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[2016] ZAWCHC 10
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Viraland Inc v Ole Media Group (Pty) Ltd and Another (9699/2015) [2016] ZAWCHC 10 (18 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 9699/2015
DATE:
18 FEBRUARY 2016
In
the matter between:
VIRALAND
INC
.......................................................................................................................
Applicant
And
OLE
MEDIA GROUP (PTY)
LTD
..............................................................................
First
Respondent
TIMOTHY
JOHN
ORRILL-LEGG
.......................................................................
Second
Respondent
JUDGMENT
DELIVERED
ON 18 FEBRUARY 2016
RILEY,
AJ
[1]
The
applicant, a company which is registered and incorporated in the
United States of America with its registered address at 442
Court
Street, Elko, Nevada, has brought an urgent application against
the first and second respondents jointly and severally
for payment of
US Dollars 470170-07 based on an oral agreement. Applicant
alleges that a company called DigiKulture which
is based in Milan,
Italy concluded the agreement on behalf of the first respondent
acting as the agent for the first respondent
concluded the agreement
on behalf of the first respondent.
[2]
First
respondent is a company registered in South Africa. The second
respondent is cited by virtue of the provisions of
Section 77(3)
of
the
Companies Act 71 of 2008
in terms of which a director of a
company may be held personally liable for any loss, damages or costs
sustained by the company
as direct or indirect consequence of the
director having acquiesced in the carrying on of the company’s
business despite
knowing that it was being conducted in a manner
prohibited by
Section 22(1)
, which prevents a company from carrying
on its business recklessly, with gross negligence, with intent to
defraud any person or
for any fraudulent purposes.
[3]
Applicant
in particular avers that the second respondent has persistently and
falsely denied that first respondent concluded an
agreement with
applicant in January 2015 in circumstances where he has at all
material times allegedly been aware that first respondent
incurred a
large debt towards applicant, a small portion of which was paid to it
by first respondent on 9 March 2015. According
to applicant the
second respondent’s conduct as managing director and chief
executive officer of first respondent is reckless,
which therefore
entitles applicant to an order declaring second respondent to be held
personally liable for first respondent’s
indebtedness to it.
[4]
The
applicant seeks final relief against the respondents on the basis of
the alleged oral agreement. In addition, the applicant
has
brought an application to join AddSuite (Pty) Ltd (“AddSuite”)
to the proceedings. The first and second respondent’s
dispute that they are indebted to the applicant and the application
to join AddSuite as a party to these proceedings is opposed.
[5]
Mr
Kirk-Cohen who appeared on behalf of AddSuite and Mr Kelly who
appeared on behalf of the respondent’s, submitted that the
applicant’s application is littered with far reaching disputes
of fact which are both genuine and material. According
to them
the most obvious and fundamental of the disputes is that the
respondent denies that it entered into an agreement with the
applicant and the fact that respondents in particular deny being
indebted to applicant at all. First respondent avers that
AddSuite concluded an agreement with DigiKulture, and that the latter
contracted independently with the applicant.
[6]
According
to the respondents and AddSuite the disputes are material, were
foreseen or should at least have been foreseen by the
applicant.
It was submitted that there was no credible basis for bringing the
application on an urgent basis and that the
applicant has persisted
in bringing the application, knowing in advance that the existence of
the contract was in dispute and more
so the fact that it sued the
incorrect party. Mr Kelly submitted that since applicant has
now conceded that it sued the incorrect
party, that as matters stand,
AddSuite is not a party to the application and that no substantive
relief can therefore be ordered
against the first or second
respondent.
[7]
It
was further submitted on behalf of the first and second respondents
that even if the joinder application is successful the application
should in any event fail, on the established principles applicable to
motion proceedings.
The
general principles applicable to motion proceedings where there are
disputes of facts
[8]
It
is generally accepted that motion proceedings are not suited to the
resolution of disputes of facts. In
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) the SCA stated the principle as follows at para
26 “
Motion
proceedings, unless concerned with interim relief are all about the
resolution of legal issues based on common cause facts.
Unless
the circumstances are special they cannot be used to resolve factual
issues because they are not designed to determine probabilities
’.
[9]
It
is further accepted law that where disputes of facts arise on the
affidavits in motion proceedings that final relief can only
be
granted if the facts averred in the applicants affidavits which have
been admitted by the respondent, together with the facts
alleged by
the respondent, justify such an order. See
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623(A)
634 – 635.
[10]
I am
mindful that in certain circumstances the denial by the respondent of
a fact alleged by the applicant may not be such as to
raise a real,
genuine or
bona
fide
dispute of fact. See
Room
Hire Co (Pty) Ltd b Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155(T)
at 1163 – 5;
DA
Mata v Otto NO
1972 (3) SA 858(A)
at 882 D – H. In such a situation, if
the respondent has not availed himself of his right to apply for the
deponents
to be called for cross-examination under Rule 6(5)(g) of
the Uniform Rules of Court, and the court is not satisfied as to the
inherent
credibility of the applicants factual credibility of the
applicants factual averment, it may proceed on the basis of the
correctness
thereof and include this fact among those upon which it
determines whether the applicant is entitled to the final relief
which
he seeks. Moreover, there may be exceptions to this
general rule for e.g. if the respondents version consists of bald or
uncreditworthy denials, or he raises fictitious disputes of fact
which is palpably implausible, far-fetched or so clearly untenable,
then the court is justified in rejecting them merely on the papers.
See
Associated
South African Bakeries (Pty) Ltd v Oryx and Vereinigte Bäckerein
(Pty) Ltd
and Others
1982 (3) SA 893(A)
at 924(A), Plascon Evans (
supra
)
at 634 – 635,
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) para 55.
[11]
It is
however clear from the decisions of our courts that a court will
dismiss an application where the applicant knew of, or ought
to have
realised when he launched the application that a serious dispute of
fact was bound to develop. See Room Hire Co.
(Pty) Ltd v Jeppe
Street Mansions (Pty) Ltd (
supra
)
at 1162.
[12]
It is
submitted on behalf of the respondents and AddSuite that the dispute
between the parties is incapable of resolution on the
papers, that
applicant ought to have realised when it launched the application
that its claim would be disputed, but that applicant
nevertheless
elected to proceed urgently on motion to enforce a disputed debt.
The
background
[13]
According
to Tomer Itszak Cohen (“Cohen”), a director of the
applicant’s company, and the deponent of applicant’s
founding affidavit, applicant operates in the ‘
ad
serving industry
’
which describes the technology services that places advertisements on
websites. Ad serving technology companies provide
platforms to
websites and advertisers to serve ads, count them, and choose the ads
that will make the website or advertise the
most revenue or monitor
progress of different advertising campaigns. An ad server is a
computer server that decides in milliseconds
what ads to display for
the purpose of maximising the revenue for the website owner.
The ad server chooses the ad from the
highest bidder. According
to Cohen ad serving also performs various other tasks like counting
or ‘
tracking
’
the number of impressions or clicks for an ad campaign and report
generation.
[14]
It is
accepted by the parties that Google provides the best known ad
exchange in the industry. It has developed a product
called the
Google Double Click Ad Exchange (AdX) service. This is a
service for managing revenue-generating methods of online
display ads
(known as “
banners
”).
