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[2014] ZAGPJHC 109
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Johannesburg Stock Exchange Ltd v Quispiam CC and Others (2011/35125) [2014] ZAGPJHC 109 (6 May 2014)
IN
THE GAUTENG LOCAL DIVISION OF THE HIGH COURT, JOHANNESBURG
Case
No: 2011/35125
DATE:
06 MAY 2014
In
the matter between:
THE
JOHANNESBURG STOCK EXCHANGE
LTD
........................................................................
Plaintiff
And
QUISPIAM
CC
.................................................................................................................................
1
st
Defendant
ANTONY
VAN
TIL
.........................................................................................................................
2
nd
Defendant
DANA
VAN DEN
BERG
...............................................................................................................
3
rd
Defendant
JUDGMENT
C.
J. CLAASSEN J
:
INTRODUCTION
[1]
This
is a delictual claim for damages arising from alleged fraud committed
during the conclusion and execution of a consultancy
contract between
the parties. The plaintiff alleges that the three defendants’
collusive conduct surrounding the conclusion
of a contract between
the plaintiff and the first defendant in terms whereof the first
defendant undertook to render certain expert
Information Technology
Asset Management (“ITAM”) services during 2009 to 2011,
amounted to fraud perpetrated to the
detriment of the plaintiff. At
the outset it is necessary to mention that the
“Lillicrap”-principle
[1]
does not apply (nor did counsel for the defendants rely in argument
thereon) as the parties never intended to regulate fraudulent
conduct
by either party in the contract concluded between the plaintiff and
the first defendant.
[2]
The
plaintiff is the Johannesburg Stock Exchange Ltd (“the JSE”).
It employed the third defendant, Mr Dana van den Berg
(“Van den
Berg”), as Head of Supplier and Asset Management. He was
instructed by his superior, Mr Riaan van Wamelen
(“Van
Wamelen”), the Chief Information Officer of the JSE, to secure
the a consultancy agreement for the rendering
of the required expert
services. Van den Berg engaged the services of the first defendant,
(“Quispiam”), to do so.
A written contract was concluded
during November 2009 in terms whereof three “Confirmations of
Engagement” agreements
(“confirmations”) were
issued and signed.
[2]
Quispiam was owned by the second defendant, Mr Antony van Til (“Van
Til”), who had known Van den Berg for some time
prior to the
conclusion of the contract. During the execution of the contract, Van
den Berg’s wife, Mrs Cecilia van den Berg
(“Mrs van den
Berg”), was employed by Quispiam.
[3]
The
initial expert, Mr Gorelick, employed by Quispiam to render the
services proved to be incompetent, as a result whereof Van Til
took
over the duties as the expert consultant. Certain work which
benefited the JSE was completed by two junior employees of Quispiam,
Messrs Y. Ragubeer (“Rugabeer”) and G. Sithonga
(“Sithonga”). However, by June 2011 the JSE cancelled the
contract due to Quispiam’s inability to render the expert
consultancy services stipulated for in the contract.
[4]
The
plaintiff’s claim for damages is computed on the basis of the
repayment to it of such amounts paid by it to Quispiam for
which the
JSE received no benefit. The total amount paid by the JSE to Quispiam
in respect of the first and second confirmations
was the sum of R1
636 200.00, from which is subtracted the amount of the salaries paid
to Ragubeer and Sithonga (including their
December 2010 bonus)
amounting to R582 000.00. This amounts to a claim for damages in the
sum of R1 054 200.00. To that amount
must be added the full amount of
R270 000.00 paid under the third confirmation for which no services
were rendered, bringing the
total claim to an amount of R1 324
200.00.
THE
WITNESSES
[5]
For
the plaintiff, the following witnesses testified:
·
Mr
Allan Greyling (“Greyling”), a chartered accountant and
forensic expert.
·
Mr
Riaan van Wamelen, the Chief Information Technology Officer of the
JSE.
·
Mr
Vuyo Sithonga, a junior employee of Quispiam.
·
Mr
Vincent Coetzer (“Coetzer”), a business man who had some
dealings with Van Til.
[6]
On
behalf of the defendants, the following witnesses testified:
·
Mr
Dana van den Berg, the third defendant.
·
Mr
Tony Trollip (“Trollip”), a senior information technology
consultant.
·
Mr
Antony van Til, the second defendant.
[7]
Let
me say immediately that I found Greyling to be an honest and
trustworthy witness. His expert testimony was to a limited extent
hampered by a lack of information which was subsequently remedied by
further information obtained during the trial from the defendants.
He
was able to pinpoint certain inexplicable inconsistencies between the
documentation provided by the defendants and the defendants’
version in court and assisted in the calculation of plaintiff’s
damages.
[8]
Van
Wamelen was an honest and straightforward witness. His evidence was
supported by documentary evidence and in regard to those
facts
unknown to him he was quick to admit his lack of knowledge.
[9]
Sithonga
was an honest witness and readily admitted his own lack of experience
and formal training in the duties required of him.
He can be believed
in the contribution that he was able to make regarding the work that
he and his colleague Rugabeer performed
and the contribution of Van
Til.
[10]
Coetzer
was not a credible witness. He had an obvious axe to grind with Van
Til. Reliance can only be placed on his evidence to
the extent that
it is either common cause or corroborated by other credible evidence.
[11]
Van
den Berg performed well in his evidence in chief, but sadly crumbled
under cross-examination especially in regard to facts emanating
from
his disciplinary hearing and the fact that he conducted himself
contrary to the ethics of his own code of conduct that he
was subject
to. He desperately attempted to distance himself from many obvious
inferences such as the involvement of his wife in
the business of
Quispiam and the transfer of certain funds to her bank account. He
found himself on the horns of a dilemma in that
he differed from Van
Til’s evidence on certain material issues.
[12]
Trollip
gave expert testimony which, in my view, in certain respects,
supported both the plaintiff’s and the defendants’
versions. He was a good witness and objective in regard particularly
to the nature of the services to be rendered in terms of the
consultancy contract concluded between the JSE and Quispiam.
[13]
Van
Til did not make a good impression upon me. I find him to be an
unreliable witness. The contemporaneous notes I made during
the
trial, reveal that I found him to be a dishonest, unsatisfactory and
lying witness. In certain instances my notes also reveal
that he
testified in an unsure manner.
[14]
The
aforesaid evaluations of the witnesses will become plain in the
remaining portion of this judgment.
THE
PLEADINGS
[15]
It
is necessary to refer to the pleadings in some detail. The
plaintiff’s particulars of claim start out with references to
the employment of Van den Berg by the JSE on 1 October 2008. The
terms of employment are captured in annexure “POC1”
attached to the particulars of claim. In particular it is alleged
that Van den Berg was responsible for the information technology
division and the JSE’s requirements in this regard. He was also
bound by a code of conduct a copy whereof is attached as
annexure
“POC2” to the particulars of claim. In paragraph 4.18 of
the code of conduct the question of conflict of interest
is dealt
with. It states the following:
“
4.18
Conflict
of Interest
The
general principle that underlies conflict of interest is that
employees should avoid any activity, investment or
interest that
might
reflect unfavourably upon the integrity or good name of the
JSE or
themselves.
Personal
interests
should
not influence employees when engaging in business dealings on behalf
of the JSE. They are expected to place the JSE’s
interest
ahead
of any personal gain
in every business transaction as well as
disclose
all the facts
in any situation where a conflict of interest may arise.
For
example, a conflict of interest may arise where an employee
:
4.18.1 Has personal
financial interests that might affect a business decision.
4.18.2 Influences, either
directly, or indirectly, the JSE’s dealings with any supplier
with whom the employee has
a personal or financial relationship.
4.18.3 Has a personal or
financial interest in the JSE’s supplier, competitor or client.
4.18.4 Gains personal
enrichment through access to confidential information.
4.18.5 Competes with the
JSE regarding trade matters or works for the JSE’s competitor
whilst currently employed.”(Emphasis
added)
[16]
In
addition clause 5.9 of the code of conduct describes “dishonesty”
as including “receiving a gift from a client
in return for a
favour(s)”.
[17]
It
is further alleged in paragraph 8 of the plaintiff’s
particulars of claim that Van den Berg owed a duty of care to the
JSE
in the following terms:
“
8.
Independent from and in addition to his duties and obligations as an
employee of the plaintiff,
the third defendant in any event, owed the
plaintiff a duty of care:
8.1
not to defraud or allow the plaintiff to be defrauded;
8.2
not to collude with any other person either to defraud the plaintiff
or to cause the plaintiff
to incur expenses or pay out monies which
were not actually due;
8.3
to do all things which were reasonably necessary in the circumstances
in order to ensure
that no act or omission on his part will cause the
plaintiff to suffer a financial loss.”
