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IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH

CASE NO: 3329/2013

Date heard: 19 June 2014

Date delivered: 29 July 2014

NOT REPORTABLE

In the matter between

WELFIT ODDY (PTY) LTD                                                                                         Applicant

And

FOURCEE INFRASTRUCTURE

EQUIPMENTS PVT. LTD                                                                                       Respondent

Contract – claim for specific performance of agreement – central dispute whether agreement sought to be enforced required execution and signature of written agreement – dispute of fact – dispute not capable of resolution on papers – referral for oral evidence.

JUDGMENT

GOOSEN, J.

[1] The applicant seeks an order of specific performance of an agreement concluded between the parties. It has tendered performance of its own outstanding obligations.

[2] The applicant is a company registered in accordance with the laws of South Africa. It has its principal place of business at Perseverance, Port Elizabeth. The applicant is a manufacturer of transport related equipment. In the mid-1980s it entered the intermodal container market and is now established as a global leader in the design and manufacture of tank containers which are designed in a manner that permits transport by road, rail, sea and river.

[3] The respondent is a company based in Mumbai, India. It specialises in the transportation of liquids, such as non-petroleum oil and lubricants, fatty acids, palm oil, molasses, chemicals and other similar products. These liquids are transported by road, rail, sea and river in tank containers of the kind manufactured by the applicant.

[4] The applicant and the respondent concluded certain agreements in terms of which the applicant manufactured and sold to the respondent a variety of tank containers built to certain specifications. The dispute in this application concerns one such agreement in terms of which it is alleged that the respondent contracted for the manufacture and supply to it of 1200 tank containers. It is alleged that the parties have partly performed that agreement, but that the respondent has now repudiated it. It is this agreement which the applicant seeks to enforce.

[5] The applicant’s cause of action is founded upon the conclusion of a written agreement between the parties. That agreement is embodied in two emails exchanged between the parties being annexures WA 14 and WA 15. It is alleged that the agreement constitutes a sub-agreement contemplated by a further written agreement between the parties, namely the Master Container Purchase Agreement (hereinafter referred to as the Master Agreement) concluded on 30 September 2010. The written agreement which the applicant seeks to enforce envisages the manufacture and supply to the respondent of 1200 tank containers at an individual purchase price of US$23 000, supplied ex-works.

[6] The applicant seeks specific performance of the respondent’s remaining obligations in terms of the agreement. In this regard the applicant alleges that it has manufactured and supplied to the respondent 699 of the 1200 tank containers and that it has been paid for these containers pursuant to the agreement, albeit that payment was affected late. This leaves 501 tank containers to be supplied. The applicant states that it has manufactured 132 of those containers which the respondent has refused to take delivery of. It tenders delivery of such containers upon payment by the respondent and further tenders to manufacture and supply to the respondent the remaining 369 tank containers upon payment.

[7] The terms of the agreement upon which the applicant relies are those contained in the Master Agreement, read together with the terms contained in the individual agreement comprised of the aforementioned email correspondence. As an alternative to this the applicant relies on the conclusion of a tacit agreement in accordance with the terms of Individual Agreement 2, a written instrument signed by the applicant and submitted to the respondent on 12 October 2011.

[8] The respondent’s defence is that no written agreement for the manufacture and supply of 1200 tank containers was concluded between the parties. In this regard it is the respondent’s case that the Master Agreement contemplated the conclusion of Individual Agreements for specific orders of tank containers to be concluded between the parties in writing and that such Individual Agreements would regulate the terms upon which particular purchase orders were made, including specifications, price and delivery of the tank containers.

[9] The respondent’s case is that it was not intended by the parties that the email exchange WA 14 and WA 15 should constitute a self-standing and independent agreement in writing for the supply to the respondent of 1200 tank containers. To the contrary, the respondent alleges that it was expressly stipulated that a written contract was to be prepared and signed by the parties. According to the respondent the common intention was that a written instrument be concluded and signed. In support of this the respondent relies upon the fact that a written agreement – Individual Agreement 2 – was prepared by the applicant and submitted to the respondent for signature. The agreement was however not signed by the respondent because it did not want to bind itself “in one single agreement” to the large financial commitment stipulated in that agreement. It is therefore contended that no agreement was concluded in accordance with the written instrument constituted by Individual Agreement 2 and that that instrument did not become a binding agreement between the parties.

