A burn­ing is­sue

Finweek English Edition - - Companies & markets - GUGU­LAKHE MASANGO

THE DI­VER­SI­FIED Im­pe­rial Group is at log­ger­heads with NCS Resins, a sub­sidiary of chem­i­cals group Sen­tra­chem, over a ware­hous­ing con­tract. Sen­tra­chem was delisted from the JSE af­ter be­ing ac­quired by US-based Dow Cor­po­ra­tion in 1997. The dis­pute is likely to re­sult in Im­pe­rial shelling out around R15,5m in dam­ages.

At the cen­tre of the row is a ware­hous­ing con­tract signed in Au­gust 2000. IWL Ware­hous­ing & Lo­gis­tics, a di­vi­sion of Im­pe­rial Group, un­der­took to pro­vide ware­hous­ing and trans­port ser­vices to NCS Resins. Un­for­tu­nately, in March 2002 there was a fire at IWL Ware­hous­ing & Lo­gis­tics’ ware­house in Wadev­ille, Gaut­eng, re­sult­ing in the de­struc­tion of and dam­age to NCS Resins’ prop­erty.

NCS Resins de­cided to sue Im­pe­rial Group for its loss. The Jo­han­nes­burg High Court ruled in favour of NCS Resins but

granted Im­pe­rial leave to ap­peal. How­ever, the Supreme Court of Ap­peal dis­missed the Im­pe­rial Group’s case with costs, in­clud­ing that of its two coun­sels.

Im­pe­rial Group de­clines to com­ment, claim­ing that the mat­ter is still sub ju­dice.

NCS Resins is likely to ask for a new trial date to be heard at the Jo­han­nes­burg High Court, which would deal with the quan­tum of the claims re­lated to the mat­ter. How­ever, NCS Resins is still in dis­cus­sions with its lawyers con­cern­ing whether to take the mat­ter back to court. Should the dis­pute go back to court, NCS Resins will con­tinue to con­tend that the loss at the Wadev­ille ware­house was a re­sult of Im­pe­rial Group’s neg­li­gence and breach of con­tract. It will sue for the breach of the ware­hous­ing con­tract.

The High Court and Ap­peal Court dealt with the is­sue of who should bear the risk of fire ac­cord­ing to the ware­hous­ing con­tract signed by Im­pe­rial Group and NCS Resins. Dur­ing the case Im­pe­rial ar­gued that, on a proper con­struc­tion of the con­tract, NCS Resins and not Im­pe­rial bore the risk of loss by fire at the ware­house.

Sur­pris­ingly, the Ap­peal Court says that the con­tract it­self is di­vided into chap­ters that deal with a com­plex busi­ness re­la­tion­ship be­tween Im­pe­rial and NCS Resins cov­er­ing a wide range of ac­tiv­i­ties, in­clud­ing trans­port, ware­house stock ro­ta­tion, in­ven­tory man­age­ment, de­cant­ing and the use of com­puter pro­grammes.

Part of the court judg­ment read: “The lan­guage used ap­pears to be that of busi­ness­man rather than lawyers. It is not par­tic­u­larly well drafted. Clauses are fre­quently out of place and the im­pres­sion cre­ated is that an ini­tial draft was sub­se­quently altered by the in­ser­tion of ad­di­tional pro­vi­sions. The words ‘dam­age’ and ‘dam­ages’ are used in­ter­change­ably and of­ten in­cor­rectly.”

Im­pe­rial Group re­lied on clause 11.6 of the con­tract, which it al­leges im­poses the risk of dam­age by fire on NCS Resins. The clause reads: “NCS will in­sure its stock against fire and nat­u­ral dis­as­ters at their cost whilst in the IWL (Im­pe­rial) ware­house.”

The Ap­peal Court dis­missed that ar­gu­ment by ar­gu­ing: “A fire caused by a breach of con­tract on the part of Im­pe­rial was not cov­ered by the 11.6 clause.” The court adopted a com­mon­sense approach to the mat­ter of in­ter­pre­ta­tion and to recog­nise that Im­pe­rial Group and NCS Resins, through a lack of drafts­man­ship, may use words or lan­guage that isn’t al­ways the most ap­pro­pri­ate.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.