relationship that had
existed between the parties. I may recall that it
is indeed apparent
that there was a cordial relationship"" between the
parties, prior to May 2007 and that they indeed
explored even the
possibility of embarking on a joint venture for the "atomising"
of copper.
Having
regard to the principles in criteria set out in Stellenbosh Farmers
Winery Group Ltd & Another v Marten Etcie 2003 (1)
SA (SCA) 5.
African Eagle Life Assurance Company Ltd v Cainer
1930 (2) SA 234
(W)
237. National Employers Genera! Insurance v Jagers
1984 (4) SA 432
(ECD) 440 E - 441 E. Banng Eiendomme BPK v Roux
[2001] 1 All SA 399
(A) at paragraph 7. Koster Kooperatiewe Landbou Maatskappy BPK v Buid
Afrikaanse Spoorwee en Hawens
1974 (4) SA 420
(W) 425; National
Employers General Insurance Association v Gany 1931 (AD) 187 at 199
and AA Onderiinge Assuransie Assosiaste v
De Beer
1982 (2) SA 603
(A)
614 H.
I
am of the view that it must be accepted that the plaintiff's version
is correct and that there was no agreement, then further
there was no
term of the agreement, that the second defendant could cancel upon 30
days notice to the plaintiff. In Ocean Accident
and Guarantee Corp
Ltd v Cogh
1963 (4) SA 147
(A) 159 C, Holmes J A said;
"As
to the balancing of probabilities I agree with the remarks of Selke E
J in Govan v Skidmore
1952 (1] SA 732
(N) 734, namely ". in
finding facts or making inferences in a civil case it seems to me
that one may as Wigmore conveys in
his work on evidence, third ed
paragraph 32, by balancing probabilities select a conclusion which
seems to be the more natural
or plausible conclusion from amongst
several conceivable ones even though that conclusion is not the only
reasonable one."
This dictum has been referred to with approval
in innumerable cases, see for example South British Insurance Company
Ltd v Unicorn
Shipping Lines (Pty) Ltd
1976 (1) SA 708
(A) 713 E - G.
Smith v Arthur
1976 (3) SA 378
(A) 386 B - D. Cooper & Another
NNO v Merchant Trade Finance Ltd
2000 (3) SA 1009
(SCA) 1023 B - C.
Hulse-Rutter & Others v Godde
2001 (4) SA 133
(6) (SCA) 14.
Jordaan v Bloemfontein Transitional Local Authority
2004 (3) SA 371
(SCA) 379. De Maayer v Serebro; Serebro v Road Accident Fund
2005 (5)
SA 588
(SCA) at paragraph 13.
It
hardly needs to be said that "plausible" is not here used
as negative sense of specious but in the connotation which
is
conveyed by words such as (acceptable, credible or suitable see the
Oxford Dictionary) Having regard to the facts, disputed
and
undisputed set out above, I consider the most:
"Voor
die hand liggende en aanvaarbare afleiding" (See AA Onder/inge
Assuransre Assosiasie v De Beer
1982 (2) SA 603
(A) 614 H) and the
more plausible, acceptable and credible conclusion on a balance of
probabilities, is once again that the version
of the plaintiff is to
prevail over that of the second defendant Mr Fagan who appears for
the plaintiff, submitted that furthermore
even if indeed there was a
clause or a term in the contract between the parties that allowed the
second defendant to cancel upon
30 days notice the second defendant
had failed to prove that it had given such notice, by reason of the
evidence which has been
outlined above.
I
may at this stage recall that it was accepted by counsel for both
sides that the onus in regard to proving that there was no clause
relating to the right of the second defendant to cancel upon 30 days
notice, rested upon the plaintiff and that in regard to whether
such
notice had been given, the onus rested on the second defendant.
Mr
Beaton accepted that on the second defendant's own version of events
it did not purport to give a 30 days notice. He submitted
however
that the notice arose ex lege when on 12 July 2007 Mr Robert
Spanjaard wrote to Mr Clifford Barnett. The difficulty that
I have
with this proposition is I cannot see how one can rely upon something
upon which one did not intend to rely at the time
It seems to me to
make no sense Be that as it may, I have already found that on the
probabilities there was no such clause entitling
the second defendant
to terminate on 30 days notice.
I
simply record this latter aspect of the argument of Mr Pagan in order
to make it clear that he was confident that he had a further
string
to his bow. The plaintiff is entitled to the damages in the sum as
computed and as agreed between the parties, in the event
that the
defence relating to the 30 day notice of cancellation fail.
It
is common cause that the summons was served on 29 October 2007 and
that that is the date from which interest is tempore morae
should run
in regard to this sum. Insofar as costs is concerned, I do not think
that the plaintiff can be criticised for being
unduly cautious in
joining the first and the second defendants. As I have already
indicated the relationship between the two is
so close that the
opportunity for being confused as to with whom one is dealing can
easily arise.
It
certainly cannot be described as reckless conduct on the part of the
plaintiff, to have joined the first defendant in the action
and
furthermore throughout one set of attorneys and counsel have been
acting for the two defendants jointly. The first defendant
has no!
been put to any needless or additional expense. Accordingly I can see
no reason to make a cost order against the plaintiff,
for having
joined the first defendant, although of course the order that I shall
now make shall prevail against the second defendant
only.
The
following order is made: The second defendant is to pay the plaintiff
:-
(ij
The sum of R593 537.15 as or for damages arising from the breach of
contract entered into between the parties on or about 13
April 2007.
(ii)
Interest on the aforesaid sum calculated at the rate of 15.5 per
cent per annum, from 29 October 2007 to date of payment.
(iii)
Costs of suit.
Counsel
for the plaintiff Advocate E W Fagan (SC).
Attorneys
for the plaintiff Bernadt Fukic Potash and Getz.
Counsel
for the defendants Advocate R G Beaton.
Attorneys
for the defendants Helena Strijdom.
Date
of hearing 15 April 2009.
Date
of judgment 16 April 2009.