Tread Research CC v Bridoon Trade and Invest 197 (Pty) Ltd t/a Nashua Cape Town (10195/2017) [2021] ZAWCHC 268; [2022] 1 All SA 865 (WCC) (8 December 2021)

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[2021] ZAWCHC 268
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Tread Research CC v Bridoon Trade and Invest 197 (Pty) Ltd t/a Nashua Cape Town (10195/2017) [2021] ZAWCHC 268; [2022] 1 All SA 865 (WCC) (8 December 2021)

IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Reportable
CASE
NO: 10195/2017
In
the matter between:
TREAD
RESEARCH CC
Plaintiff
And
BRIDOON
TRADE AND INVEST 197 (PTY) LTD T/A NASHUA CAPE TOWN
Defendant
JUDGMENT
electronically delivered on 8 December 2021
DAVIS
J
Introduction
[1]
Plaintiff earns income from the conducting of
clinical trials from its business premises which are located at
Tygerberg Hospital in
the Western Cape.  Its members are
Professor Lesley Jean Burgess (Burgess) and Professor Anton Frans
Doubell (Doubell).
[2]
Defendant operates its business under the name
Nashua Cape Town.   Plaintiff required certain telephone
services and initially
concluded a subscriber agreement with
Electronic Communications Network (Pty) Ltd (ECN) in terms of which
the latter agreed to provide
telephonic services to plaintiff using a
Voice Over Internet Protocol Technology (VOIP). In 2016 defendant
avers that a subscriber
agreement was entered into on behalf of
plaintiff by one Beulah Flandorp (Flandorp) who was employed by
plaintiff as a financial
administrator and defendant.  The
defendant was represented by one Michael Titus (Titus) as a result of
which agreement defendant
would replace ECN as the service provider
in respect of plaintiff’s telephonic services.
[3]
Telephonic services were critical to plaintiff’s
business model and thus to its income.   It appears that
the clinical
trials which it undertook involved regular contact and
monitoring of patients participating in its research studies and
regular communication
responses to these clinical trials.
Plaintiff earns income from each interaction with its patients.
Its telephonic
services are rooted to a call centre which plays a
crucial role in its recruitment of and interaction with patients who
form part
of a clinical trial.
[4]
The key issue in this case concerns the validity
of an agreement to which I have made reference and which was
allegedly concluded
on 12 May 2016 and in terms of which defendant
became plaintiff’s service provider.    The case
that plaintiff has
brought is predicated on the claim that its
telephonic services were unlawfully disrupted by defendant during the
period from 15
September 2016 to 1 December 2016.  Pursuant
thereto, plaintiff contends that it suffered damages in the form of a
loss of income
and that defendant is liable therefore.
[5]
On 26 February 2001 an
order was made in which it was recorded that defendant admits that
the plaintiff may notionally have suffered
damages in respect of a
claim but the issue of the quantum of such damages and causation in
respect of plaintiff’s claim should
be separated from the merits in
terms of the Uniform Rule 33 (4) and adjudicated upon at a later
stage, if need be.   Accordingly,
this case turns
exclusively on the merits of plaintiff’s claim.
Background
[6]
On 17 April 2015
plaintiff duly represented by Professor Burgess concluded a
subscriber agreement with ECN in terms of which it agreed
to provide
telephonic services to plaintiff.   In order to retain the
same geographical numbers that Telkom had allocated
to it, plaintiff
granted written consent so that these numbers could be ported to ECN.
[7]
At some point both ECN
and defendant operated under the “Nashua banner”.   It
also appeared from the evidence that defendant
had concluded a dealer
agreement with ECN in 2011 in terms of which it provided certain
support services to ECN including the procurement
of subscribers for
ECN and the sale of relevant hardware required in respect of the
subscription services which ECN had offered.
[8]
Plaintiff paid ECN
directly in respect of the telephonic services provided by ECN by way
of a debit order.   It paid defendant
separately for the
various hardware related rental agreements including photocopiers
that it had concluded with defendant.
The ECN subscriber
agreement and the rental agreements with defendant were distinct
agreements.
[9]
It is important to note
at this stage of the judgment that plaintiff, although it had
switched from Telkom to ECN for its telephonic
service, still require
Telkom to continue to play a role in the services provided.
The VOIP solution provided by ECN
required the use of the same
network infrastructure which had been provided by Telkom.  These
so called SAIX lines were a crucial
part of the ECN subscription
agreement and remained in place.  The cost of hiring the SAIX
lines were included in the ECN agreement.
A portion of the
subscription paid to ECN by plaintiff was then paid over to Telkom.
[10]
The ECN agreement was
to inure for a period of one year.  Thereafter it continued
indefinitely subject to termination on 90 day
notice period for
either party.  The agreement continued for a year without any
incident.   The requisite services
were rendered by ECN and
plaintiff paid all the amounts due to ECN by debit order.  It is
important to emphasise that plaintiff’s
telephonic services
included an overseas calling facility.
[11]
Thus, the trigger for
the litigation which followed began on 12 May 2016 when Mr Titus met
with Ms Flandorp, who then signed two agreements,
the subscriber
agreement and the master rental agreement.   In terms of
these agreements, the defendant would replace ECN
as service provider
in respect of the telephonic services. The master rental agreement
concerned an important item of hardware which
was required which it
was referred to as a Gateway to facilitate connectivity through a new
digital technology.
[12]
On 6 June 2016 Titus
forwarded a resolution and a suretyship document to Flandorp which he
requested should be signed by plaintiff.
Neither of these
documents were ever signed by plaintiff’s members.
[13]
Plaintiff contends that
on 23 May 2016, prior to the sending of the resolution and suretyship
agreements, defendant unlawfully interfered
with the existing ECN
agreement without plaintiff’s consent by causing it to be
terminated.   It followed that ECN ceased
providing
telephonic services to plaintiff and the debit order in terms of
which plaintiff paid ECN was cancelled.  Defendant
installed its
Gateway and caused the cancellation of the SAIX lines which were
integral to the provision of the telephonic service
plaintiff had
been entitled to enjoy in terms of the ECN agreement.  Defendant
had done all this without the consent of plaintiff,
relying instead
on the 2016 agreement.  Following thereupon defendant affected a
debit order on plaintiff’s bank account and
commenced rendering
telephonic services to plaintiff.
[14]
In terms of the
chronology, it appears that, after plaintiff declined to sign the
resolution and the suretyship documents presented
to it by defendant,
the latter terminated the plaintiff’s telephonic services on 15
September 2016 which services were only restored
on 1 December 2016.
The claims
[15]
Plaintiff advanced two
claims against defendant being a delictual claim for damages in the
sum of R 2 579 284.00 (claim A) and a claim
for unjustified
enrichment in the sum of R 81 567.00 (claim B).
[16]
The main claim, claim A
is based on the intentional, alternatively negligent omission on the
part of the defendant which resulted
in pure economic loss being
suffered by plaintiff.   The omission is pleaded as a
breach of the defendant’s legal duty
to act positively.  In
essence therefor, the issues to be determined pursuant to claim A can
be summarised thus: the defendant
justified its conduct on basis that
the agreement entered into on 12 May 2016 was validly concluded.
That, in turn, raises
questions of whether Flandorp was
authorised to sign this 2016 agreement on behalf of plaintiff; if she
was not so authorised, then
did plaintiff misrepresent to defendant
that Flandorp had the requisite authority and further, in the absence
of a positive finding
on these two questions, did plaintiff acquiesce
to the 2016 agreement?
[17]
If the 2016 agreement,
for whatever reason, is found to be invalid, then the question arises
as to the validity of defendant’s reliance
upon amounts it alleged
were due in respect of this agreement as the justification for
refusing to permit the porting of plaintiff’s
numbers to a service
provider of its choice.
[18]
Further questions then
arise; in particular, did defendant gain and/or retain control of
plaintiff’s telephonic numbers in general
and its geographical
numbers in particular in an unlawful manner and without its consent
and did defendant suspend plaintiff’s
telephonic numbers in order
to exert undue pressure on plaintiff to consent to or to ratify the
2016 agreement.   Furthermore,
a question which will
eventually have to be answered concerns whether any of this conduct
was causally related to the disruption
of plaintiff’s telephonic
services to show that an adequate legal link was established between
the damages suffered by plaintiff
and the alleged unlawful conduct by
defendant.
[19]
I turn to deal with the
invalidity of the 2016 agreement, the answer to which is critical to
the disposition of this case.
The 2016
agreement
[20]
The court is confronted
with diametrically different accounts regarding what took place when
the 2016 agreement was signed, being
the evidence on behalf of
plaintiff given by Flandorp and evidence given on behalf of the
defendant by Titus.
[21]
Ms Flandorp was
employed during 2011 and 2017 as a financial administrator.  She
testified that as an administrator she prepared
a range of documents
and, where necessary, would hand them either to the relevant manager
or to Burgess, who would be responsible
for signing contracts, even
to the extent that plaintiff required a contract for the provision of
stationery.   To a considerable
extent, the status that
Flandorp enjoyed in plaintiff’s organisation was confirmed by Ms
Riana Stander, who worked in a more senior
position than Flandorp,
between 2013 and 2017.
[22]
Turning to the 2016
agreement Flandorp testified that she was in contact with Titus who,
on her version, offered to negotiate cheaper
call rates.  In her
evidence she insisted that she had informed Titus that Burgess was
the person authorised to represent plaintiff
in the conclusion of any
contract with plaintiff Titus had assured her that documents that she
was asked to sign were relevant to
the cheaper call rates and that
further documents would be provided to Professor Burgess.
She conceded that, as she was
in a hurry to return her work, she had
signed a range of documents as requested by Titus without examining
the content thereof.
When confronted with the fact that she had
signed 10 pages some 13 times, she insisted that, insofar as she was
concerned, they all
related to reduced call rates.
[23]
Titus’ testimony
unexpectedly was reflective of a very different version of events.
He testified that there had been two meetings
with Flandorp as
opposed to one, that he had explained the new LTE proposed solution
that he was offering, that Flandorp expressed
considerable interest
in the offer and that Titus was of the view that she was the
appropriate person with which to converse on these
matters in that
she had represented that she was plaintiff’s accountant.  The
fact that the documents reflected that she was
an accountant, in Mr
Titus’ view, made it probable that she had informed him
accordingly.   It was put to Titus that
Flandorp only
earned R 11 050 per month, hardly a salary of a financial
accountant, to which he said he was unable to dispute
the point but
insisted that that this had been her representation.  He also
denied Flandorp’s version that there was no discussion
of a
technical nature and that they had only spoken about cheaper calls.
In as an answer to the question on the possible
knowledge that
Flandorp might have possessed regarding, for example the Gateway
system, he said he perceived that she has some technical
knowledge
and therefore was able to converse with him on this subject.
The different
approaches to this testimony
[24]
Mr Walther, who
appeared on behalf of the plaintiff, pointed to evidence which had
been given by Mr Mark Isaac, who had been employed
by defendant as a
consultant.   It was Isaac who had procured the ECN
agreement with plaintiff and had been responsible
for other deals
relating to equipment which were provided to plaintiff by defendant.
According to Mr Isaac, when he discovered
that Titus had arranged for
the conclusion of the 2016 agreement with the customer, whom he
regarded as his own, he sought to investigate
the matter.  In
his view, Titus’ had misrepresented to Flandorp that the deal
included cheaper call rates and he had informed
the defendant’s
sales manager, Rodney Wearing, who was not called to testify
therefore to gainsay Isaac’s evidence.  Furthermore,
Mr
Walther placed emphasis on an opposing affidavit which had been
deposed to by Mr Koekemoer, the managing director of defendant,
in
earlier summary judgment proceedings where Mr Koekemoer had confirmed
that Titus had offered cheaper call rates when he met with
Flandorp.
That was information which, in Mr Walther’s view, Mr Koekemoer
could have only received from Titus.
[25]
According to Mr
Walther, Titus were not able to satisfactorily explain why almost all
the components of the master rental agreement
which Flandorp signed
were not completed when she affixed her signature.   Isaac
testified that this was not common business
practice of defendant.
Neither was Titus able to explain why Flandorp had been asked
to sign a blank order form with
only one amount on it which served to
confirm her version regarding cheaper call rates.
[26]
By contrast, Mr Jonker,
who appeared on behalf of defendant, submitted that Flandorp’s
version of the 12 May 2016 meeting was improbable.
On her
version, Titus arrived at the premises and informed her of the
purpose of the meeting which was to negotiate cheaper rates.
No discussion followed upon the promise of an amount of cheaper
rates nor was any evidence offered by her of any further discussions
on the facts.   Titus then proceeded to placed ten
documents before her which reflected that they were in agreement and
Flandorp then proceeded to sign these agreements some 13 times
without demure.  In his view, while Flandorp might not have been
an accountant, she was an educated person holding an N6 certificate
at Northlink College in accounting.  She was no stranger
to the
nature of contractual documents, even if she was only a financial
administrator.   It was highly unlikely that she
would have
been ignorant of the implications of the meeting with Titus and thus
of her signature on these documents.
Furthermore,
plaintiff had not pleaded that the agreement was invalid because of a
misrepresentation by Titus.  Furthermore,
Flandorp had testified
that, after signing the documents on 12 May 2016, she had made copies
so she could provide Burgess with the
relevant documentation but, on
her version, she only showed Burgess the documents when the telephone
lines were suspended on 15 September
2016 on the ostensible basis
that she did not think that the documents were of particular
relevance.  Furthermore, she testified
that upon receipt of the
suretyship agreement and the resolution from Titus on 5 June 2016,
she had finally realised that the documents
might be linked.
[27]
It was clear that on 6
June 2016 not only did Titus forward a resolution but also a
suretyship document to Flandorp.  According
to Stander,
defendant’s representatives had attempted on numerous occasions to
contact Burgess.  It was at this point that
Stander began to
investigated the situation.  According to her, Flandorp had told
her she had signed a document which related
to cheaper calls.
It transpired that the fact that defendant required further
documentation meant that, on the basis of the
document signed by
Flandorp, meant that it had limited legal implications until the
completion of the balance of the documents.
Titus said
that there were two meetings with Flandorp during which Titus
allegedly discussed the solution he was offering.
Flandorp only
recalled one meeting.   Titus was unable to provide any
credible version as to what then occurred at the
‘second meeting’.
Confronted by the question of whether he had informed Flandorp
about the need for a resolution
and a suretyship agreement to
complete the process, he answered in the negative, somewhat
surprisingly on the basis that ‘at the
time, there was no need’.
He also denied Flandorp’s version that to obtain these
signatures, the ‘Professor will
have the final say’; even though
it was clear from the completed document that Burgess was the
authorised signatories.
Evaluation
[28]
In my view, neither the
version of Flandorp or Titus are particularly satisfactory.
There were clear discrepancies in some of
Flandorp’s testimony.
For example, Burgess, testified that during August 2016 she had
discussed the problem of the
2016 documents which was in conflict
with Flandorp’s version that she had only discussed the issue of
the 2016 agreements after
the lines were cut that is after 15
September 2016.   This conclusion is not grounded solely on
the basis of Burgess’
evidence but in addition there is an email
generated by Ms Stander on 14 September 2016 where mention is made of
the signing of documents
by Flandorp.   Similarly, there
was testimony that only when the lines were cut did Flandorp realise
that the signed forms
may be of critical relevance.   Flandorp’s
version holds some clear difficulties.
[29]
Titus was a most
unsatisfactory witness.  When he met Flandorp armed with his
subscription list, the relevant subscriber agreement
and the company
billing details had been already completed in advance by defendant’s
staff in which it was revealed that Burgess
was the only authorised
signatory and thus the contact person.  Titus would have had to
know by the time he entered into discussions
with Flandorp that it
was Burgess who had the requisite authority to contract on behalf of
plaintiff.  Yet he steadfastly insisted
that Flandorp had
represented to him that she had the requisite authority to contract
and that he simply accepted this position without
further
clarification.   It is hard to believe on the basis of
Flandorp’s personality in the witness box that she could
have been
taken for a senior executive authorised to enter into contracts with
third parties.
[30]
Unlike the bombastic
Titus (under cross examination), Flandorp was hesitant, somewhat
overwhelmed by the occasion and exhibited so
little confidence that
it is a stretch to envisage her as a key member of plaintiff’s
staff as opposed to both Burgess and Stander.
Similarly, there
is little clear evidence to justify that she had overreached herself
and represented that she was an accountant,
when she was no more than
the financial clerk/administrator.  Titus had spoken about
cheaper calls, as is clear from the affidavit
deposed to by Koekemoer
and to which the latter had a great deal of difficulty in explaining
away.   In short, Titus was
a remarkably unimpressive
witness who became increasingly aggressive and defensive under cross
examination.  This was in marked
contrast to the way he
represented himself when being examined by Mr Jonker.   It
is also highly unlikely, given Flandorp’s
testimony, that Titus
could have ever assumed that he was speaking to somebody with the
technical knowledge to understand the advantages
of the Gateway
system.   Unless Flandorp is in line for an Oscar for a
fine supporting role, her answers throughout gave
no reason to
believe that she had the technical knowledge as claimed by Titus.
