NAMIBIA BEVERAGES and
MARTIN AMUPOLO
CASE NO. IP) I 2450/97 1998/08/13 Maritz, J.
CILVIL PROCEDURE LAW OF CONTRACT
Civil procedure - Rules of court - particularity of allegations required - difference between simple summons and declaration
Contract - incorrect entry made in pro forma document -rectification not sought - no reliance on incorrect entry by parties - parol evidence rule not applied - consideration of issues without reference to that rule
NAMIBIA BEVERAGES
Plaintiff
and
MARTIN AMUPOLO
Defendant
CORAM: MARITZ, A.J.
Heard on: 1998-10-27 and 1998-10-28
Delivered on: 1999-08-13
JUDGEMENT
MARITZ, A.J. : The plaintiff is a manufacturer and wholesale supplier of soft drinks. It has been supplying the defendant, a retailer trading under the name "Tafel Haus" with its products on open account since December 1995. To facilitate their business relationship, the plaintiff and defendant entered into a credit agreement which in its scope and application extended beyond simple credit arrangements and incorporated the general terms of trade agreed on between the parties.
The credit agreement expressly provides that the terms thereof will apply to all dealings between the parties unless otherwise agreed to in writing (clause 1); that the defendant will pay in full for all goods purchased within 30 days of the date of the plaintiffs invoice (clause 2.1); that the prices of the goods will be those quoted at the time of the defendant's order (clause 3) and be subject to escalation.
The plaintiffs claim against the defendant is for N$7 289,55 in respect of soft drinks sold and delivered during the period April to June 1996, mora interest and costs. Whilst admitting in his plea that beverages to that value has been sold and delivered to him, the defendant pleads that the transactions have taken place in the course of a special promotion of the plaintiffs products and that, in terms of the agreement relating to that promotion, the plaintiff has undertaken to credit the defendant's account with the difference between the defendant's normal selling price of those products and the reduced selling price at which the defendant has agreed to sell them during that promotion. According to the defendant, the sum of such credits has to be set-off against the total purchase price of the beverages sold in the course of the promotion. According to him the sum of those credits exceeded the total purchase price with N$990.35 - hence the
defendant's counterclaim for payment of that amount.
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The plaintiff admits that such a promotion has taken place and that, in terms of the agreement between them relating to that promotion (to which I shall hereinafter refer to as the "promotion agreement), the defendant has been required to sell the plaintiffs products for the duration of the promotion at an agreed reduced promotional price. However, the plaintiff pleads to the defendant's counterclaim that the credits it was required to pass in terms of the promotion agreement, had to be equal to the difference between the plaintiffs suggested retail price and the price the defendant had been required to sell the beverages during the promotion.
The real issue between the plaintiff and the defendant is therefore of a limited factual nature: What, if any, is the agreed credit which the plaintiff had to pass in favour of the defendant for the promotional products of the plaintiff sold by the defendant during the promotion?
It is common cause that the promotion only related to soft drinks manufactured and distributed by the plaintiff in 500-ml glass bottles. For the sake of convenience I shall simply refer to each such unit hereunder as a "bottle"). It is also common cause that, except for a slight price increase during June 1996, the plaintiffs ruling wholesale price to the defendant has been N$1.05 per bottle and that the retail price at which the defendant has agreed to sell the soft drinks to consumers during the promotion period was N$1.20 per bottle. Although the defendant claimed during the trial not to have known about it, it was not disputed by the defendant that the plaintiffs recommended retail price (i.e. the price it recommended to dealers to sell those products to consumers when not on promotion) was N$1.35 per bottle. Similarly, although the plaintiff claimed not have known about it at the time, it did not dispute the defendant's evidence that his actual retail price to consumers prior to the promotion was N$2.50 per bottle.
As I have pointed out before, the defendant alleged that the credit entry that the plaintiff should have passed in his favour at the end of the promotion should have been equivalent to the difference between his actual retail price (N$2.50) and the retail promotion price (N$1.20) of each bottle purchased by him from the plaintiff. The plaintiff, on the other hand, alleged that such credit had to be equivalent to the difference between its recommended retail price (N$1.35) and the promotion price of each such bottle. The nett effect of the their differing claims is that, according to the plaintiff the credit it had to pass in favour of the defendant should have been 15 cent per bottle supplied to him during the promotion period, whereas, according to the defendant such credit should have been N$1.30 per bottle.
Given the non-variation clause of the general terms of trade incorporated in the credit agreement, the parties should have entered into a written agreement if it had been their intention to amend any of their respective rights or obligations under that agreement during the promotion period. (See: SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en andere, 1964 (4) SA 760 at 766 C to 767 C.) They attempted to do that in the form of a "promotional newslettef signed by their respective representatives on 19 April 1996. The pre-printed form of that letter allowed for particulars about the product, period, wholesale and retail prices applicable during the promotion to be inserted.
Unfortunately, they failed to enter particulars of the period and, instead of inserting the reduced wholesale price per bottle (N$1.05), erroneously entered the reduced retail price per bottle (N$1.20) during the promotion. The effect of the incorrect entry is that the defendant would have had to sell those beverages at exactly the same price he had to purchase them from the plaintiff - yet neither the plaintiff nor the defendant claimed rectification of that agreement. Both of them (without objection from the other) adduced evidence at variance with the express terms of that agreement as if the parol evidence-rule was of no consequence notwithstanding clear authority to the contrary. (Compare for example: Johnston v Leal, 1980 (3) SA 927 (A) at 943 B.)
This is but one example of the unsatisfactory manner in which the parties defined and treated the issues between them on the pleadings. The main cause of it probably originated in the paucity of particulars pleaded in the plaintiffs declaration and, to a lesser extent the defendants failure to either move an application that that pleading should be set aside as an irregular proceeding, except to it or to request further particulars thereto. The plaintiffs declaration is essentially a repetition the allegations made in the simple summons:
"...goods sold and delivered during 1996 by the plaintiff to the defendant at the latter's special instance and request...''.
Whereas a plaintiff is only required of to set out his or her cause of action and the relief claimed in concise terms in a simple summons (See: Volkskas Bank Ltd v Wilkinson And Three Similar Cases
1992 (2) SA 388 (C) at 395A), the paucity of such particulars would not necessarily meet the threshold requirements prescribed for the particulars to be alleged in a declaration.
The object of a simple summons is to bring the defendant before Court and to inform him or her of the nature and cause of the claim or demand he is required to meet (See: B W Kuttle & Association Inc v O'Connell Manthe and Partners Inc 1984 (2) SA 665 (C) at 668C-D). The particulars of the debt or liquidated demand to be stated in a simple summons need not be more than that required to sufficiently inform the defendant of the claim to enable him or her to decide whether or not to defend the action and to enable the court to decide, on an application for default or summary judgement, whether a cause of action has been established or not (Compare: Cohen Limited V Koekermoer 1949 (2) SA 807 (SWA) at 808 and Landman Implemente (Edms) Bpk V Leliehoek Motors (Edms) Bpk 1975 (3) SA 347 (O) at 350A). Once the defendant has entered appearance to defend the action commenced with a simple summons, he is entitled to be informed with sufficient particularity about the nature of the claim, the conclusions of law on which the plaintiff relies and the relief claimed (Rule 20(2)) so as to plead to, except to or tender an amount in settlement of that claim and, once the issues have been defined in the pleadings, to prepare for trial and present his/her defence on the basis thereof.
Because the purpose of a simple summons and that of a declaration are significantly different from one another, it follows that the extent to which the claim should be particularised in the declaration must be more extensive than the limited nature of the particulars required by the rules applicable to a simple summons. The requirement of Rule 20(2) that a declaration "shall set forth the nature of the claim" when read together with Rule 18(4) demands of the plaintiff to plead, in a clear and concise manner, the material facts relied upon by him or her in support of the claim (See: Trope v South African Reserve Bank And Another And Two Other Cases 1992 (3) SA 208 (T) at 210G -H). Moreover, the plaintiff is also required to comply with the other requirements of Rule 18 and with the guidelines relating to pleadings developed by judicial pronouncements in that regard.
