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[2011] ZAGPJHC 81
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Transnet Limited v Vusa-Isizwe Security Services (Pty) Limited (12398/2005) [2011] ZAGPJHC 81 (11 February 2011)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO
:
12398/2005
DATE:11/02/2011
In the matter between:
TRANSNET
LIMITED
.........................................................................
Appellant
…
.................................................................................................
(Appellant
a
quo
)
and
VUSA-ISIZWE
SECURITY SERVICES (PTY) LIMITED
.................
Respondent
…
..................................................................................................
(Respondent
a
quo
)
J U D G M E N T
WEPENER, J
:
[1] This appeal, from a decision
of a single judge of this Division, relates to a tender for the
provision of security services
submitted by the respondent to the
appellant and concerns, in the main, the question whether or not a
fixed term contract for a
period of 24 months was concluded between
the parties, and whether the agreement was repudiated by the
appellant and properly cancelled
by the respondent. These questions
were answered in the affirmative by the court
a
quo
.
[2] The appellant is made up of
a number of divisions, one of which is its Spoornet Division, a
division of rail and related services.
On or about 17 August 2004
the appellant issued a tender for the provision of security services
in the Johannesburg-East area.
This area is comprised of a number of
sub-areas or clusters which included six clusters, one of which was
the Sentrarand cluster.
The tender called for the supply of two
distinct types of security services namely, an equestrian service and
a vehicular service.
I shall refer to both services simply as the
security services unless the context demands otherwise.
[3] The respondent submitted a
tender to the appellant for the provision of security services in
respect of all clusters in the
Johannesburg-East area. In addition to
the respondent, a further 37 tenderers submitted tenders to the
appellant for the provision
of the security services. All of the
tenderers were evaluated by a cross-functional team comprising,
inter
alia
, of members of
the appellant’s procurement department. As part of this
evaluation the cross-functional team checks the arithmetical
calculation of the amounts quoted by the tenderers and where the
amounts are incorrectly computed they are corrected and
recommendations
are then made to the appellant’s tender board
(which was the body that had the authority to award a tender to a
successful
tenderer) based on these revised or corrected quotations.
The respondent’s tender was one such tender where the
cross-functional
team corrected the arithmetical calculation of the
amounts quoted. The respondent quoted for an amount of approximately
R600 000,00
per month for the rendering of the security services.
Unbeknown to the respondent, the cross-functional team revised that
figure
to R338 780,00. As a result the respondent was ranked fourth
amongst all the tenderers. But for the revision of the tender by
the
cross-functional team, respondent would have ranked 27
th
and would, so it was argued, not have been considered for the
provision of the security services to the appellant. However, it
is
common cause between the parties that the amendment of the
respondent’s tender was never communicated to the respondent
at
all.
[4] It was stipulated in the
tender documents that a tenderer could be advised by telegram or
letter of the acceptance or non-acceptance
of the tender – but
no procedure was laid down for purposes of communicating the
acceptance of the tender resulting in the
fact that any method of
acceptance conveyed to the respondent would be sufficient. Such
acceptance would create a contract between
the parties.
[5] After the tender was lodged,
a site evaluation took place and the respondent was evaluated by a
valuation team as per the requirements
of the tender documents. All
the arrangements which the respondent had made in respect of
equestrian services were disclosed to
the appellant in detail. The
tender period was from 1 December 2004 to 30 November 2006. The
evaluation pertaining to the horses
and the services indicated that
the respondent did not have any stables and that it hired stables and
all facilities from equestrian
specialists. It was disclosed that the
training of the guards would commence once the contract was awarded
and that no operational
plan was in place but that respondent would
use the equestrian specialists’ infrastructure to get
everything in place once
the contract was awarded. The respondent
also intended to employ its own trained guards to ride the horses and
for that purpose
the respondent had entered into an agreement with
the equestrian specialists in terms of which the respondent had
purchased the
required number of horses. In terms of an agreement
the respondent obtained ownership of the horses and payment would be
made
once the tender was awarded to the respondent. The horses were
therefore purchased on the basis of a suspensive condition and this
was disclosed during the evaluation process. There was also an
evaluation done pertaining to firearms which evaluation was not
produced at the trial. During this evaluation it was disclosed to
the appellant’s representatives that the respondent would
purchase firearms once the contract was awarded and that respondent
would then have to wait for the firearm licences to be issued.
[6] Christie,
The
Law of Contract in South Africa
(5
th
edition) at p 42 states:
“
A
call for tenders, then, is normally no more than a request to submit
offers, and each tender is an offer which the employer calling
for
tenders may accept or reject at will
.”
[7] On 30 November 2004 the
tender board of the appellant approved the award of the contract to
the respondent and the relevant
documents were drafted but they still
had to be signed. Services in terms of the tender had to commence on
1 December 2004 on
an urgent basis although certain outstanding
aspects were listed in a letter confirming the award of the tender.
However, at a
meeting held on 30 November 2004 at which the
respondent was represented by Mr Ngidi and Mr Maseko and the
appellant by Mr Naidu
and Mr Stone, the respondent was advised that
the respondent was one of the tenderers who had succeeded in being
awarded the tender
and that it had to commence with the services the
following day. Ngidi’s evidence was as follows:
“
That
we were one of the tenderers who had succeeded in being awarding the
work. He then proceeded and said they have problems because
companies that were working in the places that now will be given to
us, they were then going to be working their last shift on
that
particular night. He also said this again, he also admitted that he
knows that the time he has given us is extremely short
and he
requested us to please help him start the evening shift the following
day. Your lordship he even said he knew that we were
supposed to
have been given the contract by then but that the contract was at
head office and we would then be giving it not long.
I then asked
Your Lordship that would they not be able to give us anything that is
written, he replied and said even the other
companies had asked for
something similar.
”
[8] On 1 December 2004 Mr Naidu
handed out letters to those to whom tenders had been awarded. The
contents of the letter to respondent
clearly indicate that the tender
had been awarded and that an agreement had been entered into
regarding the specific tender. There
is a dispute regarding the
authority of Mr Naidu to enter into the agreement. It is however
important to note that a distinction
must be made between Mr Naidu
not having been authorised to sign the eventual agreement and the
question if Mr Naidu was authorised
to convey the acceptance of the
tender and to enter into the tender contract on that basis. In
November 2004 the tender had already
internally been awarded to the
respondent, and the agreement was already formulated and ready for
signing on 29 November 2004.
The only internal issue remaining was
for the official written contract to be signed and the evidence on
behalf of the appellant
concerned authority to sign the written
agreement and not the authority to convey the acceptance of the
tender to a successful
tenderer.
