Consol Limited t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and Another (11080/99) [2005] ZAWCHC 52; 2005 (6) SA 23 (C); [2005] 4 All SA 517 (C) (22 July 2005)

IN THE HIGH COURT OF SOUTH AFRICA

CAPE OF GOOD HOPE PROVINCIAL DIVISION

Case no 11080/1999

In the matter between

CONSOL LIMITED t/a CONSOL GLASS Plaintiff

and

TWEE JONGE GEZELLEN (PTY) LTD First defendant

NICHOLAS CHARLES KRONE Second defendant

JUDGMENT IN FIRST DEFENDANT’S APPLICATION TO AMEND ITS COUNTERCLAIM AND REPLICATION :

DELIVERED ON 22 JULY 2005

BLIGNAULT J:

[1] This is the beginning of the second round in the litigation between these parties in regard to bottles supplied by plaintiff to first defendant for the making of sparkling wine by means of the method known as cap classique. The first round culminated in success for plaintiff in the Supreme Court of Appeal. Its reliance upon an exemption clause in the agreement between the parties was upheld. The judgment is reported as Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and another [2004] 1 All SA 1 (SCA) (“the SCA Consol judgment”). The second round commenced with an application by first defendant to amend its pleadings in order to attempt to avoid the effect of the exemption clause.

The existing pleadings

[2] Plaintiff, a company trading as Consol Glass, carries on business as a manufacturer of glass procucts. It instituted this action against first defendant, a company which carries on business as a winemaker at Twee Jonge Gezellen, Tulbagh, Western Cape and second defendant, a shareholder in and director of first defendant, for payment of R624 829,51. This amount represents the balance owing to plaintiff in respect of bottles sold and delivered to first defendant. Second defendant is alleged to be liable by virtue of a suretyship concluded by him in favour of plaintiff.

[3] First and second defendants did not in their plea dispute plaintiff's claim save that they pleaded that the amount of first defendant's indebtedness was R605 854,53 and not R624 829,51 as alleged by plaintiff. They pleaded, however, that they were excused from paying that amount to plaintiff by reason of the fact that first defendant had a counterclaim against plaintiff which exceeded the amount of plaintiff's claim. The counterclaim arose from alleged defects in a quantity of 29 720 of the bottles which it purchased during 1996 from plaintiff in terms of the supply agreement between the parties. The bottles were used by first defendant in the production of sparkling wine according to the method known as cap classique.

[4] First defendant's principal cause of action was set forth as follows in para 2.5.1 of its counterclaim:

“2.5.1 In material and fundamental breach of the terms of the supply agreement, the aforesaid bottles delivered to first defendant were not manufactured by plaintiff according to its standard manufacturing procedures and/or techniques and/or utilising standard raw materials, more particularly in that:

2.5.1.1 Freon 134A gas instead of 152A gas was used; and/or

2.5.1.2 The method of application of the Freon gas used was not in accordance with plaintiff's standard procedures and/or techniques; and/or

2.5.1.3 Excessive and/or irregular quantities of Freon gas was used; and/or

2.5.1.4 Freon 134A gas was used, which had not been utilised by plaintiff previously.”

First defendant alleged that as a consequence of this breach of contract by plaintiff it lost 29 720 bottles of 1994 vintage cap classique sparkling wine due to the fact that:

“2.6.1.1 riddling, being the process whereby bottles are regularly turned whilst the neck of the bottle is lower than the bottom to cause particles of yeast to gradually move towards the neck of the bottle, could not be effectively executed; and/or

2.6.1.2 disgorgement, being the process whereby yeast residue is removed from the neck of the bottles by freezing after riddling has taken place, could not be effectively executed; and/or

2.6.1.3 the fermentation process was undermined, in that wine from a homogeneous blend fermented incompletely and/or inconsistently in the bottles with fluctuations from bottle to bottle.”

The loss of these quantities of sparkling wine allegedly resulted in a nett loss to first defendant of R1 747 639,00. First defendant alleged that it suffered additional losses under various heads. The sum total of its losses amounted to R10 216 215,00.

[5] First defendant put forward an alternative claim in para 3 of the counterclaim on the basis that plaintiff is liable as a manufacturer of wine bottles, including bottles used for the bottling of cap classique sparkling wine, alternatively, that plaintiff is a merchant seller of such bottles and that it publicly professed to have attributes of skill and expert knowledge in respect of such bottles. First defendant alleged that the bottles sold to it by plaintiff were latently defective and incapable of performing their intended function in the three respects set out above.

[6] In defending the counterclaim plaintiff relied inter alia on the provisions of an exemption clause in the agreement between the parties. This clause, which bears the heading ‘Claims’, provides as follows:

“All goods supplied are manufactured according to the company’s standard manufacturing procedures and techniques, utilising standard raw materials.

No claims shall be recognised by the company unless lodged within 21 (twenty one) days after receipt of goods. If goods are damaged at the time of delivery the customer shall advise the customer’s nearest sales office within twenty four hours of delivery. No guarantee or warranty regarding supply or quantity is given or implied unless specifically stated in writing by an authorized company representative. Where any written warranty is given, the company’s liability will be limited to replacement of defective goods on proven non-compliance with the warranty or accepted specification. Under no circumstances , with or without written guarantee or warranty, shall the company be liable for any consequential loss or damage howsoever arising.

The customer shall have no claim for short delivery unless the quantity short delivered is endorsed on all copies of a delivery note presented for signature. The company shall be the sole adjudicator in respect of all claims and any decision undertaken by the company in this regard shall be binding on the customer.”

[7] Plaintiff filed a plea to the counterclaim in which it admitted the sale and delivery of the bottles in question but disputed the alleged breach of contract. In para 6 of the plea (ad para 2.5.1 of the counterclaim) plaintiff pleaded as follows:

“6.1 It is denied that the plaintiff breached the terms of the supply agreement.

6.2 It is admitted that the bottles were internally treated with freon 134A gas.

6.3 The freon 134A gas was applied in accordance with the plaintiff's standard procedures and techniques, which had been in use since March 1994.

6.4 Save as aforesaid all the allegations contained in this paragraph are denied.”

Para 8.3 of plaintiff's plea to the counterclaim (ad para 2.6.1 of the counterclaim) read as follows:

“8.3 In any event, the plaintiff repeats paragraphs 5.3 to 5.7 of its particulars of claim and pleads as follows

:

8.3.1 In the event of it being found that it was an express term of the supply agreement that all glass bottles supplied by the plaintiff to the first defendant would be manufactured by the plaintiff according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, and that the plaintiff was in breach thereof, such term is a written warranty as contemplated by clause 8.3 of the supply agreement and accordingly the plaintiff's liability is limited to the replacement of the bottles in question;

8.3.2 The damage pleaded by the first defendant in paragraph 2.6 constitutes consequential loss;

8.3.3 No claim in respect of the said bottles was lodged by the first defendant with the plaintiff within 21 days after the receipt of the bottles by the first defendant.

8.4 In the premises, the claim advanced by the first defendant in para 2.6 is not competent.'

Para 22 of the plea to the counterclaim (ad sub-para 3.8 of the counterclaim) contained the following allegations:

“… 22.2.1 The plaintiff furnished the first defendant with no written warranty against latent defects.

22.2.2 The damage pleaded by the first defendant constitutes consequential loss.

22.2.3 No claim was lodged by the first defendant with the plaintiff within 21 days of the receipt of the bottles by the first defendant.

