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IN THE HIGH COURT OF SOUTH AFRICA /ES

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 6170/2002

DATE: 19/1/2005

not reportable

IN THE MATTER BETWEEN:

EVERITE AC PIPES (PTY) LTD PLAINTIFF

AND

J&R TOSI CONSTRUCTION CC 1^ST DEFENDANT

JOHN LOUIS GEORGE TOSI 2^ND DEFENDANT

JUDGMENT

MOTATA, J

In this action the plaintiff claims R75 102,50 against both defendants for goods sold and delivered on credit during the period 0ctober and November 2000. The first defendant being the principal debtor and the second defendant a surety. The plaintiff produced a certificate of balance by an authorised manager of the plaintiff, which brought down the claim to R64 893,73 together with interest at the rate of 14,5% per annum from 4 March 2001 to date of payment.

At the commencement of the trial the defendants brought a notice of motion wherein the defendants' plea is amended and I allowed the amendment in terms of prayers of the notice of motion and the third prayer wherein the defendants were to pay the plaintiff's wasted costs occasioned by the amendment. I did so after there was no objection from the plaintiff's counsel. The first defendant pleads that its name had changed to a close corporation following a conversion from a private company to a close corporation and an amendment was moved by the plaintiff to replace all references to J&R Tosi Construction Co Ltd to J&R Tosi Construction CC which would be par 2 of the plaintiff's particulars of claim. This amendment was allowed since there was no objection from the defendants' counsel.

In terms of the amended plea the defendants plead a denial of the plaintiff's allegations regarding the amount that is owing and denied expressly that any contract came into existence between the plaintiff and the first defendant for the supply of goods from the plaintiff to the first defendant. In par 4.3 they plead an oral agreement between the plaintiff and the company called Matemba Civils (Pty) Ltd as represented at the time by Mr Andre Joubert and in terms of this oral agreement it is alleged that the plaintiff undertook to supply Matemba Civils (Pty) Ltd with goods from time to time and during the period August 2000 to February 2001 the plaintiff indeed supplied or sold goods to Matemba Civils (Pty) Ltd. In other words the first defence is then that the true identity of the purchaser regarding the subject-matter of this claim is Matemba Civils (Pty) Ltd. Matemba Civils (Pty) Ltd is the purchaser and not the first defendant. The alternative plea states that should the court find that the contract was indeed concluded with the first defendant, then the first defendant at all times and with the knowledge of the plaintiff, acted as an agent for Matemba Civils (Pty) Ltd.

The only issue to be decided is whether the true purchaser is the first defendant or whether it is a company called Matemba Civils (Pty) Ltd and there are two subsidiary issues to be decided in order to arrive at that conclusion namely: firstly, the first defence that Mr Joubert when he made the agreement in fact acted on behalf of Matemba Civils (Pty) Ltd and not the first defendant; secondly, if he did act on behalf of the first defendant then he did so where the first defendant was an agent for Matemba Civils (Pty) Ltd. Defendants took issue with the contents of the plaintiff's certificate of balance as it read at the time of the issuing of the summons. The defendant pleaded in the alternative that should this court find that a contract indeed existed between the plaintiff and the first defendant, then issue is taken with the quantum of the liability where there are four issues being set out and the plaintiff and defendant agreed that three of them had actually fallen away. The first issue the defendant pleads that there was an over-supply by the plaintiff to the first defendant in an amount of R16 426,94 and that the plaintiff has refused to give the necessary credit for that. The second defence was that there were certain goods supplied that was not according to specification and that a credit is due in the amount of R4 068,44 which an agreement was reached that the plaintiff will refund the necessary credit in this regard. This the plaintiff has already made provision for the necessary credit in the new certificate of balance which is annexure "C" and which contains four credits from the initial amount owed. The third issue is the question of interest of 15,5% which the plaintiff charged for all amounts that remained outstanding over sixty days which the plaintiff accepted the rate of 14,5% per annum. The last issue raised by the first defendant which became academic as will be illustrated below is that some of the prices that the plaintiff charged, included a charge for delivery of the goods to the premises of the first defendant, but the first defendant in the end came and fetched the goods and wanted a credit for the transport element. This defence the first defendant would not pursue. The amounts in the certificate are calculated as follows:

(a) balance as per statement dated 31 December 2000 R228 703,78

(b) less payment on 3 March 2001 R156 647,18

(c) less credit 1 R 860,19

(d) less credit 2 R 4 068,44

(e) less credit 3 R 1 402,20

(f) less credit 4 R 832,04

balance outstanding R 64 893,73

Mr Hounsom testified on behalf of the plaintiff being the representative who dealt with Mr Andre Joubert of the first defendant. He testified that he was the former sales service director of the plaintiff before it underwent a name change in November 1997. He worked for the plaintiff for thirty two years where his duties entailed sales and a sales administration side of the business. He dealt with the first defendant for at least twenty five years. The first defendant had an account with the plaintiff for buying goods on credit. Prior to having this account the first defendant completed a credit application form during August 1994. The second defendant signed a deed of suretyship which forms part of the credit application form as well as signing the credit application. In the credit application form there are certain recordals which for the purposes of this judgment I shall merely mention the searliestt ones which Mr Hounsom testified to. The first one being par 3 just above the second defendant's signature which reads:

"All transactions are subject to the terms and conditions set out in the schedule headed 'Standard terms and conditions of sale' annexed hereto."

Then the preamble to the Standard terms and conditions of sale reads:

"The sale of goods by ('the seller') to its customers (hereinafter referred to as 'the purchaser') is subject to the following terms and conditions, and no other terms and conditions at variance with those contained herein shall be applicable or binding on the seller unless agreed to in writing by the seller."

Clause 1.3:

"The terms and conditions herein contained shall bind the seller and the purchaser in all future contracts, agreements, tenders and quotations unless varied by both parties in writing."

Clause 3.1:

"Unless otherwise agreed, payment in full without deduction or set-off in respect of goods sold shall be due and payable within 30 (thirty) days of the date of statement."

Clause 3.3:

"Upon failure to comply with the conditions of payment, the seller reserves the right to suspend further deliveries or to require cash payment prior to delivery or to cancel the sale."

Clause 6.2:

"In the event of the goods not being in accordance with specifications the seller's liability shall be limited to the replacement of such goods only. The seller will not be liable for any consequential loss whatsoever."

Clauses which are of relevance and need not be quoted in full is that clause 3.2 provides for the interest rate of 2% above the prime bank lending rate determined by Standard Bank from time to time and clause 3.5 provides for a certificate under the hand of a manager of the seller as to the existence and the amount of the debtor's indebtedness at any point in time.

The certificate being annexure "C", is signed by one Kim Renel Paola being the credit manager of the plaintiff.

Mr Hounsom testified that the defendant had a large account with them which defendant on contracts which the first defendant was awarded where it required piping for such contracts. The plaintiff would then send tax invoices which bore first defendant's initials and thereafter numbers ie JRT0001. During 0ctober 1999 Mr Hounsom had a telephonic discussion with Mr Joubert wherein Mr Joubert wanted a quotation for certain pipes and ancillaries for a contract which had been obtained in Port Elizabeth. 0n 11 0ctober 1999 Mr Hounsom prepared such quotation which was for Wells Estate contract phase 1. This quotation was accepted and an order placed on the same day by one Ms Sandy Cooke on the letterhead of the first defendant which had a stamp of Matemba Civils (Pty) Ltd. Mr Hounsom said that when Mr Andre Joubert spoke to him he was to deliver these two wells estate in Port Elizabeth and no mention was made that they are for Matemba Civils (Pty) Ltd. He was aware that the first defendant had formed another company which was an empowerment company but he did not say that he was placing it for the same company. He testified that he was led to believe that the first defendant was subcontracting to Matemba Civils (Pty) Ltd. Had he been made aware of the fact that this was for Matemba Civils (Pty) Ltd he would have required that they complete a credit application form. Mr Joubert never discussed with him that he was acting as an agent of Matemba Civils and there was no oral agreement in terms of which the plaintiff would sell the materials by Andre Joubert. He testified that all payments were made by the first defendant and when they stopped payment they had to buy in cash. The goods were collected by B&B Transport and in the invoice it was written that they are consigned to Matemba Civils (Pty) Ltd in Port Elizabeth.

