IN THE HIGH COURT OF SOUTH AFRICA CAPE OF GOOD HOPE PROVINCIAL DIVISION

Transcription

1 IN THE HIGH COURT OF SOUTH AFRICA CAPE OF GOOD HOPE PROVINCIAL DIVISION In the matter between Case no 11080/1999 CONSOL LIMITED t/a CONSOL GLASS Plaintiff and TWEE JONGE GEZELLEN (PTY) LTD NICHOLAS CHARLES KRONE First defendant Second defendant JUDGMENT IN FIRST DEFENDANT S APPLICATION TO AMEND ITS COUNTERCLAIM AND REPLICATION : DELIVERED ON 22 JULY 2005 BLIGNAULT J: [1] This is the beginning of the second round in the litigation between these parties in regard to bottles supplied by plaintiff to first defendant for the making of sparkling wine by means of the method known as cap classique. The first round culminated in success for plaintiff in the Supreme Court of Appeal. Its reliance

2 2 upon an exemption clause in the agreement between the parties was upheld. The judgment is reported as Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and another [2004] 1 All SA 1 (SCA) ( the SCA Consol judgment ). The second round commenced with an application by first defendant to amend its pleadings in order to attempt to avoid the effect of the exemption clause. The existing pleadings [2] Plaintiff, a company trading as Consol Glass, carries on business as a manufacturer of glass procucts. It instituted this action against first defendant, a company which carries on business as a winemaker at Twee Jonge Gezellen, Tulbagh, Western Cape and second defendant, a shareholder in and director of first defendant, for payment of R ,51. This amount represents the balance owing to plaintiff in respect of bottles sold and delivered to first defendant. Second defendant is alleged to be liable by virtue of a suretyship concluded by him in favour of plaintiff.

3 3 [3] First and second defendants did not in their plea dispute plaintiff's claim save that they pleaded that the amount of first defendant's indebtedness was R ,53 and not R ,51 as alleged by plaintiff. They pleaded, however, that they were excused from paying that amount to plaintiff by reason of the fact that first defendant had a counterclaim against plaintiff which exceeded the amount of plaintiff's claim. The counterclaim arose from alleged defects in a quantity of of the bottles which it purchased during 1996 from plaintiff in terms of the supply agreement between the parties. The bottles were used by first defendant in the production of sparkling wine according to the method known as cap classique. [4] First defendant's principal cause of action was set forth as follows in para of its counterclaim: In material and fundamental breach of the terms of the supply agreement, the aforesaid bottles delivered to first defendant were not manufactured by plaintiff according to its standard manufacturing procedures and/or techniques and/or utilising standard raw materials, more particularly in

4 4 that: Freon 134A gas instead of 152A gas was used; and/or The method of application of the Freon gas used was not in accordance with plaintiff's standard procedures and/or techniques; and/or Excessive and/or irregular quantities of Freon gas was used; and/or Freon 134A gas was used, which had not been utilised by plaintiff previously. First defendant alleged that as a consequence of this breach of contract by plaintiff it lost bottles of 1994 vintage cap classique sparkling wine due to the fact that: riddling, being the process whereby bottles are regularly turned whilst the neck of the bottle is lower than the bottom to cause particles of yeast to gradually move towards the neck of the bottle, could not be effectively executed; and/or disgorgement, being the process whereby yeast residue is removed from the neck of the bottles by freezing after riddling has taken place, could not

5 5 be effectively executed; and/or the fermentation process was undermined, in that wine from a homogeneous blend fermented incompletely and/or inconsistently in the bottles with fluctuations from bottle to bottle. The loss of these quantities of sparkling wine allegedly resulted in a nett loss to first defendant of R ,00. First defendant alleged that it suffered additional losses under various heads. The sum total of its losses amounted to R ,00. [5] First defendant put forward an alternative claim in para 3 of the counterclaim on the basis that plaintiff is liable as a manufacturer of wine bottles, including bottles used for the bottling of cap classique sparkling wine, alternatively, that plaintiff is a merchant seller of such bottles and that it publicly professed to have attributes of skill and expert knowledge in respect of such bottles. First defendant alleged that the bottles sold to it by plaintiff were latently defective and incapable of performing their intended function in the three respects set out above.

6 6 [6] In defending the counterclaim plaintiff relied inter alia on the provisions of an exemption clause in the agreement between the parties. This clause, which bears the heading Claims, provides as follows: All goods supplied are manufactured according to the company s standard manufacturing procedures and techniques, utilising standard raw materials. No claims shall be recognised by the company unless lodged within 21 (twenty one) days after receipt of goods. If goods are damaged at the time of delivery the customer shall advise the customer s nearest sales office within twenty four hours of delivery. No guarantee or warranty regarding supply or quantity is given or implied unless specifically stated in writing by an authorized company representative. Where any written warranty is given, the company s liability will be limited to replacement of defective goods on proven non compliance with the warranty or accepted specification. Under no circumstances, with or without written guarantee or warranty, shall the company be liable for any consequential loss or damage howsoever arising. The customer shall have no claim for short delivery unless the quantity short delivered is endorsed on all copies of a delivery note presented for signature. The company shall be the sole

