391-392 SOUTH AFRICAN LAW REPORTS (1979) (1) …saflii.org/za/other/ZAENGTR/1978/1.pdf391 BK TOOLING...

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BK TOOLING (PTY) LTD v SCOPE PRECISION ENGINEERING (PTY) LTD

(A ppellate D ivisio n)

1977 September 16 1978 September 15 Ja n se n JA, K otze JA,D iem ont JA, K lo pper AJA a n d T r eng o v e AJA ’ i

*Contract—Breach of—Remedies on—Reciprocal contract— Creditor prevented from performing fully by failure o f other party's necessary co-operation— Can claim performance—But subject to reduction o f the performance claimed by the dosts which he saves by not having fully to fu lfil his own counter-performance.

Contract—Breach of—Remedies on—Reciprocal contract—Exceptio non adimpleti contractus—Principles applicable.

Contract—Breach of—Remedies on—Reciprocal contract—Incomplete performance by p la in tiff—Entitled to claim compensation therefor— Where there has been no resiling plaintiff can institute a claim fo r a reduced contract price—Court can, in the exercise o f its discretion, permit a relaxation o f the strict principle o f reciprocity where the other party has utilised the partial performance— Origin o f the Court’s power—Such a contractual claim—Names such as quan-

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turn meruit and the language o f enrichment liability to be avoided.Contract—Breach of—Remedies on—Reciprocal contract—Incomplete

performance by plaintiff— Claim fo r reduced contract price— What plaintiff must prove—Onus also on plaintiff where consequential damages and damages as a result o f mora are claimed.

Work and labour—Reciprocal contract between employer and contractor—Incomplete performance by contractor—Can claim performance subject to reduction o f the performance claimed— Where reduced contract price is claimed the Court can, in the exercise o f its discretion, permit a relaxation o f the strict principle o f reciprocity where the employer has utilised the partial performance— What the contractor must prove—Onus on contractor where consequential damages and damages as a result o f mora are claimed by him.

It must be accepted that, when a creditor in a reciprocal contract is prevented from fully performing his own counter-performance by the failure of the other party’s necessary co-operation, he, despite his own incomplete performance, can claim performance by the other party, but, basically as also in other legal systems, subject to reduction of the performance claimed, namely by the costs which the creditor saves in that he does not have to perform fully in his own counter-performance.

391-392 SOUTH AFRICAN LAW REPORTS (1979) (1)(Translation)

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SOUTH AFRICAN LAW REPORTS (1979) (1) 392-394(Translation)

It would be useful for a few aspects of the principle of reciprocity and its application by means of the exceptio non adimpleti contractus to be mentioned:1. In contracts wherein reciprocal obligations are created it is basically a

matter of interpretation whether the obligations are so closely linked that the principle of reciprocity applies. If, however, no other intention appears, the principle applies by operation of law to certain well known contracts, such as, eg, the contract of sale and locatio conductio operis.

2. The sequence of performance and counter-performance also depends

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upon the contractual provisions. If, however, another intention does not , appear, the contractor, in locatio conductio operis for example, must first perform.

3. On the ground that the withholding of the thing sold was already regarded in the Corpus Juris as being analogous to the holding of a pledge, one would expect that the exceptio would only apply as a defence until performance was actually made. The right of withholding (the converse of the exceptio) is, therefore, essentially a means of enforcing the counterperformance. It can fulfil a function similar to retention moneys in a building contract. On the other hand it follows that, as long as performance remains possible and the contract is not cancelled, the other party can still perform. Indeed, this possibility should be related to our doctrine of mora and purgatio morae.

4. If the right of withholding is regarded as being analogous to the holding of a pledge, it would entail that a party’s own performance could be withheld until the counter-performance is fully made. In the case of locatio conductio operis it is all the more the case that the contractor must fully perform before he is entitled to the contract price.

5. According to Voet 19.1.23 the onus is on the plantiff, where the exceptio is raised against him, to prove that he has in fact performed his side of the contract. Since then, this has apparently never been doubted as far as our law is concerned.

It is clear from the decisions in Hauman v Nortje 1914 AD 293, Breslin v Hichens 1914 AD 312 and Van Rensburg v Straughan 1914 AD 317 that the Judges proceeded on the common assumption that on the ground of general principles the employer had a right of withholding in regard to his own performance until the contractor had strictly and fully made his counter-performance. There was also agreement that on the ground of considerations of fairness a contractor should sometimes, despite the principle of reciprocity, be permitted still to claim compensation for an incomplete performance. As that could amount to the employer’s right to strict compliance being ended, it is extremely important to determine when the employer, by way of exception, is no longer entitled to his right of withholding. In the three cases mentioned there are at least three points of view, which diverge in principle, to

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be found. The point of view of C G M a a s d o r p A JA, in the Van Rensburg case at 331, belongs more to cases where there has been a resiling whilst those of Lord D e V il l ie r s CJ, in the Hauman case at 297, and In n e s JA, in the Hauman case at 304, apply to cases where there has been no resiling. The whole basis of the relaxation of the principle of reciprocity and the recognition of the possibility of instituting a claim for a reduced contract price rests on considerations of fairness. And, clearly, these considerations can in particular circumstances prescribe that the contractor should still be compensated, even if he knows that he has not fully complied with his obli-

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gations. As an equitable solution the point of view of Lord De Villiers is too narrow and the point of view of Innes JA, namely that the Court, in the exercise of its discretion, allows a relaxation of the strict principle of reciprocity where the other party has utilised the partial performance, provides a far more supple and more satisfactory solution. As such the latter must henceforth be accepted and applied.

It must be emphasised that according to the point of view of Innes JA the coming into being of the discretionary power of relaxing the principle of reciprocity has no connection whatever with the degree of shortcoming of the incomplete performance. The decisive fact for the coming into being thereof is the utilisation of the incomplete performance by the employer — whether the shortcoming is big or small. The extent of the shortcoming is, at the most, one of the circumstances which can be weighed up in considering the question of fairness which is involved in the exercise of the discretion.

It would be desirable in the future simply to talk of a (contractual) claim for a reduced contract price, and to avoid names such as quantum meruit and the language of enrichment liability. It would lead to less confusion and greater clarity. It would also fit in, in the normal case, with the amount whereby the contract price is reduced being equivalent to ‘ ‘such sum as would enable the employer to complete the work in exact accordance with the contract” (per Lord De V il l ie r s CJ in the Hauman case at 299), or, put differently, “ the

395

cost of remedying the defects” (per Innes JA in the Hauman case at 305). If the contractor does not succeed in convincing the Court that he has fully com

plied with his side (of the contract), and he wishes then to claim a reduced contract price, he will have to prove:

(i) that the employer is utilising the incomplete performance;(ii) that circumstances exist making it equitable for the Court to exercise its

discretion in his favour;(iii) what the reduced contract price should be, ie what it will cost to bring

his performance in order for the purpose of determining by how much the contract price should be reduced.

In regard to possible consequential damages (caused by the shortcoming) already suffered and possible damages as the result of the mora of the contractor, the onus of proof will, on the grounds of general principles, still have to rest on the employer. The employer will, probably, have to institute a counter-claim.

The decision in the Transvaal Provincial Division in Scope Engineering (Edms) Bpk v BK Tooling (Edms) Bpk varied.

Appeal from a decision in the Transvaal Provincial Division (D e V illiers J). Facts not material to this report have been omitted from the judgment of Ja n se n JA.

R D Claassen for the appellant: It is clear that this contract, both according to its nature and according to the intention of the parties, is a single entity and therefore indivisible. Cf De Wet and Yeats Kon- traktereg en Handelsreg 2nd ed at 97-98 and Collen v Rietfontein Engineering Works 1948 (1) SA at 435. It therefore follows that any defect in any of the two sets of blocks will affect the contract in its entirety. The first part of the second finding of the Court a quo, viz that the appellant had accepted the second set as adequate performance, cannot hold good for the following reasons: This has never been respondent’s case on the pleadings. In order to succeed on the basis that there had been an accept

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ance on behalf of the appellant, respondent had to prove that the appellant had waived any right which he might have had to reject performance. See H A Millard and Son (Pty) L td v Enzenhofer 1968 (1) SA 334H; Hepner v Roodepoort-Maraisburg Town Council 1962 (4) SA at 8H. According to these cases a party must by his conduct expressly waive his rights in a manner which cannot be reconciled with a desire to return the goods or to refuse performance. Since this “ acceptance of perform-

396

ance” has never been part of respondent’s case, his witnesses were not cross-examined on this aspect. It cannot therefore be said that this aspect was properly canvassed by the witnesses or in cross-examination and the respondent can also not at this stage rely thereon or amend his pleadings accordingly. See Robinson v Randfontein Estates 1925 AD at 198. The second (alternative) part of the finding, viz that the appellant could not have had the work repaired by himself or someone else, at the respondent’s costs, without affording the respondent an opportunity to repair the work himself, is also not correct. The case of Reid v Springs Motor Metal Works (Pty) L td 1943 TPD 154 is applicable. According to that case it appears that there was no obligation on the appellant to return the goods to the respondent for repairs. In the present case there was no question about any custom or undertaking that the goods had to be returned to the respondent for repairs. The principle which applies with regard to a custom in a particular line of business amounts to this that the work cannot be completed without the co-operation of the employer as, for instance, in the case of a suit which must be made to fit a particular person, as applied in Wessels v Kemp 1921 OPD 58; Theunissen v Burns 21 SC 421; or a set of false teeth, as applied in Kruger v Boltman 1933 (1) PH A3; or an artificial leg, as applied in S hie Is v Minister o f Health 1974 (3) SA 276. In the present case the co-operation of the appellant was not at all necessary and it was not necessary to afford the respondent an opportunity to repair the goods. In this regard no evidence was led and there was also no question about any custom in this particular line of business. See further in this connection the legal principles set out in Dominion Earthworks v M J Greeff Electrical Contractors 1970 (1) SA at 237F-G.

Respondent’s case is that it fully performed its part of the contract in accordance with the original contract and specifications. In order to succeed in this action it must prove (i) what the contents of the contract was and (ii) that it duly completed it accordingly. See Wegerle v Pretoria Machinery Sales 1943 TPD 319; MacFarlane v Crooke 1951 (3) SA 256. A contractor in respondent’s position can, however, avoid an order for absolution from the instance and rely on the doctrine of quantum meruit in the following circumstances: (i) that the employer (appellant) benefited from the work done by the contractor (respondent); (ii) that the respondent bona fide believed that it had fulfilled its obligations


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under the contract; (iii) that there is a bona fide dispute with regard to the proper compliance with the terms of the contract. See in this regard Hauman v Nortje 1914 AD 293; Kam NO v Udwin 1940 WLD 137; 1939 WLD at 348-9; MacFarlane v Crooke 1951 (3) SA at 260D-E; Sifris en Andere NNO v Vermeulen Broers 1974 (2) SA 218; Katzenellenbogen NO v Cawood 1965 (4) SA at 320G-H; (iv) in these respects the onus was on the respondent to prove the extent of the work which had not been completed and also what the costs of repair would be. See the Wegerle case supra at 323-324. It cannot be said that the respondent proved, on a balance of probabilities, either the extent of the work which had to be repaired, or the tariff of compensation. It is clear that respondent did not

397

comply with the requirements for compensation on a quantum meruit basis. The judgment of the Court a quo should therefore have been one of absolution from the instance. Katzenellenbogen’s case supra at 320E-321A; H A Millard and Son’s case supra.

C Botha for the respondent: Although it is conceded that the two blocks did not comply with the specifications, the appellant accepted the set as adequate performance. That a debtor fulfils his contractual obligations if the creditor is satisfied with something less, appears from De Groot Inleiding 3.42.5; Van der Walt v Minnaar 1954 (3) SA at 939A-B; Montesse Township and Investment Corporation v Standard Bank o f SA Ltd 1964 (3) SA at 227B-C. Alternatively, the appellant made it impossible to complete the second set by (a) removing it before it was finished off; (b) refusing to return it to respondent for completion. As to the position if performance is made impossible by the creditor’s conduct, see De Wet and Yeats Kontraktereg 3rd ed at 121, 122; Muller v Crawley 1907 ORC 12 where the Court allowed quantum meruit in a case where the defendant had prevented the plaintiff from fulfilling his part of the contract; Benjamin v Meyers (1) 1946 CPD at 662; Grunow NO v Sieberhagen 1959 (3) SA at 906H, 907A. If it is found that there was no due performance, quantum meruit must be considered. See Hauman v Nortje 1914 AD at 301, 302; Breslin v Hichens 1914 AD at 315. In particular it must appear that the respondent bona fide believed that he had fulfilled his obligations. That a bona fide belief must be present at the time when the work is delivered, appears from Kam NO v Udwin 1940 WLD at 140, 141. In Grunow NO v Sieberhagen 1959 (3) SA at 906H, 907A it was said that a contractor did not intentionally refuse to complete a contract if the other party prevented him from doing so. In the present case the respondent was not mala fide and did not intentionally leave the work uncompleted: (a) it is clear that the respondent at all times intended to complete the second set; (b) the set was removed by Borsboom at his insistence while Groot was still working on it and Borsboom indicated that he was satisfied therewith; (c) Groot offered to rectify the defects. It is accepted that the onus is on the respondent to


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prove what it will cost to rectify the defects notwithstanding the misgivings expressed in Dominion Earthworks v M J Greeff Electrical Contractors 1970 (1) SA at 237.