[9] Subsequent to the oral
communication there was a delay in signing the agreement which was
caused by an internal investigation
conducted by the appellant. This
was not conveyed to the respondent. Mr Maelane on behalf of the
appellant testified that the first
time the issue of authority was
brought up was during a meeting on 17 January 2005 and he conceded
that the appellant did not know
anything about the authority issue
before then. It was conceded by Mr Maelane that it was reasonable of
Mr Ngidi to have thought
that the tender contract had been awarded to
respondent and that it was reasonable of Mr Ngidi to have acted on
the letter supplied
to him by Mr Naidu. It was also clear from the
evidence that the respondent proceeded with implementing the tender
contract from
1 December 2004 and acting as if a contract had been
entered into and as if the tender had been awarded and accepted.
[10] Because there is no formal
prescribed procedure for the acceptance of the tender, the
uncontested evidence of Mr Ngidi that
Mr Naidu confirmed to him that
the tender had been accepted leads to the inescapable conclusion that
the tender contract had been
awarded and that it had been entered
into on 30 November 2004. It was never any condition and it was
never raised or argued or
pleaded as a defence that the intention of
the parties was at all relevant times that only the written agreement
would be a binding
agreement between the parties. Christie,
The
Law of Contract in South Africa
5
th
Edition deals with the issue as follows on page 106:
“
This
principle, that the burden of proof is on the party who asserts that
an informal contract was not intended to be binding until
reduced to
writing and signed, was adopted by the Appellate Division in
Goldblatt v Fremantle
1920 AD 123
, in which Innes CJ said at 128-129:
‘
Subject
to certain exceptions, mostly statutory, any contract may be verbally
entered into; writing is not essential to contractual
validity. And
if during negotiations mention is made of a written document, the
Court will assume that the object was merely to
afford facility of
proof of the verbal agreement, unless it is clear that the parties
intended that the writing should embody the
contract. (Grotius
3.14.26 etc). At the same time it is always open to parties to agree
that their contract shall be a written
one (see Voet 5.1.73; V
Leeuwen 4.2, sec 2, Decker’s note): and in that case there will
be no binding obligation until the
terms have been reduced to writing
and signed. The question is in each case one of construction.’
In Woods v Walters
1921 AD 303
305 Innes CJ referred to the above
passage and added:
‘
It follows of course
that where the parties are shown to have been ad idem as to the
material conditions of the contract, the onus
of proving an agreement
that legal validity should be postponed until the due execution of a
written document lies upon the party
who alleges it.’
…
The conclusion in Goldblatt v Fremantle was explained by Blaine J
in De Bruin v Brink
1925 OPD 68
73 in the following terms:
‘
An
agreement to confirm in writing the written terms of a contract
implies that what was arranged prior thereto was merely introductory
and provisional, and of no binding force; and on that account
furnishes very strong evidence of intention that the writings
containing
the terms and the confirmation should alone form the
contract. But no such implication would, I think, arise merely from
an agreement
to embody in a written document terms which had been
previously verbally arranged, as such an undertaking would be quite
consistent
with an intention to be bound by the verbal agreement,
while a condition requiring confirmation in writing of written
(
sic
)
terms would not.
’”
It is furthermore important that
the evaluations were done pertaining to the tender and that the
tender board accepted the tender
knowing full well about the
outstanding issues pertaining to the horses and the firearms. In
support of the evidence on behalf
of the plaintiff Mr Stone, on
behalf of the defendant, testified that he was under the impression
that the letter of 30 November
2004 was the acceptance of the tender
and that the tender was accepted on that day. Stone further
testified that he acted under
the impression that an agreement had
been entered into and that he was required to deal with the execution
and implementation of
the agreement. In the light of the evidence,
the contents of the letter, the probabilities and the absence of
evidence by Mr Naidu
himself there is no doubt that it must be
accepted, on a balance of probabilities, that the tender was accepted
on 30 November
2004. In the absence of any formal requirements
regarding the acceptance of the agreement and because Mr Naidu had
informed the
respondent of the acceptance, the tender offer had
formally, correctly and validly been accepted, leading to a binding
agreement.
This is supported by the letter of 30 November 2004, Mr
Stone’s evidence and the actions of the appellant thereafter
until
23 December 2004.
[11] The appellant raises a
dispute regarding the authority of Mr Naidu, who communicated the
acceptance of the tender to the respondent.
The dispute is, however,
not supported by the evidence of Mr Stone who testified on behalf of
the appellant. Mr Naidu was no
stranger to Mr Ngidi – he was
instrumental to communicating the acceptance of another contract in
Durban to the respondent
and Mr Ngidi was aware that Mr Naidu also
orally communicated the acceptance of the tenders to other tenderers
for other clusters
on the same day namely 30 November 2004.
[12] On 23 December the
respondent received a letter from Mr Maelane acting on behalf of the
appellant denying that any valid contract
had been entered into
between the respondent and the appellant and stating that the
adjudication process was still underway. He
further mentioned that
the respondent would only be deemed to have been the successful
tenderer if the necessary documentation
had been signed by all the
parties. He alleged that respondent was on site without formal
notification from the appellant’s
duly authorised
representative and imposed certain conditions upon which the
respondent could provide services on a month-to-month
basis. The
respondent refused to accept the contents of this letter.
[13] The appellant’s
operational staff proceeded with their duties from 1 December 2004 on
the basis that there was a tender
contract in existence and the
respondent was evaluated on that basis regarding to the respondent’s
performance. It is clear
that the respondent was in a very difficult
position after 23 December 2004 and the respondent attempted to
arrange a meeting with
representatives of the appellant, including Mr
Maelane, which only occurred on 14 January 2005. In the meantime Mr
Stone, on behalf
of the appellant, sent a letter to the respondent
referring to the deficiencies in terms of the contract requiring the
respondent
to deal with those within 48 hours of receiving the
letter. Mr Stone testified that the 48 hours referred to in the
letter was
a way of putting respondent on terms to rectify alleged
deficiencies. None of these letters were meant to have been formal
demands
in terms of clause 30 (the breach clause) of the tender
agreement. On 5 January 2005 Mr Stone recorded in a document that
firearm
retaining could be finalised on 28 January 2005, horses could
be deployed by 10 January 2005 and 31 January 2005 respectively and
final training had to be finalised by 31 January 2005. According to
the respondent, the time periods were agreed to. The requirement
of
firearm licences was extended with no time period attached thereto.
In the meantime respondent rendered services and submitted
accounts.
A meeting was held on 29 December 2004 with Mr Stone during which he
discussed certain issues that were outstanding
regarding vehicles and
horses. This was confirmed in a letter of 30 December 2004. In this
letter the extensions of time already
agreed upon, were confirmed.
Respondent then wrote a letter on 7 January 2004 dealing with some of
the concerns of the appellant
and so also in another letter dated 12
January 2005. The respondent’s evidence was that it had no
choice but to render accounts
on the lower amounts because the
appellant refused to pay any other amounts. Mr Ngidi, on behalf of
the respondent, testified that
it never waived its right to claim the
full amount in terms of the agreement.