He conceded that in the correspondence some would emanate from the first defendant and some would be from Matemba Civils (Pty) Ltd. The correspondence would emanate from Mr Joubert who would sometimes be in Pretoria where it is the head office of the first defendant who shared offices with the second company Matemba Civils (Pty) Ltd and him being director of both companies. To answer the queries he was merely doing so by sometimes referring to Matemba Civils but in his mind he was dealing with the first defendant.

In cross-examination he was steadfast that he was dealing with the first defendant and he was not aware that Matemba Civils (Pty) Ltd was liable for payment of the account. With the correspondence which some emanated from Matemba Civils (Pty) Ltd he agreed that he did so because he was responding to queries raised by Mr Joubert whom he was dealing with in his capacity as a representative of the first defendant. He was questioned about a certificate which was required by the municipality of Port Elizabeth in respect of materials which were delivered to Matemba Civils (Pty) Ltd by the plaintiff. He agreed and said that he did so because this is a standard letter which the engineers request on the certificate and the client would make the payment to Matemba Civils (Pty) Ltd and would not be interested in the first defendant but he did so because he was requested by Mr Joubert as a representative of the first defendant. He did so so that the first defendant who was subcontracting to Matemba Civils (Pty) Ltd would enable him to pay for the material. He was questioned on material which was in excess which amounted to R11 920,00 which was over-supplied and he said it was not because these were specifications given by the first defendant and such material was specifically designed for that and they over-ordered and it is not the plaintiff who over-supplied. He said the quotation they had asked for was given before the order was actually placed and all tax invoices were made out to the first defendant and the first defendant paid. The material was not held in stock by the plaintiff as a specialised item. And that these were not over-supplied.

Mr Andre Joubert testified on behalf of the defendant. He was a director of the first defendant and also a director of Matemba Civils (Pty) Ltd. Both companies were involved in civil engineering construction business. Matemba Civils (Pty) Ltd was incorporated around 1998 and they got their first contract being the Wells Estate contract in Port Elizabeth. He approached the plaintiff for the supply of materials. When he did so he approached Mr Hounsom a representative of the plaintiff as he was doing so in his capacity as a representative of Matemba Civils (Pty) Ltd and not the first defendant. He approached the plaintiff to negotiate prices for the supply of material but he cannot recall that Mr Hounsom was aware that the contract had been awarded to Matemba Civils (Pty) Ltd. Nor was Mr Hounsom aware about the relationship between the first defendant and Matemba Civils (Pty) Ltd. He was supplied with a quotation and agreed on that in a letter which was on the letterheads of the first defendant but because they did not have stationery for Matemba Civils (Pty) Ltd a stamp was placed on it. Mr Joubert also confirmed that the first defendant had an existing credit application with the plaintiff and Matemba Civils (Pty) Ltd did not have such a credit facility.

He testified that the plaintiff sent accounts to the first defendant but in fact such accounts were for Matemba Civils (Pty) Ltd. Since they shared offices these accounts were paid by the auditors of the companies and merely paid because it did not have a problem with those accounts being made out to the first defendant because money would be transferred from Matemba Civils (Pty) Ltd into the account of the first defendant and thereafter pay the plaintiff. When he corresponded with the plaintiff he was doing so in his capacity as a representative of Matemba Civils (Pty) Ltd. He said when there was an over-supply an oral agreement was reached where they would be credited with R11 920,00 and such material would be collected by the plaintiff. He was not sure whether the plaintiff had sold the over-supply to a purchaser who required them. He was not aware of any reason why the plaintiff did not take them back.