As regards the aspect of acceptance, the respondent’s case was all along that it had fulfilled its obligations under the contract. One way of fulfilling these obligations will be if the appellant accepts his work as it is. See Van der Walt v Minnaar 1954 (3) SA at 939A-B. Alternatively, it is submitted that the issues were extended at the trial and that they were thoroughly dealt with. See Shill v Milner 1937 AD at 105; Marine and Trade Insurance Co L td v Van der Schyff 1972 (1) SA at 44H-45F. The question of acceptance or not, relates to the bona fides required in the case of quantum meruit. That it is not necessary to plead quantum meruit appears from MacFarlane v Crooke 1951 (3) SA at 260D. Had there been any objection concerning the evidence of acceptance it should have been raised when evidence thereanent was adduced. The appellant alleges that the trial Court should have given effect to the principle in Reid v Springs Motor Metal Works (Pty) L td 1934 TPD 154. On the fac-

398tual findings of the Court that the respondent did not offer the work as complete, but that the appellant removed it before completion, the case is not applicable.

Claassen in reply.

Cur adv vult.

Postea (September 15).

Ja n se n JA: This is an appeal against a judgment of R3 600 with costs obtained by the respondent company (plaintiff) against appellant company (defendant) in the Transvaal Provincial Division. Before dealing with the nature of the claim in any detail, the circumstances which gave rise to the case must be dealt with in broad outline. In the discussion thereof it will be convenient, instead of referring to the parties, to refer mostly to the dominant figures who have all along represented the respective companies, viz Mr Cornelius Groot and Mr Cornelius Johannes Borsboom. Groot has all along acted on behalf of the plaintiff company, and Borsboom on behalf of the defendant company (appellant). Both are qualified instrument- makers and their businesses are at Vereeniging.

Towards the end of 1973 Borsboom received from Paulstra South Africa (Pty) Ltd (hereinafter referred to as Paulstra), doing business at Rosslyn, a drawing (exh A22) of a rubber mounting for the mounting of the power-plants (engines) in certain Ford motor-cars. Paulstra would apparently cast such mountings for supply to the motor company and for this purpose he needed moulds made of steel. Borsboom would tender for the manufacture and supply of these moulds.

The drawing provided full measurements which in general allowed a tolerance of 0,5 mm. The mounting would have somewhat complicated curves and levels. Basically it would be symmetric and it would be possible to make a mould comprising two identical halves which would fit


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upon each other like two walnut halves.It would, however, have to be taken into account that rubber shrinks

to some extent if it is cooled off. In the present case the idea was to use natural rubber, and it is accepted that it shrinks a maximum of 2 per cent. Having regard thereto Borsboom made the necessary drawings for the manufacture of a mould, and towards the end of 1973 he requested Groot to do the recessing work for the steel mould (two halves which fit one upon the other) with which to cast a single mounting piece. This mould would serve as prototype. After Borsboom had been satisfied with the mould, he submitted it to Paulstra for approval. The latter found it acceptable and on 8 March 1974 he ordered two moulds, each of which was suitable for the casting of 16 mounting pieces simultaneously, from Borsboom at R5 000 each. Two separate order forms were used on which was written, inter alia: “ ...................... ”

398H

In order to cast 16 mounting pieces simultaneously each mould basically had to comprise two halves, each having 16 cavities which exactly fitted on the 16 cavities of the other piece. There would therefore have to be 32 cavities, each one the same as that in the prototype. Borsboom’s design

399

did not, however, envisage two solid sheets which would fit upon each other, but that the mould would comprise five “ blocks” , each consisting of two halves which would fit upon each other. The cavities would therefore have to be spaced accordingly. It follows that the five “ blocks” would have to be fitted in some or other kind of apparatus, but the exact nature thereof is not clear.

Borsboom intended using his own material (ie his own employees and his own workshop) to do all the work himself except for part of the recessing work. He could readily do the rough boring, but he did not have a suitable machine to do the remaining work, viz to reproduce all the contours of the cavities in the prototype in the steel blocks.

He consequently instructed Groot to do this remaining work, Groot had a particularly suitable die-sinker, fitted with an hydraulic copying stiletto. He could follow the method of first making a model of the mounting piece of steel and from that a copy in steel plastic, as model of the one half of the mould. By following the contours of the cavity in the steel plastic mould with the stiletto, he could then use the die-sinker to cut identical cavities in the steel blocks. Groot confirmed the contract with Borsboom in a letter of 8 March 1974: “ ......................”

399E

In due course, after having completed his own preceding work, Bors-


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boom delivered the “ blocks” to Groot, but Borsboom only received the first set of five “ blocks” back from Groot. It is common cause that the delay was partly due to Borsboom himself since he, inter alia, at one stage had the work stopped in view of a possible change in the design of the rubber mounting piece. Upon receipt of the “ blocks” Borsboom signed the following delivery note: “ ......................”

399G

Borsboom assembled the blocks, completed the casting form and delivered it to Jonqueres, the general manager of Paulstra, at the end of June or the beginning of July.

Borsboom, however, did not pay Groot in accordance with the note on the delivery note and Groot did not want to continue with the work on the second set of blocks. Moreover, Groot then went overseas for a month and only returned round about 20 July 1974. At that time Borsboom was under severe pressure from Paulstra and he was afraid that Paulstra could cancel the contract. He had already made an attempt to get the five remaining blocks back from Groot, but he did not want to return them. Groot was, however, persuaded to continue with the work

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and on 12 August 1974 Borsboom took delivery of the remaining blocks. Initially Groot did not want to part with them without having been paid and Borsboom, so as to be enabled to take away the blocks, gave Groot a promissory note for R4 800 payable on 16 August 1974. It was made out in favour of the plaintiff company as payee and signed by Borsboom on behalf of the defendant company as maker. Borsboom also signed it on the back, apparently in his personal capacity.

Borsboom immediately returned to his own workshop and worked into the night to assemble and complete the mould for Paulstra.

According to Borsboom he delivered the mould to Paulstra the next day. Jonqueres, an engineer and at the time production manager of Paulstra, is somewhat uncertain about the exact date: “ ...................... ”

400C

Be that as it may, on 15 August Paulstra tested the mould by casting the first 16 mounting pieces. None of the 16 complied with the specifications and Paulstra was not prepared to accept the mould. The defects were noted down on an inspection report (exh A17) and Jonqueres phoned Borsboom and informed him that they had rejected the mould. In his evidence-in-chief Jonqueres (he was called by the defendant) said the following: “ ......................”


400E

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Under cross-examination he says: “ ......................”

400G

It can now already be mentioned that he also said the following in cross- examination: “ ......................”

401A

This must be compared with the following passage in questioning by the trial Court: “ ...................... ”

40 IE

Jonqueres’s evidence was not at all disputed.Returning to Borsboom and Groot. Late the Friday afternoon, 16

August 1974, Groot phoned Borsboom with regard to payment. Feelings ran high and things ended in the two of them scolding each other. It is clear that Borsboom said that the work was hopeless and that he would not pay for it. Groot, however, offered to rectify the defects whereupon, according to Groot, Borsboom said:

“ I have lost all faith in you, I will definitely not return it to you. I will have it repaired somewhere else, and the costs will be deducted from your costs” . According to Groot, Borsboom said:‘■‘the work is shocking, and a few ugly words and we would definitely not be paid and we would hear from his attorney” .

In actual fact Groot, however, took the initiative. On 21 August and on the instructions of Groot, Mr Steyn, an attorney, phoned Borsboom and in pursuance of their conversation, Borsboom received the following letter dated 21 August 1974, from Steyn:

“ We hereby confirm the telephone conversation this morning at 11 am when the writer advised you that you either had to accept the moulds which had been cut by our client, as they were, and pay the price of R4 800 agreed upon, or return the moulds with a specification as to how they should be modified. You then replied that you would accept the moulds and deliver a cheque, post-dated for fourteen days, for the full contract price of R4 800, to us at our offices on or before Friday 23 August 1974.”Borsboom’s attorney replied as follows on 27 August 1974:

“ We are acting on behalf of BK Tooling (Pty) Ltd and client has handed us your letter of 21 instant for attention and reply.

In the first place our client denies having agreed with you that he would accept

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the moulds, and he further denies having told you that he would send you a postdated cheque for R4 800. What in fact happened was that you told our client that he had to pay your client’s account and his reaction was that he would think about it before making a decision.

Secondly, our client is not prepared to return the moulds to your client so that they can repair the defects in their work. The reason therefor is that our client is convinced that your client is unable to do the work properly.

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The original arrangements with your clients were that as soon as our client was paid for the moulds he would also pay your client’s account, and we may mention that our client has handed the moulds to another firm to rectify the defects and, according to a quotation, the costs amount to R2 880. This amount does not include the costs incurred by our client to see to it that your client’s defective work was duly repaired.

We shall again contact you later and we may mention that any action which you may institute at this stage will be defended.”Steyn replied on 30 August 1974:

“ In reply to your letter of 27 instant writer is absolutely amazed to learn that' your client now denies the contents of the telephone conversation on 21 August. There was no question about your client still having to decide whether he was going to pay or not. Your client specifically undertook to deliver a post-dated cheque on or before 23 August and that same day we advised our client accordingly.

As regards the allegation that the moulds are not according to specifications, our client finds it rather peculiar that the first set of moulds, which had been made in accordance with exactly the same specifications, was accepted. If there are any defects in the second set of moulds our client is prepared to rectify the defects immediately at their costs.

Our client denies that your client is, in terms of their contract, entitled to have the moulds modified by another firm and to deduct the costs from the contract price.

It is hereby placed on record that the above-mentioned moulds are at the moment with another firm at Vereeniging and that no modifications have as yet been effected thereto.

Alternatively, our client claims payment of the full contract price within four days from date, failing which summons will be issued.”

The reference to “ another firm” in the penultimate paragraph of Steyn’s letter is presumably a reference to “ Engravers trading as Aureco Engravers (Pty) Ltd” , a business conducted by a certain Auret and described by him as“ large-scale engraving . . . at a small-scale die-sinking and only engraving and rubber stamps” .It is not denied that Borsboom had already taken the five blocks to Auret on the Monday (19 August 1974) to have them modified. Borsboom also received a written “ quotation” dated 19 August 1974 from Auret. It read: “ Modify to specification 32 mould inputs at each R90. Total R2 880” (exh A23). This was also signed by Auret. Presumably this was the quotation referred to in the letter of defendant’s attorney dated 27 August 1974. (It should perhaps now be mentioned in advance that at the trial Auret would be called as a witness by the plaintiff and that Auret would say that the quotation was actually only R45 (he “ thinks” so) per cavity (both halves) and that exh 23 did not reflect the real state of affairs.)

Against this background plaintiff issued summons. In view of the issues which would arise it is necessary to quote in some detail from the ensuing pleadings. The declaration read: “ ......................”

403F

The further particulars which were furnished on request, read as follows:6 < > 5

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404B

It also appears that “ C” is the letter of 8 March 1974 which has already been quoted above. Thereupon the defendant pleaded as follows:

“ 1.1 The allegations in paras 1, 2, 3 (a) and 4 of plaintiffs declaration are admitted.

1.2 Defendant says that it was further agreed orally that defendant would pay the plaintiff for the work as soon as defendant received payment for the moulds which had been ordered by a third party from defendant.

2. Each and every allegation in paragraph 3 (b) is denied.3. Subject to admitting that plaintiff delivered the first set of five

blocks to defendant on 19 June 1974 and the second set on 12 August 1974, defendant denies each and every further allegation in para 5 and avers that plaintiff’s work was defective to such an extent that the blocks were useless.

4. Subject to admitting that the said Mr Groot, on behalf of the plaintiff, mentioned the amount of R4 800 as the total contract price on 16 August 1974, the defendant denies each and every allegation mentioned in para 6.

5.1 Defendant admits the allegation mentioned in para 7.5.2 Defendant further avers that the amount of R1 200 is adequate

compensation for the work done by the plaintiff and that plaintiff is not entitled to any further payment.

6. Subject to admitting that he refuses to pay R3 600, defendant denies each and every allegation in para 8.

7. Defendant offers costs up to the stage of payment into Court by defendant of the amount of R1 200.

8. For the rest defendant requests that plaintiff’s claim be dismissed with costs.”

Further particulars were requested by plaintiff: “ ......................”

405A

To this the defendant replied as follows:“ Defendant furnishes the following particulars to his plea in pur

suance of plaintiffs request:1. A d paras 1 and 2 thereof:

(a) At Vereeniging during March 1974 and a certain Groot acted onbehalf of plaintiff and a certain Borsboom on behalf of defendant.

(b) Paulstra South Africa (Pty) Ltd.(c) Yes, payment was received after defendant had duly delivered the

goods to the said Paulstra.2. A d para 3 thereof:

The blocks had not been made in accordance with specificationsand the sizes thereof differed materially from the specifications which


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had been furnished to plaintiff.3. A d para 5.2 thereof:

It cost the defendant R3 600 to get the work which the plaintiff had to do in the condition in which it should have been.”

