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[2010] ZAGPJHC 102
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Tactical Reaction Services CC v Beverley Estate II Homeowners Association (2007/16441) [2010] ZAGPJHC 102 (5 November 2010)
REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO:
2007/16441
DATE:
05/11/2010
In the matter
between:
TACTICAL
REACTION SERVICES
CC
...............................................
Plaintiff
and
BEVERLEY
ESTATE II HOMEOWNERS’ ASSOCIATION
...............
Defendant
J U D G M E N T
MBHA, J
:
[1] This is a
matter concerning a dispute between a security company (“
the
plaintiff
”)
and a homeowners association (“
the
defendant
”)
as to whether or not a written contract for the provision of services
came into existence.
[2] The plaintiff sued the defendant in terms of a security contract
for payment of the sum of R151 807.00 plus interest and costs.
The
matter became defended and proceeded to trial.
[3] The
plaintiff’s case, as pleaded, is that a written contract
between the parties came into effect on 10 September 2007
when:
the
plaintiff’s offer to contract was communicated by Renato
Ramos
(“
Ramos
”)
to the defendant; and
the
defendant, represented by Simon Bradshaw (“
Bradshaw
”)
communicated the defendant’s acceptance of the offer by means
of an e-mail sent by Bradshaw to the plaintiff.
[4] T
he
plaintiff averred in the alternative, that in the event of it being
found that the communication as aforesaid did not constitute
the
defendant’s acceptance of the offer, then the defendant through
its conduct, induced the plaintiff into the reasonable
belief that
the defendant was accepting the offer.
[5] The
defendant:
5.1 denied that it entered into any written contract as alleged;
5.2 averred that only a verbal month to month agreement was
concluded between the parties;
5.3 averred that a three month probation or assessment of services
was agreed upon; and
5.4 denied
that the defendant’s conduct constituted an implied acceptance
of all or any of the terms of the plaintiff’s
offer to
contract.
[6] It is not
in dispute that
if the written contract exists and governs the relationship between
the parties, then the plaintiff is entitled to an order as
sought in
the particulars of claim.
[7] It is common cause that:
7.1 the
written contract contained a three month probationary period and was
to thereafter endure for a 12 month period; and
7.2 the written contract was not signed by the defendant.
[8] The
plaintiff’s sole witness, Ramos, testified that on 10 September
2007 he e-mailed a quotation and a written contract
which was in
template form i.e without the manuscript portions having been
completed, to Bradshaw. On the same day, Bradshaw responded
by
e-mail in which he advised the plaintiff “
Thanks,
I will call you as soon as I have it signed
”.
There is no doubt that Bradshaw was clearly referring to the
contract.
[9] It is
common cause that Bradshaw received the aforesaid quotation and the
incomplete written contract on 10 September 2007,
and on the same day
he forwarded these to Edwards, a director of the defendant and to the
defendant’s managing agent, stating
“
Hi
All, quotation and contact for TRS
”.
The TRS mentioned in the e-mail referred to the plaintiff.
[10] Ramos
responded on 11 September 2007 by asking that the contract be signed
by that Friday 14 September 2007. For reasons which
will be apparent
later, I consider it apposite to quote the relevant text of Ramos’
aforesaid e-mail. It reads :
“
Please
note that I will need to have the contract signed from your committee
no later than Friday this week. I am on course but
please let me
know and I will have one of my staff collect the contract so that it
can be processed etc
”
[11] On 11
September 2007 Bradshaw replied by sending Ramos an e-mail in which
he undertook to have the contract signed “
as
soon as possible
”,
stating he would let Bradshaw know once the contract had been signed.
[12] Ramos
testified that on 13 September 2007 he personally hand delivered the
completed contract to Bradshaw. According to him,
it was at this
meeting that a detailed job description was agreed upon and that the
implementation date for the provision of security
services at the
defendant’s complex would be 22 September 2007.
[13] Ramos
also testified that at this meeting, Bradshaw stated that the
defendant accepted the contract, the contract had been
signed and one
more witness still had to sign.
[14] Bradshaw, in his testimony:
denied he was ever presented with a completed written contract on
13 September 2007;
was adamant
that only a verbal month to month contract was
concluded by
the parties during July 2007; and
insisted
that it was agreed that a permanent one year contract would only be
concluded subject to a positive and satisfactory
security
evaluation at the defendant’s complex being conducted.