[14] On 13 January 2005 a
certain Mr Labuschagne of the appellant conducted an inspection of
the respondent’s premises and
according to Mr Ngidi the
inspection was not conducted properly. Mr Labuschagne did not
discuss the arrangements between respondent
and the equestrian
specialists with Mr Ngidi at all. Mr Labuschagne simply came to the
conclusion that the respondent was subcontracting
all his services to
the equestrian specialists. In fact Mr Ngidi testified that the
respondent would have rendered the services
by way of its own horses
and its own trained guards on horses. The appellant’s witness
Mr Maelane agreed that that would
not have constituted subcontracting
as meant in the agreement and which would constitute a breach.
[15] On the basis of Mr
Labuschagne’s investigation the tender board purported to
terminate the tender agreement and to award
such tender to different
tenderers. Mr Labuschagne’s conclusion about the respondent’s
subcontracting the services
regarding horses was wrong. He advised
however, on that basis that the contract with respondent should be
terminated. At a meeting
on 14 January 2005 Mr Ngidi and Mr George
Knight discussed the facts with Mr Maelane. Mr Ngidi testified that
he made it clear
that the respondent was awarded the tender contract
and that it was communicated to him by Mr Naidu but that Naidu told
him that
he did not have the required delegation or authority to sign
the agreement. He testified that he told Mr Maelane that Mr Naidu
promised that the agreement would be sent to the respondent the
following week for signature. The view of Maelane was that they
were
informed of the contract by a person (Mr Naidu) who was unauthorised
and that the tender board had not awarded the tender.
This is in
clear conflict with the objective facts and the evidence of all the
parties concerned regarding the fact that the tender
board had in
fact awarded the contract and that the awarding of the tender was
communicated to the respondent albeit not in the
terms proposed by
the tender board. According to Mr Ngidi all the issues pertaining to
horses, firearm compliance and disclosure
of arrangements pertaining
to horses and firearm licences in terms of the tender were discussed
at the meeting of 14 January 2005.
In a letter dated 2 February 2005
the respondent indicated that it could not carry on on the basis it
was rendering services at
the time and that the respondent required
finality.
[16] A decision was taken on 9
February 2005 by the appellant’s tender board to cancel the
agreement with the respondent and
to enter into a new agreement with
other service providers. This decision was taken notwithstanding the
fact that the appellant’s
representatives had given the
respondent an extension of time pertaining to the horses, training
and firearm licences. At the
time the appellant had already imposed
penalties on the respondent for certain deficiencies in terms of the
agreement on the basis
that there was a tender agreement in place.
This indicates an election not to cancel the agreement on the basis
of deficiencies
but to uphold the agreement and to impose the
penalties. Mr Maelane accepted that appellant decided not to cancel
the agreement
because of the alleged non-performance and deficiencies
but that the appellant would rather levy penalties. Therefore it
must
be accepted that as at 31 December 2004 no decision had been
taken to cancel the agreement. The respondent was at that time
excused
from performing in terms of the agreement as a result of the
breach of the contract committed by the appellant, being the
repudiation
of the agreement on 23 December 2004. The appellant did
not at that time or thereafter have a basis to cancel the agreement.
[17] On 10 February 2005 Mr
Maelane wrote a letter to Mr Ngidi and prepared to cancel the
agreement. At that time a decision had
already been taken to appoint
other parties to render the services. The basis for the cancellation
appears from the letter of
10 February 2005 as non-compliance of
tender conditions. However the evidence referred to indicates
clearly that the parties were
aware at all relevant times until 10
February 2005 that there was no compliance pertaining to certain
issues when the tender was
accepted. This, therefore could not
constitute a lawful basis for the cancellation of the agreement.
Furthermore, the respondent
had been given extensions of time to
comply therewith. In his evidence Mr Maelane testified that the only
grounds for cancellation
of the agreement were the reasons given in
an internal letter to him by one Mr Gama, the Chief Executive Officer
of appellant,
on 4 April 2005. He limited the reasons for
cancellation to ownership of horses and ownership of firearms. He
conceded in cross-examination
that he was wrong regarding the horses
and accepted that the respondent owned the horses when the tender was
awarded. He also
accepted that the respondent had already purchased
firearms to comply with the firearms requirements of the appellant as
contained
in the tender documents and that obtaining of the licences
could take some time. It is also to be noted that the deficiencies
recorded by Mr Stone in terms of the contract were never a reason for
the cancellation nor advanced for that purpose. Mr Stone himself
testified that his demands were never intended to have been formal
demands to place the respondent
in
mora
in terms of the
agreement.
[18] On 24 February 2005 the
respondent’s attorneys wrote a letter to the appellant advising
it of the acceptance of the
repudiation and cancellation of the
agreement. In all the circumstances the court
a
quo
correctly held
that the acceptance by Mr Naidu orally and confirmed in the letter of
30 November 2004 constituted the conclusion
of a valid and binding
agreement as there is no dispute that Mr Naidu was authorised to
communicate the acceptance of the tender
on 30 November 2004. In
Pillay and Another v
Shaik and Others
2009
(4) SA 74
(SCA) the court at paragraphs [50] to [52] dealt with this
argument and similar issues as follows:
“
[50]
I do not agree with the court a quo's conclusion that there could be
no binding
contracts between the parties unless each was signed by or on behalf
of the buyers and the sellers. In my opinion it
is clear from
Goldblatt v
Freemantle
, supra,
and the authorities cited therein that, in the absence of a statute
which prescribes writing signed by the parties or their
authorised
representatives as an essential requisite for the creation of a
contractual obligation (something that does not apply
here), an
agreement between parties which satisfies all the other requirements
for contractual validity will be held not to have
given rise to
contractual obligations only if there is a pre-existing contract
between the parties which prescribes compliance
with a formality or
formalities before a binding contract can come into existence. That
this is so is clear, for example, from
CW Decker's annotation on Van
Leeuwen's
Commentaries
on Roman-Dutch Law
4.2
s 1 (not s 2 as Innes CJ says at 129) where he pointed out (Kotzé's
translation 2 ed vol 2 p 12) that we no longer uphold
the distinction
drawn in Roman law between real, verbal, literal and consensual
contracts because all contracts with us are made
with consent. With
regard to written contracts he referred to an observation by Samuel
Strykius (
Modern
Pandect
2.14.7) as
follows:
'(W)e
must regard the
written
contracts
as distinct, insofar as we should bear in mind that although the
writing does not constitute the essentiality of the contract,
which
is contained in the mutual consent of the parties, they may
nevertheless agree that their verbal agreement shall be of no
effect
until reduced to writing, in which case the agreement cannot before
signature have any binding force, although there exists
mutual
consent; and it cannot be said that the writing served not in
perfecting the transaction, but only as proof thereof , since
here it
is agreed that the consent should not operate without the writing,
which must be observed as a legitimate condition.'