[18]
In
paragraphs 9 to 11 the consultancy agreement which was concluded
between the JSE and Quispiam is referred to. A copy of the agreement
is attached as annexure “POC3”. The relevant clauses of
the consultancy agreement are:
“
In
this Agreement unless otherwise indicated by the context:
1.5
the following expressions shall bear the meanings assigned to them
below
and cognate expressions bear corresponding meanings:
1.5.1
‘
Agreement
’ means the agreement contained in this
document and the Confirmation of Engagement hereto which Confirmation
of Engagement
shall form an integral part hereof and to which the
provisions, stipulations and conditions of the Agreement shall apply
mutatis
mutandis. Where there is conflict between any of the
provisions, stipulations and conditions of the Agreement and that of
any Confirmation
of Engagement, the provisions, stipulations and
conditions of the Agreement,
except for those contained in the
special conditions of such Confirmation of Engagement
, shall take
precedence;
1.5.2 …
1.5.3
‘
Consultant
’ means a
skilled person from
Quispiam
who will provide the Services;
1.5.4 ‘
Confirmation
of Engagement
’ means the confirmation of engagement
substantially in the format attached hereto as Annexure A to be
signed by the Parties
which details the provision of the Services;
1.5.5 ‘
Designated
Representatives
’ means in the case of the JSE, Dana van den
Berg and in the case of Quispiam, Tony van Til or their alternates or
replacements
appointed by written notice and who must be at a level
of seniority substantially similar to the persons they are standing
in for
or replacing, and be acceptable to the other Party, in its
reasonable discretion;
…
1.5.9 ‘
Services
’
means the professional consulting services to be performed by the
Consultant to the JSE,
as more fully described
in a
Confirmation of Engagement
;
3.1
It is recorded that
nothing
in this Agreement shall constitute
an
employment relationship
between the JSE and the Consultant.
4
ENGAGEMENT
AND SERVICES
4.1
Quispiam shall ensure that the Consultants will have the necessary
skills and expertise to provide the Services.
4.2
Quispiam shall ensure that all Consultants submit weekly
timesheets
detailing the hours worked, and tasks and activities conducted by
that Consultant to the JSE’s Designated Representative,
which
timekeeping and expense records have to be approved by the JSE’s
Designated Representative.
4.3
…
4.4
The Confirmation of Engagement shall specify the following –
4.4.1
the Premises from which the Services are to be rendered;
4.4.2
the specific Services required to be rendered/task to be performed by
the Consultant;
4.4.3
the number of hours which are to be worked as well as whether such
hours shall be rendered
on a flexitime or a fixed working hours
basis;
4.4.4.
the Service Fees due by the JSE to Quispiam for the performance of
the Services by the Consultant;
4.4.5
the start date and duration of the Services, which shall be specified
as a fixed period
or until the completion of a particular task, as
described in the Confirmation of Engagement; and
4.4.6
any other information which the Parties may deem appropriate in the
circumstances.
4.5
In the event of resignation or dismissal from Quispiam of a
Consultant, Quispiam reserves
the right to replace such Consultant
with a suitable replacement, and shall provide the JSE with 30
(thirty) days
prior written notice
of such replacement.
…
5
JSE
RESPONSIBILITIES
The JSE
shall:
5.1
…
5.2
…
5.3
manage, on a daily basis, the Consultants including, without
limitation,
the work allocation and performance of each Consultant.
…
7
SERVICE
FEE
7.1
The JSE shall pay Quispiam a service fee in accordance with the rates
specified in the Confirmation of Engagement, which rates shall be
exclusive of VAT (‘Service Fee’).
7.2
Any amount due by the JSE to the Consultant shall be paid within 30
(thirty)
days from receipt of invoice.
7.3
Quispiam shall ensure that all invoices submitted to the JSE are
sufficiently
detailed and include such supporting documentation as is
necessary for the JSE to be able to confirm the correctness of the
amounts
being invoiced as well as to be able to tie each such invoice
to the specific Services delivered.
7.4
Quispiam shall maintain complete and accurate records
of, and
supporting documentation for,
all amounts invoiced to and payments
made by the JSE
in terms of this Agreement in accordance with
generally accepted accounting principles applied on a consistent
basis and shall
make these available for review to the JSE (or its
auditors) upon written notice.
…
11
DURATION AND TERMINATION
11.1
…
11.2
…
11.3
In the event of the Consultant
performing poorly
, other than
as a result of the JSE’s mismanagement of such Consultant, or
displaying unacceptable behaviour in the JSE’s
reasonable
opinion or in the event of the JSE becoming aware of information
pursuant to its security procedures and inquiries which
indicates
that it would be
prejudicial to the JSE
or to its affiliates
or to their respective customers for a Consultant to continue
rendering the Services, the JSE shall be entitled
to request Quispiam
to replace such Consultant on 7 (seven) days written notice to
Quispiam, failing which the JSE shall be entitled
to cancel the
specific Confirmation of Engagement, in which event the JSE shall
only be liable to pay Quispiam for the Services
rendered by the
Consultant up to the date of cancellation of the Confirmation of
Engagement.
…
12
WARRANTY
Quispiam
gives the following warranties to the JSE:
12.1
It shall provide adequately skilled Consultants to the JSE and the
Consultants are
qualified and suitable to render the Services to the
JSE;
12.2
It shall ensure that it and its Consultants perform its
responsibilities under this
Agreement in a manner that does not
infringe, or constitute an infringement or misappropriation, of any
intellectual property or
other proprietary rights of any third party;
12.3
…
12.4
the Consultants shall perform the Services properly, diligently,
promptly, timeously,
efficiently and in compliance with the JSE’s
lawful instructions.” (Emphasis added)
[19]
In
paragraphs 12 to 20 the plaintiff pleads the three confirmation
agreements that were concluded between the JSE and Quispiam.
The
first Confirmation was concluded on 23 November 2009 and attached to
the particulars of claim as annexure “POC4”.
It reveals
that Quispiam was to supply two junior consultants and one “ad
hoc senior ITAM resource”. The specific services
to be rendered
were stated as “development of IT asset management (‘ITAM’)
programme and associated deliverables.”
It further specifies
the amount of hours per month to be served by the junior and senior
resources and a service fee of R90 000.00
per month excluding VAT
which includes overtime. It records that the start date will be 23
November 2009 and the duration thirteen
months. It further contained
special conditions in the following terms:
“
1.
The scope and deliverables will be agreed by the parties during the
initial
stages of the Consulting Agreement.
2.
Notwithstanding clause 9 of the Agreement, the JSE is permitted
to
solicit the junior ITAM resources immediately after the duration of
engagement with no placement fee payable to Quispiam.”
[20]
The
second Confirmation of Engagement is attached as annexure “POC5”
to the particulars of claim. It constitutes the
renewed appointment
of the consultants mentioned in the first Confirmation of Engagement
for the same services to be rendered at
the same number of hours, but
the service fee was increased to R95 400.00 per month excluding VAT
and including overtime. This
constitutes approximately a six percent
increase in the service fee. The start date was set to be 24 December
2010 and the duration
until 31 December 2011. The special conditions
were the same as in the first Confirmation of Engagement agreement.
[21]
The
third Confirmation of Engagement is attached to the particulars of
claim as annexure “POC6”. It calls for the appointment
by
Quispiam of an “external legal counsel on a part time fixed
scope basis” to render a “summary of all the software
EULA’s (“End User Licence Agreements”) to ensure
compliance of our assets standards list.” It stipulates
a three
month engagement and the service fee was stated to be R90 000.00 per
month excluding VAT, but including overtime. The engagement
was to
start on 1 August 2010. It is common cause that the required external
legal counsel was never engaged and that an amount
of R270 000.00 was
paid equalling the amount of R90 000.00 per month for three months.
It is further common cause that the engagement
did not commence on 1
August 2010, but only during October 2010.
[22]
As
stated in the heads of argument for the defendants, it is common
cause that a total amount of R1 917 000.00 was paid by the JSE
to
Quispiam in respect of the three Confirmation Agreements. In this
regard, I quote from paragraph 1.12 of the defendants’
heads of
argument which states the following:
“
1.12
The first defendant submitted invoices to the plaintiff and payments
were made to the first defendant. Despite
the fact that the third
defendant denied payment by the plaintiff to the first defendant, it
can be accepted as common cause between
all the parties that the
plaintiff made the following payments to the first defendant, namely:
1.12.1
in respect of the first confirmation of engagement – R90 000.00
(plus VAT) x 13 months = R1 170 000.00 (plus
VAT);
1.12.2
in respect of the second confirmation of engagement – R95
400.00 (plus VAT) x 5 months = R477 000.00 (plus VAT); and
1.12.3
R270 000.00 (plus VAT) in respect of the third confirmation of
engagement.”
[23]
Plaintiff’s
cause of action is pleaded in paragraphs 24 to 32 of the particulars
of claim in the following terms:
“
24.
In submitting the aforesaid invoices, as detailed in paragraphs 21 to
23 above to the plaintiff, the
first defendant, duly represented by
the second defendant, represented to the plaintiff that all of the
Services provided for in
each of the First, Second and Third
Confirmations had indeed been rendered and, more particularly, that:
24.1
The senior ITAM resource, as provided for in the First and Second
Confirmations,
had indeed been assigned to the plaintiff and had
rendered 40 hours of Services per month to the plaintiff; and
24.2
The external legal counsel for whom provision was made in the Third
Confirmation
had indeed been engaged and had rendered the Services
which were provided for in the Third Confirmation.
25.
To the knowledge of the first and second defendants, the
representations as described in
paragraph 24 above were false.
26.
The aforesaid misrepresentations were made fraudulently,
alternatively negligently.
27.
More particularly, and to the knowledge of the first, second, and
third defendants (the
knowledge of the second defendant being
attributable to the first defendant):
27.1
No senior ITAM resource, as contemplated by the First and Second
Confirmations, was
ever assigned to the plaintiff;
27.2
The plaintiff did not receive or derive the benefit of 40 hours of
service per month
(or indeed any amount) from a senior ITAM resource;
27.3
The services or an external legal counsel (as provided for in the
Third Confirmation)
had never been engaged;
27.4
Despite having paid therefor, the plaintiff never received or derived
the benefit
of the services of an external legal counsel to provide
the services as contemplated by and provided for in the Third
Confirmation.
28.
The value of the senior ITAM resource for which the plaintiff paid,
but did not receive:
28.1
In terms of the First Confirmation, was the sum of R54 000.00 per
month excluding
VAT; and
28.2
In terms of the Second Confirmation, was the sum of R55 800.00 per
month excluding
VAT;
29.
Upon discovering the facts as detailed in paragraphs 24 to 28 above,
29.1
on or about 9 June 2011 the plaintiff terminated the Consultancy
Agreement and the
Second and Third Confirmations;
29.2
on or about 21 June 2011, and pursuant to a disciplinary hearing
which had been convened
and conducted, the plaintiff terminated the
third defendant’s employment contract.
30.
In the circumstances, and in consequence of that which has been
detailed in paragraphs 24
to 28 above, the plaintiff has suffered
damages in the total amount of R1 251 000.00, which amount comprises
and is calculated
as follows:
30.1
The overpayment in respect of the senior ITAM resource for the
thirteen month period
from November 2009 to December 2010 at the rate
of R54 000.00 per month, a total of R702 000.00;
30.2
The overpayment in respect of the senior ITAM resource for the five
month period
from December 2010 to April 2011 at the rate of R55
800.00 per month, a total of R279 000.00; and
30.3
The R270 000.00 which the plaintiff paid to the first defendant under
the auspices
of the Third Confirmation, in respect of the Services of
an external legal counsel which were never rendered or received.
31.
The plaintiff’s aforesaid
damages arose by virtue of the following:
31.1
The first, second and third defendants having colluded with one
another to defraud
the plaintiff out of the monies which are more
fully detailed in paragraph 30 above;
31.2
The first defendant having breached the terms of the Consultancy
Agreement and the
First, Second and Third Confirmations by:
31.2.1
failing to provide a senior ITAM resource to render Services to the
plaintiff;
31.2.2
charging for the Services of a senior ITAM resource which had never
been provided;
31.2.3
failing to ensure that a senior ITAM resource, with the necessary
skills and expertise to provide
the requisite Services, was, firstly,
appointed and provided and, secondly, rendered the requisite
Services;
31.2.4
failing to ensure that the requisite and stipulated weekly time
sheets were either produced or submitted;
31.2.5
failing to ensure that the invoices which it submitted to the
plaintiff were sufficiently detailed
and included the necessary
supporting documentation, as detailed in paragraph 11.10 above;
31.2.6
failing to appoint or engage the services of an external legal
counsel as contemplated by and provided
for in the Third
Confirmation;
31.2.7
failing to ensure that any such external legal counsel in fact
rendered the Services which he or
she was obliged to render in terms
of the Third Confirmation;
31.3
The third defendant having breached his contract of employment with
the plaintiff
in one or more or all of the following respects:
31.3.1
influencing, either directly or indirectly, the appointment of the
first defendant and the conclusion
of the Consultancy Agreement and
each of the Confirmations in circumstances where he had a conflict of
interest regarding such
appointment, particularly given that he had a
personal relationship with the second defendant;
31.3.2
acting negligently in the performance and execution of his duties as
the plaintiff’s employee;
31.3.3
failing to ensure that the Services for which the plaintiff had
contracted in terms of the First,
Second and Third Confirmations (and
for which the plaintiff paid) had indeed been rendered;
31.3.4
failing to insist upon the production and receipt of all supporting
documentation in substantiation
of the aforesaid amounts which the
first defendant invoiced to the plaintiff, and which the plaintiff
paid;
31.3.5
deliberately and wrongfully, alternatively negligently approving all
of the first defendant’s
aforesaid invoices for payment in
full, and authorising such payment to the first defendant;
31.3.6
causing and/or allowing the first defendant’s aforesaid
invoices to be paid in full under circumstances
where he ought not to
have done so;
31.3.7
conducting himself in the manner as more fully detailed in paragraphs
31.3.3 to 31.3.6 above, which
conduct amounted to and had the effect
of falsifying the process of the relevant transactions;
31.4
The third defendant having breached his duty of care as more fully
detailed in paragraph
8 above by:
31.4.1
defrauding the plaintiff, alternatively allowing the plaintiff to be
so defrauded;
31.4.2
colluding with the first and second defendants, as detailed in
paragraph 31.1 above;
31.4.3
failing to exercise due and reasonable care;
31.4.4
causing and/or allowing the plaintiff to suffer the aforesaid damages
when, by the exercise of due
and reasonable care, he could and should
have prevented such losses from occurring;
31.4.5
approving and authorising the first defendant’s aforesaid
invoices for payment in full, thereby
fraudulently, alternatively
negligently misrepresenting to the plaintiff that such payments were
indeed due to the first defendant;
and/or
31.5
The facts as detailed in paragraphs 24 to 27 above.
32.
The conduct of the first, second and third defendants, as detailed in
paragraph 31 above, jointly caused the plaintiff to suffer its
aforesaid damages.”
[24]
The
first and second defendants filed a joint plea. In essence the
allegations in paragraph 1 to 23 of the plaintiff’s particulars
of claim are admitted. Thereafter they plead as follows:
“
12.
AD
PARAGRPAH 24
12.1
First defendant represented to the plaintiff that the services
reflected on its invoices
had been rendered.
12.2
Save as aforesaid, the contents of this paragraph
are denied.
13.
AD PARAGRAPH 25 TO 28
The
contents of these paragraphs are denied.
14.
AD PARAGRAPH 29 READ WITH 29.1
14.1
It is admitted that on 9 June 2011 Plaintiff terminated the
Consultancy Agreement
and the Second and Third Confirmations.
14.2
Save as aforesaid, the
contents
of these paragraphs are denied.
15.
AD PARAGRAPH 29 READ WITH 29.2
The contents
of these paragraphs are denied.
16.
AD PARAGRAPH 30 TO 34
The contents
of these paragraphs are denied.”
[25]
The
third defendant filed a separate plea. Paragraphs 1 to 7 of
plaintiff’s particulars of claim are admitted, but paragraph
8
regarding the duty of care is denied. Paragraphs 9 to 20 are also
admitted whereas paragraphs 21 to 23 are denied. Save to admit
the
rendering of the invoices, the third defendant alleges that all the
services referred to in the invoices were in fact rendered.
He also
denies the contents of paragraphs 25, 26, 27 and 28 of the
particulars of claim, but admits the contents of paragraph 29.
As to
the remaining allegations in the plaintiff’s particulars of
claim as stated in paragraphs 30 to 34, the third defendant
denies
the same and in amplification pleads as follows:
“
10.2
In amplification of the afore stated denial, the third defendant
pleads that at all times material
to the existence of the employment
contract between the plaintiff and the third defendant, the third
defendant complied with the
obligations which were imposed upon him
by the employment contract.
10.3
Without derogating from the generality of the afore stated denials,
the third defendant
denies in particular that the third defendant
breached the terms of the employment contract as claimed by the
plaintiff or at all.
10.4
The third defendant pleads further that in the event that the above
Honourable Court
finds that the third defendant owed the plaintiff a
duty of care, then the third defendant denies that he had breached
the duty
of care.”
[26]
In
simple terms the pleadings imposed upon the plaintiff the duty to
prove on a balance of probabilities that the three defendants
colluded to defraud the JSE by representing that such services
specified in the confirmation agreements could be and was in fact
rendered. I agree with the submission of plaintiff’s counsel
that it is difficult to penetrate a fraud when the participants
close
ranks, particularly when they do so to such an extent that they
choose to be represented by the same legal team even in the
face of
obvious potential conflicts of interest.
[3]
The plaintiff submitted, however, that the JSE was able to
demonstrate the existence of a number of unusual and irregular
features
in the manner in which the Consultancy Agreement was entered
into and performed. It was argued that the defendants have either
been forced to admit these features, or have put up purported
explanations which are so improbable or contrived that they can
safely
be disbelieved.
THE
EVIDENCE
[27]
The
JSE employed Van den Berg in October 2008 as Head of Supplier and
Asset Management. At the direction of his superior, Van Wamelen,
the
JSE’s Chief Information Technology Officer, he focussed
initially on procurement and contract management. His focus
turned to asset management in the latter part of 2009.
[4]
[28]
Van
den Berg formed the view, which he communicated to Van Wamelen, who
relied upon him, that external experts would be required
because
there was insufficient expertise in the field of asset management
within the JSE.
[5]
In accordance with the procurement policy (which he had drafted), Van
den Berg ran a request for proposal (“RFP”) process
(essentially a call for tenders) in an attempt to identify external
experts.
[6]
He reported to Van Wamelen that there were no suitable responses
to the RFP.
[7]
[29]
Subsequently,
Van den Berg advised Van Wamelen that he had identified a supplier
who could provide consultancy services in the specialised
area of
IT Asset Management (ITAM). The supplier he identified was
Quispiam.
[8]
It was within Van den Berg's mandate to assess the suitability of the
service provider, and he advised Van Wamelen that Quispiam
had the
required ITAM expertise. It was on that basis that Van Wamelen
signed off on the Consultancy Agreement with Quispiam.
[9]
Van den Berg stated that he did not look further for ITAM experts due
to time pressures. This is an unconvincing excuse in view
of the
evidence of the defendants’ expert Trollip that such ITAM
experts were available overseas, although at a high price.
Van den
Berg never stated that prices were a concern to either himself or the
JSE at that particular point in time.
[30]
An
issue hotly debated during the trial was whether the contract was in
fact a Consultancy Agreement or a Labour Broking Agreement.
The
difference between the two types of agreement is in fact relevant to
this case.
A
Consultancy Agreement is one in terms of which the JSE contracts to
receive specialist and professional services, generally for
a
particular identified task or to establish a particular capability.
The provision of the services will be undertaken, managed
and
controlled by the consultant, in view of the fact that the JSE itself
does not possess the necessary skills and experience
to perform such
services by itself. On the other hand, in a Labour Broking
Agreement, the JSE simply hires people for a limited
period to
perform certain work under the management and control of existing JSE
management.
[10]
In my view, the defendants’ attempt to describe the contract
between the JSE and Quispiam as a Labour Broking Agreement must
be
rejected. The terms of the contract speak for themselves. No
surrounding evidence is necessary to interpret it, as there are
no
ambiguities in the contract requiring such evidence. In my view the
terms unambiguously call for expert professional consulting
services
to be rendered by a “Consultant” as described in the
Confirmation of Engagement.
[11]
Expressly, the parties excluded any labour broking element in their
contract.
[12]
I conclude without difficulty that the parties’ relationship
was in fact a consultancy arrangement in terms whereof Quispiam
was
required to render the expert services of an ITAM expert nature. In
my view clause 4.1 expressly requires of Quispiam to deliver
individuals that fall into this category. Clause 5.3 does not
derogate from this conclusion in any manner. “Managing the
performance” of Quispiam’s ITAM experts does not mean, as
the defendants would have it, “training the resources
to become
experts” while executing the contract.
[31]
Some
disturbing features surrounding the conclusion of the Consultancy
agreement came to light during the evidence. Some of these
features
are the following:
1.
Shortly
before identifying Quispiam as a suitable ITAM consultant, Van den
Berg had, as part of his focus on procurement and contract
management, rationalised the list of labour brokers who provided
services to the JSE. Quispiam had
not
been on the list at all, but, as a favour to Van Til
,
Van den Berg introduced Quispiam as one of only five labour brokers
who made it onto the rationalised list. Van den Berg
admitted
that he did so contrary to the proper procurement process, and
without any knowledge of or enquiry into Quispiam's track
record as a
labour broker.
[13]
1.1
On
the basis that Quispiam was on the preferred list of suppliers, Van
den Berg approached Van Til about the need for a senior ITAM
resource. Van den Berg
did
not approach other labour brokers
with
a similar request. Van den Berg made no investigation into the
availability of skilled ITAM resources from any other source
before
recommending Quispiam.
[14]
He admitted that other brokers would in all likelihood have been able
to source such a resource. He sought to excuse his conduct
on the
basis that the JSE was under
strict
time constraints
and that he was comfortable with the resource that was introduced to
him by Quispiam.
[15]
In my view this was a lame excuse. No details of any time pressures
so severe as to deny a proper investigation of other ITAM sources
were supplied by Van den Berg.
1.2
Van
den Berg approached Quispiam even though he knew that it was
not
an ITAM consultant, but just a labour broker.
[16]
He also
knew
that Van Til, though he may have had certain relevant skills, was
not
an
ITAM
expert
.
[17]
1.3
Van
Til told Van den Berg that he had a skilled ITAM resource available
who would be able to supply the services sought by the JSE.
2.
In
my view, the coincidences evidenced by this chain of events
[18]
are too
remarkable
to be accepted as true
coincidences
.
It is more probable that they establish clear evidence of an
orchestrated collusion between Van den Berg and Van Til to
bring into
effect a contractual relationship between the JSE and Quispiam for
the mutual benefit of Van den Berg and Van Til.
3.
The Consultancy Agreement was concluded contrary to those provisions
of Van den Berg's employment contract that related to the avoidance
of
conflicts
of interest
.
The conflict of interest provisions were very clearly set out, and
included examples for a clearer understanding.
[19]
Contrary thereto:
3.1
Van den Berg knew Van Til from a time long before any relationship
existed between the JSE
and Quispiam.
[20]
3.2
Van den Berg did not reveal his previous relationship with Van Til
to Van Wamelen.
[21]
3.3
According to Van Wamelen, had he known of the previous relationship,
it would have raised
a significant red flag.
[22]
3.4
Moreover, Van den Berg was the "designated representative"
of the JSE in relation
to the Consultancy Agreement, meaning that he
was the person responsible for liaising with Quispiam, and charged
with ensuring
that the services were being duly delivered and that
the obligations under the contract were being duly observed.
[23]
He was so obliged also in terms of clause 5.3 of the Consultancy
Agreement. This meant he had to retain an independent stance
vis-à-vis Quispiam in order to properly protect the JSE’s
interests as its employee.
4.
I
conclude that the proven facts militate against any other inference
but that Van den Berg arranged matters so that the established
procurement requirements could be circumvented. He relied on
the earlier RFP process as a basis for taking on Quispiam without
obtaining competitive tenders, notwithstanding that he accepted that
there was no reason to believe that other brokers would not
have been
able to provide the same service that he sought from Quispiam. This
is particularly significant as Van den Berg drafted
the procurement
policy.
[24]
FIRST
AND SECOND CONFIRMATIONS OF ENGAGEMENT
[32]
The
following definitions in the Consultancy Agreement are important to
an understanding of the services that were required to be
provided
under the confirmations of engagement:
1.
"
Consultant
"
means a
skilled
person
(in context, that meant a person skilled in ITAM) from Quispiam who
will provide the services;
2.
"
Services
"
means the professional consulting services to be performed by the
consultant to the JSE, as more fully described in a confirmation
of
engagement.
[25]
[33]
Moreover,
in clause 12 of the Consultancy Agreement, Quispiam warranted that
"it shall provide adequately skilled consultants
to the JSE and
the consultants are qualified and suitable to render the services to
the JSE".
[26]
[34]
Clause
11.3 is also relevant, given the events that occurred during the
subsistence of the agreement. It provides as follows:
“
In
the event of the Consultant performing poorly, other than as a result
of the JSE’s mismanagement of such Consultant, ...,
the JSE
shall be entitled to request Quispiam to replace such Consultant on 7
(seven) days written notice to Quispiam, failing
which the JSE shall
be entitled to cancel the specific Confirmation of Engagement, in
which event the JSE shall only be liable
to pay Quispiam for the
Services rendered by the Consultant up to the date of cancellation of
the Confirmation of Engagement.”
[27]
[35]
The
contractual right to replace incompetent consultants was never
exercised other than to replace the first incompetent Mr Gorelick
with Van Til who also proved to be incompetent. The JSE at that stage
had a right to exercise the provisions of clause 11.3 but
in view of
the fact that Van den Berg was not acting at arm’s length to
the benefit of his employer, the JSE, his favoured
friend Van Til was
also not replaced.
[36]
The
evidence, in my view, proves that Van den Berg and Van Til were in
cahoots with one another and that the relationship concluded
between
Van Til for Quispiam and Van den Berg for the JSE were
not
entered into at arm's length
.
This conclusion flows from the following:
1.
The
agreement clearly contemplated the provision by Quispiam to the JSE
of consultants with ITAM skills and experience, both at
the junior
and senior level, who would come into the JSE over a fixed period to
develop an ITAM programme. The reality was
very different.
Ragubeer and Sithonga were raw graduates with no knowledge of or
skills in ITAM.
[28]
Van Til, who took on the role of "senior ITAM resource",
was
self-confessedly
not an ITAM expert
.
Although he had certain useful skills, and had, during the course of
his career, performed some asset management-related
tasks, he knew
nothing about the newly emerging ITAM discipline.
2.
Indeed,
Van Til did not even identify himself as the appropriate ITAM
resource when Van den Berg first told him he was looking for
one.
He identified Mr Gorelick.
[29]
Gorelick contributed a mere 10 hours of background work before
Van den Berg decided it that Gorelick was entirely
unsuitable and added no value. A replacement was sought but not
found, and so Van den Berg suggested that Van Til himself
take on the
role. There is no dispute that Van Til does not fit the
description of a "senior ITAM resource".
3.
In
any event, the evidence of
Sithonga
(corroborated by Van den Berg himself) was that Van Til provided
minimal
input
or
instruction
to the
junior
resources
in relation to ITAM or at all. The juniors were instructed by
and under the guidance of Van den Berg.
[30]
The role played by Van Til was never fully explained. Van den
Berg merely said he found Van Til to be a “useful
sounding
board”.
[31]
In my view, that did not justify the appointment of Van Till as being
compliant with the requirements set by the Consultancy Agreement.
4.
Despite
the fact that Gorelick was removed from the contract by Van Til
on the basis that he would be paid for
10
hours work
,
Quispiam invoiced the JSE in full for the entire three-month period
during which Gorelick was the identified ITAM resource.
Contractually speaking this fact may be of lesser import, but
delictually speaking, it makes the existence of a scheme to defraud
the JSE that more probable.
5.
Furthermore,
Van den Berg, who was aware of the arrangement reached with Gorelick,
authorised payment of the invoices for work allegedly
done in excess
of 10 hours. Van Til sought to justify the payment on the
basis, as owner of Quispiam, that he was “
hands-on
”
with the project from the start.
[32]
However, he was obviously
not
there, as ITAM expert
at that time, and his presence did not justify his charging the JSE
for his time as if he were the ITAM consultant. It was
plain
dishonest and fraudulent to charge for a service not rendered.
[33]
6.
The
monthly fee of R90 000.00 is itself a manifestation of the
fraud. Every attempt by Van Til and Van den Berg to justify
the
amount was futile and patently contrived. It would be difficult
to assess the reasonableness of
R90 000.00
per month as a fee for the services that were supposed to be provided
in terms of the Consultancy Agreement read with the Confirmations
of
Engagement. In any event, the JSE accepted that fee for the
services described. However, Greyling testified that
when the
fee is considered against the reasonable value of the services that
were
actually
provided, the fee is
patently
unreasonably excessive
.
[34]
This conduct is more consistent with an intent to defraud than with
an intent to merely overcharge.
7.
Apart
from the fact that it was grossly excessive, the significance of the
fee being set at the level of R90 000.00 per month
is that it
falls just within the parameters of Van den Berg's authority.
Is this yet another coincidence? In terms of the
applicable limits of
authority prescribed by the JSE at the time, Van den Berg could
authorise payments of up to R100 000.00.
He was
accordingly able to, and did, authorise payment of Quispiam's monthly
invoices, thereby ensuring that no awkward questions
were asked by
independent members of the JSE management.
[35]
8.
A
telling and damning vignette involving the quantum of the fee was Van
den Berg’s attempt to justify it on the basis that
it would
have to cover the fees of other consultants enlisted from more
expensive professions whose services might be needed from
time to
time.
[36]
It was put in cross-examination on behalf of the defendants, as an
example of the use of other skilled consultants on the
contract that
services had been provided by, and payment made to, the
attorney
Regina
Jansen van Rensburg
.
The JSE was able to find its records of the payment made to Ms Jansen
van Rensburg. The records revealed that the version
put on behalf of
the defendants was entirely false and without foundation.
[37]
This was a patent attempt to deceive the court and reflects adversely
on the credibility of Van den Berg. It constituted a failed
cover for
what was a fraudulent course of action by the defendants.
9.
Despite
the stipulation in clause 4.2 of the Consultancy Agreement, no
records whatsoever were kept of the hours contributed by
Van Til.
There can be no doubt that, in an arm's length relationship, the
JSE's designated representative in relation to
the Consultancy
Agreement would have required the senior ITAM resource allocated to
the JSE, to prove the extent of his or her
provision of
services.
[38]
Both Van den Berg and Van Til were unsatisfactory witnesses in this
regard as they were unable to deal with this aspect in
anything other
than vague terms.
[37]
The
collusive and fraudulent arrangement between Van den Berg and Van Til
is, in my view, conclusively proved by the involvement
of Mrs van den
Berg as an employee of Quispiam.
[38]
The
purported employment of Mrs Cecilia van den Berg by Quispiam is
fraught with improbabilities. For example
[39]
:
1.
Van
Til did not check any references. He just looked at her and was
convinced that she was the right person. Her CV was not discovered
in
this matter.
2.
There
was no written contract of employment signed between her and
Quispiam.
3.
She
was allegedly on a contract terminable on one month’s notice.
Van Til then stated that he had agreed to a signing-on fee
provided
she stayed for the full length of the contract, i.e. twelve
months.
[40]
A monthly contract is inconsistent with a twelve month contract.
4.
When
challenged with the inconsistency between the fixed-term twelve month
contract, and the one month’s notice provision,
Van Til
backtracked and stated that she would then have had to pay back the
bonus.
[41]
5.
The
defendants claimed that she had negotiated a signing-on fee
equivalent to two months’ pay. This is despite the fact that
she had never worked in the industry and brought nothing exceptional
to the table.
6.
Van
Til asserted that she had an unwritten and yet exceedingly lucrative
“bonus” arrangement. Van Til stated that the
bonus would
be paid to her for “(A)nything that is not body shopping”.
[42]
The bonus agreement was not reduced to writing. Van Til claimed he
had a standard commission agreement with most of the employees.
[43]
This arrangement with Mrs van den Berg was not a “standard
commission agreement” with Quispiam. The standard agreements
would, according to Van Til, be one month’s profit on that
resource.
[44]
Van Til could not recall the date on which the commission agreement
was concluded with her.
[45]
7.
Van
Til could not recall where the bonus agreement was concluded.
[46]
On being asked what percentage was due to her, Van Til was quite
unclear about it, stating initially that it was “50 percent
of…contract…less costs…50 percent…minus
adjusted sort-of fees”.
[47]
Pressed further Van Til stated that it was 50% of the contract value
less costs.
[48]
The other terms of this agreement were similarly hazy. He could not
give a straight answer as to whether she became entitled to
the 50
percent bonus immediately after she made the connection between the
new business and Quispiam,
[49]
or when payment was received, or at some other point. He stated that
she would be entitled to the bonus on signing of an agreement
with
the new customer.
[50]
Moments later, Van Til sought to depart from this and said that
payment would not be made on signing of the agreement.
[51]
On being confronted with the contradiction, he asserted vaguely that
Quispiam “would normally be happy to pay on signing
of an
agreement”.
[52]
[39]
It
is also not clear in what capacity Mrs van den Berg was allegedly
employed. Her employment status appears to change during her
alleged
period of employment.
1.
In
November 2009 she was described on her payslip
[53]
as an independent contractor earning “commission”.
2.
From
March 2010, she is described as an employee earning a basic
salary.
[54]
3.
From
March 2011, she apparently reverts to being an independent
contractor.
[55]
This is reflected on all the rest of the payslips,
[56]
up to the last payslip dated December 2011.
[57]
4.
On
Quispiam’s bank statements and Mrs van den Berg’s own
bank statements, the payments are described as “commission”.
[58]
[40]
The
timing of the supposed employment of Mrs van den Berg at Quispiam is
important in unravelling the real reason for the payments
made to her
by Quispiam.
1.
In
response to the request for further particulars, Van den Berg stated
that senior ITAM services were provided by Gorelick and
Van Til
between November 2009 and January 2010.
[59]
At his disciplinary hearing, Van den Berg said that Gorelick had
played his role as the senior ITAM resource for about two months.
[60]
The contract only started on 23 November which effectively means that
the two month period would last to the end of January 2010.
That is
supported by the fact that Van Til addressed an e-mail to Gorelick on
27 January 2010 terminating his role as the senior
ITAM resource.
[61]
2.
At
his disciplinary hearing, Van den Berg stated that there was then a
period during which Van Til filled the role of senior ITAM
expert
while they were looking for another candidate. That process, if
carried out with genuine intent, would have taken some weeks.
[62]
3.
It
would follow from this chronology that Van Til would only have been
asked to take on the role of senior resource some time during
February. If Mrs van den Berg was then approached to lighten Van
Til’s burden in order to enable Van Til to take on the extra
work as senior ITAM expert, she would have begun her employment from
1 March 2011. Even if she were taken on immediately, the time
line
puts this at mid-February. Conclusively, there would be no payment
due to her for January 2010.
[63]
[41]
In
order to justify the payment of a full salary to Mrs van den Berg for
the month of January 2010:
1.
The
defendants attempted to place the removal of Gorelick and his
replacement by Van Til in early January 2010.
[64]
Van den Berg evasively claimed that discussions about replacing
Gorelick started in early January 2010.
[65]
2.
Van
den Berg’s claim that he had made the call to employ Van Til as
the senior ITAM consultant in early January 2010 is inconsistent
with
the evidence he gave at his disciplinary hearing.
[66]
[42]
The
timing of the payments made to Mrs van den Berg as monthly salary (or
commission) is inconsistent with the defendants’
version, but
supports the plaintiff’s version that the payments were merely
disguised payments by Van Til to Van den Berg
(via Mrs van den Berg’s
bank account) of Van den Berg’s share of the proceeds from the
Consultancy Agreement.
[43]
No
payments were made to her by Quispiam before 28 January 2010, and
none were made after 26 April 2011. The period during which
she
received payments matches the period of payments made by the JSE to
Quispiam under the Consultancy Agreement.
[67]
1.
The
analysis done by Greyling
[68]
reflects payments from January to March 2009 of R50 000.00,
R23 237.00, R23 237.00 and R19 712.33. If the total
of
these payments is divided by five, it amounts to R23 237.00 per
month. R23 237.00 is the net payment after deducting
tax from a
salary of R30 000.00.
2.
It
follows that the payments reflects a series of monthly payments of
R30 000.00 starting from November 2009. This contradicts
the
improbable version put up by the defendants. The R50 000.00
constitutes the payment for November and December 2009 (with
a
marginal overpayment that is corrected by the payment of R19 712.33
for March 2009); the next R23 237.00 is in respect
of January
2010; the next R23 237.00 for February; and the R19 712.33
is for March 2010 taking into account the overpayment
that is
included in the R50 000.00 referred to above. The R46 747.44
paid on 25 May 2010 is then for April and May 2010;
the R23 000.00
for June; R23 237.00 for July 2010; and then R23 237.22 is
paid for each successive month until April
2011.
[69]
The only unusual month is January 2011, which is when the R270 000.00
(less deductions) was paid, reflecting the payment for
the third
confirmation.
[44]
Quispiam
discovered IRP5 forms for 2010, 2011 and 2012. The following appears
from the forms:
[70]
1.
2010
IRP5
:
[71]
Mrs van den Berg was paid a total of R120 000.00 for the months
of November 2009, December 2009, January 2010, February
2010 at the
rate of R30 000.00 per month. Although the November 2009 payslip
reflects an amount of R270 000.00 as the
cumulative amount paid
so far in that year, there were in fact no payments before January
2010.
[72]
2.
2011
IRP5
:
[73]
She is reflected as having been paid R360 000.00 for the period
of twelve months (at R30 000.00 per month). A bonus of
R240 000.00 was also paid.
3.
2012
IRP5
:
[74]
She is further reflected as having received an amount of R150 000.00,
i.e. five payments of R30 000.00 each.
[75]
However, Greyling was only able to verify two payments of net
R23 479.80 each for March
[76]
and April 2011.
[77]
There was no evidence of the other three R30 000.00 payments to
her.
[78]
[45]
Van
Til claimed that Mrs van den Berg started working for Quispiam in
January 2010, before the middle of that month. Quispiam then
paid her
the signing-on fee and the salary for January 2010. Despite agreeing
to pay her a signing-on bonus of R60 000.00
(less deductions),
plus the January salary, he paid her R50 000.00. In fact on Van
Til’s version, she was entitled to
a gross payment of
R90 000.00 in January 2010. Van Til claimed that the payment of
R50 000.00 was an error.
[79]
He was evasive in providing an explanation as to why his so-called
thumb-suck figure was R50 000.00 instead of closer to
R70 000.00.
[80]
[46]
Not
surprisingly, Van Til denied that the payments to Mrs van den Berg
were a method of paying backhanders to Van den Berg. However,
it
would appear that of the R90 000.00 per month paid to Quispiam,
R30 000.00 would be paid to the junior resources,
R30 000.00
would be passed through to Van den Berg, and the balance of
R30 000.00 would be for Van Til.
[81]
In my view, this is the most probable conclusion from the strange and
vague evidence regarding the employment of Mrs van den Berg.
[47]
The
defendants, however, sought to explain the payment made to Mrs van
den Berg in January 2011 on the basis that the amount constituted
a
bonus paid to her by Quispiam for her introduction to Quispiam of a
consultancy agreement with ABSA (the Green IT contract).
In terms of
the Green IT contract,
[82]
the work authorisation indicates the start and end dates for both the
resources (Van Til and Nicholas Howa) are 29 November 2010
and 28
February 2011 respectively.
[83]
The total fee due to Quispiam was R499 320.00.
[48]
Clause
9, dealing with “Charges and Payment”, reflects the
earliest invoice date (in respect of the first payment of
R125 000.00) as being 25 December 2010.
[84]
On the assumption that payment would be due not sooner than thirty
days from date of invoice, the first payment would not be made
before
the end of January 2011.
[49]
The
improbabilities that this raises for the defendants’ version
are obvious:
1.
Mrs
van den Berg’s alleged bonus of R240 000.00 was 48.065369%
of the total amount (R499 320.00) payable – incredibly
strange
however it is considered.
2.
She
received the full bonus, based on the total amount payable in January
2011, after ABSA had, at best, made a payment of only
R125 000.00
which is substantially less than the bonus paid. The version is
accordingly that she received her full bonus at
a time when
three-quarters of the payments due under the Green IT contract had
not yet been made.
[85]
3.
There
is nothing in the documents provided that in fact supports the
version that Mrs van den Berg was involved in the Green IT
contract,
or its conclusion. The Green IT contract itself provided that Van Til
and Howa were each allocated 78 days of work.
[86]
4.
Van
Til stated that he did a quick and rough thumb-suck to calculate 50%
of the contract price less costs, and came up with a figure
of
R240 000.00. This is not only irresponsible, but highly
unlikely. He sought to reconcile the calculations as follows:
4.1
He took the revenue of R499 320.00 and rounded it up to
R500 000.00;
4.2
He then subtracted a costs guesstimate of R85 000.00 based on
Howa’s
and his own fees for three months;
[87]
4.3
That, he said, would leave a net revenue of R415 000.00, of
which Mrs van
den Berg would be entitled to half.
4.4
But 50% would only be R207 500.00.
5.
The
aforesaid amount of R207 500.00 is significantly below the amount of
R240 000.00 which the defendants said was the bonus
to which she
was entitled. But the estimate of 78 days fees as being R85 000.00
is just ludicrous. Even if Howa worked alone
for eight hours a day
over his allocated 78 days, R85 000.00 pays him only R136.22 per
hour. And that allows nothing for Van
Til. Moreover, if the total
cost was R85 000.00, that would imply a gross profit margin of
an incredible 600%.
6.
Confronted
with the shortfall between R240 000.00 and R207 500.00, Van Til
offered new information. He claimed that in addition
to the bonus,
Mrs van den Berg demanded the “normal” employee bonus
(R30 000.00) which Quispiam had paid to other
employees. He
stated that she was wrong about this “but because she had done
good work and because she was a permanent employee
in that sense she
asked for a bonus, so we paid her a bonus.”
[88]
The omission to pay her the normal annual bonus was dismissed by Van
Til as “a simple oversight”.
[89]
7.
Even
this version, which is pregnant with internal improbabilities, fails
to explain the figure of R240 000.00. The net amount
of the
“annual” bonus would be around R23 000.00. When that
is added to the alleged profit share of R207 000.00,
that
explains an entitlement to R230 000.00, which is R10 000.00
short of the target figure of R240 000.00 actually
paid. Faced
with that shortfall, Van Til stated that in fact he had just
“thumb-sucked” the figure of R240 000.00.
[90]
8.
Another
telling improbability arises from the fact that the figure of
R499 320.00 payable in terms of the purported Green IT
contract
is inclusive of VAT. The pre-VAT agreement figure is R438 000.00.
Accordingly, even on the highly improbable calculations
performed by
Van Til, her bonus was calculated on a figure that included VAT.
[91]
[50]
I
agree with the submission that this concocted version must be
dismissed as a desperate
ex
post facto
artifice. It follows from this conclusion that the payments to Mrs
van den Berg constitute on a balance of probabilities a fraudulent
front to divert funds from Quispiam to Van den Berg as his share of
the fraudulent scheme.
[51]
Further
confirmation of the aforesaid conclusion is found in the response to
a Rule 35(5) notice that was issued to the defendants
for documents
that showed the causa for the payments to Mrs van den Berg. A
spreadsheet was prepared by Van Til.
[92]
Van Til provided a list of people whom he stated had been placed by
her at ABSA. This was presented as the justification for paying
her
the amount of R30 000.00 a month as new business manager.
[93]
When it was pointed out during the cross-examination of Van den Berg
that the people on the list had actually been at ABSA at all
times
before, during and after Mrs van Berg’s alleged period of
employment at Quispiam, Van Til realised he had to adjust
his
version. He accordingly prepared a new spreadsheet.
[94]
Van Til hesitantly claimed that he had created the new spreadsheet
“last week, the last ten days.” The new spreadsheet
contained a list of Standard Bank placements.
[95]
Van Til conceded that Quispiam did not have a contract with Standard
Bank for placements, but stated that the placements were in
fact done
through Expert, with whom Quispiam apparently had “an
arrangement.”
[96]
[52]
Mr
van Til was unable to produce any documentation in support of this
alleged arrangement, or Mrs van den Berg’s role therein,
despite accepting that there would have been “a reasonable body
of e-mail correspondence and the like.”
[97]
This is despite the fact that the JSE had asked for all documents
evidencing the
causa
for the payments to her.
[98]
[53]
Given
the various serious improbabilities put to Van den Berg and Van Til
about the employment of Mrs van den Berg and payments
made to her,
one would have expected the defendants to call her as a witness to
defend the version put up in relation to her employment.
Significantly, and despite her availability, she was not called to
testify. It can be inferred from the failure to call her
that
her evidence would
not
have supported the versions put up by Van den Berg and Van Til.
[54]
At
the very least on the probabilities, the inevitable conclusion is
that the whole relationship, concluded between the JSE and
Quispiam
was the result of a planned course of conduct engineered as between
Van den Berg and Van Til. Nothing about the
relationship was
open and transparent, and the JSE (as represented by Van Wamelen) was
misled from start to finish. Also, there
was a clear duty of care
resting upon Van den Berg as employee of the JSE to protect it from
as opposed to being involved in such
a fraudulent scheme. The fact
that some work was done and some progress was ultimately made in the
establishment of an ITAM system
was a coincidental and beneficial
side-effect of the fraudulent scheme, resulting from the fact that
the two innocent parties in
the scheme, Ragubeer and Sithonga,
actually worked very hard to perform their functions to the best of
their unskilled abilities.
THIRD
CONFIRMATION OF ENGAGEMENT
[55]
Although
the third confirmation was concluded for particular services to be
rendered over the period 1 August 2010 to 31 October
2010, Van
Wamelen for the JSE in fact only signed it on 14 December 2010.
