About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1986
>>
[1986] ZASCA 113
|
|
Marshall Manufacturing (1979)(Pty) Ltd. (450/84) [1986] ZASCA 113 (30 September 1986)
MARSHALL MANUFACTURING COMPANY
Appellant
(1979) (PROPRIETARY)
LIMITED
(Defendant
a quo
)
and
MARSHALL ENTERPRISES (PROPRIETARY)
Respondent
(Plaintiff
a
quo
) LIMITED
Case No 450/84 mp
IN THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE
DIVISION)
In the matter between:
MARSHALL MANUFACTURING COMPANY
(1979) (PROPRIETARY) LIMITED
Appellant (Defendant
a quo
)
and
MARSHALL ENTERPRISES (PROPRIETARY)
LIMITED
Respondent (Plaintiff
a quo)
CORAM: HOEXTER, GROSSKOPF, JJA et GALGUT, AJA
HEARD:
26 August 1986
DELIVERED
: 30 September 1986
JUDGMENT
HOEXTER, JA
2.
HOEXTER ,
JA
In the Witwatersrand Local Division the
respondent company (to which I
shall refer as "the plaintiff") sued the appellant company (to which I shall
refer as "the defendant")
for payment of commission. The defendant resisted the
action and filed a counterclaim for damages in respect of an alleged breach
or
contract. Beginning in June 1983, there followed before PREISS, J a protracted
trial during an early stage of which the defendant
withdrew its counterclaim and
was ordered to pay the wasted costs occasioned thereby. The trial Court ruled
that the plaintiff was
entitled to the commission claimed by it and gave
judgment for the plaintiff in the sum of R39,300, together with interest on that
amount on an agreed sliding scale, and costs. With leave of this Court the
defendant appeals against the whole of the order so made
by the trial Court.
The
3.
The plaintiff's claim arose in the following way. For the
purpose of joining abutting rails on its railroad system the South African
Railways ("the SAR") has for many years used reinforcing slabs made of a rigid
material. Such slabs are called fishplates. The commis=
sion claimed by the
plaintiff related to a sub-contract for the machining in Johannesburg of
fibreglass insulating fishplates. During
1980 the Stores Department of the SAR
invited tenders for the supply and delivery of insulating fishplates. The
successful tenderer
was a Johannesburg company called J J Langen & Co South
Africa (Pty) Ltd ("the Langen company"). The plaintiff and the defendant
also
carry on business in Johannesburg. In its successful tender the Langen company
had nominated the defendant as its sub-contractor
to machine raw fibreglass
blocks which were to be imported by the Langen company. The sole issue in the
case was whether or not the
defendant had been awarded the sub-contract through
the instrumentality of the plaintiff
The
4.
The trial Court found that the plaintiff
had discharged the onus of proving that its efforts were the effective cause of
the appointment
of the defendant as the sub-contractor. On appeal the defendant
challenges the correctness of that finding.
The managing director of the plaintiff is a
Mr Samuel who, at the time of the trial, was aged seventy-five. Despite his
years he enjoyed good health and he was able to engage
energetically in certain
business ventures involving engineering skills and experience. In 19 52 Samuel
established in Johannesburg
a manufacturing company. Later Samuel also formed
the plaintiff company which became the holding company of the former. The
plaintiff
traded as "Marshall" Manufacturing Company" and included in its
business was to supply wooden fishplates to the SAR. During 1977
the plaintiff
sold its business as a going concern to one Strydom in order to enable the
latter in turn to sell the
business
5.
business to a new company. The new company thereafter registered was the
defendant. Pursuant to the terms of the deed of sale between
the plaintiff and
Strydom the defendant incorporated the word "Marshall" as part of its name and
it traded under the style of "Marshall
Manufacturing Company." Paragraph 8 of
the deed of sale between the plaintiff and Strydom contained,
inter alia
,
the following provisions -
"8.
RAILWAY BUSINESS
:
Inasmuch as the Seller has been the successful tenderer to the South African
Railways ('S.A.R.') for the supply of certain materials
for the manufacture of
fish plates and obtains orders from the S.A.R. for machining, it is agreed:
8.1
8.2. The Seller binds itself that it will not accept orders for machining,
will not undertake any machining but will pass on to the
Purchaser and the new
Company any enquiries for machining and will assist the Purchaser and the new
Company in tendering therefor.".
The.....
6.
The sole shareholders of the defendant were two men respec= tively called
Duek and Castiglioni. The defendant manu= factured some
metal products but its
chief commodities were woodware such as garden furniture, trelliswork and picket
fencing. After the aforementioned
sale to Strydom the plaintiff continued to
carry on business in its own right but no longer engaged in manufacturing.
During 1978 one Husemeyer, an engineer with long service in the SAR, was
appointed in the Johannesburg offices of the SAR as its Assistant
Chief Engineer
(Signals and Telecommunications). He held this senior position until ' his
retirement from the SAR at the beginning
of 1981. At the time of the trial
Husemeyer was the General Manager of Malawian Railways. In the SAR a large part
of Husemeyers's
work was concerned with insulating fishplates, and since
1958/1960 Samuel had been well-known to him as a manufacturer of wooden
fishplates. The fishplates used by
the
7.
the SAR are subjected to great stresses. Together with the
Civil Engineering Department of the SAR Husemeyer was constantly searching
for
an improved version of the fishplates used by the SAR, both with regard to the
material of the fishplates and the design according
to which they were shaped.
Until about 1977 fishplates had been fashioned from laminated wood. In that year
Husemeyer came across
fibreglass fishplates manufactured by the American 3M
company. These 3M fibreglass fishplates had a profile differing from that of
the
fishplates used in South Africa and they were unsuitable for local use.
