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[2021] ZALMPPHC 25
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Tinbar Consulting (Pty) Ltd v KPD Property Development (Pty) Ltd (6684/2018) [2021] ZALMPPHC 25 (16 March 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO
DIVISION, POLOKWANE)
CASE
NO: 6684/2018
REPORTABLE:NO
OF
INTEREST TO OTHER JUDGES:NO
REVISED
Date:
16/3/2021
In
matter between:
TINBAR
CONSULTING
(PTY) LTD
PLAINTIFF
and
KPD
PROPERTY DEVELOPMENT (PTY) LTD
DEFENDANT
JUDGMENT
MAKGOBA
JP
[1] In
this action the Plaintiff claims an amount of R 690 000-00 from the
Defendant
for services rendered in terms of a consulting agreement.
No agreement currently exists between the parties.
The
Plaintiff contends that the agreement has been repudiated by the
Defendant and such repudiation was accepted.
On
the other hand, the Defendant contends that the said agreement has
been cancelled on good cause.
[2]
The nub of the action revolves around the duration for which the
aforesaid
agreement was concluded. The Plaintiff's case is that the
said agreement was concluded for a period of one year (twelve months)
and the Defendant's version is that such agreement was concluded on a
month to month basis.
Common Cause Facts
[3]
The following facts are common cause or not in dispute:
3.1.
That an agreement was concluded between the parties even though no
written agreement
was ever signed by both parties.
3.2.
That the agreement was concluded for the rendering of consulting
services which the
Plaintiff would render to the Defendant and that
the Plaintiff would be compensated for the rendering of such
consulting services
in an amount of R 80 000-00 per month (excluding
VAT).
3.3.
The commencement date of the aforesaid agreement would be 1 March
2018. The Plaintiff
rendered consulting services to the Defendant as
from the said commencement date.
3.4.
The Plaintiff was compensated for the rendering of the service for
the period of
four months, that is March, April, May and June 2018.
The Pleadings
[4]
What follows represents a summary of the pleadings exchanged by the
parties
in the matter:
4.1.
In the amended Particulars of Claim, the Plaintiff relies on a partly
written partly oral agreement,
the written portion of which was the
service level agreement (“SLA”) excluding clauses 11,
14.1 and 14.2 thereof. The
SLA was never signed on behalf of the
Plaintiff because no consensus could be reached between the parties
in respect of clause
11 thereof (the indemnity clause).
4.2.
In terms of the Plaintiffs pleaded case, the duration of the
agreement concluded between the parties,
the agreement shall commence
on the 1st of March 2018 and endure for a period of twelve months
upto the 28 February 2019.
4.3.
It is pleaded by the Plaintiff that the Defendant repudiated the
agreement by conduct that exhibits
objectively the Defendant’s
deliberate and unequivocal intention not to be bound by the
agreement.
In the light hereof on
the 26 September 2018 the Plaintiff, acting through its attorney,
elected to terminate the agreement, which
termination was conveyed to
the Defendant, thus accepting the Defendant's repudiation
[1]
.
4.4.
Because it is not in dispute that the monthly compensation agreed
upon between the parties was an amount
of R 80 000-00 (excluding
VAT), it is pleaded that the Plaintiff would have earned an amount of
R 736 000-00 for the period July
2018 to February 2019.
4.5.
The Plaintiff pleaded that as a consequence of the Defendant’s
repudiation of the agreement and
consequent termination, the
Plaintiff saved an amount of R 46 000 -.00 on traveling expenses,
which amount was deducted from the
amount of R 736 000-00 and
consequently the Plaintiff claims for payment in the amount of R 690
000-00, interest and costs.
4.6.
In the Defendant’s amended Plea, it is contended that the
partly written partly oral agreement
it relies upon was only
concluded on the 16th of June 2018 even though it is, as aforesaid,
not disputed that the commencement
date agreed upon was the 1st of
March 2018.
4.7.
Accordingly, at best for the Defendant on the pleadings as they stand
the notion of month to month
agreement arose for the first time more
than three months after the commencement date of 1st March 2018. It
is common cause that
the Plaintiff rendered services with effect from
the 1st of March 2018 and continued to do so upto end of June 2018
4.8.
In paragraph 4 of the Defendants Plea it stated that the month to
month period was expressly, alternatively
implied agreed between the
parties. However, in paragraph 6.14 of the Defendant's Plea, the
Defendant pleads that the agreement
was only concluded on the 16th of
June 2018.
Factual Matrix
[5]
During the negotiations and conclusion of the agreement Mr. Alister
Barnetson,
the director of the Plaintiff represented the Plaintiff
whilst the Defendant was represented by Mr. Stembiso Bosch, its Chief
Executive
Officer.
Mr.
Barnetson testified on behalf of the Plaintiff at the trial of this
matter. Mr. Kobus van der Merwe, the accountant of the Defendant
and
Mr. Bosch testified on behalf of the Defendant.