[51] The passage in
Wessels
cited in the
judgment in the
Meter
Motors
judgment
supports this approach. The learned author refers to
Institutes
3.23 pr, and says
that '(t)he plain meaning of this passage seems to be that if the
parties agree to have their contract of sale
in writing, then until a
document is drawn up there is no
vinculum
juris
and therefore
no actionable contract. This is the interpretation which Voet
(18.1.3) gives to this passage and it seems difficult
to justify any
other'.
[52] In the present case
there were clearly no agreements between the parties that the mutual
consent between them would not operate
in the
absence of a
document embodying its terms signed by both buyer and seller. There
were in fact no negotiations between the parties
before Mr Pillay and
Dr Motlanthe signed their offers. It follows that I am satisfied that
the basis on which the case was decided
by the full bench cannot be
upheld. It follows also that the passage in the
Meter
Motors
case on
which Nicholson J relied, insofar as it is inconsistent with what I
have said, is incorrect. I think that it is more correct
to say, on
the facts of the present case, that these offers prescribed a
particular form of acceptance (cf
Driftwood
Properties (Pty) Ltd v McLean
1971
(3) SA 591
(A)
at
597D;
Withok Small
Farms (Pty) Ltd v Amber Sunrise Properties (Pty) Ltd
(664/07)
[2008] ZASCA 131
(21 November 2008); and E Allan
F
Farnsworth
Contracts
2
ed at 53.13 (pp 151 - 2)).
”
[19] The appellant’s
defence, however, is that Mr Naidu had no authority to award the
tender to the respondent or to make
such a communication. The
respondent contended in its replication that the appellant is
estopped from denying the authority of
Mr Naidu to sign the letter
and to communicate the acceptance of the tender. The respondent
contended that the appellant created
the impression that Mr Naidu was
authorised to do so. This appeared
inter
alia
from the fact
that Mr Naidu previously awarded and communicated acceptance to
respondent of a contract in Durban on the same basis
when the same
procedure was followed. Mr Naidu at the same time i.e. 30 November
2004 communicated the acceptance of tenders in
respect of other
clusters to other tenderers. No one ever told respondent that Mr
Naidu was not authorised to communicate the
acceptance until long
after respondent had already commenced rendering services. Mr Stone
was also under the impression that Mr
Naidu could have communicated
acceptance of the tender – he even drafted the letter of 30
November 2004. No other contracts
were cancelled for the same
reason. Mr Naidu himself did not come and say that he was not
authorised to communicate the acceptance
of the tender and to enter
into the tender contract on 30 November 2004 – he only
confirmed to Mr Ngidi that he was not authorised
to sign the written
contract. On the basis of ostensible authority, the appellant should
be estopped from denying that Mr Naidu
was authorised to enter into
the agreement.
[20] In
NBS
Bank Ltd v Cape Produce Co (Pty) Ltd and Others
2002 (1) SA 396
(SCA) at 411A to 414H as referred to in
Glofinco
v Absa Bank Ltd t/a United Bank
2002 (6) SA 470
(SCA) the requirements for holding a principal liable
on the basis of ostensible authority of its acknowledged agent were
recently
articulated as follows:
“
[12]
The requirements for holding a principal liable on the basis of the
ostensible authority of its acknowledged agent were recently
articulated in
NBS
Bank Ltd v Cape Produce Co (Pty) Ltd and Others
(
supra
in
para [26] at 412C - E) by Schutz JA to be:
'1. A
representation by words or conduct.
2. Made by [the principal]
and not merely by [the agent], that he had the authority to act as he
did.
3.
A
representation in a form such that [the principal] should reasonably
have expected that outsiders would act on the strength of
it.
4. Reliance by [the third
party] on the representation.
The reasonableness of such
reliance.
6.
Consequent prejudice to [the third party].'
I proceed to discuss the
first two of these requirements with reference to the facts of this
case.
[13] A representation, it
was emphasised in both the
NBS
cases
supra,
must be rooted in
the words or conduct of the principal himself and not merely in that
of his agent (
NBS
Ltd v Cape Produce Co (Pty) Ltd
(
supra
at 411H - I)).
Assurances by an agent as to the existence or extent of his authority
are therefore of no consequence when it comes
to the representation
of the principal inducing a third party to act to his detriment. In
the instant case counsel for the appellant
relied principally on the
very appointment by the bank of Horne as its branch manager, thereby
enabling her to impress upon Braude
that she was duly authorised,
when in fact she was not, to commit the bank to stand surety for
Playtime's post-dated cheques; this
impression was reinforced, so it
was further contended, by the fact that eight earlier cheques of
Playtime that Horne had marked
'good for funds' had been met by the
bank by the time Horne stood surety on its behalf for the last of the
series of cheques.
[14] As was pointed out in
both the
NBS
judgments
supra,
the appointment of
someone to a position of authority, albeit in a subordinate position
but with all the trappings pertaining to
the post, is a factor that
in itself is not to be underestimated (
NBS
Ltd v Cape Produce Co (Pty) Ltd
(
supra
at 410C - D, 413B -
D, 414C - D and G - H)). Thus it was stated,
apropos
a branch manager,
by Marais JA in the
SA
Eagle Insurance Co Ltd
case
supra
at
574E - G:
'The establishment of
branches was plainly to facilitate convenient access by the public to
it as an institution and to encourage
the public living in the area
concerned to make use of conveniently situated branches. These
branches were the public face of the
institution and they were
intended by respondent to be so regarded. There was no suggestion by
respondent that its branches were
not intended to be available to the
public for certain classes of lending and borrowing and that it made
that generally known.
There was no publicly proclaimed or advertised
policy of dealing with transactions of a particular magnitude only at
its head office.
The branches were held out by respondent as the
places to which anyone wishing to deposit money with it could and
should repair.
The branch manager was held out to be the person
clothed with the most authority at a branch by his very designation
as branch
manager.'
Of course that does not
mean that a bank is liable to a third party
ex
contractu
for all
the actions and transactions of the branch manager when the latter is
in truth minding not the bank's business but his own.
The
NBS
judgments dealt
with the branch manager receiving substantial deposits ostensibly on
behalf of the bank; the instant case is concerned
with a branch
manager purporting to bind the bank in the future as surety and
co-principal debtor on a series of post-dated cheques.
As Marais JA
pointed out at 573H - 574B of his judgment, in dealing with the scope
of a branch manager's authority to bind a bank:
…
[15] The appointment by a bank
of a branch manager implies a representation to the outside world.
The representation, to the knowledge
of the bank, is that the branch
manager is empowered to represent the bank in the sort of business
(and transactions) that a branch
of the bank and its manager would
ordinarily conduct. The notion of 'ordinary business' in turn implies
a qualification in the
form of a limitation: that the branch manager
is
not
authorised
to bind the bank to a transaction that is not of the ordinary kind.