[10] In relation to the alternative claim, namely that the parties by their conduct tacitly bound themselves in terms of Individual Agreement 2, the respondent denies that this is so. It is alleged that there was no consistent pattern of conduct. To the contrary, so it is contended, the exchange of correspondence between the parties reflects that the payment and delivery terms were regularly varied and that certain requirements stipulated in the Individual Agreement, such as the securing of an appropriate letter of credit, were never fulfilled. The respondent also contends that it is impermissible for the applicant to rely upon a mutually contradictory version as to the conclusion of the agreement.

[11] The respondent states further that the applicant manufactured and supplied to it individual quantities of the containers on an ad hoc basis from time to time so is to meet individual exigencies. It is therefore submitted that the applicant is not entitled to the order of specific performance upon the basis and in the terms sought.

[12] In reply the applicant pleads that the respondent is estopped from denying that it concluded a written agreement with the applicant to purchase 1200 tank containers at a purchase price of US$23 000 per container. The applicant alleges that the respondent ought reasonably to have expected that its conduct would mislead the applicant into accepting that such written agreement had been concluded between the parties. This, it is contended, is evidenced by the content of the respondent’s email of 27 September 2011 (WA15); the failure to object to the applicant securing stainless steel for the manufacture of the tanks and hedging its foreign currency in this regard; and in assuring the applicant in correspondence and meetings that the respondent remained committed to the agreement and taking delivery of the remainder of the tank containers and making payment of the purchase price.

[13] Much of the debate during the hearing of the matter focused upon the question whether there was, in relation to the central issues, a material dispute of fact and the proper approach to the resolution of such disputes in these proceedings. On behalf of the applicant it was submitted that such disputes as are raised, are not material or bona fide disputes of fact. It was argued that the “defences” raised by the respondent are not supported by the extensive and protracted exchange of correspondence between the parties and are also belatedly raised. It was argued that to the extent that disputes of fact are disclosed on the papers this court should adopt a robust approach to the resolution of the disputes.

[14] It is necessary to consider the terms in which the applicant formulated its claims since that will facilitate consideration of the nature of the factual disputes. As already indicated the applicant seeks enforcement of the respondent’s obligations arising from annexures WA14 and WA15 to the founding affidavit. In its founding affidavit the applicant states the following:

In respect of Individual Agreement 2, however, the parties have partly performed it, but the Respondent has now repudiated it. The Applicant has not accepted the Respondent’s repudiation and wishes to enforce performance by the Respondent of its obligations in terms thereof.

[15] Later in the affidavit it is stated that “the relief sought by the Applicant is for specific performance of Individual Agreement 2”.

[16] In regard to the conclusion of the agreement the applicant sets out the background giving rise to the conclusion of the Master Agreement on 30 September 2010 as well as the conclusion of Individual Agreement 1 on that date. It describes the process of negotiation which preceded the conclusion of Individual Agreement 2. These commenced in May 2011 and continued through until July 2011. These negotiations culminated in a meeting which took place in Johannesburg on 21 September 2011. The respondent was represented by four of its employees, Mssrs Lihala, Singh, Ramgharia and Deshpande. The applicant was represented by Mr Allen. The applicant states that at that meeting, it was orally agreed:

a) that respondent placed an order with applicant for 1200 standard tank containers as per the specifications applicable in terms of Individual Agreement 1.

b) agreed to a selling price per tank container of $23,000 to be delivered ex-works;

c) the respondent would provide the applicant with a confirmed Later of Credit issued by a “first class” bank to secure payment; and

d) applicant would immediately purchase stainless steel required for the execution of the agreement.

[17] After this meeting, on 26 September 2011, Alan addressed an email to Deshpande confirming the terms of the agreement. This is WA14 and it states:

I have attempted, through the points below, to provide an accurate summary of our discussions and agreements last week in Johannesburg. If there are any points that you do not agree with or would like to add, then please do so through return mail.

·         Fourcee have placed an order on Welfit Oddy to supply 1200 of 25,000 Goal T 11 tank containers generally as per the specification for the previous 270 of units supplied in 2011. Delivery will be 100 tanks per month starting in January and running through to December 2012. The January/February months will average 100 tanks as per month by prior email correspondence with Santosh.

·         Fourcee require Fort Vale fittings to be provided on the new tank container order. Welfit Oddy are concerned with the cost increase from moving from Perolo to Fort Vale but will reopen negotiations with Fort Vale.

