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THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case Number: 22702/2023
In the matter between:
MTECH SA (PTY) LTD Applicant
(Registration Number: 2015/318108/07)
and
AFOODABLE (PTY) LTD First Respondent
(Registration Number: 2003/009337/07)
JACK HENRY FRIEDMAN Second Respondent
(Identity Number: 7[…])
MORNE GROVE Third Respondent
(Identity Number: 8[…])
JEAN-PIERRE PHARO Fourth Respondent
(Identity Number: 8[…])
WESLEY ARNO COWDEN Fifth Respondent
(Identity Number: 7[…])
ADRIAAN JACOBUS DE WAAL Sixth Respondent
(Identity Number: 5[…])
Coram: Wille, J
Heard: 28 August 2024
Delivered: 4 September 2024
JUDGMENT
WILLE, J:
INTRODUCTION
[1] This is an application for summary judgment by the applicant against the
respondents. The dispute is between the applicant and the first respondent as the
remaining respondents are sureties. The first respondent conducts the business of
manufacturing and packaging food products for distribution to customers that require
that such products comply with certain specified health and safety requirements.1
[2] The applicant conducts the business of manufacturing packaging material
used in the packagin g and distributi on of food products and has special expertise
and experience concerning the manufacture and distribution of packaging material
used for the purposes required by the first respondent.2
1 Following specifications from “T he World Food Program” (this in terms of EU an FDA standards
and protocols).
2 These specific requirements were detailed in the defendants’ plea.
[3] It is not the subject of any dispute that the applicant was aware of the first
respondent’s obligation to comply with the strict protocols and requirements for the
packaging of its products for onward distribution to its customers . The first
respondent accordingly placed with the applicant a specified order (the first
respondent’s specified purchase order) with detailed s pecifications concerning the
products ordered from and to be supplied by the applicant.3
OVERVIEW
[4] About two years ago , the first respondent submitted a specified and detailed
purchase order to the applicant to manufacture and supply certain packaging
materials. A dispute arose on the papers as to whether the packaging material
provided in terms of this order was defective or not. This dispute (although still
relevant) was overtaken by arrangements made between the applicant and the first
respondent (in an attempt to settle the matter amicably).4
[5] These arrangements culminated in an agreement that the packaging material
not used by the first respondent (alleged to be defective in that same did not meet
the first respondent’s buying specifications) would be returned to the applicant, who
would send for the collection of this product from the first respondent’s premises.5
[6] It was a matter of common cause that some of this packaging material would
be returned by the first respondent to the applicant , and a credit note would be
passed to the benefit of the first respondent for thes e returns. Also, it was agreed
that the first respondent would receive a credit on account from the applicant, which
would be calculated following the cost price of the material supplied to the first
respondent.6
[7] Correspondence followed between the attorney representing the applicant
and the first re spondent representing the respondents. The respondents during this
3 This order contained specific references to certain paper “sachets” referred to in the first
respondent’s “buying specifications”.
4 The respondents signed a settlement agreement that had been drafted by the applicant’s attorney.
5 The applicant collected same from the first respondent’s premises on the morning of 31 October
2023.
6 The methodology to be used of how the amount of the credit would be calculated was agreed.
exchange of correspondence and the settlement negotiations that followed were
unrepresented. As a dire ct result of all these communications , a settlement
agreement was signed by the respondents , which was sent to the applicant for
signature.7
[8] Herein lies the cri sp dispute for determination . The issue is that between the
time the respondents signed th e settlement agreement (and the a pplicant collected
the alleged unsuitable packaging material ), the respondents communicated with the
applicant about specific features of the settlement agreement at a time when the
applicant had not yet signed off on the a greement (alternatively it was signed by the
applicant, but the acceptance thereof was not yet communicated to the
respondents).8
CONTEXT
[9] The applicant’s attorney and the fifth respondent exchanged correspondence
concerning the conclusion of the settlement agreement during the subject m onth,
and only at the end of that month did the applicant ’s attorney receive the signed
settlement agreement from the respondents.9
[10] It is alleged by the respondents that t he applicant collected the stock of
packaging material not used by it on the day after they signed the agreement, and
that happened at a time when the respondents had not been notified that it had been
so signed and accepted by the applicant.10
[11] Thereafter the first respondent immediately communicated with the applicant’s
attorney after the collection of the returned packaging material and confirmed the
following: (a) each pallet was being weighed so th e parties c ould sign off on the
volumes returned, (b) the fi rst respondent would pay for the volumes used , (c) the
stock returned would be deducted from the amount owed to the applicant, and (d)
7 This settlement agreement was to be signed by the respondents before the collection of the
unused packaging material.
8 The respondents returned more “unused packaging material” than initially anticipated.
9 From 12 October 2023 to 30 October 2023 (t he agreement was received at 16h04 on 30 October
2024).
