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Citation: 2010 1 BLR 679 HC
Court: High Court, Lobatse
Case No: Misca 167 of 2008
Judge: Gaongalelwe J
Judgment Date: April 16, 2010
T Joina for the applicant.rnJ CarrHartley for the respondent.rn

Contract - Cancellation - Cancellation consequent upon breach of contract - Notice not required.

Contract - Cancellation - Right to hearing - When required - Audi alteram partem rule not forming part of contract between juristic persons unless expressly provided for in contract.  H  


The applicant and respondent entered into a contract in terms of which the applicant was to provide certain transportation services to the respondent. It was a term of the contract that the applicant's personnel were to act in a disciplined manner and that no ill discipline would be tolerated by the respondent. The respondent cancelled the contract on the ground of the applicant's physical and verbal assault on members of the respondent. The applicant approached the High Court for an order

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declaring that such cancellation was wrongful inasmuch as it had not  A  been given the required notice or a hearing.

Held: (1) Where one party breached the contract it became voidable at the instance of the other. If the latter chose to cancel the contract, no notice was required.

(2) With regard to commercial contracts between juristic persons the audi alteram partem rule had no application unless expressly provided for in the contract. Anesthesia Intensive Care & Emergency Medical  B  (Pty) Ltd v MRI Botswana (Pty) Ltd [2005] 2 B.L.R. 252, CA applied.

(3) On the papers the applicant had not proved its case. Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) applied.
Case Information

Cases referred to:

Anesthesia Intensive Care & Emergency Medical (Pty) Ltd v MRI  C  Botswana (Pty) Ltd [2005] 2 B.L.R. 252, CA

Kgoadi v Stanbic Bank Botswana t/a Stannic; In re: Stanbic Bank Botswana t/a Stannic v Siachitema [2007] 1 B.L.R. 483, CA

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A)  D  

APPLICATION for declaratory relief. The facts are sufficiently stated in the judgment.

T Joina for the applicant.

J Carr-Hartley for the respondent.



By its notice of motion the applicant seeks orders in the following terms:

    '(a)     Declaring the contract of transport [sic] of goods between the Applicant and the Respondent has been wrongly terminated by the Respondent on the 14th March 2008.  F  

    (b)     Directing that the termination of the contract on the 14th March 2008 was wrongly [sic] and unlawful.

    (c)     Directing that the damages suffered by the Applicant as a result of the wrongful termination aforesaid be assessed by the Registrar and Master of the above Honourable court.

    (d)     Directing that Respondent pays the costs of this application.  G  

    (e)     Granting further and or alternative relief as the Honourable court deem fit including reinstating the contract.'

The background to the application is that in May 2007 the parties entered into a contract, the essential terms of which were that the applicant would transport goods within the southern part of the country  H  on behalf of the respondent at a commission of 4 per cent of the value of such transported goods.

The other material terms of such contract were that the applicant's personnel had to act in a disciplined manner and that no ill discipline would be tolerated by the respondent. The contract was specifically stated to be terminable by either party by giving one month's notice.

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The goods that were the subject-matter of the agreement would be  A  collected by the applicant from some warehouse in Gaborone and be delivered to various places including places in Gaborone, Molepolole as well as some places far off in the Kgalagadi district.

A document embodying the above terms of the contract is annexure A1 to A2 of the founding affidavit. Also annexed to the founding affidavit is  B  the letter of termination of the contract authored by the respondent. The letter reads:

    'As a result of your physical and verbal assault on members of the Worldwide (Pty) Ltd in Gaborone on the 14th March 2008, your contract to supply a distribution service to Worldwide Commodities (Pty) Ltd is terminated with immediate effect.  C  

    You will be paid for all deliveries made up to and including the close of business on Thursday 13th March 2008. Any undelivered deliveries physically loaded but not yet delivered are to be unloaded and returned to the warehouse immediately.

    Your final payment will be made once we have reconciled the stock, all  D  outstanding POD's and brought any outstanding monies from your loan to account.

    On receipt of this letter you are to remove yourself, your staff and your vehicle from Worldwide Commodities (Pty) premises immediately. Failure to do so will result in further charges of trespass being laid against you.

    I have instructed the Worldwide Commodities staff involved in this  E  incident to lay assault charges against you and these will be pursued vigorously with the help of this company.'

Annexure C to the same affidavit is a letter of response authored by the applicant's attorney. All the letter states is that the respondent terminated the contract unlawfully. It does not address the allegations  F  of physical and verbal assault on members of staff of the respondent though it is common cause that the letter of termination was duly served on the applicant.

Paragraph 9 of the founding affidavit states what may be properly referred to as the pith of the applicant's complaint thus:

    'On 14th March 2008, the Respondent, without any just cause, breached  G  the contract by unlawfully terminating the agreement. The Respondent did not give the Applicant the required notice and a hearing at all. The termination was without cause or justification.'

Again, the respondent's alleged cause of terminating the contract is not  H  denied nor addressed in any manner at all in the founding affidavit. I will revert to this failure to deal with the crucial issue of what the respondent stated as the cause for terminating the contract both in the letter authored by the applicant's attorneys as a response to the letter of termination and in the founding affidavit later.

The applicant has treated the reason stated for terminating the contract as a complete pro non scripto, though annexing the termination letter to the founding affidavit. Instead they have anchored their case on failure by the

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respondent to comply with the audi alteram partem rule and failure to  A  give notice of the intention to terminate.

Indeed annex A2, which embodies the material terms of the contract, does state that the contract may be terminated by either party by giving one calendar month's notice of its intention to do so.

The question is whether, where a party cancels the contract on account of what it perceives as a breach of contract, it is bound to give  B  notice. It must always be remembered that where there is breach the innocent party has an election of either terminating the contract on account of the breach or to treat the contract as being still in force despite the breach.

Enforcement of the contract and cancellation, being inconsistent with each other, are mutually exclusive, hence the innocent party has to make an election. Such election has to be made and communicated  C  immediately otherwise such party may be held to have waived the right to cancel. The innocent party should not approbate and reprobate on the issue. On such basis the giving of one month's notice as stipulated in the contract only applies to mere termination out of the desire of one of the parties to terminate and does not apply to termination as a result of breach.

With regard to commercial contracts between juristic persons, the audi  D  alteram partem rule has no application save where the parties' contract so provides in express terms. Anesthesia Intensive Care & Emergency Medical (Pty) Ltd v MRI Botswana (Pty) Ltd [2005] 2 B.L.R. 252, CA. This is a decision of the Court of Appeal.

Another subject which has been canvassed is that of factual disputes in motion proceedings. The point was raised by the respondent's  E  attorney urging the court to dismiss the application on such basis, while the contention of the applicant is that there is no serious dispute of fact.

My view is that indeed there are some disputes of facts. The question is how the court deals with such.

Some of the disputes are on points which are only peripheral to the main issue, but some are in respect of issues which are central to the  F  application.

On issues which are material, the applicant refutes the allegation that its managing director assaulted an employee of the respondent and the further allegation that the applicant did not do the deliveries per proper sequence, but rather chose those which were to be effected in Gaborone as they would turn out to be more lucrative.

The law seems to be that where disputes of fact arise in motion  G  proceedings a litigant who is the dominis litis, like the applicant in this case, would succeed only if the facts averred by the applicant itself in its affidavit which have been admitted by the respondent, together with those facts alleged by the respondent, justify such relief. But where there is a complete denial of the applicant's averment the court may still grant the relief in favour of the applicant where the denials made by the respondent are far-fetched or clearly untenable.  H  

It is also noteworthy that it is not in every case where there is a dispute of fact that the court has either to dismiss the application or refer same to evidence on such account. The court has a discretion.

In some cases the court would proceed with the matter despite such disputes, in which event it has to scrutinise all the averments on which

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there is a dispute. In such cases the probabilities are to be considered  A  despite the dispute and in the end it may be found that some averments are so vague and far-fetched as to be lacking in substance. See Kgoadi v Stanbic Bank Botswana Ltd t/a Stannic; In re: Stanbic Bank Botswana Ltd [2007] 1 B.L.R. 483, CA, a Court of Appeal decision.

Where the averments of a respondent cannot be ruled to be outright  B  far-fetched or vague the onus is on the applicant to prove its case. In such a situation the court evaluates the parties' averments to discern their weaknesses, probabilities, evasiveness and strength.

As stated earlier in this judgment, the applicant has chosen not to directly address the allegation that its managing director assaulted the respondent's employee. Further, para 20 of the answering affidavit  C  states that one of the express terms of the contract was that instances of ill discipline on the part of applicant or its employees would not be tolerated. In its replying affidavit, under para 16 thereof, the applicant says there was no such term in the contract. Such a bold denial is rather odd and amazing because the third sentence of the contract annex A2 states exactly that.

Regarding the assault itself, the applicant says this is a fabrication as  D  their man was acquitted in court. There is an affidavit of one Catherine Tambellini, who avers that she witnessed such assault. An acquittal in a criminal case would not of necessity mean there was no assault. Such acquittal may come about as a result of the standard of proof in a criminal case as contrasted with the onus in a civil case and that onus being on a mere respondent, for that matter.  E  

On the probabilities one would wonder why the director of the respondent and the manager would simply fabricate damning stories against the applicant's managing director. One would also wonder why the applicant's managing director chose not to answer the allegation that he assaulted the respondent's employee right from the time he answered the termination letter and in his founding affidavit. One would  F  have thought a refutal of such a damning allegation would have been in the forefront of the applicant's replying letter as well as the founding affidavit. The applicant's attorney has argued that the failure to obtain an affidavit from the lady who is said to have been assaulted is fatal to the respondent's case. This would be a good point if taken in isolation, but my view is that it is to be weighed together with all the other factors in the case.

Under paras 59 and 60 of the answering affidavit the respondent avers  G  that, as a result of some relationship between the applicant's managing director and the former clerk of the respondent, the applicant was unfairly allocated more lucrative deliveries contrary to the policy of delivering in accordance with the sequence of arrival of the goods. In answer the applicant makes yet another unsubstantiated statement that statistics would show they did most of the deliveries outside  H  Gaborone, but does not avail such statistics to the court.

This is a case where, although there are disputes of fact, the court is entitled to invoke what has come to be known as the Plascon-Evans rule, which emanated from the South African Appellant Division's decision in the case of Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A). On the basis of that rule, in circumstances as in this case, the

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court has to accept the respondent's version. Put differently, the court  A  has to find that the applicant has not proved its case. This must be more so that the court finds that the applicant's averments are couched in rather evasive terms and are not consonant with the probabilities.

The above factors taken cumulatively are no doubt weighty matters against the applicant, who otherwise bears the burden of proof. In the end, the entire application is dismissed with costs.  B  

Application dismissed.