Later the defendant furnished more particulars in which the defects in the work were set out in more detail and it was also stated that “ the blocks as supplied were useless” . A pre-trial record reads as follows:

“ Except for confirming that the parties would jointly compile a volume of documents for use at the hearing of this case agreement could not be reached on any other aspect.”Thereafter the defendant supplied more particulars for purposes of the trial. It was inter alia averred therein that the first complete mould had been delivered to Paulstra on 31 July 1974, that no specific payment had been received from Paulstra — only payment of a current account between them, that the first set of blocks was defective in specific respects, and that the amount of R3 600 relating to repair of the defects, was made up as follows:

“ 72 working hours at R10 per hour in order to rectify the first 16 blocks and R2 880 being reasonable costs to rectify the second set of blocks” .

At the end of the first day of the trial, when Groot was still giving evidence-in-chief for plaintiff, the trial Judge remarked that the parties had not come to an agreement on obvious questions, eg as to the shortcomings in plaintiff’s work. As a result thereof a “pre-trial conference” was held that same afternoon and the results were recorded as follows:

406B

“ . . . (Paulstra’s inspection report) . . . ”

406D

At the resumption of Groot’s evidence the next morning the record was handed into Court. It strikes one that according to para 1 thereof the plaintiff still insisted ihat “ there are no defects in either consignment” .

To appreciate the plaintiff’s standpoint it is necessary, however, to take the following into consideration. In his evidence-in-chief the previous day Groot, when referring to 12 August when Borsboom had come to fetch the second set of blocks, initially said the following:

“ On that day Mr Borsboom — he had phoned us the previous day to enquire how far we were. We told him that we were not finished yet and would still take a day or so. He then said he would come the next morning to see how far we were, that was the 12th. He then came early that morning, I cannot remember exactly, I think it was round about 8 o’clock, and then we told him that we had not finished, and could not as yet deliver the set.

Now, that morning when he came in, what were you doing? — I was doing some grinding on it.

Now, by hand, or . . . ? — By hand.Or with a machine? — By hand.Had the machine work already been done? — Yes, the machine work was



finished.Yes? — So he left, he went to Vereeniging and he returned at 12 o ’clock, I

think it was about 12 o’clock, and we were still busy and had not yet finished, we also told him that we were not yet ready. He then looked at the thing and said that he was quite satisfied so far as we had come, he would complete it himself. And he looked at the set, the set was lying open, the five blocks were lying open on our service table, and this sample, which we used to fit in, was lying . . . (intervention) .

You now refer to exh 4A? — A, and he looked at it, he inspected it here and there and said it looked okay. He only showed me a few . . . two places on this slant which were bulging a little and which he could feel with his finger and he said: just polish this out a bit and then I ’ll take it and be off.

Yes . . . were you two alone when all this happened . . .? — No, actually Michael Rosewall was present all the time.

Yes? — Then he took the set, and we went to my office where we signed the delivery note.”The Rosewall referred to by Groot was a director of the plaintiff, and he

407

was also the plaintiff’s first witness who testified just before Groot. His evidence-in-chief as to what happened on 12 August 1974 is in accordance with what Groot said: “ ......................”

407C

The impression which was clearly created by Groot and Rosewall, was that that morning they had expected to complete the blocks during the course of the day, and that when Borsboom took them, there remained at the most some polishing work to be done. It is therefore understandable that Groot could or would not admit that there had been anything more than that wrong with the blocks. When the defects set out in the further particulars, Paulstra’s report, and the minutes of the “ pre-trial” conference held in the afternoon of the first day of the trial, were put to him during his evidence-in-chief, he did not admit the existence of those defects. Questions as to how and at what costs such defects could be rectified he answered on an hypothetical basis — had such defects existed. In contrast herewith he was quite positive that there were no defects in the first set which he had delivered on 19 June 1974. He purportedly tested this set properly by, inter alia, casting plaster moulds therewith and measuring these moulds. The set of 14 August 1974 he purportedly did not test in this manner, inter alia, because Borsboom, being satisfied, removed the set too soon. Later in cross-examination he initially conceded, as regards the second set, that the possibility existed that the blocks were not in accordance with the specifications because “ we never had an opportunity to establish it” and, later, that it was “ quite clear” that he had not completed the work in accordance with “ the original contract and specifications” . When the contents of para 5 of plaintiff’s declaration (“plaintiff has duly performed his obligations in terms of the said agreement” ) was put to him, he said:

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“ I did not draft the summons (both talk simultaneously). If it is there, I cannot deny it.

In other words you now advance another story that the contract was in fact perhaps not in accordance with the . . . you said yourself that it had not been fulfilled, the contract had not been fulfilled, that is what you said. That is so, that is what you said just now, do you agree? No, I cannot agree, a contract is fulfilled if both parties are satisfied with the product delivered, then as far as we are concerned the contract is fulfilled. If there are complaints later we are quite prepared to consider them.”

It is apparently on the ground thereof, inter alia, and the later evidence for the defendant, that, immediately after the defendant’s case was closed, counsel for plaintiff applied for an amendment of the declaration by the addition of the following alternative to para 5 thereof:< ( 3 3


408A

This application was opposed on behalf of the defendant and eventually counsel for plaintiff, according to the record, withdrew the application for an amendment “ after having received instructions in the case” .

Despite Groot’s unwillingness all along to admit the existence of any defects in the second set of blocks, he, as has already been mentioned, nevertheless conceded under cross-examination that his work had not been according to specifications. At the conclusion of the case, after all evidence had been given, it was therefore common cause that the contract had not been complied with insofar as the second set of blocks was concerned. There were, however, a number of other remaining issues, some of which related to the contradictions in the evidence. On behalf of the plaintiff Rosewall, Groot and Auret testified, as well as a certain Pronk, who was working for the defendant in 1974, and attorney Steyn (in connection with the telephone conversation with Borsboom on 21 August 1974); on behalf of the defendant it was Borsboom and Jon- queres, as well as a certain Harwood, an engineer and toolmaker (in connection with reasonable costs of repair), Daniel D’Oliveira, an employee of the defendant (in connection with alleged defects in the first set of blocks) and attorney Mills, defendant’s attorney (in connection with an alleged previous statement by Auret as to the reasonableness of an amount of R2 880 for the repair of the defects in the second set of blocks). As regards the contradictions between Borsboom and Groot, and between Borsboom and Auret, the trial Judge rejected Borsboom’s evidence and accepted that of Groot and Auret; similarly the Court preferred Steyn’s evidence to that of Borsboom. As regards Groot, the trial Judge“ gained the impression throughout that his evidence logically accords with his version and from the manner in which he gave his version I all along gained the impression that he was telling the truth” .On the other hand, as regards Borsboom,“ he was often confronted with the situation that he had to explain his conduct. His conduct did not accord with the statements which he made in Court.”

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The trial Judge summarizes it as follows:“ The plaintiff (Groot) impressed me much more than the defendant. His

evidence seemed to me to be genuine and accorded with his conduct during the relevant period. The defendant (Borsboom), on the other hand, often had to attempt explaining his conduct; his conduct often appeared improbable in view of his evidence in Court.”As regards Auret, he says:

“ He was cross-examined and none of his questions or answers left me in doubt as to the genuineness of his answers . . .

In view of ali the facts I accept Auret’s evidence. To me he seemed to be an honest witness, he has no interests in the case, and if I accept that, then, in my opinion, it is clear that false allegations were made by the defendant Borsboom and I regard his evidence as false.”As regards Pronk and D’Oliveira, they are assessed as follows:

“ In view of my impressions of both Pronk and D’Oliveira I am of the opinion that one cannot really rely on their evidence.”Nothing in particular was said about the other witnesses.

In view of the trial Judge’s views on the case as a whole, it was, however, unnecessary for him to make a decision concerning all contradictions and issues appearing from the evidence and pleadings. His conclusions are summarized as follows:

“ After weighing all the evidence the Court is of the opinion that the first set of casting blocks was duly completed in accordance with specifications and delivered to the defendant.

409

As regards the second set of blocks (the Court is of the opinion) that the defendant accepted them at a stage when they had not been finished and that it was satisfied with the work which the plaintiff had done up to that stage and accepted it as adequate performance. Consequently, if the work were not completed properly, the defendant cannot have the work done by someone else or by itself at the plaintiff’s expense, without at least affording the plaintiff an opportunity to complete the work itself. I was referred to the following passage in Reid v Springs Motor Metal Works (Pty) Ltd 1943 TPD 154 at 158 where G r e e n b e r g JP says the following: ‘......................’

409C

In my opinion the principle has no bearing on the present case in view of my finding on the facts. If it is found that the plaintiff did not complete the work properly, then I am still of the opinion that the work which the plaintiff had to do does not differ from that which was at issue in Theunissen v Burns 14 CTR 606 and Wessels v Kemp 1921 OPD 58.

In view hereof I am of the opinion that the plaintiff is entitled to payment of the full contract price, viz R4 880.

Judgment is given in favour of the plaintiff in the amount of R3 600 and the plaintiff is authorized to take the amount of R1 200 which was paid into Court.”

The trial Judge therefore ordered performance by the defendant, viz payment of the full contract price. In view of his approach it was therefore not necessary to reach finality on inter alia the question of tolerance, the exact extent of the shortcomings in the second set of blocks, or what the reasonable costs would be to bring the blocks in the condition contemplated by the contract (cf the defendant’s particulars for trial in

106

which it is said that it would amount to R2 880).Each of the trial Judge’s findings, as well as his views on the credibility

of the witnesses, is now contested on appeal on behalf of the defendant. On behalf of the plaintiff the judgment is fully supported; the particulars of his heads of argument read as follows:“ (1) although it is conceded that the second set did not comply with the specifications, it is submitted that the appellant accepted the set as due performance;(2) alternatively, the respondent submits that the appellant made it impossible for it to complete the second set — by — (a) removing it before its completion; (b) refusing to return it to the respondent for completion” ; and alternatively,“ (3) if it is found that there was not due performance, it is submitted that quantum meruit is raised. See Hauman v Nortje 1914 AD 293 at 301 and 302; Breslin v Hichens 1914 AD 312 at 315.”It is noticeable that submissions (1) and (2) are in accordance with the amendment of his pleadings which the plaintiff applied for at the conclusion of the defendant’s case but which it withdrew as a result of opposition. It must also be pointed out that although the trial Judge found that the acceptance “ as due performance” had the result that ‘ ‘the defendant (could) not have the work done by someone else or by itself at the expense of the plaintiff, without at least affording the plaintiff an opportunity to complete the work itself’ ’,it is now submitted that acceptance must be regarded as fulfilment of plaintiff’s obligation.

Actually there can be no doubt that the plaintiff had to plead submission (1) (acceptance) and (2) (prevention by the defendant). The claim is for compliance (payment of the contract price) and it is based, inter alia,

410

on the plaintiff’s averment in para 5 of his declaration that it had fulfilled its own obligation in terms of the contract. It is in fact relying on certain grounds to excuse its own incomplete performance. In principle it should have pleaded and proved these grounds of excuse. The plaintiff’s legal advisers were apparently of the same opinion and therefore applied for the amendment in this respect at the conclusion of the plaintiff’s case. Since the application was then, however, withdrawn as a result of opposition, the question still remains whether the plaintiff could since then have relied on these grounds of excuse. But be that as it may, once the defendant’s case had been closed, no reliance could be placed on these grounds unless it was clear that these questions had been dealt with thoroughly (Shill v Milner 1937 AD 101 at 105).

The use of the word “ acceptance” in connection with “ performance” is ambiguous (cf Mackeurtan Sale o f Goods 3rd ed at 319 to 320, 4th ed s 364; Corbin on Contracts vol 3A, s 711 at 346, points out that “ acceptance is a slippery term” ). In all cases it must be borne in mind exactly what is intended. In the case of an obligation to give, “ acceptance” can merely mean the factual taking delivery of the thing by the creditor. But


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in addition other factors can also be taken into consideration, viz the intention of the creditor in accepting, or the legal consequences thereof on the further operation of the obligation. For instance, in the case of a performance which is defective in a certain respect, the “ acceptance” thereof may entail the loss of one or more of the following rights of the creditor: the right to claim proper performance, the right to claim damages; and, in the case of the reciprocal obligations, also the right of the creditor to resile or the right to withhold his own performance until the counter-performance has been duly effected (a right which will be discussed fully later). As a rule the legal consequences of the “ acceptance” will depend upon the intention of the creditor, but it is conceivable that the doctrine of estoppel and election could also play a role. In the present case it seems to be clear that both in the judgment of the trial Judge and according to plaintiff’s submission, acceptance “ as adequate performance’5 is intended to be an acceptance which is tantamount to an abandonment by the defendant of all rights by virtue of any shortcomings in the plaintiff’s work, in other words that acceptance entailed absolution of the plaintiff’s obligations. In effect it would mean that the parties had agreed on another performance in stead of the original performance (cf De Groot Inleiding 3.42.5; Van der Walt v Minnaar 1954 (3) SA 932 (O) at 939A-B; GouwsNO and Another v Montesse Township and Investment Corporation (Pty) L td and Another; Montesse Township and Investment Corporation (Pty) L td v Standard Bank o f South Africa L td and Another 1964 (3) SA 221 (T) at 227B-C).

It is not at all clear whether the possibility of such an agreement (explicitly or tacitly) was considered properly. Take for instance the telephone conversation between Borsboom and attorney Steyn on 21 August 1974. The alleged promise (denied by Borsboom) to accept the second set of blocks and to pay the full contract price, is quite relevant in this regard. But it was not pleaded as such by the plaintiff. In fact, it is not clear what exactly the plaintiff contemplated by raising this aspect,

411

unless it was to undermine Borsboom’s credibility. The cross-examination of Steyn (called as a witness by the plaintiff) begins as follows:

“ Cross-examination by Mr Claassen: Mr Steyn, I take it that this letter of 21st, A25, is not handed in as proof of the agreement which . . . as basis for the summons in this instance, is that so? — No.

You do not rely on this letter with regard to this summons in this case? — No.What is the purpose of handing it in? — Your Honour, to show that the defen

dant undertook for the second time to pay, firstly to my client when he gave him a post-dated promissory note, and secondly to me over the telephone and despite his two undertakings to pay he is still refusing to do so.

If the work is defective, is he not bound to pay, is that correct? — Well my client was quite prepared to repair the work if the work were in fact defective.

Please answer my question: if the work is defective, is he not bound to pay, correct? — Well that is for the Court to decide.”Thereafter the cross-examination was limited to the evidence which Bors-

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boom would give concerning the conversation, being put to Steyn. The question eg as to whether Steyn understood the alleged promise by Borsboom as an abandonment of rights, is not dealt with any further. The cross-examination would undoubtedly have been thorough had the pleadings attached more importance to this conversation. It is in any event noticeable that in his letter of 30 August 1974 Steyn still made the following offer:

‘ ‘Should there be any defects in the second set of moulds, our client is prepared to rectify the defects immediately at their costs.”This cannot be reconciled with any agreement that Borsboom had abandoned all rights arising from any defects in the second set of blocks. Had acceptance by the defendant been properly pleaded, this question would surely have been dealt with further.

But in any event the evidence as it stands produces certain problems for the plaintiff in this regard. Even if the present case would only be decided on the evidence adduced on behalf of the plaintiff, the evidence of, for instance, Groot and Rosewall would not justify the inference that when Borsboom took delivery of the second set of blocks (the defendant’s property) he also abandoned his rights to raise any objection whatsoever to, or recourse in respect of, any shortcomings in the plaintiff’s work. Even if he would have said that he had been satisfied and even if he had given a promissory note for R4 800, it is hardly conceivable that he could have intended to abandon all rights in respect of shortcomings — even also in respect of those shortcomings of which he was unaware, or that Groot could have understood him in that sense. Moreover, any agreement (explicitly or tacitly) would inevitably have been concluded on the assumption that no material defects were present (cf De Wet and Yeats Kontraktereg 4th ed at 138-140). Whatever the exact extent of the shortcomings was, it is at least clear (as will become apparent) that they were in extent much greater than what the parties assumed or what either Borsboom or Groot, if the latter was bona fide, realised. It therefore follows that there could not have been any abandonment by Borsboom of any rights in respect thereof.

The contention that the defendant prevented the plaintiff from performing in full is based on the assumption that the co-operation of the defendant to the performance was necessary. It is clear that this was the case initially. In order to enable the plaintiff to do the recessing work, the defendant had to make the blocks available to him, and this the defen-

412

dant did. Thereafter the defendant returned the blocks because he was under the impression that the work was more or less finished. It then appeared that much more had to be done, and the plaintiff asked that the blocks be returned to him so that he could complete the work. The defendant refused to return the blocks. It is clear that if he duly resiled by reason of the plaintiff’s malperformance, there would be no further obli


109

gation on him to return the blocks; but if he did not resile, the obligation to make the blocks available would continue to exist. The question of the cession is therefore of material importance. It follows that since the plaintiff did not raise prevention by the defendant in its pleadings, it cannot now rely on such malperformance unless the question of rescission was also fully dealt with at the trial. It was certainly not consciously done then and it is doubtful whether there is in any event sufficient material on which a decision as to rescission can be given now. But even if it could now also be decided that defendant was not entitled to resile, this would not take the plaintiff’s case much further. It claims fulfilment, viz the full contract price, and it is not without more entitled thereto.

There is quite a number of decided cases concerning reciprocal contracts where the plaintiff was granted the full contract price without more, despite incompleteness of his own counter-performance, on the ground thereof that the defendant had without valid rescission withheld his necessary compulsory co-operation towards completion of the plaintiff’s counter-performance (cf Theunissen v Burns 14 CTR 606 and 21 SC 421; Wessels v Kemp 1921 OPD 58; Kruger v Boltman 1933 (1) PH A3; Shiels v Minister o f Health 1974 (3) SA 276 (RA)). This is a recognition of the plaintiff’s continuing right to compliance in such circumstances (cf De Wet and Yeats op cit at 159), and for this approach support can be found in D19.2.38 (cf Kerr The Principles o f the Law o f Contract 2nd ed at 385 fn 4; Wessels Law o f Contract 2nd ed para 3499). However, to award the plaintiff full compliance in all instances without more (ie in the above cases the full contract price) would possibly have the result of placing the plaintiff in a better position than in which it would have been had both parties duly performed in terms of the contract. In Reid v Springs Motor Metal Works (Pty) L td 1943 TPD 154 at 158 G reen ber g JP (Ba r r y J concurrente) says: “ ...................... ”

412H

That the correct rule is that the plaintiff’s claim must be reduced by the

413

amount of the costs saved by it, undoubtedly seems to be in accordance with the basic principles of our law and it is in fact accepted by contemporary writers such as De Wet and Yeats op cit at 112 and Wessels op cit paras 3499, 3500. According to the last sentence in the quotation from the Reid case above the claim would possibly rather be regarded as a claim for compensation — with reference to certain English cases this is in fact what Wessels did — but it seems to be more in accordance with our basic principles to regard the claim as a claim for compliance, subject to deduction of the costs saved. In a textbook on Netherlands law, a related system, the position is explained as follows:

“ If in the case of a reciprocal agreement one of the parties cannot fulfil his obligation by reason of the absence of the other party’s essential co-operation,


110

he nevertheless retains his right to counter-performance . . .The costs saved by the debtor must be taken into account in reducing the

counter-performance.In the case of reciprocal agreements the debtor therefore retains his full claim

for counter-performance. If his own performance becomes impossible totally or partially, eg because it could only take place within a particular period of time which has lapsed (p 285 above), the debtor would be saved certain costs which he would have had to incur. The labourer who gets no work from his employer, will save tram money; the hotelier will save expenses for food, if his guest does not come. These costs which have been saved must now be taken into account in reducing the counter-performance. The debtor should get no benefit by reason of his creditor’s failure.”(Mr C Asser Handleiding tot de Beoefening van het Nederlands Burger- lijk Recht 3rd part — Verbintenissenrecht — first vol — De Verbintenis. Edited by Mr P A J Losecaat Vermeer and Mr L E H Rutten 3rd ed (1967) at 296-7.)

Section 324 of the German Civil Code (trans by Chung Hui Wang (1907) provides as follows: “ ......................”

413F

It is informative to find that Corbin op cit vol 3A para 767 at 540-3 writes the following: “ ......................”

413G

Elsewhere Corbin op cit vol 4 para 947 at 815, says the following in pursuance of a building contract: “ ......................”

413H

Here the reduced contract price is apparently awarded as damages and it is apparently accepted that the plaintiff has rescinded, but it is unneces-

414

sary to consider this aspect in detail. It can further only be mentioned that at English law there is also the possibility of an alternative claim by the employee, viz for quantum meruit in respect of the uncompleted work which has already been done by him at the time when he is prevented by the employer to complete the work. (See Hudson Building and Engineer Contracts 10th ed at 347, 601.) By means of quantum meruit he then claims a reasonable price for the work which he has done— which can be more than compensation calculated in accordance with the contract price or contract tariff.

In view of the above-mentioned it must therefore be accepted that, when a creditor in a reciprocal contract is prevented from fully performing his own counter-performance by the failure of the other party’s necessary co-operation, he, despite his own incomplete performance, can claim performance by the other party, but, basically as also in other legal systems, subject to the reduction of the performance claimed, namely


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by the costs which the creditor saves in that he does not have to perform fully in his own counter-performance. (Related problems such as for instance whether the creditor can also claim compensation, whether the reduction can amount to more than the costs saved, whether the absence of the other party’s co-operation must be due to fault, etc, are not relevant now.) It therefore follows that insofar as previous decisions disregarded the question of reduction, they are not correct. In a case such as Muller v Crawley 1907 ORC 12 less than the contract price was awarded by the Court. The amount was referred to as a quantum meruit, but from the report it is not clear exactly what was intended thereby, and this case can therefore be disregarded.

If these principles are now applied to the facts in the present case, it is clear that the plaintiff cannot be entitled to the full contract price merely by reason of the defendant’s refusal to make the second set of blocks available to the plaintiff for completion — the costs saved by the plaintiff, if any, must first be taken into account. The question with regard to the costs saved was never investigated and it therefore follows that neither the trial Court nor this Court was and is entitled on appeal to go beyond the pleadings and award the full contract price to the plaintiff by reason of such refusal.

All that remains of the plaintiff’s contentions in respect of the second set of blocks, is the claim to a so-called quantum meruit. As regards the first set, the argument is on a different basis: it is submitted that the plaintiff is entitled to R2 400, viz the contract price in respect of the first set, if the whole transaction between the plaintiff and the defendant is regarded as consisting of two separate contracts, each in respect of one set of blocks. It is submitted that the transaction was either separated from the beginning or that it was separated by agreement on 19 June (when the plaintiff took delivery of the first set). Without going into any detail it can be accepted that the original instruction to recess 32 moulds constituted an “ indivisible” obligation, and that the plaintiff would therefore only become entitled to payment once all 32 were completed. But the argument concerning the later separation must be granted. The provision in the delivery note (quoted above) which was signed by Borsboom on 19 June, viz “ Payment will be made one week after receipt of moulds” , is in the circumstances tantamount to a separation of the original contract, with the result that payment for the first set would be

415

due before the second set was completed. This is also the meaning of the delivery note read in its entirety, and this is the sense in which Groot also understood it. In his evidence Borsboom also wanted to include the second set of blocks with the words “ receipt of moulds” , but in the circumstances this is unacceptable even if he had signed the document as a result of pressure of circumstances, or of Groot, this would at the utmost have been a case of coactus voluit, without entailing annulment; Borsboom could also not have relied on any reservatio mentalis. The contention that the contract was then divided, must therefore be accepted,

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and if the trial Court was correct that there had been no shortcomings in the first set of blocks, this would entail that the plaintiff was entitled to the first R2 400.

It will now be convenient firstly to discuss the case of the second set of blocks and the plaintiff’s claim to a quantum meruit, and thereafter the question whether the defendant’s attack on the trial Court’s finding that the first set of blocks had no defects, was well founded or not.

As regards the quantum meruit, the plaintiff relies on Hauman v Nortje 1914 AD 293 and Breslin v Hie hens 1914 AD 312. It is also appropriate to add Van Rensburg v Straughan 1914 AD 317. These three cases, which were decided on the same day have already been applied for more than 60 years and have given rise to a good deal of discussion — in certain instances extremely critical discussion (cf H S Chanock “Quantum Meruit” 1935 SA Law Times; D G John ’n Oorsig van Onregverdige Verryking as Gedingsoorsaak in die Suid-Afrikaanse Reg at 119 et seq; J C de Wet “ Die Sogenaamde Exceptio non Adimpleti Contractus in die Praktyk van Vandag” 1945 THRHR at 239 et seq; De Wet and Yeats op cit at 183 et seq; W de Vos Verrykingsaanspreeklikheid in die Suid- Afrikaanse Reg 2nd ed at 237 et seq; A J Kerr op cit at 384 et seq). This controversy was also carried on in the Courts (cf Badenhorst v Prinsloo 1967 (1) SA 212 (O) at 216G-H) and even judicial criticism was not wanting (cf B and P Foundry Engineers v Cilliers 1950 (1) SA 257 (O) at 260-2; Dominion Earthworks (Pty) L td v M J Greeff Electrical Contractors (Pty) L td 1970 (1) SA 228 (A) at 236-7). As certain aspects of the controversy can also have a bearing on the present case, it is necessary to precisely establish the principles laid down in the said three cases. But to gain a proper understanding thereof, the common law background must first be considered, viz with regard to the defence which must have been known since the 14th century as the exceptio non adimpleti contractus and which is raised by the defendant in para 3 of his plea where he denies that the plaintiff “has duly performed its obligations” .

The basis of this defence is the recognition of the fact that in the case of certain contracts (reciprocal contracts) which give rise to mutual obligations, what is actually envisaged is an exchange of performances, having, inter alia, the result that the one party is not obliged to perform before the other party has made his counter-performance. This implies the right of the one party to withhold his own performance until the other party has performed. For the sake of convenience I shall further in this judgment refer to “ the principle of reciprocity” , while the right to withhold a performance, arising therefrom, will be referred to as the “ right of withholding” , and the defence which the latter offers to a party against the other party’s claim, will be referred to as the “exceptio” (viz

416

non adimpleti contractus). An informative view of the development of the principle of reciprocity by the legal systems originating from Roman Law can be found in Williston on Contracts (revised ed chap XXXI: Dependency o f Mutual Promises in the Civil Law (para 896 etseq; 3rd ed


113

paras 893 et seq), and only a few aspects will be dealt with here, with reference to our own old writers.

