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Orange River Export (Pty) Ltd v TDC International Fruit Frais du Monde Inc (82/03/01)  ZANCHC 2;  1 All SA 764 (NC); (21 January 2005)
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Verslagwaardig: JA / NEE
Sirkuleer onder Regters: JA / NEE
Sirkuleer onder Landdroste: JA / NEE
IN THE HIGH COURT OF SOUTH AFRICA
(Northern Cape Division)
Case Nr: 1082/2003
Case Heard: 26/10/2004
Date delivered: 21/01/2004
In the matter:
Orange River Export (Pty) Ltd Plaintiff
TDC International Fruit Frais du Monde Inc Defendant
The plaintiff is Orange River Export (Pty) Ltd (Orex Ltd) a duly registered company with limited liability with its principal place of business at Zwartbooiberg, Kakamas, Northern Cape. The defendant is TDC International Fruit Frais du Monde Incorporated (TDC Inc), a Canadian Company incorporated as such in terms of the Company Laws of that country, Boisbriand, Quebec, Canada.
Orex Ltd is an exporter of table grapes from South Africa to overseas destinations and TDC Inc is an importer of table grapes into Canada from various countries. Irrespective of the dates on which, the number of and nature of the agreements that the parties entered into, it was common cause that at all material times hereto Orex Ltd was represented by Mrs Santa Spangenberg (Mrs Spangenberg) and TDC Inc by Mr Mamoud Dhanji (Mr Dhanji).
Orex Ltd originally claimed from TDC Inc payment in the amount of US $935 646,75 for the goods, more fully described below, sold and delivered plus interest on this amount at the rate of 15,5 % per annum from 26 March 2003 to date of payment.
Orex Ltd’s recomputation of its damages is contained in Exhibit “C1” and set out as follows:
“Plaintiff’s (Orex Ltd’s) calculation of cartons:
First agreement 43 200 cartons:
Invoices B1 to part B13 US $ 293 455.00
Less 30 % US $ 88 036.50
(1) US $ 205 418.50
Balance in excess of 43 300 cartons until prior to 3/1/2003
Invoices B13 (in part) to B33 (including B14A) US $ 518 793.75
Less 30 % US $ 155 638.12
(2) US $363 155.63
Proceeds of invoices subject to market protection
Invoices B34-B38 = 18 000 cartons (Calculated at
Price per carton as per amended DP7 to Defendant’s
Plea, ie US $418 374.45 of 138 125 cartons) US $ 54 521.19
(3) US $ 54 521.19
Total of (1), (2) and (3) US $ 623 095.32
Less: Payment US $ 80 361.00
Subtotal US $ 542 734.32
30 % of loose of profit calculated on US $267 873.66
as per defendant’s amended annexure “DP10” US $ 80 362.10
Subtotal US $ 462 372.22
Less: Further calculations on basis of a finding that the
3 January agreement amount to a consignment sale
agreement (for balance of 18 000 cartons):
10 % commission on (3) supra US $ 5 452.12
Defendant’s expenses on (3) supra at 18 000/138 125
Cartons of total expenses of US $405 343.72 as per
Exhibits W and Y
Total amount due to Plaintiff US $ 404 097.04”
Orex Ltd in addition pleads that the relevant terms of the agreement between the parties were:
That Orex Ltd would sell and deliver table grapes of particular specifications and would do so on the dates set out in Annexure “A3” to its particulars of claim. Annexure “A3” is a schedule which depicts the following information;
That the prices stipulated in Annexure A3 (above) constituted the minimum gross price (MGP) per carton;
That the delivery of the grapes from the growers’ (Orex Ltd’s) packhouses would take place free on board (FOB) at Cape Town harbour and that it was Orex Ltd’s responsibility up to that stage to ensure that the grapes comply with the agreed Orange River Producer Alliance (ORPA) standards for the export of grapes, from whence the risk and liability would pass to TDC Inc;
That TDC Inc would make 50 % payment on the prices reflected in para 5.1 (above) upon delivery of the grapes to the shipping agent in Cape Town and that the balance (of 50 %) would be paid within 45 days after the delivery of the grapes in Montreal;
That a letter of credit (referred to in the correspondence as “L/C”) would be obtained by TDC Inc and issued to Orex Ltd to guarantee unpaid vouchers.
Orex Ltd pleads further that it “has performed its obligations in terms of the agreement as supplemented from time to time and has sold and delivered cartons of grapes on the dates and in the volumes and at the price as set out in its invoices, copies of which are annexed, marked Annexures “B1” to “B38”, the contents of which are again to be read herewith and incorporated herein as if specifically repeated and pleaded. The Defendant (TDC Inc) has failed to perform its obligations in that:
It has failed to provide the Plaintiff (Orex Ltd) with the agreed letter of credit;
It has failed to pay 50 % of the aforesaid invoice amounts upon the delivery of the grapes;
That (TDC Inc) has only paid the amounts of:
US $ 57 745.00 on 30 December 2002 and
US $ 22 616.00 on 9 January 2003;
Despite the expiry of 45 days since the delivery of the goods in Montreal, being 8 February 2003, TDC Inc has failed to make payment of the remaining balance of US $935 646.75, despite repeated demands.”
TDC Inc admits that it has only paid Orex Ltd the amounts set out in para 6 above (total US $80 461) but denied any further indebtedness to the company. TDC Inc initially counterclaimed for breach of contract for US $189 040,32. In the further several alternatives it claimed damages in the amount of US $139 975,18 or US $438 055,18 or US $ 73 912,81 or US $123 951,13 or US $760 482,88 plus interest at the rate of 15,5 % per annum a tempore morae to date of payment.
It was common cause that:
On the 20th October 2002 the parties concluded an agreement in terms of which Orex Ltd would sell and deliver to TDC Inc 21 600 4,5kg of Sugraone grapes. This was the “First Agreement”;
On the 14th November 2002 the parties entered into a further agreement in terms of which Orex Ltd would sell and deliver to TDC Inc an additional quantity of 21 600 packaged in 4,5 cartons of Sugraone grapes. This is the “Supplementary Agreement” to the First Agreement;
In the premises the parties were ad idem that Orex Ltd sold to TDC Inc and the latter purchased from the former an amount of 43 200 cartons of Sugraone grapes at the fixed prices set forth in Orex Ltd’s invoices which were appended to its particulars of claim marked “B1” to “B14”;
It was also common cause that during the period 12 December 2002 to 26 January 2003 Orex Ltd shipped 39 containers from Cape Town to TDC Inc via the New York port and therefrom transported same by road to Montreal;
The parties are agreed that the schedule which was marked Exhibit “A” correctly reflects a summary of the particulars of these shipments. This agreement eliminated the need to tediously prove the veracity of the source documents from which the 39 spreadsheet were compiled. The spreadsheet depict the chronological golden threat which each of the 39 containers followed with reference to: invoice dates, the identity of the producers, the packhouse dates, the packing list dates, the inspection dates, the depot and port particulars and the cold storage dates.
TDC Inc has pleaded that on the 3rd January 2003 it and Orex Ltd agreed that the balance of the grapes being 94 925 cartons of grapes (the 138 125 less 43 200 cartons alluded to in para 8) would be consigned by Orex Ltd to it subject to a “Market Protection Commitment”. This is the Second Agreement – but not to be confused with the Supplementary Agreement to the First Agreement.
A portion of the dispute (Orex Ltd’s fix agreement claim vis-à-vis TDC Inc’ Second Agreement) was resolved at the pre-trial conference. The Minutes emanating therefrom records in part that Orex Ltd admits that the grapes “invoiced to the defendant (TDC Inc) subsequent to the 3rd January 2003 were delivered to (TDC Inc) subject to the market protection commitment from the plaintiff (Orex Ltd)”. It was accordingly common cause that this admission by Orex Ltd covers the last 18 000 cartons of grapes delivered. This, from Orex Ltd’s perspective, is consonant with the revised claim as reproduced in Exhibit C1 – at para 4 (above) under the subheading: “Proceeds of invoices subject to market protection” and the later entry: “Less: Further calculations on basis of a finding that the 3 January agreement amounts to a consignment sale agreement (for balance of 18 000 cartons.” A “consignment sale agreement” is synonymous with a “market protection agreement.”
Consequently, the parties are at variance on whether the remaining 76 925 cartons of grapes were sold at a fixed price (on Orex Ltd’s version) or subject to a market protection commitment (if TDC Ltd has its way).
The parties could initially not agree on the definition of “market protection commitment” either. According to Orex Ltd the phrase bears the meaning that says in the event of TDC Inc being able to sell the grapes for a price lower than the amount invoiced by Orex Ltd, the invoiced price was to be adjusted or cascaded downwards to the price received by TDC Inc. However, should TDC Inc realize a higher price than invoiced then the invoiced price would not concomitantly adjust upwards. TDC Inc avers, per contra, that “market protection commitment” means that TDC Inc would sell the grapes at the best achievable price and account to Orex Ltd in respect of the proceeds realized less 10 % commission payable to TDC and less the expenses that TDC Inc has incurred. For reasons that will emerge later the definition propounded by Orex Ltd is problematic and makes no business sense regard being had to the turbulence of the Canadian grape market from week to week as can be established from the numerous e-mails and on a conspectus of the surrounding circumstances on how the parties conducted their affairs.