The plaintiffs declaration does not expressly refer to the contract underlying its cause of action; does not contain a statement whether that contract "is written or oral and when, where and by whom it was concluded" and the plaintiff failed to -annex a copy of the written contract (or the part thereof) on which it relies. The effect thereof on the identification of issues, both on the pleadings and during the trial, was compounded by the defendant's failure to ask further particulars or to canvass the issues in the course of the rule 37 conference.
The combined result of the casual, almost indifferent, treatment of the pleadings and the disputes in this action was that defendant did not plead to the terms of a written agreement; did not rely on the non-variation clause contained therein; did not apply for rectification of the promotion agreement; did not refer to the written agreement(s) in his claim in reconvention and was still uncertain, at the time his counsel presented final argument, whether the plaintiff was relying on a written agreement for its claim in convention and, if so, whether it was relying either on the credit agreement or on the promotion agreement or on both of them. Ultimately this displeasing state of affairs, deserving censure, has been left to the court to resolve.
I would have been entitled to dispose of both the claim and counterclaim simply by reference to the written agreements between the parties. If I were only to consider, against the background of the non variation clause in the credit agreement, the entry made in the promotion agreement to the effect that the wholesale price and the retail price per bottle during the promotion would be the same (i.e. N$l,20 per bottle), the plaintiff would have been entitled to claim more than it actually did and the defendant should fail in his counterclaim because that agreement does not require the plaintiff to grant the defendant any credit on sales during the promotion period. After all, "when a contract has been reduced to writing, the writing is, in general, regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms may be given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by parol evidence", (per Watermeyer JA in Union Government v Vianini Ferro-Concrete Pipes (Pty) Ltd., 1941 AD 43 at 47). However, the adoption of such an approach to the disputes in this matter will not do justice between the parties in the circumstances of this case, especially because neither of them has relied on the pleadings or in evidence on the correctness of that clause in the promotion agreement.
The plaintiffs operations manager testified that the plaintiff occasionally approached retailers to run special promotions of its products for a limited period of time. In the course of such a promotion the plaintiffs products would be sold at a price lower than its recommended retail price. To encourage retailer participation in such promotions, the plaintiff absorbed the difference between its
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recommended retail price and the promotion price of such products. It does so by passing a credit in that amount against its ruling wholesale
price. In casu, an arrangement to that effect has been made not only
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with the defendant, but also with a nujmber of other retailers in the same region. The defendant purchased soft drinks from the plaintiff in the course of the promotion and, in relation to such purchases, he was correctly invoiced and the agreed credits passed.
The defendant, on the other hand, testified that he was unaware of the plaintiffs recommended retail price of N$l,30 per bottle applicable prior to the promotion; was in any event not bound to such recommended price and sold soft drinks at N$2,50 per bottle to consumers. Such a high mark-up was not only generally applied by other retailers in his vicinity but was necessary to run his business on a profitable basis. When he was initially approached to participate in the promotion (during which he had to sell those products for N$l,20 per bottle) he declined, because participation would have meant slashing his profit from N$1.45 to 30 cent per bottle sold. The plaintiffs regional manager came to see him about his refusal and, according to him and the manager of his business, explained to him that he would not suffer any losses because the plaintiff would pay him the difference between his normal retail price (of N$2,50 per bottle) and the promotion price thereof (of N$l,20) at the end of the promotion period. Having received those assurances and expecting a higher turnover during the promotion period, he orally agreed to participate in the promotion although his profit per bottle sold would have been slightly reduced from N$1.45 to N$1.30 during that period. Had he known that he would only receive a credit of 15 cents per bottle instead of N$ 1,30, he would not been amenable to participate.
