About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1989
>>
[1989] ZASCA 160
|
|
Delfs v Kuehne & Nagel (PROP) Ltd. (159/89) [1989] ZASCA 160 (28 November 1989)
159/89
/mb
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between
WOLFGANG KARL RUDOLF DELFS
APPELLANT
and
KUEHNE & NAGEL (PROP) LTD
RESPONDENT
CORAM
: BOTHA, VIVIER, KUMLEBEN, EKSTEEN
et F H GROSSKOPF JJA
HEARD
: 16 NOVEMBER 1989
DELIVERED
:
28 NOVEMBER 1989
JUDGMENT
KUMLEBEN JA
/....
KUMLEBEN JA
The trial action, giving rise to the present appeal, was instituted in the
Supreme Court of South West Africa. Initially it involved
a claim and a
counterclaim. Both were based on an oral agreement between the plaintiff, now
the respondent, and the defendant, the
present appellant. For ease of reference,
as extracts from the pleadings are to be quoted, I shall continue to refer to
the parties
as plaintiff, and defendant. In terms of their agreement the
plaintiff, a shipping and forwarding agent, undertook to act as the
defendant's
agent for the shipment of certain game to Saudi Arabia, viz. 50 Oryx gazelle,
100 impala and 2 cheetah.
The plaintiff claimed a nett amount
2/...
2. of R84 446,37 for fees and disbursements together with interest
and costs, alleging fulfilment of its side of the bargain. The
defendant
resisted this claim on a number of grounds. They failed, judgment being granted
in favour of the plaintiff as prayed. This
order was not challenged on appeal
and no more need therefore be said about the main action.
The defendant in turn claimed, as damages, payment of R180 627,45 with
interest and costs. In
his counterclaim, after alleging the express term of
the agreement substantially as stated above, an implied
term was pleaded. In its ultimate form, after
certain amendments, it read as follows:
"It was an express, alternatively implied term of the said agreement that
Plaintiff would see to it that all requirements relating
to the necessary
documentation were complied with to ensure that all conditions contained in a
Letter of Credit
3/...
3.
issued by Barclays Bank were met so that on due presentation of the required
documents the said Bank would honour the said letter,
provided Plaintiff is not
required to produce documents which it knew to be false."
(Though
pleaded, the defendant did not attempt to prove an
express
term to this
effect.) The counterclaim went on to aver that, in breach of its obligations
under the implied term, the plaintiff failed
to ensure that there
was
compliance with all the requirements specified in
the Letter of Credit with the result that it was
dishonoured and the defendant was unable to recover the
amount of $93 250,00 (R180 627,45) due to him under the
Letter of Credit. Accordingly, so it was alleged, the defendant suffered
damages in this amount, for the payment of which the plaintiff
was liable. The
defendant in his plea to the counterclaim denied that any such implied term was
incorporated in their agreement and,
in the alternative, pleaded that,
should
4/...
4. such a term be proved:
"It was an implied term that, if the Defendant failed to put the Plaintiff in a
position to arrange for the transportation of and
to ship animals in accordance
with the terms of the letter of credit and/or to generally comply with the terms
of the letter of credit
, then the term alleged by the plaintiff would not
apply."
Thus, on this disputed issue of the presence and nature
of unexpressed terms in their agreement, the defendant was required. to prove
the implied term pleaded, in which event, by way of confession and avoidance,
the plaintiff relied on a further implied term rendering
the former inapplicable
in the stated circumstances.
The plea to the counterclaim raised a number of other defences. It is
unnecessary to refer to them since at the stage when the matter
was argued
before us the only issues contested, and calling for
5/...
5. decision, were:
(i) Whether the implied term pleaded by the defendant had been.proved.
(ii) If so, whether the plaintiff was in breach of his obligations under the
said term.
(iii) And if so, whether such breach was proved to have been the cause of the
damage suffered by the defendant.
The trial court found for the defendant. It held that the implied term
pleaded had been proved; that the defendant had proved his
case in all other
respects;/ and that in the result the defendant was entitled to judgment on the
counterclaim as prayedU The matter
went on appeal to the Full Court where the
decision of the court a
guo
was reversed. The court of appeal shared the
view that the implied term relied upon by the defendant was established but
decided
- as the plaintiff contended - that as a result of
6/...
6. supervening events it no longer applied. The reasoning
in both judgments will be examined in due course. With leave of this court,
the
matter is now before us on appeal.
At the trial two witnesses were called: Mr Liebich, the manager of the
Windhoek branch of plaintiff's firm, and the defendant himself.
It was common
cause that the former acted throughout on behalf of the plaintiff and was duly
authorised. For convenience I shall
simply refer to him as "the plaintiff". A
great deal of the evidence of both these witnesses canvassed issues which have
fallen away.
I shall therefore restrict a recital of the common cause facts to
those which place the dispute in its setting and which bear upon
the
abovementioned remaining issues.
7/...
7. The plaintiff, as I have said, is a shipping and forwarding
agent. The defendant is an exporter of
inter alia
game and regularly used
the services of the plaintiff for this purpose. In this case the 50 Oryx
gazelle, 100 impala and 2 cheetah
were to be delivered to a buyer in Saudi
Arabia. The sale was in the first instance between the defendant and a London
firm called
Salefour, which in turn had sold to a person in Saudi Arabia.
Payment on behalf of the buyer was to have
been by means of an irrevocable Letter of Credit drawn
on Barclays Bank PLC, London in favour of the defendant
and issued to the Dresdner Bank, Frankfurt, West
Germany. On 7 May 1985
the latter bank notified the
defendant by telex message that the Letter of
Credit
had been established in his favour. This notification
8/...
8.
recommended to the defendant that he examine the Letter of
Credit carefully and stated that:
"As even an insignificant discrepancy may cause difficulties when negotiating
the documents, you are kindly requested to pay particular
attention to the terms
of the L/C; especially, the description of the goods in your commercial invoice
must correspond with the description
in the L/C."
In due course
it arrived. It stipulated, as a prerequisite to its being honoured,
inter
alia
that the
signed invoice, the air waybill and the packing
list
should correspond with the description of the goods in the Letter of
Credit, which set out the numbers of the three species of game
in accordance
with the agreement of sale. In addition the Letter of Credit required veterinary
certificates in respect of the animals
consigned.
9/...
9.
Pursuant to their agreement, the plaintiff set about arranging
for the carrier and preparing the necessary documents for the shipment
of the
animals sold. A carrier, Tradewinds Airways, was commissioned to transport them
by air. At Windhoek the plaintiff completed
the necessary documentation, as far
as he was able to, in anticipation of the actual shipping. He
partially
completed the packing list, omitting details
of the number of crates and
animals in each crate since this information could only be obtained when the
animals arrived and were
ready to be loaded on the aircraft. He was able to
complete the air waybill and the ïnvoice, with the necessary copies, at
Windhoek.
The details of the animals on these documents - as one would have
expected - corresponded with what was sold and stated in the Letter
of Credit.
The necessary
10/...
10. veterinary certificates had been obtained. They referred, in
the case of one certificate, to "50 only Oryx gazelles" and "2 only
Cheetahs"
and, in the case
of the other certificate - somewhat strangely - to 110 impala.
It had been arranged that the animals were to be shipped from the airport at
Mmabatho. The plaintiff, the defendant and a Mr McCullum,
a representative of
Salefour, proceeded there by car from
Windhoek. They arrived during the late afternoon of 29
May 1985 - That evening the Oryx gazelle and the two cheetah arrived from
Windhoek. Some of the former had died in transit. When it
was time to load them
the next morning there were 47 alive and available for dispatch. During the
night 104 impala arrived in a number
of crates from Hoopstad in the Orange Free
State. The
11/...
11.
shortfall and surplus presented a problem. The aircraft, a Boeing 707, was on
the runway ready to be loaded. The fee for the air carrier's
services, an amount
of some 35 000 UK pounds, had been paid by the plaintiff on behalf of the
defendant. The carrier was not prepared
or obliged to delay unduly the time for
take off. It was impracticable to attempt to remove four impala from one or more
of the crates
since any attempt to do so could result in their being injured. It
was impossible to make up the shortfall of Oryx
gazelle before the aircraft
was due to leave: in fact,
as the defendant ultimately conceded, this could
not have been done within a fortnight.
After some discussion, in which all three men took part, it was decided that
the animals on hand were to be shipped, notwithstanding
the discrepancy in
12/...
12. numbers. Once this decision was taken it became necessary to
complete and amend the shi'pping documents to reflect the true position
as
regards the animals to be dispatched. The packing list was completed by
recording the number and description of the animals in
each of the 14 numbered
crates and the correct totals were then reflected on it. The air waybill, which
serves to confirm that a
consignment as described in it was received for
carriage, was amended to reflect the true position. It was required to be signed
by the carrier or his agent and was in fact signed by someone on behalf of
Tradewinds Airways. The invoice was similarly altered
to reflect the actual
consignment. It was manifest, and was appreciated by all concerned, that these
documents no longer corresponded
to the description of the goods in the Letter
of Credit. This the defendant acknowledged. In regard to the Oryx
13/...
13. gazelle, when asked "Did you expect that there then could ever be
documents reflecting, complying with the letter of credit for
50?" he replied "I
did not expect it."
The animals were duly transported to Saudi Arabia and the
Letter of Credit was presented for payment. The bank refused to honour it
on
various grounds. It is unnecessary to refer to each. It relied
inter
alia
on the discrepancies between the specification of the goods in it
and that appearing in
the documents to which I have referred. It was
common
cause that the Bank was entitled to refuse to pay out in the
circumstances; that it was the sole responsibility of the defendant to
obtain
the Letter of Credit in a form acceptable to him; and that the plaintiff was in
no way responsible for ensuring that the correct
number of animals were
available for
14/...
14. shipment.
No payment was forthcoming from the buyer in Saudi Arabia. The defendant
instructed solicitors in
England to institute action against Salefour for
payment of the purchase price. They informed him that this firm was in a parlous
financial state and would not be able to satisfy any judgment obtained. Thus it
came about that the defendant sought to recover from
the plaintiff the
equivalent of the purchase price as reflected in the Letter of Credit. (Being a
claim for damages, one would have
expected that the costs incurred by the
defendant in implementing the sale would have been deducted from the purchase
price, that
is, that his claim would have been restricted to the nett profit to
which he claimed to be entitled. But this is by the way.)
15/...
15. The legal nature of an implied term and the principles to be
applied in deciding whether one has been satisfactorily proved in
a particular
case were thus enunciated by the present Chief Justice in
Alfred McAlpine
& Son (Pty.) Ltd. v. Transvaal Provincial Administration
1974(3) S.A.
506(A) 531 H -533 B:
"In supplying ... an implied term the Court, in truth, declares the whole
contract entered into by the parties. In this connection
the concept, common
intention of the parties, comprehends, it would seem, not only the actual
intention but also an imputed intention.
In other words, the Court implies not
only terms which the parties must actually have had in mind but did not trouble
to express
but also terms which the parties, whether or not they actually had
them in mind, would have expressed if the question, or the situation
requiring
the term, had been drawn to their attention ....
The distinction between terms implied by law and implied terms based upon the
actual or imputed intention of the parties to the contract
was emphasized in
Minister van Landbou-Tegniese Dienste v. Scholtz
, 1971(3) S.A. 188 (A.D.)
at p. 197, and reference was there made to Salmond and
16/...
16.
Williams,
Contracts
, 2nd ed. , pp. 24, 36 and 37, in which the
expression 'implied term' is used to denote the former and the expression 'tacit
term'
to describe the latter .... It is not a matter of great moment what
terminology is adopted but in the interests of continuity I shall
use the
expressions 'implied term' and 'tacit term', as defined by
Salmond and
Williams
.... The Court does not readily import a tacit term. It cannot make
contracts for people; nor can it supplement the agreement of
the parties merely
because it might be reasonable to do so. Before it can imply a tacit term the
Court must be satisfied, upon a
consideration in a reasonable and businesslike
manner of the terms of the contract and the admissible evidence of surrounding
circumstances,
that an implication necessarily arises that the parties intended
to contract on the basis of the suggested term ....The practical
test to be
applied - and one which has been consistently approved and adopted in this Court
- is that formulated by SCRUTTON, L.J.,
in the well-known case of
Reigate v
Union Manufacturing Co
. ,
118 L.T. 479
at p. 483:
'You must only imply a term if it is necessary in the business sense to give
efficacy to the contract; that is, if it is such a term
that you can be
confident that if at the time the contract was being negotiated someone had said
to the parties: 'What will happen
in such a case?' they would have both replied:
'Of course, so-and-so. We did not trouble to say that; it is too clear.'