Strangely, Quispiam invoiced the JSE for the months of
October to
December 2010.
[56]
As
previously stated, Quispiam was to assign external legal counsel on a
part-time fixed scope basis to provide to the JSE summaries
of “all
the software EULA's (end user licence agreements) to ensure
compliance of our asset standards list".
[99]
It was common cause that the ostensible purpose of this engagement
was to provide the JSE with
legally
vetted
summaries of the end user licence agreements applicable to the
various software packages used by the JSE.
[57]
Once
again, notably, the service fees payable by the JSE for the services
to be provided under the third confirmation were in the
(now
familiar) amount of R90 000.00 per month (excluding VAT), being
a total aggregate of R270 000.00 (excluding VAT)
for the three
months duration of the engagement. No logical reason was ever
forthcoming to explain the similarity of fees as e.g.
that the
services to be rendered were similar as to time and skill
requirements and therefore justified the same remuneration as
the
first two confirmations.
[58]
There
was really no defence put up by the defendants to the JSE's claim for
the return of the amount of R270 000.00 plus VAT
that was paid
by it to Quispiam in respect of fees for the third confirmation of
engagement. Van den Berg admitted
that no "external
legal counsel" had been engaged and Van Til, though
maintaining that such counsel was available,
admitted that no legal
services had been performed under the third confirmation.
[100]
The explanation put up for effecting the payment despite being aware
that the work had not been done was entirely unsatisfactory.
Van den Berg said that he did not want to have to ask for the money
to be put into the budget for the following year.
[101]
Van den Berg laid no basis for this patently ridiculous assertion.
Whichever way one looks at it, the time for rendering
the required
services had lapsed with none of the services rendered. No extension
of time for the provision of the services were
either applied for or
agreed to by the time the contract was terminated in June 2011. If no
services were going to be rendered,
there was no need for any amount
to be incorporated into any future budget.
[59]
Indeed,
Van den Berg admitted that the JSE was entitled to repayment of the
sum of R270 000.00 plus VAT that had been paid
by the JSE in
terms of the third confirmation.
[102]
[60]
Van
Til, however, did not wish to concede that the JSE was entitled to
repayment of the full amount. He doggedly maintained
a stance
that the fact that some EULA summaries had been drawn up, albeit it
by non-legally qualified people, justified the payment
by the JSE of
some unspecified amount. He maintained this stance despite his
admission that the relevant service to be provided
in terms of the
third confirmation was the vetting of EULA’s by
legally
qualified people. His persistence in this contention was manifestly
mendacious.
[103]
[61]
Van
Til also sought to make a virtue of the fact that the invoices
submitted under the third confirmation stated that the services
were
"80% complete". However, he conceded under
cross-examination that the reference to "80% complete"
was
utterly meaningless, particularly as the full fee was invoiced, and
it was Van den Berg who authorised the payment thereof.
[104]
[62]
The
circumstances surrounding the conclusion of and payment under the
third confirmation have greater significance for this matter
than
merely establishing a clear monetary claim by the JSE against the
defendants. In my view the third confirmation is a
clear
manifestation of a continuing fraud committed by the defendants on
the JSE
.
It is also a manifestation of greed on the part of Van den Berg,
aided and abetted by Van Til. As is so often
the case, it was
this greed that led to the scheme being uncovered.
[63]
The
contents of the third confirmation came to the attention of
Ms
Rheeders
,
employed in the JSE's legal department. She wondered why the
JSE's approved lawyers, Webber Wentzel, had not been used,
and wanted
to see the product for which the JSE had paid. Despite trying
to cobble some EULA’s together himself over
a particular
weekend, Van den Berg could not hide the fact that no legally-vetted
summaries existed and, ultimately, the charade
was laid bare.
[105]
Van den Berg was then summoned to a disciplinary hearing, and his
employment was eventually terminated.
[64]
On
balance it is, therefore, more probable that the flow of the
R270 000.00 plus VAT from the JSE through Quispiam's bank
account demonstrates that the amount was ultimately destined for and
paid to Van den Berg (after deduction by Quispiam of amounts
it would
have to pay for tax and the like). This confirms the involvement of
all three defendants in the fraudulent scheme.
[65]
Finally,
the JSE obtained the evidence of Coetzer, who had had dealings with
Van Til and Van den Berg. However, the less said
about his
evidence, the better. In my view, his evidence did not advance either
party’s case.
DAMAGES
[66]
The
JSE could not and did not seek to demonstrate that a fee of
R90 000.00 per month would be excessive for a true consulting
service in terms of which an ITAM system was established by a senior
professional consultant assisted by two junior skilled consultants.
[67]
However,
that was not the service in fact rendered by Quispiam or received by
the JSE. What the JSE received was the benefit
of the services
of two raw graduates, entirely unskilled in ITAM, working primarily
under the direction of Van den Berg, with some
(unquantifiable) input
from a third party.
[68]
Through
its expert witness, Greyling, the JSE has sought to establish the
reasonable value of the services it in fact received.
[69]
Greyling
initially conducted a hypothetical (though very detailed and
well-researched) exercise to establish a reasonable gross
profit
margin that might properly have been charged by Quispiam on the
amounts in fact paid to Ragubeer and Sithonga (R15 000.00
per
month). This would reveal the portion of the total fee of
R90 000.00 per month that was allocated to the senior
resource,
plus an appropriate profit margin thereon.
[70]
After
preparing his initial report, however, Greyling received Quispiam's
financial statements for the period from which he could
derive the
actual gross profit margin that Quispiam had achieved historically.
The relevance of establishing the reasonable gross
profit margin that
could be charged by Quispiam was to demonstrate that the amount of
R60 000.00 per month received by Quispiam
(after it had paid the
two junior resources R15 000.00 each) was grossly excessive and
therefore indicative of a relationship
which was not concluded on an
arm's length basis. It would also, as stated above, enable
Greyling to consider the appropriateness
of the fee allocated to the
senior resource.
[71]
However,
having concluded that Van den Berg and Van Til colluded in order to
defraud the JSE out of the fees paid under the Consultancy
Agreement
and the various confirmations of engagement concluded in terms
thereof, the assessment of the JSE’s damages claim
becomes
somewhat less complex. The JSE is entitled to repayment from
Quispiam of all amounts paid to it save to the extent
that the JSE
received a benefit from the payment of those amounts.
[106]
This is in fact the negative interest payable in delictual claims.
[72]
The
only benefit received by the JSE which can properly be attributed to
the existence of the Consultancy Agreement, is the benefit
received
through the services rendered by Ragubeer and Sithonga. The
value of those services is not in dispute, as the salaries
paid to
them are common cause. There is no better measure of the value
of their services than the amount paid to them for
such services.
[73]
In
his calculation of the damages suffered by the JSE, Greyling took
account not only of the salaries paid to the junior resources,
but
also the mark-up thereon that he had calculated as being a reasonable
mark-up due to Quispiam. This would be correct
if the agreement
with Quispiam was an arm’s length one, where Quispiam had
merely provided (and the JSE had accepted) part
of the services
contracted for, but not the balance. Here, however, Quispiam’s
role only exists as a result of the
fraud perpetrated by Van den Berg
and Van Til. In these circumstances, there is no basis for
taking into account any mark
up for profit to Quispiam. A contrary
view would allow them to reap the benefits of their fraud, something
that a court couldn’t
permit.
[74]
Accordingly,
the calculation of damages becomes a relatively simple one. The
JSE is entitled to a repayment of all amounts
paid under the first
and second confirmations, less an amount of R30 000.00 per month
over the full period, taking account
also of the thirteenth cheque
paid to Ragubeer and Sithonga in December of 2010.
[75]
The
total amount paid by the JSE to Quispiam in respect of the first and
second confirmations was the sum of R1 636 200.00,
from
which must be subtracted the amount of R582 000.00 representing
the salaries in fact paid to Ragubeer and Sithonga (including
their
December 2010 bonus). This calculation amounts to a claim for damages
in the sum of R1 054 200.00. To that amount
must be added
the full amount of R270 000.00 paid under the third
confirmation, totalling an amount of R1 324 200.00.
CONCLUSION
[76]
I
make the following order:
The
defendants are ordered jointly and severally, the one paying the
other to be absolved, to pay the plaintiff:
1.
R1 324 200.00;
2.
Interest
on the aforesaid amount of 15.5% per annum as from 30 June 2011 to
date of payment.
3.
Costs
of suit on an attorney and client scale which are to include the
costs of two counsel.
DATED
THE 6
th
DAY OF May 2014 AT JOHANNESBURG
C.
J. CLAASSEN
JUDGE
OF THE HIGH COURT
Counsel
for the Plaintiff: Adv J. P. V. McNally SC
Adv T.
Mafukidze
Counsel
for the Defendants: Adv H. H. Cowley
Attorney
for the Plaintiff: Webber Wentzel
Attorney
for the Defendants: Martin Hennig Attorneys
The
Trial took place on: 18, 19, 21, 22, 25, 26, 27, 28 and 29 November
2013
Argument
took place on 2 April 2014
[1]
See
Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA)
(Pty) Ltd
1985 (1) SA 475 (AD)
[2]
See The first, second and third Confirmation of Engagement
Agreements, Bundle “A”, pp. 56 – 58
[3]
Transcript Volume 7 p. 660 lines 16 to 25 – Volume 10 p. 991
lines 1 - 11
[4]
Transcript Volume 2 p. 177 (van Wamelen) from
line 1 to middle of page; p. 90 middle paragraph
[5]
Transcript Volume 2 p. 190 Third paragraph –
p. 191 lines 1 – 5
[6]
Transcript Volume 2 p. 184 foot – p. 187
middle
[7]
Transcript Volume 2 p. 192 lines 1 – 5
[8]
Transcript Volume 2 p. 192 from last third of
page – p. 193 line 1
[9]
Transcript Volume 2 p. 194 last paragraph –
p. 195 par 2
[10]
Transcript Volume 2 p. 194 par 2
[11]
See clauses 1.5.3, 1.5.9 as read with the description of the
services in the Confirmation Engagements.
[12]
See clause 3.1
[13]
Transcript Volume 7 p. 710 line 4 – p. 716
lines 1 – 23; p. 972 line 1 – p. 977 line 1
[14]
Transcript Volume 8 p.727 lines 22 – 25
[15]
Transcript Volume 8 p. 718 lines 1 – 25 –
p. 720 lines 1 – 25
[16]
Transcript Volume 8 p. 726 lines 11 – 25
[17]
Transcript Volume 8 p.727 lines 14 – 22
[18]
As put to Van Til in cross-examination:
Transcript p. 990 line 5 – p. 991 line 19
[19]
Bundle “A” p. 35 clause 4.18
[20]
Transcript Volume 10 p. 971 lines 6 – 8
[21]
Transcript Volume 2 p. 193 line 2 to end of third
paragraph
[22]
Transcript Volume 2 p.193 lines 2 – 4
[23]
Transcript Volume 2 p.196 last paragraph –
p. 197 end of third paragraph
[24]
Transcript Volume 2 p.185 line 1 to last line; p.
186 line 1 to third paragraph – p. 187 middle of page; p.192
last paragraph
[25]
Consultancy
Agreement Bundle “A” pp. 42 – 43
[26]
Ibid
at p. 50
[27]
Consultancy Agreement Bundle “A” p.
49
[28]
Transcript Volume 4 p. 371 lines 12 – 25
and p. 376 lines 6 – 9
[29]
Transcript Volume 10 p. 991 lines 20 – 24
[30]
Transcript Volume 4 pp. 396 – 397.
Van Til accepts that he spent very little time “
on
site
” at the JSE
[31]
As explained by Van den Berg at his disciplinary
hearing – Bundle “D” pp. 206 – 207
[32]
Transcript Volume 10 p. 985 line 1 – p. 986
line 22
[33]
Transcript Volume 10 p. 986 lines 4 – 25;
p. 987 lines 1 – 19; p. 993 lines 1 – 25
[34]
This aspect was dealt with extensively by the
plaintiff’s expert, Mr Greyling. His evidence is
usefully summarised
at paragraphs 21 – 32 of his supplementary
report at Bundle “C” pp. 811 – 813. See also
Transcript
Volume 1 p. 103 line 171 – p. 108 line 6
[35]
Transcript Volume 3 p. 224 line 12 – p. 226
lines 1 – 3; see Bundle “D” Volume 2 p. 184
“
Delegation of Authority
”
[36]
Transcript Volume 7 p. 702 paragraph 1
[37]
Indeed, as it turned out, the amount charged by
Ms van Rensburg was an amount for drafting an agreement related to a
business
opportunity that Van den Berg was exploring for Van Til in
October 2010, again indicative of a relationship that was far from
arm’s length. See Transcript Volume 4 p. 363 line 16 –
p. 367 line 23
[38]
Transcript Volume 8 p. 731 lines 15 – 20;
p. 772 line 1 – p. 774 line 20
[39]
Transcript Volume 11 p. 1032 lines 1 – 21
[40]
Transcript Volume 11 p. 1033 lines 3 – 12
[41]
Transcript Volume 11 p. 1033 lines 17 – 20
[42]
Transcript Volume 11 p. 1056 lines 19 – 20
[43]
Transcript Volume 11 p. 1056 lines 21 – 25
[44]
Transcript Volume 11 p. 1057 lines 3 – 7
[45]
Transcript Volume 11 p. 1057 lines 8 – 9
[46]
Transcript Volume 11 p. 1057 lines 12 – 13
[47]
Transcript Volume 11 p. 1057 lines 17 – 22
[48]
Transcript Volume 11 p. 1057 lines 24 – 25
[49]
Transcript Volume 11 p. 1058 lines 5 – 24
[50]
Transcript Volume 11 p. 1060 lines 14 – 19
[51]
Transcript Volume 11 p. 1061 lines 15 – 22
[52]
Transcript Volume 11 p. 1061 lines 24 – 25
[53]
Bundle “B” pp. 337 – 340
[54]
Bundle “B” pp. 341 – 352
[55]
Bundle “B” p. 353
[56]
Bundle “B” pp. 354 – 362
[57]
Bundle “B” p. 352
[58]
Bundle “D” pp. 273 and 282
[59]
See excerpt from disciplinary hearing Transcript
Volume 8 p. 758 lines 22 – 25; p. 759 lines 1 – 2
[60]
Bundle “D” p. 207 line 10
[61]
[61]
Transcript Volume 8 p. 762 lines 5 – 10
[62]
Transcript Volume 8 p. 767 lines 8 – 13
[63]
Transcript Volume 8 p. 779 lines 10 – 25
[64]
Transcript Volume 8 p. 775 lines 22 – 25
[65]
Transcript Volume 8 p. 776 lines 1 – 3
[66]
Transcript Volume 8 p. 776 lines 10 – 25
[67]
Transcript Volume 1 p. 111 paragraphs 10 –
20; Bundle “D” pp. 254 – 272; first payment in Mrs
van den
Berg’s bank account on p. 272 and the last payment is
on p. 337; Payslips in Bundle “B” pp. 337 – 362
(There were payslips for the period May to December 2011, but Mrs
van den Berg did not in fact receive payments over that period
–
see Transcript Volume 1 p. 120 and Volume 11 p. 1051 lines 2 –
25)
[68]
Bundle “C” Volume 8 p. 817B
[69]
Transcript Volume 8 p. 784 lines 2 – 10
[70]
Transcript Volume 1 p. 122; Bundle “A”
pp. 305-6 (2011); pp. 307-8 (2010); pp. 309-10 (2012)
[71]
Bundle “A” pp. 307-8
[72]
Quispiam bank statement, Bundle “B”
p. 462; first payment on p. 483
[73]
Bundle “A” pp. 305-6
[74]
Bundle “A” pp. 309-10
[75]
These correspond with payslips in Bundle “B”
Volume 4 pp. 353 – 357
[76]
Bundle “D”, p. 333, Mrs van den
Berg’s bank statement
[77]
Bundle “D”, p. 337, Mrs van den
Berg’s bank statement
[78]
Transcript Volume 1 p. 123
[79]
Transcript Volume 11 p. 1039 lines 15 – 25
[80]
Transcript Volume 11 p. 1040 lines 19 – 25
[81]
Transcript Volume 11 p. 1041 lines 15 – 20
[82]
Bundle “C” Volume 8 p. 863
[83]
Transcript Volume 8 p. 797 lines 1 – 25;
Bundle “C” Volume 8 p. 865
[84]
Bundle “C” Volume 8 p. 867
[85]
Transcript Volume 8 p. 801 lines 9 – 13
[86]
Transcript Volume 11 p. 1065 lines 9 – 11;
Bundle “C” Volume 8, p. 865
[87]
Transcript Volume 11 p. 1066 lines 15 – 20
[88]
Transcript Volume 11 p. 1067 lines 20 – 25;
p. 1068 lines 1 – 4
[89]
Transcript Volume 11 p. 1068 lines 22 – 24
[90]
Transcript Volume 11 p. 1069 lines 4 – 15
[91]
Transcript Volume 11 p. 1080 lines 5 – 15
[92]
Bundle “C” Volume 8 p. 877
[93]
Transcript Volume 11 p. 1045 lines 15 – 25
[94]
Transcript Volume 11 p. 1046 lines 1 – 10
[95]
Transcript Volume 11 p. 1048 lines 1 – 25
[96]
Transcript Volume 11 p. 1049 lines 10 – 15
[97]
Transcript Volume 11 p. 1056 lines 14 – 25
[98]
Transcript Volume 11 p. 1050 lines 20 – 25
[99]
Bundle “A” p. 508
[100]
It was admitted on the pleadings that no legal
resources were employed – Bundle “A” tab 2 p.p. 69
– 70
paragraph 6.1; see also Transcript Volume 7 p.p. 663 –
667
[101]
Transcript Volume 7 p. 671 lines 14 – 18;
Volume 11 p. 1024 lines 10 – 16
[102]
Transcript Volume 7 p. 675 line 9 – p. 677
line 24
[103]
Transcript Volume 11 p. 1020 lines 1 – 25
[104]
Transcript Volume 11 p. 1021 lines 9 – 25 –
p. 1022 lines 1 – 22
[105]
Transcript
Volume 3 p. 238
[106]
Christie: “
The
Law of Contract in South Africa
”,
5
th
Edition, p.p. 295 – 299