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REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH)

Case No: 2090/2013

In the matter between:                                                                        

MIDSOUTH DISTRIBUTORS (PTY) LTD                                                                      Plaintiff

And

ANFOTO PROCESSING LABORATORY CC                                                  First Defendant

DARYL ANDERSON                                                                                   Second Defendant

 

Coram:                       CHETTY J

Heard:                        31 August 2015 – 2 September 2015

Delivered:                  15 September 2015

Summary:                   Contract – Instalment sale agreement – Non-variation clause – Applicability of – Demonstration model replaced by new model – Whether agreement terminated – Plaintiff’s managing director alleging conclusion of oral agreement – Such regulating new model – Claim dismissed

JUDGMENT

Chetty J :

[1]        The first component of the plaintiff’s cause of action against the defendant[1], has its genesis in an instalment sale agreement signed by the parties on 29 March 2012. That claim, designated Claim A in the particulars of claim, for payment of the sum of R264, 168.16, is predicated upon the defendant’s breach of the instalment sale agreement and represents the balance allegedly outstanding pursuant thereto, Claim B, arises from the defendant’s alleged breach of an oral agreement to repay the plaintiff for consumables supplied to it.

[2]        It is apposite at this juncture, as a precursor to a consideration of the issues which fall for decision to restate trite principles enunciated decades ago in Robinson v Randfontein Estates GM CO Ltd[2], where Innes C.J. stated: -

“The object of pleading is to define the issues; and parties will be kept strictly to their pleas where any departure would cause prejudice or would prevent full enquiry. But within those limits the Court has a wide discretion. For pleadings are made for the Court, not the Court for pleadings. And where a party has had every facility to place all the facts before the trial Court and the investigation into all the circumstances has been as thorough and as patient as in this instance, there is no justification for interference by an appellate tribunal, merely because the pleading of the opponent has not been as explicit as it might have been. We are therefore bound to give full effect to the failure of the appellant to establish the genuineness of the contract upon which he relies.”

[3]        With that prelude, I turn to consider the plaintiff’s case which, as adumbrated hereinbefore, arises, firstly, from the defendant’s breach of an instalment sale agreement. In its particulars of claim, the plaintiff alleged that the “material express, alternatively implied, alternatively tacit terms of the agreement” were: -

(i)           the sale of goods identified as, one HP Photosmart ML2000D system; two (2) HP imput stations and one ZS3200 Poster Printer system.

(ii)          the purchase price inclusive of VAT was the sum of R684 000,00.

(iii)         the commencement and termination dates were 1 April 2012 and 30 March 2014 respectively.

(iv)         upon delivery of the goods to it, the defendant would bear the risk.

(v)          notwithstanding delivery, ownership of the goods would remain vested in the plaintiff pending the payment of the purchase price in full.

(vi)         prior to delivery, the defendant was obligated to pay a deposit of R150 000,00.

(vii)        the defendant was further obligated to pay a further deposit of R200 00,00 and 24 monthly instalments of R16 501,51 pursuant to clause 6.2 read with the first schedule to the agreement;

(viii)       in the event of the defendant’s default of its payment obligations the plaintiff was entitled to claim immediate payment of all amounts payable, whether due or not and to repossess the goods upon due demand.

[4]        The aforegoing précis of the contractual terms are all sourced from the pleadings, with one notable exception. In paragraph 5.7 of the particulars of claim the plaintiff alleged that: -

“In terms of clause 6.2 read with the First Schedule the first defendant agreed to pay the plaintiff a second deposit of R200,00,00 on or before 16^th July 2012 and thereafter twenty four (24) monthly instalments, commencing on 31^st July 2012 of R16 510,51;”

However, the first schedule to the instalment sale agreement, which, per the definition of “agreement” in clause 1, is indivisible from the instalment sale agreement, makes no provision whatsoever for payment of a further deposit of R200, 000. 00. It explicitly makes provision for a deposit of R150, 00, 00 only, and monthly instalments of R22 500, 00 excluding VAT. In its amended plea the defendant admitted solely, the terms embodied in the instalment sale agreement and nothing else. Crucially, the allegation that the defendant was contractually bound to pay a further deposit of R200, 000. 00 was thus implicitly denied.

[5]        The allegation relating to the payment of the aforesaid amounts is incongruous with the terms of the agreement and clearly not a contractual term. It is however common cause that an amount of R200, 000. 00 was paid to the plaintiff on 16 July 2012, several months subsequent to the conclusion of the instalment sale agreement. The only memorial of this payment, annotated as “second deposit” appears from an annexure to a letter, “POC2”, addressed to the defendant, dated 28 May 2013, emanating from the plaintiff’s managing director, Mr Arnold Vosloo (Vosloo), bemoaning the defendant’s instalment arrearage.

[6]        In order to resolve this enigma, the focus must perforce shift to the evidence adduced at the trial. In his evidence in chief, Vosloo adverted to this payment during his narrative concerning the installation of the printer. Although his recollection of the factual matrix which precipitated the impasse between the parties was exceedingly vague, the crux of his testimony may be synopsized as follows –

 

The printer was not new but a demonstration (demo) model. Pursuant to the conclusion of the agreement, the printer was installed in the defendant’s premises and commissioned over the period 24, 25 and 26 April 2012.  Consequent upon what he termed “issues with the machines”, the printer was decommissioned, disassembled and removed from the premises. As a gesture of goodwill, and to mollify the defendant, a new printer was installed in the premises on 2 July 2012 and commissioned over the following days.

[7]        Under cross-examination however, Vosloo’s vague recollection mutated to amnesia - he professed ignorance not only as to the reasons underlying the removal of the printer from the premises, but when this was done and at whose behest. His nescience is not only feigned but contrived. On the probabilities, the removal of the demo model and the subsequent installation and commissioning of a new printer was occasioned solely by reason of its defectiveness and unsuitability for its stated purpose. Vosloo ultimately conceded that the breakdown of the printer constituted the reason the instalment sale agreement concluded between the plaintiff and the defendant terminated. This unsolicited admission, completely at variance with the pleaded case, elicited a query from Mr Jooste whether the plaintiff intended amending its pleadings. Mr Cothill’s curt riposte was “no, it’s not necessary, my Lord. I’ll fix it up on re-examination.” Before considering counsel’s attempt not only to dilute Vosloo’s evidence but to discount its impact, it is apposite to reproduce that testimony verbatim. 

[8]        As adumbrated earlier, Vosloo was no mere underling within the plaintiff’s organisational hierarchy. He was its managing director and his evidence must accordingly be evaluated against his stature as such. His unambiguous evidence was that the agreement, “POC1”, related to the demo model and not the printer subsequently installed and commissioned. He stated as follows-

“Yes the initial equipment was replaced by a new exactly the same model.

What was the initial equipment? --- Also an ML2000D.

And that was the initial equipment that was described in this agreement. --- That’s correct.

So this agreement relates to equipment which was replaced. --- That is correct.

So this agreement does not pertain to the equipment that is at present in the premises. Is that correct? --- Right, that is correct.

So no agreement exists which evidences the existence of the present arrangement and the present equipment because by agreement this agreement came to an end when the equip-ment was replaced. Correct? --- That’s correct.

So what are we doing here, Mr Vosloo? You haven’t got an agreement in so far as the new equipment is concerned. You removed them. You gave other equipment and you never varied this agreement to make provision for the new equipment.

MR JOOSTE Thank you M’Lord. Mr Vosloo, you see your Counsel is placing it correctly that your case is because you rely on this agreement. And going outside of the agreement is going to be objected, do you understand? --- I understand that.

But if we look at this agreement then this agreement does not deal with the equipment that is at present on the premises. Correct? --- That’s correct.

And there was never an additional agreement concluded in writing where the plaintiff and the defendant agreed to consensually cancel the old agreement or to substitute the equipment and to vary the agreement to provide for this replaced equipment in the stead of the original equipment. Do you understand? --- I understand that yes.

COURT Do you agree with that? --- We never entered into another agreement.

MR JOOSTE So looking at this agreement, Mr Vosloo, at some point we will adjourn and I’ll take this matter up with your Counsel and see if we can resolve this aspect. But your con-cession seems to hold that this agreement is no longer effective. In its present format. Something would have had to happen, either a new agreement for the new equipment or a variation or an alteration, whatever. But this agreement doesn’t cover the equipment which forms the subject matter of this trial. Do you agree? --- I agree.

Maybe I should discuss it with my Learned Friend. Maybe they want to amend their pleadings or whatever, M’Lord, I don’t know.” (emphasis added)

[9]        It will be gleaned from the aforegoing that Vosloo regarded the agreement terminated because the merchandise delineated in “POC1”, i.e. the demo model printer, had been removed from the defendant’s premises and in its stead a new printer had been installed and commissioned. His unequivocal testimony was that the new transaction was regulated by an oral agreement. Vosloo expanded hereanent as follows –

“MR JOOSTE So then Mr Vosloo, what is the defendant to make of the fact that all of these terms and all of these conditions doesn’t apply to the equipment that came into the shop? Are you relying on an oral agreement for the substitution? --- Yes.

Alright. So this equipment was installed in terms of an oral agreement? --- Yes of course it was.

Because there was a negotiation between yourself and Mr Anderson that that first equipment would be removed and this big launch was going to be ... --- Ja. And replaced with new ones.

Yes. Now who would have concluded this oral agreement? --- I did.

With Mr Anderson? --- Ja I agree with that.

And what was the subject matter of that oral agreement? --- That because of these complaints about the demo machine that we initially put in, I would replace it with a brand new machine.

So you accepted at that stage, Mr Vosloo, that the demo equipment was so defective that they couldn’t be used for the purposes that was intended for by the defendant? --- No I don’t agree with that. It was problematic but it wasn’t that defective.