Under cross-examination he testified that he did not know the reason why the plaintiff was invoicing the first defendant which in effect he should have invoiced the company which had been awarded the contract being Matemba Civils (Pty) Ltd. He conceded that the first defendant was the one that paid as mentioned above. He confirmed the terms of the credit agreement sale but said that he had reached an oral agreement with the plaintiff that they would accept the goods back despite the credit application saying everything should be in writing. He concluded this oral contract with a representative of the plaintiff being one Mr Hansen. He again considered that he was not sure whether he told Mr Hounsom when the contract was concluded, that it was concluded with Matemba Civils (Pty) Ltd but he assumed that Mr Hounsom knew because he had congratulated them on acquiring the contract. He was using the letterheads exhangeably and sometimes without noticing what he was doing but would take a letterhead and in his mind he was representing Matemba Civils (Pty) Ltd and hence his queries he was doing them on behalf of Matemba Civils (Pty) Ltd. A question was asked that when he queried the account and subsequently gave instructions he gave instructions to defend the action but said that he only became aware of the indebtedness that it was that of Matemba Civils (Pty) Ltd. This he became aware of it when he consulted with his legal representatives a week before the trial hence the amendment of the plea that he was contracting on behalf of Matemba Civils (Pty) Ltd.

From the evidence tendered by the plaintiff and the defendants the court has to discern the truth between the versions of the plaintiff and the defendants which are mutually destructive. The plaintiff bears the onus of proof and to succeed plaintiff has to satisfy the court on a preponderance of probabilities that plaintiff's version was true and accurate and in casu acceptable, and that of the defendant was either false or mistaken and in the circumstances ought to be rejected. In National Employers General Insurance v Jagers 1984 4 SA 437 (E) at 440F G the court said:

"In deciding whether that evidence is true or not the court will weigh up and test the plaintiff's allegations against the general probabilities. The estimate of the credibility of a witness will therefore be inextricably bound up with a consideration of the probabilities of the case and, if the balance of probabilities favours the plaintiff, then the court will accept his version as being probably true. If, however, the probabilities are evenly balanced in the sense that they do not favour the plaintiff's case anymore than they do the defendant's, the plaintiff can only succeed if the court nevertheless believes him and is satisfied that his version is true and that of the defendant's is false."

Having regard to the totality of the facts before me, the price list that was sent through to the first defendant read with the follow-up order and read with the invoices in the manner which they were made up there was no objection to that by the defendants but payment was made. It is common cause that payment was at all times made by the first defendant. 0n the totality of those circumstances the court has to arrive at a version that is more plausible namely whether it is that of the plaintiff or of the defendant. The evidence before court is of two witnesses who happen to be the two representatives of the two parties to the contract, the seller and the purchaser. Mr Hounsom explained why he addressed certain correspondence to Matemba Civils (Pty) Ltd. He says that was invariably because of the response to a letter written on the Matemba Civils (Pty) Ltd letterhead directed to him, and also the so called certificate relied on by the defendant. He gave a satisfactory explanation how it came that he was trying to assist the main contractor, Matemba Civils (Pty) Ltd, to obtain its progress payment from the Port Elizabeth municipality. Mr Joubert was vague in some respects. 0ne would expect that the critical issue of his conversation or discussion with Mr Hounsom regarding the contract that he would have had a more definite version of that. But he just says "I cannot recall", "I cannot remember" and "I think it was like this". He conceded that he pointed out in discussions with his auditors the so called discrepancies that the invoices were addressed to the first defendant. And on the advice of his auditors, they decided to pay the account, although they believed, so he says, that the account was truly meant for Matemba Civils (Pty) Ltd. From his own account he was alive of the true debtor as early as 21 February 2001 but nearly a year after that date he said last week before trial in consultation with his legal representative he became aware of the true debtor. He again said that in respect of the letterhead he just made an error and he used the wrong letterhead. In his answers in cross-examination Mr Joubert made a few concessions namely that the true debtor is the first defendant. This arose in the context of the B&B Transport that the first defendant had the facility that B&B Transport should transport the materials to Wells Estate. He did not disclose to Mr Hounsom that he was acting on behalf of Matemba Civils (Pty) Ltd. He assumed that because of Mr Hounsom's knowledge that the contract had been awarded to Matemba Civils (Pty) Ltd that Mr Hounsom will understand that he is acting as a representative of Matemba Civils (Pty) Ltd. He did not inform Mr Hounsom that he was a director of Matemba Civils (Pty) Ltd although it was common cause that Mr Hounsom knew that he was a director of the first defendant. He based his contention on that he was acting for Matemba Civils (Pty) Ltd through a letter which was contained in the bundle marked "B" at p5 that it must be read as Matemba Civils (Pty) Ltd order in preference to it being understood as an order form by the first defendant. 0n the consideration of the documents placed before the court with Mr Joubert's evidence as he was not sure what Mr Hounsom knew and he did not tell him any other thing one can only find that on a balance of probabilities a contract was concluded between the first defendant and the plaintiff.

