IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

Case No 4443/2006

In the matter between:

and

NRG GESTETNER SOUTH AFRICA

JUDGMENT

CLOETE AJ:

INTRODUCTION
[1] The plaintiff close corporation seeks damages for breach of contract against the first defendant. No relief is sought against the second defendant. The first defendant has filed a counterclaim against the plaintiff (but indicated during argument that it may withdraw such counterclaim). Prior to the hearing the parties agreed to separate the merits of the plaintiff's claim and the quantum (inclusive of the first defendant's counterclaim) and the trial thus proceeded on the merits of the plaintiff's claim only.

[2] The plaintiffs cause of action was initially based on an implied breach of a warranty against latent defects, alternatively negligent misrepresentation. During argument and after the conclusion of evidence the plaintiff abandoned its cause of action in respect of an implied breach of a warranty against latent defects. Accordingly the only issue for decision at this stage is whether the plaintiff has established negligent misrepresentation on the part of the first defendant.

BACKGROUND

[3] The plaintiff close corporation conducts business as printers and manufacturers of promotional products and novelties, including mouse pads, coasters and similar desktop laminated products. The first defendant conducts business as the seller and distributor of photocopying and printing machinery. For sake of convenience the parties will be referred to as plaintiff and defendant unless otherwise indicated.

'A4/A3 & A3U (Full A3 Bleed) 
2 x 500 sheet cassettes 
100 Sheet Bypass Tray'

MAINTENANCE AGREEMENT

Maintenance will be charged J R1-30 per full colour laser print - (irrespective of toner coverage up to 100U per page)
Maintenance will be charged □ 20 cents per Black & White print - (irrespective of toner coverage up to 100_3 per page)

Drum warranty 
Labour
All spare parts 
Travelling time 
Full maintenance

[7] Buttle does not recall having received a brochure for the DSC 38 nor does it seem that the defendant provided any specific operating instructions or documentation as to the machine's specifications or operating requirements. During the trial the defendant did not produce any such evidence either.

[8] The plaintiff accepted the defendants proposal. Buttle testified that the plaintiffs printing requirements averaged approximately 6 500 A3 prints per month and accordingly 50 000 colour prints per month would be more than sufficient to meet these requirements. The defendant subsequently relieved the plaintiff of the Canon.

[11] The DSC 38 did not meet the plaintiffs requirements. Virtually all of Buttles evidence relating to the problems experienced must be discounted since during the course of his testimony he gave the clear impression that he had personal knowledge of these problems and the resultant call outs by the defendants technicians It was only during cross-examination that it became evident that it was in fact Bowen who had operated the DSC 38, and a substantial amount of court time was wasted as a result

[13] Bowen testified that the major problem with the DSC 38 was the lack of colour consistency and colour degradation on print runs. In short once a proof was approved by a client the DSC 38 could not produce consistent multiple copies thereof as the Canon was able to do. His evidence was as follows:

Were there any similar problems with the Canon, this colour thing? — No, the Canon didn't have that problem.'

[16] After conclusion of the evidence and during argument plaintiffs counsel advised that plaintiff accepted that Pinker would not have recommended the machine which replaced the DSC 38 and that he (i.e. Pinker) only facilitated the replacement of the DSC 38 with the assistance of representatives of the defendant's Cape Town branch.

[18] The defendant collected the DSC 38 during May 2003 and at about the same time replaced it with the CS213D. It is common cause that the CS213D was a more expensive machine with higher maintenance costs than the DSC38. The CS213D was similarly installed at the premises then occupied by Graphic Design House CC.

[20] The plaintiff eventually cancelled the contract and released the CS213D to the defendant on approximately 25 February 2005

THE ISSUE TO BE DETERMINED

'Where a plaintiff shows that a defendant has made false statements to him intending thereby to induce him to enter into a contract and those statements are of such a nature as would be likely to provide such inducement and the plaintiff did in fact enter into that contract and thereby suffered damage and nothing more appears, common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract. However, it is open to the defendant to obstruct the drawing of that natural inference of fact by showing that there were other relevant circumstances. Examples commonly given of such circumstances are that the plaintiff not only actually knew the true facts but knew them to be the truth or that the plaintiff either by his words or conduct disavowed any reliance on the fraudulent representations.'

'It is also true that ... a contracting party can safeguard himself against loss by requiring the representor to guarantee the truth of his representation. This, with respect, seems to me to be a counsel of perfection The realities of modem commercial life show that many laymen are not aware of such legal niceties and contract upon terms put forward by the other contracting party '

[28] In support of its claim of negligent misrepresentation the plaintiff not only relies on the written proposal initially submitted by the defendant for the DSC 38 It also relies on both oral representations and conduct on the part of the defendant's representatives.

[36] I agree with the plaintiff's submission that the defendant knew what its requirements were and therefore knew what machine to supply the defendant, even if not in respect of the first machine, then certainly in respect of the second machine. The representations made by the defendant (oral, written and by the conduct of its representatives) induced the plaintiff to contract with it not only in regard to the DSC 38 but also the CS213D. It must have been obvious to the defendant that the plaintiff would place reliance upon what it had been told particularly regarding the CS213D and that the correctness of those representations would be of vital importance to it. The representations were thus material Further, the representations made (both in respect of the DSC 38 and the CS213D) related to technical matters concerning machines about which the plaintiff, as a lay customer, would necessarily have been ignorant and the defendant, as distributor, would or should have been knowledgeable. The defendant failed to take reasonable steps to ensure the accuracy of its representations, had no reasonable basis for making the representations and its actions in so doing were negligent.

ORDER

[37]    I accordingly make the following order:
1. The plaintiff succeeds on the merits of its claim against the first defendant.
2. The matter is postponed for trial on the issue of quantum (inclusive of the first defendant's counterclaim) on a date to be arranged with the Registrar.
3. Should the first defendant intend to withdraw its counterclaim it is directed to do so within 30 calender days from date of this order.
4. Costs shall stand over for later determination.