22.3 In the premises, the claim advanced by the first defendant in paragraph 3.8 is not competent.”

[8] First defendant filed a replication to the plea to the counterclaim. In para 1 of the replication it replied as follows to para 8.3 of plaintiff's plea:

“1.1 The provisions of the agreement described in paras 5.3 to 5.7 of the particulars of plaintiff's claim form part of a clause of the agreement, with the heading ''Claims'', which commences with the following words:

''All goods supplied are manufactured according to the company's standard manufacturing procedures and techniques, utilising standard raw materials.''

1.2 Upon a proper construction of such clause, Plaintiff would only be entitled to rely upon the limitations placed upon its liability as set out therein in the event of its complying with the first sentence thereof, ie in the event of the goods supplied being manufactured according to the company's standard manufacturing procedures and techniques, utilising standard raw materials.

1.3 Plaintiff failed to comply with its obligations described in such clause, as more fully set out in para 2.5 of First Defendant's Claim in Reconvention.

1.4 In the premises, Plaintiff is not entitled to rely upon the provisions of the agreement described in the abovementioned paragraph.

1.5 As regards the provision of the agreement described in para 5.3 of the particulars of claim, First Defendant alleges, in any event, that it was a tacit term of the agreement that Plaintiff would only be entitled to rely upon such provision in the event of the circumstances giving rise to the claim being reasonably apparent to First Defendant within 21 days after receipt of the goods.”

The separation of issues

[9] At the commencement of the hearing plaintiff brought an application for the separate determination of certain issues. This gave rise to an agreement between the parties that certain issues would be determined separately before the remaining issues are heard. The following issues were thus identified by the parties in a document headed 'separate issues':

“1. Whether in terms of the supply agreement the plaintiff was obliged to manufacture all bottles delivered to the first defendant according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials.

2. Whether the bottles reflected in annexures A1 to A6 to the claim in reconvention were manufactured by the plaintiff according to its standard manufacturing procedures and techniques utilising standard raw materials, in particular:

2.1 whether at the time those bottles were made, internal treatment of cap classique bottles with freon 134A gas was part of the plaintiff's standard manufacturing procedures and techniques;

2.2 whether when manufacturing those bottles the plaintiff applied freon 134A gas in accordance with its standard procedures and/or techniques;

2.3 whether at the time the bottles were made, freon 134A gas was a standard raw material for the manufacture of the bottles in question.

3. If the answer to any of the questions set out in para 2 above is ''no'', whether the plaintiff is entitled to rely on the further provisions of the clause of the supply agreement headed ''claims''.

4. Whether the provision of the supply agreement that all goods supplied are manufactured according to the plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, is a warranty as contemplated in the aforesaid clause.

5. Whether the plaintiff's liability for the breach alleged by the first defendant is limited to the replacement of bottles proven to have been defective.

6. Whether the plaintiff is exempted from liability in the event of the first defendant not having lodged its claim within 21 days of delivery of the bottles in question, or whether it was a tacit term of the supply contract that the plaintiff would only be entitled to rely on the provision that no claim would be recognised unless lodged within 21 days after receipt of the goods if the circumstances giving rise to the claim were reasonably apparent to the first defendant within 21 days of receipt of the allegedly affected bottles.

7. Whether the plaintiff is exempted from liability for the first defendant's claim set out in para 3 of the claim in reconvention unless an authorised representative of the plaintiff specifically guaranteed or warranted the relevant quality of the bottles in writing.

8. Whether the damages claimed by the first defendant in paras 2.7 and 3.8 of the claim in reconvention constitute consequential loss or damage as contemplated in the aforesaid clause of the supply contract.”

At a later stage the list of issues was amended by agreement between the parties by way of an addendum, which read as follows:

“1. The question in para 2.2 of the list of separate issues will stand over for later determination, if necessary.

2. The question in para 3 of the list of separate issues is reformulated to read as follows:

If such bottles were not manufactured by the plaintiff according to its standard manufacturing procedures and techniques, utilising standard raw materials, whether the plaintiff is entitled to rely on the further provisions of the clause of the supply agreement headed ''Claims''.”

This agreement for the separation of issues was sanctioned by the court.

The determination of the preliminary issues

[10] The agreement between the parties envisaged that evidence would be adduced for purposes of the determination of the preliminary issues. First defendant commenced with the leading of evidence. It called two witnesses, Professor Richard L Powell, an expert with extensive qualifications and experience in the field of fluorine chemistry, and second defendant. Plaintiff thereafter called Mr Jan de Wind, its technical manager, glass, who had been its operations manager at Bellville during 1998 and 1999, and Mr John B Polasek, its laboratory services manager, to give evidence on its behalf.

[11] After hearing evidence and argument I decided some of the preliminary issues in favour of plaintiff and some in favour of first defendant. My judgment was reported as Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and another 2002 (6) SA 256 (C).

[12] Plaintiff thereupon appealed to the Supreme Court of Appeal against my findings in respect of the first and the third to the seventh preliminary issues. Defendants cross-appealed against my findings on the first and third parts of the second preliminary issue. Neither plaintiff nor defendant appealed against my finding on the eighth preliminary issue. That finding was to the effect that the damages claimed by first defendant were consequential in nature.

[13] The Supreme Court of Appeal upheld plaintiff’s appeal on issues 3, 6 and 7 but its appeal on issues 1, 4 and 5 failed. Defendants’ cross-appeal also failed. In the final paragraph of the SCA Consol judgment, at 19h – 20d, Brand JA summarised the findings of the Supreme Court of Appeal on the preliminary issues as follows:

“Issue (1): In terms of the supply agreement, plaintiff was obliged to manufacture all bottles delivered to first defendant according to plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials.

Issue (2) part 1: At the time when the bottles in question were made, internal treatment of cap classique bottles with Freon 134A gas was part of plaintiff's standard manufacturing procedures and techniques.

Issue (2) part 3: At the time when the bottles were made, Freon 134A gas was a standard raw material for the manufacture of the bottles in question.

Issue (3): Even if the bottles were not manufactured by plaintiff according to its standard manufacturing procedures and techniques, utilising standard raw materials, plaintiff would still be entitled to rely on the further provisions of the clause of the supply agreement headed 'Claims'.

Issue (4): The provision of the supply agreement that all goods supplied are manufactured according to plaintiff's standard manufacturing procedures and techniques, utilising standard raw materials, is not a warranty as contemplated in the claims clause.

Issue (5): Plaintiff's liability for the breach alleged by first defendant is not limited to the replacement of bottles proven to have been defective.

Issue (6): Plaintiff is exempted from liability in the event of first defendant not having lodged its claim within 21 days of delivery of the bottles in question.

Issue (7): Plaintiff is exempted from liability for first defendant's claim set out in para 3 of the counterclaim on the ground that no authorised representative of plaintiff specifically guaranteed or warranted the relevant quality of the bottles in writing.”

[14] The nett result of these decisions was that first defendant’s counterclaim could not succeed. Brand JA did not, however, make an order dismissing first defendant’s counterclaim. In the penultimate paragraph of the judgment he remarked that “there are still some outstanding issues which can, at least in theory, lead to further proceedings”.

First defendant’s proposed amendments

[15] The matter lay dormant for a while. Then, on 1 September 2004, first defendant filed a notice of its intention to amend its counterclaim and its replication in certain respects. Plaintiff objected to the amendments. The application for the amendments was set down to be argued before me on 7 February 2005. At the commencement of the hearing on 7 February 2005 Mr Van Riet, who appeared on behalf of first defendant, informed the court that first defendant wished to effect certain changes to the proposed amendments of its pleadings. This resulted in an agreement between the parties (which was made an order of court) to the effect that first defendant would be allowed to change its proposed amendments and that the opposed application would then be heard on 18 April 2005.

