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IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

          CASE NO : CA 98/2015

       Date heard : 29 July 2016

      Date delivered : 25 October 2016

In the matter between :

EASTERN CAPE MOTORS (PTY) LTD                                                                       Appellant

and

STU DAVIDSON AND SONS (PTY) LTD                                                                Respondent

JUDGMENT

RUGUNANAN AJ:

[1] This is an appeal against the dismissal of the appellant’s (the plaintiff in the court a quo) claim for damages against the respondent (the defendant in the court a quo) in an action instituted in the Regional Court in Port Elizabeth. The appellant’s claim is based on a breach of a warranty contained in a written agreement, alternatively a claim formulated in delict arising from an alleged negligent misrepresentation.

[2] The subject matter of the claim concerns a Volkswagen Transporter motor vehicle (“the Transporter” / “the vehicle”) that was acquired by the appellant as a trade-in for the amount of R245 000.00 when the respondent purchased a Ford Ranger motor vehicle from the appellant. It is common cause that the transaction, concluded on 23 November 2012 between Mr Cornelius Pommerel representing the appellant and Mr Patrick Davidson representing the respondent, was recorded in a written agreement comprising of the following items attached to the particulars of claim as annexures ‘B1’; ‘B2’ and ‘C’, respectively :

·         an ‘Offer to Purchase’;

·         a document entitled ‘Special Conditions of Offer to Purchase’ (“the special conditions”); and

·         a further document entitled ‘Trade in Declaration by Seller’ (“trade-in declaration”).

[3] In pursuance of its claim in contract, the appellant placed reliance on clause 12.5 of the special conditions and clause 7 of the trade-in declaration. The clauses read as follows :

“12.5               You warrant that the trade-in vehicle offered in this agreement has not been involved in any accident … “

and

“7                     I / we warrant and declare that the vehicle has not been involved in a substantial / major accident (particularly if it will affect resale value).”

[4] In addition, the special conditions incorporated provision for legal costs on a scale as between attorney and own client in the event of a breach of the agreement.

[5] Based on the fact that it is common cause that Davidson disclosed to Pommerel that the Transporter had indeed been involved in an accident, the Respondent delivered a counterclaim seeking rectification that these clauses should be deleted and replaced with the following clause :

“The Transporter has been involved in an accident. Eastern Cape Motors shall undertake its own investigation into the accident to determine whether the Transporter may be traded in or not.”

[6] The judgment of the trial court reflects that the magistrate made no order in respect of the rectification pleaded in the counterclaim. The above clause is quoted ostensibly for clarification purposes, and although no cross-appeal lies on the rectification issue, counsel for the respondent correctly did not persist very fervently in seeking to persuade us that it was alive on appeal.

[7] Dealing only with those aspects of the merits of the matter considered material for present purposes, it is not in issue that Davidson disclosed to Pommerel that the Transporter had, on a prior occasion, sustained damage when it was involved in an accident. The evidence, supported by a photograph (record volume 5 ‘Exhibit B’, page 344), indicates that the damage traversed the right front suspension and front bumper. The damage, overall, was represented by Davidson as being of a minor nature. In his own words, he expressly disclosed that it was “not bad”; and in Pommerel’s estimation, the damage did not significantly influence the resale value of the vehicle. At the time of the parties’ agreement Pommerel obtained a “Vehicle Enquiry Report” (Vol 5 ‘Exhibit A’, page 310), which revealed “No adverse issue found” in respect of the vehicle (a fact overlooked by the magistrate when he criticised Pommerel). In point, all indications are that Pommerel had no reason to believe otherwise, considering the Transporter was a 2012 model with an odometer reading of only 5 600 kilometres.

[8] Pommerel, in the subsequent weeks that followed, introduced the vehicle for resale to potential dealerships, one based in Mpumalanga and another in Bloemfontein. The dealerships rejected the vehicle due to cosmetic problems. These were eventually remedied by Plastic Rebuilders who were paid by the respondent for their services. Around 17 or 18 January 2013 Pommerel approached Mr Ferdi McLeod, a sales manager who retails pre-owned motor vehicles on behalf of the appellant, to assist in disposing of the Transporter via an online auction website called “Bid4Cars”.

[9] McLeod required Pommerel to obtain certain information about the vehicle from the manufacturer, Volkswagen. Pommerel initiated further enquiries, the details of which are captured on a document entitled “Vehicle History” (Exhibit A, page 311). This document discloses that on 5 June 2012 the manufacturer’s warranty had been terminated and the vehicle declared a write-off because it was involved in an accident. (I pause to state that Volkswagen obtained a quotation for repairs dated 17 April 2012 amounting to R261 946.50 from Prestige Auto Body Repairers. This quotation was not available to Pommerel during the time of his enquiries but interceded during the course of the trial proceedings and is dealt with in the evidence of Mr Lenro Stoltz.) Believing that the vehicle was at all times involved in a minor accident as initially represented by Davidson, Pommerel pursued with further enquiries as to the basis on which it was declared a write-off. Through the assistance of a Ms Elzaan Dixon it was, in a communication by email dated 30 January 2013 (Exhibit A, page 312), established that prior to the appellant’s acquisition of the Transporter, the vehicle was deemed uneconomical to repair because it was treated as an accident write-off. Pommerel then reverted directly to the respondent. His efforts in seeking clarification from the respondent on the accident status of the vehicle before the appellant acquired it, came to naught. Towards the end of March 2013 and with the assistance of McLeod, the Transporter was eventually sold for R150 000 to one Hechter.

[10] Before proceeding further, and as a reminder of note, an appellant is entitled to a right of hearing and it is open to this court, subject to limitations, to draw its own inferences or conclusions regarding its preference for and the relative worth to be attached to the evidence of witnesses; in this instance the main protagonists Pommerel and Davidson (see R v Dhlumayo and Another 1948 (2) SA 677 (AD) at 678 paragraph [7]). A reading of Pommerel’s evidence indicates that he answered questions truthfully and conceded that he was negligent in failing to initiate the appellant’s internal protocols by doing the necessary checks on the vehicle at the time when the agreement was entered into. His concession that he was negligent does not redound to the assistance of the respondent particularly in the absence of the negligence issue being pertinently raised in the respondent’s pleadings (see AA Mutual Assurance Association Ltd v Nomeka 1976 (3) SA 45 (AD) at 55 D cited with approval in Gibson v Berkowitz 1996 (4) SA 1029 (W) at 1051 D).

[11] The evidence by Davidson indicates that he disclosed everything he knew about the Transporter having been involved in a minor accident (albeit the severity in dispute) before the agreement with Pommerel was concluded.  In argument it was contended for the respondent that he did so with the intention that Pommerel should investigate. There is a remarkable absence of detail in Davidson’s evidence that supports this contention.  In point, Davidson’s assertion that the vehicle was given to the appellant on two separate occasions to do inspections and carry out checks emerged only during his re-examination and was never traversed with Pommerel under cross-examination. All indications are that Davidson was aware of the purport of clause 7. On the probabilities one is driven to conclude that he had every opportunity to strike the clause from the agreement had he disagreed with its meaning and purport. He did not do so. That being the case, clause 7 clearly constitutes an enforceable term of the agreement (see Schmidt v Dwyer 1959 (3) SA 896 (C) at 899 A). The circumstances do not lend themselves to conclude otherwise. Counsel for the appellant both in argument and in his detailed heads correctly submitted that the representation by Davidson amounted to a dictum et prommissum on the test that “an affimation at the time of the sale is a warranty provided it appears on the evidence so intended”, which test was devised in Heilbut, Symons & Co v Buckleton [1913] AC 49-51 and applied with approval in Naude v Harrison 1925 CPD 84 at 90-91. Respectfully, the magistrate erred in concluding that the representation constituted only an opinion on the condition of the vehicle and that by implication it was not an enforceable term of the parties’ agreement. The issue to be decided on appeal must accordingly be approached on the footing that clause 7 encapsulates a warranty, the breach of which will depend on whether the Transporter was involved in a “substantial / major accident” affecting its resale value. I interpose to state that although the word “warranty” has many different meanings, it is used in the present context to mean “a term of the written agreement” (see R H Christie, The Law of Contract in South Africa, 5^th ed at page 174).

[12] On the basis of the scenario of events charted hereinabove the appellant claimed damages as follows :

(i)            R95 000.00, being the difference between what the appellant paid the respondent for the Transporter and what the vehicle was eventually sold for; and

(ii)          R10 226.00, being the costs incurred in transporting the vehicle to dealerships in Mpumalanga and Bloemfontein and finally back to Port Elizabelth.

[13] It is common cause that clause 12.5 of the special conditions finds no application in the circumstances of this matter, this due to the representation by Davidson that the vehicle sustained minor accident damage.

[14] Mr Lenro Stoltz was called as an expert witness on behalf of the appellant on the issue concerning the Transporter having been involved in a “substantial / major accident”. Before dealing with his evidence it is perhaps useful to set out the role of an expert witness.

[15] In Schneider NO and Others v AA and Another 2010 (5) SA 203 (WCC) at 211F - 212A, the duties of an expert witness (quoting only where relevant for present purposes) were set out as follows :

• Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation;

• An expert witness should provide independent assistance to the court by way of objective, unbiased opinion in relation to matters within his expertise;

• An expert witness should state the facts or assumptions upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinions;

• An expert witness should make it clear when a particular question or issue falls outside his expertise.

[16] In elaborating on these duties the court stated :

“In short, an expert comes to court to give the court the benefit of his or her expertise. Agreed, an expert is called by a particular party, presumably because the conclusion of the expert, using his or her expertise, is in favour of the line of argument of the particular party. But that does not absolve the expert from providing the court with as objective and unbiased opinion, based on his or her expertise, as possible or a particular case. An expert is not a hired gun who dispenses his or her expertise for the purposes of a particular case… ”

[17] Stoltz testified that he is the owner of a business called “Prestige Auto Body Repairers”, that he has 25 years’ experience in the repair of accident damaged vehicles, and that he provided Volkswagen with a quotation for repairs to the Transporter. This quotation is included in ‘Exhibit A’ of the record at pages 330-331 and is dated 17 April 2012.

[18] He stated that he personally inspected the Transporter and on the basis of that inspection he prepared the aforementioned quotation amounting to R261 946.50 . He explained that a quotation is usually compiled on the basis of patently visible damage. Based on what he observed about the physical condition of the vehicle including the extent of the amount quoted for, he concluded that the Transporter was involved in a major accident. In his own words “it was smashed”, and he volunteered that it sustained extensive suspension and body damage rendering it financially not viable for a factory approved repair. For this reason, Volkswagen terminated the manufacturer’s warranty and had the vehicle declared a write-off. He elaborated that a factory approved repair requires a vehicle to be repaired with new parts and approved sealants, this in accordance with the manufacturer’s standards, specifications and workmanship. Unless these standards and specifications are complied with, the warranty on the vehicle falls away.

[19] Although the quotation amounted to R261 946.50 for physical damage observed during inspection, Stoltz explained that the damage could not be limited to that amount because he could not assess mechanical damage to the vehicle. It is understood from his evidence that the mechanical damage could only be assessed once the vehicle was driven after the physical damage had been repaired. In that event, it was conceivable that the damage could exceed the amount appearing in the quotation.

[20] It is not disputed that the quotation included an amount of R77 438.00 for a replacement gearbox. During cross-examination it was put to Stoltz that the gearbox was not an integral component of the suspension or bodywork of the vehicle. This was done for the purpose of getting Stoltz to concede that he had no expertise in the assessment of mechanical damage nor could he have known whether the gearbox was mechanically damaged, and that the amount quoted for the gearbox was hearsay and not within his personal knowledge. Stoltz had no difficulty making these concessions but emphasised that his expertise was limited only to assessing “visible damage”. On being pressed as to why this item was included in the quotation, he explained that the gearbox manifested external damage in the form of scratches on its casing. More importantly, he stated “Volkswagen’s policy is that if there is visual damage then you quote on it” as the reason for including the gearbox in the quotation. The quotation, in any event, was subject to final ratification by an assessor.

[21] On being questioned by the magistrate as to the basis on which he concluded that the Transporter was involved in a major accident, Stols described the suspension of the vehicle as “heeltemal onder hom ingevou”.

[22] In argument counsel for the respondent submitted that the quotation was not proven in respect of the replacement gearbox and hence the appellant did not discharge the onus of establishing that the vehicle was involved in “a substantial / major accident”. Respectfully, I cannot agree with this submission. Stoltz pertinently stated that the gearbox was included in the quotation in keeping with Volkswagen’s policy regarding visual damage. This aspect of the evidence was not challenged nor pertinently contradicted in the trial proceedings, nor has it been shown on appeal that it is assailable.

[23] A reading of the evidence reflects that Stoltz was a reliable and professionally unbiased expert witness. He clearly confined himself to his area of expertise and gave evidence of quality without being evasive, dogmatic or argumentative as if to indicate partisanship. He was certainly not inflexible under cross-examination and methodically and skilfully countered the assertions put to him with reasonable explanations in defence of his conclusion. It is unlikely that any criticism can be directed at Stoltz for having contravened any of the strictures set out in the extracts quoted from Schneider NO, supra.

[24] In the circumstances, I am of the view that the evidence by Stoltz establishes that the Transporter was involved in “a substantial / major accident”. The consequence is that the appellant has proven a breach of the warranty contained in clause 7 of the trade-in declaration. What remains for consideration is the question of damages.

[25] In the claim based on contract the appellant’s first claim is for payment of damages in the sum of R95 000.00 calculated as the amount paid to the respondent on trade-in (R245 000.00) less the amount recovered on the sale of the vehicle to Hechter (R150 000.00).

[26] The second claim is for transportation costs amounting to R10 226.00 .

[27] In a contractual context there is a distinction between general and special damage. Sometimes the corresponding terms “intrinsic damages” (or “direct loss”) and “extrinsic damages” (or “consequential loss”) are used. General damage is regarded as loss that flows directly or naturally from the breach of contract and which the law presumes to have been within the contemplation of the parties. Special damage is loss that is usually too remote and in respect of which liability exists only if it appears from special circumstances extant at the time when the contract was concluded that it was actually or presumptively foreseen by the parties (see Shatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (AD) at 550 B-551 B and Holmdene Brickworks (Pty) Ltd v Roberts Construction (Ltd) 1977 (3) SA 670 (AD) at 687 C-H). This distinction is made only as a practical way of indicating that particular principles concerning remoteness of damage or the pleading or proof of damage, are relevant (see Visser and Potgieter, Law of Damages, 2^nd ed at pages 59-61 and Shatz Investments supra at 551B).

[28] The fundamental rule in regard to the award of damages for breach of contract is that the sufferer should be placed in the position he would have occupied had the contract been properly performed without subjecting the defaulting party to undue hardship (Holmdene Brickworks supra at 687 C). In some instances proof of direct loss is a matter of common sense (Visser and Potgieter op cit at page 59). There can be no question that the failure of the respondent to deliver a motor vehicle that had not been involved in a substantial or major accident which affected the resale value is the direct cause of the appellant’s loss in the form of having sold the Transporter at a considerably reduced value. The appellant has shown conclusively on a balance of probabilities that it suffered loss as a result of the respondent’s breach. Applying the prescript referred to in Holmdene Brickworks, and of course common sense, that loss amounts to R95 000.00 .

[29] Where the appellant’s second claim for transportation costs is concerned, it is common cause that it falls into the category of special or extrinsic damages, in that it did not flow directly or naturally from the respondent’s breach. Tritely, this category of damages must be specially pleaded and full particulars thereof must be supplied (Trust Bank of Africa Ltd v Marques 1968 (2) SA 796 (TPD) at 798 F-G). In the context of this matter, it was required of the appellant to plead and prove that the transportation costs were actually or reasonably foreseen by the parties and that such damages would probably result from a breach. The particulars of claim make no averment to the effect that the transport costs were within the contemplation of the parties, nor was any evidence led in this regard. More pertinently, there is no indication that Pommerel informed Davidson that the Transporter would be sent to other dealerships elsewhere in order to sell it and that this would result in costs being incurred. Nor was there any evidence indicating that Davidson ought to have realised that the vehicle would be sent elsewhere at a cost to the appellant. In the circumstances, the appellant’s second claim fails. This is also the fate of this claim in delict, for the reason that the loss is not sufficiently closely or directly linked to the respondent’s breach and is thus far too remote to have been within the reasonable contemplation of the contracting parties (see International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (AD) at 700 I for the appropriate test  and generally LAWSA Vol 7 paragraph [33]).

[30] In view of the conclusion arrived at in this judgment regarding the appellant’s main claim in contract, it is unnecessary to give consideration to the alternative claim formulated in delict.

[31] In the result the following order will issue:

(1)       The appeal is upheld and the respondent is ordered to pay the costs of the appeal on a scale as between attorney and own client;

(2)       The order of the court a quo is set aside and substituted to

read :

“Judgment is granted in favour of the plaintiff against the defendant for :

(a)       Payment of the amount of R95 000.00 ;

(b)       Interest on the said amount at the legal rate applicable from time to time calculated from 13 May 2013 to date of final payment;

(c)        Costs of suit on a scale as between attorney and own client including the reasonable and necessary qualifying expenses of Mr Lenro Stoltz”.

__________________________

S RUGUNANAN

ACTING JUDGE OF THE HIGH COURT

I agree.

__________________________

J D PICKERING

JUDGE OF THE HIGH COURT

Appearances:

 

For Appellant :          Adv J J Nepgen, instructed Netteltons Attorneys, Grahamstown

 

For Respondent :     Adv N J Mullins SC, instructed Neville Borman & Botha, Grahamstown

 

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