[31]
I was urged by
both parties to adopt the approach dealing with contradictory
versions as set out in
Stellenbosch
Farmers Winery Group Limited and another v Martel and Cie and others
2003 (1) SA 11
(SCA) at para 5:
‘
The
technique generally employed by courts in resolving factual disputes
of this nature may conveniently be summarised as follows.
To come to a conclusion on the disputed issues a court must make
findings on (a) the credibility of the various factual witnesses;
(b)
their reliability; and (c) the probabilities.  As to (a), the
court’s finding on the credibility of a particular witness
will
depend on its impression about the veracity of the witness.
That in turn will depend on a variety of subsidiary factors,
not
necessarily in order of importance, such as (i) the witness’
candour and demeanour in the witness-box, (ii) his bias, latent
and
blatant, (iii) internal contradictions in his evidence, (iv) external
contradictions with what was pleaded or put on his behalf,
or with
established fact or with his own extra curial statements or actions,
(v) the probability or improbability of particular aspects
of his
version, (vi) the calibre and cogency of his performance compared to
that of other witnesses testifying about the same incident
or
events.  As to (b), a witness’ reliability will depend, apart
from the factors mentioned under (a)(ii), (iv) and (v) above,
on (i)
the opportunities he had to experience or observe the event in
question and (ii) the quality, integrity and independence of
his
recall thereof.   As to (c), this necessitates an analysis
and evaluation of the probability or improbability of each
party’s
version on each of the disputed issues.  In the light of its
assessment of (a), (b) and (c) the court will then, as
a final step,
determine whether the party burdened with the onus of proof has
succeeded in discharging it.  The hard case, which
will
doubtless be the rare one, occurs when a court’s credibility
findings compel it in one direction and its evaluation of the
general
probabilities in another.  The more convincing the former, the
less convincing will be the later.  But when all
factors are
equipoised probabilities prevail.’
[32]
As indicated, the
credibility of both witnesses can be questioned with some measure of
justification.   However, Titus’
demeanour in the witness
box coupled to the fundamental contradictions between that which
appeared in the answering affidavit in
the summary judgment
proceedings and his insistence of a different version in his
viva
voce
evidence, the
manner in which the 2016 document was filled in, all point to the
inherent improbability that a financial administrator
who enjoyed a
low level of employment with plaintiff would have seen fit to
represent that she had the authority to change fundamentally
the
telephonic system of plaintiff.  To be clear demeanour alone is
to be treated with great caution but when a witness eschews
candour,
behaves aggressively and refuses to answer key questions (e.g. ‘if
you say so’), this must form part of the overall
evaluation.
As Nugent JA said in
Medscheme
Holdings (Pty) Ltd and another v Bhamjee
2005 (5) SA 339
(SCA) at para 14, ‘
an
assessment of evidence on the basis of demeanour without regard to
the probabilities constitutes a misdirection.  But demeanour
can
reinforce a conclusion reached on an objective assessment of the
probabilities or even tilt the probabilities which otherwise
would be
in equipoise
.’  See
Body Corporate of
Dumbarton Oaks v Faiga
[1998] ZASCA 101
;
1999 (1) SA 975
(SCA) at 979.
[33]
A few extracts from the
cross-examination of Titus are illustrative.  Confronted with
his insistence that Flandorp had represented
that she was an
authorised signatory of plaintiff and as to the relevant documents
which stated clearly that Burgess was the authorised
signatory,
Titus’ testimony’s was as follows:
‘
MR
WALTHER:          When,
on your version, Ms Flandorp said that she’s authorised
to sign.
Why didn’t you change the document you’re asking her to sign, to
change “authorised signatory” on page
34, from Ms Burgess, to
identify what you’d been told?  Why didn’t you ask Ms
Flandorp to do that?
MR TITUS:
To do what?
MR WALTHER:
To change the authorised signatory from “Lesley Burgess” to
comply with the information Beulah Flandorp had allegedly given you?
Why didn’t you make that change to that document?
MR TITUS:
Because the documents
are contract that people(?) … and we don’t
really make corrections on our agreements.
MR WALTHER:
Well, that’s not an acceptable explanation.  People change
things and initial them all the time.
MR TITUS:
That’s your opinion
that.  I don’t know what, that’s your
opinion.
MR WALTHER:
You see, because ultimately what we’re left with, we’re left
with
your version as to what Ms Flandorp said.  We’re left with Ms
Flandorp’s version, but the problem for you is that the
document
that you asked Ms Flandorp to sign, supports her version.
…
MR WALTHER:
Well, I put it to you that Ms Flandorp’s evidence was that she
was
a financial administrator.  At no stage did she say to you that
you were, that she was an accountant.
So I’m
putting you that that is something, that your evidence on this point
is not true.  Any comment?
MR TITUS:
That is incorrect.
MR WALTHER:
You see …  this is – if we go to your affidavit.
MR TITUS:
Page, please? File?
MR WALTHER:
File B, on page 352
MR TITUS:
Paragraph?
MR WALTHER:
Paragraph 28.  Because there the, that’s the affidavit of
Mr
Koekemoer and he, he says:
‘
Flandorp
confirmed to Titus and he also held out to be that she was dully
authorised to enter into the 2016 agreement.  The fact
that she
was the financial manager of the plaintiff, and that the plaintiff
placed her in a position and allowed her to negotiate
contractual
terms with third parties, like the defendant represented to the
defendant, that she had the necessary authority to represent
plaintiff in concluding the 2016 agreement.’
…
MR WALTHER:
And Mr Koekemoer says:
‘
There were
two things that happened at the time.  The first one is Mr Titus
came back and he gave me, you’ll see my signature
at the bottom of
the page, so I have to verify every document.  So when he came
back I spoke to Mr Titus who represented them,
and he of course gave
me info.   At that stage, we deal with the financial
agreements.   We had to do the verification
ourselves which
means we had to get one of the sales coordinators to phone customers
to verify the signatures on that page.
So the information that
I received at that stage was that there was a document to the extent,
but for some or other reason I don’t
know what happened, there was
a document, it was referred to Ms Flandorp as the financial manager,
and that, in hindsight, is not
true.  So the information I got
back seems to be incorrect.’
And then he says:
‘
But is it
Mr Titus that told you she was the financial manager?’
That’s a question from the
Court, and he says:
‘
Like I
said, M’Lord, there’s two verifications.  One with Mr Titus
confirming, he came back and gave me that impression.’
COURT:
And what do you …(intervenes)
MR TITUS:
Is there a question,
M’Lord?
MR WALTHER:
So what I’m putting to you is that you came back and told Mr
Koekemoer
that she was the financial manager.
MR TITUS:
I don’t recall.
MR WALTHER:
Well, that is what Mr Koekemoer says in his affidavit, and that’s
what you confirmed.
MR TITUS:
Like I said, 2017
was quite a long time ago, Mr Walther, I don’t
recall.’
[34]
Titus was thus the sole
conduit of information received by Koekemoer.  And Koekemoer
confirmed that Titus had told him that he
had spoken to Flandorp
about cheaper calls.  In itself this calls into question the
reliability of the testimony that I have
reproduced.
[35]
Titus was also asked
about Flandorp’s testimony that whatever she signed, further
documents needed signature before an agreement
was concluded between
plaintiff and defendant:
‘
MR
WALTHER:          And Ms
Flandorp also testified that you, when she told you that
only the
professor could sign, that your response was that she shouldn’t be
worried about that because further documentation would
come along for
the professor to sign.  Your comment?
MR TITUS:
That is 100 per cent
incorrect.
MR WALTHER:
Well, Mr Titus, that can’t be because further documentation did
come along.   We know that.   A resolution and a
suretyship provided by you did come along.   Your
comment?
MR TITUS:
Yes, the documents
did come along.  Yes, that’s right.
MR WALTHER:
Yes, So, now let’s go back.  When Ms Flandorp testified that
she had reservations about signing these forms that had been put in
form of you (?), she says you told her not to worry because further
documents, or something to that effect, that further documents would
be coming along.
MR TITUS:
That’s definitely
incorrect.  There was no reservations from
Ms Flandorp.  As on the date in question, the 12
th
,
Ms Flandorp in her own free will signed the documents.
MR WALTHER:
No look, okay …   Well, as I put it to you before, Ms
Flandorp says she signed the documents because she relied on
representation from you that there were cheaper calls to be had.
MR TITUS:
No.
MR WALTHER:
And she signed the documents believing that further documentation
for
the professor to sign, in other words, which, because she was, she
told you that the professor was the authorised signatory and
you told
her that further documents would be coming along.  Did you or
did you not say further documents would come along?
MR TITUS:
I believe I did answer
that question.
MR WALTHER:
Did you or did you not say that…?  So, in other words, you
deny?  Is it your, do you deny or admit that you…?
MR TITUS:
That’s correct.
MR WALTHER:
You deny that … (intervention)
MR TITUS:
That’s correct,
yes.
MR WALTHER:
…having told her that?
MR TITUS:
That’s correct.
MR WALTHER:
But then you did afterwards send, you admit to having sent her a
suretyship resolution?
MR TITUS:
That’s correct,
yes.’
[36]
Again and again as the
examples from his testimony reveal, Titus evidence ended in a cul de
sac.   To emphasise: the quality
of Titus’ answer are the
crucial factors in the evaluation of his evidence.  His
demeanour is but a supplementary factor.
The same
analysis has been undertaken in respect of Flandorp.  Her
version of events are more plausible than that of Titus in
that it
holds greater congruence with the documentary evidence and the
probabilities after a careful assessment of the evidence of
Burgess,
Stander, Isaac and Koekemoer.  Her demeanour as described merely
adds weight to the overall assessment.
[37]
On balance, Flandorp’s
version was therefore more convincing than that of Titus.
It is correct that she signed a document
13 times but on its own thus
is not entirely inconsistent with the version that what was being
contracted was for the existing telephone
system to be based on
significant cheaper calls.  It is also the version of Flandorp
that Titus informed her that there would
be further documents for
Burgess to sign.  Significantly in the light of his confusing
evidence about additional documents,
as set out above he sends an
email with a resolution and a surety document in order that Burgess
should sign them.  This is
evident in the following email of 6
June 2016:
‘
Good day
Beulah
As per our telecom earlier today,
please have Lesley sign
the documents attached.
I’ve marked with a green
highlighter where she needs to sign.
I also require
1 signature from you, I’ve marked with a blue highlighter where you
need to sign.’
(my emphasis)
[38]
They were sent
after defendant had prompted the termination of the ECN agreement and
proceeded to implement the 2016 agreement on
23 May 2016, an act
which was done with expeditious haste.   However, even if I
assume in favour of Titus’ version and
that this was not a case of
a naïve financial administrator succumbing to the persuasion of a
sales person seeking additional commission,
a further question arises
as to Flandorp’s legal lack of authority to contract on behalf of
the plaintiff.
Did Flandorp have
actual authority?
[39]
Plaintiff claims that
Flandorp did not have the requisite authority to contract on behalf
of plaintiff.   Defendant initially
raised a question of
estoppel but later abandoned this line of defence.  Hence,
defendant’s case is based on the submission
that Flandorp had
authority to represent plaintiff.
[40]
In a discussion of
various forms of actual authority Cassim and Cassim write as follows:
‘
There are
broadly three categories of implied actual authority.  First,
implied actual authority is that authority which is necessary
or
reasonably incidental to the effective execution of the agent’s
express authority.   For instance where the agent
has
express authority to develop property for his principal, he will have
implied authority to do all such things as are reasonably
incidental
to the development of that property such as appointing architects to
prepare plans.  Secondly, implied actual authority
may be
implied from the nature of the office or the particular position to
which the agent is appointed.  This may be referred
to as
implied usual authority.  The appointment of a person as the
managing director of a company, for instance, may carry with
it
implied usual authority to enter into contracts on behalf of the
company and to do all such things as are within the usual scope
of
that office.  Where the board of directors appoint one of their
members to an executive position, they impliedly authorise
him to do
all such things as fall within the usual scope of that office.
Implied usual authority must be distinguished from
ostensible usual
authority (see further paragraph III (b)(ii) below).  Thirdly,
implied actual authority may arise as a reasonable
inference from the
conduct of the principle, where the principal acquiesces in the
activities of the agent.  An example of this
category arose in
Hely-
Hutchinson v Brayhead Ltd
[[1967] 3 All ER 98 (CA)]’
[1]
[41]
This area of law was
canvassed recently in
Makate
v Vodacom (Pty) Ltd
2016 (4) SA 121
(CC).   There was a considerable debate
between the majority judgment penned by Jafta J and a minority
judgment authored
by Wallis J about whether the concept of estoppel
and ostensible authority are different conceptual animals.
Jafta J held that
‘ostensible authority is the power to act as an
agent indicated by the circumstances even if the agent may not truly
have been
given the power, whereas estoppel … is a rule that
precludes the principal from denying that she gave authority to the
agent.’
Jafta J held that South African courts had sometimes
conflated ostensible authority with estoppel.   The learned
judge
referred to the judgment of Schutz JA in
NBS
Bank Ltd v Cape Produce Company (Pty) Ltd and others
2002 (1) SA 396
(SCA) this approach was expressly adopted.
[42]
As Wallis AJ noted,
estoppel is constituted by a representation by a principal either by
words or conduct.  Absent a representation
which is sourced in
words or conduct of a principal, there can be no estoppel.  For
this reason, in the view of Wallis AJ ostensible
apparent authority
is a form of estoppel.
[43]
Unfortunately, that was
not the approach adopted by the majority through what appears to be a
different reading of a significant line
of cases.   I raise
this unfortunate situation because Mr Jonker pressed the majority
judgment to the effect that, at present,
authority is established if
it can be shown that the principal either by words of conduct created
an appearance that an agent has
the power act on its behalf.
For this proposition he cited para 45 of the
Makate
judgment that;
‘
Actual
authority and ostensible or apparent authority are the opposites
sides of the same coin.  If an agent wishes to perform
a
juristic act on behalf of a principal the agent requires authority to
do so for the act to bind the principal.   If the
principal
had conferred the necessary authority either expressly or impliedly
the agent is taken to have actual authority.
But if the
principal were to deny that she had conferred the authority the third
party who concluded the juristic agreement with
the agent may plead
estoppel in replication … estoppel is not a form of authority but a
rule to the effect that if the principal
had conducted herself in a
manner that misled the third party into believing that the agent has
authority the principle is precluded
from denying that the agent had
authority
.’
The difficulty
arises with the following paragraph:
‘
The same
misrepresentation may also lead to an appearance that the agent has
the power to act on behalf of the principal.  This
is known as
ostensible or apparent authority in our law.  While this kind of
authority may not have been confirmed by the principal,
it is still
taken to be the authority of the agent as it appears to others.
It is distinguishable from estoppel which is not
authority at all.
Moreover, estoppel and apparent authority have different elements
barring one that is common to both.
The common element is the
representation which may take the form of words or conduct.’
[44]
Even though it appears
to me that Wallis AJ’s analysis of the doctrine is clearly correct,
I am bound by the majority in
Makate
.
That then raises the question as to the source of Flandopr’s
authority when defendant submits that Flandorp had the
authority to
conclude the 2016 agreement.  This raise the question as to
whether this Court must examine both whether she had
actual authority
as well as ostensible or apparent authority.  This was never
made clear to me in argument before this Court.
In support of
the argument that Flandorp had actual authority, Mr Jonker referred
to the job profile attached to the employment contract
in which one
of the key performance duties of which she was required to perform
was “to negotiate with suppliers and open new accounts”
as the
source of Flandorps authority.  In other words, viewed in the
context of Flandorp’s employment contract, plaintiff
had created
the appearance that Flandorp had the power to act on its behalf,
thereby conferring the necessary authority on her.
Burgess was constrained to concede that if a third party examined
this document, it would have been under the impression, because
of
the wording thereof, that Flandorp had the authority to negotiate
with suppliers and open new accounts.  The source of this
submission is the employment contract which, in Mr Jonker’s view,
expressly created the appearance that she had the power to negotiate
and conclude contract with the suppliers such as the defendant.
[45]
However, there is
evidence which is clearly to the contrary.   Isaac, the
sales agent who initially dealt with plaintiff
regarding the
procurement of ECN contract and represented defendant regarding the
conclusion of rental agreements with plaintiff
pertaining to hardware
such PABX and photocopier machines, testified that Burgess had always
been the person with the authority to
finalise and sign any
agreement.   That position was confirmed by Burgess, who
testified that only the two members of plaintiff
(being a CC) were
authorised to represent plaintiff in concluding agreements such as
the one concluded with defendant.
Ms Stander also
confirmed that it was well known in plaintiff’s organisation that
Burgess was the person with the authority to
finalise and sign
agreements.  Stander confirmed that Flandorp’s role was that
of an administrative assistant to Burgess who
did not have any
authority to conclude agreements.
[46]
Burgess also sought to
explain the implications of the written contract of employment signed
by herself and Flandorp on 8 June 2015.
She testified that in
2014 plaintiff was engaged in the process of obtaining international
accreditation.   Pursuant thereto,
written contracts of
employment were required in respect of all plaintiff’s employees.
Burgess claimed that she used
a standard template for all employees
including for Flandorp.  Nonetheless, Flandorp continued to work
with Burgess as an administrator
on the same terms and conditions and
retained the same job descriptions and responsibilities that she had
done prior to the signing
of the contract.   She was unable
to perform the role of a financial accountant.   At the
very least Flandorp
would have had to possess a BComm degree or
equivalent work experience, neither of which she had.
Even if there can be
a debate about whether the description of the
job profile was a mistake as alleged by plaintiff’s witnesses,
defendant only came
to know of the terms of this employment agreement
upon discovery by plaintiff.   Accordingly, there was no
basis by which
defendant was aware of or misled by its contents
during 2016 or any time prior thereto; that is when the 2016
agreement was allegedly
concluded.
[47]
There was some debate
about whether Burgess or Stander knew about Flandorp’s signing of a
document in August 2016 without reacting
thereto.   While
there is merit in this point, it is also so that plaintiff’s copy
of the 2016 agreement was attached
to its initial summons consisted
of an incomplete version signed only by Flandorp.   The
completed version containing all
of the relevant information to
conclude a contract was attached to defendant’s affidavit, deposed
to in opposition to the earlier
summary judgment application.
This was the first time that plaintiff had actually seen the
fully signed completed version
of the agreement.  Titus was
unable to provide any explanation as to why the complete signed
agreement was never previously
sent to Burgess or indeed even to
Flandorp.   It is also significant that, notwithstanding
considerable pressure from defendant’s
representatives, Burgess
never signed the resolution or the suretyship agreement.
Certainly the fact that no resolution
or suretyship agreement had
been signed by Burgess makes it difficult to justify an argument that
plaintiff acquiesced to the agreement
into which Flandorp allegedly
bound plaintiff.
[48]
There is a further
important issue which concerns the nature of the 2016 agreement which
was signed by Flandorp and to which there
were numerous blank
spaces.   Mr Jonker sought to argue away the fact that the
blank spaces related solely to the commencement
date and serial
numbers and other identification of the goods.   He further
relied upon clause 20 of the contract in which
the following was
provided.
‘
The User
authorises the Renter to complete any blank spaces in the Schedule
relating to the Commencement Date and the serial numbers
and under
identification of the Goods.   The User also authorises the
Renter to rectify any manifest errors contained in
the agreement
and/or schedules.  The Renter undertakes to give the user
written notice of ay rectifications made to the agreement
and/or
schedules and for any blank spaces completed in the schedules in
terms of this clause, and to send the User a copy of the
completed
and/or corrected agreement and/or schedules.’
[49]
It is therefore
necessary to examine the context of this clause, printed as a
standard form clause which I should add, required a
microscope to
read this document.
[50]
What was signed by Ms
Flandorp other than the details of plaintiff were that there would be
a monthly rental of R12 050, excluding
VAT.   Nothing
else was filled in the document.   In short, the document
she signed contained no details of the
agreement.  Thereafter
the master agreement was populated by Mr Titus.   It is
difficult to see how the initial document
signed by Ms Flandorp can
be altered so radically in the manner that it was and still be saved
by Clause 20 of the agreement.
[51]
The initial document
which Flandorp signed supports her version that the entire
negotiations concerned cheaper rates, for that was
the only figure
inserted in the initial agreement.   Significantly, no
member of plaintiff was ever provided with the 2016
agreement which
was however signed by defendant’s representatives.   The
plaintiff’s copy of the agreement which was
attached to its summons
consisted of the incomplete version to which I have made reference.
The completed version containing
the missing and pertinent
information, to which I have also made reference, was only made
apparent to plaintiff when it was attached
to the defendant’s
affidavit opposing summary judgment application.
[52]
The position gets even
more difficult for the defendant in that Burgess never signed the
resolution or the suretyship agreement as
demanded.  As Mr
Walther submitted, there is great difficulty to understand how
plaintiff could have been taken to have acquiesced
or to have
ratified an agreement that no member of plaintiff had ever seen, and
in which, notwithstanding a consistent insistence
by defendant’s
representatives, Burgess refused to sign the resolution or the
suretyship agreement that were palpably regarded
by defendant as part
of the entire agreement, as its increased desperation to obtain
Burgess’ signature illustrates.
Unlawfulness
[53]
In its amended plea,
plaintiff avers that, notwithstanding that there was no binding
agreement in place between plaintiff and defendant:
‘
Defendant
installed certain equipment at plaintiff including a Patton Gateway
with serial number 00A0BA0BC6A0 (hereinafter referred
to as “the
Gateway”), and defendant effected the cancellation of, and/or
depravation of plaintiff’s access to the SAIX lines
(which were
integral to the provision of electronic communications services in
terms of the 2015 Agreement) without plaintiff’s
consent;
Defendant commenced providing
electronic communications services to plaintiff via, amongst other
equipment, the Gateway; and
ECN terminated its services to
plaintiff which services and obligation it had provided to plaintiff
in terms of the 2015 subscription
agreement.’
[54]
In its amended plea,
defendant responds thus:
‘
The
defendant admits that in terms of the 2016 agreement:
1.
It installed certain equipment at
plaintiff, including a Patton Gateway with serial no: 00A0BA0BC6A0
(“the Gateway”);
2.
Defendant commenced providing electronic
communications to plaintiff via, amongst other equipment, the
Gateway; and
3.
ECN terminated its services to plaintiff,
which services and obligations it provided to plaintiff in terms of
the ECN agreement.
The defendant
pleads that ECN terminated its services in terms of the ECN agreement
on the basis that the plaintiff and defendant
concluded a valid
binding agreement.
’
[55]
Plaintiff’s
contention is that, if the 2016 agreement is found to have been
invalid, it must follow that the defendant had no right
to cause the
termination of the ECN agreement because this termination would have
occurred without plaintiff’s consent and defendant’s
actions
would then amount to an unlawful interference in a contract between
plaintiff and the ECN.   Plaintiff also pleads
that,
pursuant to the defendant’s approach that the agreement was valid,
it cancelled SAIX lines which were an integral part of
the ECN
agreement and defendant did so without plaintiff’s consent.
[56]
Mark Isaac, under cross
examination, informed the court that the SAIX lines had been
cancelled as from 2016, pursuant to the conduct
of defendant, namely
that the 2016 agreement had replaced the ECN agreement in which the
SAIX lines had been utilised.
[57]
Mr Koekemoer testified
that, once instructions had been given by plaintiff pursuant to the
meeting between Titus and Flandorp in which
the two related
agreements had been signed, being the subscriber agreement and the
master rental agreement, Koekemoer regarded this
action as
representing instructions from the customer for the implementation of
that which had been agreed upon, including the employment
of the
Gateway.   As a result, on 13 May 2016 Koekemoer testified
that an order was placed for the necessary equipment
in order to
implement the 2016 agreement.
[58]
Mr Walther referred to
the fact that once defendant sought to implement the 2016 agreement
on 23 May 2016 and installed the Gateway,
it caused the cancellation
of the SAIX lines which had been integral to the provision of
telephonic services to which plaintiff had
been entitled in terms of
the ECN agreement.  Considerable pressure was then exerted upon
plaintiff to sign the necessary resolution
and suretyship documents
which were required by defendant.   It was during the
period from July 2016 to early September
2016 when plaintiff’s
members finally became aware of the existence of that which would had
been signed by Flandorp.  It was
a steadfast refusal by
plaintiff’s members to sign the resolution and surety agreement
that triggered the exertion of pressure
upon plaintiff.  This
culminated in an email sent by Mr Rodney Wearing of defendant to Ms
Stander on 14 September 2016 in which
the following was stated:
‘
Hi Riana
The surety documents were
presented at the same time as it is on the main contract, but
unfortunately the members were not available
as Lesley was out of the
country.  Beulah assured us that she has the right to sign hence
the reason why it was resented to
her.
As far as the cost, all efforts
were made to keep the costs the same.  The costs breakdown is
just now different than what it
used to be.  The previous ECN
agreement was R1599.00 Excl. VAT per month.  The new agreement
structured on R1250.00 excl.
VAT for rental and R450 excl. VAT for
line rental which is the new infrastructure.
I don’t have a
complete new
agreement
in place due to the resolution and Surety’s that is
outstanding.  I need to move back to the previous agreement and
terminate
my services immediately.’ (my emphasis)
[59]
Defendant
admitted that on 14 September 2016, through Wearing, it accepted the
plaintiff’s repudiation and termination of the 2016
agreement and
reinstated the ECN agreement between the parties.
Significantly, however, in his affidavit opposing the summary
judgment application, Mr Koekemoer had stated that Wearing had merely
conveyed to plaintiff that there were formal documents, being
the
resolution and suretyship agreement, which required a signature
pursuant to the 2016 agreement.  He then stated ‘he (Wearing)
mentioned reverted to the old agreement purely in an attempt to get
the outstanding documents from the Plaintiff.’  This was
confirmed by Wearing in a confirmatory affidavit pursuant to the
summary judgment proceedings.  Tellingly, the court never was
given the benefit of Wearing’s testimony.
[60]
The question therefore
which arose was what was behind Wearing’s email of 14 September
2016.   In my view, Mr Walther
correctly submitted that, in
the light of Wearing not testifying on behalf of defendant in these
proceedings, the inference to be
drawn was that he would have
confirmed that defendant had mentioned reverting to the ECN agreement
in order to obtain the outstanding
documents from plaintiff; that is,
this conduct was part of a campaign to pressurise the plaintiff to
sign the necessary documents
and therefore conclude the 2016
agreement.
[61]
Whatever the
motivation, it is clear that defendant suspended plaintiff’s
telephonic services on 15 September 2016.
On 16 September
2016 Flandorp, clearly concerned about the suspension, generated an
email to Wearing requesting an invoice for any
outstanding amounts
owing by plaintiff to defendant.  To that Wearing replied:
‘
Your
account is up to date.  There is no amount outstanding.
The reason for the suspension of the line is because of the
long
outstanding documents since May 2016.   The updated
agreement was signed by you with the understanding that you had
all
authority to do so.   But we required a resolution and
surety as previously requested in order to complete the paper
work as
per Companies Act.’
[62]
Pursuant thereto,
Flandorp wrote a series of emails, the most important of which was on
22 September 2016 which was directed to Wearing
in which Flandorp
told Wearing that Burgess required plaintiff’s geographic numbers
to be ported back to Telkom.
There was no response
from Wearing.
[63]
On 26 September 2016 a
further email was generated by Flandorp to Wearing indicating that
plaintiff had agreed to settle all amounts
in respect of hardware
contracts with defendants, such as the PABX and photocopier
machines.  She requested settlement figures
in this regard.
When Flandorp received the settlement figures she sought the
assistance of Mr Van Rensburg of Nashua
Tygerberg in regard to what
she considered to be erroneous figures.   Van Rensburg
advised Flandorp to address a letter
to Wearing requesting that
plaintiff’s existing numbers be ported back to Telkom.
This was confirmed in an email which
Van Rensburg wrote to plaintiff
and in which he included Wearing on 7 October 2016.  The
response from Koekemoer was as follows:
‘
Can you
maybe confirm what we need to now.  If they continue with us we
are back to square one and I will suspend their service
in order to
reactivate the line on the dealer agreement.  This can take up
to six weeks exactly what we told the customer.’
It
is clear that at this point there had been no reinstatement of the
ECN agreement which was the meaning of the phrase “dealer
agreement”.  Plaintiff sought a way out of the impasse by
paying a settlement amount but defendant continued to insist that
plaintiff pay the amounts in respect of the 2016 agreement prior to
porting.
[64]
Significantly, in his
affidavit deposed to pursuant to the summary judgment proceedings,
Koekemoer referred to a letter generated
by plaintiff’s attorney on
17 November 2016 in which the latter demanded the porting of
plaintiff’s lines to Telkom.  He
stated:
‘
I advised
Plaintiff’s attorneys that this was not possible due to the 2016
agreements still being in place.  I further advised
that before
the Defendant would relinquish its ownership of the lines to Telkom,
Defendant was entitled to payment of its settlement
amounts in terms
of the 2016 agreement.’
[65]
This position was
confirmed in a letter generated by defendant’s attorneys to
plaintiff’s attorney which the following was stated:
‘
Your client
is bound to the agreement (the 2016 agreement) to exit from same and
it is liable for the settlement figures as provided
to your client…’
[66]
It was then that
plaintiff paid the outstanding amount of R 81 567,00 on 25
November 2016 and shortly thereafter succeeded in
securing the
restoration of its lines on 1 December 2016.
[67]
There was considerable
debate about the amended plea; in particular, that in December 2020
defendant amended its plea to aver that
it had accepted plaintiff’s
repudiation and terminated the 2016 agreement and reinstated the ECN
agreement.   Its amended
plea reads thus:
‘
Upon the
plaintiff’s instruction / request, the ECN agreement was reinstated
on or about 14 September 2016, after which date the
ECN agreement
remained operative and was not terminated in accordance with clause
2.1 thereof.
In any event, there was no
obligation to release the telephone lines and port same to Telkom
given the plaintiff’s indebtedness
to the defendant for the
accelerated rental as a result of the termination of the 2016
agreement …  Accordingly, pending the
resolution the
resolution of the dispute between the parties and the payment of all
amounts outstanding to the defendant, the defendant
exercised a lien
over the telephone lines;
In the alternative, and in the
event that the court finds that the 2016 agreement was null and void,
the defendant pleads that at
all relevant times the ECN agreement
remained operative between the plaintiff and ECN and was not
terminated.’
[68]
The problem is that,
until December 2020, this had not been defendant’s approach.
In any event, reinstatement
of the ECN agreement would have required
the consent of ECN and plaintiff.  There is no proof that any of
this had been communicated
to ECN or to plaintiff.
[69]
The upshot is that,
notwithstanding some temporary restoration of plaintiff’s
telephonic services from 3 to 18 October 2016, the
SAIX lines were
only reconnected on 21 November 2016.  This meant that there was
no connection in respect of these lines from
15 September 2016 to 21
November 2016.  Absent the validity of the 2016 agreement, there
could have been no legal basis for
defendant to refuse to restore the
status
quo ante
because there would not have been a legal basis to interfere with the
infrastructure which was central to the ECN agreement.
[70]
To the extent that
defendant avers that it was under no duty to port telephone numbers
back to Telkom, its case has to be based on
the validity of the 2016
agreement.   Absent the validity thereof, there was no
legal basis by which defendant could aver
that it was not obligated
to release the telephone lines and port them to Telkom.
[71]
However, Mr Jonker
submitted that, before a requirement of wrongfulness can be shown to
be successfully pleaded, the court has to
be persuaded that the legal
convictions of the community demand that such conduct ought to be
regarded as unlawful.   That,
in my view, is a trite and
correct proposition of law.  But as was stated in
Loureiro
and others v Imvula Quality Protection (Pty) Ltd
2014 (3) SA 394
(CC) at para 53:
‘
The
wrongfulness enquiry focusses on the conduct and goes to whether the
policy and legal convictions of the community, constitutionally
understood, regard it as acceptable.   It is based on the
duty not to cause harm – indeed to respect rights – and questions
the reasonableness of the imposing liability… [a] defendant’s
subjective state of mind is not the focus of the wrongfulness
enquiry.
Negligence on the other hand focus on the state
of mind of the defendant and test his/her conduct against that of a
reasonable person
in the same situation in order to determine
fault.
’
[72]
Absent one argument
that requires further attention, in my view, it is clear that, once
it is established that the 2016 agreement
was not validly concluded,
the interference with ECN agreement and further conduct which
resulted in the plaintiff not having access
to telephonic lines which
were crucial to its research enterprise dictates a clear conclusion:
The legal convictions of the
community would not sanction such
conduct.   Harm was caused to plaintiff (the amount of the
harm stands to be quantified
in subsequent proceedings) as a result
of defendant relying on a contract which was not legally concluded.
[73]
The issue that remains
to be canvassed is Mr Jonker’s submission that a delictual remedy
is not available to the plaintiff as the
legal duty contended for
arises in the matrix of obligatory relationships based on contract.
[74]
In essence, Mr Jonker
submitted that the defence he was raising did not require this Court
to make any finding on the validity of
the 2016 agreement.  His
argument relied solely on the existence of the 2015 agreement in
terms of which ECN at would ender
VOIP telephone communication
services.
[75]
ECN had entered into
the dealer contract concluded on 22 March 2012.  Of relevance
were the following clauses:
‘
ECN granted
the defendant the right to conduct the Business (as defined in clause
1.1) which included the rendering of Support Services
(defined in
clause 1.19), the sale of Products (defined in the clause 1.13) and
the submission of Offers by prospective clients;
Clause 3.4 -
Support Service shall mean the assistance, advice and/or support
which the defendant must provide to
any Subscriber or potential
Subscriber;
Clause 1.19 -  In relation
to the Support Services, the defendant would assist any person
requesting assistance or advice with
regard to any aspect of the
Services or the Products.
Clause 10.11 – The Services
which the defendant would assist in is defined in clause 1.16 and
means –
“
The
facilities provided by ECN to Subscriber as set out in the Subscriber
Contract, consisting of, amongst other things, telephonic
service
provided by means of the connection of the equipment…”
Clause 1.16 – the defendant
will at all times be an independent contractor of ECN in rendering
its services in accordance with the
dealer contract.’
[76]
The defendant acted as
sub-contractor of ECN in, inter alia, delivering services on its
behalf to a subscriber, in the case being
the plaintiff.
Thus Mr Jonker submitted that on both the plaintiff and defendant’s
versions, the 2016 agreement could
be disregarded as from at least 14
September 2016.  This was either because the defendant accepted
the plaintiff’s repudiation
and cancelled the 2016 agreement on 14
September 2016 or the 2016 agreement was void from inception.
[77]
Thus, once the 2016
agreement is regarded as no longer legally operative, the duty to
port the numbers back to Telkom was to be located
in a contractual
arrangement between the plaintiff and ECN on the one hand and the
contractual arrangement between ECN and defendant
on the other.
[78]
Mr Jonker submitted
that Flandorp testified that, upon receipt of the suretyship
agreement and resolution from Titus on 5 June 2016,
she made the
connection that they may be linked to the documents she had
previously signed.  However, she did nothing to correct
the
position.  Moreover, Flandorp testified that she thought the
reason for the international call dilemma was due to her signing
the
documents.  That is why she emailed Titus on 26 July 2016
requesting a change to the rates to normal rates and reactivating
the
international calls.   In short, her testimony was that
only when the lines were cut, did she realise for the first
time that
the signed blank forms may be relevant.
[79]
On this basis, the
foundation for defendant’s submission was that a delictual remedy
should not be extended where the legal duty
contended for arises
within the matrix of obligatory relationships based on contract.
In turn this submission draws its authority
from
Lillicrap
Wassenaar and Partners v Pilkington Brothers (SAA) (Pty) Ltd
1985 (1) SA 475
A at 500 H – I:
‘
(
I)n
general, contracting parties contemplated their contract should lay
down the ambit of their reciprocal rights and obligations.
To
that end they would define, expressly or tacitly, the nature and
quality of the performance required from each party.  If
the
Aquillian action were generally available for defective performance
of contractual obligations, a party’s performance would
presumably
have to be tested not only against the definition of his duties in
the contract, but also by applying the standard of
the bonus
parerfamilias.  How is the latter standard to be determined?
Could it conceivably be higher or lower than the
contractual one?’
[80]
In
Bayer
South Africa (Pty) Ltd v Frost
[1991] ZASCA 85
;
1991 (4) SA 559
(A) at 570 Corbett CJ clarified the position as set
out in
Lillicrap
as follows:
‘
I hold that
in principle a negligent misstatement may, depending on the
circumstances, give rise to a delictual claim for damages
at the suit
of the person to whom it was made, even though the misstatement
induced such person to enter into a contract with the
party who made
it.  The circumstances will determine the initial issues of
unlawfulness and whether there is a casual connection
between the
making of the misstatement and the loss suffered by the plaintiff.
There is no ready formula for determining unlawfulness.
Each
case must be decided on its own facts.’
[81]
The following paragraph
from the
AB Ventures
Ltd v Siemens Limited
2011 (4) SA 614
(SCA) per Nugent JA at para 21 - 22 is also
instructive:
‘
The
principle that emerged from Pilkington Brothers was that there was no
call for the law to be extended when the existing law provided
adequate means for the plaintiff to protect itself against loss.
By its own
contractual act it took upon itself the risk of liability arising
from delay and expenses that might be caused by the default
or other
contractors.  The act of Siemens in causing delay and expense
was no more than the trigger for that liability to arise.
Had
AB Ventures not contracted to accept that risk in the first place
then it would not have suffered the loss at all.
That it
had no contractual nexus with Siemens means only that it was not
capable of shifting the loss that it had brought upon itself
to
Siemens contractually but that is beside the point.  We are
concerned with whether it was capable of avoiding the loss, and
not
whether it was capable of shifting it elsewhere, and clearly it was
capable of doing so.
’
[82]
In summary, the basis
of defendant’s submission is that in terms of the 2015 agreement
ECN took upon itself the risk of liability
arising from delay and
expenses that might be caused by the default of its contractor, the
defendant, failing to render its services
in terms of the dealer
contract.  Any act (or omission) by the defendant was no more
than a trigger for that liability to arise
in terms of the 2015
agreement ECN and the plaintiff.  Accordingly, a contractual
relationship existed between ECN and plaintiff
and thus, legal policy
on the basis of the authority of
Lillicrap
,
did not favour an extension of the delictual claim to plaintiff.
In effect, defendant contends that the 2015 was extant,
notwithstanding its vigorously pursued argument that the 2016
agreement had been validly concluded.
[83]
The problem with this
approach is the insistence from defendant’s representatives that
plaintiff had been bound to the 2016 agreement
which manifestly, on
its version, therefore replaced the 2015 agreement.  In any
event, defendant was not a party to the ECN
agreement and merely
provided support services to ECN.    It was therefore
an independent contractor which clearly
did not have the authority to
reinstate an agreement entered into between plaintiff and ECN.
Initially, defendant, by way of
the evidence of Koekemoer, had
testified that ECN had ceded the 2015 agreement to defendant on or
about May 2015.  There was
however no cession and this fact
finally transmogrified into a common cause fact.   This
concession took place after Koekemoer
testified before this Court
that ECN had ceded the ECN agreement to defendant in 2015.  It
does appear that reinstatement of
the ECN agreement would have
required the consent of ECN and plaintiff.   Further
defendant had contended that the 2015
agreement remained extant
throughout the period, but only in December 2020 did defendant amend
its plea to finally accept that plaintiff
had repudiated the 2016
agreement.
[84]
Whatever the merits of
this argument, plaintiff’s case was that, on 15 September 2016,
defendant unilaterally suspended services
to plaintiff without
arranging for the reinstatement of the services to plaintiff and
without arranging for the reinstatement of
the services to plaintiff
by ECN in terms of the ECN agreement.   The defendant
suspended its services on 15 September
2016.  Furthermore, the
ECN service could not be restored because in order to do so steps
would have had to be taken to deal
with the consequences of
defendant’s interference with the infrastructural requirements in
terms of the ECN agreement; in particular,
the cancellation of the
SAIX line service which was only reconnected on 21 November 2016.
[85]
What this reveals is
that, even if the ECN agreement had been reinstated, itself a
submission open to significant doubt, the infrastructure
to allow
that agreement to continue to be implemented was not available as
from 15 September 2016 until 21 November 2016.
The
numbers were ported back to Telkom on 1 December 2016.  That is
due to defendant’s conduct.
[86]
In summary, this is an
entirely different case from that of
Lillicrap
.
It would not have been open to the plaintiff to seek contractual
relief under the 2015 agreement.  Its only option
was to contend
that there had been unlawful conduct which had been perpetrated by
the defendant.  The core of the
Lillicrap
holding was that the existing law enabled the plaintiff to protect
itself by way of a contractual remedy.  Hence there was no
need
to extend the law of delict to create a remedy where a contractual
one existed.    For this reason, the argument
that the
Lillicrap
defence applies on the basis that there is a contractual remedy
available to plaintiff on the basis of the factual matrix this case
stands to be dismissed.
Fault
[87]
Plaintiff’s case in
respect of this requirement is that defendant’s employees,
including Koekemoer should, at least, reasonably
have known that they
had not procured plaintiff’s consent on any reasonable basis in
respect of the conclusion of the 2016 agreement
and that it was
void.
[88]
Mr Jonker conceded that
it was reasonably foreseeable that the failure to consent to the
porting of the numbers would result in the
plaintiff having no
telephone connectivity which, in turn, would lead to harm to the
plaintiff for all the reasons set out in this
judgment.
In his view, the only issue was whether the defendant failed to take
reasonable steps to guard against such
harm.   According to
Mr Jonker, once it became apparent to the defendant that the
plaintiff had repudiated the 2016 agreement,
Mr Wearing responded by
way of an email on 14 September 2016 in which he wrote to Ms Stander
as follows:
‘
When we
resigned the contract from the dealer model onto the Service Provider
model as explained by Mark, we changed the technology
and last mile
connections to the latest in the interest of Tread Research.
This had additional costs to it which we had to
carry, hence the
reason for the resign of the agreement to protect our interest.
As per your communication below,
in order to revert back to the old agreement, I need to immediately
suspend the service and request
for the old lines to be reinstalled
which will cause no voice communications for Tread Research.
Please note that his can take
up to 14 working days, should the old
infrastructure still be on site.’
[89]
That email
however has to be read within the context of an email sent by Ms
Stander, replying thereto, in which she said:
‘
Dear Rodney
Forgive me if I miss something
and if that is the case then please fill me in, but should you not
have obtained our approval for this
increase in the cost before you
implemented it, rather than requesting us in hindsight to sign for an
agreement that, quite honestly,
we did not agree to?  When
Beulah Flandorp, our Financial Administrator, was recently presented
with a document to sign she
clarified that this will have no negative
costs implications to TREAD and received re-assurance from
representative.  If that
document is linked to this event I am
wondering why the Surety Document was not presented at the same time?
Please clarify.’
[90]
Reading the two emails
together, Ms Stander made it clear to Mr Wearing that there was no
2016 agreement and that the only agreement
which existed was the 2015
agreement. Wearing’s stance on 15 September 2016 was that ‘we
have requested the old contract to be
implemented again.’  On
the basis of its reliance on the 2016 agreement, the defendant
adopted the attitude that it could
now unilaterally terminate/suspend
its services to plaintiff without arranging for the reinstatement of
a service to plaintiff as
provided by ECN or in any other way.
[91]
Koekemoer was
confronted with an email from Melanie Steyn of ECN on 1 November
2016, the import of which he unsuccessfully sought
to explain away as
follows:
‘
We have
received a port out request for the following number/s:
27219317299
27219317825
Please advise within 2 working
days if we can/cannot accept this request.
Please provide a VALID rejection
reason if rejected
This request will be accepted
should we not receive correspondence from you within the timeframe
provided.’
[92]
It was put to Koekemoer
that:
‘
ECN itself
had no objection to porting out the number, correct?
MR KOEKEMOER:
No, it’s incorrect.  That’s not – they just
No it’s not.  Incorrect.
It is a general mail that they forward, it’s not – it’s a
general mail.  They all
look like that.
MR WALTHER:
Well this looks like an email that Melanie herself has written and
it’s is extremely clear:
…
MR KOEKEMOER:
It’s a generic letter.
MR WALTHER:
Well I am putting it to you that this letter shows that ECN itself
had no objection to the porting out of the number and they were
asking you as to whether you had a valid ground for rejection.
Correct?
MR KOEKEMOER:
Mr Walther, I am confirming again it is a generic letter where all
the letters look the same.
MR WALTHER:
What I am also suggesting to you is that in terms of this letter
it’s
only the defendant that could prevent porting at this point.
Correct?
MR KOEKEMOER:
That’s why they send the letter to us, yes.
MR WALTHER:
And as we know from what you have just said the defendant did reject
the port. Correct?
MR KOEKEMOER:
Ja. Correct.
MR WALTHER:
Now generally speaking plaintiff has a right to choose its own
service
provider for its telephone services.  Would that be
correct?  Would that be a fair statement?
MR KOEKEMOER:
Well in general terms there’s a choice for everybody.
MR WALTHER:
And I putting it to you that you precluded plaintiff from switching
providers based on money owning in terms of the 2016 agreement which
we say is a non-existent agreement.
MR KOEKEMOER:
There was a dispute. I think it was clear dispute between us.’
[93]
It is clear from this
ECN email that upon receipt of plaintiff’s request to port to
Telkom, ECN advised defendant that it required
a valid reason not to
proceed with the port, failing which it would proceed in two days.
ECN claimed no right to refuse
to port itself on contractual or other
grounds.  Once plaintiff paid defendant, the port to Telkom went
ahead, the date on which
the numbers were finally restored being 1
December 2016.
[94]
When asked whether
plaintiff has the right to choose its own service provider Koekemoer
confirmed that the port was refused because
of the dispute regarding
payment.   He did not deny that plaintiff did not have the
right to port, and that defendant,
having gained unlawful control of
its numbers, had an obligation in common law to restore such
possession to its rightful possessor.
[95]
The SAIX lines were
only reconnected on 21 November 2016.   The reason
therefore was the previous act of unlawful termination
of the SAIX
line without plaintiff consent.
[96]
To the extent that
defendant contends that it lawfully exercised a lien over the
telephone lines, and therefore there was no obligation
to port the
lines to Telkom, this argument must be rejected for absence of
legality of the 2016 agreement.   Only after
defendant was
paid R81 567, 00, did it decide to instruct ECN to port the
members back to plaintiff.
Conclusion
[97]
Once it is accepted, on
the probabilities, that Flandorp did not have the requisite authority
to conclude the 2016 agreement on behalf
of plaintiff, defendant
terminated the 2015 ECN agreement in circumstances where it had no
right to do so.   In the event,
the infrastructure, which
was required for plaintiff’s telephone, was not available, namely
the SAIX lines, as a result of the
ECN agreement, having been
unlawfully terminated without plaintiff’s consent.  As a
result of defendant’s reliance upon
what turned out to be an
invalid agreement, that is the 2016 agreement, Koekemoer himself
testified that the SAIX lines were only
reconnected on 21 November
2016.
[98]
In the event that, as a
result of a reliance on an agreement which had been unlawfully
procured through Flandorp, who, on the probabilities
did not have the
requisite authority, the infrastructure which was required in order
for plaintiff to have access to its telephone
lines was not available
from 15 September 2016 to 21 November 2016.
[99]
I have found that
defendant knew well that Burgess was key to the lawful conclusion of
the 2016 contract.  The contractual documents
that I have
analysed clearly provided that the person authorised to represent
plaintiff was Burgess.   The subscriber application
described Burgess as the authorised signatory.  No verification
of Flandorp’s authority was ever undertaken by defendant.
It
follows that defendant’s employees did not act in the fashion of
reasonable sales people placed in their situation.
They
could not reasonably have believed that Flandorp had the authority to
conclude the 2016 agreement.   Furthermore,
but for the
approach defendant adopted, namely that the 2016 agreement was valid,
the suspension of plaintiff’s telephone lines
would never have
occurred.   Indeed, had plaintiff not obtained control of
plaintiffs telephone service and the geographically
numbers allocated
to it, plaintiff would not have suffered a disconnection of its
telephone service
[100]
Crucial to the
evaluation of this dispute are the competing versions of the relevant
events described by Flandorp and Titus.
On the probabilities,
the evidence, as I have outlined, it supports Flandorp’s version.
Titus, an aggressive and defensive witness
under cross examination
was clearly determined to conclude a sale.  In this endeavour,
Flandorp was a
deus
ex machina
in order
for him to achieve his goal and thus earn commission.   He
was not candid with the Court and his version thus
stands to be
rejected.  On a clear balance of probabilities, it conflicts
with the documentary evidence, the manner in which
clients such as
plaintiff should have been approached as set out in the evidence of
Isaac and a number of concessions which were
made by Koekemoer in his
summary judgment papers which was never satisfactorily explained.
To the contrary, Koekemoer
was often defensive, vague and elusive in
answering key questions.
[101]
As illustrative, when
confronted with the obvious question of Burgess appearing as the
authorised signatory, Koekemoer was typically
evasive.  The
following passage is illustrative:
‘
Well I’m
basing it on the proposition that if the professor had been prepared
to sign the resolution before your implemented the
contract and
before you signed it, then you would have known that Beaulah Flandorp
was authorised.   It is a very simple
proposition.
MR KOEKEMOER:
On the 25
th
June when we sent the paperwork through to the
professor she had a decision to make there.   Either the
paperwork was not
in place, the agreement was not in place or notify
us accordingly but nobody did that until September/October.
MR WALTHER:
I’m actually going to argue that you are being non responsive
and
that this affects your credibility Mr Koekemoer.
MR KOEKEMOER:
Hundred percent.
MR WALTHER:
And by the same reason I’m just going to ask the opposite question,
just to place it on record and clarify.  If you, before signing
the 2016 agreement and implementing it, had approached Professor
Burgess and she had declined to sign it, because then you would have
known that there was a problem.  Correct?
MR KOEKEMOER:
Completely irrelevant question.’
[102]
When asked by the Court
about Burgess appearing as the authorised signatory Koekemoer
conceded that;
‘
If we do
have a resolution and surety, although it is not a necessity for us
on that agreement and that is why we started on insisting
on it and
as the case progressed over the couple of months you would realise
that there was a lot of insistence on the surety and
resolution.
And our verification one of the other processes was those two
documents and the reason why we asked that if at
some stage that
happened that we knew we could fall back and we knew we had
verification at that stage as well.’
[103]
But there was no answer
to the key point: if Burgess appeared as the authorised signatory and
was being pressurised to sign the suretyship
agreement, on what basis
did he conclude that Flandorp was duly authorised to conclude the
contract?
[104]
It follows that the
2016 agreement was
void
ab initio
.  In
addition, plaintiffs claim for the sum of R 81 567.00 paid to
defendant under protest must succeed.
[105]
In the circumstances
the following order is made:
1.
In terms of claim A:
1.1
Defendant is liable to
plaintiff for such damages as it may prove which were occasioned by
disruptions of its telephonic services
during 15 September 2016 and 1
December 2016 to the trial in respect of the quantum of plaintiff’s
claim should be postponed for
later determination.
2.
In terms of claim B,
defendant is to pay sum of R 81 567.00 to plaintiff.
3.
The defendant is
ordered to pay plaintiff’s costs.
DAVIS J
[1]
FHI Cassim and MF Cassim “
The
authority of company representatives and the Turquand rule
revisited
”
2017
(134) SALJ 639
at 664