An early trace of the principle of reciprocity is to be found in Gaius’ text book for law students of the 2nd century AD (Institutiones 4.126 a), but it is especially certain passages in the Corpus Juris which would play a role in the development of the principle approximately a 1 000 years later than the Glossators. Of these the following can be mentioned: D19.1.13.8; D18.4.22; C8.44.5 — dealing with the contract of sale, and which show that the seller need not deliver before the buyer has paid and the buyer need not pay before the seller has delivered. The first of these three passages reads as follows: “ ......................”

416D

The comparison between withholding the thing sold and the holding of a pledge is significant and will be returned to.

The Glossators, such as Placentinus, Azo, Bassanius and Accursius, pay particular attention to the question of the sequence of performances in the case of an agreement of sale: who must perform first? It is suggested that he who claims first must offer to perform first, and that if the parties cannot trust one another the plaintiff, with the consent of the other party or in terms of a judicial order, may hand his own performance to a third party for safe keeping. In this connection reference is made to an exceptio as a defence which is available to the buyer or the seller, but there is still no reference to a general principle of reciprocity which is also applicable to other contracts (cf H W J Bosch De Exceptio non Adimpleti Contractus thesis Leiden 1936 at 19-21). With Bartolus (1314-1357) a general statement is already to be found: “ ...................... ”

416G

(Ad D 19.1.13.8) Canon law contributed the rule non servantifidem non est fides servanda, which later became frustra sibi fidem quis ab eo servari postulat, cui fidem a se praestitam servari recusat.

There can be little doubt that the general principle of reciprocity, as formulated by Bartolus, must have been received in Holland at an early stage. In the legal opinions of the 17th century this rule is, sometimes almost literary as laid down by him, applied as trite law. (C f Utrechts Consultatien 3.62.3, 3.114.3; Van den BergNederlands Advysboek 1.76, 77 and 78; Bellum Juridicum cas 3.) At the end of the 17th century Johannes Voet refers to this principle in connection with the locatio conductio operis (ad Pandectas 19.2.40), he applies it to the agreement of sale and discusses the exceptio non adimpleti contractus (op cit 19.1.23). Approximately one hundred years later Van der Keessel quotes Voet with apparent approval (Praelectiones ad Gr 3.15.3). In our own judgments the general principle of reciprocity is repeatedly expounded (with the accompanying exceptio). It was also received in Germany — Gluck

416 SOUTH AFRICAN LAW REPORTS (1979) (1)(Translation)

114

417

apparently refers to the principle of reciprocity and the accompanying exceptio as trite law in 1815 (at D 19.1 para 1043 vol 17 at 227 etseq). In 1900 the principle and the exceptio (although not by name) was laid down in s 320 of the German Civil Code. As regards France, Williston op cit revised ed para 896B: “ ......................”

417D

In his Contract de Louage Pothier (1699-1772), however, refers to the general principle of reciprocity and applies it, inter alia, in connection with the agreement of sale and lease (cf para 474 — which can be found in the “ appendice” ; para 406 — cf translation Mulligan at 151). With reference to the codification in the Netherlands Bosch (op cit at 40-41):

“ The principal of simultaneous performance is not explicitly mentioned in our law as a general principle, but it is mentioned in s 2297 of the draft 1820, which is similar to s 2618 in the third division of the third title of the third book of the draft 1816. The last section provides that one can only institute a claim in the case of a reciprocal agreement if one has fulfilled one’s own obligation. In the draft 1824 and 1833 this section, however, no longer appears.

The compilers of the draft 1824, which is mainly a translation of the Code Napoleon, did not at all think about the aforementioned two drafts; the question whether the old s 2297 should be re-enacted or not was in all probability not even considered. There is no indication that any thought was given to this section.” Apparently the general applicability of the exceptio is therefore not recognized in the judgments, although it has been expounded in the more recent legal literature that this should be the case. (Cf Mr C Assers Handleiding . . . 3rd part Verbintenissenrecht second volume De Ooreenkomst en de Verbintenis uit de Wet bewerkt, revised by Mr L E H Rutten (1952) at 374-381; Dr L C Hofmann Het Nederlands Verbintenissenrecht — De Algemene Leer der Verbintenissen 3rd part (s 1269-1387 BW), edited by Mr S N van Opstall 8th ed (1959) at 162-169.) In the Ontwerp Nieuw Burgerlijk Wetboek the exceptio is explicitly taken up (6.5.4.2).

It therefore appears that the principle of reciprocity and the exceptio originated from the classical Roman Law, was formulated by the Glossators, was received in Europe and taken up in various national legal systems, and reached us from Holland. In view of the common origin one can benefit as far as our law is concerned, from looking into related systems. It must, however, be mentioned that another side effect of this principle also developed on the Continent, viz the right to dissolution

418

(rescission, cancellation) by reason of the other party’s malperformance. With us such a right is also recognized, but especially in pursuance of the English law, and consequently English precedents have quite often in


115

418 SOUTH AFRICAN LAW REPORTS (1979) (1)(Translation)

this regard been referred to in the past. It does not, however, follow that precedents of English law must be applicable when solving problems in connection with the exceptio non adimpleti contractus.

Against this background it will be useful to mention a few aspects of the principle of reciprocity and its application by means of the exceptio non adimpleti contractus:1. In contracts wherein reciprocal obligations are created it is basically a

matter of interpretation whether the obligations are so closely linked that the principle of reciprocity applies. (Cf eg, W Pauw Observa- tiones Tumultuariae Novae vol 2 at 774; Ese Financial Services (Pty) Ltd v Cramer 1973 (2) SA 805 (C) at 809H-811A; Rich and Others v Lagerwey 1974 (4) SA 748 (A) at 716E-762A.) If, however, no other intention appears, the principle applies by operation of law to certain well-known contracts, such as, eg the contract of sale and locatio conductio operis.

2. The sequence of performance and counter-performance also depends upon the contractual provisions. If, however, another intention does not appear, the contractor, in locatio conductio operis for example, must first perform: cf De Groot Inleiding 3.19.11:“he who undertook to do work, may not claim any payment before the work has been completed and delivered . . . . ”(Apparently as a result of De Groot’s incorrect, or rather incomplete, statement with regard to the contract of sale — Inleiding 3.15.3 — our old writers paid particular attention to the sequence of performance in the case of this contract: cf the commentary of Groenewegen, Schorer and Van der Keessel Praelectiones on this passage: see also Voet 19.1.23; Schrassert Observationes Obs 137 and others.)

3. On the ground that withholding of the thing sold was already regarded in the Corpus Juris as being analogous to the holding of a pledge, one would expect that the exceptio would only apply as a defence until performance was actually made. This expectation is confirmed in various sources. J Macintosh The Roman Law o f Sale a<iD18.1.78.3 at 130 points out that the buyer “ ......................”

418G

Williston op cit revised ed para 897 puts it as follows:a 9 9

418H

Asser-Rutten op cit at 376 says:“ The contracting party, who raises the exceptio non adimpleti contractus, surely does not rely on any lapse of his obligation, but on a suspension thereof. The exceptio or the exception can be regarded as a dilatoire. ”

In our sources the same view is to be found in respect of a seller against whom the exceptio is raised if he claims the purchase price: he would

116

419

‘ ‘pending the process, still be allowed to deliver the thing, and also to make good the process by compelling the buyer to pay”(Wassenaar Praxis Judiciaria Cap XII 33 — relying on Menochius De Arbitr Jud Q16 n6: Voet 19.1.23; Schorer ad Gr (3.15.3). The right of withholding (the converse of the exceptio) is therefore essentially a means of endorsing the counter-performance. It can fulfil a function similar to retention moneys in a building contract. On the other hand, it follows that, as long as performance remains possible and the contract is not cancelled, the other party can still perform. (Cf Leviseur v Scott 1922 OPD 138; Inrybelange (Edms) Bpk v Pretorius en ’n Ander 1966 (2) SA 416 (A) at 427B-E.) Indeed, this possibility should be related to our doctrine of mora and purgatio morae. (Even in American law an approved offer to perform is not unknown: Williston op cit 3rd para 1298: Restatement, Contracts para 323 (2), especially the “Commentary” and the examples.)

4. If the right of withholding is regarded as being analogous to the holding of a pledge, it will entail that a party’s own performance could be withheld until the counter-performance has been fully made. Bartolus says that: “ ......................”

419D

and when referring to certain German writers, in pursuance of a discussion concerning the onus of proof, Gluck op cit para 1043 in 1815 says that these writers are mostly unanimous that:C ( 3 3

SOUTH AFRICAN LAW REPORTS (1979) (1) 419(Translation)

419F

(As long as there still remains something which must be performed, the exception that there has been no fulfilment can be raised both against the plaintiff himself as well as his heir — even if the smallest part of the contract has not been fulfilled or if non-fulfilment relates only to accidentalia. Because only he who has fulfilled all the provisions and promises in their entirety (ex asse), or as the practici put it, totally (totaliter), can institute action successfully.)

There seems to be no reason to presume that the general rule in Holland was different. In the case of locatio conductio operis it is all the more the case that the contractor must fully perform before he is entitled to the contract price. Opus means ex opere facto corpus aliquod perfectum (D50.16.5.1). In other words, the opus is indivisible (cf Pothier Verbintenissen para 291 trans Van der Linden 1st part at 317 et seq).

5. According to Voet 19.1.23 the onus is on the plaintiff, when the exceptio is raised against him, to prove that he has in fact performed his

side of the contract. Since then this has apparently never bee] doubted as far as our law is concerned. (In Germany the questioi received particular attention: cf Gluck op cit para 1043; Windschek para 321.)

Of particular importance in the present case is aspect 4 above, viz thai a party’s own performance can be withheld until the counterperformance has been fully made. It can be accepted that if an>

420

incompleteness of the counter-performance would be governed by the de m/w/wls-principle, the exceptio would not apply — but in the nature of things, this exception does not leave scope. It is therefore conceivable that the consistent application of this principle of reciprocity can have unfair consequences. Where, for instance, in the case of a locatio conductio operis the employer is gradually benefiting as a result of accessio and the contractor is not in a position to make full and proper performance — if he can in fact perform, the remedy is in his own hands, viz to make full performance — the situation can be reached where the employer is benefited at the cost of the contractor while the contractor has no claim. Should the contractor for instance institute an action based on the contract he would be indeterminably warded off by the exceptio.

Apparently Voet, in his well-known passage {ad Pandectas 19.2.40), must have had an unfair case of this nature in mind where he, in pursuance of a passage in Colerus, recognises an exception to the principle of reciprocity. His version of Colerus’s point of view leaves certain questions unanswered (unfortunately this work is not available to us) and his own solution is also not clear in all respects. Writers such as De Wet and Yeats and De Vos are apparently correct in their view that Voet did not intend the contractor to have a claim based on enrichment, but a contractual action, viz to claim a reduced contract price. Except for this aspect (to which I shall return) it is perhaps now of little importance to know what the exact requirements for Voet’s exception to the principle of reciprocity were, since in the said three Appeal Court cases (.Hauman v Nortje, Breslin v Hichens and Van Rensburg v Straughan) the passage in Voet was given certain particular interpretations.

It is clear that despite mutual differences, each of the members of this Court who motivated their views proceeded on the common assumption that on the ground of general principles the employer had the right of withholding in regard to his own performance until the contractor had strictly and fully made his counter-performance. A few quotations (the italics are mine) will illustrate this. D e Villiers CJ talks about


420F

(Hauman1's case ibid at 298; In n es JA says that Voet “

118

420G

(Hauman’s case ibid at 303) — and elsewhere it appears that he intends that in the absence of “ an acceptance or utilization of the work” the employer is entitled ‘ ‘to demand . . . an exact performance of the agreement (Breslin’s case ibid at 317); D e V i l l i e r s JA says that (£ >>

420H

(.Hauman’s case ibid at 306); M a a sd o r p JA accepts the rule that << >’

420H

( Van Rensburg1's case ibid at 328); M a a sd o r p AJA says<< j>

421

( Van Rensburg’s case ibid at 344).There is therefore consensus of opinion on this aspect.

There is also consensus of opinion that on the ground of considerations of fairness a contractor should sometimes, despite the principle of reciprocity, be permitted still to claim compensation for an incomplete performance. As that could amount to the employer’s right to strict compliance being ended, it is extremely important to determine when the employer, by way of exception, is no longer entitled to his right of withholding. In this regard there is, however, no agreement among the Judges of appeal concerned. In the said three cases there are at least three points of view which diverge in principle, to be found:1. The exception takes effect if (a) the contractor has applied the in

complete performance to his benefit (“ the employer enjoys the benefit of the work and labour done” ), ie has utilized it, and (b) the contractor, at the time when the action is instituted, in good faith believes that he has duly performed.

“ (The contractor honestly believes that he has performed his part of the contract . . . the contractor institutes his action in good faith . . . there is a bona fide dispute.)” tThat is the point o f view o f Lord D e V illiers CJ.

It is noticeable that the learned C h ief Justice apparently regards the employer’s enrichment as a result of accessio as insufficient for purposes of requirement (a) — he requires an act by the employer. It is, for instance, emphasized in Hauman’s case that the employer ‘ ‘took possession of the building although it disapproved of some portion of the work”(at 296) and in Breslin’s case that the employer‘ ‘never accepted the work as satisfactory nor did he even attempt to utilize it’ ’


119

(at 314). From the requirement of good faith it follows of course that the exception does not take effect if, for instance, the contractor abandons his work before completion, or has no honest intention to complete his performance, or intentionally (without the employer’s permission) deviates from the provisions of the contract.

