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IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: 925/03

In the matter between:

THEODOR WILHELM VAN DEN HEEVER N.O. First Appellant

ENVER MOHAMMED MOTALA N.O. Second Appellant

JAYANT DAJI PEMA N.O. Third Appellant

and

FREDERIK JACOBUS SMITH Respondent

FULL BENCH APPEAL

HENDRICKS J; KGOELE AJ; MOLOTO AJ

COUNSEL FOR THE APPELLANTS : ADV P F ROSSOUW SC

COUNSEL FOR THE RESPONDENT : ADV P J COETZEE

DATE OF HEARING : 28 AUGUST 2009

DATE OF JUDGMENT : 25 SEPTEMBER 2009

JUDGMENT

HENDRICKS J

[A] Introduction:-

[1] Agrichicks (Pty) Ltd (hereinafter referred to as “Agrichicks”) were placed under judicial management on 02 July 1999 and under liquidation on 14 August 2002. The Appellants in their official capacity as liquidators of Agrichicks issued summons on 11 November 2003 against the Respondent in terms of a contract that existed between the parties for payment in the amount of R469 604.96 plus interest a tempore morae (claim in convention).

[2] The Respondent oppose this claim and filed a counterclaim based on breach of contract for an amount of R513 521.54 and also a claim based on a loan that he advanced to Agrichicks in the amount of R32 783.30 (claims in reconvention).

[3] On 13 April 2006, Landman J gave judgment in favour of the Appellant’s claim in convention in the amount of R242 628.00 plus interest a tempore morae and costs. He also granted judgment in the claim in reconvention for breach of contract in favour of the Respondent in the amount of R317 366.50 plus interest at the prescribed rate as well as costs. The claim in reconvention for the loan in the amount of R32 783.30 that Respondent advanced to Agrichicks was dismissed.

[4] The Appellants as well as the Respondent noted an appeal and a cross-appeal respectively against the aforesaid judgment.

[5] On 01 September 2006 leave to appeal to the Full Bench of this division was granted both with regard to the appeal and the cross-appeal by the respective parties, hence this appeal.

[B] Ad: Condonation:-

[6] The Appellants applied for condonation for the late filing of their heads of argument which application was not opposed by the Respondent. The Appellants were all along desirous to prosecute their appeal and in the interest of justice condonation for the late filing of the Appellants heads of argument was granted at the hearing of the appeal.

[C] Ad: Point in limine:-

[7] The Respondent raised as a point in limine the fact that the notice of appeal of the Appellants is vague and embarrassing and that the grounds of appeal are in fact not grounds of appeal but general statements because it does not succinctly set out the points on which the appeal is based.

[8] I have carefully perused the grounds of appeal contained in the notice of appeal and I am of the view that they indeed conform to the required standard as grounds of appeal. It is not expected that the grounds of appeal should be fully fledged arguments. That is not the purpose of having grounds of appeal stipulated in a notice of appeal.

[9] The present matter is also clearly distinguishable from the cases that were referred to by counsel for the Respondent, Mr Coetzee. In my view the notice of appeal is not at all defective. It is for these reasons that the point in limine was dismissed at the hearing of the appeal.

[D] Background to the respective claims:-

[10] On 18 February 1999 Agrichicks and the Respondent concluded a written agreement (contract). The Appellant’s claim in convention is a contractual claim for the payment of the balance owing on the Respondent’s account with Agrichicks. The basis of the claim is that Agrichicks performed all its obligations in terms of the contract and that the amount of R469 604.96 is due and payable by the Respondent.

[11] The Respondent counterclaimed for damages as a result of breach of contract (main counter claim). Because the claim in convention and the main counterclaim for damages as a result of breach of contract arise out of a contract, it is necessary to set out the relevant contractual provisions in some detail.

[E] The contract:-

[12] This contract is not a simple contract of purchase and sale but was intended to regulate a complex relationship between Agrichicks and the Respondent as one of its producers (contract growers / farmers). The preamble to the contract bears testimony to this. The said preamble reads as follows:

“[11] ‘WHEREAS the COMPANY [Agrichicks] intends to supply day old chickens and poultry feed to the PRODUCER [farmer] on a continious basis.

AND WHEREAS the PRODUCER [farmer] intends to rear broilers for the COMPANY [Agrichicks] on a continuous basis…”

[My insertions.]

[13] It was expressly agreed that Agrichicks would retain ownership of the chickens, feed and medication supplied to the Defendant. The following is stated in the contract with regard to ownership:-

“OWNERSHIP

Ownership of day old chickens, poultry feed, medication and vaccine will not at any stage pass to the PRODUCER [farmer], but these will at all times remain the property of the COMPANY [Agrichicks]. Poultry feed, medication and vaccinations applied will be for the exclusive use of the day old chickens supplied by the COMPANY [Agrichicks].”

[My insertions.]

[14] It was envisaged that the chickens would be reared in cycles, each with an average period of 56 days. In terms of the contract, Agrichicks would endeavour to process chickens prior to 45 days of age. All chickens would be collected within 7 days of commencement of harvesting thereof.

[15] The chickens would be reared under strict control of Agrichicks and in accordance with its instructions. Agrichicks would supply the day old chickens, poultry feed, medication and vaccinations. The Defendant had to adhere to Agrichicks’ production manual and to report mortalities to Agrichicks.

[16] The Defendant would accept delivery of any consignment of day old chickens by Agrichicks. The following appears from the contract in relation to this:-

“The PRODUCER [farmer] hereby accepts delivery of any consignment of day old chickens where such consignment is loaded from the premises of the COMPANY [Agrichicks] or the premises of the normal supplier and the COMPANY [Agrichicks] will bear no responsibility for any losses suffered by the PRODUCER [farmer] as a result of casualties among the day old chickens except in cases of fire, theft or collision to compensation for mortalities over 2% within 7 (SEVEN) days based on facts, evidence and reports from the COMPANY’S [Agrichicks] field services and the PRODUCER [farmer] to this effect.”

[My insertions.]

[17] The contract provides as follows with regard to poultry feed:-

“Delivery of Poultry Feed:

The COMPANY [Agrichicks] will deliver all the poultry feed needed from the rearing of the day old chickens supplied to the PRODUCER [farmer], namely, ‘Starter, Grower and Finisher crumbles or pellets’. The PRODUCER [farmer] will not be permitted to buy feed, or keep any other producer’s poultry feed without the previously obtained written consent from the COMPANY [Agrichicks].

Manner of Delivery:

The COMPANY [Agrichicks] will deliver all poultry feed in bulk containers or as per agreement, in bags.

Minimum Specifications for Poultry Feed:

The composition and specification of the poultry feed must be furnished by the COMPANY [Agrichicks] if requested by the PRODUCER [farmer]. Any dispute as to the quality of poultry feed will be resolved by reference to the table for the Feed Industry, namely Annexure “1”.

[My insertions.]

[18] In respect of remuneration, the following was agreed:-

“The COMPANY [Agrichicks] will credit the PRODUCER’S [farmer’s] account with the agreed price per live kilogram and debit the PRODUCER’S [farmer’s] account with the agreed price of day old chickens, feed, medication and vaccination costs as set out in paragraph 7 and 8 and subject to the contents of paragraph 10.

The credit balance of any crop within the cycle will be paid to the PRODUCER [farmer] by the COMPANY [Agrichicks] on the accounting date as stipulated in paragraph 3.5.1 above.

The debit balance of any specific cycle will be carried forward as the opening balance of the following cycle. Should the debit balance of any specific cycle be carried forward more than twice (2 times) as the opening balance of the following cycle, the amount of that debit balance will immediately be due and claimable from the PRODUCER [farmer].”

[19] It is clear from the terms of the contract that the Respondent as a producer (contract grower / farmer) would rear the chickens on behalf of Agrichicks. Agrichicks was in control of the chicken growing scheme and the producer (contract grower / farmer) did not act independently but acted as Agrichick’s agent.

[20] The contract between Agrichicks and the Respondent as a producer (farmer) placed various obligations upon the respective parties. Agrichicks was obliged to supply day old chickens, poultry feed and medication. This had to be performed before any payment obligation on the part of the Respondent would arise. Whenever chickens, feed or medication were supplied by Agrichicks a corresponding payment obligation on the Respondent arose.

[F] Grounds of appeal:-

[21] The grounds of the appeal and the cross-appeal are premised on the following:-

[i] the certificate of balance;

[ii] chicken feed;

[iii] the supply of inferior chickens.

I will deal with these grounds hereunder.

[i] Ad: Certificate of Balance:-

[22] The Appellants relied upon a certificate issued by an auditor, which was produced in evidence, as prima facie proof of the amount of their claim. The Appellant’s case was closed without calling any witness in support thereof. At a pre-trial conference that was held on 14 February 2006, the following was agreed upon between the parties with regard to the certificate:-

“The parties agree that the certificate issued by the auditor Mr De Villiers may be handed in without further proof and that the certificates are what they purport to be, save that the Defendants deny the correctness of the amount certified on the basis that the Defendants challenge the correctness of certain items included in the underlying accounts on which the certificates are based.”

[23] The certificate of balance reads as follows:-

“CERTIFICATE OF BALANCE

I, the undersigned,

ROBERT MURRAY DE VILLIERS

In my capacity as an auditor, hereby certify in terms of the ‘PRODUCTION AND SALES AGREEMENT’ between Agrichicks (Pty) Ltd (in liquidation) (“the Producer”) that according to the summary debtor’s schedule complied by the Company, the balance of payments between the parties as at 12^th August 2002 in terms of the agreement was the amount of R469 604,96 in favour of the Company.”

[24] The Respondent (as well as his wife who did his bookkeeping) did not disprove or rebut the correctness of the amount of R469 604.96 as certified by the auditor.

[25] Where, in terms of an agreement, it is stipulated that one or other document shall be prima facie evidence of a particular fact, then the production of such document requires an answer and it will become conclusive proof unless evidence in rebuttal is provided.

See: S v Alexander and Others (2) 1965 (2) SA 818 (C) at 823 A-B.

Senekal v Trust Bank of Africa Ltd 1978 (3) SA 375 (A) at 382 G.

[26] The court a quo, correctly in my view, allowed the certificate of balance as prima facie proof of the amount which the Respondent owes to Agrichicks.

See:- Bank of Lisbon International LTD v Venter en ‘n Ander 1990 (4) SA 463 (A).

Berlesell (Edms) Bpk v Lehae Development Corporation BK en Andere 1998 (3) SA 220 (O).

[27] The Respondent contends that the court a quo erred in finding that the certificate of the auditor as produced by the Appellants is admissible and/or that it constitutes prima facie evidence of the amount of the indebtedness by the Respondent to the Appellants, in view thereof that:-

[27.1] the certificate presents itself as having been issued by an auditor but does not show that the named auditor is in fact the auditor of the company Agrichicks as required by clause 11 of the agreement between the parties;

[27.2] the certificate does not set out the “…. balance of payments between the parties for the specific cycle” as agreed to and authorized by clause 11 of the agreement between the parties, but rather alleges that “… the balance of payment between the parties as at 12 August 2002 in terms of the agreement was the amount of R469 604.96 in favour of the company”, which statements does not, either according to the certificate itself or the evidence placed before the court, refer to as a specific cycle;

[27.3] the certificate thus exceeds the agreed demarcation of facts which may be proved by a certificate and also exceeds the agreed capability of proof afforded such certificate:

[27.4] the Appellant thus attempts, by producing the certificate, to prove facts and allegations which cannot be proven thereby in terms of clause 11 of the agreement between the parties;

[27.5] the certificate is thus inadmissible for the purpose for which it was produced;

[27.6] the Respondent therefore only accorded the certificate a qualified acknowledgement as set out in the minute of the pre-trial conference between the parties;

[27.7] the evidence by and on behalf of the Respondent put the contents of the certificate in dispute and rebutted the contents thereof, the Respondent had acquitted himself of the onus of rebuttal (if any) or, if applicable, his onus relating to the contents of the certificate, whilst the Appellant did not produce any further or other evidence to substantiate the contents of the certificate.

[28] Whether Mr De Villiers was a statutory auditor of Agrichicks or not, is irrelevant. The certificate is submitted on behalf of Agrichicks and in that sense he is the auditor contemplated in clause 11 of the contract. It was in any event agreed at the pre-trial conference that his certificate could be submitted without further proof.

[29] Counsel for the Respondent, Mr Coetzee, correctly in my view, contended that the account was not divisible. Though each cycle can be regarded as a separate transaction, the contract was a continuous contract for the stipulated period of five (5) years.

It is true that the certificate of balance does not specify what amount was for chickens, food or medicine but only gives a globular amount that is due. It is not expected of a certificate to differentiate the amounts for each of the components that make up the amount that is owed. It is a certificate of balance and not a detailed statement of account and that is the difference.

[30] Furthermore, the court a quo found that it was admitted by and on behalf of the Respondent (by his wife) that an amount of R408 731.44 were due and owing to Agrichicks.

[31] On behalf of the Respondent, it was submitted that the court a quo erred in accepting the Respondent’s answer during cross-examination that at least R408 731.44 is due to the Appellant as support of or a confirmation of the contents of the certificate, in view of:-

The evidence of the Respondent and his wife, Mrs Smith that:-

[31.1] the Respondent, Mr Smith, was not himself involved with nor did he have any knowledge of the bookkeeping and recordkeeping of the farming activities, but was only involved with the physical caretaking of the chickens;

[31.2] Mrs Smith handled the bookkeeping and recordkeeping of the farming activities and the relevant knowledge thereof;

[31.3] the evidence of Mrs Smith during which she placed the correctness of the account allegedly due to the Appellant in doubt inter alia in that a certain payment by the Respondent was not even reflected therein;

[31.4] the fact that the answer or apparent concession by Respondent was made whilst under pressure of cross-examination and whilst expressing himself concerning an account of Agrichicks in respect of which he, by his own admission, had no knowledge of.

[32] The court a quo’s use of the word “daarbenewens” is clearly indicative of the fact that over and above the fact that the contents of the certificate of balance was prima facie proof of the amount that was due and owing to Agrichicks, the Respondent conceded his indebtedness to Agrichicks (even though for a lesser amount). This was not in support of or corroboration of the contents of the certificate.

[33] Having found that the certificate of balance - which was correctly admitted as evidence - is proof of the amount that the Respondent owes to Agrichicks, the court a quo should have granted judgment in favour of the Appellants (Agrichicks) for the said amount. At worst for the Appellants (Agrichicks) the amount should have been the amount conceded by the Respondent to wit R408 731.44, though I do not find that to be the case.

[34] However, the court a quo went on to determine the claim of the Respondent based on breach of contract and deducted an amount allegedly because of the supply of inferior chickens and feed and also the loss of profit that the Respondent suffered. I will now deal with these issues.

[ii] Chicken feed:-

[35] The Respondent relied upon the provision of the Fertilizers, Farm Feeds, Agricultural Remedies and Stock Remedies Act, 36 of 1947 (“the Act”) and contended that:-

[35.1] Agrichicks did not comply with the provisions of the Act, more specifically with the provisions of section 7 and that Agrichicks is guilty of certain offences in terms of section 18 of the Act;

[35.2] because of non-compliance with the statute, Agrichicks cannot recover any monies in respect of feed supplied;

[35.3] the feed was not of the required standard.

[36] The definition of “farm feed” in section 1 of the Act reads as follows:-

“Farm feed means:-

[a][i] any substance obtained by a process of crushing, gristing or grinding, or by the addition to any substance or the removal therefrom of any ingredients; or

[ii] any condimental food, vitamin or mineral substance or other substance which possesses or is alleged to possess nutritive properties; or

[iii] any bone product, intended or sold for the feeding of domestic animals or livestock; or

[b] any stock lick or substance which can be and is used as a stock lick, whether or not such stock lick or substance possesses medicinal properties, but does not include straw, chaff, unground hay, silage, any cereal in the grain or any substance which would otherwise be a farm feed but which has been ground, crushed, gristed or prepared for any person, in accordance with his directions for his own use, unless the Minister has by notice in the Gazette declared such substance a farm feed for the purposes of this Act.”

[37] The chicken feed in question was prepared by Agirchicks in accordance with its directions. This is clear from the evidence of Mrs Bezuidenhout and Mr Mhele. The feed was furthermore prepared for Agrichicks’ own use. The feed was not supplied to an independent third person but to Agrichicks’ own agent (the Respondent) as a producer / farmer for the rearing of Agrichicks’ own chickens. The feed remained the property of Agrichicks. The provisions of sections 7 and 18 of the Act do therefore not apply in this case.

[38] Even if the feed was not prepared by Agrichicks for its own use, (which I do not find to be the case), the non-compliance with the statute does not render the contract in terms whereof feed was supplied invalid. The dicta of Fagan JA, in Pottie v Kotzé 1954 (3) SA 719 (A) at 726 H to 727 A are apposite:-

“The usual reason for holding a prohibited act to be invalid is not the inference of an intention on the part of the Legislature to impose a deterrent penalty for which it has not expressly provided, but the fact that recognition of the act by the Court will bring about, or give legal sanction to, the very situation which the Legislature wishes to prevent.”

[39] “Farm feed” should not be seen in the same light as the other substances controlled in terms of the Act, such as fertilizers, agricultural remedies or stock remedies. The exclusion in respect of feed prepared by a person for own use is indicative of the fact that the legislature does not regard it in the same light as fertilizers, agricultural remedies and stock remedies. In the case of the latter three substances there is no exemption and the wide definition of “sell” in section 1 applies to all fertilizers, agricultural remedies and stock remedies, including those prepared by a person for his own use.

[40] I am of the view that the reasoning and finding of the court in Flexichem CC v Patensie Citrus Co-Operative Ltd 1994 (1) SA 491 (SECLD) do not apply in the present case. The court was in that case concerned with the phosphorous and potassium fluoride in respect of which Ludorf J remarked as follows at page 496 H - I:-

“The necessity for such control is of course not difficult to comprehend. It stands to reason that the indiscriminate use of yet untested and unproved chemical substances (with regard to such intended use) could lead to serious if not disastrous economic and ecological consequences which it is in the national interest to obviate by proper control by way of the machinery created by the statute under consideration.”

[41] The supply and use of farm feed, such as in the present case, cannot have “disastrous economic and ecological consequences”. Sub-standard farm feed will at its worse result in higher consumption, slower growth and a worsening of the food conversion ratio.

[42] The evidence showed that all the feed supplied by Agrichicks was used and that it had value. The performance reports in respect of the Respondent show that profits were made in each cycle from January 2001, with the exception of the last two cycles and the September 2001 cycle, when a small loss of

R6 776.00 was made.

[43] To treat the supply of the chicken feed by Agrichicks to the Respondent as invalid or illegal will have harsh, inequitable and inconvenient results. In the Pottie v Kotzé 1954 (3) SA 719 (A) at 727 E-F Fagan JA stated:-

“A further compulsory penalty of invalidity would – as the cases I have referred to show – have capricious effects the severity of which might be out of all proportion to that of the prescribed penalty, it would bring about inequitable results as between the parties concerned and it would upset transactions which … the Legislation could have had no reason to view with disfavour.”

[44] The penalties provided for in the Act are of a deterrent value. The practical consequence, even if every supply of farm feed not perfectly in accordance with the statutory requirements were to be treated as a legal nullity, would be that the recipient, who actually received and used the feed could resist the supplier’s claim whenever the supplier was unable to prove perfect compliance with every detail.

[45] The court a quo found that the Flexichem judgment, supra, was binding and disallowed the part of the claim in respect of poultry feed. In my view, the court a quo erred in disallowing the amount of R226 976.50 and judgment should have been granted in favour of the Appellants for the full amount of the claim in convention.

[iii] The supply of inferior chickens:-

[46] The court a quo found that inferior “F2” chickens were supplied whereas “F1” chickens should have been supplied and that reference to chickens in the contract means “F1” chickens.

See:- Judgment paragraph 9.1 to 9.8 in the record.

Vol. 13/13 page 1053 to 1055.

[47] The contract contains no provision to the effect that chickens of a particular kind or quality (such as F1 chickens) should have been supplied. Mr Coetzee, quite correctly in my view, conceded that no provisions are made in the contract that the chickens that Agrichicks will supply will be of a particular kind and quality namely “F1” chickens. This concession was indeed well made. The court a quo erred in finding that the chickens referred to in the agreement means “F1” chickens.

[48] So too, was it wrong to conclude that the Respondent suffered damages inter alia as a result that chickens of an inferior quality (F2 chickens) was supplied by Agrichicks to the Respondent and that contributed to the loss in profit that the Respondent suffered.

[49] Furthermore, some of the day old chickens delivered by Agrichicks apparently suffered from Omphalitis (“mushy chicks”). It is not clear what the extent of this problem was and how many mortalities can be ascribed to this condition. In any event, any liability on the part of Agrichicks is excluded in terms of clause 8.2 of the contract. There is no evidence that the mortalities exceeded 2% within 7 days and that “facts, evidence and reports” were furnished in this regard to render Agrichicks liable. The “mushy chicks” aspects is in my view not a valid defence to the Appellant’s claim.

[G] The claim in reconvention based on breach of contract:-

[50] The main claim in reconvention by the Respondent is based on breach of contract. The following are the relevant alleged breaches:-

• the alleged failure by Agrichicks to supply feed in accordance with the statutory requirements;

• the supply of feed otherwise than in pellet form;

• the supply of feed not properly mixed;

• the supply of infected “mushy chicks”;

• the failure to supply feed after 09 August 2002.

The abovementioned aspects will be dealt with hereunder.

[51] Mr Coetzee, on behalf of the Respondent, submitted that farm feed was sold to the farmers (including the Respondent) though as he submitted, not directly but indirectly. I do not agree with this submission. Though the method used to calculate the profit at the end of each cycle may be such that it can create the impression that the chickens and chicken feed was sold to the farmer by Agrichicks, it is clear from the agreement that the chickens and chicken feed remains the property of Agrichicks. Ownership of the chickens does not pass on to the farmer (the Respondent in this case). The chicken feed is farm feed used for own consumption if regard is had to the stipulated terms of the contract. In any event, the feed was apparently useful and contributed greatly to the Respondent’s profitable farming, except for the last two cycles of May and August 2002.

[52] Furthermore, there is no evidence that the supply of feed in a form other than pellets or the supply of feed allegedly incorrectly mixed caused any measurable loss. In any event, the evidence shows that the situation pertained for approximately the last two years prior to the winding-up of Agrichicks whereby feed was often produced in a form other than pellet form. There is no reason why such feed would suddenly in the last two cycles cause losses, but not in earlier cycles.

[53] Insofar as “mushy chicks” is concerned, there is no evidence that this condition manifested itself only during the last two cycles or that it increased sharply during these cycles. In any event, clause 8.2 of the contract precludes the Respondent from relying upon this condition as a basis for a claim of damages.

[54] The failure by Agrichicks to deliver feed after the 09^th August 2002 could hypothetically give rise to a claim for damages, provided that it can be shown that the Respondent had to purchase feed at higher prices elsewhere. This the Respondent did not prove. However, this is also expressly prohibited in terms of the contract.

[55] Five different methods were presented to calculate the Respondent’s damages. This is indeed indicative of the fact that unusual and unacceptable methods were employed to calculate the quantum of the main counterclaim.

[56] Mr Smith contended that his damages were as follows:-

[a] R437 386.59 on the basis as indicated in “C1”; or

[b] R130 428.47 “C2”; or

[c] R174 724.66 “C3”; or

[d] R429 211.60 (71(f)); or

[e] R317 375.50 (71(g)) premised on “C1” with 1999 as basis year.

Dr Viljoen as an independent expert prepared the first, third, fourth and fifth sets of calculations. He indicated under cross-examination that he only accepts the first calculation as correct (C1).

[57] The first calculation (Annexure “C1” to the main counterclaim) was based upon invalid “control months” dating from 1997 to 1998, prior to the conclusion of the contract between Agrichicks and the Respondent. In terms of this calculation the Respondent suffered damages in an amount of R404 603.15. If this is correct, it will mean the Respondent will receive an award of R2.70 per chicken placed, which is far in excess of the expected fair and reasonable profit per chicken placed at the time. The court a quo correctly in my view dismissed this calculation as unreliable.

[58] The calculation of the amount of R404 603.15 as appears from Annexure “C1” to the counterclaim is in any event based solely upon the Respondent’s expected performance during 2002 compared to May 1997 and May 1998, without taking into account market forces, the performance of other similar chicken farmers and especially the fact that the Respondent did not have a contractual relationship with Agrichicks during 1997 and 1998.

[59] Dr Vijoen based his defence of this method of calculation solely upon the contention that the Respondent would have been a much more experienced farmer in 2002 compared to 1997/1998. The fundamental flaw in Dr Viljoen’s approach becomes clear when the performance of the Respondent is compared with the performance of a fellow contract grower / farmer, Mr S E Harman. A smaller number of chickens, to wit 70 051 were placed with Mr Harman on 31 May 2002 and he made a profit of R112 128.84 in that cycle. It overlapped to an extent to the Respondent’s May/August 2002 cycles. This shows that the same quality of day old chickens, feed and medication was possible to make a substantial profit. However, Dr Viljoen incorrectly refused to accept that the inference to be drawn from the comparison is that the Respondent should personally be held accountable for his losses.

[60] Nowhere in the contract is provision made that Agrichicks would compensate the contract growers (farmers) for losses that they may suffer for not making a profit. What is stipulated in the contract is that casualties above 2% will be compensated in that the contract grower’s (farmer’s) account would be credited under certain strict conditions.

[61] What remained was Dr Viljoen’s last calculation of the main counterclaim (pages 71(g) to (i)). These were prepared while he was under re-examination. While these calculations may be based upon “correct” control months, the result is unrealistic, in that the amount of R317 375.50 indicates a profit of R2.12 per chicken placed. This is still far in excess of the fair and reasonable profits expected at the time. The calculation is also subject to the same criticism as the calculation set out in Annexure “C1” to the counterclaim.

[62] One further calculation remains to be considered, and that is set out in Annexure “C2” to the main counterclaim at pages 71(c) and (d) (Second Supplementary Vol, pages 11 and 12). This calculation was prepared by Mrs Smith. It is based upon the premise that the Respondent had paid all monies due to Agrichicks, including the monies in respect of day old chickens, medication and feed.

[63] However, she conceded that the calculation incorporated an amount of R321 576.95 in respect of feed, medication and day old chickens as if this had been paid. The calculation was therefore fatally flawed. In terms thereof, the Appellants are liable for damages to the Respondent in the amount of R130 428.47. However, if the true facts are taken into account, namely that the Respondent owed Agrichicks (on Mrs Smith’s own version) the amount of R321 576.95, there would be no claim for damages whatsoever.

[64] Mrs Smith’s calculation is at least based upon a common sense and logical approach. The method of calculation is correct, although the result is incorrect. On the other hand, Dr Vijoen’s calculations are fanciful and unrealistic. Where there is a special method of calculating damages, the onus is on the party relying on such method to satisfy the court that it is an appropriate method. In Katzenellenbogen Ltd v Mullin 1977 (4) SA 855 (A) at 880 B-C the following is stated in this regard:-

“… a litigant does not have an unqualified discretion in the selection of the measure to be employed in determining the extent of his loss.”

This is applicable to Dr Vijoen’s calculations.

[65] Before it can be found that there was a breach of contract on the part of Agrichicks, the effect of such breach must be assessed through a comparison of the Respondent’s patrimonial position at the relevant time with his hypothetical patrimonial position, if there had been proper and timeous performance. A loss of profit can generally not be recovered, unless such loss (as special damage) was foreseen or foreseeable by the parties.

See:- Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) at 687 D-F.

Thompson v Barclays Bank DCO 1969 (2) SA 160 (W) at 164 G-165 A.

[66] There is no evidence that at the time the contract was concluded, damages in the form of loss of profits were foreseen. The express terms of the contract indicate that the parties contemplated that losses would be made in certain cycles and that the farmer would bear these losses.

[67] As stated earlier on in this judgment, Dr Viljoen was the author of four of the five alternative methods of calculating the quantum of the main counterclaim. Mr and Mrs Smith did not understand these methods. Dr Viljoen has under cross-examination indicated that he accepts only the first calculation, (“C1”), as correct. However, as pointed out earlier in this judgment, this calculation should be rejected. He prepared the alternative calculations at the instance of the Respondent’s attorney, but does not support it. He agreed under cross-examination that these calculations should be disregarded. They do therefore not merit any consideration.

[68] Because of the difficulty experienced by the Respondent to prove the quantum of his damages suffered, the court a quo should have found that the Respondent did not succeed in proving the main counterclaim and should have dismissed it.

[H] Set off:-

[69] It was contended by Mr Coetzee, on behalf of the Respondent, that the court a quo erred in granting two judgments, one in favour of each of the two sets of parties without ordering that it be set off against each other. In my view, the granting of judgment in favour of the Respondent was wrong as alluded to earlier in this judgment. But over and above that, even if the award of the judgment in favour of the Respondent was correct, (which I do not find to be the case) it was a claim for damages and not a liquidated claim and therefore cannot be set off against the claim of the Appellants (Agrichicks).

See:- Thorne and Another NN.O. vs The Government 1973 (4) SA 42 (T) at 45 F-H.

The Government vs Thorne and Another NN.O. 1974 (2) SA 1 (A) at 9 E-H.

[I] Conclusion:-

[70] In view of the abovementioned, the court a quo should have granted judgment in favour of the Appellants (Agrichicks) for the claim in convention in the amount claimed and should have dismissed the main counterclaim based on breach of contract. The second counterclaim based as a loan that the Respondent advanced to Agrichicks was, correctly in my view, dismissed by the court a quo.

[71] Because of the aforementioned, this court is therefore at liberty to interfere with the judgment and order granted by the court a quo. There is also no plausible reason why costs should not follow the result.

[J] Order:-

[72] Consequently, the following order is made:-

[1] The appeal is upheld with costs.

[2] The cross-appeal is dismissed with costs.

[3] The order of the court a quo is set aside and is substituted with the following order:-

[a] The defendant is ordered to pay the amount of R469 604.96 plus interest a tempore morae.

[b] The defendant is ordered to pay the costs.

[c] The two counterclaims of the defendant are dismissed with costs.

R D HENDRICKS

JUDGE OF THE HIGH COURT

I agree.

A M KGOELE

ACTING JUDGE OF THE HIGH COURT

I agree.

M J MOLOTO

ACTING JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPELLANT: DE VRIES INCORPORATED c/o MINCHIN & KELLY INC.

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