I cannot find or arrive at a conclusion as counsel for the defendants argued that the contract was concluded between Matemba Civils (Pty) Ltd and the plaintiff. The tax invoices were all made out consistently to the first defendant and the first defendant paid. The plaintiff had a credit application before it sells goods on credit to the first defendant. The first defendant had a long established business relationship with the plaintiff and they started up a new company and with their first contract and they do so without reference to the standard terms and without asking for any security which had been the procedure with the plaintiff. I find that Mr Hounsom on behalf of the plaintiff gave satisfactory evidence. All the difficulties that were put to him by counsel for the defendant were answered satisfactorily. In contradistinction I cannot say the same of Mr Joubert. He gave his evidence and was vague in some respects as mentioned above. The earliest document which is found on p3 of the bundle was addressed to the first defendant pursuant to earlier discussions that the two gentlemen namely Mr Hounsom and Mr Joubert had. I find that regardless of what Mr Joubert might have intended whom he wanted to introduce as a party to the contract it is clear from this that Mr Hounsom understood his counter-party to be the first defendant. That is much clear from the document. When one has consideration of the documents in the bundle and particularly the documents on p3 and p5 the probabilities indicate that the contract was concluded between the plaintiff and the first defendant. Mr Tosi signed as surety and since the first defendant did not pay it follows that he is liable in terms of the suretyship.

WESSELS, JA (as he then was) in South African Railways & Harbours v National Bank 1924 AD 705 at p715 said:

"The law does not concern itself with the working of the minds of the parties to a contract, but with the external manifestation of their minds. Even therefore if from a philosophical standpoint the minds of the parties do not meet, yet, if by their acts minds seem to have met, the law will, where fraud is not alleged, look to their acts and assume that their minds did meet and that they contracted in accordance with what the parties purported to accept as a record of their agreement. This is the only practical way in which courts of law can determine the terms of a contract."

In casu tax invoices were made to the first defendant and the defendants paid and the question never arose as to you are billing or invoicing the wrong company. Mr Joubert testified that Matemba Civils (Pty) Ltd transferred funds to the first defendant so that the plaintiff could be paid and no reason is given why if it was the other company why did it not make payment themselves. In my view there was only one company namely the first defendant and the other company was merely a convenient vehicle which the first defendant seeks to employ in this proceedings.

I was addressed on the question of costs and counsel for plaintiff argued that because of the issues raised in this matter it was appropriate that this matter be brought in the high court and in any event when this matter was previously postponed costs were ordered on the high court scale and the same were paid by the plaintiff. He further argued that because of the credit application the costs order should be amended to read costs on an attorney and client scale which was the order made by my brother BERTELSMANN, J on 5 June 2003 and similarly the credit agreement also makes provision for the same. Counsel for the defendants argued that should I find in favour of the defendants a costs order must be made in terms of the high court scale since they were brought to the high court and they had to defend the action. Again in this matter the defendants in their amendment tendered costs on the high court scale and I do not see the reason why costs in this matter should not be on the high court scale.

In the circumstances I make the following order:

1. The defendants pay the plaintiff R64 893,73 as claimed with interest at 14,5% from 31 December 2001 to date of payment.

2. First and second defendants to pay the costs of this action, the one paying the other to be absolved.

3. The defendant pay the wasted costs occasioned by the amended plea.

N J MOTATA

JUDGE OF THE HIGH COURT

6170-2002

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