About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2021
>>
[2021] ZAGPJHC 36
|
|
Markit Systems (Pty) Limited v Fulcrum Group (Pty) Limited (39734/2018) [2021] ZAGPJHC 36 (8 April 2021)
THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES:
NO
(3)
REVISED:
Date:
8
th
April 2021
CASE
NO
:
39734/2018
DATE
:
8
th
april 2021
In the matter between:
MARKIT SYSTEMS
(PTY)
LIMITED
Plaintiff
and
FULCRUM
GROUP (PTY) LIMITED
Defendant
Coram:
Adams J
Heard on
:
17, 18, 19, 21 and 22 August 2020;
14, 15, 16, 17 and
18 September 2020.
Closing Argument on:
21 October 2020 – The
‘virtual hearing’ of this matter (the trial) was
conducted as a series of videoconferences
on the aforementioned trial
dates on the
BlueJeans
digital platform.
Delivered:
08 April 2021 - This judgment was handed down electronically by
circulation to the parties' representatives by email, by being
uploaded
to the
CaseLines
system of the GLD and by release to
SAFLII. The date and time for hand-down is deemed to be 12H00 on 8
April 2021.
Summary:
Interpretation of contract – between
provider of information technology services and customer for the
development and build
of system – cancellation of agreement in
terms of cancellation clause – supplier alleges unlawful
cancellation and
repudiation of contract by customer – claim
for contractual damages resulting from repudiation of agreement by
customer –
whether customer entitled to cancel agreement in
terms of the cancellation clause and whether cancellation amounted to
repudiation
– agreement validly cancelled as eventuality
allowing cancellation materialised – claim dismissed –
counterclaim
allowed –
ORDER
(1)
T
he plaintiff’s claim is
dismissed with costs, which costs shall include all reserved costs,
the qualifying fees of defendant’s
expert witness, Mr Hands,
who is declared a necessary witness, and all costs consequent upon
the employment of two counsel, one
being a Senior Counsel.
(2)
Judgment is granted on the defendant’s counterclaim in
favour of the defendant against the plaintiff for:
(a)
Payment of the sum of R4 500 000;
(b)
Payment of interest
a tempore morae
on R4 500 000
at the applicable legal rate of 10.25% per annum from 14 December
2014 to date of final payment;
(c)
Costs of suit, including the costs consequent upon the
employment of two counsel, one being a Senior Counsel.
JUDGMENT
Adams J:
[1].
On 26 April
2017, the plaintiff, Markit Systems Limited (Markit), and the
defendant, Fulcrum Group (Pty) Limited (Fulcrum), concluded
a written
technology agreement (the agreement), in terms of which Markit was to
provide Fulcrum with technology and related services
aimed at
building and thereafter maintaining and supporting an innovative
Insurance Broker software system (‘the System’)
to
replace the outdated information technology system (Flexibroker) used
at that stage by Fulcrum. The parties agreed that the
project would
commence immediately upon signature of the agreement and it was
envisaged that once the system had been built, Fulcrum
would enjoy a
technological advantage in the insurance and insurance brokerage
industry.
[2].
The scope of
the project was to be agreed upon between the parties and recorded in
a Business Requirement Document (‘the BRD’),
which would
set out Fulcrum’s requirements subsequent to a detailed
analysis of their business and business requirements
by Markit.
Either party was entitled to terminate the agreement immediately at
any time by written notice to the other party if
agreement could not
be reached on the details to be included in the BRD.
[3].
The main issue
in this action is whether Fulcrum was entitled to terminate the
agreement on the basis that the parties failed to
agree on the
details to be included in the BRD. Intricately related to this issue
was the other in this action, that being whether
Fulcrum’s
termination of the agreement amounted to an unlawful repudiation of
the contract and a breach of its admitted obligation
to cooperate
with and assist Markit in preparing and finalising the BRD. If not,
then, in my view,
cadit quaestio
as regards Markit’s
case.
[4].
It bears
emphasising at the outset that, at the time the parties concluded the
agreement, Fulcrum’s business information and
operating system
was the Flexibroker system. This system was at that time still
serving its purpose as a vehicle which enabled
Fulcrum to serve its
insurance and insurance broker customers. However, it had become
outdated and antiquated and at the very least
required to be upgraded
so as to keep up with the times and to enable Fulcrum to remain
relevant and to retain a competitive edge
in the insurance industry.
