African Products (Pty) Ltd v Venter NO and Others (A188/05) [2006] ZAWCHC 32; [2007] 3 All SA 605 (C) (2 August 2006)

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[2006] ZAWCHC 32
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African Products (Pty) Ltd v Venter NO and Others (A188/05) [2006] ZAWCHC 32; [2007] 3 All SA 605 (C) (2 August 2006)

REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Case No.:
A188/05
In this matter between:
AFRICAN PRODUCTS (PROPRIETARY)
LTD
Appellant
And
ANNA
FRANCINA VENTER N.O.
First
Respondent
(in her capacity as the liquidator of
JOHN THOMPSON AFRICA (PTY) LTD)
LLOYDS REGISTER (“LLOYDS”)
Second Respondent
MUTUAL & FEDERAL INSURANCE COMPANY LTD
Third
Respondent
Coram: Traverso, DJP et Louw, J et Yekiso J
Delivered: 2 August 2006
Summary:
Prescription
– Extinctive Prescription – when prescription
commences to run
Section 12 of the Prescription Act
– prescription commences
to run from when the creditor has knowledge or is deemed to have
knowledge of “facts from which the
debt arises”
Undertaking by debtor to investigate proximate cause of the root
problem
– whether such undertaking has an effect of delaying
onset of prescription -
in casu,
held that prescription does
not commence to run whilst such investigation is in progress
JUDGMENT DELIVERED ON 2 AUGUST 2006
YEKISO, J
[1] African Products
(Proprietary) Limited (African Products), as plaintiff, instituted an
action out of this Court against John Thompson
Africa (Pty) Limited
(John Thompson Africa), as the defendant, for recovery of damages
allegedly suffered on the ground of alleged
breach of contractual
obligation by John Thompson Africa. The contractual obligation
arise from an oral agreement concluded between
African Product and
John Thompson Africa at Germiston, in the province of Gauteng, on 24
January 1996. Whilst the action was still
pending, John Thompson
Africa was wound up. Because of the winding up order issued against
John Thompson Africa, Mutual and Federal
Insurance Company Limited
(Mutual & Federal) was joined as a co-defendant in terms of the
provisions of
section 156
of the
Insolvency Act, 24 of 1936
. At all
material times prior to the granting of the final order of
liquidation against John Thompson Africa, Mutual and Federal
was its
insurer and was on risk when the incident constituting the cause of
action occurred.
[2] Lloyd’s Register,
described in the pleadings as an association or firm within the
meaning of Rule 14 of the Uniform Rules, was
appointed as an
independent inspection authority in terms of the agreement concluded
between African Products and John Thompson Africa.
By virtue of
this appointment, Lloyd’s Register assumed certain responsibilities
defined in the agreement concluded between African
Products and John
Thompson Africa. Lloyd’s Register, was cited as the co-defendant
in the proceedings in that capacity. John
Thompson Africa, Lloyd’s
Register and Mutual & Federal were cited as first, second and
third defendant, respectively, in the
court
a quo
and,
accordingly, are now cited as first, second and third respondent in
this appeal. I shall hereafter refer to African Products
as the
appellant and John Thompson Africa as the first respondent as and
when a need arise to specifically refer to these parties.
Whenever
a reference is made to an agreement between the appellant and the
first respondent, unless the context clearly indicates
otherwise,
such reference shall be to the oral agreement concluded between the
appellant and the first respondent at Germiston, in
the Province of
Gauteng, on 24 January 1996.
[3] In terms of the
agreement concluded between the appellant and the first respondent,
the first respondent undertook to manufacture
and supply a new tube
bundle to be supplied to the appellant for use in the gluten drier at
the appellant’s Germiston mill. The
appellant’s claim against
the first respondent is based on an allegation in its particulars of
claim that the first respondent,
contrary to its contractual
obligation to manufacture a new tube bundle using proper materials
and proper workmanship, the first
respondent supplied the appellant
with a defective tube bundle. The summons commencing action was
served on the first respondent
on 18 September 2001, whilst service
on the second respondent was effected on 21 September 2001. No
service was effected on the
third respondent as the third respondent
was joined in the action after the final liquidation order was issued
against the first
respondent.