TDC Inc in addition pleads that on the 5th February 2003, whilst Mrs Spangenberg was in Canada, the parties entered into a Salvage Agreement in terms of which TDC Inc would sell the admittedly defective grapes at the best achievable price in Canada and account to Orex Ltd in respect of the proceeds less 10 % commission to TDC Inc and less expenses incurred by TDC Inc. TDC Inc avers further that in terms of the Salvage Agreement, the existence of which is strenuously disputed by Orex Ltd, if its accounting showed a shortfall then Orex Ltd would pay to it (TDC Inc) such shortfall forthwith but if the accounting showed a surplus TDC would be liable to pay such surplus to Orex Ltd forthwith.
Adv A F Arnoldi, SC, (assisted by Adv N Davis) conceded that Mrs Spangenberg admitted, deliberately and on legal advice, on behalf of Orex Ltd the defective quality of some of the grapes, and having inspected the grapes over several days at the end of January/beginning of February 2003, she estimated that 25 % of the exported grapes had been adversely affected by brown stems or brown stemming and ancillary defects. When she testified Mrs Spangenberg unequivocally made a further concession. She said that having had regard to Dr Jacobus Steenkamp’s (TDC Inc’s expert’s) report she accepted in fact that as high as 30 % of the exported grapes were affected by the brown stems. Mr Arnoldi submitted that in the light of these concessions by his key witness and the fact that no apparent inadequacies having been detected in the cold storage temperates (“the temptales”) of the containers, Exhibit “O”, Orex Ltd was constrained to recalculate its claim in the manner set out in para 4 (above).
TDC Inc’s has a counterclaim against Orex Ltd as already pointed out. The first of these is founded on the Salvage Agreement for the payment of US $109 167.72 This claim represents the shortfall after the deduction of the 10 % commission and expenses from the proceeds of the sale of 138 125 alleged defective cartons grapes some samples of which Mrs Spangenberg inspected in several stores in Canada for her sojourn there from 28 January until 5 February 2003. See TDC Inc’s amended accounting to Orex Ltd marked Annexure “DP7” dated 8 November 2004 reproduced below at para 74 of the judgment.
Alternatively to the first counterclaim (para 15 above) TDC Inc counterclaims for loss of profits on both the First Agreement, the Supplementary Agreement and for the shortfall on the Market Protection Agreement. If TDC Inc were to succeed in this counterclaim the damages would have to be based on two legs:
The First Leg: The amount claimed is US$183 656.26 which represents TDC Inc’s loss of profits which it alleges it has suffered as a result of Orex Ltd’s delivery of the 43 200 below standard cartons of grapes. The aforesaid sum is arrived at in the manner depicted in Annexure “DP8” (below) as amended on 4 November 2004:
“CALCULATION OF DEFENDANT’S DAMAGES ON 43 200 CARTONS OF GRAPES PURCHASED IN TERMS OF THE AGREEMENT OF 19 OCTOBER 2002 AS SUPPLEMENTED BY THE AGREEMENT OF 14 NOVEMBER 2002.
Presumed Sales to COSTCO 924 585.37
(43 200 x 4.5/8.2 x 39)
Less: Costs of Sales (424 875.95)
(285 453 x 1.488425)
(See Note 2)
Less: Costs that Defendant would have (151 200.00)
Incurred had it repacked for COSTCO
(43 200 x 3.50)
See Note 3)
Less: Proceeds of Sale of the defective grapes (194 761.97)
(622 719.83 x 43200/138 125)
(See Note 4)
Plus: Payment made to plaintiff 119 611.48
(80 361.00 x 1.488427)
(See Note 5)
CAD $ 273 358.93
Defendant’s Loss of Profit US $ 183 656.26
(See Note 6)
Note 1: The grapes were bought in ,5 kg cartons. The price of COSTCO was given as CAD $39 for a 8.2 kg carton.
Note 2: The price that Defendant (TDC Inc) would have had to pay to the Plaintiff (Orex Ltd) had the goods been in a proper and agreed condition.
Note 3: The cost of repacking from 4,5 kg boxes to 8.2 kg boxes amount to US $2.35. This translates at CAD $1.488427 to CAD $3.50.
Note 4: The total sales of all the grapes are as set out in the summary of Exhibit “E” (revised) and amount to US $ 418 374.45 which converts to US $622 719.83 at an exchange rate of 1.488427. The ratio 43200/138125 is calculated on the basis of the cartons sold in terms of the 19/20 October 2002 and 14 November 2002 agreements (43 200 cartons) to the total number of cartons sold by the plaintiff to the defendant (138 125 cartons).
Note 5: Payment was made by the defendant to the plaintiff in US $. The US $80 361 payment coverts to CAD $119 611.48. The payments were made on 30 December 2002 and 9 January 2003. (See paragraph 7.3 of the plaintiff’s particulars of claim).”
The Second Leg: TDC Inc claims US$20 915.95 which represents its alleged shortfall after the deduction of 10 % commission and expenses from the proceeds of the sale of the balance of 94 925 cartons (138 125 less 43 200 cartons) of grapes. The computation is as reproduced below in Annexure “DP9” as amended on 8 November 2004:
“DEFENDANT’S ACCOUNTING TO PLAINTIFF IN TERMS OF THE SECOND AGREEMENT
(Also called the “market protection agreement” or the “consignment agreement” concluded on 3 January 2003)
Proceeds of Sale of the defective grapes 287 523.58
(See Note 1 and Note 2)
Less: 10 % Commission (28 752.36)
Less: Expenses (279 687.17)
(See Note 3)
Shortfall ie amount payable by the plaintiff to the
Defendant 20 915.95
(US $ 20 915.95 converts to CAD $31 131.86 at an exchange rate of1.48827)
Note 1: Number of cartons sold over and above those sold under the first and supplementary agreements of 19/20 October 2002 and 14 November 2002.
Total number of cartons delivered 138 125
Less: Containers delivered under fixed price
Agreement of 19/20 October 2002 and
14 November 2002 43 200
Note 2: Proceeds of the sale of all the grapes amount to US $418 374.45. An apportionment is then made (94 925/138 125) to establish the sales for these 94 925 cartons. (See Exhibit “E”). This amounts to US $287 523.00.
Note 3: The total expenses amount to US $405 343.72 (See Exhibits “W” and “Y”). The apportionment (94925/138125) thereof to the 94 925 cartons amounts to US $279 687.17.”
In the final (the second) alternative to the main counterclaim TDC Inc counterclaims for US$267 873.66 in respect of its alleged loss of profits suffered as a result of Orex Ltd’s professed delivery of the defective grapes. TDC Inc bases its claim in this regard on Orex Ltd’s contention that 120 125 (which is 138 125 less 18 000) cartons of grapes were purchased at the fixed invoice price as well as 18 000 cartons at invoice price which has been reduced to the actual price at which TDC Inc sold the grapes. The breakdown is to be found in Annexure “DP10” infra:
“CALCULATION OF DAMAGES
(This calculation of damages suffered by the defendant (TDC Inc) due to the delivery of defective grapes, is on the basis that the Court finds in plaintiff’s (Orex Ltd) favour that all the grapes were sold to defendant (TDC Inc) by the plaintiff (Orex Ltd) as per invoice prices (B1-B38), save for those invoices issued after 3 January 2003. The latter sales are assumed for the purpose of the calculation to be governed by “market protection”, as understood by Mrs Spangenberg.
Presumed Sales to COSTCO 2 493 919.21
(116 525 white seedless grapes x4.5/8.2x39)
(see Note 1) 24 695.12
(3 600 red grapes x 4.5/8.2 x12.50)
Less: Costs of Sales (1 208 958.09)
(US $ 812 238.75 x 1.488427)
(See Note 2)
Less: Costs of Repacking for COSTCO (407 837.50)
(116 525 x 3.50)
Less: Proceeds of actual sale of the defective (541 569.01)
Grapes (Exhibit “E”)
(622 719 x 120 125/138 125)
Plus: Payment 119 611.48
(80 361.00 x 1.488427)
Less: Sales of defective grapes delivered under (81 150.82)
(622 719.83 x 18 000/138 125)
CAD $ 398 710.39
(CAD $ 398 710.39 translates to US $267 873.66)
THE SALVAGE AGREEMENT
Counsel on either side are ad idem, and I agree with them, that a decision in favour of TDC Inc on the Salvage Agreement will dispose of all the alternative counterclaims discussed in paras 16 and 17 (above).
TDC Inc pleads the Salvage Agreement in these terms:
“6.9 On or about 5 February 2003 and in Montreal, Canada, the plaintiff, (Orex Ltd) represented by Ms Spangenberg, and the defendant, (TDC Inc) represented by Mr Dhanji, concluded an oral agreement (‘the salvage agreement’).
To the extent relevant for present purposes, the salvage agreement expressly, alternatively by implication, further alternatively tacitly, provided that:
The plaintiff and the defendant agreed that the grapes, which the plaintiff delivered to the defendant pursuant to the abovementioned agreements, did not comply with the abovementioned and/or agreed standards.
The defendant would sell such grapes on behalf of the plaintiff in Canada at the best achievable price.