[16] On 10 February 2005 first defendant filed a substitute notice of amendment. In terms of this notice first defendant sought to introduce two new paragraphs, numbered 4 and 5, in its counterclaim. In the proposed paragraph 4 first defendant initially sought to introduce a claim for enrichment. At the hearing of the matter on 18 April 2005, however, he replaced the proposed enrichment claim with the following proposed new paragraph 4:

“4.1 Alternatively to sub-paragraphs 3.1 to 3.10 above, and in any event, First Defendant pleads that it was an implied term of the said contracts of sale that their glass bottles would be fit for the purpose for which they were sold, i.e. the production and sale of Cap Classique sparkling wine by First Defendant.

The said glass bottles were latently defective and unfit for such purpose for the reasons set out in paragraph 3.7 above and, consequently, entirely useless to First Defendant.

4.3 In ignorance of the defective nature of the said bottles, First Defendant effected payment to Plaintiff in respect of the purchase price of the said bottles in a total amount of R286 295,77.

In the event that this Honourable Court should hold that First Defendant is not entitled to recover the consequential losses set out above, Defendants aver that, by reason of the defective nature of the bottles as set out in paragraphs 3.7 and 4.2 above, First Defendant has suffered damages in the said amount of R286 295,77.”

[17] The proposed new paragraph 5 of the counterclaim contains a delictual claim. It reads as follows:

“5. First Defendant’s Claim ex delicto by reason of Plaintiff’s material non-disclosures

As at the time of the conclusion of the sale agreements in question, Plaintiff was aware of the following facts and circumstances, whilst to the knowledge of Plaintiff, First Defendant was then unaware thereof:

5.1 As at the time of manufacture of the bottles which form the subject matter of First Defendant’s counterclaim, there had been, since the conclusion of the supply agreement, a material change in Plaintiff’s manufacturing process and techniques which was likely to, alternatively could, as a reasonable possibility, have impaired the effectiveness of the bottles for the purpose for which they were sold in that:

5.1.1 Plaintiff had, during this period, for the first time, commenced with the treatment of the bottles for the prevention of a phenomenon known as bloom;

5.1.2 In the process, Plaintiff had introduced the use of a fluorine-containing gas compound called Freon 134A so as to neutralize the alkalinity of the inside surface of the bottles;

5.1.3 The Freon 134A gas used in the treatment of the bottles sold to First Defendant was as yet untested and unused, in South Africa or elsewhere for such application and there was accordingly uncertainty as to whether such use/treatment may impair the suitability of the bottles for the production of sparkling wine;

5.1.4 In particular, the fluorine gas (Freon 152A) previously used in the U S A for such purpose has an auto-ignition temperature of less that the temperature at which the treatment took place, and it, accordingly, ignited during such treatment. Freon 134A ignites at a temperature higher than that at which the treatment took place and it was accordingly uncertain how it would react to such temperatures and whether it would undergo a process of thermolysis and/or decomposition or not;

5.1.5 Other glass bottles, so produced and treated by Plaintiff, had not as yet been demonstrated to be suitable for the production of sparkling wine;

5.1.6 As at the date of manufacture of the bottles in question, the use of Freon 134A was still being experimented with by Plaintiff and it was known to Plaintiff that, in some cases, there was serious over-treatment therewith.

5.2 As a fact, the Freon 134A gas did decompose, which resulted in the production of a toxic chemical residue. As a consequence of such treatment, the bottles ere, for the reasons set out in paragraph 2.6 of First Defendant’s Claim in Reconvention, unfit for the purpose as aforesaid. In addition, the chemical residue in the bottles meant that First Defendant could not continue to market and sell its sparkling wine as having been manufactured according to a completely natural process and without the addition of any preservatives or other chemicals.

5.3 The circumstances were such that there was an involuntary reliance by First Defendant upon the non-disclosure of this information b Plaintiff;

5.4 The said information was also such that a duty to communicate same to First Defendant would have been mutually recognized by honest persons;

5.5 Plaintiff failed to communicate such information to First Defendant, either prior to the conclusion of the said sale agreements or at any time thereafter;

5.6 Plaintiff’s representatives knew, or ought reasonably to have known that, should they fail to communicate the said information for First Defendant, First Defendant may be induced to conclude the contracts of sale in respect of bottles which had been treated as aforesaid, which it would not have done but for the non-disclosures aforesaid;

5.7 The said non-disclosures, in fact, induced the conclusion of the contracts, which First Defendant would not have concluded but therefore;

5.8 Had First Defendant been aware of the facts and circumstances set forth in paragraph 5.1 above, it would have required Plaintiff to leave the bottles purchased by it untreated against bloom as aforesaid. Were Plaintiff not prepared to sell untreated bottles to First Defendant it would have purchased the bottles required for the production of its wine from another source. In each case the bottles would then have been fit and suitable for the production of sparkling wine;

5.9 By reasons of Plaintiff’s non-disclosures as aforesaid, and First Defendant’s purchase of the treated, and defective bottles pursuant thereto, Defendants have suffered the damages set out in paragraphs 2.6.2 – 2.6.5 above.”

[18] In terms of the substitute notice of amendment first defendant also gave notice of its intention to amend its replication to plaintiff’s plea to its counterclaim by the deletion of para 1 thereof and the insertion of the following new paras 1 and 2 in the place thereof:

“1. AD PARAGRAPH 8.3 OF PLAINTIFF’S PLEA AS AMENDED TO FIRST DEFENDANT’S CLAIM IN RECONVENTION:

It was an implied, alternatively tacit term of the supply agreement that the exemption and/or disclaimer clauses provided for therein, would be applicable to future contracts of sale between the parties, but subject thereto that, since the conclusion thereof, there had been no material change in the Plaintiff’s manufacturing procedures and/or techniques which was likely to or could, as a reasonable possibility, impair the effectiveness of the glass bottles for the purpose for which they were being sold and of which First Defendant was not informed prior to the sale.

As at the time of manufacture of the bottles which form the subject matter of First Defendant’s counterclaim, there had been, since the conclusion of the supply agreement, a material change in Plaintiff’s manufacturing process and techniques which was likely to, alternatively could, as a reasonable possibility, have impaired the effectiveness of the bottles for the purpose for which they were sold in that:

1.2.1 Plaintiff had, during this period, for the first time, commenced with the treatment of the bottles for the prevention of a phenomenon known as bloom, the existence whereof may cause the glass to lose its transparency and become opaque;

In the process, Plaintiff had introduced the use of a fluorine-containing gas compound called Freon 134A so as to neutralize the alkalinity of the inside surface of the bottles;

The Freon 134A gas used in the treatment of the bottles sold to First Defendant was as yet untested and unused, in South Africa or elsewhere, for such application and there was accordingly uncertainty as to whether it may impair the suitability of the bottles for the production of sparkling wine;

The fluorine gas (Freon 152A) previously used for such purpose has an auto-ignition temperature of less than the temperature at which the treatment took place, and it, accordingly, ignited during such treatment. Freon 134A ignites at a temperature higher than that at which the treatment took place and it was accordingly uncertain how it would react to such temperatures and whether it would undergo a process of thermolysis decomposition or not.

Other glass bottles, so produced and treated by Plaintiff, had not as yet been demonstrated to be suitable for the production of sparkling wine;

Indeed, and as at the date of manufacture of the bottles in question, the use of Freon 134A was still being experimented with by Plaintiff and it was known to Plaintiff that, in some cases, there was serious over-treatment therewith.

As a fact, the Freon 134A gas did decompose, which resulted in the production of a toxic chemical residue. As a consequence of such treatment, the bottles were accordingly, for the reasons set out in paragraph 2.6 of First Defendant’s claim in Reconvention, unfit for the purpose as aforesaid. In addition, the chemical residue in the bottles meant that First Defendant could not continue to market and sell its sparkling wine as having been manufactured according to a completely natural process and without the addition of any preservatives or other chemicals;

First Defendant was, at all material times, unaware of the facts set out in paragraph 1.2 above.

In the premises, the disclaimers/exemptions provided for in the supply agreement do not apply to the sales of the bottles in question for First Defendant.

2. Alternatively to paragraph 1 above, and in any event, First Defendant pleads:

It was a tacit term of the supply agreement that should the circumstances giving rise to a claim not become reasonably apparent to First Defendant within 21 days after receipt of the bottles, then the time period of 21 days provided therein for the lodging of claims, would commence to run upon such date as it did become reasonably apparent to First Defendant;

2.2 First Defendant in fact lodged its claim with Plaintiff within 21 days of becoming aware of such facts.”

[18] In response to defendant’s substitute notice of amendment plaintiff filed a notice in terms of rule 28(3), advising first defendant that it objected to the proposed amendments and setting out the grounds of its objection. Plaintiff brought a formal application for leave to effect the proposed amendments.

[20] At the hearing of the matter on 18 April 2005 Mr van Riet intimated that first defendant intended to amend the proposed new paragraph 5 of the counterclaim (ie the delictual claim) further in order to make it clear that first defendant relied in the first instance upon that claim and only in the alternative on the contractual claims contained in the existing paragraphs 2 and 3 and the proposed new paragraph 4 of the counterclaim. The latter amendment was formalised in the following proposed para 4bis:

“4bis The claims in terms of paragraphs 2, 3 and 4 hereof are brought in the alternative to the claim ex delicto brought in terms of paragraph 5 below, and only in the event that the above Honourable Court should decline to declare the contract rescinded on the basis of the non-disclosures pleaded therein.”

Argument was not concluded on 18 April 2005. The matter was postponed 20 June 2005 for further argument which concluded on that day.

Plaintiff’s grounds of objection

[21] Two of plaintiff’s grounds of opposition to the amendments are of a general nature, namely that there has been an unreasonable delay on the part of first defendant in seeking the amendments and that it would result in disruption, wastage and prejudice to plaintiff if they were allowed. In addition thereto plaintiff contended that the amendments did not raise any triable issues. Mr Rosenberg, who acted for plaintiff, referred in this regard to Ciba-Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd en 'n ander 2002 (2) SA 447 (SCA) at 462G – 463B where the test of a triable issue was authoritatively restated as follows:

“[34] In Trans-Drakensberg Bank Ltd (Under Judicial Management) v Combined Engineering (Pty) Ltd and Another 1967 (3) SA 632 (D) is op 641A - B gesê:

'Having already made his case in his pleading, if he wishes to change or add to this, he must explain the reason and show prima facie that he has something deserving of consideration, a triable issue; he cannot be allowed to harass his opponent by an amendment which has no foundation. He cannot place on the record an issue for which he has no supporting evidence, where evidence is required, or, save perhaps in exceptional circumstances, introduce an amendment which would make the pleading excipiable. . . .'

Die betrokke uitlating van Caney R word met goedkeuring deur Corbett HR aangehaal in Caxton Ltd and Others v Reeva Forman (Pty) Ltd and Another [1990] ZASCA 47; 1990 (3) SA 547 (A) te 565G - I. Ook die volgende stelling van De Villiers RP in Krogman v Van Reenen 1926 OPD 191 te 195 word daar goedgekeur:

'(H)e must show, for instance, that the matter involved in the amendment is of sufficient importance to justify him in putting the Court and the other party to the manifold inconveniences of a postponement. . . .'

Blykens die aangehaalde dicta kan 'triable issue' verstaan word in die sin van:

(a) 'n geskilpunt wat, indien dit aan die hand van die getuienis wat die applikant in sy aansoek in die vooruitsig stel, bewys word, lewensvatbaar of relevant sou wees; of

(b) 'n geskilpunt wat op die waarskynlikhede deur die getuienis wat aldus in die vooruitsig gestel word, bewys sou wees.”

The proposed paragraph 4 of the counterclaim

[22] The proposed para 4 of the counterclaim purports to introduce an additional contractual claim. Mr Rosenberg submitted that this claim is predicated upon an implied term that the bottles would be fit for the purpose for which they were sold. This is in essence the seller’s implied warranty against latent defects. The Supreme Court of Appeal, however, in dealing with the seventh preliminary issue, found that the claims clause excluded any reliance on the implied warranty against latent defects. The proposed para 4, according to his argument, therefore does not raise a triable issue. Mr van Riet submitted, however, that the applicability of the claims clause was attacked in the proposed amendments to first defendant’s replication. He conceded that the proposed amendment of paragraph 4 of the counterclaim could not succeed if the proposed amendments to the replication were not allowed.

The proposed paragraph 5 of the counterclaim

[23] The proposed para 5 of the counterclaim purports to introduce a delictual claim on the grounds of an alleged non-disclosure by plaintiff. The object of this amendment is clear. A delictual claim for misrepresentation giving rise to the cancellation of the agreement would not be subject to the claims clause which forms part of the agreement. I should point out here that the proposed para 5, quoted above, does not in terms refer to the cancellation of the agreement. The proposed para 4, at the time when the notice of amendment was served on 10 February 2005, contained an allegation that first defendant was cancelling the agreement “herewith”. That allegation disappeared when the proposed para 4 was further amended. The matter was however argued by both sides on the basis that the proposed para 5 should be read as including a purported cancellation of the agreement by first defendant by way of the notice of amendment served on plaintiff on 10 February 2005. I propose to consider it on that basis.

[24] Mr Rosenberg (for plaintiff) raised two objections to the proposed para 5. He submitted first that in order to present a triable issue in regard to such a claim first defendant must be able to show that the agreement had been timeously cancelled by it. First defendant is, however, precluded by the doctrine of election from relying on any attempt at cancellation. By trying to enforce its contractual rights against plaintiff with full knowledge of the facts it had elected to keep the contact alive. Mr Rosenberg’s second objection to the proposed para 5 is that the delictual claim now put forward by first defendant has already become prescribed. I propose to deal with the question of prescription first and then with election.

Prescription

[25] Section 12 of the Prescription Act 68 of 1969 deals with the commencement of the running of prescription. Sub-sections 12(1) and (3) read as follows:

“12 When prescription begins to run

(1) Subject to the provisions of subsections (2) and (3), prescription shall commence to run as soon as the debt is due.

… …

(3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.”

[26] Mr van Riet submitted first that first defendant’s cause of action only arose when first defendant cancelled the agreement in February 2005. Prescription could therefore, according to his argument, not have commenced running before that date. Mr Rosenberg, however, with justification, relied on the rule that a creditor is not allowed to postpone the commencement of prescription through his own inaction. See Uitenhage Municipality v Molloy [1997] ZASCA 112; 1998 (2) SA 735 (SCA) at 742B-D:

“As was stated by Van den Heever J in Benson and Another v Walters and Others 1981 (4) SA 42 (C) at 49G:

'Our Courts have consistently held that a creditor is not able by his own conduct to postpone the commencement of prescription.'

This approach was confirmed by the Court in the case of The Master v I L Back & Co Ltd (supra at 1005G) when Galgut AJA endorsed the following assertion:

'If all that is required to be done to render the debt payable is a unilateral act by the creditor, the creditor cannot avoid the incidence of prescription by studiously refraining from performing that act.'”

[27] First defendant’s knowledge (or deemed knowledge) of the facts from which the alleged delictual claim arose, is therefore of decisive importance for purposes of plaintiff’s defence of prescription. Counsel were agreed that the running of prescription of the delictual claim in this case was interrupted by the service upon plaintiff’s attorneys on 10 February 2005 of first defendant’s substitute notice of amendment. Counsel were also agreed that the onus would be on plaintiff at the trial to prove the requisite knowledge on the part of first defendant.