[4] After service of
summons, the first, second and the third respondent raised a special
plea of prescription. The special plea
is premised on a contention
that at the time the summons was served on each of those respondents
on whom summons was served, a period
of three years had already
elapsed since the appellant’s claim became due.
[5] In a pre-trial
conference held in terms of Rule 37(1) the parties agreed that the
appellant bears the onus to prove the merits
of its claim whilst the
respondents accepted that they bear the onus of proof and the duty to
begin in respect of the plea of prescription.
The trial in the
court
a quo
thus proceeded on the basis that the respondents
bear the onus of proof and the duty to begin. Based on this
approach, all that
we are required to determine in this appeal is
whether, on basis of the facts established at trial, the court
a
quo
was correct in its finding that the respondents discharged
the onus resting on them to prove that the appellant:
[5.1] knew the facts from
which the debt arises, by not later than 21 September 1998, being
three years before the summons was served;
[5.2] if the appellant
did not know the facts from which the debt arose on or before the
aforementioned date, whether the appellant
should be deemed to have
had such knowledge because it could have acquired it by exercise of
reasonable care.
[6] In an ensuing trial
which commenced on 15 March 2004 before Parker AJ, the court made an
order, by consent between the parties,
to separate the adjudication
of the question of prescription raised in the respondents’ pleas.
Arising from this order, only
the question of prescription had to be
adjudicated at trial.
At the conclusion of the trial the
appellant’s claim was dismissed with costs, the learned judge
having found that the respondents
succeeded to discharge the onus
resting on them that as at the time of the service of the summons on
the respondents, the appellant’s
claim had become prescribed. The
appeal against the order dismissing the appellant’s claim is with
the leave of the court
a quo.
WIDER ISSUES TO BE
DETERMINED
[7] The primary task of
the trial court, and indeed of this Court, was to determine if the
respondents had acquitted themselves of
the onus resting on them
that, as at the time of service of summons on them, the appellant’s
claim had already become prescribed.
The trial court determined
that the respondents had discharged the onus resting on them, hence
the dismissal of the appellant’s
claim. The issue for
determination by this court is, therefore, to determine if the trial
court was correct in that finding. To
do so, of necessity, will
require the consideration and evaluation of evidence tendered at
trial with a view to determining if, based
on the facts established
at trial, the trial court was correct in its finding.
[8] In terms of
section
11(d)
of the
Prescription Act, 68 of 1969
, the appellant’s claim is
subject to a three-year extinctive prescription period. In an
endeavour to avoid the appellant’s
claim, the respondents rely on
the provisions of
section 12
of the Prescription Ac which provide as
follows:
“
(1) Subject to the
provisions of subsection (2) and (3), prescription shall commence as
soon as the debt is due.
If the debtor wilfully
prevents the creditor from coming to know of the existence of the
debt, prescription shall not commence to
run until the creditor
becomes aware of the existence of the debt.
(3) A debt shall not be
deemed to be due until the creditor has knowledge of the identity of
the debtor and of
the facts from which the debt arises
;
Provided that a creditor shall be deemed to have such knowledge if he
could have acquired it by exercising reasonable care.”
(Emphasis
added)
[9] In the instance of
this matter, there is no suggestion that the respondents either
prevented the appellant from coming to know
of the existence of the
debt as contemplated in
section 12(2)
of the Prescription Act or that
the appellant had no knowledge of the identity of the debtor as
contemplated in
section 12(3)
of the
Prescription Act. The
appellant had had a long business relationship with the first
respondent so that there is no question of the identity of the debtor
not having been known to the appellant at the time the debt which was
the subject of the dispute at trial became due. The crisp
issue,
therefore, which was the subject of determination at trial, was
whether the appellant had knowledge of the facts from which
the debt
arises on 16 August 1998 or, if not, whether the appellant should
have acquired such knowledge by exercise of reasonable
care before 21
September 1998.