From Fulcrum’s
point of view, it was desirous to replace that system in its entirety
with a more modern, up to date, efficient
and generally better
operating system.
[5].
It was
therefore envisaged by Fulcrum and so communicated to Markit that a
new and improved information technology system was required
to be
developed
by modifying and expanding their existing
software system, that being the old Flexibroker system.
This
meant, as
testified to by Fulcrum’s expert
witness, Mr Hands, that a reverse flow of information was required
from Markit, as the supplier,
to Fulcrum, as the customer. It
therefore stands to reason that Markit needed to educate Fulcrum in
the features and functions
of the Markit system, using it as a
sounding board or catalyst to elicit Fulcrum’s requirements.
[6].
The agreement
was to ‘continue indefinitely unless cancelled upon written
notice as provided for in [the agreement]’.
[7].
However, on 13
December 2017 Fulcrum gave written notice to Markit of immediate
cancellation of the agreement, ostensibly on the
basis that Markit
had committed material breaches of the agreement. Importantly,
Fulcrum, in their notice of cancellation of the
contract, alleged
that the BRD had not been agreed upon, which entitled it (Fulcrum) to
cancel the agreement. Markit’s response
to the cancellation
notice was to deny that it had breached the agreement and it insisted
on Fulcrum complying with its obligations
in terms of the agreement.
It was in fact Fulcrum, so Markit retorted, which was in breach of
the agreement in that it had failed
to co-operate in the production
of the BRD and its purported cancellation of the agreement amounted
to an unlawful repudiation
of the contract.
[8].
In this
action, Markit claims R40 414 803 as damages for breach of
contract. Essentially, the basis of the claim is that
Fulcrum’s
termination of the agreement constitutes an unlawful repudiation of
the contract, resulting in Markit suffering
damages, which damages
also resulted, so Markit alleges, from numerous other actionable
material breaches of the agreement by Fulcrum.
[9].
Fulcrum
defends the action on the basis that its conduct did not constitute a
repudiation of the agreement – it was simply
enforcing its
right under the agreement to terminate in the event that an agreement
had not been reached on the BRD, described
by Fulcrum as a ‘critical
document’. The case of Fulcrum is simply that it had the right
to cancel the agreement in
the event of the parties being unable to
reach agreement on the BRD. Fulcrum alleges that this eventuality, as
contemplated by
the parties in the agreement, in fact materialised,
therefore it was entitled to cancel the contract without further ado,
which
is exactly what they did.
[10].
Fulcrum denies
Markit’s claim that the reason why agreement could not be
reached on the BRD was due to a breach on the part
of Fulcrum of the
agreement, which required Fulcrum to co-operate with Markit in the
preparation and compilation of the BRD. In
any event, so the case on
behalf of Fulcrum goes, irrespective of the reason for the failure to
reach agreement on the BRD, once
there is no agreement on the BRD
within a reasonable period, any of the parties had the right to
cancel the contract. That defence
is contained in and incorporated in
a Special Plea raised by Fulcrum.
[11].
As regards
Markit’s contention that Fulcrum did not cooperate with it in
ensuring that agreement on the BRD was reached, Fulcrum
admits its
obligation in terms of the contract to timeously provide Markit with
complete and accurate information to enable it
to perform its
obligations. However, Markit, being the information technology expert
employed by Fulcrum precisely for its expertise,
was obliged, so
Fulcrum contends, to solicit such information from Fulcrum, and, in
breach of the agreement, failed to do so.
[12].
Fulcrum also
counterclaims a refund of the amount of R4 500 000 paid by
it to Markit in terms of the agreement, which
it alleges should be
repaid on the basis that it was not due in terms of the agreement.
[13].
At the heart
of the dispute between the parties is the BRD, which is defined in
the agreement as: ‘A document detailing the
business processes
the system will need to address as set out in schedule 2’.
Schedule 2 to the signed agreement was a blank
page with the heading:
‘Schedule 2’. And to this day that is what Schedule 2 to
the agreement is – a blank page.
[14].