[28] The important facts, according to first defendant, that were not disclosed to it, are those set forth in sub-paras 5.1 (including sub-paras 5.1.1 to 5.1.6) and 5.2 of the proposed new para 5 of the counterclaim. Mr Rosenberg pointed out that Professor Richard L Powell, who testified as an expert witness on behalf of first defendant at the hearing, had prepared a report, dated 21 September 2001, on the technical issues in the matter. A copy of this report was served on first defendant’s attorneys on 26 September 2001 as part of a notice in terms of rule 36(9)(b). In this report Prof Powell contended, inter alia, that:

(i) plaintiff should have been aware from literature in the public domain that problems could arise from using Freon 134A;

the cause of the riddling and fermentation problems was excessive Freon 144A application;

plaintiff should have anticipated problems in utilizing Freon 134A;

plaintiff’s approach to the application of Freon 134A in its process was remarkably irresponsible.

Prof Powell also dealt in his report with the problems and consequences of the different auto ignition points of Freon 152A and Freon 134A and the circumstances under which Freon 134A would undergo a process of decomposition. Mr Rosenberg pointed out that first defendant was also in possession of an earlier report, dated 19 November 1999, prepared for it by Dr D Kruger, an expert in the field of toxological analysis. Dr Kruger had conducted an experiment on the effects of heat treated Freon 134A on the production of carbon dioxide by yeast cells in base wine. Mr Rosenberg accordingly contended that all the facts relative to plaintiff’s alleged duty to disclose were known to first defendant by not later than 26 September 2001.

[29] In second defendant’s affidavit in support of the amendment he stated that the facts now relied upon (save for that recorded in the last three lines of sub-para 5.1.4) became known to first defendant very shortly before or during the trial of this matter in April 2002. In argument Mr van Riet, however, accepted that the relevant facts became known to first defendant during the course of the evidence given by Polasek on 29 April 2002.

[30] I have considered the arguments raised by counsel on the question of prescription but I formed the view that it would not be practically possible to determine the question of prescription at this stage. The enquiry is complicated by two factors. The first is that first defendant’s cause of action does not simply depend on certain facts being known to plaintiff but also that plaintiff’s knowledge of these facts was such that it would, in all the relevant circumstances, have given rise to a duty to disclose them to first defendant. The second factor is that plaintiff is able to rely not only upon actual knowledge on the part of first defendant but also upon deemed knowledge within the meaning of section 12(3) of the Prescription Act. I have no reason to believe that plaintiff will not dispute first defendant’s allegations underlying the delictual claim. In these circumstances I do not think that the question of prescription can be decided on a hypothetical basis at this stage.

Election

[31] Plaintiff’s second objection to the proposed delictual claim is based on the doctrine of election. In Du Plessis and Another NNO v Rolfes Ltd [1996] ZASCA 45; 1997 (2) SA 354 (A) Zulman AJA discussed the doctrine of election and referred with approval, at 364 G – 365 A, to the following passage in the judgment of Watermeyer AJ in Segal v Mazzur 1920 CPD 634 at 644 - 645:

'Now, when an event occurs which entitles one party to a contract to refuse to carry out his part of the contract, that party has the choice of two courses. He can either elect to take advantage of the event or he can elect not to do so. He is entitled to a reasonable time in which to make up his mind. . . . Whether he has made an election one way or the other is a question of fact to be decided by the evidence. If, with knowledge of the breach, he does an unequivocal act which necessarily implies that he has made his election one way, he will be held to have made his election that way; this is, however, not a rule of law, but a necessary inference of fact from his conduct: see Croft v I Lumley 6 HLC (672) at 705 per Bramwell B; Angehrn & Piel v Federal Cold Storage Co Ltd 1908 TS at 786 per Bristowe J. As already stated, the question whether a party has elected not to take advantage of a breach is a question of fact to be decided on the evidence, but it may be that he has done an act which, though not necessarily conclusive proof that he has elected to overlook the breach, is of such a character as to lead the other party to believe that he has elected to condone the breach, and the other

party may have acted on such belief. In such a case an estoppel by conduct arises and the party entitled to elect is not allowed to say that he did not condone the breach.'

[32] Another instructive judgment on the question of election is that of Friedman JP in Bekazaku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd 1996 (2) SA 537 (C). See the following passages at 542E – I:

“When one party to a contract commits a breach of a material term, the other party is faced with an election. He may cancel the contract or he may insist upon due performance by the party in breach. The remedies available to the innocent party are inconsistent. The choice of one necessarily excludes the other, or, as it is said, he cannot both approbate and reprobate. Once he has elected to pursue one remedy, he is bound by his election and cannot resile from it without the consent of the other party. Election is a species of waiver; an election to pursue one remedy involves the waiver or abandonment of the other. The onus of establishing that the party seeking to rely on the breach has elected to affirm the contract is on the other party. See Montesse Township and Investment Corporation (Pty) Ltd and Another v Gouws, NO and Another 1965 (4) SA 373 (A) at 381; Van Schalkwyk v Griesel 1948 (1) SA 460 (A) at 473.

In order to discharge this onus, it is necessary for the party seeking to rely on the other party's election to affirm the contract to prove that the latter had knowledge of the material facts constituting the breach, as well as knowledge of the rights thereby created. See Feinstein v Niggli and Another 1981 (2) SA 684 (A) at 698H-699A. In the present case that involved proof by the respondent that the applicant knew that it had the right to cancel, as well as knowledge that the statement dated 12 December 1994 was in fact not audited”

Friedman JP pointed out that the question sometimes arises whether an objective or subjective approach should be adopted with regard to the conduct alleged to constitute the election. He provided the following answer, at 543J – 544D :

“If the innocent party with full knowledge of his rights performs an unequivocal act from which a reasonable person would necessarily infer that he has elected to affirm the contract, he would be bound thereby, whatever subjective reservations he might have had. On the other hand, if the act on which it is sought to rely for the exercise of an election is not unequivocal, regard may be had to the subjective considerations which motivated the party concerned in order to determine whether the act in question does in fact constitute an election or not. This approach appears to me to accord with that adopted in Van Schalkwyk v Griesel (supra) and in Segal v Mazzur 1920 CPD 634 at 644-5, where Watermeyer AJ stated:

'Whether he (ie the innocent party) has made an election one way or the other is a question of fact to be decided by the evidence. If, with knowledge of the breach, he does an unequivocal act which necessarily implies that he has made an election one way, he will be held to have made his election that way; this is, however, not a rule of law, but a necessary inference of fact from his conduct. . .'

See also Kerr Principles of the Law of Contract 4th ed at 563-4 and the remarks of Coetzee J in the unreported judgment in Breitenmoser v Farm 62 Palmietfontein Developments (Pty) Ltd, quoted in Palmer v Poulter (supra at 20F-H).”

[33] Mr Rosenberg submitted that first defendant, already at the time of the commencement of the hearing in April 2002, had full knowledge of the facts giving rise to its delictual claim. First defendant nevertheless continued to pursue its contractual claims in a lengthy hearing in this court and thereafter in an appeal to the Supreme Court of Appeal. This, he submitted, constituted an unequivocal election to keep the contract alive. Its notice of amendment of 10 February 2005 was the first intimation of a cancellation of the agreement.