[10] The dispute between
the parties arises out of an incident which occurred in the early
hours of 16 August 1998 when a crack emitting
steam in the pressure
vessel of the appellant’s new germ drier appeared. The crack was
located at the idling shaft-to-dished
end butt joint. This occurred
after a period of somewhat six months after the tube bundle was
installed and commissioned. It
later transpired on basis of
evidence that the root cause of the failure of the tube bundle was a
substantial misalignment at the
joint between the dished end and the
shaft and that this was due to positive mal-performance on the part
of the first respondent.
After the crack was discovered, it became
apparent to all those present on site that the root cause of the
crack would require
detailed investigation. Based on correspondence
on behalf of the appellant addressed to the first respondent, it is
clear that
the appellant expected the first respondent to do the
required investigation and thereafter furnish the appellant with the
report.
Evidence led on behalf of the respondents was intended to
show that if the appellant did not know the root cause of the crack
on
the day the incident occurred, namely, 16 August 1998, the
appellant, by exercise of reasonable care, ought to have known the
root
cause of the crack shortly thereafter and, in any event, by not
later than 21 September 1998.
FACTS ESTABLISHED
ON EVIDENCE TENDERED AT TRIAL
[11] Based on evidence
led at trial, there appears to be some facts which are common cause
or, alternatively, facts which were not
seriously challenged by
either of the parties involved in the proceedings. In the
paragraphs which follow I shall set out those
facts which appear to
be common cause or, alternatively, such facts as appear not to have
been seriously challenged by each one of
the parties.
[12] The first such
common cause fact or fact not seriously challenged is the discovery
of a crack emitting steam in the tube bundle
at the appellant’s
Germiston mills on 16 August 1998. The crack had occurred at the
idling shaft-to-dished end butt joint. The
crack occurred after a
period of somewhat six months since the tube bundle was commissioned.
Allistair James Morrison (Morrison),
the operational support
manager at the appellant’s Germiston mills at the time, was alerted
of this fact by those on site soon
after the crack had occurred.
Morrison, in turn, once informed of this fact, immediately contacted
one Jonathan D’Aquilar Kirkman
(Kirkman). Kirkman, at the time,
was an insurance adjustor in the employ of Crawford-TAG (South
Africa) (Pty) Ltd. Kirkman, by
way of academic qualification, is
the holder of a master’s degree in Metallurgy from the University
of the Witwatersrand. He
is a qualified engineer and generally used
to be called upon to investigate claims relating to engineering
related machinery breakdown.
Kirkman was well-known to Morrison
and the two of them attended at the site together. Roy Ernest May
(May), a regional contract
manager in the employ of first respondent,
was also informed of the fact. Peter Keller (Keller), a
representative of Indserve cc
(Indserve), was also present at the
site. Richter Roets (Roets), one of the appellant’s engineers,
was also present on site.
Indserve was proposed by the first
respondent as the government approved inspection authority in terms
of the agreement of 24 January
1996 concluded between the appellant
and the first respondent. Indserve, as the government approved
inspection authority, ultimately
had to oversee the repair work to
the crack. Evidence seems to suggest that it was a representative
of the first respondent who
suggested that a representative of
Indserve be called in.
[13] Whilst the location
of the crack was discovered at the site on 16 August 1998, none of
the parties present knew what the root
cause of the crack was.
Kirkman inspected the damage in the presence of Morrison, Roets, the
appellant’s engineer and Keller
of Indserve. The inspection
revealed damage in the form of a long crack, almost a metre in
length, running along the edge of the
weld connecting the dished end
of the tube bundle to the idling shaft. Kirkman expressed the view,
amongst those present, that
it was a typical fatigue crack. A
decision was made that temporary repairs be effected. It was
anticipated that the tube would
be re-commissioned no later than
Monday, 17 August 1998. The first respondent had arranged for the
inspection and the re-welding
of the crack. In the event, the crack
was duly repaired and the appellants were able to re-commence
production at 16h00 on Tuesday,
18 August 1998. Up until the stage
of the temporary repair to the tube bundle, the first respondent had
made no undertaking to
investigate the root cause of the crack.
