MAKARAU JP: Some day in or
around October 2003, a businessman who still believes in customer
care moved down the fuel queue that had formed at his forecourt to
ensure that no one was jumping the queue. He would stop and chat with
this or the other customer. He came across a white gentleman who was
sitting in his car and awaiting his turn to have his car refueled. He
spoke to this gentleman.
He went back to his manageress and asked who the gentleman was. He
was told that it was the plaintiff's managing director. The
plaintiff had an account with the service station.
The businessman went back and made a suggestion to the gentleman. The
suggestion was well received. The parties parted company on this
happy note. Each had an understanding of what had been discussed in
the fuel queue.
The businessman is the defendant before me and the content of the
suggestion that he made to the gentleman in the queue is the subject
of the dispute that I have to determine.
On 30 October 2006, the plaintiff issued summons against the
defendant claiming the sum of $77,206-48 together with interest
thereon at the prescribed rate from the date of summons to date of
judgment in full and delivery to it of 3390,5 litres of petrol and
6,462 litres of diesel. The claim was accompanied by the usual prayer
for costs of suit.
In its declaration, the plaintiff alleged that it had an arrangement
with the defendant to draw fuel from the main tank at his service
station. It further alleged that in or about November 2003, the
defendant established a separate and different facility whereby the
plaintiff could draw fuel from a reserve tank, which arrangement
entailed the plaintiff paying for fuel in advance and the defendant
storing the fuel for the plaintiff in his reserve tank. Finally, it
was alleged in the declaration that as at January 2006, the defendant
held a deposit of $7,206,477 in respect of fuel to be drawn from the
main tank and 3390,6 litres of petrol and 6462,02 litres of diesel in
the reserve tank, which despite demand, the defendant failed to avail
to the plaintiff, prompting the plaintiff to approach the court.
The claim was defended.
In its plea, the defendant admitted that he had an arrangement with
the plaintiff but averred that at all times the fuel in both tanks
belonged to him and he did not owe the plaintiff fuel but cash
balances in respect of each facility. In particular, the defendant
denied that the reserve tank facility was exclusively for the
plaintiff or that the plaintiff purchased the fuel stored in that
tank in advance and in bulk. He further averred that the reserve tank
was simply a preferential arrangement for account holders in the
event that he did not have fuel in his main tank.
As to why the defendant could not supply the plaintiff with the fuel
for which he held deposits, the defended averred that he had been
compelled by the national task force to sell all the fuel he had in
his tanks to the public. The plaintiff had tried to fill drums with
the fuel that was due to it but due to volatility of the period, this
was not advisable.
Thus, at the pre-trial conference of the matter, the following issues
were identified for trial:
1. Is the plaintiff entitled to
specific performance, and on what basis and in what quantity?
2. What were the terms of the
facility agreement between the plaintiff and the defendant?
3. Whether the defendant received
oral or written directive from the Ministry of Industry and
International Trade to sell the diesel and petrol that the plaintiff
alleges it was holding for plaintiff?
4. Whether the defendant
requested the plaintiff to secure alternative petrol and diesel
storage facilities to the facilities available at defendant's
service station?
At the trial of the matter, the plaintiff called four witnesses.
First to testify was Michael John Derry. At the time, he was the
National Sales Manager for the plaintiff. His evidence was to the
following effect:
The defendant approached him one day whilst he was in the fuel queue
at the defendant's service station. The plaintiff was an account
holder with the defendant. In terms of the arrangement between the
parties, the plaintiff would deposit some money with the defendant
and would then draw down fuel. When the defendant approached him in
the queue, he suggested that the plaintiff could deposit a sum of
money with the defendant who would then purchase fuel for the
plaintiff when he purchased his own.
The witness told the plaintiff's managing director about this
suggestion and an arrangement was then put in place.
When the defendant did not have fuel in his main tank, the plaintiff
would then draw its own fuel from the reserve tank. He did not know
the finer details of the arrangement as this was handled by the
administration section of the plaintiff. His understanding was that
in the second arrangement, the plaintiff purchased its own fuel which
was stored by the defendant in a separate tank. When there was no
fuel in the main tank, the plaintiff would then draw fuel from this
side tank, which the plaintiff took to be its fuel.
The witness impressed me as honest and reliable. He was not shaken
under cross-examination and I shall rely on his evidence to the
extent that it reveals that an offer to treat was made by the
defendant to the plaintiff.
The second witness to testify on behalf of the plaintiff was Kevin
James Shadwell. He is the managing director of the plaintiff. His
evidence was to the following effect:
Historically, the plaintiff maintained an account with the defendant
in terms of which the plaintiff would pay a deposit down and then
draw fuel against the deposit. Thereafter Mike Derry approached him
and advised him of the alternative arrangement that had been
suggested by the defendant. He understood that this arrangement would
guarantee supply.
Under normal circumstances, plaintiff would continue to draw fuel
from the main tank under the historic arrangement. Under the second
arrangement, the defendant was offering plaintiff a reserve tank in
which the plaintiff would store its fuel and from which the plaintiff
would only draw fuel in the event that there was none in the main
tank.
He gave the approval for the arrangement and instructed the
administration office to put the arrangement in place.
Thus, according to his understanding, while the plaintiff deposited
for fuel in the main tank, it purchased outrightly the fuel in the
reserve tank.
The plaintiff was under the impression that the fuel in the reserve
tank was exclusively its and if there was more fuel in the tank than
the plaintiff had purchased, this did not concern the plaintiff.
The witness did not personally discuss the details of the second
arrangement with the defendant.
Some time in August 2006, the plaintiff received a call from the
defendant that there was no more fuel and that the fuel that had been
stored in the reserve tank had been sold to the public. The witness
held two meetings with the defendant over the issue. The plaintiff
could not collect fuel that was due to it in drums as it was seen as
inappropriate at the time as there was a critical shortage of fuel
countrywide.
At some stage, the plaintiff furnished the defendant with a letter
authorizing the defendant to sell the fuel in the reserve tank to the
public. The letter was meant to protect the defendant from the task
force so that he would not be seen to be hording fuel in times of
shortages. The plaintiff's understanding was that the fuel once
sold to the public at the instance of the task force, would be
replaced by the defendant.
At no stage did the parties discuss the issue of storage charges for
the fuel in the reserve tank.
In my view, the witness gave his evidence well. He was clear as to
the understanding that the plaintiff had of the two arrangements that
it had with the defendant. He was also clear that he personally got
this understanding from the report that he received from the first
witness and the subsequent conduct of the parties. At no stage did he
personally discuss the terms of the agreement with the defendant. At
no stage did either party seek to keep a contemporaneous record of
what had been agreed upon.
The third witness for the plaintiff was Ephraim Kundishora Mawonedzo.
He was employed by the plaintiff as the Administration and Human
Resources Manager.
In November 2004, he was approached by the plaintiff's managing
director who told him that the plaintiff had agreed on a better deal
with the defendant that would cushion the plaintiff in times of fuel
shortages. The managing director informed him that the offer for the
better fuel deal was made to Derry by the defendant. The witness then
made out a cheque to the defendant. He gave this to Dorcas, the
manageress of defendant's service station.
The cheque was sufficient to cover 5000 litres of petrol and 5000
litres of diesel.
When making the payment to the defendant he communicated that the
cheque was for the reserve facility. Thereafter the facility was put
in place.
Sometime in April/May 2005, there was a critical shortage of fuel.
The defendant expressed concern about keeping large quantities of
fuel in the reserve tank. The witness then wrote a letter, addressed
to 'whom it may concern', allowing the defendant to sell the fuel
stored on behalf of the plaintiff in the reserve tank to the public.
The letter was meant to protect the defendant from the task force.
The witness was never told that the task force on fuel had visited
the defendant's service station and had ordered that he disposes of
all the fuel that he was holding in his tanks. The defendant should
still have left enough fuel in his tanks to service the needs of the
plaintiff as such fuel was on reserve.