The defendant would account to the plaintiff in respect of the proceeds of such sales, less expenses, less 10 % commission, such commission being the defendant’s usual, alternatively a reasonable, renumeration for the defendant’s selling of such grapes on behalf of the plaintiff.
If such accounting showed a shortfall, the plaintiff would be liable to pay such shortfall to the defendant forthwith; and if such accounting showed a surplus, the defendant would pay such surplus to the plaintiff forthwith.
The defendant has duly disposed of such grapes in accordance with the salvage agreement.”
TDC Inc pleaded that Orex Ltd breached the First Agreement, as supplemented by the Supplementary Agreement by delivering grapes to it that were defective in one or more or all of the following respects: (a) their berries were not green but amber; (b) their stems were brown brittle and/or dry; (c) their bunch compactness, bunch sizes, overall conditions and crop distribution were below the standards agreed upon; (d) the undersized berries exceeded the allowed tolerance of 12 %; (e) Orex Ltd delivered the grapes in Cape Town in an unsuitable condition which caused their failure to meet the required standards in Canada, despite being conveyed from Cape Town to Canada in the normal time and under normal temperatures and conditions, etc.
Adv A P Joubert SC (with him Adv H H Steyn) for TDC Inc has argued that on Orex Ltd’s own admission 30 % of the grapes were defective and did not comply with the agreed standards. He submitted that the evidence has established that as high as 70 % of the grapes were affected mainly by brown stemming. This, he says, constituted malperformance on the part of Orex Ltd which entitled TDC Inc to cancel that very agreement which Orex Ltd relied upon to the end. Counsel went on to say that the effect of this breach by Orex Ltd is that the substratum of its claim has fallen away, and that Orex Ltd was in substance reduced to being a defendant in TDC Inc’s counterclaim. Hence the birth of the Salvage Agreement.
Notwithstanding the concessions made by Orex Ltd concerning the partial defect to some grapes caused mainly by brown stemming it is important to record in brief, through the eyes of the witnesses, how this highly specialized industry operates in the export of its table grapes.
Orex Ltd called as one of its witnesses Mr André Nel an inspector at the Perishable Products Export Central Board (PPECB). This statutory body was created in terms of the Agricultural Products Standards Act No 199 of 1990 and is tasked with the monitoring of the export of perishable agricultural products. PPECB is also certified to ensure that such products comply with international standards. In terms of the said Act a product will only be approved for export if it complies with the standards regarding the qualities prescribed in section 4(3)(a)(ii) of the Act. In addition the grapes have to comply with the protocols prescribed by such exporters and/or producers themselves. These protocols require even more stringent standards than the statutory minimum standards. The ORPA standards already alluded to is one set of such standards.
Mr Nel conducted inspections of the grapes in question destined for export during the 2002/2003 grape picking season in the Orange River area. Mr Joubert did not seriously criticize any aspect of Mr Nel’s evidence particularly in the light of Orex Ltd’s concession that something, for which Orex Ltd was responsible, went wrong in the chain of processing: between the picking of the product in Kakamas and delivering in port at Cape Town.
This is a résumé of Mr Nel’s evidence. He holds a National Technical Diploma in Agriculture and is an agricultural inspector. He has been employed as a Regional Manager at Citrusdal and Northern Cape in the Department of Agriculture. He was trained and acquired extensive experience in the inspection, classification and rating of agricultural products (including grapes) and how these are to be packed and stored for agricultural purposes. He went on to say:
The grapes are picked between first light and ± 08H00 daily. They are then taken to a “pre-cooler” at a packhouse. There, the temperature of the grapes (then still contained in picking bins) are maintained in a humid atmosphere at ± 18 d/Celsius. Thereafter the grapes are moved into the packhouse on conveyer belts to sorting tables. The bunches of grapes are then cut and shaped and sorted in colour-coded bins according to size. Tables of cutters and sorters are supervised by table overseers. The grapes are then sorted, which sorting and packing into boxes are overseen by a “fixed checker”.
At all times the packhouse-manager also exerts his control and monitoring. As inspector, Mr Nel testified, he moved through the pre-cooler and the sorting-lines approximately three times per day during which he gains an overall impression of the condition of the grapes harvested for the day. All grapes harvested for the day are packed during that day. He conducts a number of inspections whenever sufficient pallets have been accumulated for inspection.
The procedure for an inspection is as follows: The pallets to be inspected are identified. Four cartons (constituting a 2 % sample) are randomly selected from each pallet. The grapes are inspected in an inspection room. Cartons are individually weighed to ensure the nett weight equals 4,5 kg. Each individual bunch of grapes in a case is then separately inspected. The inspection (at eye level) consists of checking for colour, bunch compactness, disease and appearance. A sugar test is then also conducted. The testing consists of picking the least ripe bunch on appearance, stripping it of its berries, pressing the berries through a cloth and conducting a laboratory test on the juice obtained. An extension of this testing to determine an acidity ratio also determines the ripeness of the berries. Berry-size and stragglingness are also assessed.
Mr Nel further testified as regards the tolerances of the quality of grapes which are prescribed and allowed by the ORPA standards and how pallets are disqualified for non-compliance. He associated the amber berries with the brown stemming. It became common cause that the OPRA Standards had a zero tolerance for brown stems. He also testified that the grapes that were inspected and certified by PPECB officials and loaded in inspected and sealed containers complied with the ORPA and statutory standard prescribed for export table grapes. In the light of the concessions already made by Orex Ltd I will assume in Mr Nel’s favour that the undisputed defects later discovered had not manifested themselves sufficiently or at all on the occasion of his inspection.
Mr Francois Smit also testified for Orex Ltd. He has been in the employ of PPECB for a considerable period and has been involved in inspections of perishable products since 1974. The monitoring of the South African grape export industry falls under his overall scrutiny.
Mr Smith also examined some grapes from a bundle of photographs which Mr F D Deneau, TDC Inc’s expert, had taken in Canada in the course of inspecting Orex Ltd’s grapes. The evidence shows that Mr Deneau took the photos shortly after the delivery of the 39 containers in Montreal. Mr Smit confirmed the presence of dry and browning stems. As to the remainder of the defects he testified that a photo, as a two dimensional picture, is an inappropriate method of adjudicating or examining grapes. Grapes have to be physically handled and inspected. Referring to the red grapes specifically, he says their colour can only be judged by holding the grape by the stem at eye-level with the grapes hanging in their natural position and not by laying it open on a table. Grapes which on the photographs may appear not to qualify for export might fall within the acceptable percentage of tolerance when evaluated as part of a pallet or container or shipment as a whole. He identified some organic grapes that he believed to be those of Valentin Boerdery included in the bundle (which were not exported by Orex Ltd). Mr Deneau testified that the Valentin Boerdery plastic wrapper was merely used to demonstrate how bad Orex Ltd’s grapes would look on the shelves.
Mr Gerhard van der Westhuizen was one other witness called by Orex Ltd to give expert evidence. He was employed as an assessor by PPECB since 2002. He floundered and froze during his testimony. His performance in the witness box could be ascribed to the fact that he was hugely inexperienced when he conducted his inspection of the exported grapes. In fact, he may not have had much or any prior experience. Mr Arnoldi, correctly, pointed out that Mr van der Westhuizen’s evidence should be ignored. However, discarding his evidence has consequences. He was unquestionably the weakest link in plaintiff’s case. The performance of his task left a whole lot to be desired. The result is that he did not or could not detect any defects in the grapes. In the light of his poor showing it is not surprising that Mrs Spangenberg made the concessions aforesaid.
Mr Arnoldi has pointed out that Mr André Spangenberg, Mrs Spangenberg’s brother-in-law, was called to dispel the suggestion that the professed poor condition of the exported grapes might be attributable to hail damage in the region. This witness was even less helpful than Mr van der Westhuizen to Orex Ltd’s case. He was highly suspicious of and avoided answering questions until he had an explanation why the question was being asked or until he thought he worked out why the question was asked. Although he anticipated questions even then he was evasive in his responses. He was irritated by trivialities. He certainly was not frank. I attach no weight to his evidence. In any event, the issue of whether there was hail and if so whether it affected the quality of the grapes is immaterial to the decision I came to. Relying on Mrs Spangenberg’s denial I will accept that there was no hail damage on the exporting producers’ farms.
The evidence of Mrs Santa Spangenberg is pivotal to Orex Ltd’s claim and indeed central to the entire case. She was the marketing manager for Orex Ltd and negotiated the agreements with Mr Dhanji of TDC Inc. She was a much better witness than Mr van der Westhuizen and her brother-in-law, Mr André Spangenberg. It was common cause that the agreements between the parties were negotiated principally by e-mail correspondence. There was also regular telephonic contact between the two. According to Mrs Spangenberg it is precisely some of these telephonic conversations which resulted in the shipment of the volumes of grapes which were in excess of the initial 43 200 cartons. Mrs Spangenberg calls the excess shipments an extension of the First Agreement (as supplemented) and negotiated between the 14th November 2002 and the 1st January 2003.
Mr Arnoldi argued that TDC Inc never rejected the shipment of the excess grapes (in excess of 43 200 cartons), and neither did TDC Inc cancel the First Agreement despite having pleaded cancellation in para 6.7 of its amended plea. TDC Inc pleaded in this regard that:
“6.7 The defendant (TDC Inc) duly cancelled the First Agreement as supplemented by the Supplementary Agreement on or about 5 February 2003, as it was entitled to do.”
It is significant to note how the shipments were made. It must be borne in mind that 43 200 containers of grapes – which is equal to 12 containers – were exported by consent between the parties. However, on board the ship Safmarine Letaba were an extra 5 (five) containers viz containers 13 to 17 shipped on the 27th December 2002. This pushed the number of cartons up to 58 935. On the 31st December 2002 on board the MSC Veronique 12 more containers (containers no’s 18-30 excluding container 21) were shipped escalating the total cartons to 102 115 and therefore 58 915 in excess of the original 43 200.
Mrs Spangenberg has conceded under cross-examination that the “Market Protection Commitment” in reality constituted a “Consignment Agreement” on the basis suggested by TDC Inc. Mr Arnoldi has consequently also conceded that the definition proffered by TDC Inc in this regard prevails (see para 12 above). This concession encompass only what Mrs Spangenberg termed “the balance of the grapes” shown in the spreadsheet appended to Orex Ltd’s pleadings. In terms of Annexures B34 to B38 only 18 000 cartons would therefore have been shipped in January 2003 subject to the Market Protection Agreement. See para 4 (above) respecting to Orex Ltd’s recalculations.
Mrs Spangenberg accused TDC Inc of being over-fastidious concerning the quality of the grapes whereas they have never had similar complaints from other importers in Europe, America, the Far East etc. I don’t have to say anything in this connection other than that a different crop may have been exported, under different circumstances, to different consumers, under different requirements, which issues are not germane to this enquiry. Mrs Spangenberg was also critical of the cold storage facilities used by TDC Inc visited by her in Canada as not measuring up to the South African standards and reckoned that this contributed to the deterioration of the grapes. Mr Dhanji and Mr Deneau took issue with her on this. The problem is that Mrs Spangenberg was not conversant with the Canadian conditions. She departed from a scorching Kakamas on the 28th January 2003 and arrived in a Montreal that was minus 16 d/Celsius.
Mr Joubert has sought to impugn Mrs Spangenberg’s credibility as a witness by questioning her closely on why her company claimed the full amount notwithstanding the fact that she knew and personally determined that 25 % of the grapes were defective. Her justification seems to boil down thereto that there existed between the parties a Fixed Price Agreement and that she was accordingly entitled to make the claim although she was not adamant that the initial claim was not an error.
Mr Arnoldi urged upon me to accept Mrs Spangenberg’s explanation that the cartons which were in excess of the 43 200, over which there is no dispute, were delivered pursuant to an oral agreement extending the First and Supplementary agreements. He says that Mrs Spangenberg was not cross-examined on the oral agreement and that her evidence therefore remained unchallenged. He has relied for this submission on the following dictum in President of the Republic of SA and Others v South African Rugby Football Union and Others  ZACC 11; 2000 (1) SA 1 (CC) at p36J(para 61) – p38B (para 65) whereat the unanimous court held:
“61. The institution of cross-examination not only constitutes a right, it also imposes certain obligations. As a general rule it is essential, when it is intended to suggest that a witness is not speaking the truth on a particular point, to direct the witness's attention to the fact by questions put in cross-examination showing that the imputation is intended to be made and to afford the witness an opportunity, while still in the witness-box, of giving any explanation open to the witness and of defending his or her character. If a point in dispute is left unchallenged in cross-examination, the party calling the witness is entitled to assume that the unchallenged witness's testimony is accepted as correct. This rule was enunciated by the House of Lords in Browne v Dunn (1893) 6 R 67 (HL) and has been adopted and consistently followed by our courts. (R v M 1946 AD 1023 at 1028; Small v Smith 1954 (3) SA 434 (SWA) at 438E-H).
62. The rule in Browne v Dunn is not merely one of professional practice but 'is essential to fair play and fair dealing with witnesses'. It is still current in England and has been adopted and followed in substantially the same form in the Commonwealth jurisdictions.
63. The precise nature of the imputation should be made clear to the witness so that it can be met and destroyed, particularly where the imputation relies upon inferences to be drawn from other evidence in the proceedings. It should be made clear not only that the evidence is to be challenged but also how it is to be challenged. This is so because the witness must be given an opportunity to deny the challenge, to call corroborative evidence, to qualify the evidence given by the witness or others and to explain contradictions on which reliance is to be placed.
64. The rule is of course not an inflexible one. Where it is quite clear that prior notice has been given to the witness that his or her honesty is being impeached or such intention is otherwise manifest, it is not necessary to cross-examine on the point, or where 'a story told by a witness may have been of so incredible and romancing a nature that the most effective cross-examination would be to ask him to leave the box'.
65. These rules relating to the duty to cross-examine must obviously not be applied in a mechanical way, but always with due regard to all the facts and circumstances of each case. But their object must not be lost sight of. Its proper observance is owed to pauper and prince alike.”
Mr Joubert has maintained that TDC Inc’s case has been conducted on the basis that 30 % or more of the brown stems to the grapes vitiated the entire agreement(s) and that there was no need for Mrs Spangenberg’s detailed cross-examination on this point. In my view the cross-examination by plaintiff’s counsel of Mrs Spangenberg to establish the existence of the Salvage Agreement is clearly and strongly indicative that TDC Inc contradicted Mrs Spangenberg’s averments or at the very least the perpetuation of that agreement to the end was disputed.
Mr Arnoldi has contended that by virtue thereof that neither the First nor Supplementary agreements were cancelled, and the fact that the extent of the brown stemming of the grapes has been determined at 30 % therefore the remainder of the grapes, comprising 70 % thereof, are good. Mr Arnoldi also submitted that TDC Inc should have repacked the grapes because, he says, Mr Dhanji never testified that it was impossible for his company to do so and that his only explanation was that it would have been uneconomical to repack, having regard to Mr Dhanji’s averment in evidence that the grapes had virtually no shelf life. Mr Arnoldi also suggested that the non-existent shelf life was not pertinently raised in the e-mails and this fact was not put to Mrs Spangenberg. In my view in the context of this case the difference between “Impossible to repack” and “uneconomical to repack” is more imagined than real. These were colossal amounts of grapes. A scenario was sketched that the grapes could cover a quarter of a sports field (rugby or soccer) and reach about 2,3 meters high. Mr Dhanji did not have storerooms of his own. He subcontracted the distribution of the grapes.
Short shrift can be made of the issue underlined (in para 37 above) by reference to an e-mail from Mr Dhanji addressed to Mrs Spangenberg dated the 14th January 2003. He writes:
“(T)he grapes packed for Cosco, as you can see the stem have this progressive disease (4 days after). We have also noticed that its starting from the secondary stem going up”.
Mr Dhanji explained that this e-mail shows that the grapes had virtually no shelf life. Whether Mr Dhanji was correct or not is another matter. The fact remains that he pointed out that certain problems (disease) manifested themselves after four days.
It is opportune with the aid of all the aforegoing information to tackle the question of the existence or non-existence of the Salvage Agreement which has been pleaded by TDC Inc as reflected in paras 18 and 19 (above). Upon Mrs Spangenberg’s departure from Canada on the 5th February 2003 Mr Dhanji dispatched this e-mail to her on the same day:
“We have started to move the merchandise. I would like to confirm our agreement:
For the good grapes it is preferable that we maintain the stock and get the higher price, as leverage for all the poor quality grapes that we have in our hand.
I will check pallet by pallet before shipping to classify the good from the poor condition.
Final account will be as soon as the customer accept the product and the invoice.
Final account by pallet ID.
? have notice the following: packing mistake as mix quality in the same box, regular grapes pack as large, dry stem, poor Thompson and regal, amber grapes. Mix pallets with good boxes and bad boxes (I also saw today that I have a pallet of Punets). For the sugarone we have good and poor (quantity to be determined only at pre-shipping visual inspection).
We will ship for the best market value.
You have also seen the different quality available in the market and the quality required by Costco as we have failed to respect our programme and this without any penalty except the loss of business. I have also committed to you to try to get the programme accepted again even if we have to lower the price because of lower standard, as it will still be in everybody best interest. My meeting with the buyer is schedule for Friday (dinner).
I have provided you with USDA report on daily prices for the different quality.
In general our strategy is based on the fact that market will be cleaned up from poor grapes, pushing the good grapes to go up.”
Mr Joubert has argued that Mrs Spangenberg has not proffered any explanation why she failed to deny in her responses the contents of Mr Dhanji’s e-mail confirming that a Salvage Agreement has been entered into. Mr Arnoldi has countered that she has done so. He in turn refers to an e-mail to Mr Dhanji dated the 19th February 2003. (It appears that from Canada Mrs Spangenberg departed to Europe and only returned to South Africa around the 18th February 2003.) The e-mail states:
“Thank you for the breakdown you sent to me. If I look at the figures I am more than concerned that I got problem on my hands with the situation as it is now.
These grapes you got on hand is now already 3 months old. It worries me that you cannot sell the grapes as we discussed during my week of visit to you. Up till now it has not gone according to what you told me. It is not a matter of dumping the grapes, that is very easy now that we are worried because the grapes cannot be stored longer.
This is my biggest concern. The stems will not get any better but will deteriorate and get more and more dry by day. You plainly waited too long. This we have discussed during my visit but we as producers was not aware that the grapes have to be stored and sold you estimate the market will be okay.
We are not used to this sort of operation. We haven’t negotiated on this issue. We have finalized a price ex CT. We have given you the volume out on a regular basis but it was your choice to store because of market values.
All the producers need their money now. You have to admit both of us have to compensate this matter. Up till so far we haven’t got any payment from you so far only the earliest vessels the advance.
I cannot see prices on your spreadsheet so far therefore please sit with Alou and finalize this for me and sent it through and give me a full plan of action what will happen in the next two weeks.
I am really unhappy that you do not perform as you promised me. Hanneke promised me that you can handle the volume but give me the assurance of that. I have to have a meeting with the growers on Thursday afternoon SA time and have to explain what is going on. Everybody is panicking at the moment of not getting their money and I have to give the answers.
Please assure me that this will not happen.” (My underlining)
Mrs Spangenberg says in her quoted e-mail that she and Mr Dhanji have not “negotiated on this issue”. The issue possibly being the Salvage Agreement. It was clearly understood during the trial that “Salvage Agreement” is a legal concept but the parties clearly understood what the one was conveying to the other. They understood that a scheme had to be devised, to use Mrs Spangenberg’s words in the underlined sentence, whereby it should not be “a matter of dumping the grapes” but to sell them at the best achievable price. Mrs Spangenberg says “we have finalized a price ex Cape Town”. This was apparently a reference to the Fixed Price Agreement. An appraisal of the evidence thus far evaluated is fairly plain that the initial agreement did not remain static:
Mr Dhanji’s proposal in an e-mail dated 16th October 2002 that TDC Inc make: “Payment of 40 % of MGP (Minimum Guaranteed Price) at loading in Cape Town and 60 % 45 days after arrival” was changed at Mrs Spangenberg’s instance in an e-mail on the same date. She wrote: “I want to alter the payment percentage to 50 % 45 days after arrival of the fruit in Canadian port”. This was agreed to;
There was a Supplementary Agreement, as supplemented;
There was also a Second Agreement; and
There was a shift from the First Agreement as supplemented to a Market Protection Commitment in respect of 18 000 of the grape cartons in access of the initial 43 200.
I am at a loss on why Mrs Spangenberg says they have not “negotiated on this issue”. She may not have left South Africa to Canada to negotiate but, on her own admission, some of the concerns that Mr Dhanji expressed to her in at least two e-mails prior to her departure concerning the substandard quality of the grapes were confirmed by her upon her inspection in loco. If she discovered that about 25 % of the grapes were defective surely the probabilities are that there would have been negotiations of some kind. She says Mr Dhanji did not “perform as he promised” her. It is highly unlikely that he could have promised to pay 100 % of the price in the face of Orex Ltd’s admitted malperformance. What stands out is that Mrs Spangenberg is completely silent in her aforequoted e-mail on the question of her estimated 25 % defective grapes.
Mr Joubert has a point when he says that some of Mrs Spangenberg’s correspondence confirmed portions of what Mr Dhanji has written concerning the Salvage Agreement. For instance on the 20th February 2003 Mrs Spangenberg wrote to Ms Eunice Laatz, TDC Inc’s agent based in Polokwane, amongst other things that she is concerned that what she and Mr Dhanji discussed some three weeks ago relating to the strategy to move the volumes of grapes is not materializing. She tells Ms Laatz that it appears that Mr Dhanji does not care what prices the grapes are fetching as long as he gets rid of them. The point here is if a minimum guaranteed price agreement is in existence then it should not be Orex Ltd’s concern for what prices the grapes are disposed of.
Mr Dhanji, with some “aggro”, responded immediately (on 19/02/2003) to Mrs Spangenberg’s letter and said:
“First of all, when the first seven containers arrived, all the grapes had condition problem. As a result of this we had to cancel our programme for condition and standards.
And all following shipment had the same condition problem, however there was mix quality, some good, some substandard.
So at arrival your grapes were worth nothing. So it wasn’t to store for better market but to sell for the highest value of the product and selling without return of product (refusal).
As for storage, we had a programme with you on Sugarone for 30 000 cartons. When you ask Hanneke to ship me my reply to you was for as long as I have good grapes that I can store.
As for product now, by maintaining the product at zero, we are holding them to the same level. As for the Valley Pride even with humidity, the stems are brown, and wet bag (condensation can be an issue of claim) that (is) why I wanted to change the bags. It is not because of decay. As for red globe and Larochelle, and Thompson your company just did this type of shipment with a full knowledge of it (two bunches per bag).
We have also a pallet of punets (I have refused from the beginning this packing). We have grapes that were pack for Alfred Price, this is your US organic client.
We also have the freight invested (with) all the cost and all market consequences on our shoulder.
I will put all final price and we will evaluate the final outcome to allow us to make you a provision(al) payment.”
I mention for the record that it was evident from the e-mails that an Afrikaans-speaking exporter (Mrs Spangenberg) and a French-speaking importer (Mr Dhanji) did not always write the most elegant English but one does not throw away the apple for the core.
There are therefore two diametrically opposed versions on whether the minimum guaranteed price agreement remained in existence to the end as contended for by Orex Ltd or whether a Salvage Agreement was negotiated or came into existence as urged for by TDC Inc. In Stellenbosch Farmer’s Winery Group Ltd and Another v Martell et cie and Others 2003 (1) SA 11 (SCA) the Court held at 14I-15E:
“5. On the central issue, as to what the parties actually decided, there are two irreconcilable versions. So, too, on a number of peripheral areas of dispute which may have a bearing on the probabilities. The technique generally employed by courts in resolving factual disputes of this nature may conveniently be summarized as follows. To come to a conclusion on the disputed issues a court must make findings on (a) the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities. As to (a), the court's finding on the credibility of a particular witness will depend on its impression about the veracity of the witness. That in turn will depend on a variety of subsidiary factors, not necessarily in order of importance, such as (i) the witness' candour and demeanour in the witness-box, (ii) his bias, latent and blatant, (iii) internal contradictions in his evidence, (iv) external contradictions with what was pleaded or put on his behalf, or with established fact or with his own extracurial statements or actions, (v) the probability or improbability of particular aspects of his version, (vi) the caliber and cogency of his performance compared to that of other witnesses testifying about the same incident or events. As to (b), a witness' reliability will depend, apart from the factors mentioned under (a)(ii), (iv) and (v) above, on (i) the opportunities he had to experience or observe the event in question and (ii) the quality, integrity and independence of his recall thereof. As to (c), this necessitates an analysis and evaluation of the probability or improbability of each party's version on each of the disputed issues. In the light of its assessment of (a), (b) and (c) the court will then, as a final step, determine whether the party burdened with the onus of proof has succeeded in discharging it. The hard case, which will doubtless be the rare one, occurs when a court's credibility findings compel it in one direction and its evaluation of the general probabilities in another. The more convincing the former, the less convincing will be the latter. But when all factors are equipoised probabilities prevail.”
Mrs Spangenberg was extremely angry that Mr Dhanji withheld payment on the balance of the grapes after having made two initial payments. She said it in so many words that she lured him to South Africa to have him arrested in order to pressurize him to make payment. This arrest has nothing to do with Mr Dhanji’s initial arrest to found jurisdiction. When asked whether she could have had Mr Dhanji arrested for fraud if he paid his alleged debt Mrs Spangenberg said she would not have done so. People do not commit criminal fraud by not paying a debt. A number of inaccuracies, I put it no higher, appeared from Mrs Spangenberg’s statement to the police. I am not surprised that the criminal charges against Mr Dhanji have been withdrawn. This conduct by Mrs Spangenberg does tarnish her credibility somewhat.
Mr Dhanji noticed immediately upon delivery of the grapes that they are defective. He enlisted the help of Mr Francois Deneau, a director of F & G Inspections Inc of Montreal, and an expert inspector/assessor in the fruit industry in Canada who then had 6 years experience as such and 13 years experience with fresh produce. Mr Deneau inspected samples of the 39 containers between the 8th January 2003 and the 24th February 2003 and confirmed the defect. He testified to that effect.
Mr Dhanji also subjected the grapes for testing by Prof Ralph Estey of the Department of Science, McGill University. Prof Estey did not testify. The results of his examination therefore remained hearsay despite the protestations of Mr Arnoldi; although I cannot imagine how those results, if confirmed, would have remotely assisted Orex Ltd’s case. However, what this conduct by Mr Dhanji shows is that he considered that there was something untoward with the grapes and sought confirmation from outside. In fact Orex Ltd’s own expert, Mr Smit, also conceded the defects.
Mr Arnoldi suggested to Mr Dhanji that in mitigating its own losses TDC Inc should rather have dumped the grapes in the sea (figuratively speaking) rather than attempting to mulct Orex Ltd in proliferating losses by disposing of the grapes at uneconomic prices. Mr Dhanji’s response was that he had already incurred costs and continued to do so and had to put up his best endeavours to recoup some of his loss and that the only vehicle through which he could do so was by means of the Salvage Agreement.
It is significant to note that notwithstanding Mrs Spangenberg’s refutation of the existence of the Salvage Agreement she readily conceded during cross-examination that TDC Inc was entitled to a handling fee for separating the good grapes from the defective ones, and also conceded that TDC Inc was entitled to its usual 10 % commission for selling the grapes (as has been the case since 16/10/2002). The handling fee, Mr Dhanji testified, was US$1.00 per carton. Consequent upon all these concessions by Mrs Spangenberg and further under cross-examination (below) very little if anything separates Mrs Spangenberg’s evidence from that of Mr Dhanji on what consequences flowed from the defective grapes, as can be discerned from the exchanges now following.
Mr Joubert here cross-examines Mrs Spangenberg (the translation is mine for the benefit of the Canadian company – the Afrikaans text appears from the record pp277(17) – 279(14)):
“Q: You are aware that some considerable expenses have been incurred in the disposal of these massive amount of grapes, is that correct?
R: That is correct.
Q: … Mr Dhanji will testify that the first group (of people) that he paid are attached to Sat Logistics, in Cape Town?
R: That is correct.
Q: Then he had to pay for the consignment from Cape Town to Canada, you agree?
R: That is correct.
Q: The two companies were Mearsk Sealand and MSC Shipping Company, this relates to the voyage from Cape Town to its destination in Canada?
R: That is correct.
Q: In other words at the New York port they are transferred to be transported by road to Canada. Mr Dhanji also had to pay the so-called customers brokers in New York for the clearance. Does this ring correct to you?
R: That is correct.
Q: Then a lot of storage costs are involved, to mention but a few: Virgin, ITL and Frigal and others, Mondo as well, he had to bear the storage costs in Canada?
R: That is correct.
Q: Then in several instances payment had to be made for the delivery of the products to purchasers, does this also sound correct to you?
R: That is correct
Q: Due to the fact that the grapes arrived in a bad condition which necessitated the separation of the good from the bad, in truth a method had to be devised for every consignment which would otherwise not have been necessary, considerable handling costs were incurred in the process, do you accept that as reasonable?
R: Yes, I can accept that as reasonable.
Q: There was a lot of expenditure, which eventually exceeded the income, in addition to the US$80 000,00 (the actual amount is US$80 361,00 – see para 4 under “Calculation – less payment) which has already paid to you. That sound acceptable or do you think the proposition is totally unacceptable?
R: Maybe I cannot comment thereon, because I was not involved in the procedures and the duration (“die duurte” – less likely – “how expensive” or the “prices”), but I can accept the costs, that he incurred costs (on his part) to transport the products from one point to the next.
Q: Yes? … R: Hundred percent.
Q: That is a fair answer on your part …”.
In criticizing Mr Dhanji Mr Arnoldi maintained that on being cross-examined he did not deny that the extension of the agreements, interchangeably referred to as “orders”, were made telephonically as testified to by Mrs Spangenberg. Mr Dhanji indeed said he could not recall such conversations. No specific dates or exact terms were put to him by Mr Arnoldi. This is consonant with Orex Ltd’s particulars of claim that the dates were unknown. In fact Mr Dhanji stated that Mrs Spangenberg’s version on this point may be correct. One has to juxtapose these answers with what Mr Dhanji said in re-examination by Mr Joubert when alerted to certain facts to avoid a skewed picture. This is what transpired (this part is not a translation):
“Q: Then there is the version of Ms Spangenberg that says that telephonically she agreed with you that the extra containers that were sent were, she contacted you regarding those extra containers sent, it would be on the basis of an extension of the old Fixed Price Agreement, that is what she said. We know there is no E-Mail to confirm that, but she said telephonically she did so. Was there such an agreement?
R: There, it was impossible to have such an agreement because I brought the issue of the storage, you know, prior to the shipping, okay prior to the shipping, she knew the market, the weather, it was in January - high market, February - we store. We bring them back in many months. Those factors were already known to her, okay, and also on her E-Mail 78, okay, on the 18 December when I told her, I said you know only companies with programme and quality will maintain pricing. So it means that you know the trade there handicaps. You know it (is) to be stored, you need a storage situation where you know you are going be able to trade in the right market position.
Q: But the issue goes even further than that. What Ms Spangenberg says there was an agreement for 6 extra containers on the Letaba and 12 containers on the Veronique. The agreement was this, you buy it out right for the prices as per invoice. Was that ever agreed? R: No.
Q: Would you have entered into such an agreement?
R: I would have not, no.
Q: And why not?
R: Because knowing for a fact you know that the February market would be low, buying the extra volume at that high price and the reason why I bought those 6 first containers was for a specific window market position and then we added 6 more and it was still in that window fertility, but further than that I mean it was impossible to go into that Fixed Price Agreement.
Q: Well, the implication of what she says in her testimony, the agreement that she contends for, is that you will take the risk, because you buy it out right, it becomes yours. Do you understand the implication of what she said? --- R: Yes.
Q: Now did you do that? --- R: No.”
From what emanates from the aforegoing passage it is evident that Mr Dhanji did not fully appreciate the import of his answer to the effect that Mrs Spangenberg’s version concerning the oral extension of the agreement could be correct. It happens frequently that it is suggested to a witness that because he/she cannot recall an event taking place therefore he/she cannot dispute the fact that the occurance took place. The witness sometimes feels constrained to agree with the proposition. Sometimes erroneously. The evidence and the e-mail exhibits bundle shows that Mrs Spangenberg and Mr Dhanji exchanged e-mails voraciously – sometimes up to three each way per day. I therefore find it incomprehensible that there is not so much as a mention in either party’s e-mails concerning Mrs Spangenberg’s alleged oral extension of the contract whereas the First and the Supplementary agreements as further supplemented were all negotiated and confirmed by e-mail. That is why the existence of the Salvage Agreement commends itself to me because it is consonant with the manner in which the parties conducted their affairs. This observation must be read in conjunction with what I have already said concerning the Salvage Agreement.
I am satisfied that the objective facts and surrounding circumstances already alluded to, notwithstanding Mrs Spangenberg’s assertion that the Salvage Agreement was not negotiated or entered into, show that there was at the very least an implied agreement to salvage or rescue what was left of the then existing agreement or there was an acquiescence thereto. In McWilliams v First Consolidated Holdings (Pty) Ltd 1982 (2) SA 1 (A) at 10E-H the Court held:
“I accept that 'quiescence is not necessarily acquiescence' (see Collen v E Rietfontein Engineering Works 1948 (1) SA 413 (A) at 422) and that a party's failure to reply to a letter asserting the existence of an obligation owed by such party to the writer does not always justify an inference that the assertion was accepted as the truth. But in general, when according to ordinary commercial practice and human expectation firm repudiation of such an assertion would be the norm if it was not accepted as correct, such party's silence and inaction, unless satisfactorily explained, may be taken to constitute an admission by him of the truth of the assertion, or at least will be an important factor telling against him in the assessment of the probabilities and in the final determination of the dispute. And an adverse inference will the more readily be drawn when the unchallenged assertion had been preceded by correspondence or negotiations between the parties relative to the subject-matter of the assertion. (See Benefit Cycle Works v Atmore 1927 TPD 524 at 530 - 532; Seedat v Tucker's Shoe Co 1952 (3) SA 513 (T) at 517 - 8; Poort Sugar Planters (Pty) Ltd v Umfolozi Co-operative Sugar Planters Ltd 1960 (1) SA 531 (D) at 541; and of Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co Ltd 1963 (1) SA 632 (A) at 642A - G.) I have no doubt that appellant's silence and inaction after receipt of the letter justify an inference adverse to him.”
Mr Arnoldi has also submitted that one of the biggest credibility failures of Mr Dhanji related to his evidence on the calculation of TDC Inc’s income and expenditure pertaining to the grapes. He says that although the amounts erroneously included in the expenses bundle are not large, regard being had to the total amount, the fact that Mr Dhanji recalculated the amounts after it was exposed in cross-examination that two or three transaction not related to this case were attributed to Orex Ltd, does not detract from the fact that he put two versions before the court.
This submission does not do justice to Mr Dhanji. It does not take account of the fact that already in his evidence-in-chief Mr Dhanji, who holds a B.Comm degree, pointed out mero motu that one of the items charged to Orex Ltd has to be disallowed because it has already been accounted for or incorporated in an earlier entry. When the case stood down so that Mr Dhanji could effect the recalculation after discarding the transactions erroneously included as pointed out in cross-examination by Mr Arnoldi he, once again, after revisiting the source documents, discovered an additional two or three transactions erroneously included. At no stage did I understand Mr Arnoldi to suggest that the now discounted transactions or amounts were fraudulently included by Mr Dhanji to inflate his claim. However that may be, any imputation to that effect would be way off the mark.
Concerning the evidence of Mr Deneau, briefly this addition. The ORPA Standards were unknown to him when he inspected Orex Ltd’s grapes in Montreal. He used the Unifruco Standards emanating from the Western Cape, South Africa. He drew up detailed score charts in respect of each of the 39 containers upon inspection. These score charts were modelled on the Capespan (RSA) score charts with which he was familiar as he had inspected their fresh produce over several years. In the end Mr Arnoldi conceded that irrespective of which standards or protocols were used by this witness the result relating to the brown stems remains the same – zero tolerance.
Mr Deneau also testified that during Mrs Spangenberg’s aforementioned visit to Canada he showed her one of the score charts prepared from Orex Ltd’s grapes, the preparation of which she found acceptable. Mr Arnoldi put it to Mr Deneau that Mrs Spangenberg denies that she gave the score charts her approval.
I am unable to make a finding on this aspect as it was not pertinently taken up by Mr Joubert with Mrs Spangenberg in cross-examination. The fact that Mr Deneau, Mr Dhanji and Mrs Spangenberg were in each others company, discussed the condition of the grapes and dined together is common cause, though.
What did shine through in Mr Deneau’s evidence is that he is conversant with requirements of the Canadian market and had to have regard thereto in conjunction with the Unifruco/Capespan Standards that are in essence not dissimilar to ORPA Standards concerning the overriding issue of the brown stems. His detailed score charts comprising pages 238 to 275 of the Expert Bundle consists of 29 columns clearly set out in Exh “L” called the “Legend of the Score Charts”. Mr Deneau had no choice but to comply with the United States Standards for Grades of Table Grapes issued by the United States Department of Agriculture in terms of which it is a requirement that the stems must not be dry and brittle. With them there is also a zero percent tolerance for this defect. This requirement co-incide fully with the ORPA Standards. I found Mr Deneau to have been a credible witness, though some minor aspects of his evidence may have been lost in the course of the translation from French into English and vice versa.
Dr Eksteen did not examine the grapes but made his evaluation from the pictures of the grapes taken by Mr Deneau and contained in the photo album, Bundle “B”. Mr Deneau’s evidence is to be preferred above that of Dr Eksteen on this point because the former made the empirical examination. This approach would redound to the benefit of Orex Ltd because Dr Eksteen, who is very experienced, knowledgeable and best qualified of all the witnesses on this subject spoke of “severe brown stems” in excess of 30 %. In some respects he was even more critical of the quality of the grapes than Mr Deneau. Orex Ltd accepted Dr Eksteen’s evidence on the examination of the ships logs relating to the container temperatures during the sea voyage as well as the “temptales” extracted from the electronic devices placed inside the containers. These temperatures were found to be in order. Dr Eskteen was a good witness who was not discredited or shaken under cross-examination. I accept his evidence with the minor qualification made above.
Before I conclude my evaluation of the evidence I need to examine Orex Ltd’s application for an amendment because there is some overlap with the evidence examined up to this stage.
PLAINTIFF’S APPLICATION FOR AMENDMENT OF ITS PARTICULARS OF CLAIM
At the end of the trial lasting more than ten days and at the commencement of its argument in reply Orex Ltd applied for leave to amend its particulars of claim to the effect that TDC Inc accepted Orex Ltd’s malperformance to the extent of 30 % of the defective grapes and that TDC Inc accepted the remainder of the grapes (being 70 %) as good.
If amended as sought paragraph 6 of Orex Ltd’s particulars of claim will read as follows, with the portions sought to be incorporated underlined:
The plaintiff has performed its obligations in terms of the agreement as supplemented from time to time and has sold and delivered cartons of grapes on the dates and in the volumes and at the prices as set out in its invoices, copies of which are annexed hereto, marked Annexures “B1” to “B38”, the contents of which are again to be read herewith and incorporated herein as if specifically repeated and pleaded.
The plaintiff concedes that, in performing its aforesaid obligations, 30 % of the grapes delivered were defective, in that it did not comply with the ORPA standards;
The defendant accepted the remainder of the grapes, being 70 % thereof (as good);
Accordingly, the defendant is entitled to a price reduction of 30 % in respect of the invoiced amounts referred to in the plaintiff’s aforesaid invoices less those amounts calculated and reflected in annexure “C1” hereto.
The envisaged amendment is strenuously opposed.
Mr Arnoldi has argued that the amendment is sought on the basis that the facts which sustain the intended amendment have been canvassed in evidence and that the aim is merely to bring the pleadings in line with the evidence and that no new matter is imported. He intimated that TDC Inc did not reject the consignments of the grapes but indicated its willingness to make payment to Orex Ltd despite the fact that some of the grapes (the conceded 30 % thereof) were defective. He went on to say that according to Mrs Spangenberg’s evidence the understanding between her and Mr Dhanji at the end of her first trip to Canada was that Mr Dhanji would check the grapes pallet by pallet during the pre-packing procedure, sell the grapes and make payment of the arrears relating now being claimed.
He concluded his argument on this aspect by submitting that TDC Inc presented its case on the basis that the defendant could have rejected the whole consignment of grapes as a result of the defects but did not do so. He adds that it is “exactly this approach that is now being imported by way of the amendment” and that the amendment would not prejudice TDC Inc in anyway as the facts were sufficiently canvassed in evidence, and would not be bolstered by the leading of further evidence. He invoked as authority for his approach Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A); Horne v Hide 1947 (4) SA 757 (SR) and Middleton v Carr 1949 (2) SA 374 (A).
Mr Joubert has argued that the proposed amendment raises an entirely new issue, namely whether TDC Inc accepted the sale in respect of 70 % of the grapes which purportedly complied with the ORPA Standards and thus contractually severing the sale in respect of 30 % of the defective grapes from the component of the alleged good grapes. Counsel submitted that this issue was never raised nor investigated during the trial. I agree fully with this submission but there are further impediments in the way of Orex Ltd militating against the amendment sought.
Should I find in favour of TDC Inc on the Salvage Agreement, which the evidence already examined and evaluated point irresistibly in the direction of, such finding would unquestionably dispose of this knew issue raised in the proposed amendment as well. No purpose would accordingly be served in granting the amendment at this very very late stage even if the application to amend had some merit.
I cannot agree that the evidence adduced established that TDC Inc accepted unequivocally that 70 % of the grapes complied with the ORPA Standards. In fact Mr Arnoldi cross-examined Dr Steenkamp on his use of Mr Deneau’s score charts, discussed above, which Dr Steenkamp used in his expert opinion to try and show that the doctor should have come to the conclusion that less than 30 % of the grapes were defective. When Mr Joubert re-examined Dr Eksteen on Mr Deneau’s score charts it emerged that in fact more than 50 % of the grapes in terms of those score charts could be defective. Mr Dhanji puts the percentage of the defective grapes much higher than 50 %. Orex Ltd cannot assert that TDC Inc accepted that 30 % of the grapes were good without TDC Inc abandoning the Salvage Agreement. TDC Inc never waived its case on the Salvage Agreement. TDC Inc could also not have adopted the course that Orex Ltd attributes to it in the proposed amendment without having abandoned its alternative claims which have so elaborately been set out in paras 16 and 17 of this judgment. What Orex Ltd contends for in the proposed amendment strikes me as very odd because the upshot thereof is akin to saying that: “There is an agreement between the parties that 30 % of the grapes were bad and 70 % were good. TDC Inc agreed to pay Orex Ltd more or less as set out in Exhibit “C1” (which has been reproduced in para 4 of this judgment). TDC Inc is not allowed to renege on the agreement. Orex Ltd holds TDC Inc to the agreement and asks the Court to enforce it.” The facts of this case do not bear out such a conclusion.
Mr Joubert has said that “if this new issue” was timeously raised during the trial TDC Inc would have conducted its case entirely differently. He says there was no need during the trial to investigate what the exact percentages of the defective grapes were because the ORPA Standards, it was common cause, had a zero tolerance for brown stems and that, in the circumstances, TDC Inc did not and could not investigate the following matters concerning its professed acceptance of the alleged 70 % good grapes:
“Exactly when, where and how was this acceptance made? Who represented the parties, respectively, when it was made? Was it oral or in writing? Exactly what percentage of the grapes was bad? Over and above the brown stems, what other defects would render the grapes liable to rejection? What percentage of the grapes should be rejected for having these other defects?”
I find it superfluous to deal with other matters which Mr Joubert suggested would prejudice his client.
The case law and principles pertaining to amendments:
In Commercial Union Assurance Co Ltd v Waymark NO 1995 (2) SA 73 (TKGD) at 77F-J White J distilled the following principles from a long list of cases:
“The principles enunciated in the abovementioned cases can be summarised as follows:
1. The Court has a discretion whether to grant or refuse an amendment.
2. An amendment cannot be granted for the mere asking; some explanation must be offered therefor.
3. The applicant must show that prima facie the amendment 'has something deserving of consideration, a triable issue'.
4. The modern tendency lies in favour of an amendment if such 'facilitates the proper ventilation of the dispute between the parties'.
5. The party seeking the amendment must not be mala fide.
6. It must not 'cause an injustice to the other side which cannot be compensated by costs'.
7. The amendment should not be refused simply to punish the applicant for neglect.
8. A mere loss of time is no reason, in itself, to refuse the application.
9. If the amendment is not sought timeously, some reason must be given for the delay.” See also Trans-Drakensberg LTD (Under Judicial Management) v Combined Engineering (Pty) Ltd and Another 1967 (3) SA 632 (D) at 638-641.
In Cole v Government of the Union of South Africa 1910 AD 263 at 272 Innes JA (then) held:
“(T)he mere fact that a point of law brought to its notice was not taken at an earlier stage is not in itself a sufficient reason for refusing to give effect to it. If the point is covered by the pleadings, and if its consideration on appeal involves no unfairness to the party against whom it is directed, the Court is bound to deal with it. And no such unfairness can exist if the facts upon which the legal point depends are common cause, or if they are clear beyond doubt upon the record, and there is no ground for thinking that further or other evidence would have been produced had the point been raised at the out-set.”
In du Plessis v Semmelink 1976 (2) SA 500 (T) The Court held at 501G - 502G:
“Onder kruisverhoor het die verweerder toegegee dat 'prakties, is die eiendom niks werd sonder die pad'. Op grond van hierdie getuienis is dit namens eiser aan die hand gedoen dat die wysiging die pleitstukke in ooreenstemming met die (verweerder se) getuienis sou bring; in die woorde van GREENBERG R, in Rosenberg v Bitcom, 1935 W.P.A. 115 te bl. 117:
'... such an amendment (would) facilitate (s) the proper ventilation of the dispute between the parties.'
Daarteen egter is dit 'n beginsel dat:
'Overall, however, is the vital consideration that no amendment will be allowed in circumstances which will cause the other party such prejudice as cannot be cured by an order for costs and, where appropriate, a postponement... Where there is a real doubt whether or not prejudice or injustice will be caused to the defendant if the amendment is allowed, it should be refused... '.
(Per CANEY R, in Trans-Drakensberg Bank Ltd. (Under Judicial Management) v Combined Engineering (Pty) Ltd. and Another, 1967 (3) SA 632 (D) te bl. 638, 639). Die voorgestelde skuldoorsaak bring mee dat die juiste waarde van die eiendom ten tye van die sluiting van die kontrak bepaal moet word. Hierdie splinternuwe geskilpunt was nie in die aanvanklike pleitstukke geopper nie. Die verweerder het homself dus nie daarvoor voorberei nie en, afgesien van die bogenoemde verwysing uit die verweerder se getuienis, is dit glad nie in die getuienis bespreek nie. Bewys van hierdie moeilikhede het mnr. Rossouw toegegee dat daar 'n uitstel van die verhoor moes gewees het; sulke uitstelling sou enige benadeling aan die kant van die verweerder uit die weg ruim, so het hy betoog. Ek kon nie met hierdie stelling saamstem nie. Die aansoek is op 'n baie laat stadium gemaak, soos ek alreeds aangedui het, nadat die verweerder sy saak gesluit het en nadat die verhoor alreeds vir 'n paar dae geduur het. Dit sou waarskynlik nodig gewees het om die eiser terug te roep vir verdere kruisverhoor en om die verweerder terug te roep vir verdere hoofgetuienis en veral om sy bogenoemde erkenning te verduidelik. Hierbenewens sou beide partye miskien verdere (deskundige) getuies wou roep. Dus sou die uitstel vir 'n taamlike lang tyd moes gewees het met voortvloeiende ongerief aan die Hof en die verweerder in dié verband is die volgende woorde van VAN DEN HEEVER R (soos hy destyds was), in Van Aswegen v Fechter 1939 O.P.A. 78 te bl. 88, van toepassing:
''n Gedingvoerende party wat ter elfder ure aansoek doen vir wysiging van die stukke om 'n splinternuwe regsvordering te besig maak nie op 'n reg aanspraak nie maar vra om toeskietlikheid. Aangevoer word dat verweerder nie beswaar kan word nie aangesien 'n bevel ten aansien van gedingkoste enige beswarende gevolge kan voorkom. By nadere beskouing blyk hierdie argument egter nie so oortuigend nie. Deurgaans moet die Howe toesien utinis sit litium. …'.
In Knightsbridge Investments (Pvt) Ltd v Gurland, 1964 (4) SA 273 (SR) te bl. 281, het LEWIS R, gesê:
'In the second place, the Court will normally only allow an amendment at the late stage of the proceedings if the issues raised by the proposed amendment have already been canvassed in the evidence and there is no prejudice to the other party'.
(Sien ook Pennefather v Gokul, 1960 (4) SA 42 (N) te bl. 51).
Ek het die beginsels dat blote versuim om 'n aansoek vir wysiging te bring nie 'n goeie rede is nie vir die weiering daarvan (Trans-Drakensberg Bank Ltd, supra ) en dat die Howe geneë is (onderhewig aan die kwessie van benadeling) om wysigings toe te staan nie oor die hoof gesien nie. In al die omstandighede, egter, het ek tot die slotsom gekom dat mnr. Ackermann korrek was toe hy aan die hand gedoen het dat dit 'n verkeerde uitoefening van my diskresie sou gewees het om die aansoek toe te staan.’
Applying the principles in paras 69 (69.1-69.3) to the facts in paras 61 – 68 in particular but also generally to the facts of the entire case I am satisfied that the application at such a late stage without even seeking a postponement to lead further evidence or to put statements to TDC Inc’s witnesses consonant with the proposed amendment is untenable and is bound to cause serious prejudice to TDC Inc. The application for amendment stands to be dismissed with costs including the costs for the supplementary Heads of Argument relating to the proposed amendment, which was filed at the Court’s request.
I have found Mrs Spangenbert to be a strongwilled person who was prepared to take a decision when it became necessary. It is evident that she is the pivot around which Orex Ltd’s trades moves. She made the concession concerning the brown stemming boldly, although one might say she had very little choice in the light of the overwhelming evidence to that effect. Somehow somewhere in Orex Ltd’s own system or processes she was let down. Someone should have prevented the defective consignment from being exported. It was a monumental error which was committed. This blame cannot be placed at TDC Inc’s door. I have found Mrs Spangenberg to be a relatively good witness but the weight of evidence is against her
Mr Dhanji was also a relatively good witness. It was difficult to say whose evidence between his and Mrs Spangenberg’s is to be preferred in the event of a conflict. However, the objective facts and the probabilities in the case enhance the veracity of Mr Dhanji’s evidence considerably. His demeanour in the witness box and his calm disposition have impressed me markedly. It is for these reasons that I found him not only to have been a credible witness but also a better witness than Mrs Spangenberg.
It is true that the law can be an ass. What kind of justice is this, a man in the street may ask, that allows Orex Ltd to export grapes which would cover a quarter of a ruby/soccer field and 2,3 meters high and yet fail to earn a dime in profit in return and is still indebted to TDC Inc?. Unfortunately equity does not come into the reckoning in this matter but the law of contract. In this instance the contract that has been proven to have come into existence is the Salvage Agreement contended for by TDC Inc.
I am consequently satisfied that TDC Inc (the defendant) has proved its claim based on the Salvage Agreement and is therefore entitled to be paid by Orex Ltd (the plaintiff) the amount of US$109 167.72. It is competent for a South African Court to grand judgment in a foreign currency: See Standard Chartered Bank of Canada v Ned-Perm Bank Limited  ZASCA 146; 1994 (4) SA 747 (A) at 774F-J. The amount of US$109 167.72 is computed as set out in Annexure “DP7” dated the 8th November 2003, and reproduced below:
“DEFENDANT’S ACCOUNTING TO PLAINTIFF IN TERMS OF
THE SALVAGE AGREEMENT
Proceeds of Sale of defective grapes 418 374.45
(See Exhibit “E”)
Less: 10 % Commission (41 837.44)
Less: Expenses (405 343.72)
Less: Payment (80 361.00)
Shortfall: ie Amount payable by the plaintiff
To the defendant 109 167.72
(US $109 167.72 converts to CAD $162 488.18 at an exchange rate of 1.488427)”
Nothing that Mr Joubert submitted to me concerning a punitive costs order persuades me to do so. The allegation that Mrs Spangenberg was malicious in having had Mr Dhanji arrested on a trumped up charge of fraud is not sufficient to attract such costs moreso, it appears, that Mr Dhanji has instituted or will be instituting a civil claim for his alleged wrongful arrest and detention. I agree with Mr Arnoldi that that issue is for another forum to decide. The costs order will therefore be on the ordinary scale.
I point out for completeness that at the inception of the trial Orex Ltd withdrew its claim in Case 1082/2003 against TDC Inc which was consolidated with the current case and offered to pay the costs relating to that case. The cause of action was that TDC Inc made certain fraudulent representations to Orex Ltd which induced Orex Ltd to deliver the grapes knowing that it (TDC Inc) never intended honouring the obligations under that agreement. I accordingly ordered Orex Ltd to pay the costs in the withdrawn case to TDC Inc.
The following order is made:
It is ordered that the plaintiff (Orange River Export (Pty) Ltd) pay the defendant (TDC International FFDM Inc) the amount of US$109 167.72;
The plaintiff is to pay interest on the above amount at the rate of 15.5 % per annum from 10 October 2003 to date of payment;
Plaintiff’s application for the amendment of its particulars of claim filed on 9 November 2004 is dismissed with costs;
The plaintiff is to pay the defendant’s costs on a party and party scale including the costs consequent upon the employment of two counsels. The costs shall also include those occasioned by the filing of the supplementary Heads of Argument.
F D KGOMO
NORTHERN CAPE DIVISION
For the Plaintiff: Adv F Arnoldi, SC
Adv N Davis
Instructed by: van der Wall & Partners
For the Defendant: Adv A P Joubert, SC
Adv H H Steyn
Instructed by: Haarhoffs