Maize Board v Hart

• Jurisdiction: South Africa
• Judge: Hancke J
• Judgment Date: 12 February 2004
• Citation: 2005 (5) SA 480 (O)
• Docket Number: 2726/1996
• Counsel: D A Gordon SC (with him S Joubert and E J B Lingenfelder) for the plaintiff. J A Ploos van Amstel SC (with him A Stokes) for the defendant.
• Court: Orange Free State Provincial Division

Hancke J:

The plaintiff is the Control Board referred to in s 6 of the Maize Marketing Scheme (the scheme) H published by Proc R45 of 1979 and established in terms of the Marketing Act 59 of 1968.

It is common cause that the defendant concluded two written agreements with Rainbow Chicken Farms (Pty) Ltd (Rainbow), a breeder and producer of broiler chickens, which were entitled respectively as a I 'Lease agreement', and a 'Management agreement'. The terms of the lease agreement were to the effect that the defendant let and Rainbow hired for the particular season farmland situated within the magisterial district of Harrismith and that Rainbow undertook to plant, grow and harvest, inter alia, yellow maize, on the said land. J

Hancke J

The terms of the management agreement were to the effect that Rainbow A appointed the defendant as its manager to manage the farm operations on the land leased by it in terms of the lease agreement, and that the defendant undertook to supply the necessary labour, machinery, equipment, fuel, expertise and to prepare and fertilise the land, plant seed, apply herbicide and insecticide, cultivate, harvest and produce the said crop and arrange the delivery of the crop to a milling company or at such other place as Rainbow may direct. It is B also common cause that thereafter the defendant produced and delivered, according to Rainbow's directions, a crop of yellow maize of 409,263 tons.

It is the plaintiff's cause of action that each of the lease and management agreements were simulated and were concluded in their terms C with the intention of disguising that the defendant in fact sold, and Rainbow in fact purchased, the yellow maize produced on the land, and of evading the payment of the levies referred to in the scheme, on the basis that Rainbow was the 'producer' of the crop for its own use and thereby exempt from the said levies, whereas in truth and in fact the defendant was in respect of each such crop the 'producer' of it, as defined in the said Maize Marketing Scheme, and therefore the D entity obliged to pay the levies. According to the plaintiff's particulars of claim, the said levies ought, according to law, to have been paid by the defendant to the plaintiff, which defendant failed to do.

The issues between the parties therefore relate to the question as to E whether or not the management agreement and the lease agreement are simulated transactions.

Up until now the plaintiff has called three witnesses, the last of which was Mr Rudman, the attorney for the plaintiff, who testified that he obtained certain documents of the Maize Board, Rainbow Chickens and F Verus Farms respectively. In view of the objection made by Mr Ploos van Amstel, counsel for the defendant, to the admissibility of the documents handed in by Mr Rudman, Mr Gordon, counsel for the plaintiff, applied for the admission of this documentary evidence contained in Bundle X as evidence in the trial.

The said documents consist, first, of an agency agreement concluded G between Rainbow and Verus Farm Holdings (Pty) Ltd on 6 September 1994, and appendices to said agency agreement; secondly, memoranda and correspondence, including Verus progress reports, forward buying contracts, Rainbow internal memoranda and other documents of Verus Farms; and, thirdly, Rainbow internal memoranda. H

As far as Rainbow's role in the present litigation is concerned, it appears that clause 17.2 of the management agreement provided that the defendant

'irrevocably waives any claims or actions which it may have at any time against Rainbow in respect of any claims of actions, whether at law or administrative, which may be brought against the manager by any government authority, statutory board or the like in respect of the I land or the farming operations'.

Rainbow, in the present action and, apparently, in all the other actions, has waived that clause and undertaken the defence of each and every action.

An application to set aside subpoenas duces tecum issued at the instance J

Hancke J

of the plaintiff was lodged three days before the commencement of the present trial. In his affidavit herein Mr Stephen A Burridge Heath, legal advisor and company secretary of Rainbow, stated that Rainbow agrees

'in principle to indemnify each of the individual farmers in respect of the claims brought against them by the first respondent (the Maize Board).

Given the vast number of actions brought individually against the various farmers, it was also necessary to consolidate the legal B representation of the defendants. All of the defendants are being represented through attorneys MacCullums Inc of Cape Town appointed at the instance of Rainbow Chickens and at its expense. . . .

During 1995 Rainbow Chickens appointed Verus Farming and Investments (Pty) Ltd (Verus), a company based in Brighton Beach, Durban, to administer the maize contracts.' C

Subsequently Rainbow has either itself or through its attorneys directed the defence of the actions, apparently participated in all the necessary discussions with the plaintiff's attorneys and paid the judgments, interests and costs in the broiler cases which have reached finality. D

I agree with Mr Gordon's submission that Rainbow has conducted itself as a party to the action and although it is not the defendant de iure, it is the de facto defendant or the alter ego of the defendant.

The strategy of Rainbow puts itself in a crucial and advantageous E position; for example, under the guise that the farmer defendants are independent of it, Rainbow directed the defendant to require the plaintiff to prove its own documents, and those of its agents. The most common way to prove the authenticity of the relevant documents would be to call the author or authors to identify the documents. Zeffertt, Paizes and Skeen (formerly Hoffmann and Zeffertt) The South African Law of Evidence (2003) at 694. Rainbow has F therefore placed the plaintiff at an evidential disadvantage to prove the documents to compel the plaintiff to call witnesses who will manifestly be unhelpful, if not hostile, to the plaintiff and give itself the advantage of the ability to sympathetically cross-examine any witness merely called to identify a document. G

As far as the common law in this regard is concerned, Human J stated the following in Howard & Decker Witkoppen Agencies and Fourways Estates (Pty) Ltd v De Sousa 1971 (3) SA 937 (T) at 940E - G:

'The law in relation to the proof of private...