·         The selling price agreed for the containers is US$23 000.00 ex-works. The selling price shall remain at this level, irrespective of the outcome of the Fort Vale pricing discussions.

·         Foresee will have some flexibility to structure the tank payments – minimum US$ 22 200.00 for a maximum quantity of 600 tank containers. The remaining 610 containers will then have a price of US$23 800.00 i.e. the average tank price over the year will be US$23 000.00.

·         Fourcee will provide Welfit Oddy, within a few days, a confirmed letter of credit issued from a irst-class bank.

Based on the above agreements, Welfit Oddy will immediately purchase the stainless steel required for the contract. Welfit Oddy will also proceed to hedge the currency. Both of these events enable Welfit Oddy to fix the selling price for the contract.

Welfit Oddy will draw up a contract for signature by both parties.

[18] On 27 September Deshpande replied as follows (WA15):

We are in agreement with all the points mentioned below.

Please go ahead and draft the contract.

[19] The applicant prepared Individual Agreement 2 to reflect the terms agreed upon and submitted a signed copy to the respondent for signature on 12 October 2011. It is common cause that Individual Agreement 2 was not signed by the respondent.

[20] It is clear from the formulation of the applicant’s cause of action that it relies upon the conclusion of a written agreement, the terms of which are embodied in WA14 and WA15, as well as Individual Agreement 2 which was signed by applicant and submitted to the respondent. The respondent denies the conclusion of a written agreement. The respondent states that it was expressly stated and contemplated by the parties at the meeting of 21 September 2011, that Individual Agreement 2 would be required to be properly executed by both parties for it to become a binding agreement. It is further alleged that neither party had any intention to conclude a contract by way of the exchange of emails.

[21] In argument it was submitted by the applicant that the “defence” raised by the respondent is opportunistic and that it does not give rise to a bona fide dispute of fact. To the extent that there is a dispute of fact it is to be resolved on the basis of the applicant’s version. In support of this it was submitted that the applicant’s detailed allegations regarding the conclusion and execution of the agreement is supported by documentary evidence in the form of an exchange of correspondence between the parties. It was pointed out in argument that at no stage during this exchange of correspondence had the respondent denied that there was in existence an agreement for the supply of 1200 tank containers. To the contrary, it was argued, the existence of the agreement was confirmed in correspondence, as also in meetings which were held both in Mumbai, India and Noordwijk, Netherlands. At these meetings discussions were held in relation to the problems encountered in securing payment for the tank containers which had by then been manufactured. It was pointed out that a minute of the meeting held in Mumbai on 20 November 2012 had been signed by representatives of the respondent. That minute records agreements “after discussions on procurement of balance 678 units of tank containers out of 1300 units agreed upon for purchase by Fourcee from WO.”[1]

[22] It was therefore argued that the denial of the conclusion of the agreement does not constitute a real, genuine and bona fide dispute of fact (see Wightman t/a J W Construction v Headfour (Pty) Ltd [2]). On the strength of this it was submitted that the denial of the conclusion of the agreement is so untenable and palpably implausible having regard to the extensive documentary evidence to the contrary, that the respondent’s version may be rejected on the papers alone (cf. Administrator, Transvaal v Theletsane [3]; National Scrap Metal (Cape Town) Pty Ltd v Murray &  Roberts Ltd [4]).

[23] The respondent argued that the Master Agreement expressly records that the parties would conclude individual agreements in writing. Reference was made to the preamble to the Master Agreement which states that:

The price, delivery and specification of these containers are agreed in writing between the Vendors and the Purchaser at the time each Individual Agreement is made.

[24] The Master Agreement further records that each individual agreement shall be recorded and attached as an annexure to the Master Agreement. In support of its contention that the parties expressly intended that a written agreement be executed and signed to the respondent pointed to the content of WA14 where Allen records the fact that a written contract was to be drafted. Subsequent to this Individual Agreement 2 was drafted. The respondent argued that the submission to the respondent constituted an offer which stipulated the mode of acceptance, and that such mode of acceptance was that the respondent should append its signature. This it never did and accordingly no written agreement came into existence between the parties.

[25] The respondent’s case in regard to this aspect is therefore that it was specifically required that the agreement be in writing and signed. Central to the resolution of this aspect is a factual finding as to what transpired at the meeting of 21 September 2011 and whether it was stipulated expressly that a written agreement was to be executed and signed, alternatively whether the subsequent recordal in writing of the essential terms of the Individual Agreement would constitute a binding agreement, as contemplated in terms of the Master Agreement. The respondent’s defence was not that there was no agreement at all between the parties. It was that there was no written agreement, the terms of which the applicant seeks to enforce by way of specific performance.