Clause 02 of
the agreement provides that ‘t
he
scope of the project is explained in more detail in the BRD as
detailed in Schedule 2’, and then goes on to provide that:
‘
Once
[Markit] has analysed and documented [Fulcrum’s] business
requirements, both parties shall jointly agree on:
a
A BRD which shall set out what [Fulcrum’s] requirements are
subsequent to a detailed
analysis of [Fulcrum’s] business by
[Markit]. The BRD shall include (but shall not be limited to):
I
Application Functional and Non-Functional Requirements;
II
Migration Requirements including:
(a)
details
of insurer products required to be migrated;
(b)
customer
data;
(c)
details
of the migration process, stipulating the level of automation to be
implemented in the process.’
[15].
This clause is
central to the dispute, as are clauses 2(d) and 16, which I cite
extensively in the paragraphs which follow.
[16].
Clause 2(d) of
the agreement reads as follows:
‘
Either
party shall be entitled to cancel this agreement in accordance with
clause 16 (c) below in the event that the parties are
unable to reach
agreement on the details of the BRD’.
[17].
The relevant
portions of clause 16 of the agreement reads thus:
‘
16.
Term
and termination
a.
This
agreement shall commence on the Effective Date and shall continue
indefinitely unless cancelled upon written notice as provided
for in
this clause 16.
b.
Notwithstanding
the above, neither party shall be entitled to cancel this agreement
within the first five years from the Effective
Date, save for
termination in accordance with this clause 16 (c).
c.
Either
party may terminate this agreement immediately at any time by written
notice to the other party if:
i.
that other party commits any material breach of its obligations under
this agreement
which (if remediable) is not remedied within [14] days
after the service of written notice specifying the breach and
requiring
it to be remedied; or
ii.
that other party:
1.
.
. . . . .
. . .
. . .
5.
any
process is instituted which could lead to that party being dissolved
and its assets being distributed to its creditors, shareholders
or
other contributors (other than for the purposes of solvent
amalgamation or reconstruction); or
iii.
… ….
iv.
… …;
v.
The Parties fail to reach agreement in respect of the details to be
documented in the BRD,
vi.
The Supplier fails to meet the mutually agreed timelines and
expectations to be recorded in the
detailed BRD or any requirements
as stipulated in the BRD (Schedule 2) and/or Project Plan (Schedule
1); or otherwise fails to
perform or meet the requirements of the
agreed Service Levels documented in Schedule 3.
vii.
… ...’
[18].
Fulcrum’s
case, as explained by its Counsel, Mr Morison, is that it was
entitled to cancel because the parties were unable
to reach agreement
on the content of the BRD. That is the pleaded case of Fulcrum. The
cancellation happened because they could
not agree on the BRD.
Markit’s case is that Fulcrum failed to cooperate, which
resulted in Markit being unable to produce
the BRD. Fulcrum’s
case is not that Markit failed to perform as the basis of the
cancellation – it is that the parties
did not agree on the
content of the BRD and that gave Fulcrum the right to cancel.
[19].
Markit
disputes Fulcrum’s entitlement to cancel the agreement in terms
of clause 16(c)(v), because, so Mr Berridge, Counsel
for Markit,
contended, the parties did not fail ‘to reach agreement in
respect of the details to be documented in the BRD'.
Far from it, so
the contention on behalf of Markit goes, the parties were well on
their way to reaching such agreement and, but
for the unlawful
termination of the contract by Fulcrum, agreement would have been
reached and the BRD or BRD’s would have
been produced.
[20].
Other relevant
clauses relied upon by Markit in support of its cause are clauses 3
and 4 of the agreement.
[21].
Clause 3 sets
out Markit’s responsibilities and provides in clause 3(a) that
it was Markit’s obligation to ‘analyse
and document
Fulcrum’s requirements, to be encapsulated in the BRD as
provided in clause 2(a) above’. Fulcrum interprets
this clause
as placing on Markit the responsibility and the obligation to produce
the BRD. Markit disagrees. In this clause one
finds, so Markit
contends, a temporal and consecutive element, that being the analysis
and documentation process (which was Markit’s
responsibility)
preceded the production of the BRD, which was the joint exercise upon
which the parties had to jointly agree.
[22].
Markit
contends that this clause does not impose the obligation of producing
the BRDs upon Markit. I will revert to this aspect
of the matter
later on in the judgment. Suffice to say, at this point, that in the
view I take of this matter, nothing turns on
this.
[23].