7 7 adjudicator in respect of all claims and any decision undertaken by the company in this regard shall be binding on the customer. [7] Plaintiff filed a plea to the counterclaim in which it admitted the sale and delivery of the bottles in question but disputed the alleged breach of contract. In para 6 of the plea (ad para of the counterclaim) plaintiff pleaded as follows: 6.1 It is denied that the plaintiff breached the terms of the supply agreement. 6.2 It is admitted that the bottles were internally treated with freon 134A gas. 6.3 The freon 134A gas was applied in accordance with the plaintiff's standard procedures and techniques, which had been in use since March Save as aforesaid all the allegations contained in this paragraph are denied. Para 8.3 of plaintiff's plea to the counterclaim (ad para of the counterclaim) read as follows: 8.3 In any event, the plaintiff repeats paragraphs 5.3 to 5.7 of its particulars of claim and pleads as follows

8 8 : In the event of it being found that it was an express term of the supply agreement that all glass bottles supplied by the plaintiff to the first defendant would be manufactured by the plaintiff according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, and that the plaintiff was in breach thereof, such term is a written warranty as contemplated by clause 8.3 of the supply agreement and accordingly the plaintiff's liability is limited to the replacement of the bottles in question; The damage pleaded by the first defendant in paragraph 2.6 constitutes consequential loss; No claim in respect of the said bottles was lodged by the first defendant with the plaintiff within 21 days after the receipt of the bottles by the first defendant. 8.4 In the premises, the claim advanced by the first defendant in para 2.6 is not competent.' Para 22 of the plea to the counterclaim (ad sub para 3.8 of the counterclaim) contained the following allegations: The plaintiff furnished the first defendant with no

9 9 written warranty against latent defects The damage pleaded by the first defendant constitutes consequential loss No claim was lodged by the first defendant with the plaintiff within 21 days of the receipt of the bottles by the first defendant In the premises, the claim advanced by the first defendant in paragraph 3.8 is not competent. [8] First defendant filed a replication to the plea to the counterclaim. In para 1 of the replication it replied as follows to para 8.3 of plaintiff's plea: 1.1 The provisions of the agreement described in paras 5.3 to 5.7 of the particulars of plaintiff's claim form part of a clause of the agreement, with the heading ''Claims'', which commences with the following words: ''All goods supplied are manufactured according to the company's standard manufacturing procedures and techniques, utilising standard raw materials.'' 1.2 Upon a proper construction of such clause, Plaintiff would only be entitled to rely upon the limitations

10 10 placed upon its liability as set out therein in the event of its complying with the first sentence thereof, ie in the event of the goods supplied being manufactured according to the company's standard manufacturing procedures and techniques, utilising standard raw materials. 1.3 Plaintiff failed to comply with its obligations described in such clause, as more fully set out in para 2.5 of First Defendant's Claim in Reconvention. 1.4 In the premises, Plaintiff is not entitled to rely upon the provisions of the agreement described in the abovementioned paragraph. 1.5 As regards the provision of the agreement described in para 5.3 of the particulars of claim, First Defendant alleges, in any event, that it was a tacit term of the agreement that Plaintiff would only be entitled to rely upon such provision in the event of the circumstances giving rise to the claim being reasonably apparent to First Defendant within 21 days after receipt of the goods. The separation of issues [9] At the commencement of the hearing plaintiff brought an

11 11 application for the separate determination of certain issues. This gave rise to an agreement between the parties that certain issues would be determined separately before the remaining issues are heard. The following issues were thus identified by the parties in a document headed 'separate issues': 1. Whether in terms of the supply agreement the plaintiff was obliged to manufacture all bottles delivered to the first defendant according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials. 2. Whether the bottles reflected in annexures A1 to A6 to the claim in reconvention were manufactured by the plaintiff according to its standard manufacturing procedures and techniques utilising standard raw materials, in particular: 2.1 whether at the time those bottles were made, internal treatment of cap classique bottles with freon 134A gas was part of the plaintiff's standard manufacturing procedures and techniques; 2.2 whether when manufacturing those bottles the plaintiff applied freon 134A gas in accordance with its standard procedures and/or techniques; 2.3 whether at the time the bottles were made, freon 134A gas was a standard raw material for the

12 12 manufacture of the bottles in question. 3. If the answer to any of the questions set out in para 2 above is ''no'', whether the plaintiff is entitled to rely on the further provisions of the clause of the supply agreement headed ''claims''. 4. Whether the provision of the supply agreement that all goods supplied are manufactured according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, is a warranty as contemplated in the aforesaid clause. 5. Whether the plaintiff's liability for the breach alleged by the first defendant is limited to the replacement of bottles proven to have been defective. 6. Whether the plaintiff is exempted from liability in the event of the first defendant not having lodged its claim within 21 days of delivery of the bottles in question, or whether it was a tacit term of the supply contract that the plaintiff would only be entitled to rely on the provision that no claim would be recognised unless lodged within 21 days after receipt of the goods if the circumstances giving rise to the claim were reasonably apparent to the first defendant within 21 days of receipt of the allegedly affected bottles. 7. Whether the plaintiff is exempted from liability for the first

13 13 defendant's claim set out in para 3 of the claim in reconvention unless an authorised representative of the plaintiff specifically guaranteed or warranted the relevant quality of the bottles in writing. 8. Whether the damages claimed by the first defendant in paras 2.7 and 3.8 of the claim in reconvention constitute consequential loss or damage as contemplated in the aforesaid clause of the supply contract. At a later stage the list of issues was amended by agreement between the parties by way of an addendum, which read as follows: 1. The question in para 2.2 of the list of separate issues will stand over for later determination, if necessary. 2. The question in para 3 of the list of separate issues is reformulated to read as follows: If such bottles were not manufactured by the plaintiff according to its standard manufacturing procedures and techniques, utilising standard raw materials, whether the plaintiff is entitled to rely on the further provisions of the clause of the supply agreement headed ''Claims''. This agreement for the separation of issues was sanctioned by the

14 14 court. The determination of the preliminary issues [10] The agreement between the parties envisaged that evidence would be adduced for purposes of the determination of the preliminary issues. First defendant commenced with the leading of evidence. It called two witnesses, Professor Richard L Powell, an expert with extensive qualifications and experience in the field of fluorine chemistry, and second defendant. Plaintiff thereafter called Mr Jan de Wind, its technical manager, glass, who had been its operations manager at Bellville during 1998 and 1999, and Mr John B Polasek, its laboratory services manager, to give evidence on its behalf. [11] After hearing evidence and argument I decided some of the preliminary issues in favour of plaintiff and some in favour of first defendant. My judgment was reported as Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and another 2002 (6) SA 256 (C).

15 15 [12] Plaintiff thereupon appealed to the Supreme Court of Appeal against my findings in respect of the first and the third to the seventh preliminary issues. Defendants cross appealed against my findings on the first and third parts of the second preliminary issue. Neither plaintiff nor defendant appealed against my finding on the eighth preliminary issue. That finding was to the effect that the damages claimed by first defendant were consequential in nature. [13] The Supreme Court of Appeal upheld plaintiff s appeal on issues 3, 6 and 7 but its appeal on issues 1, 4 and 5 failed. Defendants cross appeal also failed. In the final paragraph of the SCA Consol judgment, at 19h 20d, Brand JA summarised the findings of the Supreme Court of Appeal on the preliminary issues as follows: Issue (1): In terms of the supply agreement, plaintiff was obliged to manufacture all bottles delivered to first defendant according to plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials. Issue (2) part 1: At the time when the bottles in question were

16 16 made, internal treatment of cap classique bottles with Freon 134A gas was part of plaintiff's standard manufacturing procedures and techniques. Issue (2) part 3: At the time when the bottles were made, Freon 134A gas was a standard raw material for the manufacture of the bottles in question. Issue (3): Even if the bottles were not manufactured by plaintiff according to its standard manufacturing procedures and techniques, utilising standard raw materials, plaintiff would still be entitled to rely on the further provisions of the clause of the supply agreement headed 'Claims'. Issue (4): The provision of the supply agreement that all goods supplied are manufactured according to plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, is not a warranty as contemplated in the claims clause. Issue (5): Plaintiff's liability for the breach alleged by first defendant is not limited to the replacement of bottles proven to have been defective. Issue (6): Plaintiff is exempted from liability in the event of first defendant not having lodged its claim within 21 days of delivery of the bottles in question. Issue (7): Plaintiff is exempted from liability for first defendant's claim set out in para 3 of the counterclaim on the ground that no authorised representative of plaintiff specifically guaranteed or

17 17 warranted the relevant quality of the bottles in writing. [14] The nett result of these decisions was that first defendant s counterclaim could not succeed. Brand JA did not, however, make an order dismissing first defendant s counterclaim. In the penultimate paragraph of the judgment he remarked that there are still some outstanding issues which can, at least in theory, lead to further proceedings. First defendant s proposed amendments [15] The matter lay dormant for a while. Then, on 1 September 2004, first defendant filed a notice of its intention to amend its counterclaim and its replication in certain respects. Plaintiff objected to the amendments. The application for the amendments was set down to be argued before me on 7 February At the commencement of the hearing on 7 February 2005 Mr Van Riet, who appeared on behalf of first defendant, informed the court that first defendant wished to effect certain changes to the proposed amendments of its pleadings. This resulted in an agreement between the parties (which was made an order of court) to the

18 effect that first defendant would be allowed to change its proposed amendments and that the opposed application would then be heard on 18 April [16] On 10 February 2005 first defendant filed a substitute notice of amendment. In terms of this notice first defendant sought to introduce two new paragraphs, numbered 4 and 5, in its counterclaim. In the proposed paragraph 4 first defendant initially sought to introduce a claim for enrichment. At the hearing of the matter on 18 April 2005, however, he replaced the proposed enrichment claim with the following proposed new paragraph 4: Alternatively to sub paragraphs 3.1 to 3.10 above, and in any event, First Defendant pleads that it was an implied term of the said contracts of sale that their glass bottles would be fit for the purpose for which they were sold, i.e. the production and sale of Cap Classique sparkling wine by First Defendant. 4.2 The said glass bottles were latently defective and unfit for such purpose for the reasons set out in paragraph 3.7 above and, consequently, entirely useless to First Defendant. 4.3 In ignorance of the defective nature of the said bottles, First Defendant effected payment to Plaintiff in respect of the purchase price of the said bottles in a total amount of R , In the event that this Honourable Court should hold that

19 19 First Defendant is not entitled to recover the consequential losses set out above, Defendants aver that, by reason of the defective nature of the bottles as set out in paragraphs 3.7 and 4.2 above, First Defendant has suffered damages in the said amount of R ,77. [17] The proposed new paragraph 5 of the counterclaim contains a delictual claim. It reads as follows: 5. First Defendant s Claim ex delicto by reason of Plaintiff s material non disclosures As at the time of the conclusion of the sale agreements in question, Plaintiff was aware of the following facts and circumstances, whilst to the knowledge of Plaintiff, First Defendant was then unaware thereof: 5.1 As at the time of manufacture of the bottles which form the subject matter of First Defendant s counterclaim, there had been, since the conclusion of the supply agreement, a material change in Plaintiff s manufacturing process and techniques which was likely to, alternatively could, as a reasonable possibility, have impaired the effectiveness of the bottles for the purpose for which they were sold in that: Plaintiff had, during this period, for the first time, commenced with the treatment of the

20 20 bottles for the prevention of a phenomenon known as bloom; In the process, Plaintiff had introduced the use of a fluorine containing gas compound called Freon 134A so as to neutralize the alkalinity of the inside surface of the bottles; The Freon 134A gas used in the treatment of the bottles sold to First Defendant was as yet untested and unused, in South Africa or elsewhere for such application and there was accordingly uncertainty as to whether such use/treatment may impair the suitability of the bottles for the production of sparkling wine; In particular, the fluorine gas (Freon 152A) previously used in the U S A for such purpose has an auto ignition temperature of less that the temperature at which the treatment took place, and it, accordingly, ignited during such treatment. Freon 134A ignites at a temperature higher than that at which the treatment took place and it was accordingly uncertain how it would react to such temperatures and whether it would undergo a process of thermolysis and/or decomposition or not; Other glass bottles, so produced and treated by Plaintiff, had not as yet been demonstrated to be suitable for the production of sparkling wine; As at the date of manufacture of the bottles in question, the use of Freon 134A was still being experimented with by Plaintiff and it was known to Plaintiff that, in some cases, there was serious over treatment therewith. 5.2 As a fact, the Freon 134A gas did decompose, which resulted in the production of a toxic chemical residue. As a consequence of such treatment, the bottles ere, for the reasons set out in paragraph 2.6 of First Defendant s Claim in Reconvention, unfit for

21 21 the purpose as aforesaid. In addition, the chemical residue in the bottles meant that First Defendant could not continue to market and sell its sparkling wine as having been manufactured according to a completely natural process and without the addition of any preservatives or other chemicals. 5.3 The circumstances were such that there was an involuntary reliance by First Defendant upon the non disclosure of this information b Plaintiff; 5.4 The said information was also such that a duty to communicate same to First Defendant would have been mutually recognized by honest persons; 5.5 Plaintiff failed to communicate such information to First Defendant, either prior to the conclusion of the said sale agreements or at any time thereafter; 5.6 Plaintiff s representatives knew, or ought reasonably to have known that, should they fail to communicate the said information for First Defendant, First Defendant may be induced to conclude the contracts of sale in respect of bottles which had been treated as aforesaid, which it would not have done but for the non disclosures aforesaid; 5.7 The said non disclosures, in fact, induced the conclusion of the contracts, which First Defendant would not have concluded but therefore; 5.8 Had First Defendant been aware of the facts and circumstances set forth in paragraph 5.1 above, it would have required Plaintiff to leave the bottles purchased by it untreated against bloom as aforesaid. Were Plaintiff not prepared to sell untreated bottles to First Defendant it would have purchased the bottles required for the production of its wine from another source. In each case the bottles would then have been fit and suitable for the production of sparkling wine;

22 By reasons of Plaintiff s non disclosures as aforesaid, and First Defendant s purchase of the treated, and defective bottles pursuant thereto, Defendants have suffered the damages set out in paragraphs above. [18] In terms of the substitute notice of amendment first defendant also gave notice of its intention to amend its replication to plaintiff s plea to its counterclaim by the deletion of para 1 thereof and the insertion of the following new paras 1 and 2 in the place thereof: 1. AD PARAGRAPH 8.3 OF PLAINTIFF S PLEA AS AMENDED TO FIRST DEFENDANT S CLAIM IN RECONVENTION: 1.1 It was an implied, alternatively tacit term of the supply agreement that the exemption and/or disclaimer clauses provided for therein, would be applicable to future contracts of sale between the parties, but subject thereto that, since the conclusion thereof, there had been no material change in the Plaintiff s manufacturing procedures and/or techniques which was likely to or could, as a reasonable possibility, impair the effectiveness of the

23 23 glass bottles for the purpose for which they were being sold and of which First Defendant was not informed prior to the sale. 1.2 As at the time of manufacture of the bottles which form the subject matter of First Defendant s counterclaim, there had been, since the conclusion of the supply agreement, a material change in Plaintiff s manufacturing process and techniques which was likely to, alternatively could, as a reasonable possibility, have impaired the effectiveness of the bottles for the purpose for which they were sold in that: Plaintiff had, during this period, for the first time, commenced with the treatment of the bottles for the prevention of a phenomenon known as bloom, the existence whereof may cause the glass to lose its transparency and become opaque; In the process, Plaintiff had introduced the use of a fluorine containing gas compound called Freon 134A so as to neutralize the alkalinity of the inside surface of the bottles; The Freon 134A gas used in the treatment of the bottles sold to First Defendant was as yet

24 24 untested and unused, in South Africa or elsewhere, for such application and there was accordingly uncertainty as to whether it may impair the suitability of the bottles for the production of sparkling wine; The fluorine gas (Freon 152A) previously used for such purpose has an auto ignition temperature of less than the temperature at which the treatment took place, and it, accordingly, ignited during such treatment. Freon 134A ignites at a temperature higher than that at which the treatment took place and it was accordingly uncertain how it would react to such temperatures and whether it would undergo a process of thermolysis decomposition or not Other glass bottles, so produced and treated by Plaintiff, had not as yet been demonstrated to be suitable for the production of sparkling wine; Indeed, and as at the date of manufacture of the bottles in question, the use of Freon 134A was still being experimented with by Plaintiff and it was known to Plaintiff that, in some cases, there was serious over treatment

25 25 therewith. 1.3 As a fact, the Freon 134A gas did decompose, which resulted in the production of a toxic chemical residue. As a consequence of such treatment, the bottles were accordingly, for the reasons set out in paragraph 2.6 of First Defendant s claim in Reconvention, unfit for the purpose as aforesaid. In addition, the chemical residue in the bottles meant that First Defendant could not continue to market and sell its sparkling wine as having been manufactured according to a completely natural process and without the addition of any preservatives or other chemicals; 1.4 First Defendant was, at all material times, unaware of the facts set out in paragraph 1.2 above. 1.5 In the premises, the disclaimers/exemptions provided for in the supply agreement do not apply to the sales of the bottles in question for First Defendant. 2. Alternatively to paragraph 1 above, and in any event, First Defendant pleads: 2.1 It was a tacit term of the supply agreement that should the circumstances giving rise to a claim not become reasonably apparent to First Defendant within 21 days after receipt of the bottles, then the time period of 21

26 26 days provided therein for the lodging of claims, would commence to run upon such date as it did become reasonably apparent to First Defendant; 2.2 First Defendant in fact lodged its claim with Plaintiff within 21 days of becoming aware of such facts. [18] In response to defendant s substitute notice of amendment plaintiff filed a notice in terms of rule 28(3), advising first defendant that it objected to the proposed amendments and setting out the grounds of its objection. Plaintiff brought a formal application for leave to effect the proposed amendments. [20] At the hearing of the matter on 18 April 2005 Mr van Riet intimated that first defendant intended to amend the proposed new paragraph 5 of the counterclaim (ie the delictual claim) further in order to make it clear that first defendant relied in the first instance upon that claim and only in the alternative on the contractual claims contained in the existing paragraphs 2 and 3 and the proposed new paragraph 4 of the counterclaim. The latter amendment was formalised in the following proposed para 4bis: 4bis The claims in terms of paragraphs 2, 3 and 4 hereof are

27 27 brought in the alternative to the claim ex delicto brought in terms of paragraph 5 below, and only in the event that the above Honourable Court should decline to declare the contract rescinded on the basis of the non disclosures pleaded therein. Argument was not concluded on 18 April The matter was postponed 20 June 2005 for further argument which concluded on that day. Plaintiff s grounds of objection [21] Two of plaintiff s grounds of opposition to the amendments are of a general nature, namely that there has been an unreasonable delay on the part of first defendant in seeking the amendments and that it would result in disruption, wastage and prejudice to plaintiff if they were allowed. In addition thereto plaintiff contended that the amendments did not raise any triable issues. Mr Rosenberg, who acted for plaintiff, referred in this regard to Ciba Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd en 'n ander 2002 (2) SA 447 (SCA) at 462G 463B where the test of a triable issue was authoritatively restated as follows:

28 28 [34] In Trans Drakensberg Bank Ltd (Under Judicial Management) v Combined Engineering (Pty) Ltd and Another 1967 (3) SA 632 (D) is op 641A B gesê: 'Having already made his case in his pleading, if he wishes to change or add to this, he must explain the reason and show prima facie that he has something deserving of consideration, a triable issue; he cannot be allowed to harass his opponent by an amendment which has no foundation. He cannot place on the record an issue for which he has no supporting evidence, where evidence is required, or, save perhaps in exceptional circumstances, introduce an amendment which would make the pleading excipiable....' Die betrokke uitlating van Caney R word met goedkeuring deur Corbett HR aangehaal in Caxton Ltd and Others v Reeva Forman (Pty) Ltd and Another 1990 (3) SA 547 (A) te 565G I. Ook die volgende stelling van De Villiers RP in Krogman v Van Reenen 1926 OPD 191 te 195 word daar goedgekeur: '(H)e must show, for instance, that the matter involved in the amendment is of sufficient importance to justify him in putting the Court and the other party to the manifold inconveniences of a postponement....' Blykens die aangehaalde dicta kan 'triable issue' verstaan word in die sin van: (a) 'n geskilpunt wat, indien dit aan die hand van die getuienis wat die applikant in sy aansoek in die vooruitsig stel, bewys word, lewensvatbaar of

29 29 relevant sou wees; of (b) 'n geskilpunt wat op die waarskynlikhede deur die getuienis wat aldus in die vooruitsig gestel word, bewys sou wees. The proposed paragraph 4 of the counterclaim [22] The proposed para 4 of the counterclaim purports to introduce an additional contractual claim. Mr Rosenberg submitted that this claim is predicated upon an implied term that the bottles would be fit for the purpose for which they were sold. This is in essence the seller s implied warranty against latent defects. The Supreme Court of Appeal, however, in dealing with the seventh preliminary issue, found that the claims clause excluded any reliance on the implied warranty against latent defects. The proposed para 4, according to his argument, therefore does not raise a triable issue. Mr van Riet submitted, however, that the applicability of the claims clause was attacked in the proposed amendments to first defendant s replication. He conceded that the proposed amendment of paragraph 4 of the counterclaim could not succeed if the proposed amendments to the replication were not

30 30 allowed. The proposed paragraph 5 of the counterclaim [23] The proposed para 5 of the counterclaim purports to introduce a delictual claim on the grounds of an alleged nondisclosure by plaintiff. The object of this amendment is clear. A delictual claim for misrepresentation giving rise to the cancellation of the agreement would not be subject to the claims clause which forms part of the agreement. I should point out here that the proposed para 5, quoted above, does not in terms refer to the cancellation of the agreement. The proposed para 4, at the time when the notice of amendment was served on 10 February 2005, contained an allegation that first defendant was cancelling the agreement herewith. That allegation disappeared when the proposed para 4 was further amended. The matter was however argued by both sides on the basis that the proposed para 5 should be read as including a purported cancellation of the agreement by first defendant by way of the notice of amendment served on plaintiff on 10 February I propose to consider it on that basis.

31 31 [24] Mr Rosenberg (for plaintiff) raised two objections to the proposed para 5. He submitted first that in order to present a triable issue in regard to such a claim first defendant must be able to show that the agreement had been timeously cancelled by it. First defendant is, however, precluded by the doctrine of election from relying on any attempt at cancellation. By trying to enforce its contractual rights against plaintiff with full knowledge of the facts it had elected to keep the contact alive. Mr Rosenberg s second objection to the proposed para 5 is that the delictual claim now put forward by first defendant has already become prescribed. I propose to deal with the question of prescription first and then with election. Prescription [25] Section 12 of the Prescription Act 68 of 1969 deals with the commencement of the running of prescription. Sub sections 12(1) and (3) read as follows:

32 32 12 When prescription begins to run (1) Subject to the provisions of subsections (2) and (3), prescription shall commence to run as soon as the debt is due. (3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care. [26] Mr van Riet submitted first that first defendant s cause of action only arose when first defendant cancelled the agreement in February Prescription could therefore, according to his argument, not have commenced running before that date. Mr Rosenberg, however, with justification, relied on the rule that a creditor is not allowed to postpone the commencement of prescription through his own inaction. See Uitenhage Municipality v Molloy 1998 (2) SA 735 (SCA) at 742B D: As was stated by Van den Heever J in Benson and Another v Walters and Others 1981 (4) SA 42 (C) at 49G:

33 33 'Our Courts have consistently held that a creditor is not able by his own conduct to postpone the commencement of prescription.' This approach was confirmed by the Court in the case of The Master v I L Back & Co Ltd (supra at 1005G) when Galgut AJA endorsed the following assertion: 'If all that is required to be done to render the debt payable is a unilateral act by the creditor, the creditor cannot avoid the incidence of prescription by studiously refraining from performing that act.' [27] First defendant s knowledge (or deemed knowledge) of the facts from which the alleged delictual claim arose, is therefore of decisive importance for purposes of plaintiff s defence of prescription. Counsel were agreed that the running of prescription of the delictual claim in this case was interrupted by the service upon plaintiff s attorneys on 10 February 2005 of first defendant s substitute notice of amendment. Counsel were also agreed that the onus would be on plaintiff at the trial to prove the requisite knowledge on the part of first defendant. [28] The important facts, according to first defendant, that were not disclosed to it, are those set forth in sub paras 5.1 (including sub paras to 5.1.6) and 5.2 of the proposed new para 5 of the counterclaim. Mr Rosenberg pointed out that Professor Richard L Powell, who testified as an expert witness on behalf of first defendant at the hearing, had prepared a report, dated 21 September 2001, on the technical issues in the matter. A copy of this report was served on first defendant s attorneys on 26

34 September 2001 as part of a notice in terms of rule 36(9)(b). In this report Prof Powell contended, inter alia, that: 34 (i) plaintiff should have been aware from literature in the public domain that problems could arise from using Freon 134A; ii) the cause of the riddling and fermentation problems was excessive Freon 144A application; iii) plaintiff should have anticipated problems in utilizing Freon 134A; iv) plaintiff s approach to the application of Freon 134A in its process was remarkably irresponsible. Prof Powell also dealt in his report with the problems and consequences of the different auto ignition points of Freon 152A and Freon 134A and the circumstances under which Freon 134A would undergo a process of decomposition. Mr Rosenberg pointed out that first defendant was also in possession of an earlier

35 report, dated 19 November 1999, prepared for it by Dr D Kruger, 35 an expert in the field of toxological analysis. Dr Kruger had conducted an experiment on the effects of heat treated Freon 134A on the production of carbon dioxide by yeast cells in base wine. Mr Rosenberg accordingly contended that all the facts relative to plaintiff s alleged duty to disclose were known to first defendant by not later than 26 September [29] In second defendant s affidavit in support of the amendment he stated that the facts now relied upon (save for that recorded in the last three lines of sub para 5.1.4) became known to first defendant very shortly before or during the trial of this matter in April In argument Mr van Riet, however, accepted that the relevant facts became known to first defendant during the course of the evidence given by Polasek on 29 April [30] I have considered the arguments raised by counsel on the question of prescription but I formed the view that it would not be practically possible to determine the question of prescription at this stage. The enquiry is complicated by two factors. The first is that

36 36 first defendant s cause of action does not simply depend on certain facts being known to plaintiff but also that plaintiff s knowledge of these facts was such that it would, in all the relevant circumstances, have given rise to a duty to disclose them to first defendant. The second factor is that plaintiff is able to rely not only upon actual knowledge on the part of first defendant but also upon deemed knowledge within the meaning of section 12(3) of the Prescription Act. I have no reason to believe that plaintiff will not dispute first defendant s allegations underlying the delictual claim. In these circumstances I do not think that the question of prescription can be decided on a hypothetical basis at this stage. Election [31] Plaintiff s second objection to the proposed delictual claim is based on the doctrine of election. In Du Plessis and Another NNO v Rolfes Ltd 1997 (2) SA 354 (A) Zulman AJA discussed the doctrine of election and referred with approval, at 364 G 365 A, to the following passage in the judgment of Watermeyer AJ in

37 37 Segal v Mazzur 1920 CPD 634 at : 'Now, when an event occurs which entitles one party to a contract to refuse to carry out his part of the contract, that party has the choice of two courses. He can either elect to take advantage of the event or he can elect not to do so. He is entitled to a reasonable time in which to make up his mind.... Whether he has made an election one way or the other is a question of fact to be decided by the evidence. If, with knowledge of the breach, he does an unequivocal act which necessarily implies that he has made his election one way, he will be held to have made his election that way; this is, however, not a rule of law, but a necessary inference of fact from his conduct: see Croft v I Lumley 6 HLC (672) at 705 per Bramwell B; Angehrn & Piel v Federal Cold Storage Co Ltd 1908 TS at 786 per Bristowe J. As already stated, the question whether a party has elected not to take advantage of a breach is a question of fact to be decided on the evidence, but it may be that he has done an act which, though not necessarily conclusive proof that he has elected to overlook the breach, is of such a character as to lead the other party to believe that he has elected to condone the breach, and the other party may have acted on such belief. In such a case an estoppel by conduct arises and the party entitled to elect is not allowed to say that he did not condone the breach.' [32] Another instructive judgment on the question of election is

38 that of Friedman JP in Bekazaku Properties (Pty) Ltd v Pam 38 Golding Properties (Pty) Ltd 1996 (2) SA 537 (C). See the following passages at 542E I: When one party to a contract commits a breach of a material term, the other party is faced with an election. He may cancel the contract or he may insist upon due performance by the party in breach. The remedies available to the innocent party are inconsistent. The choice of one necessarily excludes the other, or, as it is said, he cannot both approbate and reprobate. Once he has elected to pursue one remedy, he is bound by his election and cannot resile from it without the consent of the other party. Election is a species of waiver; an election to pursue one remedy involves the waiver or abandonment of the other. The onus of establishing that the party seeking to rely on the breach has elected to affirm the contract is on the other party. See Montesse Township and Investment Corporation (Pty) Ltd and Another v Gouws, NO and Another 1965 (4) SA 373 (A) at 381; Van Schalkwyk v Griesel 1948 (1) SA 460 (A) at 473. In order to discharge this onus, it is necessary for the party seeking to rely on the other party's election to affirm the contract to prove that the latter had knowledge of the material facts constituting the breach, as well as knowledge of the rights thereby created. See Feinstein v Niggli and Another 1981 (2) SA 684 (A) at 698H 699A. In the present case that involved proof by the respondent that the applicant knew that it had the right to

39 39 cancel, as well as knowledge that the statement dated 12 December 1994 was in fact not audited Friedman JP pointed out that the question sometimes arises whether an objective or subjective approach should be adopted with regard to the conduct alleged to constitute the election. He provided the following answer, at 543J 544D : If the innocent party with full knowledge of his rights performs an unequivocal act from which a reasonable person would necessarily infer that he has elected to affirm the contract, he would be bound thereby, whatever subjective reservations he might have had. On the other hand, if the act on which it is sought to rely for the exercise of an election is not unequivocal, regard may be had to the subjective considerations which motivated the party concerned in order to determine whether the act in question does in fact constitute an election or not. This approach appears to me to accord with that adopted in Van Schalkwyk v Griesel (supra) and in Segal v Mazzur 1920 CPD 634 at 644 5, where Watermeyer AJ stated: 'Whether he (ie the innocent party) has made an election one way or the other is a question of fact to be decided by the evidence. If, with knowledge of the breach, he does an unequivocal act which necessarily implies that he has made an election one way, he will be held to have made his election that way; this is, however, not a rule of law, but a necessary inference of fact from his conduct...'

40 40 See also Kerr Principles of the Law of Contract 4th ed at and the remarks of Coetzee J in the unreported judgment in Breitenmoser v Farm 62 Palmietfontein Developments (Pty) Ltd, quoted in Palmer v Poulter (supra at 20F H). [33] Mr Rosenberg submitted that first defendant, already at the time of the commencement of the hearing in April 2002, had full knowledge of the facts giving rise to its delictual claim. First defendant nevertheless continued to pursue its contractual claims in a lengthy hearing in this court and thereafter in an appeal to the Supreme Court of Appeal. This, he submitted, constituted an unequivocal election to keep the contract alive. Its notice of amendment of 10 February 2005 was the first intimation of a cancellation of the agreement. [34] On the face of it first defendant s conduct appears to fall squarely within the ambit of election. The continued pursuit of its contractual rights is simply inconsistent with a cancellation of the agreement for misrepresentation. In response to the defence of election Mr Van Riet, however, submitted that first defendant s prosecution of its contractual remedies was not inconsistent with

41 its delictual claim. He placed much reliance in this regard on 41 certain passages in Christie The Law of Contract 4 th edition After quoting the statement in the Segal case, quoted above, the author says the following: This passage makes clear the true nature of the doctrine of election. It is not a mechanical rule of law but a combination of waiver and estoppel the onus is on the defendant to prove that, as a question of fact, the plaintiff has waived the relief he claims or, failing such proof, that he is estopped from claiming it reinforced by a logical bar to claiming inconsistent remedies, but only if the claims are truly inconsistent. So the double barrelled procedure of claiming enforcement with an alternative claim for cancellation and damages is permissible It is also permissible to claim cancellation or alternatively enforcement, or vice versa, upon different factual averments, ie on the basis that the main factual averments may not be proved. The question expressly left open in Tillett v Willcox 1941 AD whether the issue of a summons claiming a particular type of relief necessarily bars a subsequent claim for inconsistent relief can, on the principles considered in the previous paragraph, be answered with a fair measure of certainty. It will normally act as such a bar because it is strong evidence of waiver of the inconsistent remedy, but a summons for specific performance does not bar a subsequent claim for cancellation

42 42 and damages if the plaintiff s change of mind follows the defendant s persistence in his refusal to perform. Similarly, a summons for cancellation and damages, issued in the mistaken belief that the defendant has repudiated, does not bar a claim for enforcement after the mistake has been discovered. In neither case is waiver proved, but the issue of summons in such a case might give rise to an estoppel. A plaintiff who carries his summons for specific performance through to judgment has irrevocably elected not to cancel, and a subsequent claim for cancellation must fail. [35] It appears from these passages that the author describes, with reference to case law, three categories of cases where the pursuit of a certain remedy did not preclude the claimant from enforcing an apparently inconsistent remedy at a later stage: i) The first category described by the author is the double barrelled procedure of claiming enforcement with an alternative claim for cancellation and damages. (ii) The second category is a claim [for] cancellation or alternatively enforcement, or vice versa, upon different

43 43 factual averments. (iii) The third category is a summons for cancellation and damages, issued in the mistaken belief that the defendant has repudiated, does not bar a claim for enforcement after the mistake has been discovered. I propose to consider the categories of cases referred to by Christie, loc cit, in order to determine whether they provide support for first defendant s contention in this case that the pursuit of its contractual remedy against plaintiff was not inconsistent with a cancellation of the agreement by reason of a misrepresentation on the part of plaintiff. [36] The first category is the so called double barreled procedure. The authoritative decision in this regard is Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3) SA 462 (A). The true nature of that procedure appears from the following passage at 470D F:

44 44 It is open to a plaintiff seller to pursue his remedy for the implementation of the agreement in one action, and, should defendant fail to comply with the Court's order, to institute a second action claiming rescission of the agreement and damages. A procedural practice has, however, grown up in our Courts which permits a plaintiff seller to elect to pursue the first of these rights, i.e., to demand implementation of the agreement and obtain judgment therefor, but further permits him in the same action to ask the Court, should the defendant fail to comply with the Court's judgment for implementation of the agreement, to set aside the agreement and grant consequential relief. It is apparent from this passage that the claim for cancellation is only intended for the situation where the debtor persists with his breach of the agreement. The remedies pursued by the creditor are accordingly not inconsistent and this type of case does not support first defendant s contention. [37] The second category mentioned by Christie is a claim of cancellation or alternatively enforcement, or vice versa, upon different factual averments. Two decisions are cited by him. The first is Magnet Motor Co. v Bernstein 1929 TPD 431, the second is Le Roux v Autovend (Pty) Ltd 1981 (4) SA 890 (N) at 892F 893A.