I have carefully listened to the evidence presented by the plaintiffs operations manager. He was at the time the regional manager of the plaintiff. He was confident and well informed about the plaintiffs policies as regards the promotion and marketing of its products. He had a clear recollection of the events leading up to the dispute and without hesitation conceded matters not falling within his personal knowledge even though those concessions might have been adverse to the plaintiffs case. He impressed me as an honest witness. I have no doubt that he would not have offered the defendant an agreement whereby the plaintiff had to give him N$l,30 credit on each bottle of soft drinks sold. Such an arrangement would not only have been in conflict with the plaintiffs promotion and marketing policies and unfair to other retailers participating in the same promotion, but would also have resulted in the plaintiff actually having had to pay the defendant to sell its products without the plaintiff receiving anything in return for such sales. Why? Because the wholesale price at which the plaintiff sold its products to the defendant was at the time approximately N$l,05 per bottle. If, as the defendant claims, the plaintiff had to pass a credit in favour of the defendant in an amount of N$l,30 per bottle, the nett result thereof would have been that the plaintiff would have had to actually pay the defendant 25 cents per bottle sold! The sum thereof is precisely what the defendant is claiming.
Whereas it may not be uncommon for suppliers or manufacturers to agree to the free distribution of their products for a very limited time and in limited quantities at certain designated outlets, the notion that the plaintiff actually had to pay the defendant to sell its products over an extended period of time in unlimited quantities, is so improbable that it can be discounted. The evidence adduced on behalf of the plaintiff is furthermore corroborated by the substantial number of invoices handed in as exhibits from which it is apparent that the credits passed in favour of the defendant during the promotion period accorded with the plaintiffs version of what the terms of the promotion agreement had been.
The evidence of the defendant was less persuasive and, in any event not supported by the probabilities in the case. He received several invoices in which only credits according with the plaintiffs version of the agreement had been passed. He noticed that those credits were substantially less than those he was, according to his version of the agreement, entitled to receive. Yet, he did not do anything at the time to protest the incorrectness of those entries. He continued to order soft drinks from the plaintiff and participate in the promotion, thereby lulling the plaintiff into the belief that there was no dispute between them as to the terms of the promotion agreement. The defendant's rather lame excuse for his inaction was that he had thought to "sort it out " at the end of the promotion.
When asked why he failed to pay his accounts timeously in terms of the credit agreement, he testified that he did not make any profit on sales during the promotion period. The uncontested evidence is that he continued to make at least 15 cent gross profit on every bottle sold (in addition the further credit of 15 cent per bottle passed on his account by the plaintiff). The gross income generated by the sales was therefor more than sufficient to pay the invoiced amounts.
The strongest argument, advanced by the defendant in support of his contention that the probabilities were favouring him, relates to the reduction of profit he would have had to accept had he participated in the promotion on the terms relied on by the plaintiff. Why, Mr Mouton argued on behalf of the defendant, would the defendant, who normally makes a profit of N$1.45 per bottle sold, agree to an arrangement in terms whereof he would receive only 30 cents per bottle? Had it not been for the fact that the plaintiff discovered, when visiting the defendant's premises during the promotion, that he was still selling the soft drinks at his normal retail price of N$2.50 during the promotion (thereby making a profit of not N$1.45 but N$1.60 per bottle!), the argument might have been more persuasive.
Although, on the face thereof, the evidence of the defendant's manager corroborates the defendant's version of the promotion agreement, he was generally a poor witness. He eventually, and not with much persuasion, conceded that he could not remember much about the conversation concerning the terms of that agreement. Given his subordinate relationship with the defendant and his poor performance as a witness, I attach little weight to his testimony.
I am satisfied that the plaintiff has proven its claim on a balance of probabilities and that the defendant has failed to discharge the burden of proof he had to discharge in respect of the counterclaim. In view of the remarks I have made above about the unsatisfactory nature of the pleadings, I intent to make a special order as to costs.
In the result I make the following order:
The defendant is ordered to pay to the plaintiff the sum of N$7 289.55 plus interest thereon calculated at a rate of 20% per annum from 15August 1996 until the date of payment thereof;
the defendant is further ordered to pay the plaintiffs costs of this suit, excluding any costs relating to the drafting of or attendance on any of the pleadings filed in convention;
the defendant's claim in reconvention is dismissed with costs.
ON BEHALF OF THE PLAINTIFF: Instructed by:
ON BEHALF OF THE DEFENDANT: Instructed by:
ADV G DICKS Behrens & Pfeiffer
ADV C J MOUTON P F Koep & Co.