In May or June 2005, he ran around trying to get clearance form the
Ministry of Energy and form the police to allow the defendant to
store plaintiff's fuel in bulk. He was not successful. When he
returned to the defendant's service station, he was advised that
all the fuel had been sold.
The second witness and he arranged to meet with the defendant who
promised to give them fuel when next he received a delivery.
At one stage, the witness heard that the defendant was once again
dispensing fuel from his station. When he approached the defendant
for fuel as per the promise, the defendant denied owing the plaintiff
fuel but money.
The defendant then tendered a cheque to the plaintiff in full and
final settlement of the balance owing. The plaintiff did not accept
the cheques which it sent back to the defendant.
Regarding whether it would be impossible for the defendant to procure
the fuel that the plaintiff was claiming, the witness was of the view
that the defendant could easily do so as he is a fuel dealer and has
access to fuel suppliers.
The plaintiff had dealt with the defendant for years without any
problems, which is why the arrangement between the parties was not
reduced to writing.
Under cross examination, the witness admitted that he was not party
to the negotiation of the arrangements between the plaintiff and the
defendant but was informed of the details of the arrangement by his
managing director.
In my view, the witness was being truthful in his evidence. He was
not shaken in cross–examination and I have no reason to disbelieve
him.
After the evidence of Mawonedzo, the plaintiff called one Kedius
Mpiningo. At the time of testifying, he was employed by the plaintiff
as a Human Resources and Administration Officer, working directly
under the last witness. His duties included keeping records and
allocating fuel to the plaintiff's vehicles.
He joined the plaintiff on 15 July 2005 well after the dispute
between the parties had arisen. He was made privy to the details of
the arrangement between the parties by his immediate boss and from
the records that he found in the office.
The witness gave his evidence well. To the extent that he narrated to
the court what he had been made privy to, I have no reason to
disbelieve his evidence. It however does not assist me much in
establishing what it is that the parties had agreed upon in the first
instance as I shall show below.
After leading evidence from Mpiningo, the plaintiff closed its case,
prompting Mr Fitches for the defendant to apply for the defendant to
be absolved on the basis that the plaintiff had failed to lead
evidence to establish the terms of the arrangement between the
parties that it was relying on.
The application was resisted and after hearing submissions, I
declined the application and indicated that my reasons would appear
in the main judgment.
In declining the application for
absolution from the instance, I was guided by the sentiments
expressed by BEADLE CJ in Supreme
Service Station (1969) (Pvt) Ltd v Fox and Goodridge (Pvt) Ltd 1971
(1) RLR 1 (A) to the effect that if the plaintiff has made out a case
that the defence is something peculiarly within the knowledge of the
defendant, justice demands that the defendant be placed on his
defence.
In my view, since the alleged agreement between the parties was oral,
and the parties had related under the agreement for a period, the
defendant had to give evidence on his understanding of the terms of
the arrangement between the parties and if his understanding
coincided with that of the plaintiff in a material respect, then the
agreement between the parties would have been established.
The defendant gave evidence.
He used to run the service station in Hatfield known as H.E.R.
Bonanza. One day he was walking up and down the fuel queue that had
formed at the service station. He saw the plaintiff's second
witness in the queue and stopped to talk to him. When he had
ascertained the identity of the plaintiff's second witness from his
manageress, he approached him again and asked him if he would like to
open an account with the defendant to save some time in the queue.
The witness promised to get back to him. The plaintiff's
representatives came back a few days later and an account was opened
for them.
The defendant then detailed his understanding of how the arrangement
between the parties would work. In his view, the arrangement was an
advance deposit system where the plaintiff would pay in advance a
deposit for fuel and against which deposit it would then draw down
fuel.
Later, the defendant decided that one of the pumps at the service
station would service commuter buses, one would service the public
while one was reserved for account holders and friends. This was
referred to as the reserve facility.