10 On the morning of 31 October 2024.
hopefully the volumes would align with the calculations mentioned in the settlement
agreement.11
[12] On the same day, the applicant’s attorney responded in writing and stated that
the settlement agreement had been signed, that the figures had been agreed upon
and that any unilateral amendments by the first respondent would be considered a
breach of the contract. Most importantly, it was stated that the applicant would not
credit any stock over and above what had been agreed upon.12
[13] On the same day, the fifth respondent (on behalf of the first respondent)
communicated that he would revert once the numbers had been agree d and that the
parties should wait for the final numbers to be calculated. The applicant’s attorney
responded by stating that the respondents were bound by the terms of the
settlement agreement and attached a counter -signed version to their communication
to the respondents.13
[14] More letters followed on the day of the collection of the returned packaging.
The respondents calculated the amount due to the applicant following the collection
and return of the packaging material. They requested the applican t to align this
calculation with what the applicant had received in return from the first respondent.14
[15] The applicant finally responded via its attorney of record to the respondents to
the effect that they had signed a settlement agreement and that they were
accordingly obliged to pay into the applicant’s bank account the exact amount
stipulated in the settlement agreement.15
CONSIDERATION
THE SHIELDS RAISED BY THE RESPONDENTS
11 The respondents knew that the applicant had collected more stock than anticipated.
12 The applicant stated that it would revert once it had examined the stock that had been collected by
it.
13 According to the first respondent it had by then withdrawn the offer to settle on the prior agreed
figures.
14 The respondents alleged they were indebted to the applicant only to the sum of R371,808.88.
15 The amount of returned stock stipulated in the settlement agreement was the sum of R623,542.01.
[16] The respondents contend that the offer in the settlement agreement signed by
them and sent to the applicant’s attorney was validly withdrawn by them before it
was accepted by the applicant. Alternatively, the settlement agreement did not fully
and correctly s et out the terms of the agreement because of a bona fide and
common mistake and ought to be rectified as set out in the respondents’ conditional
counterclaim16.
THE FIRST SHIELD
[17] The respondents contend for the overarching theme and agreement in
principle of the parties, which was that the respondents would only pay for the
volumes of packaging material used by the first respondent. To fortify this shield,
they advance that by their conduct, they unequivocally communicated a withdrawal
of their offer in the settlement agreement.17
[18] They say this because once it is clear that parties intend to agree to employ a
written contract, the contract will only come into existence when all parties have
signed and accepted the contract. They contend that this is one of those contracts
that only finds application when it has been accepted by all the parties to the
contract.18
[19] By elaboration, it is argued that in this species of contract, the first signatory
thereto creates an offer which the intermediary signatories accept , which in turn
creates an offer that the final signatory accepts.19
[20] The respondents aver that upon a proper reading of the applicant’s papers, it
cannot be contended by the applicant that the applicant had countersigned the
settlement agreeme nt before the respondents had communicated their withdrawal
16 The respondents pleaded this in terms and also filed a conditional counter -claim.
17 They say they acted immediately when a larger quantity of goods was collected by the applicant.
18 Goldblatt v Fremantle 1920 AD 123 at 129.
19 G B Bradfield Christie’s Law of Contract in South Africa, 8th Ed, at 138.
from the settlement because of what had been revealed when the returned
packaging material had been reconciled.20
[21] Thus, the respondents advan ce that this is a triable issue , which will
determine whether the offer in the settlement agreement signed by the respondents
had been withdrawn and whether the contract was signed on behalf of the applicant
before such withdrawal occurred.21
[22] Further, the respondents contend for the position that the overarching
intention of the parties bears scrutiny. They say this because the settlement
agreement itself provides for a process of verification, which would involve thorough
weighing, inspection and sto ck-taking of the packaging to be returned to the
applicant.22
[23] It is advanced that the figure agreed upon should be considered concerning
the preamble to the settlement agreement that records an amount due in respect of
the stock at a time before any of the stock was returned.23
[24] The core argument is that the overarching intention was that the first
respondent would return whatever unused stock of packaging material it had and
that after that, a verification process would take place , at which point further
adjustments to the amount owing by the first respondent to the applicant would be
made.24
[25] In summary, the respondents say that to interpret the settlement agreement in
these circumstances in any other way would be both absurd and unbusinesslike25.
20 The respondents say that the applicant’s papers are unclear and that they do not engage with this
issue sufficiently.
21 The respondents aver that this was always the common intention of the parties regarding the return
of the packaging material.
22 This would result in a written confirmation detailing the exact quantity of goods r eturned to the
applicant.
23 The then stipulated amount of R623,542.01 was agreed upon before any stock was weighed and
returned.
24 The respondents say they reacted immediately upon the realization that more stock had been
collected by the applicant.
25 Metcash Trading Ltd v Credit Guarantee Insurance Cooperation of Africa Ltd 2004 (5) SA 520
(SCA) at 526 B–F.