Bradshaw was adamant that he never had sight of any
completed
written agreement.
[15] It was
submitted
on behalf of the plaintiff that based on all the objective facts of
the case, the court ought to reject Bradshaw’s
contention and
find that Ramos completed and signed the contract and thereafter
delivered it to Bradshaw on 13 September 2007.
[16] It is
common cause that with effect from the implementation date
,
the 22
nd
September 2007, the plaintiff duly employed and posted guards at the
defendant’s premises. Furthermore a security evaluation
was
conducted on 24 October 2007 at which several concerns were raised
vis-à-vis
the plaintiff’s overall performance at the site.
[17] It was
submitted on behalf of the plaintiff, inter alia, that as the
quotation does make provision for a “
security
evaluation to take place on acceptance of quote and delivered within
two weeks of signed contract
”,
and as the security evaluation was concluded, it was clear that the
plaintiff’s state of mind was that a contract
was concluded
either on 10 or 11 September 2007. In this regard Mr Vivian,
appearing for the plaintiff, submitted that the party
whose actual
intention did not conform to the common intention of the parties was
Bradshaw who misrepresented the facts to Ramos
by leading the
plaintiff to believe that the offer contained in the e-mail of 10
September 2007, enclosing the incomplete written
contract and quote,
was accepted. It was also submitted that this belief was reasonable
in the circumstances.
[18] In
support of this contention, the plaintiff sought to rely on numerous
entries in Ramos’ diary wherein reference is
made about
collecting the (signed) contract from Bradshaw and Edwards.
THE LAW
[19] It is
trite law that a contract is created by offer and acceptance.
Furthermore, acceptance of an offer by the offeree must
be clear,
unequivocal and unambiguous. See
Boerne
v Harris
1949
(1) SA 793
(A) at 799-800,
Collen
v Rietfontein Engineering Works
1948 (1) SA 413
(A) at 421-2,
Potchefstroomse
Stadsraad v Kotze
1960 (3) SA 616
at 634 (per Malan AJA dissenting.)
[20
]
Not only must the offer be accepted but the acceptance itself must
be communicated by the offeree to the offeror. Until that
happens, no
contract can validly come into existence. See Willie’s
Principle of South African Law 9
th
Edition at page 743.
[21
]
It is also trite that where the mode of communication of the
acceptance of the offer has been prescribed, the offeree is bound
to
accept in the mode prescribed.
[22
]
In
Driftwood
Properties (Pty) Ltd v Mclean
1971 (3) SA 591
(A) at 597 D-E Van Blerk JA said the following:
“
It
is trite that an offeror can indicate the mode of acceptance whereby
a vinculum juris will be created, and he can do so expressly
or
impliedly
”.
T
he
court held that where the transferee was expressly requested to sign
the contract as a mode of acceptance, failure to do so would
result
in the lapse of the offer. See also
Dietrichsen
v Dietrichsen
1911 T.S. 486
at 494.
[23
]
Needless to say, acceptance of the offer can be done by conduct
indicating acceptance of the offer as well as by words expressing
it.
This position was aptly described by Watermeyer A.C.J. in
Reid
Bros. (South Africa Ltd) v Fischer Bearings Co. Ltd
1943 A.D. 232
at 241 when he stated:
“
Now
a binding contract is as a rule constituted by the acceptance of an
offer, and an offer can be accepted by conduct indicating
acceptance,
as well as by words expressing acceptance. Generally, it can be
stated that what is required in order to create a binding
contract is
that acceptance of an offer should be made manifest by some
unequivocal act from which the inference of acceptance
can logically
be drawn.
”
[2
4] In
order for a court to find that a contract has come into existence
under the doctrine of quasi-mutual assent or estoppel, as
in this
case, there must be a representation which, through conduct, induces
a reasonable belief on the part of the other party,
that the former
was accepting the offer thereby precluding such former party from
denying the existence of such contract. See
JC
Sonnekus
“
The
Law of Estoppel in South Africa
”,
at page 31. The question that has to be asked, is whether or not the
party who is trying to resile from the contract is
to blame in the
sense that by his conduct he has led the other party, as a reasonable
man, to believe that he was binding himself.
See
George
v Fairmead
1958 (2) SA 465
A 471 B-C.