Google provides a platform that facilitates the buying and selling of
online display ads whose prices are determined
through bidding from
multiple ad networks. These are companies that connect
advertisers to websites whose aim is to generate
revenues from
selling advertising space on their website. Another type of
advertisement in the industry is a “
pop-up
”,
which opens in a window when the visitor clicks on a webpage which
contains the “
pop-up
”
code.
[15]
Applicant
therefore derives revenue from these advertisements based on two
metrics:
1.
A
cost per thousand “impressions” known as a cost per mile
(“cpm”), representing the number of times an
advert is
displayed on the website to visitors; or
2.
On a
‘cost per click’ basis; where the advertiser will pay the
website an agreed fee every time a visitor to the website
clicks on
the advertisement.
It is generally
accepted that the online advertising industry is characterised by a
relationship between different suppliers.
For e.g. the owner of
a website (as is the case of the applicant) will typically not have a
contractual relationship with the ultimate
companies whose products
and services are advertised on its websites. Online advertising
is “
served
”
(delivered) to websites via third parties. Third parties
include advertising agencies, online advertising brokers
and Google.
Put more simply, Google has developed a market place to connect
advertiser with content websites with inventory
(i.e. space on their
websites) and the market place known as AdX operates like a stock
market in a sense that the prices paid by
advertisers will be based
on a market price that is determined through a bidding process, as
opposed to pre-agreed prices.
Websites would therefore receive
advertising on either a cost per cpm or a cost per click basis and do
so based on pre-agreed rates
or via Google AdX at prevailing market
prices.
The
agreement
[16]
According
to the applicant it entered into an oral agreement with the first
respondent on 14 January 2015 in terms of which it would
display
advertising on its website Viralands.com. According to Cohen:
“
55.1
Applicant would display AddSuite’s Bet 365 pop-up on its two
websites at $20 cpm for January 2015, where
after the price would
revert to $10 cpm;
55.2
Applicant would display AddSuite’s ATF $2 cpm banners on
Viralands.com;
55.3
The campaign would run for twelve months as long as performance was
good for both parties;
55.4
Payment would be made by AddSuite to applicant on a net 45 day
basis”.
[17]
After
the agreement was allegedly concluded with AddSuite, applicant went
“
live
”
on 14 January 2015, i.e. it began displaying the advertisements on
its websites.
[18]
According
to the applicant it terminated the Bet 365 campaign on 11 February
2015 and that from 20 March 2015 applicant removed
AddSuite’s
Google AdX codes from applicants DFP and server.
[19]
It is
necessary to emphasise that at the heart of the application is the
involvement of “
DigiKulture
”,
an online advertising agency, which is based in Milan, Italy.
Applicant avers that it was approached by DigiKulture,
a broker or
agent and that DigiKulture had introduced first respondent to
applicant which ultimately resulted in the conclusion
of the
agreement.
[20]
In
this regard it is accepted that the applicant places reliance for the
existence of the alleged agreement, on transcripts of skype
conversions which took place between Cohen and a certain Debra
Fleenor (“Fleenor”), a representative of Digikulture.
In this regard Cohen states that “
[i]n
order to prove its case against AddSuite, applicant has
annexed to this affidavit various screenshots depicting
contents of
the skype conversations that took place between Debra and me over
this period
”.
[21]
The
following appears to be common cause between the parties:
1.
That
there was no interaction at all between the first respondent (or
AddSuite) and the applicant at the time the agreement was
concluded.
2.
On
applicants version DigiKulture acted as first respondent’s
agent and concluded the alleged agreement with the applicant
on
behalf of the first respondent.
3.
Fleenor
has not filed a confirmatory affidavit confirming the content of her
interactions with the applicant and the assertion by
applicant that
her company acted as agent for the first respondent.
Urgency
of the application
[22]
At
the outset I deem it appropriate to deal with the question whether or
not the applicant was justified in bringing this application
on an
urgent basis. The applicant has launched this application on an
urgent basis for the following reasons:
22.1 Applicant avers that it is
a start-up company that commenced operating on 21 September 2014 and
that in order to raise
the necessary capital expenditure it ‘…
entered into a loan agreement with its associated company, Skylikes,
a US
based company, for an amount of US $ 750 000-00 on the
basis that the full capital amount plus interest at the rate of 5%
per annum would be repayable on 21 September 2015.
22.2 The failure by AddSuite to
pay applicant its debt of US $ 477 170-07 has placed applicant
under severe financial
pressure as it is struggling to pay its
service providers in the ordinary course of business.
22.3
The
non-payment of the substantial amount owed by AddSuite had caused the
applicant to be unable to generate revenues from its websites.
22.4
According
to applicant it was able to generate solid revenues from its websites
and thereby pay its service providers, before the
AddSuite debacle.
[23]
Mr
Elliot submitted that applicant is a foreign company and it has
demonstrated that it was not dilatory in bringing the application
as
one of urgency. Placing reliance on
20
th
Century Fox Film Corporate & Another v Anthony Black Films (Pty)
Ltd
1982
(3) SA 582
(WLD) at 586(G), he submitted that applicant had showed
that the urgency of commercial interest justify the invocation of
Rule
6(12) no less than other interest. In the alternative he
submitted on the authority of
H
& B Marcow Caterers (Pty) Ltd v Greatermans SA Ltd & Another
1981 (4) 108 CPD, a judgment of Fagan J, that the respondents would
not be prejudiced should this matter be heard on the semi-urgent
roll
and that respondents have had sufficient time to deliver their
answering affidavits.
[24]
Although
the principles laid down in H & B Marcow Caterers (Pty) Ltd v
Greatermans SA Ltd & Another (
supra
)
and the 20
th
Century Fox case (
supra
)
are sound, it is however also so that each case must depend upon its
own circumstances and the court must be satisfied that the
applicant
has sound and good reasons upon which it relies for urgency.
[25]
In
the present matter the applicant was made aware of the respondent’s
attitude to its claim as early as 17 March 2015.
The applicant
however elected to wait until 26 May 2015, a period of more than two
months, before it launched the main application.
Upon closer
examination of the reasons upon which applicant relies for urgency it
appears that the so-called ‘
loan
agreement
’
between applicant and Sky Likes Inc. is not a loan agreement.
It is in fact a credit facility granted by Sky Likes
Inc. to
applicant. The document which is headed “Advertising
Agreement” provides under the heading “
Additional
payment terms
”
that:
‘
-
Skylikes
will provide a credit line of up to $750 000-00 US Dollars;
-
The
amount ($750 000 US Dollars) plus interest at the rate of 5% per
annum would be repayable 12 months from signing this agreement
and
will be paid to Skylikes Inc. bank account.
’
The
document is signed by ORR Stern on behalf of Skylikes Inc. and Tomer
Itzak Cohen on behalf of the Advertiser (the applicant
in this
matter).
The
advertising agreement provides
inter
alia
that Skylikes owns and operates a technology system and service for
promoting and disseminating content, through social networks
(the
‘service’) using various third party content promoters
(Publishers) and that the applicant wishes to engage Skylikes
in
order to use the service and promote certain content through it.
The agreement provides further that Skylikes shall provide
applicant
with their service for the purpose of “
disseminating
and proliferating
”
their “
content
through social networks
”
(an ‘Advertising Campaign’).
[26]
Considering
that the document was signed and executed on 21 September 2014, well
before the agreement that the applicant alleges
it concluded with
AddSuite, it is difficult to understand how applicant can aver
that there is any connection between the
‘
Advertising
Agreement
’
and its dealings with the first respondent or AddSuite for that
matter. In my view there is no basis upon which the
applicant
can claim that the ‘
loan
agreement
’
was executed as a consequence of the applicant’s alleged
agreement with AddSuite and/or that it was in any way connected
to
its involvement with AddSuite. I am satisfied that there is no
basis in fact or law for the suggestion or averment that
applicants
failure to repay monies owing under its credit facility with Skylikes
is due either to AddSuite and/or Ole Media.
The assertion
that it is unable to pay its suppliers is also unsubstantiated and
must similarly be dismissed based on vagueness.
Neither
AddSuite nor the respondents can be held responsible or liable for
the manner in which the applicant decided to structure
its business
when it commenced operating.
[27]
In my
view this kind of commercial pressure, if it can be described as
such, that applicant finds itself in, is self-created and
does not
qualify as falling in the class of recognised urgency that justifies
a litigant of obtaining a preference on the court
roll at the expense
of other litigants. See
Schweizer
Reneke Vleis Mkpy (EDMS) Bpk v Die Minister van Landbou en Ander
1971 (1) PHII (T) at FII – 12,
Nelson
Madela Metropolitan Municipality & Others v Greyvenouw CC &
Others
2004 (2) SA 81
(SE). There is further merit in the submission
that the fact that the applicant agreed to the postponement of the
application
has in any event, resulted in what may have started as an
urgent application, into one of semi-urgency, or conceivable an
application
which has no urgency at all. The fact that it was
postponed to the semi-urgent roll may at best indicate that it was
regarded
as being semi-urgent. Having regard to the
particular facts and circumstances of this case, I am accordingly
satisfied that ‘
the
loss that applicants might suffer by not being afforded an immediate
hearing is not the kind of loss that justifies the disruption
of the
roll and the resultant prejudice to other members of the litigating
public
’.
See
IL
& B Marcows Caterers (Pty) Lyd v Greatermans SA Ltd
1981 (4) SA 108
(c) at p. 114 A - B. Accordingly I am of the
view that the applicants application is not urgent and that it should
be dismissed
for this reason alone.
The
hearsay issue
[28]
As
stated, the applicant seeks to rely on the transcripts of the skype
conversations between Cohen and Fleenor as a basis to establish
an
alleged oral agreement between it and AddSuite. It is common
cause that AddSuite was not a party to these discussions.
The
question which arises is whether or not applicant is entitled in law
to rely on the transcripts of the skype conversations
between Cohen
and Fleenor and more so whether or not the skype conversations are
admissible as evidence in the application.
It is accordingly
necessary to consider this issue as the skype conversations between
Cohen and Fleenor essentially form the basis
of the applicant’s
case against the respondents and AddSuite (should I order that
AddSuite be joined to these proceedings).
[29]
Mr
Elliot submitted that there can be no dispute about the admissibility
of the information transmitted over skype by Cohen.
On the
other hand it was submitted on behalf of the respondents and AddSuite
that the transcripts constitute inadmissible hearsay
evidence.
The essence of the objection is that Fleenor has not deposed to an
affidavit confirming the skype conversations,
to establish that she
acted as AddSuite’s agent and thus concluded an agreement on
behalf of AddSuite with the applicant.
[30]
In
the present matter it is common cause that the applicant has not made
an application in terms of section 3 of the Law of Evidence
Amendment
Act 45 of 1988 (“The Act”) for the admission of the
transcripts into evidence. In oral argument and
in his
supplementary heads of argument, Mr Elliot submitted that the
transcripts of the skype conversations could be accepted into
evidence on the basis of the dicta in
Southern
Pride Foods (Pty) Ltd v Mohidien
1982 (3) SA 1068(c)
, a judgment of this court.
[31]
Section
3 of the Act provides that: “(1) Subject to the
provisions of any other law, hearsay evidence shall not be admitted
as evidence at criminal or civil proceedings, unless-
(a)
each
party against whom the evidence is to be adduced agrees to the
admission thereof as evidence at such proceedings;
(b)
the
person upon whose credibility the probative value of such evidence
depends, himself testifies at such proceedings; or
(c)
the
court, having regard to-
(i)
the
nature of the proceedings;
(ii)
the
nature of the evidence;
(iii)
the
purpose for which the evidence is tendered;
(iv)
the
probative value of the evidence;
(v)
the
reason why the evidence is not given by the person upon whose
credibility the probative value of such evidence depends;
(vi)
any
prejudice to a party which the admission of such evidence might
entail;
(vii)
any
other factor which should in the opinion of the court be taken into
account; and
(viii)
is of
the opinion that such evidence should be admitted in the interests of
justice.”
[32]
Section
3(4) of the Act defines hearsay evidence as evidence whether oral or
in writing, the probative value of which depends upon
the credibility
of any person other that the person giving such evidence.
[33]
It is
accepted law that hearsay evidence is inadmissible and that it can
only be admitted into evidence pursuant to an application
in terms of
Section 3 of the Act which sets out the requirements for its
admission. It is further accepted law that the admissibility
of
hearsay evidence is a matter of law and not of discretion. See
McDonalds
Corporation v JoBurgers Drive-In Restaurant (Pty) Ltd
1997
(1) SA 1
(A) at 27D – E. In Mohidien (
supra
),
Odes AJ, with reference to
Galp
v Tansley NO
and Another
1966 (4) SA 555
(c) held that our courts have permitted
hearsay evidence in affidavits in interlocutory matters of an urgent
kind. The learned
acting judge held at 1071 H that, “
The
courts were not indulging in formalistic fantasies in requiring an
affidavit or affirmation ‘of information and belief’
for
the admission of hearsay statements. Sound and practical
reasons exist for the two fold requirement. The source
of
information must be disclosed to enable a respondent confronted by an
allegation normally inadmissible as hearsay, to check
its accuracy
and when the courts prescribe the disclosure of the source of
information, they mean, in my view, a disclosure with
a degree of
particularity sufficient to enable the opposing party to make
independent investigations of his own, including, if
necessary,
verification of the statement from the source itself. General
statements as to source such as “one of the
respondent’s
creditors” will not suffice to constitute an adequate
compliance with the requirements. Such statements
tell the
opposing party nothing and are no more a disclosure of source than
the well-worn phrase, “I have been informed.
”
[34]
It
was contended on behalf of the respondents and AddSuite that since
Mohidien’s case was decided before the enactment of
the Act and
because the admission of hearsay evidence is now regulated under the
Act, that the exception in Mohidien is now to
be narrowly construed.
It is so that the principle laid down in Mohidien recognises that in
urgent matters it is often not
possible for a party for logistical
reasons to obtain affidavits urgently and that for this reason
hearsay evidence must in certain
cases be admitted. In
Cerebos
Food Corp v Diverse Foods SA
1984 (4) 149 TPD Van Dijkhorst J at 157 E confirmed this longstanding
practice of the court ‘…
in
urgent applications to receive hearsay evidence if an acceptable
explanation is given why direct evidence is not available and
the
source of the information and the grounds for the belief in the
truth
’.
What is however clear from the authorities is that it is only in
exceptional cases, where the urgency of the matter
precludes evidence
being confirmed under oath that it may be admitted into evidence.
See also
Fey
NO v Van Der Westhuizen and Others
2005 (2) SA 236
CPD at 241 at F –.
[35]
Mr
Elliot has urged me to approach the matter on the basis that the
urgency of the matter precludes the evidence of Fleenor from
being
confirmed under oath and that I may therefore admit the skype
conversations into evidence. It is however important
to note,
as stated hereinbefore, that on the applicants own version it delayed
bringing the application by more than a month. As
will be
recalled, it alleges that “
[i]n
order to raise the necessary capital expenditure, applicant entered
into a loan agreement with its associated company, Sky
Likes Inc, a
US based company for an amount of US $ 750 000,00 on the basis
that the full capital amount plus interest at
a rate of 5% per annum
would be repayable on 21 September 2015
”.
As stated, the document purporting to be the loan agreement is
clearly not a loan agreement. It is described
as an
‘
Advertising
Agreement
’
and provides that Sky Likes extends a ‘
credit
line
’
of up to USD 750 000-00 to applicant. There is nothing to
suggest that this money was transferred to the applicant
as
‘
necessary
capital
’.
The applicant has for some time prior to bringing the
application, been aware that respondents dispute
indebtedness in
respect of its claims. It is further clear that for a
substantial period of time prior to launching the application,
that
applicant and/or its representatives had contact with Fleenor.
It must therefore be so that when the applicant contemplated
instituting these proceedings, that it must, or at least ought to
have realised that Fleenor was a crucial witness to its case.
As I have mentioned, practically the whole of applicant’s case
relies on the skype conversations with Fleenor. I could
however
not find anything in the applicant’s papers to suggest that
circumstances of urgency precluded the applicant from
obtaining an
affidavit from Fleenor when the application was initially launched on
25 May 2015. At the time of the hearing
of this application on
17 September 2015, applicant has still not given an explanation as to
why Fleenor has still not deposed
to an affidavit confirming the
contents of the skype transcripts, and the applicant’s
interpretation of the content thereof.
[36]
In
regard to the issue of urgency and whether or not the present
application is indeed urgent it is necessary to look at the history
of the matter. By mid-March, respondent made it clear that it
was disputing liability and that it did not contract with applicant.
The founding affidavit of Cohen was deposed to on 22 May 2015
and the application was launched on 25 May 2015. Although
the
application was set down for hearing on 17 June 2015 it was removed
from the roll by agreement between the parties on 12 June
2015.
On 18 June 2015 the matter was postponed by agreement for hearing on
the semi-urgent roll on 17 September 2015.
[37]
Although
the applicant has brought this application as if it is urgent, the
applicant has not showed any circumstances of urgency
or of an
exceptional nature which allows me to absolve the applicant of the
obligation to provide and/or to furnish this court
with an affidavit
by Fleenor. The fact that Fleenor is apparently overseas does
not assist the applicant and cannot be used
as justification for
applicant’s failure to provide an affidavit by her. I say
this because in bringing the application
in the way that it did,
applicant was able to secure affidavits in support of its application
from Daniel Treisman, who is based
in Israel and Mr Soheil Amorpour
who is based in Sweden. Apart from the fact that no real effort
seems to have been made
to obtain an affidavit from Fleenor, there
are indications that the reason why Fleenor has not filed an
affidavit in support of
applicants case is that she declines to do
so. In my view the applicant has failed to show that this
matter falls to be dealt
with in the category of exceptional cases
where urgency of the matter precluded the hearsay evidence from being
confirmed under
oath. In the result the attempt to have the
hearsay evidence of the skype conversations between Cohen and Fleenor
admitted
into evidence is denied.
The
respondent’s case
[38]
On
the respondents version the first respondent is a holding company
which provides management services to its subsidiary companies.
The
shares in the first respondent are held by the Manor Trust.
First respondent in turn holds 100% of the shares in four
trading
companies, namely, Managed Mobile Services (Pty) Ltd; TeamTalk Media
(Pty) Ltd, which in turns owns PA Sports SA (Pty)
Ltd, Honeykome
(Pty) Ltd and AddSuite. AddSuite specialises in the provision
of online advertising services to publishers
(i.e. owners of websites
seeking to monetise advertising space on their websites), and
advertises i.e. companies that seek to maximise
advertising exposure
through online advertising campaigns. In short AddSuite offers
a full spectrum of services in the online
industry, employing a team
of sales people who it states are ‘
skilled
in selling advertising space on websites that are clients of
AddSuite, as well as a team specialising in the management
and
administration of digital advertisements known as Campaign, Managers,
or Ad operations Executives
’.
[39]
On
the respondent’s version, AddSuite concluded an agreement with
Wi Get Media an advertising agency based in Stockholm, Sweden
in
November of 2014. It is not in dispute that Wi Get Media
represents Bet 365.com. According to Timothy John Orrill-Legg
(“Orril-Legg”) who deposed to the answering affidavit on
behalf of the first respondent, AddSuite was engaged by Wi
Get Media
to provide online advertising for Bet 365 by way of banner
advertisements and that Wi Get Media in turn agreed to pay
AddSuite
at a rate of USD $4 per cpm (i.e. per 1000 impressions), and would do
so based on Wi Get Media’s System of tracking/monitoring
these
impressions.
[40]
According
to Orril-Legg, AddSuite approached DigiKulture during December 2014
regarding the provision of online advertising services
and concluded
an agreement, the terms which are usefully summarised in respondents
heads of argument as follows:
‘
36.1
DigiKulture agreed to place Bet 365 banner advertisements on two
websites owned by its clients, one being Viralands.com
which is owned
by the applicant.
36.2 AddSuite would pay
DigiKulture a fee of USD 2 per cpm for Bet 365 banner
advertisements. (The respondents explain
that AddSuite was
prepared to agree to these terms with DigiKulture because it would
receive USD 4 per cpm from Wi Get Media –
i.e. it was able to
earn a margin of USD 2 per cpm).
36.3 Banner advertisements would also
be delivered to Viralands.com via Google’s AdX platform as
managed by AddSuite.
These banner advertisements would be in
addition to Bet 365 banners, and based on the prevailing AdX market
prices.
36.4 AddSuite would
retain a commission of 15% of all revenue generated through AdX
advertising, with the balance payable to DigiKulture.
(For
example, if an advertiser was prepared to pay USD 1 per cpm on
Google’s AdX platform, AddSuite would retain 15c per
cpm, and
the remaining 75c would be payable to DigiKulture).
[41]
The
essence of respondents answer to applicants case is set out in the
affidavit of Orril-Legg where he states that ‘…
at
all times AddSuite dealt with DigiKulture. At no stage did Ole
Media or AddSuite deal with Viralands in relation to the
Bet 365
campaign, or the advertisements displayed on Viraland.com via Adx.