[14] In the meantime, and
on Monday, 17 August 1998, Kirkman, the insurance adjustor, composed
a letter addressed to TM Insurance
Brokers relating to the incident.
The letter, in part, reads as follows:
“
Temporary repairs are
in progress and the insured hope to recommission the machine by the
afternoon of Monday, 17 August. However,
a detailed investigation
will be required to establish the cause of the cracking and develop a
suitable repair procedure. At this
stage, the insured intend to
treat the matter as a guarantee claim and will hold John Thomson
Africa liable for both the temporary
and permanent repairs.”
[15] Once the temporary
repairs had been effected, a J W Sanetra (Sanetra), the operations
manager at the appellant’s Germiston
mill, composed the following
letter, dated 19 August 1998 addressed to the first respondent:
“
We wish to record our
appreciation for the speed of response from your Company when the
failure of the Germ Drier was notified to
you. We are also grateful
to you for arranging so promptly and the re-welding of the crack.
We managed to recommence production
at 16h00 Tuesday, 18 August.
Notwithstanding this
appreciation of your endeavours, we have to register the greatest of
concerns with you, that after only 8 months
of service the Drier has
incurred this failure.
No doubt a full assessment of the
probable cause of the crack will come to be made, and we request that
you make the findings available
to us.
The immediate reaction
on the part of African Products is that a failure of this nature can
only be attributed to some cause on
the part of JTA, for which we
have to hold responsible. (sic)
Kindly be in touch so
that a permanent solution to the failure may be discussed, and the
likely period of time that the temporary
repair may be expected to
endure. In the meantime we hold JTA responsible for the damage and
loss incurred to date, just as we
hold your Company responsible for
the permanent repair.
While this note is, of
necessity, somewhat formal in nature, it does not detract from the
writer’s sincere appreciation of your
endeavours to assist us.”
(once again emphasis added)
[16] The
letter in the preceding paragraph was addressed to the first
respondent within the context and the background of the first
respondent having been notified of the steam emitting crack which
occurred in the tube bundle; of the first respondent having arranged
for the inspection authority to be called in and of the first
respondent having arranged for the prompt repair of the crack.
[17] On
27 August 1998 Roy May (May) of the first respondent requested a copy
of a report on the repairs effected on the tube bundle
from Indserve.
May, under cross-examination, conceded that the first respondent
may have requested a report from Indserve because,
as the
manufacturer and the supplier of the tube bundle, the first
respondent may have been concerned about the root cause of the
crack
in the tube bundle. May further confirmed, under cross examination,
that at that stage, neither the appellant nor the first
respondent
knew what the root cause of the crack was.
[18] The next event of
significance was the meeting of 17 September 1998 at the appellant’s
Germiston mill. That meeting was attended
by Morrison of the
appellant’s firm and May, a Mr Page and Mr Clifford, all of the
first respondent. At that meeting the representatives
of the first
respondent, obviously acting on behalf of the first respondent,
agreed to undertake the investigations into the root
cause of the
mechanical defect in the tube bundle. Actions agreed upon at this
meeting involved the following:
African Products (the
appellant) would prepare a report giving a detailed sequence of
events surrounding the repairs.
African Products (the
appellant) would provide a set of log readings for the period
leading up to the failure.
African Products (the
appellant) would provide X-rays taken of the repairs for review by
the first respondent.
The first respondent
would provide a report on the findings of their investigations which
would include the cause of the failure
of the tube together with the
recommendations.
[19] Before the first
respondent could determine the root cause of the crack and before it
could furnish the appellant with the report
and recommendations
arising from such a report as it had undertaken to do at the meeting
of 17 September 1998, the second crack in
the tube bundle manifested
on 26 October 1998. On this occasion Indserve, in its capacity as
the inspection authority, was immediately
called in by the appellant.