[26] As I understand it, the respondents’ case is not that the settlement agreement
was varied, cancelled, novated or otherwise terminated or that any waiver of any
existing rights took place, but rather t hat no valid and enforceable settlement
agreement came about in the first place. They say this because it is trite that an offer
may be withdrawn at any time before a contract is accepted by all the parties to it.26
[27] The affidavit resisting summary ju dgment seems to suggest that the fifth
respondent’s understanding of what should take place concerning the return of the
stock of packaging material (which was not used by the first respondent) differed
materially from what was provided for in the settlement agreement. This was when
the applicant had not yet signed and accepted the settlement agreement, and thus,
the proposal contained in the settlement agreement was withdrawn and fell away.27
[28] As far as the first shield is concerned, t he respondents contend for the
position that a triable issue exists in that the first respondent conveyed a clear
intention that the respondents did not intend to perform in terms of the settlement
agreement as recorded and that t his constituted an unequivocal withdrawal of the
offer contained in the settlement agreement before communication of acceptance by
the applicant.28
[29] Thus, without a contextual approach to the interpretation of the settlement
agreement, it could mean that if the respondents were to sign the agreement first,
they would be bound by the terms of the agreement even where the agreement was
signed many years later, by or on behalf of the applicant. It is submitted that such an
interpretation would not be businesslike and purposeful.29
THE SECOND SHIELD
26 Robarts v Antoni N.O. 2014 JDR 1004 (SCA) para [21] at pages 13 and 14.
27 The respondents aver that they were accordingly entitled to withdraw their offer of settlement and
they did so timeously.
28 The compl aint by the respondents is that th e applicant needs to engage with this issue in its
papers.
29 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (A) para [18] at 603
E–604 D.
[30] Regarding the alternative second shield, which is based on rectification of the
settlement agreement, it is submitted that there is no basis on which it may be found
that this shield is not bona fide as the applicant has not alleged that the conditional
counterclaim by the first respondent is subject to exception.30
[31] The first respondent contends that it was always its understanding that it
would not be oblig ed to pay for any stock of packaging material it received from the
applicant that it did not use , that such stock would be returned to th e applicant and
that an aliquot credit would be granted to the first respondent.31
[32] The issue is whether or not, in these circumstances, considering the evidence
and the pleaded case before the court, a finding can be made that this shield raised
by the first respondent, read with the conditional counter -claim, can be legally
labelled as a sham.32
[33] The respondents submit that this court is not in a position to do so as there
are strong indications that : (a) t he parties were in ag reement that the first
respondent would return unused packaging material which the first respondent
purchased from the applicant, and (b) the applicant and the first respondent intended
to contract on the basis that the first respondent would be able to return all unused
stock of packaging material to the applicant and it would receive a credit therefor.33
[34] The first respondent avers that s uch an intention is furt her supported by the
settlement agreement itself which provides for a verification process with regard to
the stock returned to the applicant.34
[35] The approach by the respondents is that the applicant pressed for the
conclusion of the settlement agreement, on the basis of an acknowledgment by the
30 The applicant did not file an exception to the respondents’ conditional counter claim.
31 The respondents say this is precisely why they elected to settle their disputes with the applicant.
32 The respondents submitted that this shield was not untenable as no exception was filed against the
counterclaim.
33 The respondents took the position that the general theme of the agreement was that all the unused
stock would be returned.
34 Dole South Africa (Pty) Ltd v Pieter Beukes (Pty) Ltd 2007 (4) SA 577 (C).
first respondent of a liability in a fixed amount and that this was motivated by a
strategy of snatching at a bargain and unfairly pressurizing the first respondent.35
RULE 32 OF THE UNIFORM RULES
[36] The respondents may (to resist summary judgment) in terms of rules:
‘…satisfy the court by affidavit … [t]hat the defendant has a bona fide defence
to the action; such affidavit … [s]hall disclose fully the nature and grounds of
the defence and the material facts relied upon therefor…’
[37] It cannot be held that the applicant has demonstrated that the shields raised
by the respondents do not raise any issues for trial. The shields relied upon do
indeed raise factual matters which are only capable of determination by way of the
trial process. Self-evidently, the respondents’ claim to rectify the settlement
agreement will undoubtedly raise trial issues. If the court has some doubt, then the
court should not grant summary judgment.36
[38] The next issue for consideration is whether the two shields raised by the
respondents are bona fide or a sham. This latter determination is difficult to make
when the respondents allege that the applicant deceitfully supplied packaging
material to the first respondent which did not meet the specified specifications.37
[39] In these circumstances, the respondents are not required to demonstrate that
the shields they raised to the summary judgment application will likely prevail. All
they have to demonstrate is that, on the face of it, the defences they have raised are
genuine and bona fide. This, they have done.38
CONCLUSION AND ORDER
[40] The following order is granted:
35 Rule 32(2)(b) of the Uniform Rule Court.
36 First National Bank of SA Ltd v Myburgh and Another 2002 (4) SA 176 (C) para [9].
37 This is undoubtedly a triable issue.
38 Tumileng Trading CC v National Security and Fire (Pty) Ltd. 2020 (6) SA 624 (WCC).
1. The application for summary judgment is refused.
2. The respondents (the defendants in the action proceedings) are given
leave to defend the action.
3. The costs of the application are reserved for decision by the trial court.
_________
E.D WILLE
Cape Town