Moreover, and for the avoidance of any doubt on
this issue,
DigiKulture did not act as an agent of Ole Media or AddSuite (or any
of the Ole Media group of companies). AddSuite
contracted
directly with DigiKulture; both parties acting as principals
’.
[42]
I am
satisfied that the overwhelming objective facts support the
respondent’s version. In this regard I refer to the
following:
1.
The
fact that AddSuite and DigiKulture dealt with each other directly.
No money changed hands between Ole Media and/or AddSuite
(on the one
hand) and the applicant (on the other hand).
2.
DigiKulture
invoiced AddSuite for services rendered and AddSuite paid DigiKulture
for those services directly.
3.
There
is no evidence of any direct dealing between the applicant and Ole
Media or AddSuite.
[43]
In
addition to the above, I am satisfied that it is unlikely and highly
improbable that Ole Media or AddSuite would have entered
into an
agreement with applicant as alleged by it, i.e. to pay applicant USD
10 or USD 20 per cpm in respect of the Bet 365 campaign
as this would
have resulted in a situation where AddSuite would incur significant
losses in terms of its contract with Wi Get Media
in terms of which
it received a fixed fee of 4 USD per cpm.
[44]
I
further take into account that as regards the applicants AdX claim
i.e. for a fixed rate of USD 2 per cpm, the respondents aver
that
although AdX operated like a stock exchange where prices are not
fixed, AddSuite and DigiKulture had agreed that the prevailing
market
prices would apply.
[45]
It is
necessary to mention that the applicant has also attempted to place
reliance on an insertion order which Fleenor provided
to Cohen on 17
February 2015. According to Cohen, Fleenor had informed him
that she had received the insertion order from
AddSuite. An
insertion order (IO) is an industry term to describe a purchase order
for future advertising space. In
this regard Cohen states in
the founding affidavit that she (i.e. Fleenor) ‘…
stated
that she had “got them up to $1.60” and that she had told
AddSuite that they must expect her to increase it “for
the next
time
”.
He states that “
Debra
forwarded the email to me at 19h25 on 17 February 2015. A copy
of the email containing the IO as an attachment is annexed
hereto as
“TC24”. I was not happy with AddSuite’s
offered rate of $1.60 cpm and stated in a skype conversation
with
Debra that the rate should be $2 cpm for ATF and $1 cpm for BTF
”.
[46]
I
agree with counsel for the respondents that it does not assist
applicant to rely on the insertion order as the effect of the IO
is
in fact to undermine applicant’s case in that:
1.
The
insertion order was issued by AddSuite to DigiKulture as the
‘Client’. This in my view supports the respondent’s
version that AddSuite dealt only with DigiKulture and did so as
principal.
2.
The
period referred to in the insertion order differs from the period of
the contract as contended for by applicant. It has
a
commencement date of 1 March 2015 and an end date of 31 August 2015.
The dates in the insertion order are clearly in conflict
with
applicant’s assertion that it concluded an agreement with
AddSuite in January 2015.
3.
According
to the terms and conditions, payments will be made according to the
number of impressions served in the campaign and the
contract sum is
limited to USD 32 000-00 over the six month period.
[47]
What
is abundantly clear from the version presented by the respondents is
that they at the outset and before commencement of the
proceedings by
applicant, made it clear to applicant and to applicants attorneys of
record that no agreement was concluded between
the respondents and
applicant, and that the alleged debt owed by respondents to the
applicant was disputed on other grounds.
On the respondent’s
version, the applicant was advised as early as 17 March 2015 that
AddSuite had no contractual relationship
with Viraland and that there
was no basis for any claims, when ORR Stern, a director of the
applicant spoke telephonically to Orril-Legg.
Subsequent to
this telephonic discussion and on 13 April 2015 applicants attorneys
of record addressed an email to the Ole Media
Group in which
applicant demands payment of USD 477 170-07 within 72 hours.
The second respondent to whom this letter
was
inter
alia
emailed to, responded to the letter of demand on the same day and
advised that ‘W
e
have no contractual relationship with your client and do not
understand why this letter was sent and how the claim of US $ 477
000-00 was calculated
’.
Second respondent requested applicant’s attorneys to provide
more information. On 13 May 2015 applicants
attorneys addressed
a further letter to the Ole Media Group (Pty) Ltd in which
inter
alia
the following is stated:
“
Since
you denied any liability to our client, it has furnished us with
detailed instructions for the purposes of bringing High Court
proceedings against your company in Cape Town. Draft court
papers have been prepared and representatives of our client are
scheduled to travel to Cape Town to finalise these over the period 20
to 22 May 2015.
Having considered
all the relevant documentation in the matter we have advised our
client with a strong degree of confidence that
it will be able to
demonstrate in the High Court that your company’s grounds of
denying any liability to our client are false.
Our client
will demonstrate in the court papers that your company enjoyed a
contractual relationship with it. We point out in this
regard that
your company paid our client the amount of $32265,75 on account on 15
February 2015. Our client is also confident
that it can
demonstrate to the High Court that the grounds upon which you stated
that you were not able to process our client’s
invoice in an
email to Debra Fleenor of DigiKulture.com on 17 March 2015 are devoid
of any merit.
”
[48]
It
is necessary to point out at this stage that even though applicant
avers that DigiKulture allegedly acted as first respondents
agent and
that this gave rise to the alleged agreement, that it concedes that
the alleged agreement could not have been concluded
with the first
respondent but rather with AddSuite. In an attempt to bolster
its case that there was indeed an agreement
between applicant and
first respondent through DigiKulture, Cohen states in the founding
affidavit that on 4 March 2015, ‘
AddSuite
paid applicant $32 265-75’
.
I am not sure how much weight, if any, I can place on the fact that
this payment was made by AddSuite to the applicant as
Cohen later
states in the founding affidavit that the amount of $32 265-75
was in fact not paid by first respondent or AddSuite
to the
applicant. On the respondent’s version as contained in
their answering affidavit, AddSuite paid DigiKulture
based on an
invoice that DigiKulture had rendered to AddSuite. According to
the respondents AddSuite paid the $32 265-72
to DigiKulture
based on two purchase orders issued by AddSuite as follows:
“
40.1
The first purchase order (“AA12”) was in respect of the
advertising generated on Viralands.com by Google
AdX and based on AdX
revenue reports for January 2015, amounting to USD 20221.01.
40.2
The second purchase order (“AA13”), also for Google AdX
revenue, amounted to USD
12043-71, in respect of Inquist (which as I
have explained is another client of DigiKulture).”
[49]
In
the letter of 13 May 2015 applicant’s attorney also threaten
that applicant also intends to join Orril-Legg, Desere Orril-Legg
and
possibly Alessandro Valecic in their capacity as directors on the
basis that they be held personally liable, jointly and severally
with
the first respondent in that they “
caused
Ole Media to incur a large amount of debt to our client and
thereafter deny any liability as being reckless, alternatively
grossly negligent, at the very least”
.
[50]
On
19 May 2015 the respondent’s attorney replied to the letter of
13 May 2015 categorically denying that it has any contractual
relationship with applicant; and that it is not indebted to the
applicant in the amount claimed or any amount.
