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[2014] ZAWCHC 114
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Transnet Limited T/A Transnet Frieght Rail v SA Metal And Machinery CO (Pty) Limited (A 439/2013) [2014] ZAWCHC 114 (7 August 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
CASE
NO: A 439/2013
DATE:
07 AUGUST 2014
Reportable
In the matter
between:
TRANSNET LIMITED
t/a TRANSNET FREIGHT RAIL
….......................
Appellant
And
S A METAL &
MACHINERY CO (PTY)
LIMITED
..................................
Respondent
JUDGMENT: 07
August 2014
DAVIS
J
Introduction
[1] This appeal
essentially concerns the status of a sale between appellant and
respondent of two lots of marine fenders which took
place by way of
an online auction on 26 November 2009.
[2] Appellant
advertised two lots of fenders for sale. One lot consisted of twenty
fenders and the other lot consisted of fourteen
fenders. Respondent
bid for these fenders.As the highest bidder, it was successful and
immediately paid the necessary sale price,
being R 200 000 for the
lot of twenty fenders and a further R 140 000 for the lot of
fourteen fenders. The full purchase price
amounted to R 445 740,
consequent upon the addition to the bid amounts of a buyer’s
premium of 15% and value added tax.
It was common cause
that appellant was unable to deliver all thirty-four fenders.
Respondent accepted delivery of fourteen fenders
and sued appellant
for the delivery of the balance of twenty fenders.
[3] Initially
respondent claimed an order directing appellant to deliver to it the
balance, namely 9 x 10 m fenders and 11 x 6
m fenders. During the
course of the trial, it amended its particulars of claim by seeking
an order which defined the criteria
which the fenders were required
to meet in order to comply with respondent’s version of the
contract. These fenders had
to be inflated, reasonably usable and
equipped with nets and transmitters.A transmitter is an item of
equipment which is employed
to control the pressure inside the fender
and which is not visible from outside.
[4] Appellant did
not dispute this definition of the contractual criteria. It pleaded,
inter alia, that the respondent had refused
to collect and remove
nine of the fenders that formed part of the contract and which were
still available for collection at the
Saldanha Bay Harbour. It also
undertook to repay respondent R 50000 plus VAT together with the
buyer’s premium of R 51 000
together with VAT. Later it
tendered to deliver fourteen fenders and repay an amount for the
remaining six fenders. These tenders
notwithstanding, respondent
continued to contend that it was entitled to the performance by
appellant of its contractual obligations
to deliver the full merx.
[5] The core of its
argument before the court a quo was that it was not liable for
respondent’s claim because of an agreed
exclusion from
liability, pursuant to the provisions of Clause 11 of the
‘auctioneers terms and conditions’.
[6] This clause
reads thus:
‘All goods are
sold “AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT RECOURSE”.
Illustrations, pictures or videos
posted on the Site are for the
convenience of the buyers only.
The Auctioneer and,
where applicable, Goindustry DoveBid has used its reasonable
endeavours to ensure that the description of each
lot(s) appearing on
the Site are accurate, but the buyer relies upon such description as
its own risk. Buyers should satisfy themselves
prior to the sale as
to the condition of the lot and should exercise and rely on their
judgment as to whether the lot accords with
its description at their
own risk.
Subject to the
obligation accepted by Goindustry DoveBid and, where applicable, the
Auctioneer under these Terms and Conditions
neither the seller nor
Goindustry DoveBid nor, where applicable, the Auctioneer nor any of
their respective employees or agents
are responsible for errors of
description or for the genuineness for authenticity of any lot and no
warranty whatever is given
by Goindusty DoveBid or, where applicable,
the Auctioneer, or their respective employees or agents or the seller
to the buyer in
respect of any lot and any express or implied
conditions or warranties are hereby excluded to the greatest extent
permitted by
law.’
[7] Before the court
a quo, appellant contended that the clause was a form of voetstoots
clause which provided that neither appellant,
the auction company nor
any of their employees could be held liable for errors of description
or for the genuineness or authenticity
of either of the two lots
which had been sold to respondent.
[8] In his judgment,
Blignault J interpreted Clause 11 by drawing a distinction between
the description of the merx and the presence
or absence of defects.
In his view, Clause 11 did not save the appellant from the failure to
deliver the merx as that had been
advertised. Accordingly, he
ordered the appellant to be directed to deliver to respondent 9 x 10
m fenders and 11 x 6 m fenders
inflated, reasonably usable with nets
and transmitters purchased by plaintiff from defendant on auction on
26 November 2009.
[9] With the leave
of the Supreme Court of Appeal, the appeal against the order has come
before this court.
Appellant’s
case
[10] Mr Arendse, who
appeared on behalf of the appellant, contended that Clause 11 went
beyond a traditional voetstoots clause.
In his view, the clause
included two further provisions, both of which were critical to the
disposition of this case. In the
first place, the clause provided
that a purchaser, such as respondent, was required to satisfy itself
prior to the sale as to the
condition of the lot and to exercise its
own judgment as to whether the lot, which it had examined, accorded
with the description
contained in the advertisement. Furthermore,
neither the seller, the relevant auctioneer nor the respective
employees could be
held legally liable for any errors of description
or authenticity of the lot which had been advertised.
[11] Accordingly, Mr
Arendse insisted that when Mr Barnett, a director of respondent,
inspected the fenders on 30 November 2009
and found deflated bags on
the ground and not the thirty four fenders that he thought respondent
had bought, he should have undertaken
this inspection prior to
attempting to conclude the contract, or, at the very least, prior to
respondent’s payment to appellant.
In short, Mr Arendse
submitted that where a purchaser, such as the respondent, had an
opportunity to inspect the property before
buying it and nevertheless
bought it with patent defects, there was no recourse against the
seller. In this connection Mr Arendse
relied on Odendaal v Ferraris
2009 (4) SA 313
(SCA) at para 35:
‘As a general
rule, where a buyer has an opportunity to inspect the property before
buying it, and nevertheless buys it with
its patent defects, he or
she will have no recourse against the seller. It is apparent\t that
the respondent discovered the water
damage immediately after taking
occupation – and thus that he would have done so had he asked
for access at the time of his
inspection. He has himself to blame
for failing to do so and cannot hold his failure against the
appellant.’
Evaluation
[12] Mr Arendse
appear to accept that if clause 11 was indeed no more than a
voetstoots clause, it would have a restricted ambit.
As Ogilvie
Thompson J (as he then was) said on behalf of a full bench of this
Division in Cockraft v Baxter
1955 (4) SA 93
(C) at 98 B-C:
‘There however
appears to me to be no sufficient warrant for expanding the ambit of
a mere agreement to buy voetstoots (without
more) beyond its
recognised sphere of relieving the vendor from liability for latent
defects to the extent of precluding the buyer
from relying upon any
misrepresentation whatever as to the condition of the article sold.
If the vendor wishes to guard himself
against all liabilities for all
representations as well as for all defects he should, in my opinion,
incorporate into the sale
an appropriate condition on their behalf.’
[13] Mr Arendse’s
argument however was that the clause extended beyond the ambit of a
voetstoots clause set out in Cockraft
v Baxter, supra in that it
placed an obligation upon the purchaser, being the respondent, to
satisfy itself prior to the sale as
to the condition of the lots.
Further, as a corollary thereto, the seller could not be held liable
for errors of description or
for the authenticity of any lot. Hence,
the legal classification of clause 11 and its precise legal ambit lay
at the heart of
the resolution of the present appeal.
[14] Central to the
finding of Blignault J was a distinction which the learned judge drew
between the description of the merx and
the presence or absence of
defects. This distinction finds support in Freddy Hirsch Group
(Pty) Ltd v Chicken Land (Pty) Ltd
2010 (1) SA 8
(GSJ) at para 41,
namely a distinction must be drawn between defects in the goods sold
and the seller’s failure to perform
in terms of the agreement
between the parties; that is a failure to deliver the merx as
promised in terms of the contract.
[15] In relation to
Mr Arendse’s attack on the distinction drawn by Blignault J
recourse by appellant to Odendaal, supra is
also unhelpful. That
case turned on defects, whether latent or patent, in respect of a
merx being immovable property which the
seller that undertaken to
transfer to the purchaser. In particular, the question arose in
this case about water damage which
the purchaser only discovered
after taking occupation but which would have been ascertained earlier
had he asked for access to
the property for the purpose of his
inspection of the property.
[16] In the present
case, the question arises as to whether Clause 11 saves the seller,
in this case appellant, from delivering
that which was the merx as
opposed to defects in respect of the merx.
[17] I accept that
the clause is hardly the epitome of clarity and that it requires
interpretive work in order to give it a reasonable
meaning. The key
question is whether the reasonable meaning to be given to the clause
extends so far beyond a traditional voetstoots
clause with its
accepted scope and can be held plausibly to amount to the imposition
of a condition that only upon inspection of
the lots by the
purchaser, could the actual merx be determined.
[18] Mr Arendse
resisted the suggestion that, on this latter construction, the sale
of the lots amounted to a form of lottery, in
that a purchaser would
not know what it had actually purchased until such time as it
inspected the lot, irrespective of the description
of the merx in
advertisements which in the first place had prompted the purchaser to
enter into contractual arrangements with the
seller. For example,
albeit that the advertisements sought to sell thirty four fenders
upon inspection, it may well have turned
out that only five fenders
were on offer. To that Mr Arendse’s response was effectively
that until such time as the purchaser
has satisfied itself as to the
number of fenders on offer, it should not have entered into the
contract and, if it so acted, it
did so at its own risk.
[19] This
interpretation seeks to expand Clause 11 way beyond the traditional
voetstoots clause, which is manifestly the meaning
set out in the
first paragraph of Clause 11. This interpretation could also blur
the distinction between a merx which is the
subject of the contract
and defects pertaining to that merx, a distinction which is made
apparent in the case law to which I have
made reference already. See
Odendaal, supra at para 35-36 and Freddy Harsch Group (Pty) Ltd,
supra at para 41.
[20] It must follow
that a reasonable reading of Clause 11 supports the basis of the
judgment of Blignault J. To the extent that
there were any defects
in the lot, Clause 11 might come to assistance of the appellant.
But Clause 11 could not constitute a
defence to the non-delivery of
thirty four fenders as advertised nor that the fenders would not
accord at all with the description
as set out in the advertisements.
An advertisement of an auction clearly has legal significance. See
Shandel v Jacobs and another
1949 (1) SA 320
(N) at 326. The
interpretation as contended for by Mr Arendse would reduce the
importance of the advertisement of the lots to
no more than a
possible but not even probable offer of a particular merx.
[21] To the extent
that the argument that the significance of the advertisement is
rendered nugatory by Clause 11 has any merit,
the pleadings in this
case are dispositive. In respondent’s amended particulars of
claim the following appeared:
‘4.1 Annexure
“PC1” to “PC4” were all printed on 10
December 2009, therefore subsequent to the auction
having taken place
and the marine fenders being sold.
4.2 For that reason,
annexure “PC2” indicates that the bidding had closed and
annexure “PC3” indicates that
the marine fenders had been
sold and what the selling price of each of lot 602 and 603 was.
4.3 However, save
for the various indicates of the way in which the auction process had
progressed, these annexures all formed part
of the advertisement for
the auction from the outset, and the marine fenders as described and
depicted therein constituted the
subject matter of the auction and
the resultant sale agreement.’
[22] The reference
in respondents amended particulars of claim to PC 2 is to the two
lots namely of fourteen fenders and twenty
fenders to which I have
referred earlier. The document PC 3 is of particular significance.
It describes the one lot as 10,6
marine fenders (fourteen) inclusive
of transmitter and fender nets and the other as 6,5 m marine fenders
(twenty) inclusive of
transmitter and fender nets. In both cases the
document says ‘assets sold’, in the case of the 10 x 6 m
for R 140
000 and in the case of 6 x 5 m for R 200 000.
[23] The defendant’s
plea responds with a specific paragraph which reads thus:
‘9. The terms
governing the auction, and thus the basis on which the parties
contracted, are the following:
9.1 Annexure “PC
5” to the Particular’s of the Plaintiff’s Claim
(“the auctioneer’s terms”);
9.2 The terms
contained in the participation form, a copy of which participation
form is annexed hereto marked “P1”;
and
9.3 The general
terms and conditions applicable to the use of the auctioneer’s
website (“the general terms and conditions”),
a copy of
which general terms and conditions are annexed hereto marked “P2”.
10. Save as
aforesaid, the contents of this paragraph are admitted.’
[24] When the
pleadings of both parties are read together it would appear that,
save for a reference to Clause 11 by way of a more
general mention of
the general auctioneer’s terms and conditions, the appellant
accepted the balance of respondent’s
plea. This acceptance
included, inter alia, the averment that the two sets of assets, that
is the two sets of marine fenders had
been sold for R 140 000 and R
200 000 respectively and that both had been sold inclusive of
transmitters and fender nets. Thus
appellant accepted that the
contract included a particular merx which was described clearly in
PC3. In other words, the appellant
did not place in issue the
passage in respondent’s particulars of claim that ‘the
marine fenders as described and depicted
therein (PC3) constituted
the subject matter of the auction and the consequent result of a sale
agreement.
[25] Respondent
pleaded that the agreement of sale was subject to the auctioneers
terms which are contained in the participation
form in the general
terms and conditions. This implies clearly, as it admitted the
balance of the plea, that respondent did not
dispute the essentialia
of the agreement of sale for neither the participation form nor the
general terms and conditions dealt
therewith. When the plea is read
as a whole, it is clear that what had been agreed between the
parties, upon the closure of the
pleadings, was that the respondent
was the seller and appellant was the purchaser, the sale price was
for R 340 000 for the two
lots of tenders and that the merx was the
‘marine fenders as advertised’.
[26] It is common
cause that appellant did not fulfilled these contractual obligations
and that it did not delivered the property
which conformed
substantially with the contractual description nor I might add to the
quantity thereof. For analogous cases see
Fitt v Louw
1970 (3) SA
73
(T); Schmidt v Dwyer
1959 (3) SA 896
(C); Marais v Commercial
General Agency Limited
1922 TPD 440
at 444-445.
[27] While
respondent raised an alternative claim for payment for damages, it
was clear, as a result of the evidence of Mr Conradie
who testified
on behalf of respondent, that there were thirty two marine fenders,
fitted with the features contained in the description
and depiction
of the merx which were currently in use in Saldanha Bay in addition
to two fenders available Coega which could be
delivered by the
appellant to the respondent.
[28] In the result
therefore the appeal is dismissed with costs.
DAVIS J
BAARTMAN J
And
DOLAMO
J concurs