[25] A
related question is whether the doctrine of
quasi
-mutual
assent can be applied in circumstances where the acceptance of an
offer does not take place in accordance with a prescribed
mode, but
the conduct of the offeree is such as to induce a reasonable belief
on the part of the offeror that the offer has been
duly accepted
according to the prescribed mode. In
Pillay
and Another v Shaik and Others
2009 (4) SA 74
(SCA) at 846, Farlam JA, affirming that although a
mode of acceptance was prescribed, the doctrine of quasi mutual
assent applied,
opined:
“
This
raises the question as to whether the doctrine of quasi-mutual assent
can be applied in circumstances where acceptance does
not take place
in accordance with a prescribed mode but the conduct of the offeree
is such as to induce a reasonable belief on
the part of the offeror
that the offer has been duly accepted according to the prescribed
mode. Viewed in the light of basic principle,
the question must
surely be answered in the affirmative because the considerations
underlying the application of the reliance theory
apply as strongly
in a case such as the present as they do in cases where no mode of
acceptance is prescribed and the misrepresentation
by the offeree
relates soley to the fact that there is consensus
.”
[26] T
he
principle is thus established that if a defendant behaved in such a
manner as to make the plaintiff believe that it had accepted
the
contract, then the court will hold that there was consensus even
though the defendant never accepted the offer in the manner
prescribed, for example by signing the contract to signify its
acceptance.
APPLICATION OF THE LAW TO THE FACTS
[27
] It
is common cause that the plaintiff’s offer to contract in this
case was contained in the quotation and the incomplete
contract Ramos
e-mailed to Bradshaw on 10 September 2007. Furthermore, the
defendant did not sign any written contract.
[28
] The
plaintiff submitted that there was a binding agreement which was
valid for one year and that the defendant, by its conduct,
led the
plaintiff to believe that a validly binding contract had been
concluded. Furthermore, such belief was reasonable in the
circumstances.
[29
] I
am in total agreement with the plaintiff that the fact that a party,
in this case the defendant, omitted or failed for whatever
reason to
sign a contract, is no bar per se, to the conclusion of a valid
contract, provided all the other requirements for the
conclusion of a
contract have been met. See
Pillay
and Another v Shaik and Others (supra)
at 83F-G.
[30
] In
my view, a clear method or mode of acceptance was prescribed in the
offer to contract which the plaintiff made to the defendant.
The
defendant had to signify its acceptance by signing the contract. I
say so for the following reasons:
30.1 the
quotation that was emailed by Ramos together with the incomplete
contract, expressly provides that the contract had to
be signed by
the defendant. This quotation expressly provides:
“
Security
evaluation to take place on acceptance of quote and delivered within
two weeks of
signed contract
.
No charge
.”
(my underlining.)
30.2 In the
email dated 11 September 2007 which Ramos sent to Bradshaw on the
same day, it was similarly made clear to Bradshaw
that the plaintiff
needed the contract ”…
signed
from your committee
…
”
(my
underlining). Significantly, in the said email Ramos made it clear
that the contract had to be signed by Friday (14 September)
of that
week.
30.3 Ramos
testified that during the ensuing period until about the middle or
end of December 2007, he either personally went to
or phoned Bradshaw
or Edward, both representing the defendant, on numerous occasions
specifically intending to collect the signed
contract. To this end
Ramos referred the court to various entries in his diary wherein it
is recorded that he either had to phone
or personally go to the
defendant to collect the signed contract.
[31
]
As the contract was never eventually signed, it follows that no
written contract was concluded between the parties.
[32
]
The question to be answered is whether the defendant, by its
conduct, in particular Bradshaw’s conduct, if any, led the
plaintiff, (Ramos) to believe that Bradshaw had accepted the contract
on behalf of the defendant.
[33
]
I have set out in detail the manner of exchange of the relevant
correspondence and emails between Ramos and Bradshaw in paragraphs
[8] to [11] above. Based on the aforesaid chronology of events, the
plaintiff submitted that:
33.1
Bradshaw
led Ramos to believe that the offer contained in the email of 10
September 2007 (the written but incomplete contract and
the
quotation) was accepted by the defendant;
t
his
belief was entirely reasonable in the circumstances; and
33.3 a
contract came into force on 10 or 11 September 2007, which contract
included the terms contained in the written contract.