[26] In relation to the specific allegation that it was pertinently discussed at the meeting of 21 September 2011 that an agreement for signature by both the applicant and the respondent would be prepared, the respondent pointed to the acceptance of this fact by the applicant in reply and its limited denial that it was expressly agreed that a written contract would be signed by the parties. In this regard the applicant alleged in reply that had it been the intention of the parties that signature was an additional requirement that there would be no doubt that this would have been expressly stipulated.

[27] The applicant relied on the principle in Woods v Walters [5] to the effect that where the parties are shown to be ad idem as to the material terms of a contract, the onus of proving that legal validity would be postponed until the execution of a written document rests on the party alleging this. It was submitted that the respondent had not put up evidence to discharge such onus.

[28] In the view I take of the matter there is a material dispute of fact regarding the intention to conclude a written agreement between the parties. The resolution of this dispute encompasses consideration, not only of the conduct of the parties, as evidenced by the correspondence, but also as to what transpired and was specifically agreed at the meetings, initially in Johannesburg on 21 September 2011 and subsequently thereafter in the Mumbai and Noordwijk. I do not agree that the resolution of this dispute ought to occur on the basis either of a robust approach of the kind referred to in Soffiantini v Mould [6] or by way of the more usual approach as set out in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [7]. There is in any event the question of the alternative basis upon which the applicant seeks relief, namely the conclusion of an agreement tacitly by way of the conduct of the parties and the applicant’s reliance, in reply, on estoppel. These are matters which, in my view, are not resolvable on the papers before me.

[29] Nor do I consider that this is a case, contrary to the position of the respondent, where it can be said that the applicant ought to have anticipated the disputes of fact such as have been raised. To the contrary, there is considerable force in the submission that the central defence now raised was belatedly raised, inasmuch as it is not foreshadowed in the correspondence between the parties prior to the alleged repudiation of the agreement upon which the applicant relies.

[30] In the light of this conclusion I am of the view that the matter should be referred for the hearing of oral evidence in accordance with the terms of the draft order which the parties agreed should regulate such referral in the event that I come to this conclusion. I have, for self-evident reasons, refrained from a detailed discussion and consideration of the nature of the dispute regarding the conclusion of the agreement more particularly as is reflected in the correspondence upon which the applicant relies. I have done so to avoid any comment upon the nature of the evidence contained in such correspondence and other documents put up by the applicant. These aspects to be addressed by the court hearing the oral evidence in due course.

[31] In the circumstances I make the following order:

1. The application is referred for the hearing of oral evidence in respect of the following issues:

1.1 whether it was a requirement or the intention of the parties that Individual Agreement No 1056–2 was to be signed by the representatives of the parties for it to be binding;

1.2 whether the parties concluded a written agreement constituted by annexures WA14 and WA15 to the founding affidavit, and if so, whether it was varied from time to time in writing;

1.3 whether the respondent represented to the applicant that the parties had concluded a written agreement in terms of Individual Agreement No 1056–2, alternatively, in terms of annexes WA14 and WA15 to the founding affidavit, as varied from time to time in writing;

1.4 whether, if the issue listed in paragraph 1.3 above is determined in the applicant’s favour, the applicant was induced by such representation to act to its prejudice.

2. The witnesses shall be the deponents to the affidavits filed of record.

3. Should either party wish to call any witness other than a deponent to an affidavit, it shall (within 20 days before the hearing in the case of the applicant and within 10 days before the hearing in the case of the respondent) deliver a statement of the evidence in chief to be given by such witness.

4. The parties shall, within 20 days of the date of this order, make discovery in terms of High Court Rule 35 in respect of documents relating to the issues listed in paragraph 1 above.

5. The costs of the hearing of this application on 19 June 2014 are reserved for determination by the court hearing the oral evidence and determining the application on the strength thereof.

______________________

G. GOOSEN

JUDGE OF THE HIGH COURT

 

APPEARANCES:     For the Applicant

                                    Adv. S.C. Rorke SC assited by Adv. K.D. Williams

                                    Instructed by Mike Nurse Attorneys

 

                                    For the Respondent

                                    Adv. C.M. Eloff SC

                                    Instructed by Rushmere Noach Incorporated

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