The reserve facility was set up due to shortages in the supply of
fuel. The plaintiff and other account holders were asked to pay a
separate deposit for the use of this reserve facility. The facility
allowed them to draw fuel from the reserve tank in times of
shortages.
His understanding was that the fuel was always his and did not belong
to the plaintiff after a deposit for such fuel was paid. He was
holding cash and not fuel on behalf of the plaintiff. The plaintiff
did not pre-pay for the fuel.
The defendant is a confident man. He gave his evidence confidently.
He clearly was mistaken when he testified that the man he spoke to in
the fuel queue on the forecourt of his service station was the
plaintiff's managing director. He spoke to Mr Derry. Despite this
mistake in his evidence, I found him generally honest and easy to
believe.
The defendant called Dorcas Sibindi, the manageress at the service
station during the relevant time. Her evidence was brief and concise.
She knew the second and third plaintiff's witnesses as plaintiff
was one of the account holders at the service station. The station
operated three tanks, one for commuter buses, one for the public and
another for account holders.
In operating its account, the plaintiff would issue cheques in favour
of the defendant and she would deduct from that deposit each time the
plaintiff drew down fuel. The parties operated two schemes. The main
tank was used when there were no queues on the forecourt. The reserve
tank was used when queues had formed on the forecourt for the
preferred customers to avoid the queues.
The plaintiff paid a deposit to the defendant for both schemes and
drew down against such deposits. The defendant never kept any fuel
exclusively for the plaintiff.
The witness was not as forthcoming in her responses to questions put
to her under cross-examination, leaving me with the impression that
she was not telling me the entire truth.
For instance, she could not remember how the letter authorizing the
defendant to sell all of plaintiff's fuel got into the file she
kept for the plaintiff yet she managed the account and kept the file.
She denied any memory of the letter and would have me believe that
she merely saw it in the file at the time she handed over the file to
the defendant in preparation for the litigation. She also denied
having spoken to Mpiningo on the phone about the details of the
account.
I have found Mpiningo to be generally truthful and reliable and in my
view, he would not have had any reason to lie about the telephone
call, which is innocuous by all regards.
On the basis of the above, I shall only rely on the evidence of this
witness where it is corroborated by some other reliable testimony.
After the testimony of Dorcas, the defendant closed his case.
The issue that falls to be determined in this matter is in my view,
simple. It is to establish whether the terms of the agreement that
the parties entered into entitles the plaintiff to delivery of fuel
in the volumes claimed.
The issue is captured in very broad terms in the second issue settled
at the pre-trial conference.
It is trite that having come to court to assert and enforce a
contract, the plaintiff bore the onus of proving not only the terms
of such a contract, but breach of a material term thereof.
The plaintiff asserts that the second arrangement was a reserve
facility in terms of which it pre-purchased fuels from the defendant
who was obliged to keep such litreage in reserve for the plaintiff.
This is the case that the plaintiff has brought to court.
Advocate Uriri submitted that on
the evidence led, I must find that the parties reached consensus ad
idem on the above
terms when the defendant met with Mr Derry in the fuel queue.
I find myself unable to agree with that submission.
I have accepted it on a balance of probabilities that the defendant
met with Mr. Derry and not with me Shadwell on the day the proposal
was put to the plaintiff to set up a reserve facility. The testimony
of Mr Derry as to what was discussed during this brief and impromptu
meeting is quite clear and concise in this regard.
It is important in my view that I analyze the evidence of Mr Derry in
this regard critically for it forms the offer that was communicated
to the plaintiff.
In the words of Mr. Derry, the defendant suggested that the plaintiff
could put down a whole lot (deposit a sum of money with the
defendant), who would then purchase fuel for the plaintiff when he
purchased his own. This is what Mr. Derry heard the defendant to be
saying.
The issue remains to be determined whether the offer by the defendant
was understood and communicated in the terms in which it was made.
It is pertinent in my view to note at this stage that no further
discussion was held between Mr Derry and the defendant on where and
how this fuel would be stored for and behalf of the plaintiff and how
the plaintiff would take delivery of same.
It s not in dispute that Mr Derry did not accept the offer that the
defendant had put to the plaintiff. He took the offer to Mr Shadwell,
the plaintiff's managing director.
When he received the offer, Mr Shadwell understood the defendant to
be offering them an alternative facility to the one existing. He
understood that this arrangement would guarantee supply. Under normal
circumstances, plaintiff would continue to draw fuel from the main
tank under the historic arrangement. Under the second arrangement,
the defendant was offering plaintiff a reserve tank in which the
plaintiff would store its fuel and from which the plaintiff would
only draw fuel in the event that there was none in the main tank.
This is the offer that he gave instructions to the plaintiff's
administrative staff to accept.
I have observed above that Mr Shadwell gave his evidence well but
that he did not personally discuss the terms of the new “deal”
with the defendant. He took his understanding from Mr Derry and
instructed that the offer be accepted as he understood it.
It is trite that accepting an
offer that has not been made does not bring into being a contract.
(See Couve and Another
v Reddot International (Pty) Ltd and Others
2004 (6) SA 425 (W) Bourbon-Leftley
en Andere (Landbous) BPK 1999
(1) SA 902 (C).
A contract is brought into being by the acceptance of a matching
offer.
It thus remains for me to establish whether the plaintiff has
established that the offer that it accepted was the one made by the
defendant.
Again words used by the defendant become of paramount importance in
this matter.
The defendant testified that the reserve facility was set up due to
shortages in the supply of fuel. The plaintiff and other account
holders were asked to pay a separate deposit for the use of this
reserve facility. The facility allowed them to draw fuel from the
reserve tank in times of shortages.
His understanding was that the fuel was always his and did not belong
to the plaintiff after a deposit for such fuel was paid. He was
holding cash and not fuel on behalf of the plaintiff and all other
account holders. The plaintiff did not pre-pay for the fuel.
In such circumstances, can I say that there was a meeting of the
minds of the parties sufficient to establish the terms and conditions
of the agreement that the plaintiff alleges and relies on?
I think not.
This was an arrangement that was entered into on the basis of a
single chance discussion between two persons who were not directly
involved in the implementation of the arrangement.
The defendant understood he was simply offering a reserve tank
facility to the plaintiff. The plaintiff understood it was being
offered a pre-paid fuel facility. No contemporaneous document of the
agreement was kept by either side and the misunderstanding was
perpetuated over a period, giving each side comfort in the belief
that its understanding of the arrangement was the one more from the
passage of time and less from a shared intention and the observance
of the requisite legal formalities.
It is trite that in actions based on contract, the party alleging the
contract must be able to establish by evidence, the communication of
an offer and acceptance of that offer. This is what establishes the
contract and a cause of action for the plaintiff.
Where the defendant denies making the offer alleged by the plaintiff,
the onus rests on the plaintiff to prove, by his conduct, that the
defendant made the offer.
Where however the evidence adduced by the plaintiff regarding the
defendant's conduct is consistent with either of the party's
understanding of the agreement, as occurred in this matter, the
conduct of the defendant cannot act as proof of the common intention
of the parties.
I have not been able to establish from the evidence of the plaintiff,
any conduct on the part of the defendant consistent only with and
corroborative only of the plaintiff's assertions. To the contrary,
the parties maintained the two facilities and the plaintiff drew down
fuel from the reserve tank when there was no fuel in the main tank.
According to the plaintiff, when doing so, it was drawing down on its
fuel reserves. According to the defendant, the plaintiff was simply
drawing down fuel in accordance with the second account facility that
gave it preference over members of the public and those who only had
access to the main tank.
On the basis of the foregoing, I am unable to find for the plaintiff
as in my view, insufficient evidence has been led to prove the terms
of the second facility.
In the result, I make the following order:
1. The defendant is absolved from
the instance.
2. The plaintiff shall pay the
defendant's costs.
Honey & Blankernberg, plaintiff's legal practitioners
Costa & Madzonga, defendant's legal practitioners