What
the ordinary
kind of business of the branch is remains a matter of fact and hence
of evidence. There is this passage in the evidence
of Strang, the
expert witness called by Glofinco on banking practise: …
”
[21] Recently, in
Jacobs
v Imperial Group (Pty) Ltd
2010 (2) All SA 540
(SCA) the court dealt with the way in which an
agent’s own actions pertaining to his authority should be
considered, in paragraph
[8] of the judgment:
“
I
now consider the appellant’s argument that Jacobs, as his
agent, did not have authority to bind him to the owner’s
risk
notice. This brings to the fore the question whether in fact Jacob’s
authority was limited. There is no evidence from
Jacobs or anyone
else to suggest that Jacobs’ authority was limited. In fact,
the evidence is clear that, when handing over
the motor vehicle, and
signing the necessary paperwork, there was nothing circumscribing his
authority. The respondent was perfectly
justified in relying on
Jacobs’ conduct, which evidenced all the attributes of actual
authority. It is trite that ‘the
law, as a general rule,
concerns itself with the external manifestations, and not the
workings, of the minds of parties to a contract’.
The
conclusion of the High Court that Jacobs had the necessary authority
to conclude the contract is beyond reproach. He properly
bound his
principal, the appellant, to the terms of the contract which included
the owner’s risk notice.
”
[22] In order to succeed with
estoppel, respondent showed the following: that appellant and also
Mr Naidu conveyed acceptance
of the tender contract and entered into
an agreement; the representation was made by both the principal and
the agent; it was
reasonable to have expected of the respondent to
have acted on the strength thereof; (this was confirmed by Mr Maelane
in cross-examination);
the evidence of Mr Ngidi was clear that there
was reliance placed on the representation and that the respondent
acted in accordance
therewith; the reliance was clearly reasonable
in the light of the aforegoing; respondent clearly acted to its
prejudice if it
is correct that Mr Naidu was not authorised to have
acted as such.
[23] It can, in any event, not
be expected of an outside party, such as the respondent, to have
known of the internal arrangements
of the appellant pertaining to
authority to enter into contracts. In terms of the so-called
Turquand
rule, outside persons contracting with a company and dealing in good
faith, may assume that the procedures within its constitution
and
powers have been properly and performed, and they are not bound to
enquire whether the acts of internal management have been
regular or
not.
It must be determined if:
23.1 A person acted beyond his
authority;
23.2 If the outside party knew
that the official was acting beyond its actual authority;
23.3 If the circumstances
should have put him on enquiry.
[24] It appears clearly from the
a foregoing facts that the respondent could not have been put on his
enquiry, that he did not
know that Mr Naidu was acting beyond his
initial authority, (if that was the case), and he could not have
thought that Mr Naidu
was acting beyond his usual authority in the
light of the evidence.
[25] In the circumstances the
appellant should not be allowed to rely on Mr Naidu’s lack of
authority to have communicated
the fact that the tender contract was
awarded.
[26] The conclusion must be that
the tender contract was awarded and entered into on 30 November 2004
and came into operation on
1 December 2004.
[27] In any event, it is clear
from the actions of the appellant that the appellant, from 1 December
2004 to 23 December 2004,
and even thereafter, through Mr Stone and
others, acted as if there was a valid contract in existence.
[28] In addition to the clear
terms of the letter of 30 November 2004, in terms of the doctrine of
quasi
-mutual
assent the appellant should be held bound to the agreement contended
for by the respondent.
[29] In the most recent decision
on the subject,
Pillay
and Another v Shaik and Others
2009 (4) SA 74
(SCA),
quasi
-mutual
assent was dealt with as follows in paragraphs [54] to [60] of the
judgment:
“
[54]
It is now necessary to consider whether, on the application of the
doctrine of quasi-mutual assent, Mr Pillay and Dr Motlanthe
have
established their entitlement to the relief sought.
[55] The approach to be
adopted in a case such as this was set out in
Sonap
Petroleum (SA) (Pty) Ltd v Pappadogianis
,
supra, at 239F - 240B, as follows:
'If
regard is had to the authorities referred to by the learned Judges
(see
Logan
v Beit
7
SC 197
at 215;
I
Pieters and Company v Salomon
1911
AD 121
at 137;
Hodgson
Bros v South African Railways
1928
CPD 257
at 261;
Van
Ryn Wine and Spirit Co v Chandos Bar
1928
TPD 417
at 422 - 4;
Irvin
& Johnson (SA) Ltd v Kaplan
1940
CPD 647
and, one could add,
Collen
v Rietfontein Engineering Works
1948
(1) SA 413
(A)
at
430 - 1), I venture to suggest that what they did was to adapt, for
the purposes of the facts in their respective cases, the
well-known
dictum
of
Blackburn J in
Smith
v Hughes
(1871)
LR 6 QB 597
at 607, namely:
"If, whatever a man's real intention may be, he so conducts
himself that a reasonable man would believe that he was assenting
to
the terms proposed by the other party, and that other party upon the
belief enters into the contract with him, the man thus
conducting
himself would be equally bound as if he had intended to agree to the
other party's terms.''
In
my view, therefore, the decisive question in a case like the present
is this: did the party whose actual intention did not conform
to the
common intention expressed, lead the other party, as a reasonable
man, to believe that his declared intention represented
his actual
intention? Compare Corbin on
Contracts
(one
volume edition) (1952) at 157. To answer this question, a three-fold
enquiry is usually necessary, namely, firstly, was there
a
misrepresentation as to one party's intention; secondly, who made
that representation; and thirdly, was the other party misled
thereby?
See also
Du
Toit v Atkinson's Motors Bpk
1985
(2) SA 893 (A)
at
906C - G;
Spindrifter
(Pty) Ltd v Lester Donovan (Pty) Ltd
1986
(1) SA 303
(A)
at
316I - 317B. The last question postulates two possibilities: Was he
actually misled and would a reasonable man have been misled?
Spes
Bona Bank Ltd v Portals Water Treatment South Africa (Pty) Ltd
1983
(1) SA 978
(A)
at
984D - H, 985G - H.'
[56] The answers to the
questions set out in that passage, when applied to the facts of this
case, are clear: the party whose actual
intention did not conform to
the common intention expressed (ie that there were contracts on the
terms set forth on the standard
form) was Mr Blake, acting for
himself and the other developers. He led Mr Pillay and Dr Motlanthe,
as reasonable men, to believe
that the declared intention represented
his actual intention. With regard to the threefold enquiry:
(a)
there was a
misrepresentation as to his intention;
(b)
made by his agents
(in the various letters sent by Mooney Ford to Mr Pillay and Dr
Motlanthe which unmistakably represented that
the offers had been
accepted and binding contracts had come into existence); and
(c)
Mr Pillay and Dr
Motlanthe were actually misled, as reasonable men in their position
would have been.
[57] It is clear on the
evidence that Mooney Ford had authority to call for and receive
deposits paid under contracts for the sale
of member's interests in
the close corporation to which units were to be allocated; to call
for guarantees under the contracts;
to allocate close corporations,
from the list made available to them by Mr Blake's accountants, to
particular units; to call for
copies of identity documents and
marriage certificates so as to be able to open the sectional title
register and transfer member's
interests; to write to the buyers
regarding the finishes of the units and to ask for additional
payments occasioned by changes
thereto; and to give notices under
clause 13 of the standard form contracts threatening cancellation.
[58] All these acts,
which they were authorised to perform on behalf of Mr Blake and his
fellow developers, amounted, in my view,
to a clear representation
that the offers made by Mr Pillay and Dr Motlanthe had been duly
accepted.
[59] Although the
acceptance by the developers of the Pillay and Motlanthe offers did
not comply with the prescribed mode of acceptance
they conducted
themselves in such a manner as to induce the reasonable belief on the
part of Mr Pillay and Dr Motlanthe that the
developers were accepting
the offers according to the prescribed mode.
[60] It follows in my
view that Balton J correctly held, on the basis of the doctrine of
quasi-mutual assent, that the developers
were bound by the agreements
in respect of units 402 and 502.
”
[30] If the abovementioned test
is to be applied to the current facts, it is clear that the appellant
conducted itself in such
a way that a reasonable person in the
position of the respondent would have believed that appellant was
assenting to the terms
proposed by the respondent in its tender, and
that the respondent upon that belief entered into the contract with
appellant and
acted as if a contract had been entered into.
Therefore, even though the appellant’s case is that it never
had the actual
intention to enter into the agreement, its actions led
the respondent as a reasonable person to believe that appellant had
accepted
the respondent’s tender even if it can be said that
the agreement was not formally entered into and even if Mr Naidu had
no authority to enter into the agreement or to convey acceptance of
the tender.
[31] It consequently follows
from the aforegoing that on one or more of the grounds referred to
above, a valid and binding agreement
came into existence between
appellant and respondent.
[32] However the main thrust of
the argument on behalf of the appellant on appeal developed by Mr
Soni on behalf of the appellant
is what counsel for the appellant
referred to a constitutional issue. For this, Mr Soni relied on the
defendant’s amended
plea, which reads as follows:
“
Alternatively,
to paragraph 6.2 above, and in the event of the above Honourable
Court finding that Mr Naidu informed the plaintiff
that the ‘tender’
had been awarded to the plaintiff and that Annexure ‘A’
constituted acceptance of the
plaintiff’s tender, then in that
event the defendant avers that:
…
6.3.2 The defendant is not
bound to the agreement arising therefrom as it constituted a breach,
alternatively was contrary to the
Public Finance Management Act 1 of
1999
(‘
the
Act
’).”
This, Mr Soni argued, was the
constitutional or purely legal issue which it is entitled to raise on
appeal although not fully dealt
with in the court below. The
question that arises is whether a legal or constitutional point has
been pleaded issuably and raised
adequately for the respondent to be
aware that the question is indeed an issue to be dealt with. Mr Soni
argued that the reference
to the aforesaid Act was sufficient to have
placed the respondent on its guard and to deal therewith. Upon
questioning, Mr Soni
stated that reliance is placed on section 76 of
the Act.
[33] In
Wildner
v Compressed Yeast Ltd
1929 TPD 166
Tindall J after setting out the provisions of the Rule
regarding pleading remarked:
“
A
plea ought to state expressly that defences which the defendant
relies on, but it may happen to be so drafted that it indicates
impliedly that the defendant intends to rely upon a certain defence.
And if the terms of the plea do indicate, by implication,
that the
defendant intends to rely upon a certain defence, then I think it is
the duty of the defendant to state clearly and concisely
the material
facts on which the defence is based. …
”
In
Yannakou
v Apollo Club
1974 (1)
SA 614
(A) at 623 Trollip JA stated as follows:
“
That
the drawer should have stated with at least reasonable clarity which
of the two pleas he relied on, admits of no doubt. Rule
19(4) of the
1968 Magistrates’ Courts’ Rules (like Supreme Court Rule
22(2)) requires of a defendant that he shall
in his plea
‘
clearly and concisely
state the nature of his defence and all the material facts on which
it is based’.
Hence, if he relies on a
particular section of a statute, he must either state the number of
the section and the statute he is relying
on or formulate his defence
sufficiently clearly so as to indicate that he is relying on it (cf.
Ketteringham v. City of Cape Town,
1934 A.D. 80
at p. 90).
And
if his defence is illegality, which does not appear
ex
facie
the
transaction sued on but arises from its surrounding circumstances,
such illegality and the circumstances founding it must be
pleaded. It
is true that it is the duty of the court to take the point of
illegality
mero
motu
, even if the
defendant does not plead or raise it; but it can and will only do so
if the illegality appears
ex
facie
the
transaction or from the evidence before it, and, in the latter event,
if it is also satisfied that all the necessary and relevant
facts are
before it. (See Jones and Buckle,
Civil
Practice of the Magistrates' Courts
,
6th ed., pp. 529 - 530, where the authorities are collected, to which
Cape Dairy and
General Livestock Auctioneers v Sim
,
1924 AD 167
, and
Dada
& Sons v Makhetle
,
1949
(2) SA 485
(T)
,
can be added).
Those rules of practice are
substantially the same as those in English law; perhaps they even
originated therefrom. The instructive
and lucid summary of the
English Rules derived from their authorities on the need to specially
plead any statute or
illegality
relied on as a defence is given in the White Book (The Supreme Court
Practice 1973) at pp. 266 - 7. It is to the same
effect as stated
above. The leading English case is
North
Western Salt Co. Ltd
.
v
Electrolytic
Alkali Co. Ltd.
,
1914 A.C. 461.
There Viscount HALDANE, L.C., at p. 469, summed up the
position in language most apposite to the situation in the present
case:
"My Lords, it is no
doubt true that where on the plaintiff's case it appears to the Court
that the claim is illegal, and that
it would be contrary to public
policy to entertain it, the Court may and ought to refuse to do so.
But this must only be when either
the agreement sued on is on the
face of it illegal, or where, if facts relating to such an agreement
are relied on, the plaintiff's
case has been completely presented. If
the point has not been raised on the pleadings so as to warn the
plaintiff to produce evidence
which he may be able to bring forward
rebutting any presumption of illegality which might be based on some
isolated fact, then
the Court ought not to take a course which may
easily lead to a miscarriage of justice. On the other hand, if the
action really
rests on a contract which on the face of it ought not
to be enforced, then, as I have already said, the Court ought to
dismiss
the claim, irrespective of whether the pleadings of the
defendant raise the question of illegality."