[51]
In
the same letter from respondents attorney, respondent declines to
meet with applicant and in clarification states that:
“…
4.1
The
amount of $32265-75 was paid by our client to DigiKulture in
settlement of an invoice for this amount rendered by DigiKulture
to
our client and pursuant to a supply agreement concluded between our
client and DigiKulture;
4.2
Our client has had no dealings whatsoever with your client nor has it
concluded any agreement or understanding with your client
for the
supply of services or any related activity;
4.3
Our client stands by the contents of its email addressed to Debra
Fleenor of DigiKulture, and we have been provided with copies
of the
notifications addressed to our client by Google AdSense advising of
violations of Google Ad Sense program policies by your
client
…”
[52]
Respondent’s
attorneys further made it clear to applicant’s attorney that
any proceedings which applicant may choose
to institute for recovery
of any amount referred to by applicant would be vigorously opposed.
Applicant was also advised
that its contention that respondent’s
directors are liable is without foundation in law or fact.
Applicant was cautioned
that should it institute proceedings against
respondent’s directors that an appropriate cost order would be
sought against
it.
[53]
On
consideration of the correspondence and more particularly the letter
from respondents attorneys dated 19 May 2015, I am satisfied
that the
applicant knew or at the least should have known that the material
facts of its claim was or would be disputed.
It is difficult to
understand why, faced with the information that it now had, that it
persisted in bringing this application on
an urgent basis as it did.
It is apparent that notwithstanding the averment in the letter by the
applicant’s attorney
‘
that
we have advised our client with a strong degree of confidence that it
will be able to demonstrate …. that your company’s
grounds of denying any liability to our client are false
;’
that applicant knew or must have known that there was no substance in
this averment.
[54]
The
applicants claim that it is owed an amount of USD 477,170-07, appears
on its own version, flawed or at the very least lacking
in adequate
substantiation. In this regard I refer to the following aspects
which further highlight the extent of the disputed
issues in this
matter:
1.
In
respect of the applicants AdX claim it alleges that it generated
254,630,425 impressions. If one applies a rate of USD
2 per cpm
in respect of these impressions, based on the applicant’s
alleged agreement, one arrives at an amount of USD 509,260,85.
Although the applicant attempts to deal with this in reply by stating
that some of the impressions were charged at USD 2 it does
not give a
breakdown thereof.
2.
The
applicants attempt to rectify the dispute in regard to the
calculation of the amount allegedly owed is at odds with and
inconsistent
with its version of the agreement as it alleges that the
parties agreed to a fixed price of USD 2 per cpm.
3.
The
applicant has further failed to substantiate its claim in respect of
the Bet 365 claim and does not explain how it arrived at
an amount of
USD 111 863-39 in respect of this claim if regard is had to the
alleged agreement concluded between the parties.
[55]
On
the whole I have grave concerns about the calculation by the
applicant of the amount allegedly owed by the respondents to the
applicant considering the various disputes of facts and the problems
relating to the calculation of the amount owing and the fact
that the
applicant has not properly substantiated and proved the amount owing
to it by the respondents, if at all.
[56]
It
is common cause that the relief sought by the applicant is of a final
nature. It was submitted on behalf of the respondents
that even
if I were to have regard to the skype transcripts on the basis that
they are admissible notwithstanding their hearsay
nature that,
firstly, they do not establish the existence of an agreement as
contended for by the applicant and secondly, considerations
of
evidential weight must be assessed because:
1.
The
Plascon Evans rule applies i.e. the facts upon which the application
must be determined are those of the respondents;
2.
The
respondents have stated under oath that there was no agency
relationship and that AddSuite dealt with DigiKulture qua principal,
not qua agent.
[57]
In
its replying affidavit and its heads of argument and in oral argument
the applicant attempts to counter the version presented
by the
respondent. In regard to Bet 365 claim applicant attempts to
suggest that AddSuite had entered into an agreement with
the
applicant on wholly unfavourable terms, being at USD 20 or USD 10 per
cpm in circumstances where it was in fact receiving only
USD 4,
because it was in breach of its contract with Wi Get Media and was
anxious to remedy the breach. This theory, which
only appears
in reply, is based on an alleged dispute between AddSuite and Wi Get
Media. Neither of these parties are party
to this application.
What is fatal to the applicant’s case is that the belated
introduction of this theory does not
mean or demonstrate that the
respondent’s version that it did not contract with the
applicant is untenable or far-fetched.
It also does not lead to
the conclusion that the respondent’s version should be rejected
on the papers as being implausible.
[58]
As
appears from what is set out hereinbefore, the applicant also
suggests that the respondent’s version regarding the AdX
claim
should be rejected. In this regard it relies on the invoice
from DigiKulture dated 17 March 2015 and avers that the
invoice is
proof that AddSuite and applicant had agreed to a fixed rate of USD 2
per cpm and USD 1 per cpm, respectively for advertising
via Google
AdX. This allegation is however expressly denied by the
respondents. On the evidence before me the respondents
disputed
the contents thereof and in its answering affidavit state:
‘
As I
have set out above, the amounts reflected on this invoice were not
what was agreed between AddSuite and DigiKulture.
In this
regard I point out that they were inconsistent with the amount of USD
32 265-75 that DigiKulture invoiced on 15 February
2015 and
which AddSuite paid to DigiKulture – which was in terms of the
agreement.
’
[59]
Applicant
has also averred that the fact that; according to Google’s
terms and conditions, companies that have AdX accounts
(such as
AddSuite) must have a contractual relationship with publishers such
as the applicant and that this proves that the parties
contracted
directly, and on the terms alleged by it. I do not agree with
the applicant that the fact that the Google’s
terms and
conditions may require parties such as AddSuite and the applicant to
deal directly with one another is evidence that
the agreement as
alleged by the applicant, was in fact concluded. The
overwhelming objective evidence supports a finding
that AddSuite
dealt only with DigiKulture including receiving invoices from
DigiKulture and making payment to DigiKulture.
On the whole I
am satisfied that the respondent’s version is not far-fetched
or untenable or implausible and that the existence
of the alleged
agreement between applicant and respondents must accordingly be
determined on the version of the respondents which
must prevail.
The
liability of the second respondent
[60]
Applicant
avers that second respondent is liable jointly and severally with the
first respondent for the liability incurred by the
first respondent
on the grounds set out in
section 77(3)
of the
Companies Act No 71 of
2008
.
[61]
According
to Henochsberg on the
Companies Act Vol
1 [Issue10] p302, a director
is liable to the company for any loss or costs arising as a direct or
indirect consequence of the
director:
-
‘
acting
for and on behalf of the company, signed anything on behalf of the
company or purported to bind the company or authorise
the taking of
any action by/or on behalf of the company despite knowing that he/she
lacked authority;
-
acquiesced
to carrying on the business of the company while knowing that is
prohibited under
s22
;
-
being
party to an act or omission by the company despite knowing that it
was calculated to defraud a creditor, employee or shareholder
of the
company, or had another fraudulent purpose;
-
having
signed, or consented to the publication of a financial statement that
was false or misleading in a material aspect or of
prospectus, or a
written statement contemplated in
s101
, that contained an ‘
untrue
statement
’
as defied in
s95
knowing that, or with reckless disregard as to
whether the statement was false, misleading or untrue, as the case
may be …’
Section
22 of the Act prohibits “
reckless
trading
”.