On the recommendation of Indserve, a Dr Grobler (Grobler) who it
appears is an expert in the field
of mechanical failure analysis, was
commissioned to investigate the root cause of the further tube bundle
failure. On a visual
examination, Grobler believed that the second
crack had manifested at a stress concentration point, and that there
was a significant
surface misalignment at the idling shaft-to-dished
end butt joint. Approximately a week after being commissioned,
Grobler orally
reported to the appellant that the likely cause of
both cracks was a substantial misalignment at the joint between the
dished end
and the shaft, and that indications are that the first
respondent is responsible for it. This finding was repeated in his
written
report of 14 November 1998 and later in his final report of
July 1999.
[20] The facts set out
and summarised in the preceding paragraphs constitute the salient
features of the evidence tendered at trial
and on basis of which the
trial court found that the respondents had discharged the onus
resting on them that the appellant’s claim
had become prescribed
and, on that basis, dismissing the appellant’s claim. It is also
on the basis of this body of evidence
that we have to determine if
the trial court was correct in its finding that the respondents had
succeeded to discharge the onus
resting on them that the appellant:
[20.1] knew the
facts from which the debt arises, by not later than 21 September
1998, and if not;
[20.2] whether the
appellant should be deemed to have had knowledge of such facts before
the aforementioned date because it could
have acquired it by exercise
of reasonable care.
[21] It appears to be
accepted between the parties, and indeed this is what the trial court
appears to have found, that as at 16 August
1998, none of the parties
present on site had knowledge of the root cause of the mechanical
failure of the tube bundle. It also
appears to be accepted between
the parties that it was not until Grobler had informed the
representatives of the appellant, almost
a week after the second
crack had manifested, of the root cause of the bundle failure. The
task facing this court, in the first
instance, is to determine if the
appellant, in the light of the admitted fact that it first had
knowledge of the root cause of the
bundle failure after it had been
informed of that fact by Grobler, almost a week after the second
crack had manifested, could have
acquired that knowledge, by exercise
of reasonable care by not later than 21 September 1998. If we do
find that the appellant could
have acquired that knowledge before the
aforementioned date, the next question which we are called upon to
determine is whether the
trial court was correct in its finding that
the appellant’s claim, as at the time of the service of summons,
had since become prescribed
and, consequently, whether it was correct
in upholding the special plea of prescription. A finding that a
claim has become prescribed
should, in the nature of things, be
preceded by a finding of when the debt becomes due.
WHEN DOES THE
DEBT BECOME DUE
[22] As has already
been stated in paragraph [7] of this judgment,
section 12(1)
of the
Prescription Act provides
that prescription shall commence to run as
soon as the debt is due. The
Prescription Act does
not define the
concept of “when a debt becomes due”. In the absence of the
definition of this term, the courts have held in
a number of
decisions that the term must be given a wide and general meaning.
In
The Master v I L Back & Co Ltd
1983(1) SA 986(A) 1004
F-G it was held that the term “debt is due” in
section 12(1)
of
the
Prescription Act means
that there must be a liquidated money
obligation presently claimable by the creditor for which an action
can be brought against the
debtor. The debt must be one in respect
of which the debtor is under obligation to pay immediately.
[23] In
Evins v
Shield Insurance Co Ltd
1980(2) SA 814 (A) 838 D-H it was held
that a debt is due when the creditor acquires a complete cause of
action for the recovery of
the debt, that is, when the entire set of
facts which the creditor must prove in order to succeed with his or
her claim against the
debtor is in place or, in other words, when
everything has happened which would entitle the creditor to institute
an action, and
to pursue his or her claim. (See also
De Loitte
Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman
Deutsch (Pty) Ltd
1991(1) SA 525(A) 532H)
[24] The general
consensus arising from a survey of these decisions appears to be that
in its broad sense, the concept of a debt in
relation to the
Prescription Act, refers
to an obligation to do something, whether by
payment or be delivery of goods and services or not to do something
ultimately concluding
that the concept of a debt has a proprietary
character. (See
The Law of South Africa: Ed Joubert
first
re-issue Vol 21, p55 par 142 and the authorities cited therein). To
the requirement that the debt must be one in respect of
which the
debtor is under an obligation to pay immediately, I might add, in
respect of which the debtor has no
bona fide
or valid defence.
It has further been held that the debt is only due when the
creditor’s cause of action is complete.
[25] When can it,
therefore, be said, in the instance of this matter, the debt became
due in the light of authorities cited in the
preceding paragraphs.
The costs consequent upon the temporary repairs effected in the tube
bundle obviously became known to the
appellant soon after the
temporary repair were effected. The temporary repairs bear no
relationship to the root cause of the problem
as it is an admitted
fact that these were not known until a report by Grobler. There can
be no suggestion that, as at the time
the temporary repairs were
effected, the appellant had acquired a complete cause of action in
the sense of the entire set of facts
which the appellant had to prove
in order to succeed in its claim. The statement made by Sanetra in
the letter addressed to the
first respondent dated 19 August 1998 to
the effect that the appellant is holding the first respondent liable
for the damage and
loss incurred, is not based on the factual
ingredients of the cause of action but is more a legal conclusion
that could be drawn
from the facts as and when these become known.
The facts constituting the cause of action were definitely not known
at the time
the letter was written. The statement in the letter
composed by Sanetra and addressed to the first respondent to the
effect that
the appellant was holding the first respondent
responsible for the failure of the tube cannot be construed as
indicating knowledge
of the root cause of tube bundle failure on the
part of the appellant as at the time the said letter was composed and
written.
(See in this regard
Truter and Another v Deysel
2006(4)
SA 168 (SCA) para 17).
THE FACTS FROM
WHICH THE DEBT ARISES
[26] Corollary to the
concept of “due debt” is the concept “the facts from which the
debt arises”. What this in effect means
is knowledge on the part
of the creditor of the material facts constituting its cause of
action. Thus, where a creditor’s claim
for damages is based on
the debtor’s defective workmanship, all that is required is
knowledge, not only of the defect and the resultant
damage, but also
the root cause of the defect and the resultant damage. On 16 August
1998 all that the appellant knew was that
there had been a failure of
the tube bundle. What was not established on 16 August 1998 was the
root cause of the crack. There
was consensus on all those present
on site that the actual cause of the crack warranted further
investigation. As we have seen
on the basis of evidence, the
envisaged investigation was ultimately carried out by Grobler. It
was not until Grobler had carried
out his investigation, about a week
after the second crack had manifested, that the appellant came to
know of the root cause of the
crack.
[27] It therefore
follows that the appellant had knowledge for the first time of the
facts from which the debt arose after the second
crack had manifested
on 26 October 1998. Whether the appellant could have acquired this
knowledge by exercise of reasonable care
before then, and, in
particular, before 21 September 1998, is the issue next to be
determined.
EXERCISE OF
REASONABLE CARE
[28] In
Drennan Maud
& Partners v Pennington Town Board
1998(3) SA 200 (SCA) 209
F-G, the requirement in
section 12(3)
of the
Prescription Act that
the creditor exercises reasonable care was held to require diligence
not only in the ascertainment of the facts underlying the debt,
but
also in relation to the evaluation of those facts. This means that
the creditor is deemed to have the requisite knowledge if
a
reasonable person in his position, would have deduced the identity of
the debtor and the facts from which the debt arises.
[29] It was the
appellant’s case in the court
a quo
, and still is the
appellant’s case in this appeal, that it had no knowledge of the
facts from which the debt arises until informed
of such fact by
Grobler almost a week after the second crack had occurred. The
respondents contend that the appellant acted unreasonably
and that
had the appellant acted reasonably it could have acquired knowledge
of the requisite facts long before Grobler was commissioned
to
conduct the investigations, and in any event, by not later than 21
September 1998. The respondents contend that it was unreasonable
of
the appellant not to carry out its own investigation soon after the
first crack had occurred and that had the appellant done so,
it
probably would have acquired knowledge of the requisite facts from
which the debt arose by not later than 21 September 1998.