It is further noticeable that in this regard no mention is made of any discretion of the Court to apply the exception or not. Indeed, it is difficult to appreciate how such a discretion would be compatible with this point of view. It is, however, clear that the Ch ie f Justice leaves the question as to costs in the discretion of the Court (Hauman’s case at 299).

2. The exception can take effect if the employer has applied the incomplete performance to his own benefit, ie has utilized it:a > >


422'

(Hauman’s case at 304) then the Court has a discretion to recognise the exception (.Hauman’s case at 305). That is the point of view of In n e s JA.

It is noticeable that also in this regard enrichment as a result of accessio is insufficient — there must be an act by the employer, an application of the incomplete performance, a utilization thereof. Once this has occurred, then the Court has a discretion:“ . . . the result of such action would be to bring him (the employer) within the operation of the equitable doctrine referred to. In that case the Court would have regard . . . to the actual fact that he was taking advantage of the results

(.Hauman’s case at 304). No requirement of a bona fide dispute is laid down although the learned Judge says that there is a presumption that the contractor’s fraud will operate against him (Hauman’s case at 305). As regards costs, the position is stated as follows:i < J J

422C

{Hauman’s case at 304).3. The exception takes effect: “ ......................”

422D

If that is the case {Van Rensburg’s case at 331), “ ......................”

422E

{Van Rensburg’s case at 331).According to all three points of view (1-3 above) the compensation

payable to the employer is usually determined with reference to the contract price — that is a reduced contract price which the contractor is

120

awarded. But in the case of the third point of view above it is clear that the basic question relates to the actual enrichment of the employer but <« ”

422F

( Van Rensburg’s case at 333). M a a sd o r p J therefore expressly says:£ I >>

422G

To determine the extent of the enrichment in this manner could be criticized (cf Hichens v Breslin 1913 TPD 667 at 685 per W essels J), but it is nevertheless clear that the learned Judge had an enrichment action in mind.

In the case of the other two points of view the position is not that clear. The terminology of enrichment is used, but it appears that enrichment as such is not the determining factor. It is accepted that the contractor could vt>e entitled to a reduced contract price — the extent of the actual enrichment is not relevant. The fact of accessio as such is unimportant, while attention is focused at the employer’s action. On analysis it appears that these two points of view actually envisage a contractual claim and this is in accordance with Voet’s approach, as explained above. It would

423

be desirable in future simply to talk of a (contractual) claim for a reduced contract price, and to avoid names such as quantum meruit and the language of enrichment liability. It would lead to less confusion and greater clarity. It would also fit in, in the normal case, with the amount whereby the contract price is reduced being equivalent to “ such sum as would enable the employer to complete the work in exact accordance with the contract”(per Lord D e V illiers CJ in the Hauman case at 299), or, put differently, “ the cost of remedying the defects” {per In n e s JA in the Hauman case at 305). The purport of a reduction of price on this basis is to enable the employer to bring about, on the contractor’s account, complete compliance with the contractor’s obligation. The reduction of the contract price will thus still be aimed at complete fulfilment of the contractor’s obligation. It is noticeable that at Netherlands’ law, according to s 1277 BW, the creditor can be authorized by the Court to comply with an obligation to do something or to let such obligation be complied with at the costs of the creditor, and that this is regarded as direct real execution (Asser-Rutten at 165 et seq). The resemblance with the arrangement in Pothier Louage s 426 is also noticeable.

In passing it must, however, be mentioned that even in terms of the point of view of Lord D e V illiers CJ and In n e s JA the costs of repair or


121


completion will not always be the amount with which the contract price is reduced. According to the point of view of In n e s J reduction of the costs of repair occur “ as a general (though not an invariable) rule” (Hauman’s case at 304); and in the Van Rensburg case a different basis for the reduction was accepted. Presumably compelling reasons of expedience, fairness and reasonableness may justify a deviation from this general rule. At English and American law, in the case of a claim for damages on the grounds of shortcomings in the construction, the cost of repair or completion is the ordinary criterion for the damages awarded to the employer. McGregor on Damages 13th ed para 822 recognises the following exception: “ ......................”

423

Hudson Building and Engineering Contracts 10th ed at 585-590 deals with the general criterion, as well as the possible alternative criterions, and the considerations which should apply when electing a criteria. Corbin op cit vol 5 para 1089 et seq lays down the following rule:ft 5 ?

423H

Whether similar considerations apply in our law with regard to the choice of criterion for reduction of the contract price, need not, however, now

424

be d iscussed . It m ust, how ever, be rem em bered that In n e s J does n o t refer to the cost o f repair as “ d am ages” . H e d oes, how ever, m en tion the p ossib ility o f a further deduction in add ition to th e co st o f repair, viz “ a d eduction for any dam age fo u n d to have been su sta in ed ” (Hauman’s case at 304), but in the nature o f th ings this can only be a reference to consequentia l d am age w hich has already resulted from d efects and dam age as a result o f the con tractor’s mora.

This Court has apparently not yet given a decision on the question as to which of the said three points of view is correct. The relatively recent discussion of the relevant cases in Nortje en }n Ander v Pool NO 1966 (3) SA 96 (A) at 137E-138E cannot be regarded as decisive in respect of the relevant questions. It is therefore necessary to consider the matter with reference to basic principles. As starting point those cases where the employer has validly resiled by reason of the contractor’s malperformance must be distinguished from those cases where no such rescission has taken place. Enrichment liability appears to be more appropriate in the case of the former than in the case of the latter, while contractual liability contemplating fulfilment of the obligation belongs to the latter.

Whether there can be an overlap — in the sense that even where there has been no rescission an action based on enrichment can be available —

122

will largely depend on the question as to what is understood by the concept “ unjust” enrichment. According to De Vos it is unjust “ when there is no conclusive legal ground for the passing or the continuation of the passing of value from one estate to another one”(op cit at 308) and he is of the opinion that“ when, as a result of a breach of contract, enrichment exists at a particular time, it cannot be regarded as sine causa as long as the contract continues”(op cit at 310). He therefore accepts that enrichment liability can only occur after rescission, and he limits this liability to those cases where “ the innocent party, after rescission, retains the benefit which cannot be returned”(at 310),“ where, according to the nature of the performance, restitution is possible and practicable”he is of the opinion that the obligation to restore must be ascribed to the fact that“ the rescission also entitles the guilty party to claim back that which he delivered” ,and cannot be ascribed to enrichment liability (op cit at 143). These views pose certain questions of principle. It can, inter alia, be mentioned that they are apparently partly based on the idea that the contract is cancelled ab initio as a result of the rescission (except for a claim for damages); at present there is a tendency to accept that the cancellation only applies in fu turo . (Cf eg Radiotronics (Pty) L td v Scott, Lindberg and Co L td 1951 (1) SA 312 (C) at 319 et seq; Crest Enterprises (Pty) L td v Rycklof Beleg- gings (Edms) Bpk 1972 (2) SA 863 (A); A JKerr op cit at 232-3; Cheshire and Fifoot Law o f Contract 9th ed at 576, 579; Goff and Jones Law o f Restitution 1st ed at 341.) These and related problems cannot now be dealt with. For purposes of the present case it will be sufficient to accept in genera], without making a very sharp distinction, that the point of view of M aa sd o r p J belongs to rescission while those of Lord D e V illiers and In n e s J are applicable to cases where there has been no rescision. It

425

is,true that in the Van Rensburg case there was apparently no valid rescission, but apparently M aa sd o r p J regarded this case as somewhat analogous. The case of Ambrose and Aitken v Johnson and Fletcher 1917 AD 327, a case of locatio conductio operis, must be regarded as an example of a valid rescission by the employer where an action based on enrichment did not succeed because the employer had abandoned the enrichment (through accessio). In Spencer v Gostelow 1920 AD 617, a case of locatio conductio operarum, where the employer had validly resiled, the employer’s action based on enrichment, however, succeeded (cf De Vos (op cit at 243-5)). In this case a pro rata portion of the wage was allowed, but this is not necessarily the case in all instances:


425C

123

0Spencer v Gostelow at 631 per In n e s J, then Chief Justice). The use of the stipulated wage as a measure of enrichment is still susceptible to criticism (cf De Wet and Yeats (op cit at 188)), but on the other hand it can possibly, in a case of this nature, be justified as an indication of expenses saved (cf De Vos (op cit at 253-4).

It is not clear whether, in this regard, it is required that for enrichment liability the party who malperformed must have acted in good faith. In Spencer v Gostelow (supra at 635-6) M a son AJA accepted that the references to bona fides in the Hauman, Breslin and Van Rensburg cases and a requirement that the party who malperformed must not be someone who “ has wilfully broken the terms of his contract” , was not applicable in the case of “ ......................”

425E

In n e s CJ preferred “ ......................”

425F

(at 632). Since even a mala fide possessor, for instance, has an action based on enrichment against the owner, it is perhaps difficult to appreciate how a requirement of bona fides can be laid down in a case such as the present one. But the existence of an action based on enrichment is also subject to considerations of policy (cf De Vos’ fifth requirement supra at 315-7) and in connection with contracts certain considerations of policy may possibly. influence one’s approach. As regards American law, Williston op cit 23rd ed para 1473 puts it as follows:6i 9 9


426A

(cf also Corbin op cit vol 5A paras 112 et seq); Restatement, Contracts para 357; G off and Jones (op cit at 356). It is, however, unnecessary in the present case to give any decisive answer on our law in this regard or to express any opinion on the question as to whether an employee will in certain instances forfeit an action based on enrichment.

If the employer has not validly resiled by reason of the contractor’s malperformance, there is, according to the points of view of Lord D e Villiers and In n e s J, as construed above, the possibility that the contractor can, despite the incompleteness of his own performance, nevertheless institute a contractual claim for a reduced contract price. As has already been explained there are material differences between the requirements laid down by each of the two points of view: Lord D e V illiers requires, for instance, a bona fide dispute and good faith on the part of the contractor as prerequisite, and he does not mention that the contractor would in this regard rely on a discretionary interference by the court; on the other hand In n e s J emphasizes the discretion of the Court

124

and bona fides are not a prerequisite but at the most a factor which must be taken into account in the exercise of the discretion. As has already been said, this Court has apparently not yet decided which is the correct point of view. In the case of Koenig v Johnson and Co L td 1935 AD 262 there are, however, dicta which are reconcilable with the point of view of In n e s J. Chief Justice W essels says at 276: “ ......................”

426F

At 281-2 and 283 Str atfo r d JA says: “ ......................”

426H

In the lower Courts bona fides was often required (cf eg Kam NO v Udwin 1940 WLD 137 at 140-1) or it was said that if a contractor abandoned his work, he could not succeed (cf eg Jansen v Rosenbaum 1948 (1) SA 578 (T)), and by implication the point of view of Lord De V illiers was therefore accepted. It does not, however, appear to be too late for this Court to maintain the point of view of In n e s J.

427

The whole basis of the relaxation of the principle of reciprocity and the recognition of the possibility of instituting a claim for a reduced contract price rests on considerations of fairness. And, clearly, these considerations can in particular circumstances prescribe that the contractor should still be compensated, even if he knows that he has not fully complied with his obligations. As an equitable solution the point of view of Lord D e V illiers is too narrow and the point of view of In n e s JA provides a far more subtle and more satisfactory solution. As such the latter must henceforth be accepted and applied. It is noticeable that the position in our law would thus show great similarity with the law which is applied on the Continent. With regard to the position in the Netherlands Asser Nederlands Burgerlijk Recht 3rd part, second vol, first portion 1952 ed at 377-8, says:

“ If one contracting party who claims compliance, has committed malperformance, even in respect of only a part of his obligation, it must be decided with reference to the principle of good faith whether, and if so to what extent, the party who is called upon to comply, may rely on the exception . . . It will have to be decided from case to case whether, and if so to what extent, the party who is called upon to comply may rely on the exception.”It is the exceptio non adimpleti contractus to which reference i£ made here. The position is also similar according to the BGB, s 320:


427E

(Translation Chung Hui Wang). The reference to good faith in this

125

respect is strongly reminiscent of the fact that in Roman law the recognised reciprocal contracts are regarded as bona fide. With regard to the present discussion it is, however, particularly noticeable that the draft Nieuw Burgerlijk Wetboek (Meyers) of the Netherlands contains the following (6.5.4.2):“ 1. If one of the parties does not perform at all, the other party may keep his

performance in abeyance unles that will be in conflict with reasonableness and fairness.

2. If one of the parties only performs partially or not properly, the other party may keep his performance in abeyance insofar as reasonableness and fairness will justify it.”

The decisive role of reasonableness and fairness is noticeable.It must be emphasized that according to the point of view of In n e s JA

the coming into being of the discretionary power of relaxing the principle of reciprocity has no connection whatever with the degree of the shortcoming in the incomplete performance. The decisive fact for the coming into being thereof is the utilization of the incomplete performance by the employer — whether the shortcoming is big or small. The extent of the shortcoming is, at the most, one of the circumstances which can be weighed up in considering the question of fairness which is involved in the exercise of the discretion. In this respect our law inter alia differs from English and American law.

The general mutual dependency of the reciprocal obligations in the case of reciprocal contracts was apparently only accepted in English law towards the end of the 18th century (by Lord M a n sf ie l d : Williston 3rd ed para 817). Thereafter the principle of reciprocity was sometimes applied strictly, as appears from a case such as Sumpter v Hedges (1898)

428

1 QB 673 (a case of a builder who had only completed his work partially and then abandoned the contract: he could not claim anything in respect of the work which had already been done). This case is, eg, mentioned by D e V illiers J in the Hauman case (at 307) and from his discussion of the English law it appears that “ the English decisions hold parties strictly to their legal rights” . Since then a change has, however, taken placed in England and a builder is not always treated so strictly (cf eg Dakin and Co L td v Lee (1916) 1 KB 566; Hoenig v Isaacs (1952) 2 All ER 176). Cheshire and Fifoot Law o f Contract 9th ed at 528, inter alia mention these two cases under the heading “ The Doctrine of Substantial Performance” . There it is said that: “ ......................”

428C

Apparently “ substantial performance” occurred when the shortcomings were not of such a nature that the employer could resile. For the uninitiated the position is, however, not clear in all respects. Presumably an evolution in legal approach has been under way for the past years.


126

In the first edition of their book, (1945) Cheshire and Fifoot for instance write about this doctrine (at 352) that it: “ ......................”

428F

(The first exception contemplates a quasi contractual claim; the plaintiff resiled. Cf at 424-5.) It is noticeable how this exposition differs from that in the 9th ed (1976) from which the above quotation was taken. In his Law o f Contract 3rd ed 1970 G H Treitel still writes the following:

428H

(This footnote (89), however, does not appear in the 4th edition at 566.)

429

One of the cases where the party who has malperformed is usually not entitled to any compensation, is where his performance is less than “ substantial” . In this regard Glanville Williams (1941 LQR at 511) advocates reform, viz: “ ......................”

429B

In general G off and Jones op cit at 355-6 say the following:< < ? f


429G

Sometimes the impression is created that “ acceptance” plays a decisive role in the case of “ substantial performance” , but Hudson Building and Engineering Contracts 10th ed at 376-7 advocates the contrary.

Apparently the doctrine of “ substantial performance” already gained ground in American law earlier. In the Hauman case the American case Hayward v Leonard is mentioned (at 301, 307) and D e V illiers J says the following (at 308-9): “ ......................”

430A

A reference to recent literature, however, creates the impression that since then there has been quite a development. (Cf eg Corbin op cit part 3A chap 36: “ Substantial Performance, its Character and Effect” ; 17 Am Jur 2d “ Contracts” paras 375 et seq; 13 Am Jur 2d “ Building, etc Contracts” paras 41 et seq, 110; 66 AM Jur 2d “ Restitution and Implied Contracts” paras 70 et seq.) The writers apparently do not always appreciate the distinction between a contractual action and an action based on enrichment and in practice the one or the other is used to assist, for

127

instance, a contractor in certain circumstances. The Restatement (Contracts para 268 (2)) puts the contractual position in general as follows:( ( J 5


430D

The supplementary quasi contractual arrangement is apparently found in para 357. It is, however, clear that the matter in question is not dealt with in exactly the same manner in all legal ystems. The views of Williston 3rd ed on the matter are therefore informative.

The terminology used by Williston is largely alien to our law, which does not facilitate the matter for the uninitiated reader, but his point of view apparently amounts to the following. The principle of reciprocity is complied with by “ substantial performance” , in other words despite a party’s own incomplete performance, he can still claim counterperformance in terms of the contract and the other party must supplement the incomplete performance by way of a claim for damages (para 805). He points out that this principle is sometimes extended to the fulfilment of express “ conditions” . In conclusion he says in para 842:C C 3 >

430H

Williston, however, would place the extension to the express conditions on a quasi contractual basis (paras 805 to 844 et seq)\ “ ......................”

431C

Where a party has committed a “ material breach” (ie his performance is not “ substantial” ) Williston also advocates a quasi contractual remedy and says (para 1473 at 222-4): “ ......................”

431D

Williston also emphasizes the difference between the calculation of the award in terms of the contractual claim and the calculation in terms of the quasi contractual claim (paras 1478-1485). The following remarks (para 1482 at 292-4) could perhaps be mentioned: “ ......................”

431E

From the aforementioned the contrast which has been mentioned earlier, between the English and American approach and that of In n es J, should be quite clear: according to the former the contractual claim for the counter-performance comes into being as soon as “ substantial performance” of a party’s own performance has taken place; according to the latter no such claim comes into being unless either a party’s own

128

performance has been made in full or the Court in the exercise of its discretion allows a relaxation of the strict principle of reciprocity — and this discretion only comes into being when the other party utilizes the partial performance. It therefore follows that the decision in Kam NO v Udwin 1939 WLD 339 which is often criticized must be regarded as correct. Unless a builder who claims the counter-performance avers that he has fully performed, his pleading is susceptible to exception. If he wants to rely on the discretion of the Court, he must at least aver that the other party has utilized the incomplete performance, as well as those facts which may influence the Court to exercise its discretion in his favour.

There are, however, dicta in our judgments indicating the contrary and which proceed from the assumption that in our law too the right of withholding lapses as soon as “ substantial performance” has occurred. In eg B and P Foundry Engineers v Cilliers 1950 (1) SA 257 (O) at 261 D e Beer JP (B r in k J concurrente) says that“ where the performance which is delivered or offered is defective the plaintiff can nevertheless institute a claim unless a defendant may resile because there has not been substantial performance . .and also in Anastasopoulos v Gelderblom 1970 (2) SA 631 (N) a Full

432

Bench (J ames JP , H e n n in g and Leo n JJ) on appeal approves of the following statement (quoted at 636A) of F a n n in J about the exceptio non adimpleti contractus: “ ......................”

432B

Some of our writers are also of the same view (De Wet and Yeats op cit at 183-4, read with 162); De Vos op cit at 241; cf also H J Chanock “ The Doctrine of Substantial Performance” 1935 SA Law Times at 162 et seq).

With due respect, however, this point of view seems to be in contrast with the common law concept of the exceptio, as well as the approach of this Court in Hauman v Nortje, ibid and the related cases in this Court. This approach is in fact based to a certain extent on certain earlier dicta in our decisions, but it would nevertheless appear as if these dicta cannot be regarded as decisive, or should not be regarded as such.

In Hichens v Breslin 1913 TPD 676, eg, phrases such as the following appear in the judgment of W essels J: “ fails in substantially carrying out this undertaking” , “ a substantial difference in kind” , “ a material and important deviation” , and “ material deviations from the terms of the contract” . It is, however, to be doubted whether the learned Judge had in mind the doctrine of “ substantial performance” , as it was to be

( , known in English law later. At 682-3 he says: “ ......................”

432G


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Apparently “ substantial” is seen in this regard as a counterpart of “ insignificant” , the latter being actually one of the minima of which the law does not take notice. Moreover, the words italicized by me in this quotation indicate that actually, as a question of interpretation of the contract, it must be determined how much scope is to be allowed. This is in accordance with what is said at 684: “ ......................”

432H

(The italics are mine.) Eight years later the same line of thought apparently formed the basis of the approach of W essels J (then JP) concerning a genus sale of 400 bags of maize in Cedarmount Store v Webster and Co 1922 TPD 106. For purposes of that case it was accepted that the facts showed that there was a shortage of 40 bags in the quantity of bags delivered. The learned Judge (at 110) says: “ ......................”

433A

He comes to the conclusion that a shortage of 10 per cent was too much (at 111): “ ......................”

433B

The possibility that some scope could be allowed is an idea which is inter alia derived from Baudry Lacantinerie and Signat Vente para 325. It is noticeable that these writers refer only to a small difference and the exception to the general rule that exact performance is required, is limited to “les usages commerciaux”. (With us legislation possibly also plays a role today. Cf Act 13 of 1958.) This is far removed from a general doctrine of “ substantial performance” . It is noticeable that G reg o ro w sk i J does not refer to any possibility of a shortage (at 113): “ .......... ............”

433D

With a few exceptions (cf, for instance, the case of the sale of a piece of ground when dimensions are mentioned, where some scope is sometimes allowed with regard to size, with adaptation of the purchase price: Welgemoed en Andere v Sauer 1974 (4) SA 1 (A)) the general tenure of our law is that obligations must be complied with promptly (and specifically). It can be said that the obligation is primarily aimed at (specific) compliance. The debtor is not entitled, if he so wishes, to offer damages as substitute for the performance (Farmers Co-operative Society v Berry 1912 AD 343 at 350; Shill v Milner 1937 AD 101 at 106-7; Haynes v King Williams Town Municipality 1951 (2) SA 371 (A) at 378D-F). Despite any doubts which might once have existed in this regard (cf H de Groot Ini 3.3.41; Voet 46.3.10, 19.1.14), it is clear that these rules also apply to obligationes faciendi (cf, inter alia, Groenewegen’s commentary on the said passage in De Groot, as well as that of Fockema Andreae en Apeldoorn; and also Van der Keessel’s Praelectiones on De Groot 3.3.41, and also his Theses Selectae 512; Wessels op cit 2nd ed paras 3089-3103; De Wet and Yeats op cit at 188-192; Kerr op cit at 334-342). To avoid any possible claim for


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damages there must be prompt compliance. In particular the debtor is not entitled to discharge the obligation in parts — even if the performance is divisible, eg the payment of money (D22.1.41.1; H de Groot Ini 3.39.9; Bernitz v Euvrard 1943 AD 595 at 602; Moosa v Robert Shaw and Co L td 1948 (4) SA 914 (T) at 917; Wessels op cit para 2237). He is also not entitled (except in the case of a facultative obligation) to offer something else than the performance due: aliudpro alio invito creditori solvi non potest, D12.1.2.1 (cf C8.42(43). 16; I van den Berg Nederlands Advys-Boek 1.122 (money + letter of interest = money); Celliers v Papenfus en Rooth 1904 TS 73 (undivided share of approximately 70 morgen of farm land = divided share of 62 morgen of that farm); Hochmetals Africa (Pty) L td v Otavi Mining Co (Pty) L td 1968 (1) SA 571 (A) at 579B-F, 583B-C (part payment + payment into Court of balance = full payment in money); Van Diggelen v De Bruin and Another 1954 (1) SA 188 (SWA)). Moreover, if in the case of the reciprocal contract the performance which must be made first, would be

434

construed as a condition for the claimability of the counter-performance, then a requirement of strict compliance would also apply here. Unless any other intention is apparent, fulfilment of a condition must be prompt and complete, viz in forma specifica and not per aequipollens (Wessels op cit para 1337; Hanomag SA (Pty) L td v Otto 1940 CPD 437).

Against this background it would be rather surprising if in a case of a reciprocal contract a debtor can always claim the counter-performance by reason of his own incomplete performance — provided only that the defects in his own performance are not serious. This would mean that the other party is denied his right to compliance and a remedy to enforce it, viz the exceptio, and that he will have to be satisfied only with supplementary damages — the extent of which he will have to prove in a counter-claim. That would afford the debtor the opportunity, if he so wishes, to compel the creditor to accept damages as part of the performance. It is an entirely different matter if the other party can as a rule raise his exceptio and if that entails unfairness, to grant the Court a discretion to rectify the matter, and that is actually the approach of In n e s J as explained and accepted above.

Decisions and dicta which are in contrast with the point of view of In n es J should no longer be followed. Also the following passage in the judgment of M ason AJA in Spencer v Gostelow (supra at 636) must be viewed in the light of that point of vie\v: “ ......................”

434F

The fact that an employer still requires that the contractor complete his performance, viz that he still wants to enforce compliance, is one of the factors which the Court will take into consideration in the exercise of its


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discretion. The shortcomings in question, however, need not necessarily be “ substantial5’ in the particular technical sense.

Something must also be said about the onus of proof. As indicated above, it was already accepted early in our law that if the exceptio is raised, the plaintiff must prove that he has completed his own performance. But what if he cannot succeed in proving that and he then wishes to claim a reduced contract price? In other words, what is the position with regard to the onus of proof if he requires a discretion to be exercised in his favour? He will certainly have to convince the Court that it will be fair to relax the principle of reciprocity, and at least since 1946 it has been accepted in our decided cases that, if the contractor does not succeed in proving the absence of shortcomings in his performance and he then wishes to obtain quantum meruit, “ he must prove how much it will cost to remedy the defects” {per N eser J in Wegerle v Pretoria Machinery Sales 1946 TPD 319 at 324). Some of the decisions given subsequently are mentioned in Sifris en ’n Ander NNO v Vermeulen Broers 1974 (2) SA 218 (T) at 223D-G, and Badenhorst v Prinsloo 1967 (1) SA 212 (O) at 216C-E can also be added. If this approach is applied to the point of view of In n e s J, it amounts to the following: if the contractor does not succeed in convincing the Court that he has fully complied with his side of the contract, and he wishes then to claim a reduced

435

contract price, he will have to prove: (i) that the employer is utilizing the incomplete performance, (ii) that circumstances exist making it equitable for the Court to exercise its discretion in his favour, (iii) what the reduced contract price should be, ie what it will cost to bring his performance in order for the purpose of determining by how much the contract price should be reduced. In Dominion Earthworks (Pty) L td v M J Greeff Electrical Contractors (Pty) L td 1970 (1) SA 228 (A) at 237F-H R um pff JA expressed doubt “ ......................