A fortiori
in
the present case, where two possible pleas were available to the
drawer of the cheque, the one consistent with the transaction
being
innocent, albeit unenforceable, and the other involving charges of
criminality and illegality,
"he must say which he
means, and if he intends to charge illegality, he must state facts
for the purpose of shewing what the
illegality is"
(
per
Lord DAVEY in
Bullivant v
Attorney-General for Victoria
,
1901 A.C. 196
at p. 204).
Turning now
to the drawer's pleas, I think that he only relied on the common law
defence relating to gambling, that he did not plead
any defence of
illegality based on sec. 6 of the Gambling Act, either as required by
the above-mentioned rules of practice or at
all, and that he did not
at any stage of the
proceedings
in the two lower Courts raise such a defence. The following facts and
circumstances, I think, bear that out.
Para. 3
(b)
of his initial
alternative plea reads:
"Alternatively
to sub-para.
(a)
hereof,
and if the plaintiff is the holder of the said cheque, the defendant
denies that it is the holder thereof in due course
or that it gave
value for the said cheque and says that the said cheque was
negotiated to the plaintiff in payment of a gambling
debt not
recoverable at law."
That
clearly relates to the common law defence of gambling.
The drawer was then asked to particularise those allegations
as follows:
“
(a) When and where
is it alleged that the said cheque was negotiated to the plaintiff in
payment of a gambling debt.
The nature of the alleged
'gambling' is required.
(c) The amount of the
alleged 'gambling debt' is required."
He replied:
"
(a)
Defendant
does not admit that the cheque was negotiated to the plaintiff.
Alternatively,
If the above Honourable Court
should hold that the cheque was negotiated to the plaintiff, then the
cheque was delivered to the
plaintiff in payment of a gambling debt
not recoverable at law at the plaintiff's place of business, The
Apollo Club.
(b)
The
gambling was
chemin
de fer
which
was conducted by the plaintiff at the Apollo Club at its place of
business in circumstances prohibited by law.
The precise amount of the
gambling debt is unknown to the defendant but it was in excess of
the amount of the cheque sued upon."
The mention of the place where the gambling occurred was in
answer to the specific questions as to where and how the gambling
occurred.
The allegation, "in circumstances prohibited by law",
relates to the common law defence in the plea, and, therefore, takes
that plea no further. The pleader apparently misunderstood the common
law to prohibit gambling. If the Gambling Act had been in
his mind,
he would undoubtedly have said "prohibited by the Gambling Act"
and not simply "prohibited by law".
The alternative plea was later amended (I assume the amendment
was granted) by the substitution for the words "in payment of
a
gambling debt not recoverable by law" of the following:
"’in
return for chips or counters bearing a total money value equivalent
to the value of the cheque, to be used by defendant
(
sic
)
for the purpose of gambling at plaintiff's premises, where plaintiff
permitted, encouraged and organised such gambling, and from
which
gambling plaintiff profited. Plaintiff's claim is thus based on an
illegal transaction or one contrary to public policy and
is
accordingly unenforceable.'"
The purpose of the
amendment was to allege that the plaintiff was the keeper of a gaming
house who had advanced the proceeds of
the cheque to Phedonas for
gambling on its premises. A clear reference, I think, to the common
law principle enunciated in
Krasner
v Maleta, supra
.
The pleader again erred in thinking that such a transaction was not
only unenforceable but illegal. That defence seems to have
been
present to the drawer's mind, too, when he filed his affidavit
resisting the application for summary judgment. He there said
the
transaction was
"a
gambling transaction in circumstances prohibited by law in the gaming
house unlawfully conducted by the plaintiff in Hillbrow,
Johannesburg".
Even if that affidavit
could be regarded as constituting a part of the drawer's plea, it
still merely relates to the common law
defence founded on
Krasner
v Maleta
. I pause
here to observe, therefore, that nowhere in the drawer's plea or its
further particulars is the Gambling Act or its relevant
provisions
referred to by name or number; nor, if it was intended to base any
defence thereon, was it clearly formulated, as is
required by
Ketteringham's
case,
supra
.
Moreover, the alleged transaction between the club and Phedonas was
not
ex facie
illegal as being
contrary to the Gambling Act. Such illegality, if any, would
essentially have to depend upon the circumstances
surrounding it, in
particular whether, the premises in question being a club, the public
in general nevertheless had access to
it or, if not, it was
habitually used for gambling (see sec. 6(2) of the Act). Those
sine
qua non
circumstances
were not alleged in the plea or its further particulars, as is
required by the rules of practice canvassed above.
Putting it another
way: the drawer, if he intended relying on illegality, should have
alerted the club by his plea to the fact
that he was charging it with
criminal and illegal conduct which vitiated the transaction. That he
did not do. Indeed, of the two
pleas available to him, I think he
chose the common law and not the statutory one.
That that was his
intention is also confirmed by how his counsel conducted his defence
at the trial and on the appeal before the
Court
a
quo
. When the club
had closed its case, counsel informed the court that the drawer's
only defence was that the cheque was
"negotiated
to Apollo Club in respect of a gambling transaction".
Not a word was apparently
said about the Gambling Act. Nor did the magistrate in his reasons
for giving judgment in the drawer's
favour mention it. On the
contrary, he relied exclusively on the common law. Having dealt with
the facts, he posed the question,
"how does this render the
defendant not liable on the cheque?" And then he immediately
proceeded to say what the common
law is quoting
Krasner
v Maleta, supra
. He
found that the club was a gaming house and that, as the proceeds of
the cheque were advanced for gambling there, the club could
not
recover on it. It is therefore obvious that the Gambling Act was not
invoked during argument. On the appeal to the Court
a
quo
the same
counsel appeared for the drawer. That he did not rely on any
illegality under the Act seems clear from the concurring judgment
of
DE KOCK, J. He said:
"It
will be seen from the judgment of my Brother MARGO and it is, I
think, important that the point should be emphasised, that
there was
nothing illegal in the transaction between the payee and the
plaintiff in this case. At worst, from the plaintiff's point
of view,
it can be said of the transaction that it was
contra
bonos mores
.
But the plaintiff's title as such is not tainted with illegality. The
question whether he would have succeeded in an action on
the cheque
against the drawer if he had taken the cheque for an illegal
consideration as distinct from one that is merely against
public
policy does not, therefore, arise in this case. It may well be that
where the holder takes a cheque for an illegal consideration,
e.g.,
an undertaking by him to commit a crime, the rule
ex
turpi causa non oritur actio
would
preclude the plaintiff from recovering on the cheque as against the
drawer therefor,... However, on the facts of the present
case, I am
in full agreement with the judgment and the order proposed by MARGO,
J."
In the heads of argument
for the drawer in the appeal to this Court, the same counsel raised
the question of the transaction being
illegal by reason of sec. 6(1)
of the Gambling Act, contending that a court is obliged to take
cognizance of it "even if the
matter that affects it is not
pleaded". (I mention counsel's conduct above merely to confirm
that the defence of illegality
was never previously pleaded or raised
and not to criticise him).