The
question which needs to be answered therefore is whether the
appellant acted unreasonably by not conducting its own investigation,
leaving it rather to the first respondent to investigate the root
cause of the tube bundle failure.
[30] What the proviso
in
section 12(3)
of the
Prescription Act requires
the creditor to do
is no more than what could reasonably be expected in the
circumstances of a reasonable person. The first point
that needs to
be considered is the decision to have the crack repaired. None of
the witnesses who testified for the first respondent
at trial could
say, unequivocally, that the appellant acted unreasonably in having
the tube bundle repaired. May, under cross-examination,
was
constrained to concede that the appellant’s decision in this regard
was based on the bottom line and even went so far as to
say that he
would have expected the appellant to repair the bundle and that he
would have expected the appellant, as a reasonable
organization, to
have had the problem fixed.
[31] Professor Robert
Bennet Tait (Tait), a professor in the Mechanical Engineering
Department at the University of Cape Town and
a professional
engineering consultant in the field of Fracture Mechanics and Failure
Analysis, also testified in the first respondent’s
case. His
evidence was intended to show that had the appellant carried out its
own investigation soon after the first crack had
occurred, the
appellant would have discovered the root cause of the bundle failure,
and thus the facts from which the debt arises,
within a period of two
weeks afterwards, and, in any event by not later than 30 August 1998.
However, under cross-examination Tait
conceded that the
investigation coupled with the production of the required report
would depend on the circumstances which come to
bear in the course of
such investigation, as for an example, the availability of the
investigator, the availability of the necessary
information and other
matters in regard whereto there is never certainty and there is
seldom dependability. He too, could not fault
the appellant’s
decision to have the tube bundle repaired and went so far as to say
there would have been a need to have the system
repaired as soon as
possible and get it back into service. It was the first respondent
who secured the attendance of Indserve on
site. This obviously was
with a view that whatever repairs that would have needed to be done,
these would have had to be done as
soon as possible to minimise any
claim for loss of production in respect of which the first respondent
would be exposed to liability.
[32] As to the decision
to have the tube bundle repaired, there does not seem to be any basis
to fault the appellant’s conduct,
particularly in the light of the
first respondent’s exposure to liability arising from potential
loss of production.
[33] The next point to
consider is whether it was reasonable of the appellant not to carry
out its own investigation and its ultimate
reliance on the first
respondent to undertake the required investigation. The point that
needs to be taken into account in as far
as this aspect of the matter
is concerned is the relationship which existed at the time between
the appellant and the first respondent,
it being one of
manufacturer/supplier and that of consumer/user. The evidence on
record has established that the tube bundle was
installed on the
appellant’s Germiston mills during February 1998. As at the time
of the mechanical failure the bundle had been
in service for a period
of slightly longer than six months. It has further been established
on basis of evidence that after the
first crack had occurred, it was
clear to all those present that a detailed investigation would be
required to establish the cause
of the crack and possibly develop a
repair procedure thereafter. When the appellant indicated to the
first respondent that “(n)o
doubt a full assessment of the probable
cause of the crack will come to be made” coupled with a request
that the findings be made
available to the appellant, the first
respondent did not complain and raise an objection that the
expectation and the request made
was unreasonable. As a matter of
fact, the first respondent went so far as to request for a copy of a
report relating to the temporary
repairs from Indserve. It was
conceded on behalf of the first respondent that the report may have
been requested because the first
respondent was concerned about the
root cause of the crack in the tube bundle.
[34] At a meeting
between the parties on 17 September 1998 the first respondent had no
problem in undertaking to conduct the investigation
and report to the
appellant. The first respondent went so far as to request the
appellant to furnish it with such information as
would facilitate
proper investigation. The first respondent was more than adequately
represented at this meeting, having been represented
by May, Page and
Clifford. That the first respondent took a conscious decision to
undertake the investigation was not unreasonable
if due regard is had
to the business integrity the first respondent had to protect, the
expertise the first respondent professed
to have had, and the long
business relationship which existed between the parties. There is
no basis to suggest that the appellant
should not have believed the
bona fides
of the first respondent’s undertaking to
investigate the root cause, more so, that the first respondent was
both the manufacturer
and the supplier.