Section 22(1) in particular prohibits a company from carrying on
business recklessly with gross negligence, with the intent
to defraud
any person or for any fraudulent purpose.
[62]
It is
however clear from the authorities that liability in terms of s77 is
to the company and not to third parties. See
Sanlam
Capital Markets (Pty) Ltd v Mettle Manco (Pty) Ltd & Others
(2014) 3 All SA 454
(GJ) para 41. Third parties could, however
in terms of s218(2) have a claim against the directors for each
breach of their
fiduciary and other duties to the company, although
these duties are owed to the company and not to them. See
Grancy
Property Limited & Another v Gihwala & Others
:
In re: Grancy Property Limited & Another & Others (1961/10;
12193/11)
[2014] ZAWCHC 97
(26 June 2014) para 103).
[63]
On
the evidence before me, the second respondent advised ORR Stern of
the applicant on 17 March 2015 that AddSuite had never had
any direct
dealings with the applicant, that AddSuite had no contractual
relations with applicant and that there was no basis for
applicant’s
claim against AddSuite. On 13 April 2015 the second respondent
received an email from applicants attorneys
of record in which
applicant demanded the sum of USD 477 170-07 to be paid in 72
hours. Second respondent replied to
this letter by recording
his surprise at receiving the letter and explained that first
respondent had no contractual relationship
with applicant and queried
how the amount was calculated. This was followed by a further
letter by applicant’s attorney
of record in which they repeated
their earlier demand and claimed that a contractual relationship
existed between first respondent
and applicant on the basis that an
invoice of USD 32 265-75 was paid by first respondent.
First respondent’s attorney
of record responded to this letter
and again denied that first respondent had any contractual
relationship with applicant and denied
that first respondent is
indebted to applicant and specifically stated that the amount of USD
32 265-75 was paid to DigiKulture
in settlement of an invoice
received by DigiKulture. Considering the facts of the matter
and the defences raised by the respondents,
second respondent’s
denials can hardly amount to reckless conduct and/or conduct which
was committed with intent to defraud.
[64]
On
consideration of the papers before me, I am satisfied that the
applicant has presented no evidence whatsoever upon which the
second
respondent can be held liable for ‘
any
loss, damages or costs sustained by the company as a direct or
indirect consequence of the director having acquiesced in carrying
on
the company’s business despite knowing that it was being
conducted in a manner prohibited by s22(1) …
’
I can further find no evidence that the second respondents conduct as
managing director and/or chief executive officer
of the first
respondent was either reckless and/or with intent to defraud.
Considering that the applicant has conceded that
it cannot obtain
relief against the first respondent and considering that applicant
wishes to hold second respondent liable in
the main application based
on his conduct as managing director of the first respondent, it must
follow that applicant can never
have any prospect of success either
on the facts or in law against the second respondent.
[65]
In
short second respondent cannot be held liable
vis-a
vis
the first respondent. I point out that applicant has also not
made an application to file supplementary affidavits in respect
of
the second respondent
vis-a
vis
AddSuite.
The
application to join AddSuite (Pty) Ltd
[66]
On 7
September 2015, ten days before the hearing of the main application,
the applicant gave notice of its intention to join AddSuite
(Pty) Ltd
as a third respondent in the main application. According to
Jeremy Ivo Simon, (“Simon”) applicant’s
attorney of
record, who deposed to the affidavit in support of the application,
applicant was under the impression that AddSuite
was a division of
the first respondent and not a separate company when the applicant
launched its application in May 2015.
[67]
According
to Simon, applicant had no reason to believe that it had not cited
the correct legal entity at the time of preparing the
founding
affidavit. In this regard Simon relies on the response received
from first respondents attorneys in which they state
that first
respondent had concluded a supply agreement with DigiKulture and that
payment of the amount of $32 265-75 was paid
by first respondent
to DigiKulture in settlement of an invoice for this amount that was
owing in terms of the supply agreement.
[68]
Simon
avers that it was only when respondent provided his answering
affidavit, did it furnish proof that AddSuite is a separate
legal
entity in the Ole Media Group of companies.
[69]
In
his view AddSuite has contravened the provisions of
s32(4)
of the
Companies Act 71 of 2008
which requires that it must have its name
and registration number mentioned in legible characters in all
notices and other official
publications of the company, including
such notices and publications in electronic format as contemplated in
the
Electronic Communications and Transactions Act, No 25 of 2002
.
Accordingly he averred that AddSuite had contravened the
Companies
Act due
to its failure to comply with
ss 32(4)
and
32
(5).
[70]
According
to Simon, grounds of convenience, equity, the saving of costs and the
avoidance of unnecessary additional litigation justifies
the joinder
of AddSuite as the third respondent.
[71]
Mr
Elliot submitted that AddSuite will not be prejudiced by the
joinder. In his view AddSuite has had ample opportunity to
ventilate its opposition to the application and in any event stated
that it will pay monies into its attorney’s account pending
the
outcome of the matter.
[72]
As
he did in argument in respect of the main application, Mr Elliot
persisted in his submission that there is no genuine or
bona
fide
dispute of fact in this matter and that the version put forward by
respondents including AddSuite, is untenable and can be rejected
on
the papers. Accordingly he was of the view that AddSuite had no
basis to oppose the joinder.
[73]
It
is generally accepted that a plaintiff may join separate defendants
in one action and that under common law a number of defendants
may be
joined; whenever convenience so requires, subject to the power of the
courts to order separation of actions. It is
accepted law that
where there is a reasonable prospect of an overlap of factual issues
in different trials, convenience dictates
that the risk of
conflicting judgments on issues that are common to all actions should
be avoided and that in such circumstances
joinder is appropriate.
See Lawsa (2ed vol. 3
part 1
, para 61,
Dendy
v University of Witswatersrand & Others
[2005] ZAGPHC 39
;
2005 (5) SA 357
(W)
[2005] 2 All SA 490
(at 387 A – B).
[74]
In
considering the merits of the joinder application, I agree that it is
necessary to assess (both procedurally and on the merits)
the main
application. It is common cause from what I have already said
in respect of the main application that the applicant
seeks payment
of a disputed debt based on an oral agreement, the existence of which
is disputed.
[75]
Although
the answering affidavit filed in the main application already records
aspects of the opposition AddSuite would advance
(if joined),
Orril-Legg states that the fact that it is already recorded that
AddSuite is not a “
division
of the Ole Media Group but a separate company and denies that it
concluded the oral agreement as alleged by the applicant
this is far
from a full defence and was proffered as a show of good faith to
demonstrate that Addsuite, although not a party to
the proceedings,
also denied liability to the applicant
”.
[76]
I
agree that should I come to the conclusion that AddSuite be joined as
a respondent in the main application, that AddSuite should
be allowed
an opportunity to file what it has referred to as a substantive
response to the main application as is requested by
Orril-Legg in the
answering affidavit to the applicant’s application to join it.