Fulcrum’s
responsibilities are detailed in clause 4 of the Agreement. Clauses
4(a) and (b) provide as follows:
‘
(a)
[Fulcrum] acknowledges that [Markit’s] ability to provide the
services is dependent upon the full and
timely co-operation of
[Fulcrum] (which [Fulcrum] agrees to provide), as well as the
accuracy and completeness of any information
and data [Fulcrum]
provides to [Markit]. Accordingly, [Fulcrum] shall provide [Markit]
with access to, and use of, all information,
data and documentation
reasonably required by [Markit] for the performance by [Markit] of
its obligations under this agreement.
(b)
To assist [Markit], [Fulcrum] will appoint a dedicated Business
Analyst to assist with the creation
of the BRD. [Fulcrum] shall be
responsible for the accuracy and completeness of the Materials on the
System.’
[24].
‘
Materials’
are, in turn, defined as meaning the content provided to Markit by
Fulcrum from time to time for incorporation
on the System.
[25].
It is this
clause 4 that Markit contends was breached by Fulcrum.
[26].
In addition,
and in terms of clause 8 of the Agreement, each party was obliged to
appoint a project manager. This clause provides
as follows:
‘
8.
Project
management
Each party
shall appoint a project manager who shall:
a.
provide
professional and prompt liaison with the other party; and
b.
have
the necessary expertise and the authority to commit the relevant
party.
The
project managers shall jointly appoint a Project steering committee
which shall constitute representation from both Parties.’
[27].
Simply put, the questions to be answered in
the adjudication of the disputes between the parties are the
following: (1) Did the
parties fail to reach agreement in respect of
the details to be documented in the BRD? (2) And if so, was this
failure to reach
agreement on the details as a result of a breach by
Fulcrum of the terms of the agreement? In seeking answers to these
questions,
one is required to embark on a legal interpretation of the
relevant clauses of the agreement and of the agreement as a whole.
[28].
Markit’s conclusion is that there was
not a failure by the parties to reach agreement in respect of the
details to be incorporated
in the BRD. In any event, so Markit
submits, even if there was such a failure to reach agreement, such
failure was caused as a
result of Fulcrum’s breach of the terms
of the agreement in that it failed to comply with a number of its
obligations in
terms of the agreement, notably its failure to
cooperate with Markit and to furnish it with the requisite
information and data
which would have enabled Markit to analyse and
document Fulcrum’s business requirements. Fulcrum’s case
is that there
was a failure by the parties to reach agreement on the
details to be incorporated in the BRD and that failure was not as a
result
of any breach by them of any of the terms of the agreement.
[29].
In support of its claim, Markit led the
evidence of two of its senior executives, namely: Malcolm McLean, its
Chief Technical Officer,
and Simon Turner, its Executive Chairman, as
well as the evidence of an Expert, Cornelius Fourie, a Forensic
Accountant. Mr Fourie’s
evidence related to the quantification
of the plaintiff’s claim. Fulcrum led the evidence of Paul
Schreuder, who was its
Chief Information Officer at the relevant
time, and the evidence two of its Project Managers, Shirley Ann
Oakley-Brown and Karen
Bouic. Fulcrum also called an expert witness,
Mr William Michael Hands, an IT Expert, who gave evidence on the
merits of the case
of Fulcrum. In the end and after the evidence was
completed, it became apparent that there were not many genuine
factual disputes
between the parties. In my view, the versions of the
parties part ways only at the point of interpretation of the facts,
which,
in any event, were borne out for the most part by the
documentary evidence. I deal in the paragraphs which follow with the
salient
and relevant facts in this matter as gleaned from the
evidence placed before me by both parties. That I do simultaneously
with
the discussion and the analysis of the law and its application
to the facts in the matter.
[30].
However, before I do that, it may be
apposite at this juncture to say something briefly about the correct
legal approach to the
interpretation of contracts.
[31].
It is so, as submitted by Mr Berridge, that
the more modern
approach to interpreting contractual instruments that was started by
decisions such as
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[1]
and
Bothma-Batho
Transport (Edms) Beperk v S Bothma and Seun Transport (Edms)
Beperk
[2]
and carried through
into judgments such as, for example,
Novartis
SA (Pty) Limited v Maphil Trading (Pty) Limited
[3]
,
has conveniently been summarised as follows in
North
East Finance (Pty) Limited v Standard Bank of South Africa
Limited
[4]
:
‘
The
court asked to construe a contract must ascertain what the parties
intended their contract to mean. That requires a consideration
of the
words used by them and the contract as a whole, and, whether or not
there is any possible ambiguity in their meaning, the
court must
consider the factual matrix (or context) in which the contract was
concluded.’
[32].
Thus, whilst
the logical point of departure remains the language of the provision
itself, that is no longer the end of the enquiry
and as was
reiterated in
Tshwane
City v Blair Athol Homeowners Association
[5]
:
‘
It
is fair to say that this court has navigated away from a narrow
peering at words in an agreement and has repeatedly stated that
words
in a document must not be considered in isolation. It has repeatedly
been emphatic that a restrictive consideration of words
without
regard to context has to be avoided. ... the purpose of the provision
being interpreted is also encompassed in the enquiry.
The words have
to be interpreted sensibly and not have an unbusinesslike result.
These factors have to be considered holistically.’
[33].
The aforegoing
approach is subject to the proviso that the evidence must indicate a
common understanding of the terms of the agreement,
may not alter the
meaning of the words used and should be used as conservatively as
possible. In that regard, see:
KPMG
Chartered Accountants (SA) v Securefin Limited and Another
[6]
.
The point is that, whilst accepting the parol evidence rule remains
part of our law, the manner in which the parties themselves
not only
understood but implemented their contractual obligations is a very
important aid in the interpretative process, provided
of course that
such interpretative exercise does not alter the written words of the
contract itself.
[34].
That brings me back to a discussion of the
facts in the matter and applying to those facts the aforegoing
principles.
[35].
Prior to the
conclusion of the agreement, Markit, during February 2017, produced
and furnished to Fulcrum a ‘Project Initiation
Plan’,
referred to by the parties as a ‘PID’. Markit attaches
substantial weight to this PID, although no mention
is made thereof
in the agreement. The PID was reviewed and refined by Fulcrum’s
Mr Schreuder during June 2017 and he also
made certain critical
insertions to it. Markit seems to suggest that this document is
evidence that the parties were working towards
the BRD.
[36].
This document,
however, was clearly not a BRD neither did it contain all of the
details to be included in the BRD. All that was
recorded in this
document as and at 15 June 2017 under the heading ‘Scope’
was the following: ‘All existing functionality
in Flexibroker’.
Similarly, it cannot be said that a document produced during October
2017, titled: ‘Product and Entity
– Business Requirement
Specification’, was an indication that agreement had been
reached between the parties on the
details to be included in the BRD.
This document, which was a discussion document, is also referred to
by the parties as the Product
and Entity BRD, and specifically dealt
with Fulcrum’s product and entity business requirements
relative to the project. It
was a sub-BRD, which, by all accounts,
was very close to being signed off by Fulcrum and Markit. This
document was however not
signed off by the parties, and, in any
event, cannot be said to have contained all of the details to be
included in the BRD.
[37].
The same
applies to a series of emails between Fulcrum’s Business
Analyst, Mr Ashmeer Mahabeer, and Markit’s Mr
Roger
Walters during November 2017, starting on 14 November 2017 and ending
on 22 November 2017. This series of emails is referred
to by Mr
Berridge as a ‘multicoloured document’ and started off
with a list of twenty sub BRDs from Mr Roger Walters,
the first one
being the ‘Entity and Product Configuration’. In the
emails exchanged, questions are asked by Mahabeer
in relation to the
sub-BRDs, to which Walters respond and between the two of them the
BRDs are discussed. The point is that this
document also did not
amount to an agreement between the parties on the details to be
included in the BRD. And this was seven months
since the agreement
had been signed.
[38].
The
multicoloured emails, Mr Berridge submits, best exemplify the fact
that the parties would indeed have been able to reach agreement
on
the details to be included in the BRD. Quite clearly, so Mr Berridge
contends, that email exchange was the very implementation
of the
‘teamwork philosophy’ that the parties would have had in
terms of the agreement. It comprised a series of questions
and a flow
of information that was either forthcoming or promised to be
forthcoming from Fulcrum in the future.
[39].
I disagree.
The point is that by November 2017 the parties had still not agreed
on the details to be included in the BRD and that,
in my judgment,
was not as a result of any breach on the part of Fulcrum. On the
contrary and as already indicated, this can be
laid squarely at the
door of Markit and the supine attitude adopted by them after the
conclusion of the agreement.