435B

But, with all due respect, this doubt seems to be based on a wrong premise. The learned Judge of Appeal says: “ ...................... ”

435C

As has been attempted to indicate above, the application of the exceptio usually implies the continued existence of the contract and the possibility that full performance can still be made. It is therefore the contractor’s contractual right to rectify his performance. If for some or other reason he does not wish or cannot do so (not taking into account the position in the case of objective impossibility) but nevertheless wishes to have a part of the contract price, it does not seem to be unreasonable that he must


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indicate to what he is in fact entitled. He as an expert is in fact better equipped than the employer to do so. There therefore seems to be no sufficient reason to deviate from, the line of decisions which burdens the contractor with the onus of proof. (It is interesting to note that in the United States the question of the onus of proof also gives rise to differences of opinion. Cf Corbin op cit vol 3A para 710.)

The judgments in the Hauman case, however, also accept that the contract price must further be reduced by the amount of the damages to which the employer is entitled as a result of the malperformance. In the nature of things, as has already been mentioned, this relates to possible consequential damages (caused by the shortcomings) which have already been suffered and possible damage as a result of the contractor’s mora. By virtue of general principles the employer will, in this respect, still be burdened with the onus of proof. The employer will probably have to institute a counter-claim, but this procedural question need not be considered now.

With regard to costs, the judgment of In n e s J in Hauman v Nortje {supra at 304) possibly creates the impression that if the employer is utilizing the contractor’s incomplete performance, and the contract price is claimed from him, he must of necessity tender a sufficient amount should the contractor succeed with a claim for a reduced contract price— in order to avoid an order that he must pay the contractor’s costs. But this seems to be a question which must depend entirely upon the circumstances. It is, for instance, conceivable that the employer utilizes the partial performance and claims that completion must still take place and that he cannot reasonably be required to take precautionary steps against the possibility that the Court will grant a reduced contract price.

436

Before the aforementioned principles are applied to the facts in the present case, it is necessary to make a few general observations.

From the review of the English and American law given above, it appears that the former, despite the doctrine of “ substantial performance” , does not sufficiently provide for the exclusion of all cases of unfairness arising from the application of the principle of reciprocity, while the latter apparently does in fact achieve that with the assistance of the doctrine of “ substantial performance” , supplemented where necessary with the grant of an action based on enrichment. With regard to our law, there is in fact, in the light of what was accepted above, sufficient provision for all cases where an employer utilizes the incomplete performance or where he has cancelled the contract. In the former case the contractor has a contractual claim, subject to the discretion of the Court; in the latter case, an action based on enrichment. The only case for which there is no apparent legal remedy is where the other party has neither cancelled nor utilized the incomplete performance. Whether such cases will often occur, having unfair consequences if there is no legal


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remedy — especially if the incomplete performance is valuable (then the employer will probably rather utilize it) or if the contractor is still in a position to make proper performance (when he will probably rather fully perform), is not clear. But be that as it may, Kerr op cit at 389-90 advocates the recognition of a discretionary contractual remedy which would also cover a case of this nature. Such a result could be achieved within the ambit of the point of view explained above if the requirement of utilization for the existence of the discretion is relinquished. Whether it is now, as a result of the full acceptance thereof that the solution of In n e s J in effect grants a contractual remedy, possible to relinquish (or at least to qualify) this requirement and to move more towards the view maintained on the Continent, is a question which will perhaps have to be considered later. Another possibility, based on the point of view of M a a sd o r p J, would perhaps be to recognise in such cases in certain circumstances an action based on enrichment, despite the existence of the contract. Whether this is reconcilable with the view that the enrichment must be sine causa (unjust), and whether this would be in accordance with considerations of policy, are questions which will possibly also have to be considered later.

This problem of an appropriate legal remedy will perhaps not often arise if it is accepted that the requirements for the existence of the right to reject a performance, for the existence of a right of rescission and for the existence of the right of withholding (exceptio) are basically the same. (Cf, eg, De Wet and Yeats op cit at 180-1 and 183 read with 162-3; De Vos op cit at 241-2.) As soon as the performance (made or offered) is “ substantial” (ie the shortcomings are not serious), there is no right to reject, to resile or to withhold the counter-performance. Nevertheless, if the performance is not “ substantial” and the employer rejects the performance but does not resile and still claims compliance (apparently the only instance where, according to this approach, the exceptio can apply (De Vos op cit at 241 nl6)), the problem will once again arise. Moreover, as is apparent from the aforegoing, a test of this nature for the existence of the right of withholding would be contrary to the historical development of our law, contrary to the point of view of this Court in Hauman

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v Nortje ibid and related cases, and would detract from the employer’s right to (specific) performance. But apart therefrom this semetric solution still leaves certain problem areas. It is, for instance, not quite clear whether “ rejection” of the performance would in terms thereof include the acceptance and retention of a partial performance — but with an accompanying insistence on complete compliance and an expectation that the performance will be completed. Even the Restatement (Contracts) accept that para 356 does not apply in all such eases. In the commentary on ss (1) it is inter alia said: “ ......................”


437C

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The application in general of the criterion of a “ serious” shortcoming, as it applies with regard to the right of rescission, in answering the question whether the creditor can reject the performance offered, or raise the exceptio, is also not always conducive of clarity and simplicity. The concept “ serious” can, for instance, vary in degree depending on the circumstances. Corbin op cit vol 3A para 711 inter alia says the following:u >>

437G

(Cf Williston op cit 3rd ed para 842.) Moreover, it is, for instance, not unthinkable that in certain instances, if the debtor is allowed a period within which to perform, the creditor may reject a performance tendered within the period, by reason of shortcomings, but he would nevertheless not be entitled to resile before the period has lapsed and then only if due performance has not been made by then.

The facts in the present case can now be dealt withy and, as was contemplated at the begining of the discussion of quantum meruit, the case of the second set of blocks will be dealt with first. It will be remembered that the original indivisible contract was divided on 19 June 1974 when the defendant came to fetch the first set of blocks from Groot, and that the remaining second set of blocks was fetched on 12 August 1974. Since it is clear that the plaintiff’s work on the second set had certain shortcomings, the defendant quite correctly raised the exceptio and the plaintiff cannot succeed with his claim for full performance, viz of that part

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of the contract price relating to the second set (ie R2 400). The trial Court therefore erred in granting an order for such performance.

The question, however, remains whether the trial Court should not have awarded a reduced contract price to the plaintiff. It was not requested as an alternative in the summons or declaration, but such a claim could certainly not have surprised the defendant. The defendant apparently foresaw the possibility of such a claim — thence the payment into Court of R1 200 by him. It is in fact clear that the defendant utilized the incomplete performance, but, as indicated above, the plaintiff must convince the Court that it would be equitable to relax the principle of reciprocity, and the onus rests om him to prove how much it would cost to remedy the shortcomings in the performance. It will be convenient to discuss the question of the costs of repair first, and thereafter the exercise of the discretion.

As already mentioned, Groot had admitted in the witness box that his work on the second set of blocks was not quite in accordance with specifications. For purposes of this appeal the plaintiff accepts the correctness of the report emanating from Paulstra concerning the defects in the rubber castings (and therefore in the cavities of the blocks) and also


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that certain work still had to be done in order to bring the second set of blocks in accordance with the specifications. In judging the evidence concerning the extent and costs of the necessary work, the disputed question with regard to tolerance is now of little importance, since the tenure of the evidence (if viewed carefully) relates more specifically to the following: the costs to make the blocks, with the defects appearing from the Paulstra report, acceptable to Paulstra. The actual tolerance allowed in the contract between plaintiff and defendant is therefore of little importance and does not play any role worth mentioning.

[The learned Judge analysed the evidence and proceeded as follows.]On close examination it appears that the only thing that the plaintiff

succeeded in proving with regard to this aspect of the case, is that the defendant had entered into a contract with Auret to complete the blocks at R45 per cavity. It does not appear that the defendant acted unreasonably by entering into such a contract. (Had the defendant claimed the contract price as damages, the onus to prove that the defendant could have reduced his damage, would have rested on the plaintiff; the present situation appears to be analogous in this regard.) In view of Harwood’s quotation it can in fact rather be said that the defendant acted reasonably.

However, is proof of this amount only sufficient for the determination of the amount by which the contract price, agreed upon by plaintiff and defendant, must be reduced? In principle it seems that in these'circumstances a defendant will not be entitled to a greater reduction of price than the actual costs incurred by him to bring his incomplete performance in order. Although the reduction of price will generally amount to the reasonable costs of repair, the defendant will, if incomplete performance is supplemented by one third in terms of a particularly beneficial contract, however, not be entitled to bring into account the greater amount than the amount determined in the contract. In the present case the fact that Auret did not complete the work, that Borsboom, eg, assisted him with that part which he had completed, does not alter the

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position. According to Auret — and his evidence must, as already explained, be accepted for purposes of this appeal — Borsboom did it of his own accord and he further also prevented Auret from completing the work by removing the blocks. Had it therefore not been for Borsboom’s conduct, the shortcomings in the blocks could have been remedied at a cost of R720. It follows that in the present case the plaintiff has provided sufficient proof of the amount by which the contract price must be reduced, should the Court decide to exercise its discretion in favour of the plaintiff and to relax the application of the principle of reciprocity.

As already emphasized, the Court must in the exercise of its discretion take into consideration all circumstances. A factor which inter alia counts against the plaintiff is that he persisted for such a long time in his


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allegation that he had fully complied with the contract. As will be remembered, even during the “ pre-trial conference” which was held after the first day of the trial, he still persisted that there were no defects in the blocks — although even before the issue of summons on 20 September 1974 he should have known that the company to whom defendant had to make delivery (Paulstra) had rejected the blocks. But in the particular circumstances of the present case the scales were turned in favour of the plaintiff by reason of Steyn’s letter of 30 August 1974 in which an offer was still made to rectify the defects, and the defendant did not accept that, but acted in such a manner that at the time of the trial it would no longer be possible for the plaintiff to rectify such defects, since the work had by then already been done by someone else.

It follows that in respect of the second set of blocks a reduced contract price must be awarded to the plaintiff, viz R1 680 (R2 400-R720).

As regards the first set of blocks, the position is somewhat different. According to Borsboom, a few days after he had taken delivery of the first set of blocks on 19 June 1974, he discovered that there was a fault in the cavities, that sufficient metal had not been removed. He and D’Oliveira then both worked on them to bring them in order — they used an ordinary milling machine and a hand grinder. Together they spent approximately 72 hours on this work. D’Oliveira confirmed this in his evidence but in his opinion they had worked about 70 hours. Borsboom also says that his ordinary tariff would be R10 per hour and that he mentioned the defects to Groot after the latter had returned from abroad. He concedes that:* ‘had the second set been correct, then I would have regarded the repairs which I had done on the first set as part of the bargain. The damage at the time was not so great” .On the other hand there is the evidence of Groot, Rosewall and Pronk. Groot denies that there was anything wrong with the first set of blocks — he used them to make plaster castings which he tested and found nothing wrong. Moreover Borsboom never complained to him about the first set of blocks. Rosewall, who was apparently always present during the discussions between Borsboom and Groot, also says that Borsboom did not raise any complaints in respect of the first set of blocks. Pronk was at the time in the employ of Borsboom and he also denies that work was done on the blocks as described by Borsboom and D’Oliveira. Borsboom says that Pronk should have been aware thereof, had he used his eyes.

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As mentioned at the beginning, the trial Court had accepted Groot’s evidence and rejected that of Borsboom, and consequently decided that there was nothing wrong with the first set of blocks. The Court was not impressed either by D’Oliveira or by Pronk. Since Borsboom was found to be unrealiable vis-a-vis Auret and since in his attorney’s letter of 27 August 1974 no mention whatsoever was made of any defects in the first


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set of blocks — apparently this question was only raised in the application for summary judgment in the replying declaration — it can hardly be found that the Court erred in this regard, especially in the light of the very clear impressions which the Court gained from the witnesses. It is also quite unlikely that Borsboom would have raised the question of defects in the first set of blocks to either Groot or Rosewall, after their return from abroad. At that stage Borsboom was trying to persuade them either to return to him the second set (on which hardly any work had been done), or to continue with the work on the second set. Any mentioning of defects would only have confused matters further.

It follows that the appeal, with regard to the first set of blocks, cannot succeed; as regards the second set, the appeal succeeds partly in that the contract price is reduced by R720. This partial success is, however, substantial and is sufficient to award the costs of the appeal to the appellant. As regards the costs of trial, the order of the Court a quo must be sustained.

The following order is made:(a) The appeal succeeds partly; the respondent shall pay the costs of

the appeal;(b) para 1 of the trial Court’s order is amended accordingly, with the

result that the order will now read as follows:“ 1. Judgment for the plaintiff in the amount of R2 880 with

costs.2. The plaintiff can receive the amount of R1 200 which was

deposited with the Registrar.3. Each party shall bear his own costs incurred on 15 and 16

March 1976.”

K otze JA, D iem ont JA, K lo pper AJP and T reng o v e AJA con cu rred.

Appellant’s Attorneys: Couzyn, Hertzog & Horak, Pretoria; Naude & Naude, Van de Wall & Partners, Bloemfontein. Respondent’s Attorneys: Vorster & Prinsloo, Pretoria; Siebert & Honey, Bloemfontein.


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UNIVERSITY OF PRETORIA v TOMMIE MEYER FILMS (PTY) LTD

(A ppellate D ivisio n)

1978 August 24; September 29 Rabie JA, C o rbett JA, H ofm eyr JA, M iller JA and D iem ont JA

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