It is therefore necessary to consider
the reasons advanced by the
applicant as to why the joinder application should succeed. In
doing so the starting point must
be to look at the applicant’s
decision to litigate against Ole Media and not AddSuite when it
launched the proceedings.
[77]
On 17
February 2015 Fleenor of DigiKulture sent an email to applicant at
Viraland@gmail.com
.
Attached to the email is an insertion order which bears the AddSuite
(logo). No reference is made to Ole Media.
DigiKulture is
reflected as the client and the only reference to the applicant is
that the campaign in question is the “
Viraland’s
”
campaign
[78]
According
to the founding affidavit in the main application it is stated that
limited consultations were held between applicant
and its legal team
in Cape Town on 13 April 2015. On the same day applicant
performed a windeed search on the Ole Media Group.
On studying
the windeed search document which is attached to the founding papers
as TC2, it is clear that applicant focussed on
the corporate detail
of Ole Media and not AddSuite. All the indications are that,
had they sought out the corporate detail
of AddSuite, whose name
appears boldly on the top of the insertion order, then applicant
would easily have established that AddSuite
was a separate company
and not a division of Ole Media. Considering that it intended
to launch proceedings in court it is
hard to imagine how it failed
and neglected to have ascertained this important aspect at the
outset.
[79]
For
reasons of its own the applicant and its attorneys, in preparing its
case, hastily jumped to the conclusion that AddSuite was
a division
of Ole Media Group. Applicant was clearly aware of the website
presence of the Ole Media Group as it refers to
it in its founding
affidavit as
www.olemediagroup.com
.
As appears from the screenshots of the home page the Ole Media Group
website, (as is attached to the respondents answering
affidavit to
the joinder application), and if the screenshots are cross referenced
to the organogram, then the following is clear:
1.
Annexure
“TL1-1” is a screenshot of the ‘above the fold’
section of the home page of this website.
2.
Annexure
“TL1-2” is the first ‘below the fold’ section
of the website and makes it clear that AddSuite is
a digital
advertising services company. The four entities listed
correspond to those four on the organogram.
3.
Annexures
“TL1-3” and “TL 1-4” pertain to Mobi Media
and TeamTalk media respectively. These companies
fall into the
corporate structure which is clear from the organogram.
4.
In
annexure “TL1-5” which is the next section, AddSuite is
described as “
a
digital advertising services company
”.
This description is in line with the organogram referred to
hereinbefore.
[80]
Considering
the nature of the business that the applicant is involved in, it
seems to me that minimal effort on its part would have
yielded the
information that AddSuite was a company separate from Ole Media
Group. Further objective facts which point to
the fact that
applicants dealings were not with Ole Media are that:
1.
There
is no original documentation which applicant has annexed to its
papers which suggest that it contracted with Ole Media Group;
2.
The
documentation relied on by applicant came into its possession via
emails and indicates that AddSuite (as a separate company)
and not
Ole Media Group, was dealing with DigiKulture. Examples of this as
appears from the papers are the following:
-
The
email forwarded to Fleenor on 21 January 2015 at 08h41 am came from
AddSuite;
-
Alessandro
Valecic who sent the email has an email address which suggests his
involvement with AddSuite and not Ole Media Group;
-
In
the digital signature at the bottom of the email it is mentioned that
AddSuite is also Ole Media Group Company.
[81]
Having
regard to what I have referred to hereinbefore, there is no basis for
the suggestion or allegation that applicant was or
could have been
misled into believing that Ole Media Group had paid DigiKulture the
sum of USD 32 265-70. I say this as it
is clear that Orril-Legg
had drawn the corporate distinction between AddSuite and Ole Media at
an early stage. What rather
appears to be the case is that
applicant had in its undue haste and for reasons of its own, made a
decision to sue Ole Media Group
before receipt of the letter of 19
May 2015.
[82]
A
further important factor to consider in the joinder application is
that the applicant knew that the main application was set down
for
hearing on 17 September 2015. On 3 August 2015 the answering
affidavit of the first and second respondents had been delivered
on
which date applicant again recorded that AddSuite is a company
separate and distinct from Ole Media Group and that it had no
contractual nexus with the applicant. Notwithstanding this the
applicant took no steps whatsoever to rectify the non-joinder
of
AddSuite to the proceedings. Some 35 calendar days later and on
7 September 2015, the joinder application was served upon
attorneys
Cliffe Decker Hofmeyer but was never formally served upon AddSuite.
[83]
Applicant
has given no reasonable explanation for its delay in bringing the
application for the joinder of AddSuite, in an application
where it
seeks final relief, and in circumstances where AddSuite has not
formally been served with papers and/or been given an
opportunity to
file papers.
[84]
There
is merit in the objections by AddSuite to its joinder, and
particularly in relation to the manner that applicant has gone
about
doing so. As I have mentioned when dealing with the main
application, the respondent’s raise genuine and material
disputes of fact which were foreseen or was at the very least
foreseeable. It further appears that AddSuite has information
concerning the applicant’s business practices that are relevant
to the merits of the main application and which it avers
would only
worsen the conflicts of fact which already exist on the record.
[85]
It is
therefore not unreasonable to conclude that if AddSuite were to be
joined to the motion proceedings and file further affidavits,
the
existing disputes of fact, which are in my view already incapable of
resolution on the papers, would only deepen.
[86]
Of
course there is nothing that prevents a litigant from claiming
payment of a monetary debt by way of motion proceedings.
It is
however accepted that motion proceedings are not an appropriate
mechanism to claim monetary relief in circumstances where
the party
instituting the proceedings is aware that there is a dispute of fact
and/or that such dispute of fact was at the very
least foreseeable,
as is clearly demonstrated in this matter. In my view the
applicant ought to have made certain of its
facts at the outset and
considering the issues in dispute, ought then to have considered
whether or not it was not better to proceed
by way of action for the
relief that it seeks.
[87]
A
further aspect that requires considerations is the impact of the
joinder application on the first and second respondents.
If
AddSuite is joined, the matter will be delayed as AddSuite will
require an opportunity to address the main application.
No
doubt this will have costs implications for first and second
respondents as they will be forced to remain parties to the matter
in
circumstances where applicant has already accepted that it cannot
obtain substantive relief against first respondent as it sued
it in
error and that it could not have concluded the oral agreement with
first respondent.
[88]
Considering
what I have said hereinbefore about the disputes of fact which
already exists and the fact that they are incapable of
being resolved
on the papers, I am not persuaded that the applicant has made out a
case that AddSuite should be joined to the proceedings.
Conclusion
[89]
In
the result the applicants claim on the main application as well as
the joinder application must fail. Although respondents
have
asked that I make a cost award against the applicant on the attorney
client scale as it brought the present application urgently
and on
motion in the face of a clear dispute of fact, I am however not
persuaded that this is a case where a cost award on the
attorney
client scale is justified.
[100]
In the premises I make the following order:
The application by
the applicant directing first and second respondents to pay applicant
the sum of $477 170-07 and the application
to join AddSuite
(Pty) Ltd to these proceedings, is dismissed with costs including the
costs of two counsel.
RILEY,
AJ