17/...
17.
This is often referred to as the 'bystander test'."
(In the light
of what is said on the terminology, I shall henceforth refer to the "implied"
term under discussion as a "tacit term".)
A similar statement on the correct
approach to the recognition of a tacit term is to be found in
Techni-Pak
Sales (Pty.) Ltd. v. Hall
1968(3) S.A. 231 (W) 236 - 237:
"The Court has no power to supplement the bargain between the parties by adding
a term which they would have been wise to agree upon,
although they did not. The
fact that the suggested term would haye been a reasonable one for them to adopt
or that.its incorporation
would avoid an inequity or a hardship to one of the
parties, is not enough. The suggested term must, in the first place, be one
which
was necessary as opposed to merely desirable, to give business efficacy to
the contract; and, what is more, the Court must be satisfied
that it is a term
which the parties themselves intended to operate if the occasion for such
operation arose, although they did not
express it ....
That does not mean, in my view, that the parties
18/...
18.
must consciously have visualised the situation in which the term would come into
operation .... It does not matter ... if the negotiating
parties fail to think
of the situation in which the term would be required, provided that their common
intention was such that a
ref erence to such a possible situation would have
evoked from them a prompt and unanimous assertion of the term which was to
govern
it."
To return to the tacit term pleaded in
this
case, up until the argument stage at the trial it read
as follows:
"it was an ... implied term of the said agreement that Plaintiff would see to it
that all requirements were complied with to ensure
that all condïtions
contained in a Letter of Credit issued by Barclays Bank were met so that on due
présentation of the
required documents, the said Bank would honour the
said Letter of Credit."
It, one notes, was unqualified: the
implication being
that in
all circumstances
the plaintif f would
ensure
that the documents accorded wïth the requirements of
the Letter of
Credit. It goes without sayïng that such
a provision would not pass the tests for its inclusion
19/...
19. as a tacit term as laid down by the decisions to which I have
referred. It would in effect make the plaintiff the insurer or guarantor
that
there would be compliance with all the terms of the Letter of Credit. Moreover,
it is to be noted that certain of them have
nothing to do with the plaintiff,
for instance, the provision of a "Airline certificate stating that the carrying
aircraft will not
call at an Israeli airport en route to Saudi Arabia". On the
wording of the tacit term the plaintiff was obliged to ensure that there
was
compliance with this condition as well. Had the notional bystander at the time
of contracting asked the plaintiff whether he
was undertaking to see to it that
the conditions of the Letter of Credit would be in all circumstances fulfilled
even if, for instance,
the reguired number of animals were not available for
shipment, his answer would have been: "The very idea!"
20/...
20. In both the above passages quoted from the two
decisions there is a reference to "imputed knowledge". (See too
Van den Berg
v. Tenner
1975(2) S.A. 268(A) 277). In the present case I am not at all
certain that the possibility of the incorrect number of animals arriving
for
loading was not a foreseeable and contemplated eventuality present to the minds
of the parties at the time of contracting, in
which event any need to impute
such knowledge does not arise. But if such prescience is to be attributed to
them, the
plaintiff's reply to the officious bystander would have
been exactly the same.
The fact of the matter is that the proviso or qualification, omitted from the
term as pleaded,should have been that the obligations
stated in it would only
arise if, or persist for as long as, the defendant
21/...
21. intended to ship the animals as specified in the Letter of
Credit.
At the argument stage counsel for the defendant appreciated the need
for qualification of the term pleaded. The reason for the obvious
and
appropriate one not being appended was no doúbt the fact that the
undisputed evidence on record disclosed that the correct
number of animals had
not been produced by the defendant for shipment. Be that as it may, the proviso
counsel elected to introduce
reads as
follows: "provided Plaintiff is not
required to produce
documents which it knew to be false." This amendment
did not, and could not, overcome the defendant's
difficulty, for two
reasons. First, as a probability a
tacit term in this form would not have
been agreed upon
in preference to the more appropriate one, to which I
have referred.
Second, if one assumes such a tacit
22/...
22.
term with this proviso to have been proved, the facts of this
case establish that it applied - that the proviso became operative.
As the
common cause facts amply demonstrate, at Mmabatho airport the plaintiff
was
required by force of circumstances to produce documents which were
false in a sense that they were incorrect. (Cf.
Breedt v. Elsie Motors
(Edms.) Bpk
1963(3) S.A. 525 (A) 529.) It follows that in terms of the
proviso the plaintiff was relieved of the obligations contained in the
tacit
term. Thus, even on an acceptance of it in its final form, a cause of action
based on it cannot be sustained.
At the hearing in this court
Mr Gauntlett
appeared on behalf of the
plaintiff, replacing Mr
Farlam
, who was not available to argue the
appeal. Mr
Gauntlett
's heads of argument differed substantially
23/...
23.
from those first lodged on behalf of the defendant. His
argument ran along these lines. He submitted - to quote from his heads of
argument - that:
"It is submitted that the Respondent was bound -as both the Trial Court and the
Full Bench found -by a tacit term to see to it that
all requirements relating to
the necessary documentation were complied with, to ensure that all conditions
contained in the letter
of credit were met."
In other words, the
submission was that the stated. obligations were unqualified or at least not
qualified in any relevant respect.
The finding of the Full Court that this tacit
term had subsequently been "qualified" because it became impossible for the
plaintiff
to comply with its terms was, so counsel submitted, incorrect: the
true position being that the alleged obstacle to defendant's claim,
which was
upheld by that court, was supervening impossibility of performance.
24/...
24.
For present purposes it is unnecessary to decide whether the
court a
quo
based its conclusion on an implied qualification (which was
pleaded by the plaintiff) or on supervening impossibility of performance
(which
was not directly or explicitly pleaded by the plaintiff). The factual issue is
the same one, namely, whether it became impossible
for the plaintiff to comply
with its terms. The court a
quo
found this to be the case.
Mr
Gauntlett
disputed this finding. Counsel submitted that, notwithstanding
the
change in the numbers of the animals to be shipped, it
remained possible for the plaintiff (legitimately) to
draw up or complete the necessary documents in such a
way that they complied with the Letter of Credit.
In support of this submission counsel
submitted: (i) that the shortfall in the number of Oryx
25/...
25.
gazelle was to be left out of account in deciding what the
plaintiff could or could not have done to remedy the situation and comply
with
the Letter of Credit since the discrepancy in the documentation arising from the
short delivery of Oryx gazelle was not a ground
re-lied upon by the bank
fór refusing to honour the Letter of Credit; (ii), that, since the impala
sent out-numbered those
specified in the Letter of Credit, 100 impala could,,
and should, have been recorded on the va-rious documents; and (iii) that the
f
act that the
veterinary certificates referred to guantities differ-
ing from those actually sent was of no real consequence.
In the light of the conclusion that the tacit term pleaded (on which counsel
conceded he was obliged to rely), was not proved and,
in any event, that there
was no breach thereof by virtue of the proviso, it is
26/...
26.
strictly unnecessary to state the reasons for rejecting
counsel's submissions on "possibility of performance". However, let me just
say
that, in my view, the short-fall in the number of Oryx gazelle
was
a
discrepancy raised as an objection by the bank; that the plaintiff could not
have drawn up the documénts, particularly the
packing list, (and have
certain of them signed by the carrier or his agent) in such a way that they
would reflect the itrue position
and still comply with the requirements of the
Letter of Credit; and finally that
there were good reasons why the veterinary
certificates
reflecting different numbers, were unacceptable, it
being quite beyond the power of the plaintiff to have
these altered
timeously, even assuming that it was his
duty to have seen to this.
Mr Gauntlett
adopted the heads of argument 27/...