[34] On the face of it first defendant’s conduct appears to fall squarely within the ambit of election. The continued pursuit of its contractual rights is simply inconsistent with a cancellation of the agreement for misrepresentation. In response to the defence of election Mr Van Riet, however, submitted that first defendant’s prosecution of its contractual remedies was not inconsistent with its delictual claim. He placed much reliance in this regard on certain passages in Christie The Law of Contract 4th edition 427-428. After quoting the statement in the Segal case, quoted above, the author says the following:

“This passage makes clear the true nature of the doctrine of election. It is not a mechanical rule of law but a combination of waiver and estoppel – the onus is on the defendant to prove that, as a question of fact, the plaintiff has waived the relief he claims or, failing such proof, that he is estopped from claiming it – reinforced by a logical bar to claiming inconsistent remedies, but only if the claims are truly inconsistent. So the double-barrelled procedure of claiming enforcement with an alternative claim for cancellation and damages is permissible … …It is also permissible to claim cancellation or alternatively enforcement, or vice versa, upon different factual averments, ie on the basis that the main factual averments may not be proved.

The question expressly left open in Tillett v Willcox 1941 AD 100 108 – whether the issue of a summons claiming a particular type of relief necessarily bars a subsequent claim for inconsistent relief – can, on the principles considered in the previous paragraph, be answered with a fair measure of certainty. It will normally act as such a bar because it is strong evidence of waiver of the inconsistent remedy, but a summons for specific performance does not bar a subsequent claim for cancellation and damages if the plaintiff’s change of mind follows the defendant’s persistence in his refusal to perform. Similarly, a summons for cancellation and damages, issued in the mistaken belief that the defendant has repudiated, does not bar a claim for enforcement after the mistake has been discovered. In neither case is waiver proved, but the issue of summons in such a case might give rise to an estoppel. A plaintiff who carries his summons for specific performance through to judgment has irrevocably elected not to cancel, and a subsequent claim for cancellation must fail.”

[35] It appears from these passages that the author describes, with reference to case law, three categories of cases where the pursuit of a certain remedy did not preclude the claimant from enforcing an apparently inconsistent remedy at a later stage:

The first category described by the author is “the double-barrelled procedure of claiming enforcement with an alternative claim for cancellation and damages.”

(ii) The second category is a “claim [for] cancellation or alternatively enforcement, or vice versa, upon different factual averments”.

(iii) The third category is “a summons for cancellation and damages, issued in the mistaken belief that the defendant has repudiated, does not bar a claim for enforcement after the mistake has been discovered.”

I propose to consider the categories of cases referred to by Christie, loc cit, in order to determine whether they provide support for first defendant’s contention in this case that the pursuit of its contractual remedy against plaintiff was not inconsistent with a cancellation of the agreement by reason of a misrepresentation on the part of plaintiff.

[36] The first category is the so-called double-barreled procedure. The authoritative decision in this regard is Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3) SA 462 (A). The true nature of that procedure appears from the following passage at 470D-F:

“It is open to a plaintiff-seller to pursue his remedy for the implementation of the agreement in one action, and, should defendant fail to comply with the Court's order, to institute a second action claiming rescission of the agreement and damages. A procedural practice has, however, grown up in our Courts which permits a plaintiff-seller to elect to pursue the first of these rights, i.e., to demand implementation of the agreement and obtain judgment therefor, but further permits him in the same action to ask the Court, should the defendant fail to comply with the Court's judgment for implementation of the agreement, to set aside the agreement and grant consequential relief.”

It is apparent from this passage that the claim for cancellation is only intended for the situation where the debtor persists with his breach of the agreement. The remedies pursued by the creditor are accordingly not inconsistent and this type of case does not support first defendant’s contention.

[37] The second category mentioned by Christie is a claim of cancellation or alternatively enforcement, or vice versa, upon different factual averments. Two decisions are cited by him. The first is Magnet Motor Co. v Bernstein 1929 TPD 431, the second is Le Roux v Autovend (Pty) Ltd 1981 (4) SA 890 (N) at 892F-893A. The Magnet Motor case is not really helpful. In the course of his judgment, at 434, Tindall J did, however, make the following obiter remarks: “…one would expect the seller to allege the repudiation and claim damages in his main declaration, and then, in case he should fail to establish that the contract is at an end, put in an alternative claim for payment of the instalment due.”

[38] In the Le Roux case the plaintiff had purchased five automatic vending machines from the defendant for a purchase price of R6 645,60. Relying upon allegations of defects in the machines as his main and alternative causes of action, the plaintiff claimed cancellation of the agreement and payment of the sum of R6 645,60 plus interest from the defendant. The plaintiff then gave notice to the defendant of its intention to amend his particulars of claim to introduce an allegation that at all material times the difference between the purchase price and the value of the said five automatic vending machines, was the amount of R3 000. The defendant opposed the amendment on the basis that by introducing the actio quanti minoris, the plaintiff was seeking to rely upon two inconsistent remedies, albeit in the alternative. The court (Leon J) allowed the amendment. His reasoning appears from the following passages, at 893A and 894A-D, in his judgment:

“However, in my view what the defendant has failed to appreciate is that the plaintiff is not seeking to rely on inconsistent remedies arising from the same set of facts, but relies in the alternative on different remedies based upon different factual averments. (See Glenn v Bickel 1928 TPD 186.)

… … …

In the present case what the plaintiff has sought under both the actio empti and the actio redhibitoria is redhibition and the alternative claim is brought as an alternative to a claim for redhibition. In these circumstances the further remarks of MURRAY J in [Clarke Bros & Brown (1913) Ltd v Truck & Car Co Ltd 1952 (3) SA 479 (W)] at 483 are in point:

"I can see no answer to the plaintiff's contention that, if it could prove the averments in paras 4, 7 and 8 to the Court's satisfaction, it desired redhibition; if it failed to prove those averments, and only then, it desired damages by way of quanti minoris. I can see no prejudice to defendant in this form of pleading, nor any possible difficulty in the way of the Court's selecting the appropriate form of judgment as was referred to by TINDALL J in Magnet Motor Co v Bernstein 1929 TPD 431 at 433."

As far as I am aware there is nothing in Roman-Dutch law which is inconsistent with the above conclusion. On the contrary Van Warmelo in his doctoral thesis Vrywaring teen Gebreke By Koop in Suid-Afrika points out at 81, 82 and 84 that in Roman-Dutch law it was in the discretion of the Court to determine whether redhibition or only a reduction in price will be allowed to a plaintiff. If a plaintiff could claim redhibition, but be allowed only a reduction in the price, then in principle he must be entitled to claim redhibition and, in the alternative, a reduction of price.”

[39] It seems to me that at best for first defendant a rule may be extracted from this second category of cases to the effect that the strict operation of the principle of election may be relaxed in cases where the innocent party couples his election with a qualification or condition. Such a rule, I may point out, would accord with the following statements in the Australian textbook, Greig and Davis The Law of Contract 1261 in a section headed Conditional affirmation:

“If the innocent party, by his words or conduct, unequivocally appears to be keeping the contract on foot, he cannot in principle, preserve his right of termination by at the same time using words disclaiming an intention to affirm the contract.

However, this cannot be regarded as a rigid principle. Both the conduct of the innocent party, and the words used, must be viewed in the light of all the circumstances. There are undoubtedly situations in which the innocent party will be regarded as doing no more than insisting that the other party fulfil his obligations, but making it equally clear that if the latter party fails to perform timeously, the contract will be at an end. There has been no irrevocable election to affirm, but merely an indulgence to the guilty party.”

[40] The problem for first defendant in this case is that such a rule will not assist it for the simple reason that its election to enforce the contract against plaintiff was not coupled with any condition or qualification. It elected to pursue its contractual remedy by completing the hearing before me, by asking for leave to appeal and thereafter by pursuing the appeal to its logical conclusion. First defendant’s conduct was indeed “an unequivocal act which necessarily implie[d] that he has made his election one way”. It never sought to qualify its election in any manner at all until it sought to introduce the delictual claim on 10 February 2005. The question whether it was open to first defendant to have qualified its election in this case by reserving the right to cancel the agreement at a later stage, need not be decided. It simply does not arise in this case.

[41] The third category of case referred to by Christie is where the creditor made an election in mistake. He cited Langverwacht Farming Co v Sedgwick & Co Ltd (II) 1942 CPD 155 as an example hereof. The following passage in the judgment of Howes J, at 164-5, supports the author’s statement:

“Finally the question arises whether an election as to remedies is irrevocable even if it turns out to have been exercised when no grounds for such election existed.

… …

It would seem extremely unjust that a plaintiff who has had good ground to believe from what the defendant has said that the latter is repudiating the contract but who was in fact mistaken should be unable to change his position if he discovers his mistake before any detriment has been suffered by the defendant.”

[42] The question of the effect in law of an election made in mistake can be a vexing one. In some cases it may in any event give rise to an estoppel. In the present case, however, the question of mistake also does not arise. Plaintiff’s objection to the amendment on the ground of election is premised upon the assumption that first defendant acquired the necessary knowledge during the hearing of the matter in April 2002. By that time first defendant was not labouring under any mistake.

[43] I conclude therefore that plaintiff’s objection, on the grounds of election, to first defendant’s proposed new paragraph 5 of it counterclaim, is sound and falls to be upheld.

The proposed new paragraphs 1 and 2 of the replication

[44] The proposed new para 1 of the replication seeks to introduce a new “implied alternatively tacit term”. (I shall simply refer to it as a tacit term.) The object of introducing the tacit term is clearly to avoid the effect of the decision the SCA Consol judgment in respect of the third preliminary issue. For ease of reference I quote that decision again:

The thrust of the tacit term now put forward by first defendant is to render the entire claims clause subject to a proviso, namely that there had not been any “material change in the Plaintiff’s manufacturing procedures and/or techniques which was likely to or could, as a reasonable possibility, impair the effectiveness of the glass bottles for the purpose for which they were being sold and of which First Defendant was not informed prior to the sale.”

[45] The tacit term to be introduced by the proposed new para 2 of the replication concerns the 21 day notice clause. This clause formed the subject matter of the sixth preliminary issue. The decision in the SCA Consol judgment with respect to that issue read as follows

The thrust of the proposed new tacit term is that the period of 21 days referred to in the claims clause would only commence to run upon the date when the circumstances giving rise to a claim become reasonably apparent to plaintiff.

[46] Plaintiff objected to both the proposed paragraphs on the ground that allowing them at this stage of the proceedings would offend against the doctrine of res iudicata. Plaintiff also objected to the proposed tacit terms on the basis that there are no grounds for importing them into the contract. I propose to consider the question of res iudicata first.

Res iudicata

[47] The gist of the defence of res iudicata is that the matter or question which is being raised by one’s adversary has previously been finally adjudicated upon in proceedings between the parties and that it cannot be raised again. A classic formulation of the requirements for the defence of res iudicata in our law is that of Maasdorp JA in Mitford’s Executor v Ebden’s Executors and others 1917 AD 682 at 686:

“Are the first defendants entitled to set up that decision as res judicata in the present action? To determine that action it will be necessary to enquire whether that judgment was given in an action (1) with respect to the same subject matter, (2) based on the same ground, and (3) between the same parties.”

In the present case there is no question that the parties are the same and that the subject matter of the claim is the same. The question to be determined is whether the proposed amendment is based on the “same ground” as the decision of the Supreme Court of Appeal. This requirement was explained in more detail in African Farms and Townships Ltd v Cape Town Municipality 1963 (2) SA 555 (A) at 562B – E:

“In regard to the requirement that the ground of the demand must be the same, the authorities refer to the causa petendi or origo petitionis. According to Voet, 44.2.4, it is not the form of action which determines the sameness of the causa petendi, but the identity of the question which is again raised or set in motion. (Cf. Vinnius, Inst. 4.13.5). That was also the Roman law. (Dig. 44.2.3; 44.2.7 paras. 1 and 4). Huber, Praelectiones 44.2.6, indicates that, if the merits of the action (meritum actionis) which is instituted, were not examined in previous proceedings, that may be an answer to the judicati exceptio, while Z. Huber, Observationes 35 at p. 128, refers in the same connection to the meritum casae. The rule appears to be that where a court has come to a decision on the merits of a question in issue, that question, at any rate as a causa petendi of the same thing between the same parties, cannot be resuscitated in subsequent proceedings. Where, for instance, the causa or quaestio is ownership, the claimant, if his case is that he has the ownership through inheritance, would not, according to Dig. 44.2.11 para. 5, be instituting a new claim by alleging a donation, for no matter in what way he may have acquired the ownership, his right to it would be finally disposed of in the first action. According to Dig. 44.2.27, regard must be had to the immediate cause of action, and the reason why a claimant may think it is a good cause, is of no consequence.”

[48] An important judgment in the development of our law of res iudicata was that of Greenberg J in Boshoff v Union Government 1932 TPD 345. He referred to the above requirements and said that would be useful to refer to the English law on the point “as the object of the rule in both systems of the law is substantially the same’. The learned judge then quoted and applied the following passage from Spencer-Bower Res Judicata para 162:

“Where the decision set up as a res judicata necessarily involves a judicial determination of some question of law or issue of fact, in the sense that the decision could not have been legitimately or rationally pronounced by the tribunal without at the same time, and in the same breath, so to speak, determining that question or issue in a particular way, such determination, though not declared on the face of the recorded decision, is deemed to constitute an integral part of it as effectively as if it had been made so in express terms; but, beyond these limits, there can be no such thing as a res judicata by implication.”

[49] The judgment of Greenberg J gave rise to some controversy. It was said by some critics that he had relied upon the English law of ‘issue estoppel’ which was in conflict with the principles of res iudicata in our law. The judgment of Botha JA in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653 (A), however, placed the matter in proper perspective. He pointed out that the judgment in Boshoff v Union Government, supra, was based on common-law principles. Greenberg J, he held, invoked English law to arrive at an expansive application of the exceptio rei judicatae, but he did so without applying English law to the exclusion of common-law principles. He continued, at 669F-H of the report, as follows:

“Die ware betekenis van Boshoff v Union Government is dat die beslissing ingehou het dat die streng gemeenregtelike vereistes vir 'n verweer van res judicata (in die besonder: eadem res en eadem petendi causa) nie in alle omstandighede letterlik verstaan moet word en as onwrikbare reëls toegepas moet word nie, maar dat daar ruimte is vir aanpassing en uitbreiding, aan die hand van die onderliggende vereiste van eadem quaestio en die ratio van die verweer. In hierdie lig beskou, kan daar na my mening in beginsel nie fout gevind word met die benadering van die Hof in Boshoff v Union Government nie.”

[50] The English courts have for many years recognised the principle that res iudicata does not only cover the express judicial declaration in the earlier proceedings, but also points that should have been raised but were omitted to be raised in the earlier proceedings. The decision generally recognised as first expressing this principle is that of Wigram VC in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100 at 114 - 115 where the following was said:

“In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

In Arnold and Others v National Westminster Bank plc [1991] 3 All ER 41 (HL) Lord Keith confirmed, at 46e – 48j, that the Henderson principle applies to both cause of action estoppel and issue estoppel in English law.

[51] In the present case, it should be noted, the defence raised by plaintiff is one of res iudicata and not issue estoppel. In Horowitz v Brock and others 1988 (2) SA 160 (A), Smalberger JA explained the difference between res iudicata and issue estoppel by saying, at 179A, that “[t]he doctrine of issue estoppel does not require for its application that the same thing must have been demanded, and it is the lack of this element which distinguishes it from res judicata.” See also National Sorghum Breweries Ltd (t/a Vivo African Breweries) v International Liquor Distributors (Pty) Ltd [2000] ZASCA 159; 2001 (2) SA 232 (SCA) at 236G. In the present case it is clear that first defendant’s contractual claims are still aimed at the recovery of the “same thing. Plaintiff’s defence is therefore one of res iudicata properly so called.

[52] The Henderson principle, so it seems to me, is not in conflict with the approach of Botha JA in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk, supra. There do not appear to me to be any considerations of logic or equity militating against its application in the present case. I propose to follow it.

[53] Mr Van Riet submitted that the issues raised by the proposed new paragraphs of the replication differ from those that were adjudicated upon at the first hearing because first defendant now seeks to rely upon new tacit terms. It seems to me, however, that this submission attaches too narrow a meaning to the concept of issue in the present context. The eight preliminary issues that were put up by the parties for separate determination were not defined in isolation. They were defined with reference to the parties’ pleadings as they stood at that time. The purpose of putting them up for separate adjudication was to obtain final decisions on these issues between the parties as they were defined by those pleadings.

[54] The third preliminary issue was intended to define the parties opposing stances on the question of the linkage of the first part of the claims clause to the remainder thereof, in particular whether plaintiff’s non-compliance with the terms of the undertaking in the first sentence of the claims clause would affect the enforceability by it of the remainder of that clause. First defendant advanced various arguments in support of the construction contended for by it, namely that the two parts were interlinked. As appears from the discussion in paras [40] to [43], at 14a – 15e, of the SCA Consol judgment, however, these arguments were rejected by the Supreme Court of Appeal. First defendant now seeks to re-open the same debate, but this time relying on a new tacit term. In my view that would offend against the principle of res iudicata.

[55] The same considerations apply to the sixth issue, namely the effect of the 21 day period. The sixth preliminary issue was concerned with the effect of the 21 days’ provision. The tacit term suggested by first defendant was rejected by the Supreme Court of Appeal (in paras [47] to [53], at 16c-18a, of the judgment) but first defendant now seeks to re-open the same issue by relying on a different tacit term. The Supreme Court of Appeal, in rejecting the construction contended for by first defendant, in effect held that plaintiff’s claims were subject to that clause. First defendant should not be allowed to re-open that issue.

[56] The fact that the issues in question formed the subject matter of a separate determination of issues does not affect the operation of res iudicata. Insofar as authority may be required for this statement it is found in the following passages in the judgment of Diplock LJ in Fidelitas Shipping Co Ltd v V/O Exportchleb [1965] 2 All ER 4 (CA) at 10B-E:

“In the case of litigation the fact that a suit may involve a number of different issues is recognised by the Rules of the Supreme Court which contain provision enabling one or more questions (whether of fact or law) in an action to be tried before others. Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence: but such application will only be granted if the appellate court is satisfied that the fresh evidence sought to be adduced could not have been available at the original hearing of the issue even if the party seeking to adduce it had exercised due diligence.This is but an example of a specific application of the general rule of public policy, nemo debet bis vexari pro una et eadem causa. The determination of the issue between the parties gives rise to what I ventured to call in Thoday v. Thoday ([1964] 1 All ER at 352) an "issue estoppel." It operates in subsequent suits between the same parties in which the same issue arises. A fortiori it operates in any subsequent proceedings in the same suit in which the issue has been determined.”

[57] Finally on the question of res iudicata, I may point out that the Henderson principle allows for exceptions to the rule “in special cases”. In many of the decided cases the question indeed arose whether there were not special circumstances present that would permit a relaxation of the principle. In the present case, however, there do not appear to be any exceptional circumstances that would allow such a relaxation. The issues in question were squarely raised and determined by an authoritative court.

Can the tacit terms be imported into the contract

[58] Plaintiff’s second objection to the proposed paragraphs is that, as a matter of fact, the proposed tacit terms can simply not be imported into the parties’ agreement. The various tests that apply in this regard were referred to in paras [50] to [51], at 16h-17d, of the SCA Consol judgment. Of particular relevance is the requirement that there should not be any difficulty or doubt in regard to the content of the proposed term. See the following statement by Trollip JA in Desai and Others v Greyridge Investments (Pty) Ltd 1974 (1) SA 509 (A) 522H-523A:

“… I do not think that it is either clear or obvious which of those forms of the term should prevail, and hence none of them can be implied. The reason is that the implication of a term depends upon the inferred or imputed intention of the parties to the contract … and "once there is difficulty and doubt as to what the term should be or how far it should be taken it is obviously difficult to say that the parties clearly intended anything at all to be implied".

[59] Before dealing with the specific terms I may point out that courts are sometimes reluctant to deal with questions of the construction of, or tacit terms in, agreements at the stage when an amendment of a pleading is being sought. In this case, however, there is already a considerable body of evidence on record in regard to what may be called background and surrounding circumstances. Mr van Riet has not suggested that there is any other evidence that might be relevant in this regard. The viability of the proposed tacit terms can therefore be tested at this stage of the proceedings.

[60] The problem with the first suggested tacit term is twofold. Its formulation, firstly, is by no means straightforward. It seems to have been inspired by an ex post facto review of the specific nature of the problems that arose in this case. The proposed term is, secondly, to a large extent destructive of the very protection that plaintiff was seeking to achieve by the inclusion of the claims clause. From plaintiff’s point of view it would not have made sense to agree to such a term as part of its exemption clause.

[61] The second tacit term was no doubt inspired by certain remarks made by Brand JA in the SCA Consol judgment. I quote para [52] of the judgment, at 17d-h, in full:

“[52] In finding for Twee Jonge Gezellen on this issue, the Court a quo was influenced (at 278D) by the consideration that, without the suggested term, the 21-day clause could operate extremely harshly on the purchaser of bottles, in that he would be deprived of all redress in the case of latent defects which he could not possibly discover within the 21-day period. That is undoubtedly so. It can accordingly be accepted with confidence that Twee Jonge Gezellen's response to the bystander's enquiry regarding the existence of the suggested tacit term would have been a positive one. That, however, is not the end of the enquiry. The further step is to establish what Consol's response would have been. Consol's problem with the effect of the suggested (tacit) term would in all likelihood have been that, once the defects are of a kind that cannot reasonably be recognised within 21 days, there would be no time bar at all. Though Consol may well have conceded that the 21-day provision was to be amended or ameliorated if the circumstances giving rise to the claim were not reasonably apparent within 21 days, it cannot be assumed that Consol would have agreed to the suggestion that in those circumstances there would be no time limit at all. At best for Twee Jonge Gezellen, the inference could be that Consol would have asked for time to consider or that it would have insisted that in these circumstances the claim should at least be instituted within 21 days of the alleged problem having manifested itself. In these circumstances the tacit term suggested by Twee Jonge Gezellen cannot be inferred.”

[62] I have considered these remarks. Upon my reading of the judgment, however, the learned Judge of Appeal did not intend to determine that such a tacit term in fact formed part of the contract. He merely indicated that such a term might have had a better prospect of succeeding than the one put forward by first defendant. Having regard to the difficulties of formulating the proposed term and the difficulties that would arise in practice to enforce it, I am not persuaded that it can be imported into the parties’ agreement.

Conclusion

[63] I am accordingly of the view that first defendant’s proposed amendments do not raise triable issues. The application for the amendment of its pleadings is accordingly refused with costs.

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A P BLIGNAULT