Namibia Beverages v Amupolo (2450 of 1997) [1999] NAHC 9 (13 August 1999)

NAMIBIA BEVERAGES a nd MARTIN AMUPOLO CASE NO. IP) I 2 4 5 0 / 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 THE HIGH COURT OF NAMIBIA CASE NO. (P) I 2 4 5 0 / 97 In the m a t t er between: NAMIBIA BEVERAGES a nd MARTIN AMUPOLO CORAM: MARITZ, A. J. Plaintiff Defendant Heard on: 1998-10-27 a nd 1998-10-28 Delivered on: 1999-08-13 JUDGEMENT MARITZ, A. J. : The plaintiff is a m a n u f a c t u r er a nd wholesale supplier of soft d r i n k s. It h as been supplying the defendant, a retailer t r a d i ng u n d er t he n a me "Tafel H a u s" with its p r o d u c ts on open a c c o u nt since December 1995. To facilitate their b u s i n e ss relationship, t he plaintiff a nd defendant entered into a credit agreement which in its scope a nd application extended beyond simple credit a r r a n g e m e n ts a nd incorporated t he general t e r ms of trade agreed on between t he parties. The credit a g r e e m e nt expressly provides t h at the t e r ms thereof will apply to all dealings between the parties u n l e ss otherwise agreed to in writing (clause 1); t h at t he defendant will pay in full for all goods p u r c h a s ed within 30 days of the date of the plaintiffs invoice (clause 2.1); t h at the prices of the goods will be those quoted at the time of t he d e f e n d a n t 's order (clause 3) a nd be subject to escalation. The plaintiffs claim against the defendant is for N$7 2 8 9 , 55 in respect of soft d r i n ks sold a nd delivered during the period April to J u ne 1996, mora interest a nd costs. Whilst admitting in his plea t h at beverages to t h at value h as been sold a nd delivered to him, the defendant p l e a ds t h at t he t r a n s a c t i o ns have taken place in the course of a special promotion of t he plaintiffs p r o d u c ts a nd that, in t e r ms of t he a g r e e m e nt relating to t h at promotion, the plaintiff h as u n d e r t a k en to credit t he defendant's a c c o u nt with the difference between t he d e f e n d a n t 's n o r m al selling price of those p r o d u c ts a nd t he r e d u c ed selling price at which t he defendant h as agreed to sell t h em d u r i ng t h at promotion. According to the defendant, the s um of s u ch credits h as to be set-off against the total p u r c h a se price of the beverages sold in t he c o u r se of the promotion. According to him the s um of t h o se credits exceeded t he total p u r c h a se price with N$990.35 - h e n ce t he d e f e n d a n t 's counterclaim for p a y m e nt of t h at a m o u n t. i The plaintiff a d m i ts t h at s u ch a promotion h as t a k en place a nd t h a t, in t e r ms of the a g r e e m e nt between t h em relating to t h at promotion (to which I shall hereinafter refer to as t he "promotion agreement), t he d e f e n d a nt h as been required to sell t he plaintiffs p r o d u c ts for t he d u r a t i on of t he promotion at an agreed reduced promotional price. However, t he plaintiff pleads to the defendant's counterclaim t h at t he credits it w as required to p a ss in t e r ms of the promotion a g r e e m e n t, h ad to be equal to the difference between the plaintiffs suggested retail price a nd the price the defendant h ad been required to sell t he beverages d u r i ng the promotion. The real i s s ue between the plaintiff a nd the defendant is therefore of a limited factual n a t u r e: What, if any, is the agreed credit which t he plaintiff h ad to p a ss in favour of the defendant for the promotional p r o d u c ts of the plaintiff sold by the defendant during the promotion? It is c o m m on c a u se t h at the promotion only related to soft d r i n ks m a n u f a c t u r ed a nd distributed by the plaintiff in 500-ml glass bottles. For t he s a ke of convenience I shall simply refer to each s u ch u n it h e r e u n d er as a "bottle"). It is also common c a u se that, except for a slight price increase during J u ne 1996, t he plaintiffs ruling wholesale price to t he defendant h as been N$1.05 per bottle a nd t h at t he retail price at which the defendant h as agreed to sell the soft d r i n ks to c o n s u m e rs d u r i ng t he promotion period w as N$1.20 per bottle. Although t he defendant claimed during t he trial not to have k n o wn a b o ut it, it w as not disputed by the defendant t h at t he plaintiffs r e c o m m e n d ed retail price (i.e. the price it recommended to dealers to sell t h o se p r o d u c ts to c o n s u m e rs w h en not on promotion) w as N$1.35 per bottle. Similarly, although the plaintiff claimed not have k n o wn i a b o ut it at t he time, it did not dispute the defendant's evidence t h at h is a c t u al retail price to c o n s u m e rs prior to the promotion w as N$2.50 per bottle. As I have pointed out before, the defendant alleged t h at t he credit entry t h at t he plaintiff should have p a s s ed in his favour at t he end of t he promotion should have been equivalent to t he difference between h is a c t u al retail price (N$2.50) a nd the retail promotion price (N$1.20) of each bottle p u r c h a s ed by him from the plaintiff. The plaintiff, on the o t h er h a n d, alleged t h at s u ch credit h ad to be equivalent to t he difference between its recommended retail price (N$1.35) a nd t he promotion price of each s u ch bottle. The nett effect of t he their differing claims is t h a t, according to t he plaintiff t he credit it h ad to p a ss in favour of the defendant should have been 15 cent per bottle supplied to him d u r i ng the promotion period, w h e r e a s, according to t he defendant s u ch credit should have been N$1.30 per bottle. Given t he non-variation clause of the general t e r ms of t r a de incorporated in t he credit agreement, t he parties should have e n t e r ed into a written agreement if it h ad been their intention to a m e nd a ny of their respective rights or obligations u n d er t h at agreement d u r i ng t he promotion period. (See: SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en andere, 1964 (4) SA 7 60 at 7 66 C to 7 67 C.) They a t t e m p t ed to do t h at in the form of a "promotional newslettef signed by their respective representatives on 19 April 1996. The p r e - p r i n t ed form of t h at letter allowed for particulars a b o ut t he product, period, wholesale a nd retail prices applicable during the promotion to be inserted. Unfortunately, they failed to enter particulars of the period a n d, instead of inserting the reduced wholesale price per bottle (N$1.05), erroneously entered the reduced retail price per bottle (N$1.20) d u r i ng t he promotion. The effect of the incorrect entry is t h at t he defendant would h a ve h ad to sell those beverages at exactly the s a me price he h ad to p u r c h a se t h em from the plaintiff - yet neither the plaintiff n or t he defendant claimed rectification of t h at agreement. Both of t h em (without objection from the other) a d d u c ed evidence at variance with t he e x p r e ss t e r ms of t h at agreement as if the parol evidence-rule w as of no c o n s e q u e n ce notwithstanding clear authority to t he contrary. (Compare for example: J o h n s t on v Leal, 1980 (3) SA 9 27 (A) at 9 43 B.) This is b ut one example of the unsatisfactory m a n n er in which t he p a r t i es defined a nd treated the i s s u es between t h em on t he pleadings. The m a in c a u se of it probably originated in the paucity of p a r t i c u l a rs pleaded in the plaintiffs declaration a n d, to a lesser extent t he d e f e n d a n ts failure to either move an application t h at t h at pleading s h o u ld be set aside as an irregular proceeding, except to it or to r e q u e st further p a r t i c u l a rs thereto. The plaintiffs declaration is essentially a repetition the allegations m a de in t he simple s u m m o n s: "...goods sold and delivered during by the plaintiff to the defendant at the latter's special instance and request...''. W h e r e as a plaintiff is only required of to set out his or h er c a u se of action a nd the relief claimed in concise t e r ms in a simple s u m m o ns (See: V o l k s k as Bank Ltd v Wilkinson And Three Similar C a s es 1992 (2) SA 3 88 (C) at 395A), the paucity of s u ch p a r t i c u l a rs would not necessarily meet the threshold r e q u i r e m e n ts prescribed for t he p a r t i c u l a rs to be alleged in a declaration. The object of a simple s u m m o ns is to bring the defendant before Court a nd to inform h im or her of the n a t u re a nd c a u se of t he claim or d e m a nd he is required to meet (See: B W Kuttle & A s s o c i a t i on Inc v O'Connell Manthe and Partners Inc 1984 (2) SA 6 65 (C) at 668C-D). The p a r t i c u l a rs of the debt or liquidated d e m a nd to be stated in a simple s u m m o ns need not be more t h an t h at required to sufficiently inform t he defendant of the claim to enable h im or h er to decide w h e t h er or not to defend the action a nd to enable t he court to decide, on an application for default or s u m m a ry j u d g e m e n t, w h e t h er a c a u se of action h as been established or not (Compare: Cohen Limited V K o e k e r m o er (2) SA 8 07 (SWA) at 8 08 a nd Landman I m p l e m e n te (Edms) Bpk V Leliehoek Motors (Edms) Bpk 1975 (3) SA 3 47 (O) at 350A). Once the defendant h as entered a p p e a r a n ce to defend t he action commenced with a simple s u m m o n s, he is entitled to be informed with sufficient particularity a b o ut the n a t u re of t he claim, t he c o n c l u s i o ns of law on which the plaintiff relies a nd t he relief claimed (Rule 20(2)) so as to plead to, except to or t e n d er an a m o u nt in settlement of t h at claim a n d, once the i s s u es have been defined in t he pleadings, to p r e p a re for trial a nd present h i s / h er defence on t he b a s is thereof. B e c a u se t he p u r p o se of a simple s u m m o ns a nd t h at of a declaration are significantly different from one a n o t h e r, it follows t h at t he extent to which t he claim should be particularised in the declaration m u st be more extensive t h an the limited n a t u re of the p a r t i c u l a rs required by t he r u l es applicable to a simple s u m m o n s. The r e q u i r e m e nt of Rule 20(2) t h at a declaration "shall set forth the nature of the claim" w h en read together with Rule 18(4) d e m a n ds of the plaintiff to plead, in a clear a nd concise m a n n e r, the material facts relied u p on by h im or h er in s u p p o rt of t he claim (See: Trope v S o u th African R e s e r ve Bank And A n o t h er And Two Other Cases 1992 (3) SA 2 08 (T) at 2 1 0G - H). Moreover, t he plaintiff is also required to comply with t he o t h er r e q u i r e m e n ts of Rule 18 a nd with t he guidelines relating to pleadings developed by judicial p r o n o u n c e m e n ts in t h at regard. The plaintiffs declaration does not expressly refer to t he c o n t r a ct underlying its c a u se of action; does not contain a s t a t e m e nt w h e t h er t h at c o n t r a ct "is written or oral and when, where and by whom it was concluded" a nd t he plaintiff failed to -annex a copy of t he written c o n t r a ct (or t he p a rt thereof) on which it relies. The effect thereof on t he identification of i s s u e s, both on the pleadings a nd d u r i ng t he trial, w as c o m p o u n d ed by the defendant's failure to a sk further p a r t i c u l a rs or to c a n v a ss the i s s u es in the course of the rule 37 conference. The combined result of the casual, almost indifferent, t r e a t m e nt of t he pleadings a nd t he d i s p u t es in this action w as t h at defendant did not plead to t he t e r ms of a written agreement; did not rely on t he n o n- variation clause contained therein; did not apply for rectification of t he promotion agreement; did not refer to the written agreement(s) in h is claim in reconvention a nd w as still u n c e r t a i n, at the time h is c o u n s el p r e s e n t ed final a r g u m e n t, w h e t h er t he plaintiff w as relying on a written a g r e e m e nt for its claim in convention a n d, if so, w h e t h er it w as relying either on t he credit agreement or on the promotion a g r e e m e nt or on b o th of t h e m. Ultimately t h is displeasing state of affairs, deserving c e n s u r e, h as been left to the court to resolve. I would have been entitled to dispose of both the claim a nd c o u n t e r c l a im simply by reference to t he written a g r e e m e n ts between t he p a r t i e s. If I were only to consider, against the b a c k g r o u nd of t he n on variation c l a u se in t he credit agreement, the entry m a de in t he promotion agreement to the effect t h at the wholesale price a nd t he retail price per bottle d u r i ng the promotion would be t he s a me (i.e. N $ l , 20 per bottle), the plaintiff would have been entitled to claim more t h an it actually did a nd t he defendant should fail in h is counterclaim b e c a u se t h at agreement does not require t he plaintiff to g r a nt t he 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 G o v e r n m e nt v Vianini Ferro-Concrete Pipes (Pty) Ltd., 1941 AD 43 at 47). However, the adoption of s u ch an a p p r o a ch to t he d i s p u t es in t h is m a t t er will not do justice between the parties in the c i r c u m s t a n c es of t h is c a s e, especially b e c a u se neither of t h em h as relied on t he pleadings or in evidence on the correctness of t h at c l a u se in t he promotion agreement. The plaintiffs operations m a n a g er testified t h at t he plaintiff occasionally a p p r o a c h ed retailers to r un special promotions of its p r o d u c ts for a limited period of time. In the course of s u ch a promotion the plaintiffs p r o d u c ts would be sold at a price lower t h an its r e c o m m e n d ed retail price. To encourage retailer participation in s u ch p r o m o t i o n s, the plaintiff absorbed the difference between its i r e c o m m e n d ed retail price a nd the promotion price of s u ch p r o d u c t s. It does so by p a s s i ng a credit in t h at a m o u nt against its ruling wholesale price. In casu, an a r r a n g e m e nt to t h at effect h as been m a de not only i with t he defendant, b ut also with a nujmber of other retailers in t he s a me region. The defendant p u r c h a s ed soft d r i n ks from the plaintiff in t he c o u r se of the promotion a n d, in relation to s u ch p u r c h a s e s, he w as correctly invoiced a nd the agreed credits p a s s e d. The defendant, on the other h a n d, testified t h at he w as u n a w a re of the plaintiffs r e c o m m e n d ed retail price of N $ l , 30 per bottle applicable prior to the promotion; w as in any event not b o u nd to s u ch r e c o m m e n d ed price a nd sold soft d r i n ks at N$2,50 per bottle to c o n s u m e r s. S u ch a high m a r k - up w as not only generally applied by other retailers in h is vicinity b ut w as necessary to r un his b u s i n e ss on a profitable b a s i s. When he w as initially approached to participate in the promotion (during which he h ad to sell those p r o d u c ts for N $ l , 20 per bottle) he declined, b e c a u se participation would have m e a nt s l a s h i ng h is profit from N$1.45 to 30 cent per bottle sold. The plaintiffs regional m a n a g er came to see h im a b o ut his refusal a n d, according to h im a nd the m a n a g er of h is b u s i n e s s, explained to h im t h at he would not suffer any losses b e c a u se the plaintiff would p ay him t he difference between his n o r m al retail price (of N$2,50 p er bottle) a nd t he promotion price thereof (of N$l,20) at t he e nd of t he promotion period. Having received those a s s u r a n c es a nd expecting a higher turnover d u r i ng t he promotion period, he orally agreed to participate in t he promotion although h is profit per bottle sold would have b e en slightly reduced from N$1.45 to N$1.30 during t h at period. Had he known t h at he would only receive a credit of 15 c e n ts p er bottle i n s t e ad of N$ 1,30, he would not been a m e n a b le to participate. I have carefully listened to the evidence presented by t he plaintiffs o p e r a t i o ns m a n a g e r. He w as at the time the regional m a n a g er of t he plaintiff. He w as confident a nd well informed a b o ut t he plaintiffs policies as r e g a r ds the promotion a nd m a r k e t i ng of its p r o d u c t s. He h ad a clear recollection of the events leading up to the d i s p u te a nd w i t h o ut hesitation conceded m a t t e rs not falling within h is p e r s o n al knowledge even t h o u gh those concessions might have been adverse to t he plaintiffs case. He impressed me as an h o n e st witness. I have no d o u bt t h at he would not have offered the defendant an a g r e e m e nt w h e r e by t he plaintiff h ad to give him N $ l , 30 credit on each bottle of soft d r i n ks sold. S u ch an a r r a n g e m e nt would not only have been in conflict with the plaintiffs promotion a nd m a r k e t i ng policies a nd unfair to other retailers participating in the s a me promotion, b ut would also have resulted in the plaintiff actually having h ad to pay t he defendant to sell its p r o d u c ts without t he plaintiff receiving a n y t h i ng in r e t u rn for s u ch sales. Why? Because t he wholesale price at which t he plaintiff sold its p r o d u c ts to the defendant w as at t he time approximately N $ l , 05 per bottle. If, as the defendant claims, t he plaintiff h ad to p a ss a credit in favour of t he defendant in an a m o u nt of N $ l , 30 per bottle, t he nett result thereof would have been t h at t he plaintiff would have h ad to actually pay t he defendant 25 c e n ts p er bottle sold! The s um thereof is precisely w h at t he defendant is claiming. W h e r e as it m ay not be u n c o m m on for suppliers or m a n u f a c t u r e rs to agree to t he free distribution of their p r o d u c ts for a very limited time a nd in limited q u a n t i t i es at certain designated outlets, the notion t h at t he plaintiff actually h ad to pay the defendant to sell its p r o d u c ts over an extended period of time in unlimited quantities, is so i m p r o b a b le t h at it c an be discounted. The evidence a d d u c ed on behalf of t he plaintiff is furthermore corroborated by the s u b s t a n t i al n u m b er of invoices h a n d ed in as exhibits from which it is a p p a r e nt t h at t he credits p a s s ed in favour of the defendant during the promotion period accorded with t he plaintiffs version of w h at the t e r ms of t he promotion a g r e e m e nt h ad been. The evidence of t he defendant w as less persuasive a n d, in a ny event not s u p p o r t ed by t he probabilities in the case. He received several invoices in which only credits according with the plaintiffs version of t he a g r e e m e nt h ad been p a s s e d. He noticed t h at those credits were s u b s t a n t i a l ly less t h an those he w a s, according to his version of t he a g r e e m e n t, entitled to receive. Yet, he did not do anything at the time to p r o t e st the incorrectness of those entries. He c o n t i n u ed to order soft d r i n ks from t he plaintiff a nd participate in t he promotion, thereby lulling t he plaintiff into the belief t h at there w as no d i s p u te between t h em as to t he t e r ms of the promotion agreement. The d e f e n d a n t 's r a t h er l a me excuse for h is inaction w as t h at he h ad t h o u g ht to "sort it out " at t he end of t he promotion. When a s k ed why he failed to pay his a c c o u n ts timeously in t e r ms of t he credit agreement, he testified t h at he did not m a ke a ny profit on sales d u r i ng the promotion period. The u n c o n t e s t ed evidence is t h at he c o n t i n u ed to m a ke at least 15 cent gross profit on every bottle sold (in addition the further credit of 15 cent per bottle p a s s ed on h is a c c o u nt by the plaintiff). The gross income generated by t he sales w as therefor more t h an sufficient to pay the invoiced a m o u n t s. The strongest a r g u m e n t, advanced by t he defendant in s u p p o rt of h is contention t h at the probabilities were favouring him, relates to t he r e d u c t i on of profit he would have h ad to accept h ad he participated in t he promotion on the t e r ms relied on by the plaintiff. Why, Mr Mouton argued on behalf of the defendant, would the defendant, w ho normally m a k es a profit of N$1.45 per bottle sold, agree to an a r r a n g e m e nt in t e r ms whereof he would receive only 30 c e n ts p er bottle? Had it not been for the fact t h at the plaintiff discovered, w h en visiting t he defendant's premises d u r i ng the promotion, t h at he w as still selling the soft d r i n ks at his n o r m al retail price of N$2.50 d u r i ng t he promotion (thereby m a k i ng a profit of not N$1.45 b ut N$1.60 p er bottle!), t he a r g u m e nt might have been more persuasive. Although, on t he face thereof, the evidence of t he defendant's m a n a g er c o r r o b o r a t es t he defendant's version of the promotion agreement, he w as generally a poor witness. He eventually, a nd not with m u ch persuasion, conceded that he could not r e m e m b er much about the conversation concerning the t e r ms of t h at agreement. Given h is s u b o r d i n a te relationship with the defendant a nd his poor performance as a w i t n e s s, I a t t a ch little weight to his testimony. I am satisfied t h at the plaintiff h as proven its claim on a b a l a n ce of probabilities a nd t h at the defendant h as failed to discharge t he b u r d en of proof he h ad to discharge in respect of the counterclaim. In view of t he r e m a r ks I have m a de above a b o ut the unsatisfactory n a t u re of t he pleadings, I intent to m a ke a special order as to c o s t s. In the r e s u lt I m a ke the following order: 1. The defendant is ordered to pay to the plaintiff t he s um of N$7 2 8 9 . 55 p l us interest thereon calculated at a rate of 2 0% per annum from 15August 1996 until the date of p a y m e nt thereof; 2. t he defendant is further ordered to pay the plaintiffs c o s ts of t h is suit, excluding any costs relating to the drafting of or a t t e n d a n ce on a ny of t he pleadings filed in convention; 3. t he defendant's claim in reconvention is dismissed with c o s t s. ON BEHALF OF THE PLAINTIFF: ADV G DICKS Instructed by: Behrens & Pfeiffer • ON BEHALF OF THE DEFENDANT: ADV C J MOUTON Instructed by: P F Koep & Co.