Now on what basis did you decide to replace the equip-ment? Out of pure benevolence? --- Well, ja.

To keep the customer relations ... --- Correct. Absolutely.

On what date was this oral agreement entered into Mr Vosloo? --- I don’t have a specific day, I can’t tell you a specific date where we went to enter this.” (emphasis added)

The aforegoing testimony, finds corroboration in the evidence of Mr Mike Dean (Dean), the plaintiff’s then sales representative. He conceded under cross-examination that he could not dispute Vosloo’s evidence that an oral agreement governed the new printer and its paraphernalia.

[10]      Notwithstanding the aforegoing unequivocal admissions, plaintiff’s counsel, seemingly oblivious to the import of Vosloo’s testimony, submitted that the evidence was inconsequential given the non-variation/cancellation clause in “POC1”. Ergo, so he pontificated, Vosloo’s alleged cancellation of the agreement offended the clause and  was void. The submission made is astonishing, to say the least. A cursory reading of “POC1” establishes that one of its material terms was payment of a deposit of R150, 000. 00 and monthly instalments of R22 500, 00. Those terms were consequently embodied in paragraph 5.6 of the particulars of claim. Paragraph 5.7 of the particulars of claim is therefore an anachronism – neither clause 6.2 of the agreement nor the first schedule, which the particulars of claim proclaim are contractual provisions, make reference to a second deposit of R200, 000. 00 and monthly instalments of R16 501, 51. To suggest, as Mr Cothill does, that the R200, 000.00 constitutes an indulgence of sorts, is clearly claptrap. The only reasonable inference is that the deposit and instalments as aforestated constituted terms of the oral agreement vouchsafed for by Vosloo. It superseded the instalment sale agreement. The plaintiff’s cause of action against the defendant was however predicated upon the defendant’s breach of the terms of “POC1” and not the oral agreement, of which neither the terms, nor the alleged breach was adverted to in evidence. The plaintiff has accordingly not established a cause of action against the defendant and it follows that claim A must consequently fail.

[11]      Claim B is, as adverted to, founded upon an oral agreement. The particulars of claim alleged that pursuant thereto, the plaintiff undertook to, inter alia, sell and deliver consumables or render services to the defendant at its special instance from time to time. In paragraph 16 thereof, the plaintiff alleged that the defendant breached the agreement “in that it ordered and received cons mables and services but has failed to pay for them within thirty (30) days of invoice thereof, alternatively has failed to pay for them within a reasonable period.”

[12]      In its amended plea, the defendant denied the breach and averred that the plaintiff supplied consumables to it of its own volition, a large percentage of which had been utilised during the test run of the printer whilst the remainder had been returned. In amplification of its claim, the plaintiff annexed a raft of invoices reflecting divers paraphernalia supplied to the plaintiff. It is evident from Dean’s testimony that save for the imput station reflected on the invoice bearing the order date 23 October 2012, the defendant had not ordered any of the items reflected on the invoices. He testified that the standard procedure in the industry entailed the supply of the paraphernalia listed on the remaining invoices to a prospective purchaser concomitantly with installation of the printer and that the volume of such consumables was the sole preserve of the manufacturer, Hewlett Packard. This evidence finds expression in the defendant’s plea that the consumables were supplied unsolicited. Dean’s testimony concerning the supply of the imput station referred to hereinbefore is far from satisfactory. He conceded that the imput station was not a consumable and this concession begs the question as to what agreement regulated its alleged purchase given that the particulars of claim restricted the ambit of the oral agreement to consumables only.

[13]      Although the plaintiff’s witnesses, Vosloo, Dean and the chief technician, Mr Fritz Kuhn (Kuhn) testified that some of the consumables, reflected on the invoices dated 31 March 2015, were utilised during the test runs, there is a dearth of evidence concerning the volume thus expended. It is however evident from Kuhn’s testimony that a substantial aggregate was used by the plaintiff’s technicians in the testing process. Notwithstanding, the plaintiff has claimed the costs of all of the paraphernalia invoiced to the defendant without making any allowance for the amount of consumables used thereanent. Absent evidence pertaining thereto, computation of the amount, which may allegedly be due, is rendered impossible. In order to succeed the plaintiff is required to establish the quantum of its claim, and, when it fails to do so, it must be non-suited.

[14]      In the result the following order will issue: -

The plaintiff’s claims are dismissed with costs.

_____________________

D. CHETTY

JUDGE OF THE HIGH COURT

 

Obo the plaintiff:                   Adv C Cothill

Instructed by                        Garratt Hugo De Souza Inc c/o McWilliams & Elliott Inc

                                                83 Parliament Street, Central, Port Elizabeth

                                                Tel: (041) 582 1250

                                                Ref: E J Murray

 

Obo the defendant:              Adv P. E Jooste

Instructed by                        Dean S Murray, 29 Bird Street, Central, Port Elizabeth

                                                Ref: D Murray

                                                Tel: (041) 585 3270

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