Elgin Brown & Hamer (Pty) Ltd v Industrial Machinery Suppliers (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Hoexter JA, Smalberger JA, F H Grosskopf JA, Van Coller AJA and Kriegler AJA
• Judgment Date: 01 April 1993
• Citation: 1993 (3) SA 424 (A)
• Hearing Date: 19 March 1993
• Court: Appellate Division

Hoexter, JA.:

The appellant company ('the plaintiff') carries on the H business of marine engineering at Durban. The respondent company ('the defendant') is an industrial machinery supplier and repairer whose main place of business is at Pinetown. In April 1991 the plaintiff instituted an action in the Durban and Coast Local Division against the defendant (which was cited as the first defendant) and two co-defendants. For purposes of this appeal no reference to the claims against the I co-defendants is necessary. Relevant to the plaintiff's action are two contracts, as varied from time to time, which are respectively described in the particulars of claim as 'the first agreement' and 'the second agreement'. Against the defendant the plaintiff claimed payment of damages in the sum of R1 482 179,48 flowing from the defendant's alleged breaches J of the second agreement.

Hoexter JA

A The defendant excepted to the plaintiff's particulars of claim on the ground that they lacked averments necessary to sustain a cause of action. Mall AJ upheld the exception with costs, including the costs of two counsel. With leave of the Court a quo the plaintiff appeals against the whole of the judgment.

B The terms of the first and second agreements are set forth in paras 5-12 of the particulars of claim. The main content of these paragraphs may be shortly stated. The first agreement was concluded in June 1987 between the plaintiff and Emopesca EE ('Emopesca'). In terms thereof the plaintiff undertook, against payment of a certain contract price, to overhaul two fishing trawlers, the Sistallo and the Fontaeo, including the C reconditioning of their diesel engines, within a period of 12 weeks of a defined date. If this period were exceeded, the plaintiff would be liable to Emopesca for penalties. After September 1988 the first agreement was varied by a further agreement that, while the Sistallo would still be reconditioned, the Fontaeo would be scrapped, save that its two engines D would be reconditioned by using parts from the two engines of the Sistallo.

The second agreement, which was concluded in November 1988, was a contract between the plaintiff and the defendant. In terms thereof the reconditioning of the aforesaid two engines would be carried out at a certain contract price by the defendant as a subcontractor to the first agreement. The defendant would use the spares available from all four E engines. Prior to delivery the engines would be thoroughly tested on a test-bed and the engines would be installed and run in by the defendant. The defendant's standard conditions of contract would apply to the second agreement.

In June 1989 Emopesca and the plaintiff and the defendant agreed to vary F the first and second agreements. The estimated budget price for completion of the two engines was increased and time limits were set for the reconditioning of the two engines by the defendant. During September 1989 the plaintiff and the defendant further varied the second agreement by agreeing (i) that prior to delivery the engines would not be run on a test-bed; (ii) the engines would be installed in the Sistallo by a G technician of the defendant assisted by labour from the plaintiff; and (iii) the engines would be commissioned by the defendant after they had been installed in the Sistallo.

The performance of the engines after they had been installed is described in paras 13-17 of the particulars of claim. They initially ran H successfully for some 30 hours. On 9 January 1990, when tested under full load conditions, the port engine failed within five minutes. Both engines were removed and stripped and found to have been damaged during their commissioning. The engines were taken to the defendant's premises where they were once again stripped and overhauled, whereafter at the beginning of March 1990 the defendant returned the engines to the Sistallo. On 28 I March 1990, and after being installed, the port engine was tested at Durban and again failed. Both engines were again removed, stripped and found to be damaged.

The computation of the damages claimed by the plaintiffs from the defendant is set forth in paras 23-25 of the particulars. The plaintiff alleges (i) that in terms of the first agreement it was obliged to buy two J new

Hoexter JA

A engines for use in the Sistallo at a cost of R199 646; (ii) that it suffered damages in the sum of R745 839, being wasted costs for items installed on the Sistallo which were destroyed during the refitting of the engines, items which became redundant when the new engines were installed, labour and wasted fuel costs; (iii) that it suffered loss and damages in the sum of R536 694,48, being the total of penalties payable by it to B Emopesca and loss of interest on the contract price payable by Emopesca calculated from 12 November 1989 to 31 May 1990.

Mention has already been made of the fact that it was a term of the second agreement that the defendant's standard conditions of contract ('the SCC') would apply thereto. The plaintiff annexed to its particulars C of claim a copy of the SCC. The exception noted by the defendant is based on the provisions of clause 8 of the SCC, in which reference is made to the defendant as 'IMS'. That clause is in the following terms:

'Whilst reasonable care will be taken to ensure that first class materials and workmanship will be used in the execution of the contract IMS will not be liable for any loss or damages whatsoever, direct or D ...