[35] I am unable to
find, on the basis of the observations I made in paragraphs [33] and
[34] of this judgment that the appellant
conducted itself
unreasonably in allowing the first respondent to undertake the
required investigations. There is therefore no
justification, in my
view, in the circumstances of this matter, for a finding attributing
knowledge of the root cause of the bundle
failure to the appellant
during the period preceding 21 September 1998.
THE RESPONDENTS’
SUBMISSIONS
[36] In an attempt to
show that the appellant was unreasonable in the approach it took to
determine the cause of failure of the tube
bundle, the Respondents
seek to suggest that had the appellant been diligent in its approach
to determine the cause of failure, the
appellant would have been in a
position, prior to 18 September 1998, to have known precisely what
the cause of the failure was.
The respondents base their submission
on the fact that the appellant, in the first instance, had access to
its own team of engineers,
its own engineering department and to
independent engineering consultants. Because of the availability of
these resources, so the
respondents contend in their submissions, and
with due diligence, the appellant would have been able to determine
the cause of failure
shortly after the first crack had occurred, and,
in any event, prior to 18 September 1998. This submission fails to
take into account
that the appellant’s engineering team was not
trained and experienced in the expert field of failure analysis; it
fails to take
into account that the first respondent accepted, if not
by implication, at least prior to 17 September 1998, that it had a
duty to
investigate the cause of failure and, ultimately, the first
respondent’s undertaking to investigate the cause of failure and to
furnish the appellant with the report and recommendations arising out
of such a report.
[37] The respondents
also seek to suggest in their submissions that it was unreasonable of
the appellant to rely on the first respondent
to investigate the
cause of failure. The respondents argue that this approach has, as
a consequence, the delay in the onset of
prescription and that a
creditor cannot escape the consequences of prescription by foisting
an onus of investigation onto its debtor.
I have already dealt with
this argument elsewhere in this judgment but would reiterate that the
expectation on the appellant for
the first respondent to carry out
the required investigation should be seen within the context of the
business relationship the parties
had at the time, the length of time
the tube bundle was installed and commissioned and the integrity the
first respondent professed
to have had as the manufacturer and the
supplier of the equipment.
[38] I have, in the
nature of things, taken note of the rest of the submissions made on
behalf of the respondents but I am not, in
the light of evidence
tendered at trial, persuaded that the appellant was in any way
unreasonable in conducting itself after the
first crack had
manifested on 16 August 1998.
[39] Taking all the
factors listed in the preceding paragraphs into account, I am unable
to find that the appellant conducted itself
unreasonably after the
first crack had occurred. To suggest otherwise would be no less
than adopting the position of an armchair
critic who is only wise
after the event. Having said that, I am not persuaded that the
appellant was unreasonable in conducting
itself after the first crack
had manifested and, in particular, in relying on the first
respondent’s undertaking to investigate
the root cause of the crack
in its capacity as the manufacturer and the supplier of the defective
tube bundle. In particular, I
am not persuaded that the respondents
succeeded in their endeavour to show, in the circumstances of this
matter, that the circumstances
are such that the appellant be deemed
to have had knowledge of the root cause of the crack prior to 18
September 1998.
[40] It therefore
follows, in my view, that the trial court was incorrect in its
finding that the respondents succeeded to discharge
the onus resting
on them that at the time of service of summons on the respondent, the
appellant’s claim had become prescribed.
[41] In the result I
would propose the following order:
[41.1] The appeal
succeeds with costs.
[41.2] The order of
the trial court is set aside and is substituted with the following
order:
“The respondents’
special pleas of prescription are dismissed with costs.”
…………………
..
NJ Yekiso, J
I agree.
…………………
...
WJ Louw, J
I agree and it is so
ordered.
……………………
JHM Traverso, DJP