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IN THE HIGH COURT OF SOUTH AFRICA /ES

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 1448/06

DATE: 9/2/2006

NOT REPORTABLE

IN THE MATTER BETWEEN:

PAUL JOHANNES VAN DER MERWE NO 1^ST APPLICANT

GERHARDUS FRANCOIS ROSSOUW NO 2^ND APPLICANT

AND

PIONEER HI-BRED RSA (EDMS) BPK RESPONDENT

REASONS FOR JUDGMENT

SERITI, J

1. INTRODUCTION

This is a matter which came before me in the urgent court on 24 January 2006.

The applicants launched an urgent application against the respondent.

In terms of the notice of motion the applicants were inter alia requesting for an order compelling the respondent to deliver bags of maize seeds to the applicants, alternatively if the court finds that there is no binding agreement between the parties, repayment of an amount of R309 985,00 plus costs.

The applicants' application was dismissed with costs.

At the time I made the above order, I did not give any reasons. I have now received a request for reasons in terms of rule 49(1)(c) and the said reasons follow hereunder.

2. FOUNDING AFFIDAVIT

The founding affidavit was deposed to by the first applicant, one of the only two trustees of Rotsvas trust. The other trustee is the second applicant.

He alleges that on 18 January 2006 the trustees of Rotsvas trust took a formal decision to launch this application.

The Rotsvas trust intends to plant this season white maize on the 6 300 hectares land it owns.

0n 5 January 2006 he telephoned Mr Derek Massyn, a representative of the respondent, in order to discuss with him the maize seeds they intended buying from the respondent. He informed Mr Massyn that the trust intends to buy the maize seeds on the basis that 50% of the purchase price be paid in cash and the other 50% be payable after the harvest.

Mr Massyn advised him that he (Mr Massyn) will discuss the payment arrangements with Mr 0ellermann, their sales director, and Mr Willem Engelbrecht. He is not certain about the position that Mr Engelbrecht occupied within the structures of the respondent.

0n 14 January 2006 he spoke over the phone with Mr 0ellermann and it was agreed that Messrs 0ellermann and Massyn will visit the farm on 16 January 2006 in order to discuss and finalise the payment arrangements.

Messrs 0ellermann and Massyn came to their farm on 16 January 2006. They had a discussion with him and his father, Mr C J van der Merwe.

During the said discussion Mr 0ellermann advised them that the payments for maize seeds they intend buying from the respondent should be paid in the following manner:

(a) when placing the order the trust should pay 50% of the total purchase price of the maize seeds being ordered – the trust will then receive 5% discount on the said portion of the purchase price;

(b) the other 50% of the purchase price will be payable before or on 25 July 2006.

Mr 0ellermann further informed them that the delivery of the said seeds will be made on 20 January 2006.

It was further agreed that two bags of the seeds (which is portion of the required seeds) can be collected on 17 January 2006.

After some discussions it was further agreed that the second payment should be made on or before 25 September 2006, instead of the earlier date mentioned.

He further alleges that after the abovementioned discussions, an agreement was concluded with the following essential terms:

1. That the trust buys 1 970 bags of maize seeds from the respondent.

2. When an order is placed, 50% of the purchase price should be paid in cash and the trust will be given 5% discount on the said cash payment.

3. The balance of 50% of the purchase price is payable by 25 September 2006.

Both representatives of the respondent were aware of the fact that the trust requires seeds urgently to plant same on a piece of land which is 1 500 hectares in size.

Before the departure of the representatives of the respondent Mr Massyn worked out on a piece of paper the total number of required bags of seeds to plant on an area of 1 500 hectares, and came to the conclusion that an amount of R309 985,00 is immediately payable in respect of the bags of seeds required on the said 1 500 hectares of land. The said piece of paper was attached to the papers.

During the abovementioned discussion he took out a cheque in the amount of R309 985,00 and gave same to the respondents' representatives.

Mr Massyn advised them that he did not have their order book and on his arrival back at his office he will telefax him the necessary order form which will confirm the order.

Later during the same day he received by fax two order forms which he attached to his affidavit. The first order form indicates a certain quantity of maize seeds and the amount payable after 5% discount, the said amount being R309 985,00. Date of payment is indicated as 16 January 2006 and date of delivery as 20 January 2006. The second order form indicates a certain quantity of maize seeds, payment date as 25 September 2006. Where date of delivery was supposed to be inserted it is blank.

Both order forms are signed by both buyer and seller. Mr Massyn signed the said forms before faxing same to him. 0n receipt of same he signed them and faxed them back to the respondent.

It was agreed with Mr 0ellermann that two bags of the seeds will be collected by Mr C J van der Merwe from the respondent – whilst on his way to collect the two bags of seeds his father received a telephone call from Mr 0ellermann who advised him that they no longer wish to proceed with the transaction. His father asked Mr 0ellermann why are they no longer keen to proceed with the transaction and Mr 0ellermann said to him "Julle is nie kredietwaardig nie." His father continued and went to the gate of the premises of the respondent as earlier arranged but there were no bags of seeds for him to collect. The cheque he gave to Mr Massyn was deposited by the respondent and same was honoured.

He further alleges that an agreement was concluded between the trust and the respondent. Respondent is now repudiating the contract which repudiation the trust does not accept.

A supporting affidavit deposed to by Mr Cornelis Jansen van der Merwe was attached.

3. ANSWERING AFFIDAVIT

Mr Willem Thomas Engelbrecht is the deponent to the said affidavit. He is the country manager in the employ of the respondent.

He denies the allegations of the applicants as to the factual statements and conclusions drawn by the applicants.

He further alleges that the respondent sold to the trust for cash 245 bags of maize seeds at a total selling price of R309 985,00. The trust paid the amount of R309 985,00 to the respondent by cheque and on 20 January 2006 respondent delivered 245 bags of maize seeds sold for cash to the trust. The respondent did not grant any credit facilities to the trust as the trust never applied to the respondent for such facilities. There is no agreement that was entered into between the trust and the respondent that seeds would be sold on credit to the trust.

As far as the sequence of events from about 5 January 2006 are concerned, he alleges that on or about 5 January 2006 a person by the name of Paul van der Merwe telephoned the respondent's agent in the Waterberg area, John Frederick Massyn. Paul enquired from Mr Massyn about the best suitable seed to plant on their land. Mr Massyn referred him to Mr 0ellermann, their sales manager. Nothing was discussed between them.

0n 11 January 2006 a person who identified himself as Jan van der Merwe telephoned him. During the said telephone conversation the said Jan informed him that he (Jan) wanted to purchase maize seeds from the respondent on the basis that half of the seeds purchased would be paid for in cash and the other half purchased had to be sold on credit. He intended to plant 1 000 hectares. Paul further informed him that he (the deponent) should phone Paul van der Merwe.

He then informed Jan during the said telephone conversation that:

1. Messrs 0ellermann and Massyn will contact Paul van der Merwe.

2. Paul van der Merwe will have to apply to the respondent for credit facilities. Mr 0ellermann will furnish him with the respondent's standard documentation in that regard.

0n the same day Messrs 0ellermann and Massyn were requested to contact Mr Paul van der Merwe. Later Mr Paul van der Merwe telephoned Mr Massyn. During the said telephone conversation Mr Van der Merwe advised Mr Massyn inter alia that they intended planting approximately 1 500 hectares.

He further stated that in terms of the respondent's credit policy the respondent only sell maize seeds on credit if there is compliance with the respondent's existing credit policy. All employees of the respondent should and do respect the said policy. That is the reason why on 11 January 2006 he told Mr Jan van der Merwe that Messrs 0ellermann and Massyn will visit Mr Paul van der Merwe and that the latter had to apply for the granting of credit facilities by the respondent.

In terms of their credit policy, the applicant of such facilities must inter alia complete the respondent's official application form and an acknowledgement of debt. In the case of a trust, financial statements for the previous two years must be attached to the application form for credit facilities – respondent's credit policy was attached to the papers.

0n 16 January 2006 Messrs 0ellermann and Massyn held a meeting at the farm of the applicants with both Mr Van der Merwe junior and senior. During the said meeting Messrs Massyn and 0ellermann were advised that the applicants intend planting on a piece of land which is 1 500 hectares in size. Mr 0ellermann conveyed to the applicants that in the light of the payment method proposed earlier by Mr Paul van der Merwe on 11 January 2006, the only basis upon which the purchase of the maize seeds could be done was that 50% of the purchase price had to be made in cash and the other 50% of the purchase price had to be made on an approved extended credit facility.

It was further pointed out to them that the trust would have to complete the respondent's standard forms for the application for the granting of extended credit facilities and sign the acknowledgment of debt. After some discussion it was agreed that the repayment date of the capital plus interest would be 25 September 2006.

At the meeting and after the abovementioned arrangements were made Mr Massyn made calculations of quantities required to plant 750 hectares (which is half of the proposed 1 500 hectares) and the cost of the quantities to be purchased in cash, which came to an amount of R309 985,00 after deducting discount of 5%.

0n request of Mr Van der Merwe senior, Mr Massyn did a calculation of the cost of planting on the whole farm which is 6 300 hectares in extent – the said calculations were made and are in the handwriting of Mr Massyn.

After calculations were completed, Mr 0ellermann commenced completing the portion of the extended credit application form pertaining to the extended credit requirements. He was able to calculate the amount of credit that the trust had to apply for with reference to Mr Massyn's calculations.

Mr 0ellermann then handed the application form for extended credit facilities and the acknowledgment of debt to Mr Van der Merwe senior. He told both Messrs Van der Merwe that they had to complete the said forms that evening or early the next morning on 17 January 2006 and furnish the completed forms to the respondent as soon as possible.

A cheque in the amount of R309 985,00 in payment of the purchase price of the 245 bags of maize seeds purchased for cash was given to Mr 0ellermann by Mr Van der Merwe senior.

Lastly, Mr Van der Merwe senior requested Mr 0ellermann to make two bags of maize seeds available to the trust in order for the trust to calibrate their planters and Mr 0ellermann agreed to make the necessary arrangements.

Upon their return at the office Mr Massyn completed two of the respondent's standard order forms.

0n one of the order forms, which are attached to the papers, the delivery date is left uncompleted. The reason thereof is simply because the delivery thereof depended on the granting of credit facilities to the trust by the applicant.

Both order forms were sent per facsimile to the applicants on 16 January 2006 at about 17:55.

From 11 January 2006 after his first telephone conversation with Mr Jan van der Merwe he made enquiries in the market place regarding the personalities involved with the trust. Based on what was conveyed to him, he formed an opinion that it was not advisable for the respondent to enter into any transaction with the trust.

0n 17 January 2006 he gave instructions that no business should be conducted with the trust. At that stage he was aware that no credit facility had been granted to the trust but he was not aware of the cash sale of 16 January 2006.

Mr 0ellermann then telephoned Mr Van der Merwe senior and informed him that respondent would not want to do any business with the trust.

Respondent complied with its contractual obligations by delivering 245 bags of maize seeds on 20 January 2006, which maize seeds were paid for in cash.

He denies that an agreement was entered into between the trust and the respondent in terms of which the respondent agreed to sell 245 bags of maize seeds to the trust on credit.

4. REPLYING AFFIDAVIT

Same was attested to by Mr Paul Johannes van der Merwe. He basically repeated his allegations as contained in the founding affidavit, particularly relating to the alleged agreement that was entered into between the trust and the respondent. He further alleges that the calculations made by Mr Massyn clearly indicates that an agreement was entered into relating to the sale of 1 970 bags of maize seeds. At no stage were they informed about an application for credit facilities.

He admits that the respondent has a credit policy but states that same was never mentioned or discussed with them. He was given an impression that seeing that they are going to pay 50% of the purchase price, it is not necessary to make any application for credit facility.

He denies that the credit policy of the respondent is applicable to the trust.

The reason why the second order form did not have a date of delivery is because the said date is already contained on the first order form which deals with cash payment. Respondent was aware that the maize seeds are required to be planted immediately. Date of delivery was agreed as 20 January 2006. The amount they paid was not for 245 bags of maize seeds but was for 490 bags. The arrangements made with the respondent are extraordinary ones in terms of which applicant would only pay 50% of the purchase price in cash.

Respondent is desperate for sales – conditions are very difficult in the sector in which respondent operates and it is not easy for the respondent to conduct normal sales.

5. ANALYSIS OF THE FACTS AND FACTUAL FINDINGS

5.1 The following facts are common cause between the parties:

5.1.1 The trust, duly represented by the first applicant, made contact with the two representatives of the respondent, namely Messrs Massyn and 0ellermann, and informed the latter representatives that the trust intends buying maize seeds from the respondent.

5.1.2 The representatives of the respondent were informed that the trust intends to do the sale transaction on the basis that 50% of the purchase price will be paid in cash and that the other 50% will be paid at a later stage.

5.1.3 0n 16 January 2006 on the trust's farm a meeting took place between Messrs Massyn and 0ellermann on the one hand and Messrs Van der Merwe junior and senior.

5.1.4 Mr Massyn during the said meeting made certain calculations relating to the purchase price of certain number of bags of maize seeds.

5.1.5 A cheque in the amount of R309 985,00 made payable to the respondent was given to the respondent's representatives, which cheque was deposited and honoured prior to 20 January 2006.

5.1.6 The representatives of the respondent did not have with them during the visit to the trust's farm on 16 January 2006 the respondent's order book.

5.1.7 0n the same day at about 17:55 Mr Massyn telefaxed to the representatives of the trust two orders. The first applicant signed the orders and telefaxed them back to Mr Massyn.

5.1.8 0ne of the order forms indicated that the amount payable by the trust is R309 985,00 after deducting 5% cash discount and the quantity of maize seeds is apparently 245 bags. The second order form has no delivery date, the quantity mentioned is 245 bags and the amount is R326 300,00.

5.1.9 That 245 bags of maize seeds were delivered by the respondent to the trust on 20 January 2006.

5.1.10 The respondent had a credit policy in place and same was not complied with by the applicants.

5.1.11 That the trust was established towards the end of the year 2005.

5.2 The facts in dispute which are relevant to the order I made are, inter alia, the following:

5.2.1 Did the parties conclude an agreement as alleged by the applicants?

5.2.2 Did the parties discuss the question of the trust applying to the respondent for credit facilities?

I will first deal with the second question.

The respondent has a credit policy in place. In terms of the said policy before a buyer can obtain credit the buyer is required inter alia to complete an application form, submit financial statements for the previous financial years, provide security for the facility and sign an acknowledgement of debt.

Clearly the purpose of the procedure outlined above is to protect the respondent and make certain that people or entities which obtain credit will, in the opinion of the respondent, be able to meet their financial commitments in terms of the said credit facility.

To me it is highly improbable that the respondent would, without much ado, agree to sell on credit to the trust maize seeds worth well over R300 000,00 without the trust complying to some extent at least with the credit policy of the respondent.

The above-mentioned conclusion is strengthened by the manner in which the two order forms mentioned above have been completed. 0ne order form, which mentions the purchase price of R309 985,00, has a delivery date and the number of bags therein mentioned were delivered on the date mentioned therein.

The other order form has no delivery date although the amount of purchase price is mentioned. The probabilities are that the delivery date was going to be inserted after the approval of the credit facilities.

Somewhere in the papers the applicants make mention of the fact that the trust in all required 1 970 bags of maize seeds from the respondent. In terms of their agreement the trust was going to pay 50% of the purchase price, respondent would deliver the required number of bags of maize seeds and the balance of the purchase price would be paid at a later stage.

I find it improbable that the respondent would have agreed to extend credit facilities of over R1 million to the trust without the trust complying with the credit policy of the respondent.

The most probable version is the respondent's version.

I find that there was no agreement between the parties whose terms are as alleged by the applicants.

The most probable terms of the agreement entered into by the parties were that the respondent would sell maize seeds to the trust on cash basis and if the trust requires any credit facilities from the respondent the trust must comply with the credit policy of the respondent, material terms of which were explained by the respondent's representatives to the trust's representatives at a meeting held on 16 January 2006 at the trust's farm.

For the abovementioned reasons I made the order mentioned above.

W L SERITI

JUDGE OF THE HIGH COURT

1448-2006

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