Husemeyer had a high regard for Samuel's skills and knowledge
in regard to
fishplates and he explained to Samuel that they should try to find fibreglass
fishplates suitable for local use. The
Langen company is the local agent of
various foreign engineering companies, one such being Röchling, which has a
factory at
Haren in West Germany. In 1979 Mr Langen, who is the managing
director of the Langen company, paid a
visit
8.
visit to the offices of Husemeyer and tried to interest
Husemeyer in the purchase of laminated wood. Husemeyer told Langen that he
was
no longer interested in wood as a material for fishplates and he showed Langen
fibreglass samples from the SAR workshops. One
of Röchling's products is
fibreglass. As a result of this meeting Langen communicated with Röchling
in Germany and in due
course Langen brought Husemeyer some samples of
Röchling fibreglass.
By early 1980 Husemeyer's office had obtained four slabs of fibreglass
whereof two (each being almost one metre long) came from the
3M company and the
remaining two (each being almost half a metre long) came from Röchling.
Husemeyer wished small test pieces
for tensile and compression tests to be made
from the slabs of each company; and in addition he wished to have twelve pairs
of fishplates
to be fashioned from the 3M slabs. Husemeyer arranged with Samuel
that the latter should cut the necessary test pieces and fishplates
from the
aforesaid slabs. A letter written
by
9.
by Husemeyer to the plaintiff on 7 March 1980 reflects that
Samuel undertook this work in anticipation of a petty contract formally
to be
concluded between the SAR and the plaintiff at a future date. In fact the petty
contract was finally concluded and signed only
on 25 July 1980. However, with a
view to the manufacture of the test-pieces and fishplates so undertaken by the
plaintiff, Samuel
promptly made arrangements, during March 1980, to have the
necessary work done at the defendant's factory. As to the manner in which
these
arrangements were concluded between the plaintiff and the defendant and as to
the further question how much of the work in
terms of the petty contract was
done by Samuel himself, the evidence at the trial produced strongly con=
flicting versions which
will be examined later in this judgment. Suffice it here
to mention that pursuant to the anticipated petty contract Samuel on 6 May
1980
delivered to the SAR the required test-pieces cut from both the 3M and the
Röchling fibreglass; and that during or about
the
10.
the latter half of July 1980 Samuel further delivered to the SAR the sample
fishplates cut from the 3M slabs of fibreglass.
While the petty contract was being performed at the defendant's factory the
Chief Mechanical Engineer of the SAR had been conducting
his own tests on
test-pieces from a slab of fibreglass available to him. In the light of these
tests the SAR decided to go to tender
- this being the tender to which the
plaintiff's claim for commission relates - before it received the sample
fishplates from Samuel.
Already in June 1980, and with a view to the said
tender, the SAR published a detailed set of specifications known as
"Specification
CSE 87/6".
Before the year 1980 Samuel and Langen had never met. They were introduced to
each other over the telephone in the following circumstances.
On a date during
the first
half
11.
half of 1980 Samuel was present in the office of Husemeyer
while the latter was having a telephone conversation with Langen. Husemeyer
interrupted his conversation with Langen to hand the telephone receiver to
Samuel, whereafter a telephone conversation took place
between Samuel and
Langen. I shall refer to this introduction of Samuel to Langen by Husemeyer as
"the telephone introduction." To
what end Husemeyer effected the telephone
introduction, and what was said in the course of the ensuing telephone
conversation between
Samuel and Langen, are both matters important to an
assessment of the probabilities in the case and will be explored later in due
course.
At or about the end of May or the beginning of June 1980 Langen paid a visit
to the defendant's factory. On 25 July 1980, and at the
defendant's factory,
Duek on behalf of the defendant signed a letter ("the commission letter")
addressed to the plaintiff and containing
the following:-
"Dear
12. "Dear Sir
Should your efforts be successful and result in orders for the Machining of
Glass Fibre Insula= ting Fishplates, then we herewith
confirm, that we will pay
you a commission of 10% (ten per centum) on our charges for all orders received.
This is in respect of
S.A.R. Tender, which will be published shortly and will be
for the total orders placed, tentatively 30,000 pairs.
Yours faithfully (Signed)
J.M. DUEK
DIRECTOR."
On 28 July 1980, and at the defendant's factory, the terms of the commission
letter were varied in a manuscript document bearing that
date and signed by both
Duek and Samuel. To this document, wherein reference to the plaintiff company is
made by the initials "M.E.",
I shall refer as "the increased commission note."
Its effect was to increase the amount of the commission payable to the plaintiff
(assuming the success of its efforts in terms of the commission letter) by the
defendant. The increased commission notice reflected
the following details:-
"Order
13
"
Order
Insulating Fishplates Fibreglass
You can charge per pair R9,50
Your quote
8,60
,90
We agreed to 50 : 50
This means R8,60
10% ,86
plus 50% of ,90 ,45
Rl,31
per pair
commission for M.E. This applies only to the first tender for - 30 000
pairs."
At the beginning of August 1980 Samuel travelled to Europe and he returned to
this country only at the beginning of October of that
year. His journey took him
to West Germany and during his stay in that country he paid a visit to the
Röchling factory at Haren.
There Samuel had discussions with the managing
director, the sales director and the factory manager of Röchling.
At the end of August 1980 the SAR issued tender forms in respect of Tender No
1080 75207 for the supply and
delivery
14.
delivery of insulating fishplates in conformity with Specification CSE
87/6. On 15 September 1980 Duek, on behalf of the defendant,
addressed to the
Langen company a letter the opening portion whereof was in the following
terms:-
RE : Quotation 1080 75207
S.A.R. Stores Department
We have been advised that the samples submitted to S.A.R., made by us with
your material, have been approved.
We hereby submit our quote for the machining, stamping, lacquering and
packing for
Item 1 No 28119 30,000 pairs Fibre Fish Plates Alternatively
Item 2 No 28119 20,000 pairs Fibre Fish Plates
Insulating fish plates complete in
accordance with specification
C.S.E.
87/6, Drawing E3331. Our price is
R9,60 per pair excluding G.S.T.
Plus
3% of value of tender submitted by
you to S.A.R "
In respe ct of Tender No 1080 75207 the Langen company during October 1980
submitted to the SAR a tender for a total value in excess
of R2m. In its said
tender the Langen company
nominated
15.
nominated the defendant as its sub-contractor in respect of
the machining, drilling, stamping, lacquering and packing of the fibreglass
blanks involved. By letter dated 5 December 1980 the Chief Stores Superintendent
of the SAR informed the Langen company that its
tender had been accepted.
On 10 December 1980 Langen, on behalf of the Langen company, wrote to the
defendant as follows:-
re: S.A.R. CONTRACT 4/3187. 75207. 010
for 30.000 Pairs of Insulating
Fishplates
Based on your quotation of 15.9.1980 we have
pleasure in herewith awarding you our sub-contract for:
30.000 Pairs of Insulating Fishplates to be supplied from overseas in raw blocks
as per your drawing and to be machined, stamped,
lacquered, printed on and
packed by you, including delivery to S.A.R. Stores, Langlaagte.
Price:
At R9,60 per Pair plus R 2,12 being 3% of our total quote to the
S.A.R. of R 70,69 per Pair.
On......
16.
On 3 February 1981 Duek delivered by hand to
Samuel a
letter addressed to "Mr Samuel, Marshall Enterprises" which Duek had written on
behalf of the defendant. The first two paragraphs
of this letter read as
follows:-
"When you discussed the machining by us of insulating fibre fish-plates for
the South African Railways last year and when we agreed
to effect certain
payments to you if we obtained the order through you, you left us under the very
clear impression that if we obtained
the order it would have been as a result of
your efforts. It was on that basis that we agreed to pay certain commission to
you.
In fact it has now become very clear that the sub-contract awarded to us was
not the result of any efforts on your part. We regret
that in the circumstances
you must realise that we are unable to pay any commission to you in respect of
this order since it was
not obtained through your efforts."
The above letter was followed by an exchange of correspondence between the
attorneys respectively acting for the plaintiff and the
defendant and in June
1981 the plaintiff instituted its action. Copies of the commission letter and
the
increased
17.
increased commission note were annexed to the particulars of
claim wherein it was averred that the plaintiff "had fulfilled its undertakings"
entitling it to payment of commission. The defendant sought further particulars
to the plaintiff's claim. The defendant wished to
know, for example, whether the
plaintiff alleged that the sub-contract had been awarded to the defendant
"solely as a result of the
efforts of the plaintiff". The plaintiff's answer was
that its efforts had been "the effective cause" of the award of the
sub-contract.
The defendant required the plaintiff to detail the efforts which
at the time of the agreement in July 1980 "had been made and were
to be made" by
the plaintiff in fulfilment of its undertakings. This question elicited the
following response from the plaintiff:-
" The efforts made by Mr Samuel acting for and on behalf of the plaintiff
included the following:-
(i) he negotiated with officials of the S.A.R. in connection with the S.A.R.
acquiring and using fibreglass fishplates instead of
the wooden fishplates which
the S.A.R. had used and were using up to that stage;
(ii) he
18
(ii) he designed the form of the fibreglass
fishplates and did the necessary experiments in connection therewith;
(iii) he did experiments to determine a satis= factory and economical
technique for cutting and machining the fibreglass fishplates;
(iv) he secured an order from the S.A.R. for the making of eleven pairs of
fishplates as samples to be used by the S.A.R. for testing
purposes, and
thereafter duly made and supplied the said 11 pairs to the S.A.R.;
(v) he recommended to the S.A.R. that the.
sub-contract for machining be awarded to the defendant;
(vi) he introduced and recommended the defendant to J.J. Langen and the 3M
company who were suppliers of the material involved and
who, it was
contemplated, would submit tenders for the main contracts;
(vii) he made a special trip to the factory of
Rochling in Germany in connection therewith."
In its plea the defendant denied that the efforts described
in sub-paragraphs (i), (ii ) , (iii ) , (vi) and (vii) quoted
above had been made by Samuel; and it pleaded that it had
no knowledge of the efforts described in sub-paragraphs (iv
and (v). Accordingly the defendant put the plaintiff to
the.....
19.
the proof of all the allegations set forth in sub-paragraphs
(i) to (vii). The defendant further denied that the plaintiff or the
plaintiff's
alleged efforts had been the effective cause of the award of the sub-contract to
the defendant.
Against the above summary of the main
undisputed facts of the matter and
the essential issues as reflected in the pleadings it is necessary now to look
more closely at
the evidence adduced at the trial. The witnesses for the
plaintiff were Husemeyer and Samuel while for the defendant there testified
Duek, Castiglioni and Langen.
From the tender forms issued by the SAR it
appears that in regard to the
manufacture of goods required by the SAR the policy of the Administration is to
encourage local manufacture
thereof by industrial and commercial undertakings
established in the Republic of South Africa. When Langen came back to him with
samples of Röchling
fibreglass
20.
fibreglass Husemeyer explained to Langen the SAR's policy
favouring local manufacture. In his evidence Husemeyer said that while it
would
have been quite impermissible for him to have selected a sub-contractor for a
supplier, it was nevertheless open to him to
make recommendations in this regard
to a supplier. He testified that he told Langen that Samuel had been involved in
the manufacture
of fish= plates in this country for many years; and that he
recommended Samuel to Langen with a view to the local machining of fishplates.
According to Husemeyer there were at that time locally only two parties capable
of making fibreglass fish= plates, the one being
the workshops of the SAR's
Chief Mechanical Engineer and* the other being Samuel.
In the course of his evidence it transpired
that early in 1980 (and, indeed, until the date of the trial itself)
Husemeyer had been under the impression that Samuel was still
directly involved
in the manufacture of fishplates
by
21.
by "Marshall Manufacturing". This fact prompted a suggestion
in the cross-examination of Husemeyer that if any testing of fibreglass
had to
be done the logical person to be approached - outside of the SAR - would be the
defendant company. Husemeyer repudiated this
suggestion and replied:-
"I would go to the only non-railway expert, Mr Samuel."
Reference has already been made to the SAR's letter of
7 March 1980 as a result of which Samuel, in anticipation of
the petty contract, began making test-pieces and sample
fishplates from fibreglass supplied by the SAR. That
letter was signed by Husemeyer and addressed to the plaintiff
Husemeyer explained that the purpose of the petty contract
was to enable Samuel to experiment with fibreglass
fishplates. According to Husemeyer Samuel had earlier
during their association conceived the idea of a
new profile for wooden fishplates. His innovation
involved the elimination from the fishplates of
certain
22.
certain concave surfaces for which plane surfaces were substituted. Samuel
had contended that this would mean speedier and more economical
manufacture of
fishplates. Husemeyer testified that Samuel's idea was accepted by the SAR and
incorporated in drawings of fishplates
produced by the Chief Civil Engineer's
Department.
In regard to the possibility that Röchling fibreglass might be used as
the future material for the SAR's fishplates Husemeyer
said that, he had
"continuous contact" with Langen; and that the latter's attitude towards the
matter of local machining was -
"...that he couldn't determine where else
to go and he would accept our recommendation."
While Samuel was busy making the test-pieces and sample fishplates in
execution of the petty contract, so testified Husemeyer, Samuel
kept him
informed of the progress of the work. He had regarded Samuel as an expert in
the
manufacture
23.
manufacture of fishplates and insofar as fibreglass was
concerned he considered that Samuel knew better than anyone else how to handle
this material; and how to cut and drill
it.
In regard to the telephone introduction of
Langen to Samuel while the
latter was in his office Husemeyer testified that he had effected the
introduction with a view to a possible
tender; and he gave as the gist of his
words to Langen over the telephone:-
"If Mr Langen were to be successful in a bulk tender for fishplates, I would
recommend Mr Samuel. Mr Samuel is in my office if you
wish to speak to him.
Did he speak to him? Yes."
Samuel told the trial Court that from 1977 to
1978, and at the office of Husemeyer, he often discussed with the latter the
possibility of using fibreglass in the manufacture of
fishplates and also the
technical problems
which
24.
which machining of the new material was likely to present.
Samuel corroborated the evidence of Husemeyer that he (Samuel) had devised
the
expedient of eliminating curved surfaces on the fishplates and had made the
proposal for the new design which was in fact adopted
by the SAR. Even before he
had collected the 3M and Röchling fibreglass slabs from the SAR pursuant to
the anticipated petty
contract, so testified Samuel, he went to the defendant's
factory and he there proposed to Duek and Castiglioni that the defendant
should
embark upon the manufacture of fibreglass fishplates. The defendant worked
mainly in wood, however, and since Samuel mentioned
the difficulties which
working the new material might present, the reaction of Duek to his proposal was
"negative". Duek and Castiglioni
nevertheless agreed that Samuel should be
allowed to use the defendant's factory in order to make the fibreglass
test-pieces and
sample fishplates for the SAR. After Samuel had collected these
slabs he began working on them at the defendant's
factory
25. factory. According to Samuel he worked there "for quite
a
few weeks nearly every day". Initially he worked on
his own; later he
worked together with Castiglioni who was responsible for the technical side of
operations at the defendant's factory.
Samuel said that he alone cut the
test-pieces and did the drilling of the sample fishplates; but that he
co-operated with Castiglioni
in the cutting of the fishplates. Working on the
fibreglass necessitated certain modifications of the defendant's machinery for
which
certain new parts and accessories had to be purchased. These purchases
were paid for by Samuel. When the sample fishplates had been
produced Samuel
agreed with Duek and Castiglioni that the defendant should be compensated for
the time spent by Castiglioni in working
with Samuel on the petty contract; and
a by mutual agreement a figure of R50 per fishplate was fixed. Samuel therefore
paid the defendant
R550. The remuneration paid to Samuel by the SAR in respect
of the petty contract was R1236,71.
In
26.
In his evidence Samuel was unable to fix the
date of the telephone
introduction more precisely than to say that it took place at some time during
the period April to June 1980;
but the witness was able to give a fairly
detailed account of what had been said by Husemeyer to Langen and the content of
the ensuing
conversation between Samuel and Langen. I quote from Samuel's
examination-in-chief:
"I was in Mr Husemeyer's office and there was a telephone conversation
between Mr Langen, and Mr Husemeyer and Mr Husemeyer introduced
me to Mr Langen
over the telephone as the man who would eventually make these fibre glass fish
plates.
Did you then speak to Mr Langen?
Mr Husemeyer gave me the phone. I spoke to Mr Langen and Mr Langen said to me
over the phone: 'I believe we have to co-operate in
the manufacture of fibre
glass fish plates.
1
What did you reply? My reply was
that I was still connected with the manufacture, but that I had sold the
manufacturing company and that Mr Langen would have to negotiate
with the people
who bought the company, my successors, Messrs. Duek and Castiglioni, over the
actual contract."
Samuel.....
27.
Samuel testified that when the success of his experiments at the
defendant's factory demonstrated the feasibility of mass production
of
fibreglass fishplates, he had discussions with Duek and Castiglioni which
culminated, on 25 July 1980, in the agreement reflected
in the commission
letter:
"We mutually agreed that I was entitled to a commission for the efforts which
I had until that time made in order to bring this whole
thing so far as to
convince Mr Duek that this could be done."
According to Samuel he told Duek and Castiglioni that a tender would be
forthcoming and he (Samuel) dictated the terms of the commission
letter which
Duek signed. . In regard to the figures mentioned in the increased commission
note Samuel said that the sum of R8.60
therein described as the defendant's
"quote" had been worked out together by the parties on 25 July; but that
thereafter he "had
heard that
28.
a price of R9.50 would be acceptable". He passed on this
information to Duek and Castiglioni and this led to the drawing up of the
increased commission note. After the signature of these two documents, so Samuel
told the trial Court, he offered to be of assistance
in negotiations between the
defendant and the suppliers of fibreglass, but Duek told him very pointedly that
he did not want Samuel
to discuss the terms of any sub-contract with possible
suppliers.
During cross-examination there was explored with Samuel whether the
plaintiff's "efforts" mentioned in the commission letter related
to past or
future efforts. Initially the witness was adamant that:-
"This agreement refers to past activities."
When his attention was called to the fact that the plaintiff's particulars of
claim made mention of "efforts made
and to be made
" (my underlining) the
reply of the witness was:-
"What
29.
"What was contemplated is that I would assist in the setting
up of the Marshall Manufacturing process."
Before leaving Samuel's evidence brief mention should be made of a number of
suggestions put to him by the defendant's counsel, all
of which Samuel firmly
repudiated. These were:-
(a)
that Duek had not been
opposed to Samuel's initial proposal that the defendant should machine
fibreglass fishplates;
(b)
that in the
manufacture of the test-pieces and the sample fishplates Samuel's own
contribution had been minimal, involving
an odd
half-hour here and there over a period no longer than a week;
(c) that all the sample fishplates had been cut
by Castiglioni;
(d) that,
30.
(d)
that, far from having been the earlier inspiration of Samuel, the
idea of using flat as opposed to concave surfaces on the fibreglass
fishplates
was in fact the brain-child of Castiglioni during March
1980;
(e)
that Castiglioni had not been
present during the discussions preceding Duek's signature of the commission
letter;
(f)
that initially Duek refused to
sign the commission letter; and that his signature was ultimately procured only
because Samuel duped
him into believing that Samuel "was in charge of this
project with the SAR" and that it was within Samuel's power whether or not
a
sub-contract would be awarded to the defendant;
(g)
that Samuel had not offered to be of assistance in negotiations
between the defendant and suppliers.
Duek
31. Duek told the trial Court that he was the
Managing Director of the defendant and that he was in charge of practically
every facet of its business. He said that when in March
1980 Samuel approached
the defendant he (Duek) was amenable to the idea that the defendant should make
the test-pieces and the sample
fishplates. In the course of his work Castiglioni
hit upon the idea of flat instead of concave surfaces on the fibreglass
fishplates.
At the end of May or the beginning of June 1980 Langen came to see
the defendant's factory. Langen intended to put in a tender for
fibreglass
fishplates if the SAR should call for such tenders and Langen further informed
Duek "that Mr Husemeyer told him that we
(i.e. the defendant) are going to do
the machining." I mention in passing that this last-mentioned bit of evidence by
Duek is of
particular significance in weighing the probabilities. Duek then
showed Langen over the factory. There were two or three meetings
in all with
Langen at the factory before the SAR issued its tender, and at such meetings
Duek discussed with Langen the possibility
of the machining of the fibreglass
being undertaken by the defendant.
On
32.
On 25 July 1980 Samuel came to the factory and told Duek that
the SAR would shortly go out on tender for fibreglass fishplates; that
the SAR
had asked him (Samuel) to be in charge of the project; and that Samuel knew the
people supplying the fibreglass material.
From all this, so testified Duek, he
concluded that Samuel would be the successful tenderer through one of Samuel's
overseas principals.
When Samuel presented the commission letter to Duek for
signature, so Duek further contended, the defendant had recently lost its
garden
furniture business and he (Duek) felt that he had his back to the wall. In this
situation, and without consulting Castiglioni,
he signed the letter.
In cross-examination Duek said that in the
execution of the petty contract the only work done by Samuel himself was the
grinding of some test-pieces. Duek agreed with a suggestion
by the plaintiff's
counsel that in bringing
the
33.
the work under the petty contract to the defendant's factory
Samuel had intended that the defendant and its employees should gain
experience
and technical skill in fashioning fishplates from fibreglass; but he denied that
the underlying reason was to equip the
defendant to handle a large machining
sub-contract. Deviating from his evidence in chief Duek then proceeded to deny
that when Langen
visited the defendant's factory Langen had made any mention of
the possibility of a tender.
Castiglioni is an Italian immigrant whose
English is poor. After a brief and unsuccessful attempt to speak English in
the witness-stand he gave his evidence through an interpreter.
By his own
admission Castiglioni was a nervous and confused witness with a very scanty
recollection of the events in relation to
which he tried to testify. His
evidence may be dealt with very shortly. He said that the mechanical side of the
defendant's operations
was his
particular
34.
particular responsibility and that Duek attended to all the administrative
work and dealings with clients. When in March 1980 Samuel
sought the defendant's
assistance both he (Castiglioni) and Duek were interested in Samuel's proposals.
He had not worked with fibreglass
before, and later in his evidence he agreed
that the machining of fibreglass presented many technical difficulties. Samuel
came to
the factory to look at the progress of the work from time to time but
Samuel was not really involved in either the cutting or the
machining of the
sample fishplates. According to Castiglioni he himself realised that the
elimination of concave surfaces on the
fishplates would make for quicker and
cheaper manufacture and during March 1980 he recommended to Samuel that the
profile of the
fishplates be modified accordingly. Armed with this idea Samuel
went off to the SAR and returned with a drawing reflecting the amended
design.
The letter which the SAR addressed to the plaintiff on 7 March 1980 in
connection with the petty contract made reference,
by a number, to a
particular
35.
particular SAR drawing. At the time of preparation for trial the drawing was
no longer in Samuel's possession and it was not discovered.
A copy thereof was
obtained by Samuel during the trial and, the objections of the defendant's
counsel to the production thereof having
been disallowed by the trial Court,
Castiglioni's claim that he was the origina= tor of the notion of plane surfaces
was tested in
cross-examination by reference to the drawing which reflected a
fishplate design in which the concave surfaces had already been eliminated.
After an initial display of reluctance to make any concession in regard
thereto Castiglioni was finally constrained to admit that
the manufacture of the
test-pieces and the sample fishplates had been undertaken with a view to a SAR
tender for fishplates and in
order to equip the defendant with experience and
skill in the machining of
fishplates.
So
36.
So much for Castiglioni. Of rather greater
importance in
deciding the issues in the case is the evidence of Langen. Langen immigrated to
this country as a fitter and turner
and through the Langen company he carries on
the business of a manufacturer's representative. It will be recalled that
according
to Husemeyer in his discussions with Langen he recommended Samuel with
a view to the local machining of fishplates. Husemeyer's evidence
to this effect
was not challenged in cross-examination. Langen nevertheless told a rather
different story. In this connec= tion,
so testified Langen, Husemeyer had
recommended the defendant. Husemeyer recommended the defendant because it had
experience in manufacturing
fishplates and it had worked for the SAR before.
Langen said that on the strength of this re= commendation he went to the
defendant's
factory. He paid this visit to the factory because the Langen
company was going to tender in the near future for a fishplate contract
and
it
would
37. would need a local manufacturer.
During his evidence in chief Langen said that
the factors which induced him to ask the defendant to give a quotation for
the sub-contract were his "satisfaction as to their
bona fides
" and "the
recommendation of the Railways." He gained the impression that the defendant was
a company "that could indeed handle this
machining contract". According to
Langen, in the matter of nominating a. subcontractor for the machining of the
fibreglass the Langen
company was not subject to anybody's instructions; and his
decision to nominate the defendant had not been influenced at all by the
Röchling company.
The plaintiff's counsel explored at some length with Langen by what means the
witness had been able to satisfy himself of the defendant's
ability to perform
the machining sub-contract. On this point Langen's evidence wavered somewhat. He
said that he had "accepted" that
they
would
38
would be good enough to handle fibreglass, but in the same breath he added
that he "took a chance on it". In a
singularly unconvincing reply he then went on to say that Husemeyer himself
had no proper appreciation of the diffi=
culties involved in working with fibreglass.
Of particular significance, however, is the evidence of Langen in regard to
the telephone introduction. Earlier in the trial Samuel
had been cross-examined
at great
length, and after the defendant's counsel had consulted with
Langen. It is noteworthy that in his cross-examination
Samuel was nowhere challenged either as to the approximate
date which he assiqned to the telephone introduction or as
to what had been said during the course thereof. In
relation to the telephone introduction Langen's evidence was
characterised by much vacillation and marked inconsistency. Although he
finally conceded that it was not possible for
him to fix the date of the telephone introduction, Langen
sought
39.
sought to deny that his first visit to the defendant's
factory took place after the telephone introduction. In order to determine
the
probable sequence of events it is important to consider with what object in mind
Husemeyer effected the telephone introduction.
In this respect the following
passages in the cross-examination of Langen are revealing:-
"
MR WISE:
I put it to you it must have been quite clear to you that
the purpose of that phone call by Mr Husemeyer to put you in direct contact
with
Mr Samuel is directly related to the forthcoming tender for fibreglass
fishplates and with a view that there should be co-operation
between you and Mr Samuel in that regard?
You are putting words in my mouth here.
Well, do you wish to comment on what the purpose of Mr Husemeyer telephoning
you to introduce you to Mr Samuel might have been if
it
wasn't that? Well, I think only Mr Husemeyer
can- answer that.
COURT:
No, Counsel is putting a certain
proposition to you, you can
either accept it or
repudiate it or qualify it. Counsel has put
to you the
purpose of Mr Husemeyer's telephone
call to you on this date that you
were
introduced to Mr Samuel was directly with the
view that you and
Samuel should co-operate, do
you agree or not? I agree."
At.....
40.
At this juncture it is convenient to notice
what
impressions the trial Court formed as to the credibility and reliability of each
of the five witnesses whose testimony I have
briefly summarised above. Although
it found Samuel's evidence to be somewhat marred by his propensity towards
stating unnecessary
detail the trial Court considered both Samuel and Husemeyer
to be truthful witnesses; and it found that their testimony accorded
with the
probabilities and was consistent with the documentary evidence produced. In the
opinion of the Court below Samuel's evidence
stood in sharp contrast to that of
Duek and Castiglioni:-
" who were clearly fabricating evidence
in regard to what his (Samuel's) role in the machining of fibreglass blanks
was."
The trial Court's impression of Duek was that he deliberately set out to
paint a picture as unfavourable as possible to Samuel. The
learned Judge found
that Duek had been deliberately untruthful and evasive; that in his evidence
he
41.
put forward a version which had not been properly canvassed
in the cross-examination of the plaintiff's witnesses and which did not
tally
with the defendant's pleadings.
In the estimation of the trial Court Castiglioni was an evasive and uneasy
witness whose technical knowledge was "extremely scanty"
and whose version in
evidence-in-chief was entirely demolished in the course of cross-examination.
Differing in this respect from
the witness Duek, so stated the learned Judge,
there was in the case of Castiglioni:-
"....not so much of the deliberate intention of setting out to create a false
impression in the mind of the Court but rather an inability
to sustain evidence
because he was testifying to matters of which he bore no real knowledge."
The cross-examination of Castiglioni with reference to the drawing mentioned
in the SAR's letter dated 7 March 1980 indicated to the
learned Judge:-
"...without
42
"...without possibility of doubt that it was Samuel who eliminated the
concave surfaces on the wooden fishplate at a period long before
the test pieces
were to be manufactured and it serves to satisfy me that Mr Castiglioni's claim
that he introduced this improvement
during the machining of the test pieces as
being a complete fabrication. And where Mr Duek attempts to support Castiglioni
in this
regard I regard it as no more than bluster and fabrication."
Hence the Court
a quo
concluded that it could pay no regard whatsoever
to the evidence of Castiglioni where it was not confirmed by the evidence of
some
acceptable witness.
The trial Court's impression of Langen was that this witness -
"...although superior to Castiglioni and Duek was attempting to go out of his
way to push his own efforts at the expense of Samuel's."
The learned Judge found Langen to be a highly intelligent and astute witness,
but one who easily pleaded failure of memory when cornered.
Of Langen the trial
Court remarked:-
"Where
43.
"Where his evidence conflicts with that of Samuel's and
Husemeyer's I have no hesitation about accepting the latter's."
The overall conclusion to which the trial Court was impelled was stated by
the learned Judge in the following way:-
" I accept the evidence of the plaintiff's
two witnesses and I reject the evidence of Catiglioni and Duek
in toto
and Langen in several material respects."
In argument before us it was urged by counsel for the appellant that the
trial Judge had been rather too fulsome in his commendation
of Samuel as a
witness; and that in truth Samuel's evidence was not free from blemish. There
are, I think, several (if rather minor)
criticisms to be made of Samuel's
evidence. For example, when he was pressed in cross-examination to say exactly
how and from whom
he had managed to discover between 25 July 1980 (the date of
the commission letter) and 28 July (the date of the increased commission
note)
that R9.50 would be an acceptable
figure
44.
figure for the defendant to quote, Samuel dithered not a
little in his replies. Again, as has emerged earlier in this judgment, Samuel's
evidence in relation to what
future
efforts (if any) on the part of the
plaintiff were contemplated in the commission letter was inconsistent and
unsatisfactory. It was
said further that the trial Court had been unduly
critical of Langen, more particularly in the following connection. The trial
Court
disbelieved Langen's evidence that he nominated the defendant as the
sub-contractor in the tender by the Langen company without having
recourse to
its principal, the Röchling company in Germany. This was an issue not
canvassed with Langen in his cross-examination
and in my view there is merit in
the argument of counsel for the appellant that there was no evidence on which to
base the outright
rejection of Langen's evidence on this score. This is an
appeal, however, in which we have the benefit of a very comprehensive judgment
by the learned trial Judge. His assessment of the witnesses was based on a
thorough analysis
of
45.
of all the evidence and a careful appraisal of the probabi= lities. Having
due regard to the minor criticms which may properly be
levelled at the evidence
of Samuel the total potrait of him which emerges from the record is that of a
trustworthy witness. The opposite
is true of the defendant's three witnesses.
And, although the trial Court may have erred in finding as a fact that Langen
did communicate
with Röchling before nominating the defendant as the Langen
company's sub-contractor, an examination of the record shows that
in regard to
the crucial issue of the case, the causative-potency of the telephone
introduction, Langen was a slippery and thoroughly
unsatisfactory witness. In my
view there are no real grounds upon which the strong credibility findings of the
learned Judge can
be assailed. The appeal must accordingly be approached in the
light of those findings.
The construction which the trial Court put upon the commission letter of 25
July 1980 was that it was:-
"...principally
46.
"... principally a reward for Samuel's past efforts and Duek knew it. It
contemplated some future conduct namely a visit to Germany."
In regard to the abovementioned "future effort" the trial Court found on the
probabilities that Samuel's visit to the Röchling
factory in Germany was
one of the causes of the award of the sub-contract to the defendant; but he went
on to say that even if he
had wrongly so found this -
"...would not derogate from my conclusion in regard to efforts 1 to 6."
In the final result the trial Court came to the conclusion that the plaintiff
had discharged the
onus
of establishing that the effective cause of the
award on the sub-contract to the defendant was "all the efforts cumulatively
assessed".
In order to see the line of reasoning on which the aforesaid
conclusion was based it is convenient to quote here at some length from
the
judgment of the Court below. In this connection the learned Judge observed:-
"Apart
47.
"Apart from other incidental causes, for example the quality of the
Röchling fibreglass and the tender price, one must ask oneself
how it came
about that the sub-contract went to the Defendant. One must begin with events
that preceded the tender by several years.
Samples were requested, in this case
from Three M and Röchling. At this stage there was no contact between the
Railways on the
one hand and Duek and Castiglioni on the other in this field. On
the contrary it is Samuel and Samuel alone who was in regular contact
with
Husemeyer, keeping abreast of new technology and helping Husemeyer to overcome
technical problems arising from working with
an unfamiliar substance. The
discussions had been fruitful, leading at least to the adoption by the Railways
of a new and
improved profile design
This petty contract gave Samuel the opportunity to promote the Defendant, to
enable an entity outside the Railways to gain experience
in the new technology
and in working with hitherto unfamiliar material. Samuel went to the Defendant.
Duek was unwilling at first
but Samuel persuaded Duek and Castiglioni
inter
alia
by offering to work with the material himself and by helping to solve
problems to be encountered in machining. After the test pieces
and sample fibre
fishplates were completed and proved to be satisfactory for the Railways Samuel
was in a position to put the Defendant's
name forward, not in the form of a
recommendation for the tender but as an assurance to Husemeyer that the
Defendant in Samuel's
opinion was capable of working adequately in this new
field. This
carried
48.
carried weight with Husemeyer and the latter's views in turn
were likely to carry weight with the Tender Board of the Railways.
Consistent with this development was Husemeyer's introduction of Samuel to
Langen. Langen agreed that the introduction was of such
a nature that he felt
and said that he and Samuel would have to co-operate in future. Samuel referred
Langen in turn to the Defendant
and Langen visited the factory several times to
confirm that the Defendant could safely be named as a sub-contractor in a
tender.
Samuel not only referred Langen to the Defendant but advised him to
negotiate with the Defendant directly."
The heads of argument for the defendant include a general submission that the
trial Court erred in accepting the evidence of the plaintiff's
witness and in
rejecting that of the defendant's witnesses. For the reasons already mentioned
in dealing with the credibility findings
made by the Court
a quo
this
submission is an untenable one. Mr
Nochumsohn,
who argued the defendant's
appeal, wisely did not persist with it. While advancing the broad argument .
that the plaintiff had failed
to prove that any of the
efforts
49. efforts detailed in the further particulars, whether
singly
or collectively, represented the effective cause of the award of the
sub-contract to the defendant, Mr
Nochumsohn
vigorously attacked the
trial Court's finding that Samuel's visit to the Röchling factory in
Germany had been a contributory
cause of the sub-contract. In this connection
counsel called
attention to the absence of evidence either by any representa= tive of the
Röchling company or of any communication affecting
the sub-contract between
the Röchling company and the Langen company. Counsel further stressed that
this particular issue had
not been explored with Langen in cross-examination.
Although it seems to me to be a distinct probability that there was some or
other
communication between the Röchling company and the Langen company in
regard to
the sub-contract, I agree with Mr
Nochumsohn
that the finding in
question lacks any real factual foundation and that it cannot be sustained. It
seems to me, however, that the
jettisoning of effort (vii) - Samuel's visit to
Röchling - does not conclude the inquiry. Here I should mention, perhaps,
that
an argument put up by the defendant in the Court below to the effect that,
since
efforts
50.
efforts both past and future had been alleged in the plain= tiff's further
particulars, proof of some future effort causally linked
with the award of the
sub-contract was an essential ingredient of the plaintiff's cause of action, was
in this Court rightly abandoned.
Effort no (vii) having been discarded the
question remains whether any one or more of efforts nos (i) to (vi) represented
the determining
cause of the award of the sub-contract to the defendant.
On behalf of the defendant it was strenuously contended that inasmuch as,
apart from the workshops of the SAR's Mechanical Engineer,
the only factory with
actual experience in the manufacture of fishplates (albeit wooden fishplates)
was that of the defendant it
was not improbable that, even if Samuel had not
referred Langen to the defendant, ultimately Langen would in any event have
gravitated
to the defendant. I disagree with that argument which seems to
me
51.
me entirely to overlook the causative efficacy of the
plaintiff's action in persuading the defendant that the work required of the
plaintiff under the petty contract should be executed in the defendant's
factory. This arrangement, as Mr
Wise
for the plaintiff correctly pointed
out, had two very significant consequences. First, it enabled the defendant to
acquire skills
and a proficiency in machining fishplates from fibreglass blanks
- a technique of which it knew nothing. Second, and no less important,
the
experience and knowledge so gained by the defendant enabled the defendant, in
consultation with the plaintiff, to give to a supplier
of fibreglass blanks a
quotation in respect of a subcontract for machining which was (a) realistic and
competitive and (b) at the
same time ensured a suitable profit margin to the
defendant. Time was moreover of the essence. The SAR tender was issued at the
end
of August 1980. The defendant was able to give the Langen company a
quotation by 15 September 1980 - a quotation very close, be it
noted,
to
52.
to the figure foreshadowed in the increased commission note
of 28 July 1980.
Then it was said on behalf of the defendant that at best for the plaintiff
the evidence demonstrated no more than that the plaintiff
had been the effective
cause of the award of the sub-contract conjointly with Husemeyer; and that as
this had not been pleaded the
claim for commission should fail. I do not think
that there is any merit in this submission. That Husemeyer's recommendation of
Samuel
to Langen operated powerfully on the mind of the latter is obvious? but
it is no less clear that what prompted that recommendation
was Husemeyer's
recognition of Samuel's skill and his sustained efforts in the development and
refinement of fishplates in the course
of the long and fruitful collaboration
between Husemeyer and Samuel.
To the inquiry into the matter of what had been
the
53.
the effective cause of the award of the sub-contract the
learned Judge brought what he described in his judgment as "a commonsense
approach"; and it seems to me, with respect, that he was entirely right in so
doing. In such a case, so I consider, the law is concerned
not with any minute
analysis based on the views of causation held by scientists or metaphysicians
but rather with the ordinary man's
notions of cause and effect. So viewing the
matter it appears to me that the real substance of the voluminous evidence in
the case
may be condensed somewhat as follows:-
(A) Husemeyer thought highly of Samuel's skill in the field of fishplates and
this induced Husemeyer to give the petty contract, involving
experimentation
with fibreglass as a suitable material for fishplates, to the plaintiff. The
experiments were successful.
(B) Before
54.
(B)
Before
March 1980 the defendant had had no experience in working with fibreglass, a
process which presents considerable technical
difficulties. The plaintiff,
having arranged that the test-pieces and sample fishplates required by the petty
contract should be
produced at the defendant's factory, thereby achieved the
result that the defendant's factory acquired experience of and proficiency
in
the machining of fibreglass fishplates. Thus equipped the defendant was by the
end of July 1980 ready and able not only to execute
a sub-contract for the
machining of fibreglass blanks but also to give a suitable quotation for the
work.
(C)
Langen was interested in submitting
to the SAR a
bulk tender for fibreglass fishplates
and he knew that the SAR favoured local machining. To that end Husemeyer
recommended Samuel
to Langen; and he
in fact introduced Langen to Samuel whereupon Samuel explained to Langen that
he would have to
work through the defendant.
(D) Langen
55.
(D) Langen did go to the defendant; he obtained an
acceptable
quotation for the sub-contract from the defendant; and in submitting its tender
to the SAR Langen's company nominated the
defendant, as the sub-contractor.
(E) The SAR accepted the tender of the Langen company
wherein the
defendant had been nominated as sub
contractor .
It is unnecessary, I
think, to make any further observations on the merits of this appeal, the
consideration whereof has required
a fairly detailed examination of the
evidence. At the end of a careful judgment PREISS, J arrived at the conclusion
that at least
efforts no (i) to (vi) led to the award of the sub-contract to the
defendant. I have earlier quoted the passages in his judgment
which reflect the
learned Judge's line of reasoning, and I am unable to find any valid ground for
differing from that reasoning.
So far from being persuaded that the
conclusion . . .
56.
conclusion to which the trial Court was impelled was wrong, I am satisfied
that it was entirely right.
The appeal is dismissed with costs.
G G HOEXTER, JA
GROSSKOPF, JA )
Concur GALGUT, AJA )