27. originally
lodged on behalf of the defendant but elected not to elaborate on them. These
heads, having submitted that the tacit
term was proved, in order to prove a
breach of its terms, rely on evidence of what took place at Mmabatho when the
problem arose.
Thus it is said that the defendant "was never expressly warned
that to send the animals at hand would jeopardise the negotiability
of the
Letter of Credit"; that "in view of Liebich's obligations it was natural and
probable that the Appellant would rely on him
and his advice relating.to
documentation"; that "Appellant would have stopped'the shipment had he known the
Letter of Credit might
not be met"; that "Appellant was guided by Liebich on
what course to take when the numbers of animals available for shipment did
not
comply with the number mentioned in the Letter of Credit"; and, finally, that
"Liebich never informed Appellant that
28/...
28.
he (Liebich) could not fulfil his obligations
vis-a-vis
Appellant relating to the documentation."
Whether these allegations, which were no doubt the source of the defendant's
sense of grievance, were proved in evidence is an open
question. This, however,
is by the way, since any obligations imposed on the plaintiff - directly or by
implication - by these facts
are not contained in the tacit term: if they give
rise to a cause of action, it has simply not been pleaded.
It remains to refer briefly to the judgment of the trial court. It relied on
certain "surrounding circumstances" to conclude that
the tacit term in its
amended form was proved. These circumstances were, as enumerated in the
judgment:
29/...
29.
"(i) The documents in this instance were prepared by Liebich with the exception
of one or two which were not;
(ii) in this instance Liebich accompanied the Defendant to Mmabatho, partly to
see to it that all the documentation was in
order;
(iii) Liebich knew that the Defendant was
very
concerned about transactions involving
Letters of Credit because he
knew that if
all the reguirements were not complied with
then the Bank wouldn't honour such a Letter of Credit. This was told to him
by Defendant.
(iv) In this case Liebich knew about an unfortunate experience that the
Defendant had before with another firm of forwarding
agents.
(v) Liebich also knew that the Defendant was concerned because the transaction,
in this case, involved Saudi Arabia, and he furthermore
knew of the Defendant's
attempts to be present in Saudi Arabia when the consignment of animals was
off-loaded. He also knew that
these attempts were unsuccessful.
(vi) Liebich had seen a letter written by the Dresdner Bank to the Defendant
wherein attention was drawn to the fact that even an
insignificant discrepancy
between the Letter
30/...
30.
of Credit and the documents required by it may have an effect on the
negotiability of the Letter of Credit. It is probable that the
Plaintiff made a
copy of this letter before going to
Mmabatho.
Against this background it is also necessary to look at the evidence of Liebich.
Liebich stated unequivocally that he was far more
knowledgeable about the
preparation of the documents in respect of Letters of Credit than was the case
with the Defendant. He also
knew how very important it was that the documents
should be correctly completed and, so he stated, he knew that the Defendant was
relying on him to ensure that that was done. This assurance was given by Liebich
on many occasions. Later cm in cross-examination
the evidence of Liebich was
that he accepted that the Defendant looked towards him to make sure that the
documents were, in compliance
with the Letter of Credit so that the Defendant
would be paid the money secured by such Letter. That this was the position was
also
confirmed by Liebich on more than one occasion during his evidence in
cross-examination. Liebich further stated that when problems
in connection with
a Letter of Credit arose, the Defendant came to him to attend to the matter
because that was the Plaintiff's department.
He also accepted that the Plaintiff
was responsible for looking after the documents and making sure that they would
comply with the
Letter of Credit."
Assuming all these facts to
have been common cause or
31/...
31.
proved, the flaw in this reasoning, with due respect, is that
they are consistent with the plaintiff having undertaken to see to it
that the
documentation complies with the Letter of Credit "provided that the correct
number of animals are produced for shipment".
But these circumstances do not
warrant the inference that a tacit term having the effect of making the
plaintiff a guarantor for
the payment in terms of the Letter of Credit was ever
agreed upon.
In the light of the above conclusions it is
unnecessary to consider whether the causative element
in plaintiff's cause of action was proved.
The appeal is dismissed with costs.
M E KUMLEBEN JUDGE OF APPEAL
BOTHA )
VIVIER ) EKSTEEN ) - Agree F H GROSSROPF)