[40].
The express
agreement between the parties was that work on the project would
start immediately. This, in my view, required of Markit
to
immediately start the process of analyzing and documenting Fulcrum’s
business requirements with a view to the parties
jointly agreeing on
the BRD. This positive obligation to analyse and document Fulcrum’s
business requirements is placed on
Markit by clause 2 as well as by
clause 2a, which provides in no uncertain terms the BRD shall set out
what Fulcrum’s requirements
are ‘subsequent to a detailed
analysis of [Fulcrum’s] business by
the
Supplier
[Markit]’ (emphasis added). There can be no doubt that, as a
starting point of the project, Markit was to immediately embark
on an
analysis and a documentation of Fulcrum’s business
requirements. This is expressly provided for by the wording of the
contract.
[41].
Notwithstanding
the aforegoing provisions and despite the fact that it was the party
with the necessary expertise and the requisite
skill and was required
to take the lead in the project, Markit adopted a somewhat supine
attitude and expected of Fulcrum to do
all the work which it was
required to do in terms of the contract. For at least the months of
May and June 2017 Markit did nothing
other than to receive payment of
the initial deposit of R3 million payable in terms of the agreement.
[42].
It is so, as
argued by Markit, that, if regard is had to clause 4 (supra) of the
agreement, the BRD was to include information and
data which had to
emanate from Fulcrum. It may also be that Fulcrum failed to appoint
in good time the personnel it was contractually
obliged to appoint –
such as the Project Manager and a dedicated Business Analyst.
[43].
However, in my
judgment, the primary obligation to ask for and obtain that
information lay with Markit, who was obliged to analyse
and document
Fulcrum’s business requirements. This obligation is reiterated
by clause 3 of the agreement under the heading:
‘Supplier
Responsibilities’, which provides that:
‘
The
Supplier shall:
a.
Analyse and document the Customer's requirements, to be encapsulated
in the BRD as provided
in clause 2(a) above.’
[44].
It
is also instructive to note that clause 4, which is relied upon
fairly heavily by Markit for its claim that Fulcrum was in breach
of
its obligation to cooperate with Markit, also provides that:
‘
a
. . . Accordingly, the Customer shall provide the Supplier with
access to, and use of, all
information, data and documentation
reasonably
required by the Supplier
for the performance by the Supplier of its obligations under this
agreement.’ (Emphasis added).
[45].
I therefore
conclude that by the time Fulcrum gave Markit notice on 13 December
2017 of immediate cancellation of the agreement,
the parties had
failed to agree on the details to be included in the BRD. I am also
of the view that the failure to agree upon
the detail to be included
in the BRD did not result from Fulcrum’s breach of any of the
provisions of the agreement, but
rather from Markit’s failure
to comply with its obligation to analyse and document Fulcrum’s
business requirements.
[46].
The only
question remaining is whether the aforegoing entitled Fulcrum to
cancel the agreement in view of the fact that the relevant
clause
does not expressly provide for a time period during which such
agreement ought to have been reached. This calls for a further
interpretation of the relevant clauses and the agreement as a whole
by the application of the principles alluded to
supra
.
[47].
There can be no doubt that the parties contemplated and
agreed that agreement on the details should be reached within a
reasonable
time. The alternative postulation to the effect that the
parties would have given themselves an indefinite period within which
to reach agreement on the details is nonsensical. There would then
have been no need and no reason to include the particular
cancellation
clause in the agreement. Therefore, in my view and as
pleaded by Fulcrum, in terms of the agreement, either party could
terminate
the contract if the parties within a reasonable period
failed to reach agreement in respect of the details to be included in
the
BRD.
[48].
The question whether a reasonable time had elapsed
before the cancellation is answered by the contract and the evidence
during the
trial. In the technology agreement the parties recorded
their expectation that the agreement on the BRD would to be achieved
within
three months. By the time the cancellation took place they had
been working at the project for eight months. As confirmed by the
expert witness, Mr William Hands, the parties had given themselves a
reasonable time to reach the agreement, yet they had failed
and the
only sensible thing for them to do was to end the project.
[49].
Mr Berridge
submitted that what had to be agreed in terms of the agreement were
not the BRDs themselves, but rather the details
that were to be
included in them. In this regard, so he submits further, with
reference
inter
alia
to
the multicoloured emails, there was a great deal of agreement. It was
not only agreed that there would be one single high-level
(or
‘umbrella’) BRD, with a number of sub-BRDs, it was also
agreed what each of those sub-BRDs would comprise. Each
sub-BRD was
given a name which was descriptive and showed what type of detail
needed to be included in it. There was most certainly
not an
inability or a failure to reach agreement on these aspects, so Mr
Berridge contends, but rather the contrary. I disagree
– the
point is simply that within a reasonable time the parties did not
agree in respect of the details to be included in
the BRD, and
therefore they had ‘failed’ to reach such agreement.
[50].
In all of the
circumstances, I am of the view that Markit has failed to prove that
Fulcrum was not entitled to cancel the agreement
in terms of clause
16(c)(v). Markit’s claim therefore stands to be dismissed.
[51].
Concomitantly,
Fulcrum’s counterclaim should be upheld. The quantum thereof
should be based on the provisions of clause 19(c))(iii)
of the
agreement, which provides as follows:
‘
iii.
Should this agreement be terminated in accordance with clause 16, due
to non-compliance with the BRD or failure
to reach agreement on the
BRD, the balance of the initial deposit shall thereafter be paid over
to the Customer.’
[52].
The reference
to the balance of the initial deposit is a reference to the 50% of R3
million upfront deposit payable into the trust
account of a firm of
attorneys to be held in trust until such time as the BRD had been
produced. It stands to reason that all other
payments made by Fulcrum
should be refunded.
[53].
As regards costs, the general rule
is that the successful party should be given his costs, and this rule
should not be departed
from except where there are good grounds for
doing so, such as misconduct on the part of the successful party or
other exceptional
circumstances. See:
Myers
v Abramson
[7]
.
[54].
I can think of no reason why I
should deviate from this general rule.
[55].
I am therefore of the view that
Markit should pay Fulcrum’s costs of the application.
Order
[56].
Accordingly, I make the following
order: -
(1)
T
he plaintiff’s claim is
dismissed with costs, which costs shall include all reserved costs,
the qualifying fees of defendant’s
expert witness, Mr Hands,
who is declared a necessary witness, and the costs consequent upon
the employment of two counsel, one
being a Senior Counsel.
(2)
Judgment is granted on the defendant’s counterclaim in
favour of the defendant against the plaintiff for:
(a)
Payment of the sum of R4 500 000;
(b)
Payment of interest
a tempore morae
on R4 500 000
at the applicable legal rate of 10.25% per annum from 14 December
2014 to date of final payment;
(c)
Costs of suit, including the costs consequent upon the
employment of two counsel, one being a Senior Counsel.
L R ADAMS
Judge of the High Court
Gauteng Local Division, Johannesburg
HEARD ON:
17, 18, 19, 20 & 21 August 2020; 14, 15, 16, 17 & 18
September 2020 – in a ‘virtual hearing’ during
a
series of videoconferences on the
BlueJeans
digital
platform
CLOSING ARGUMENT ON:
21
st
October 2020
JUDGMENT DATE:
8
th
April 2021 – judgment handed down
electronically
FOR THE PLAINTIFF:
Adv Bruce Berridge SC
INSTRUCTED BY:
Clyde & Co Incorporated
FOR THE DEFENDANT:
Adv L J Morison SC, together with Adv Ntombi Mncube
INSTRUCTED BY:
Nicqui Galaktiou Incorporated
[1]
Joint Municipal Pension
Fund v Endumeni Municipality
2012
(4) SA 593 (SCA)
[2]
Bothma-Batho Transport
(Edms) Beperk v S Bothma and Seun Transport (Edms) Beperk
2014
(2) SA 494 (SCA)
[3]
Novartis SA (Pty)
Limited v Maphil Trading (Pty) Limited
2016
(1) SA 518 (SCA)
[4]
North East Finance
(Pty) Limited v Standard Bank of South Africa Limited
2013 (5) SA 1 (SCA)
[5]
Tshwane City v
Blair Athol Homeowners Association
2019 (3) SA 398
(SCA)
[6]
KPMG Chartered
Accountants (SA) v Securefin Limited and Another
2009
(4) SA 399 (SCA)
[7]
Myers v Abrahamson
1951(3) SA 438
(C) at 455