Hence, it is, in my view,
clear that the defence of the alleged illegality was not pleaded or
raised at any stage of the proceedings
in the lower Courts. It was
raised for the first time during the appeal to this Court. It is true
that counsel for the club - he
did not appear in the lower Courts -
did not object to its being raised, but then he could not object.
For, according to the authorities
canvassed above, this Court,
despite such illegality not having been pleaded or raised, is
obliged, even at this late stage, to
take cognisance of it if the
evidence establishes it. But the importance of its not having been
pleaded or raised at the proper
time is (and I emphasise this) that,
before taking cognisance of it, we must be satisfied, in order to
avoid any miscarriage of
justice, that all the necessary and relevant
facts were canvassed at the trial and are before us.
”
See also:
Tucker’s
Land and Development Corporation (Pty) Ltd v Loots
1981 (4) SA 260
(T) at 267.
[34] I am not satisfied that the
issue pursuant to the Act had been pleaded and properly raised. It
certainly was not dealt with
in evidence or argument in the court
below. Mr Soni also argued that it is a purely legal issue which may
be raised on appeal.
It is doubtful whether this is purely a legal
issue. In order to decide whether respondent (or any other tenderer)
falls within
the rules relied upon by the tender board, certain
factual matters need to be canvassed. It was argued that after
applying its
arithmetical corrections the tender board arrived at
certain figures which placed the respondent fourth on the list of
prospective
contractors and the recalculations were the reasons why
the respondent was ranked fourth. If the arithmetical calculations
had
not been made the respondent would have ranked 27
th
and the allocation of the tender would not have been cost-effective
pursuant to section 76 of the Act. Other tenderers, so it
was
argued, may have then had an unassailable case on review. I do not
agree. The internal workings of the cross-functional team
of the
appellant’s procurement department are not before the court –
it is not possible to ascertain on all the facts
that were canvassed
whether the respondent’s ranking would have remained at number
27 or would have improved by virtue of
other factors which the team
may have taken into account. Indeed, on the evidence that have been
canvassed, no successful review
would have been possible. For the
proposition that this Court could now consider this new point of law
(the constitutional point)
reliance was placed on
Alexkor
Ltd v The Richtersveld Community
[2003] ZACC 18
;
2004
(5) SA 460
(CC) at 477 where it was held at paragraph [44] as
follows:
“
[44]
It is therefore open to Alexkor and the Government to raise in this
Court the legal contention which they abandoned in the
SCA. However,
they may only do so if the contention is covered by the pleadings and
the evidence and if its consideration involves
no unfairness to the
Richtersveld Community. The legal contention must, in other words,
raise no new factual issues. The rule is
the same as that which
governs the raising of a new point of law on appeal. In terms of that
rule 'it is open to a party to raise
a new point of law on appeal for
the first time if it involves no unfairness . . . and raises no new
factual issues'.
”
In the matter under consideration
the issue was not raised on the pleadings and would require a
consideration of facts which were
not canvassed during the trial.
Clearly a new point of law can be considered if it involves no
unfairness to the other party and
raises no new factual issues. See
Naude and Another v
Fraser
[1998] ZASCA 56
;
1998 (4) SA 539
(SCA) at 558A. Also see
Correia
v Commanding Officer, Windhoek Prison and Another
1999 (2) SA 939
(NmSC) at 945G-946E. During argument counsel for the
appellant accepted that the issue was not pertinently raised in the
court
a quo
but that it is raised for the first time on appeal. He argued that
it was referred to obliquely in the plea by reference to the
Finance
Management Act, but it has been held that constitutional points are
to be raised particularly so that it can be dealt with
properly:
“
Dit
is myns insiens vir die behoorlike ordening van die praktyk absoluut
noodsaaklik dat konstitusionele punte nie deur advokate
as laaste
debatspunt uit die mou geskud word nie maar pertinent in die stukke
as geskilpunt geopper word sodat dit volledig uitgepluis
kan word
deur die partye ten einde die Hof in staat te stel om dit behoorlik
te bereg
”,
per Van Dijkhorst J in
Prokureursorde van
Transvaal v Kleynhans
1995 (1) SA 839
(T) at 849A-B. See
Swissborough
Diamond Mines (Pty) Ltd and Others v Government of the Republic of
South Africa and Others
1999 (2) SA 279
(T) at 323F-G and
Gauteng
MEC for Health v 3P Consulting (Pty) Ltd,
unreported
case no. 179/10 of the Supreme Court of Appeal which held, after
referring to the
Swissborough
matter that “
The
dictum is not only of application to constitutional issues – it
applies to all issues
”.
See
Billiton Aluminium
SA Ltd t/a Hillside Aluminium v Khanyile and Others
2010 (5) BCLR (CC) at para [18]. The argument for the appellant was
further developed in that the tender agreement would be illegal
and
contrary to the provisions of the Constitution in that in terms of
section 217(1) of the Constitution it is required when an
organ of
state contracts for services, it is required to do so in accordance
with a system that is fair, equitable, transparent,
competitive and
cost-effective. In addition so it was argued in terms of section 33
of the Constitution the appellant is obliged
to respect the
administrative of justice rights of all tenderers with the
consequence that the appellant may not enter into a contract
that is
not a product of a system that complies with section 217(1) or
section 33 of the Constitution. Consequently, so it was
argued, in
determining whether or not to recognise the contract contended for by
the respondent, it is essential to consider whether
these mandatory
provisions have been complied with. Mr Soni argued that the appellant
explained the “
system
”
and that the respondent would not have been accepted as a tenderer
were it not for the arithmetical adjustments as testified
to by Mr
Maelane. However, Mr Maelane’s evidence was only from the
prospectus of the tender board of which he was a member.
No evidence
of any nature was forthcoming from the cross-functional team of the
appellant’s procurement department. That
is the evidence which
would be required to ascertain whether the respondent’s
position would have changed and if so, to what
extent. That is the
evidence which might have indicated whether the agreement was indeed
illegal for want of compliance with the
Constitution. In the absence
of such evidence it would be speculative to decide that the court
would be upholding an agreement
that is illegal. Price was not the
only factor. There were a host of factors taken into account, none
of which were canvassed
in the court
a
quo
in order to
determine whether there was any illegality or not. The fact that the
issue was not canvassed in the court
a
quo
and the absence of
evidence which would place a court in a position to determine the
illegality of the contract or otherwise, distinguishes
this matter
from what was said in
Logbro
Properties CC v Bedderson NO and Another
2003 (2) SA 40
(SCA). In the circumstances the “
constitutional
point
” or “
legal
argument
” raised
on behalf of the appellant on appeal cannot be entertained.
[35] In the circumstances, the
appeal is dismissed with costs.
_____________________________
W
L WEPENER
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
I agree:
_____________________________
P
BORUCHOWITZ
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
I agree:
_____________________________
R
MATHOPO
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG