SF Recovery Systems (Pty) Ltd v Amoref (Pty) Ltd
| Jurisdiction | South Africa |
| Judge | JR Murphy J |
| Judgment Date | 17 April 2018 |
| Citation | 2018 JDR 0696 (GP) |
| Docket Number | 67722/2015 |
| Court | Gauteng Division, Pretoria |
Murphy J:
The plaintiff, SF Recovery Systems (Pty) Ltd, ("SF Recovery"), a company conducting business in the recovery of minerals, has instituted action against the defendants for restitution and damages arising out of the sale and lease of certain equipment. The first defendant is Amoref (Pty) Ltd, ("Amoref"), a company which manufactures and supplies mining equipment. The second defendant is PJ Roux, the general manager of Amoref who represented himself to SF Recovery as an expert in the design, manufacturing and supply of mining equipment.
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Murphy J
In January 2015 SF Recovery entered into a contract with Anglogold Ashanti ("Anglo") to recover gold from gold bearing material at the Savuka Plant in Carletonville ("the Anglo contract"). SF Recovery was required in terms of the Anglo contract to break up, crush and mill large sections of concrete flooring into which gold dust had syphoned or settled over time and to extract the gold residue. The work had to be completed by 30 March 2015. The contract price was fixed at R6 965 840.00 (VAT exclusive) . The scope of the Anglo contract was defined to be:
"The provision of all suitably qualified personnel, supervision, labour, materials, contractor's equipment and transportation necessary for the gold recovery project (uplift and process gold bearing material) at Savuka Plant..."
In order to fulfil its obligation under the Anglo contract, SF Recovery required a gold extraction plant with the capability of processing 15 to 20 tons per hour of raw material.
SF Recovery accordingly contracted with Amoref to supply it with a gold extraction plant ("the gold plant"). SF Recovery later also wanted to extract gold from the red soil below the concrete and needed a wash plant to do that. SF Recovery leased a wash plant from Amoref for that purpose. SF Recovery's action against Amoref comprises three claims, two related to the gold plant and one related to the wash plant.
The pleadings
The first claim is against both defendants. SF Recovery alleges that in February 2015 Amoref and Roux represented to SF Recovery that: i) the defendants had the required knowledge and skill to manufacture, commission and maintain a container housed gold processing plant (code named CGO3); ii) the gold plant would be capable of processing 15 to 20 tons per hour of gold bearing material such as concrete; iii) after commissioning of the gold plant the defendants would provide reasonable aftermarket assistance to keep the gold plant operational; iv) the manufacture of the gold plant would be completed and capable of performing at the
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Murphy J
warranted capacity of 15-20 tons per hour, by no later than 27 February 2015; and v) the all-inclusive purchase price for the gold plant would be R 2 268 600.00 (VAT inclusive). SF Recovery alleged that the defendants misrepresented the truth about their own capabilities to design and deliver the gold plant and the capabilities of the gold plant to process 15 to 20 tons per hour raw material.
The gold plant was supposed to be delivered on 27 February 2015. However, it could only be assembled on the Anglo site during April-May 2015. Once on site, the gold plant was incapable of processing 15 - 20 tons per hour raw material.
The alleged misrepresentations resulted ultimately in SF Recovery cancelling the contract for the supply of the gold plant. SF Recovery thus firstly claims confirmation of the cancellation of the contract, the return of the purchase price of the gold plant (less 10% retention), being a total of R2 190 940.00, and tenders the return of the dysfunctional gold plant.
SF Recovery's second claim is for consequential damages. It alleges that when the defendants made the misrepresentations they were aware of the fact that time was of the essence in that performance in terms of the Anglo contract was due by 30 March 2015. The misrepresentations that Amoref could provide a gold plant with the stipulated capacity by no later than 27 February 2015, it alleges, caused the completion of the Anglo contract to be delayed by 133 days and SF Recovery to incur extra running costs in the amount of R1 079 893.00 and additional costs to make the gold plant operational amounting to R41 144.45. They also caused SF Recovery to be unable to complete the Anglo contract, resulting in Anglo cancelling the Anglo contract and causing SF Recovery a loss of R3 824 840.00. Thus SF Recovery claims consequential damages in the amount of R4 945 877.45. In the alternative in the event of it being found that the defendants did not misrepresent the truth, SF Recovery claims the same amounts from Amoref on the basis that the gold plant contract had been breached. SF Recovery has pleaded that it was within reasonable contemplation between the parties that SF Recovery would suffer consequential damages if the gold plant was not delivered, commissioned and supplied according to the agreed specifications.
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Murphy J
During March 2015, when it became clear that the gold plant would not be delivered on time, SF Recovery and Amoref entered into an oral agreement in terms of which Amoref would supply SF Recovery with an operational wash plant to extract gold from red soil ("the wash plant contract"). The material terms of the wash plant contract were alleged by the plaintiff to be: i) the wash plant would be fit for the purpose of extracting gold from red soil; ii) SF Recovery would pay R75 797.37 to Amoref, which Amoref required to repair the wash plant; iii) as consideration for the payment, SF Recovery would be entitled to use the wash plant for a period of between 10 to 15 days to extract gold from red soil; and iv) the wash plant would be operational by no later than one week after receipt of payment by Amoref.
SF Recovery pleaded that pursuant to the wash plant contract it paid R75 797.37 to Amoref on 19 May 2015, but Amoref repudiated the contract by failing to supply the wash plant in a fully functional condition and consequently SF Recovery was unable to use the wash plant for the agreed period. SF Recovery accepted the repudiation and cancelled the wash plant contract. In an attempt to make the wash plant operational, and to mitigate the damages which SF Recovery stood to suffer as a result of the repudiation of the wash plant contract, SF Recovery incurred necessary expenses amounting to R 13 054,00. As a result, SF Recovery claims contractual damages in the amount of R88 851.37.
The defendants in their plea admitted that following the representations made by them, the parties entered a partly oral, partly written contract in terms of which Amoref agreed to manufacture and commission a gold plant having the aforementioned capabilities at a site of SF Recovery's choice by no later than 27 February 2015. They moreover admitted in their initial plea the allegations in the particulars of claim regarding the representations but added that "the plant functioned in perfect order if operated correctly". They also admitted that the representations were material to the gold plant contract, but denied that the representations were false and further denied that the representations had induced SF Recovery to enter into the gold plant contract. They averred that the defendants "at all times reacted and acted on the instructions and mandate of plaintiff'.
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Murphy J
The defendants pleaded that they performed in terms of the agreement and deny that SF Recovery was entitled to cancel the agreement. The gold plant, they averred, was delivered in accordance with the payments made by SF Recovery to Amoref. The "full deposit" was paid on 15 April 2015 and that the "delayed payment caused a delay in delivery of the plant". The defendants denied that they delivered an inoperative gold plant and alleged that it was due to SF Recovery's "own ineffectiveness and incompetence" in operating the plant that damages if any were suffered.
During the course of the trial, the defendants sought a postponement for the purpose of amending their plea. The amended plea puts up two different defences in the alternative.
In paragraph 3.8.1 of the amended plea the defendants acknowledged that they represented to SF Recovery that they "had at all times the required knowledge and skill to manufacture, commission and maintain a container housed gold plant which was capable to process 15 to 20 tons per hour of gold bearing material such as concrete". However, as to any other representations, they pleaded that such were "merely conversation".
The first defence is based on the existence of a dealership agreement between SF Recovery and an entity known as Vitex Distribution & Logistics (Pty) Ltd ("Vitex" and "the Vitex agreement"). In terms of the Vitex agreement, signed on 3 June 2015, SF Recovery became the "dealer", responsible for the distribution of Amoref's products. Amoref was not a party to the Vitex agreement. Clause 2.1 of the Vitex agreement provides:
"Vitex hereby appoints the dealer as a 'certified dealer' of the goods listed in Schedule A to this Agreement and any products that Vitex may add to this list (hereinafter referred to as "distributed products"), and the dealer accepts such appointment. The appointment of the dealer is non-exclusive and does not imply the granting of a specific geographic area."
Although not clear from the plea itself, it emerged during evidence that the defendants contend that clause 12.8 of the Vitex agreement renders the agreement between SF Recovery and Amoref for the purchase of the gold plant invalid. Clause
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12.8 provides:
"Dealers may not distribute products for personal use under the pretence that it is for a client. This will lead to an immediate termination of this Agreement and the commission will be...
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