[34
]
Bradshaw’s responses, as can clearly be seen from his
emails, were that he would have the contract signed. Clearly he
would
not be able to sign the contract personally. In fact as can be
gleaned from Ramos’ email dated 11 September 2007, Ramos
was
acutely aware that the defendant’s committee had to authorise
and sign the contract. Apart from the fact that Ramos had
expressly
stated in this email that he had wanted the committee (of the
defendant) to sign the contract, he conceded during cross
examination
that he possessed extensive and detailed knowledge and expertise of
the inner workings of homeowners associations,
and added that
resolutions were required to enter into contracts on behalf of
homeowners associations similar to the defendant.
[35
]
In my view, it defies logic that Ramos, who had this sort of
background knowledge on the inner workings of homeowners
associations,
could reasonably rely on any assertion that Bradshaw
would “
get
it (the contract) signed
”
or possess the authority on his own to bind the defendant. J.C
Sonnekus, in “
The
Law of Estoppel in South Africa
”
2
nd
Edition, at page 57 states that:
”
Any
pre-knowledge as to the real or factual legal position applicable to
the circumstances will tend to minimize the chances that
the
representee will be considered to have been misled by the
representation. This rule ties in with the common sense approach
according to which a person who is aware of the real position can
never be heard to say that he was misled by any conduct of the
other
party
.”
[36
]
Bradshaw’s testimony that the defendant could not simply rush
in and enter into a yearly contract with the plaintiff until
a
satisfactory evaluation of the security situation at the defendant’s
residential complex, accords with common sense and
with the common
cause facts. It was not disputed that there was dissatisfaction
amongst residents at the defendant’s complex
with the previous
security company that rendered security services. It accordingly
follows as a matter of logic, that the defendant
would have first
wanted to satisfy itself that the plaintiff would be able to
discharge the defendant’s security needs at
the complex.
[37
]
In the light of all the aforesaid, I come to the conclusion that
the plaintiff has failed to prove the conclusion of a written
contract with the defendant either on the ground of quasi mutual
assent or estoppel as alleged.
[38
]
Even if I were to charitably interpret in the plaintiff’s
favour the defendant’s conduct and hold that a valid contract
was concluded, the question that still has to be answered is whether
the defendant’s reasons and manner of cancellation of
the
contract on 7 January 2008 were reasonable in the circumstances, an
issue to which I now turn.
[39
] It
is common cause that the probationary period stipulated in the
contract was from 22 September 2007 until 22 December 2007.
[40
] The
defendant only notified the plaintiff on 7 January 2008 that:
40
.1 based
on the verbal agreement the parties had to convene on the expiration
of the probationary period and negotiate a fixed term
contract;
40.2 the defendant had decided
not to enter into any term fixed contract with the plaintiff because
of unsatisfactory work performance
by the plaintiff’s security
guards; and
40.3 as the defendant’s
offices closed on 14 December 2007 for the festive holidays, they
could not convey their aforesaid
decision not to enter into a fixed
term contract with the plaintiff at the end of the probationary
period.
[41] In my view, the defendant’s
explanation that because their offices closed on the 14
th
December 2007, and consequently it was not possible to notify the
plaintiff that they were not going to enter into any fixed term
contract, was reasonable in the circumstances. There was no practical
way in which the defendant could have notified the plaintiff
of this
fact before 22 December 2007. Furthermore, in my view, the defendant
did not extraordinarily delay unduly to notify the
plaintiff of its
intentions.
[42] In the circumstances, I find
that no written contract was concluded between the parties. There
was a month to month contract
concluded between the parties which
contained a probationary period of three months. At the conclusion
of the probationary period,
the defendant gave proper notice to the
plaintiff that as defendant was not satisfied with the plaintiff’s
work performance,
the defendant was not going to enter into any fixed
term contract.
[43] It is common cause that the
plaintiff, at the instance of the defendant, stopped rendering
services at the defendant’s
premises on 11 January 2008.
[44] As there was a month to
month agreement between the parties, the plaintiff was entitled to a
month’s notice of cancellation
of the (verbal) agreement. This
means that the defendant is liable to pay the plaintiff the sum R13
000.00 in respect of the period
11 January 2008 until 11 February
2008. Because of the amount involved, I have decided that costs due
to the plaintiff should
be on the Magistrate Court scale.
[45] I accordingly make an order
as follows:
45.1 Judgment is entered in
favour of the plaintiff for:
(a) payment of the sum of R13
000.00;
(b) interest thereon at the rate
of 15.5% per month from 11 February 2008 to date of payment, both
days inclusive;
(c) costs of suit on the
Magistrate Court scale.
_____________________________
B
H MBHA
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG