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South Africa: Supreme Court of Appeal |
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Reportable
Case No: 365/2000
In the matter between:
AFRICA SOLAR (PTY) LTD Appellant
and
DIVWATT (PTY) LTD Respondent
Coram: Nienaber, Olivier, Streicher, Farlam and Nugent, JJ A
Heard: 25 February 2002
Delivered: 28 March 2002
STREICHER JA:
[1] I have read the judgment by Nienaber JA but cannot agree that the appeal should be dismissed. My reasons are substatially the same as those given by Southwood J for disagreeing with the majority judgment in the court a quo.
[2] At the request of the parties the trial court ordered that the following issues be decided first:
‘1 Whether the plaintiff’s action has been compromised as alleged in defendant’s special plea;
By whom the plaintiff was represented in concluding the agreement of sale with the defendant, and what the terms of the agreement between the parties were upon which the dispute should be adjudicated;
The implication of the terms of the agreement between the parties, in particular:
Whether the defendant is precluded from raising a defence of non-payment due to an alleged defect in some of the solar panels; and
Whether the defendant is precluded by such terms from claiming damages in the nature set out in defendant’s counterclaim.’
In my view the issues were formulated too widely. The real issues between the parties, apart from the compromise issue, were whether the standard conditions of trade of the appellant applied to the sale of solar panels by the appellant to the respondent, whether the respondent was contractually precluded from raising a defence of non-payment due to a defect in the solar panels and whether the respondent was contractually precluded from claiming consequential damages as a result of such a defect. The parties were entitled to a determination of those issues and not to a determination of each and every term of the contract and of whom represented the parties in respect of each such a term. The trial court should only have decided the real issues between the parties and those are the only issues that I will address in this judgment.
[3] As stated by Nienaber JA the major issue between the parties at this stage of the proceedings is whether the standard conditions of trade of the appellant applied to the sale of solar panels by the appellant to the respondent. He, as well as the majority of the court a quo, are of the view that Pichulik, a director of the respondent, never agreed that the standard conditions would apply.
[4] The following facts are not in dispute:
The appellant is a company within the Marvol group of companies.
During the period June to August 1993 the parties were negotiating a sale of solar panels by the appellant to the respondent.
On 28 June 1993 the appellant, in writing quoted for the supply of solar panels to the respondent. In terms of the quotation the appellant offered a 10 year guarantee on all solar modules. The quotation stated that the payment terms were to be discussed.
The parties agreed that five panels would be delivered to the respondent for testing purposes.
The respondent contemplated that a purchase of the solar panels would be on credit.
On 4 August 1993 Ms Gerber, a bookkeeper and credit supervisor in the employ of the appellant, faxed a document to the respondent. The document was headed ‘APPLICATION FOR CREDIT FACILITIES’.
On 9 August 1993 the director responsible for the financial side of the respondent’s business, Mr Pichulik, signed the document and returned it to the appellant. Pichulik’s signature appears immediately below the following paragraph:‘All purchases will be made in terms of and subject to the conditions of trade of Helios Power (Pty) Ltd, as printed on the reverse hereof, which by signing this, I acknowledge having read, understood and accepted. I also warrant that I am authorised to sign this application.’
In terms of the standard conditions of trade ‘approved credit’ is for a maximum period of 30 days after delivery of goods unless specified otherwise in writing.
The respondent did not otherwise apply to the appellant for credit.
The question whether the appellant should grant credit to the respondent was taken up with Dr Venter, the managing director of the appellant, but he was not prepared to grant credit facilities to the respondent. Thereupon the matter was taken up with Mr Wolf, the financial director of the Marvol Group. He decided that the respondent was good for credit and conveyed his decision to the management of the appellant.
On 16 August 1993 the respondent wrote to the appellant in a letter faxed to Mr Mac Micciarelli:
‘With regard to our telephone conversation this morning, I confirm the following:
(a) the prices of your modules are R1 133,00 for the HTO, and R910,00 for the H55S nett 30 days.
This is an official order for the following quantities . . .’
[5] Pichulik’s evidence was to the effect that he did not consider the document that he signed to be an application for credit facilities, nor did he intend to contract on the basis set out in the document. According to him Gerber had telephoned him before the test panels were delivered to the respondent. She said that it was an unusual situation in that the respondent was going to receive panels without paying for them and that she needed some information about the respondent in order to update her records. For this reason she was going to send him the appellant’s standard form which he should fill in. When Pichulik received the form he did not think that the relevant paragraph quoted above applied because there was no purchase yet. He thought that the second page had not been sent because it was not in the minds of either Gerber or himself to enter into a contractual arrangement.
[6] Gerber’s evidence was that it was the appellant’s practice to fax both the front page and the back page of the credit application form to applicants for credit facilities. Upon receipt of the application her secretary would make the necessary enquiries whereafter the form would come back to her. She would then have taken it up with Venter. She could not remember precisely what happened in this case but could remember that Venter was not satisfied, that Wolf got involved and that Wolf authorised the grant of credit facilities to the respondent. It is implicit in her evidence that she could at least remember that there was a credit application. She could not think that she would have said that the document was required merely for information purposes.
[7] The trial court held that Pichulik’s evidence regarding the circumstances under which he received the front page of the document purporting to be an application for credit facilities was uncontested and that his evidence was accordingly to be accepted. Nienaber JA, after an examination of the evidence, concludes that:
‘In the absence of any other explanation for the furnishing of the document, Pichulik’s evidence, that it was required as an information sheet for record purposes, accordingly stands unchallenged. The trial Court accepted it and no compelling reasons have in my opinion been advanced why this Court should depart from that finding.’
[8] In my view it is so improbable that Pichulik did not intend the document to be considered as an application for credit that his evidence in this regard should have been rejected out of hand. In any event I do not agree with the trial court and Nienaber JA that his evidence stands unchallenged.
[9] I consider Pichulik’s evidence to be improbable in the light of the facts stated above, more particularly the fact that the document was headed ‘Application for credit facilities’ in bold capital letters, the fact that Pichulik appended his signature below words to the effect that the respondent intended to make all purchases in terms of and subject to the conditions of trade of the appellant, the fact that the parties, at the time, were negotiating a sale of solar panels and the fact that the terms of payment still had to be negotiated. It is even more improbable in the light of Pichulik’s own evidence to the effect that:
It was contemplated that the respondent would buy on credit.
He must have read the document. He normally does not sign documents that he has not read.
It was obvious to him that the appellant wanted to ‘check’ the respondent ‘out from a credit point of view, it was not just updating records’.
He anticipated that the information contained in the form ‘would be used and probably incorporated into the decision’ to grant the respondent credit. Moreover, he knew that the information sought would be used for purposes of deciding whether or not to give credit to the respondent should the respondent do business with the applicant.
His role in the respondent was that of ‘director for everything, except for the technical execution of the company’.
When presented with standard conditions of trade he normally scratches out all those paragraphs which are not to his liking.
He drew a line through the space provided for trade references and wrote ‘New Company’.
He drew a line through the words ‘YES/NO’ in respect of the question whether the directors were prepared to sign guarantees and wrote ‘to be negotiated’.
He drew a line through the space provided for particulars of fixed property offered as security.
He did not delete the words ‘application for credit facilities’ or the statement that purchases would be made subject to the conditions of trade of the appellant.
The granting of credit would have required further negotiations between the parties and additional information. Yet, he did not suggest that any such further negotiations took place before credit was granted to the respondent.
[10] In the light of all these facts Southwood J held:
‘Mr Pichulik’s evidence about his intention not to enter into a contract cannot be accepted at face value. He was an experienced busninessman. He was described and described himself as a punctilious person. He confirmed that he never signs any document without reading it first. He testified that if there are terms in a document which are not to his liking he deletes them. He confirmed that in this case he read the application for credit facilities carefully and entered information and made deletions and amendments where appropriate. It is obvious that the application has a serious commercial purpose and he confirmed that it would be used for the basis of granting credit.
If Mr Pichulik had really not intended to bind the respondent to the appellant’s conditions of trade then the overwhelming probability is that two things would have happened.
First: He would not have signed the document as it stood. On his evidence there was no need to sign the document. All that the appellant wanted was certain information.
Second: He would have deleted the certificate or undertaking as was his wont. On his evidence that is what he did when he did not find terms in an agreement to his liking.
The fact that he signed the document just below the certificate after carefully reading and amending the document is overwhelming evidence that he intended to bind the respondent to the conditions of trade.’
I agree.
[11] For the reasons that follow I do not agree with Nienaber JA and the trial court that Pichulik’s evidence stands uncontradicted. Pichulik’s evidence was challenged in cross-examination. In a laborious cross-examination over a number of days the improbabilities in his version were exposed. It should and could have been done in an hour or two. In the light of Gerber’s evidence that she often faxed the document to customers her evidence that she could not specifically remember her conversation with Pichulik is not surprising and affords no justification for finding that Pichulik’s evidence stands uncontradicted. On her evidence it is improbable that she would have told Pichulik that she merely wanted information. Not only did she say so, she also dealt with the form as if it was an application for credit facilities as is confirmed by the evidence of Venter and Wolf. Although Venter was uncertain as to whether he had seen the specific document and Wolf could not recall having seen the written credit application both of them confirmed that they dealt with a credit application by the respondent. Nobody suggested that there was another credit application and no reason was advanced as to why the evidence of Venter and Wolf should not be accepted. The fact that the respondent had not yet finally decided to buy does in my view not make it improbable that Gerber would have asked Pichulik to complete a credit application. By that time the parties had been negotiating since June 1993, the appellant had been asked to quote for the supply of solar panels and in the appellant’s quotation dated 28 June 1993 it was stated that payment terms had to be discussed. It does not seem to me improbable at all that the respondent would have applied for credit facilities on 9 August 1993, some 7 days before an order was eventually placed.
[12] There is yet another reason why Pichulik’s evidence should have been rejected. According to him he was horrified when the appellant claimed that he was bound by the standard conditions and a copy thereof was sent to him. However, in an application for the rescission of a default judgment granted to the appellant in this very matter De Villiers, another director of the respondent, deposed to an affidavit in which he said that when the respondent first did business with the appellant a credit application form was filled out and signed by the directors of the respondent but that as far as could be recalled the terms and conditions of contract referred to therein were not attached at the time of signing thereof. Pichulik was the person who gave the instructions to the attorney who drafted the affidavit and when he subsequently read the affidavit there was, according to him, nothing in the affidavit which struck him as being incorrect. If Pichulik had not intended the relevant document to be a credit application and if he was horrified to hear that it was considered to be such it is inconceivable that the statement in the affidavit would not have struck him as being incorrect.
[13] In my view the trial court erred by failing to recognise that Pichulik’s evidence was highly improbable and by considering his evidence to stand uncontested.
[14] In any event, I agree with Southwood J that the document is clear and unambiguous and that there is no room for mistaking its import. Even if Gerber told Pichulik that she wanted him to fill in a form for information purposes, it would have been clear to him, when he received the form, that she wanted him to submit a credit application when he received the form. There could, therefore, have been no doubt in his mind that the document he returned constituted an application for credit facilities and an undertaking to be bound, for the future, by the standard conditions of trade,
[15] Pichulik signed a credit application in which he said that purchases would be made in terms of and subject to the conditions of trade of the appellant as printed ‘on the reverse hereof’. The reference was clearly to the reverse of the original document. Pichulik never said that he understood the reference to be to the reverse of the fax. If the reverse was not faxed to him and not known to him he could have called for a copy. By not doing so he indicated that he was nevertheless prepared to contract on the basis of the appellant’s standard conditions. The full court erred in holding that a person ‘cannot be held to be bound by something which he has not seen’. If a person is prepared to contract subject to standard conditions which he has not seen there is nothing preventing him from doing so.
[16] In my view the following evidence established that the application for credit facilities submitted by Pichulik to the appellant was granted by the appellant. Gerber said that she would have referred the credit application to Venter and that she would have given the form to him. Venter testified that a credit application by the respondent was submitted to him although he could not be sure that he had seen the specific document signed by Pichulik. He was not prepared to grant credit. Wolf then became involved and he authorised the grant of credit to the respondent. On the 16th of August 1993 the respondent was advised by Mr Mac Micciarelli that the respondent could buy solar panels on 30 days credit.
[17] The question then arises whether the respondent was contractually precluded from raising a defence of non-payment due to a defect in the solar panels and whether the respondent was contractually precluded from claiming consequential damages as a result of such defect. Clauses 1, 3 and 5 are relevant in this regard. They are quoted in Nienaber JA’s judgment.
[18] The respondent contends that the solar panels delivered by the appellant were defective and did not comply with the specifications in that ‘the output of electricity given was, 15 to 21% below that which (was) laid down in the specification’. It tendered to return to the appellant the panels it still had in stock.
[19] The appellant did not submit that the conditions relieved him from the obligation to deliver solar panels complying with the specification and the clauses clearly did not have that effect. What the appellant did submit was that, in terms of the standard conditions, the respondent was not obliged to pay the purchase price but that to the extent that the panels became defective subsequent to delivery clause 3 of the standard conditions applied. The respondent, on the assumption that the standard conditions applied submitted that to the extent that the panels became defective before payment had to be made i.e. within the 30 day credit period, it was not obliged to pay the purchase price. In my view the standard conditions are clear. The appellant’s obligation was to deliver solar panels complying with the specification. After delivery of panels complying with the specification the appellant had a discretion to either replace or repair them in the event of them subsequently becoming defective.
[20] Clause 5 of the standard conditions excludes liability on the part of the appellant for consequential damages.
[21] I agree with Nienaber JA that the appellant should be sanctioned for the inordinate, tiresome and protracted cross-examination of Pichulik and De Villiers. A proper sanction would be not to accede to the appellant’s request that costs be granted on the attorney and client scale and to deprive the appellant of a third of its costs of appeal.
[22] The parties agreed that if the appeal were to be upheld the respondent would be liable to pay the wasted costs of the postponements of the trial of this matter on 5 August 1996 and 29 August 1997.
[23] In my view the following order should be made:
The appeal is allowed.
The respondent is ordered to pay two thirds of the appellant’s costs of appeal.
The order made by the court a quo is set aside and replaced with the following order:
‘1 The appeal is allowed with costs.
2 Paragraphs 2 to 5 of the order of the trial court are replaced with the following paragraphs:
“2 It is declared:
That the sale of solar panels by the plaintiff to the defendant was in terms of and subject to the plaintiff’s standard conditions of trade as set out in annexure A to the plaintiff’s declaration.
That, to the extent the solar panels sold and delivered to the defendant by the plaintiff became defective after delivery the defendant is precluded from raising a defence of non-payment due to such defect.
That the defendant is in terms of clause 4 of the standard conditions precluded from claiming consequential damages as a result of defective panels from the plaintiff.
The defendant is ordered to pay the wasted costs of the postponements of the trial set down for 5 August 1996 and 29 August 1997.”’
_____________
P E Streicher
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.RTF of original document