[6]
Mr. Barnetson testified that he met Mr. Bosch during March 2017.
After
Mr. Barnetson told Mr. Bosch of his career in the development
of properties spanning over three decades, Mr. Bosch wanted to
involve
Mr. Barnetson in the project and indicated that he has
secured the right to develop student accommodation for 10 000
students on
four different campuses in Limpopo, and after conveying
to Mr. Barnetson that he did not have the necessary experience and
expertise,
he enquired whether Mr. Barnetson would consider assisting
him in the aforesaid project.
Since
at least May 2017 the parties discussed the extent of the services to
be rendered by the Plaintiff to the Defendant. Mr. Barnetson
then
became involved in attending meetings with learning institutions,
travelling to Pretoria on regular basis to meet committees,
attend
meetings with Mr. Bosch’s attorney, attending meetings with
potential architects, engineers and quantity surveyors.
[7]
According to Mr. Barnetson a huge quantity of work was done and that
he
put in a huge effort in that year, referring to the year 2017. The
compensation payable to the Plaintiff was agreed at R80 000-00
per
month excluding VAT. In respect of duration, the parties initially
agreed on a period of 5 years. Mr. Barnetson indicated that
such
period gave him a reasonable opportunity of recouping some of the
costs he had incurred and all the work that he has invested
during
the course of 2017 and early 2018. In summary, Mr. Barnetson
indicated that during 2017 already it was known who the contracting
parties would be, the remuneration was agreed upon and the duration
of the agreement was agreed upon.
[8]
It is not in dispute that the parties envisaged the ultimate
formalization
of the consulting agreement in the form of a written
service level agreement (“SLA”). It is common cause that
although
different version of the written SLA were exchanged between
the parties, the Plaintiff ultimately refused to sign the last
version
of the SLA because he was, at that stage, not satisfied with
the indemnity clause contained therein. Mr. Bosch, on behalf of the
Defendant was, on the 14th of June 2018, completely satisfied with
the last version of the SLA and had signed same. Mr. Barnetson
explained that he had discussed the indemnity clause with Mr. Bosch
on many occasions and that it was a particular severe indemnity
clause which he was not prepared to accept. The said indemnity clause
constituted the only remaining obstacle for him signing the
SLA.
[9]
Mr. Barnetson testified that at that stage an oral agreement was in
place
where “
important ingredients that I was concerned
about had already been agreed. So what was to be incorporated in the
SLA was merely the
formalization (sic) of the agreement
that
had already been reached.”
Two days after Mr. Bosch signed
the last version of the SLA, and on the 16th of June 2018, he sent an
e-mail to Mr. Barnetson. This
email was sent in response to Mr.
Barnetson’s email also dated the 16 June 2018 wherein he stated
that he had received no
response to his request for an amendment of
the indemnity clause. In response to this, Mr. Bosch stated that:
“
In the meantime
we will have to agree on
a
month to month then.
You
are
already
part
of
the
managing
team
and
signatory,
we
can’t
continue
without
a
clear
working relationship”
According to Mr.
Barnetson he never agreed to this. Mr. Barnetson explained that the
aforesaid email constituted merely an extension
of an invitation to
him to consider whether to continue on a month to month basis.
[10]
Furthermore, Mr. Barnetson stated that he never agreed
to Mr. Bosch’s proposal that in the meantime
the parties
continue on a month to month basis
According
to Mr. Bosch he proposed that the parties agreed to a month-to-month
agreement and that Mr. Barnetson accepted the proposal.
Mr.
Barnetson’s evidence is that he did not accept the proposal as
all the parties’ duties were clearly defined in
the existing
oral agreement, resulting therein that it was not necessary to
conclude an oral agreement on a month to month basis.
[11]
The events of the 29 June 2018 resulted in some animosity between the
parties and ultimately
resulted in the alleged repudiation of the
agreement, which repudiation was on the 26 September 2018 allegedly
accepted on behalf
of the Plaintiff.
[12]
Mr. Barnetson's evidence is that on the 29 June 2018 he was at a
meeting with Mr. Bosch
and other stakeholders when he received from
Mr. Kobus van der Merwe a schedule of payments to be released. The
payment had been
authorized by Mr. Bosch and then loaded on the
computer by Mr. van der Merwe.
It was for Mr. Barnetson
to release those payments. Included in that schedule was a payment of
R 92 000-00 which included VAT, due
and payable to the Plaintiff.
Against this amount there was a comment or note to the effect that:
“
SLA required.
Payment not loaded”
Mr. Barnetson showed Mr.
Bosch the schedule and asked whether Mr. Bosch had authorized the
payments whereafter Mr. Bosch answered
that he had. Mr. Barnetson
then went on to release the payments including the amount due and
payable to the Plaintiff.
[13]
Before releasing the payments Mr. Barnetson phoned Mr. van der Merwe
to tell the latter
that the payment due to the Plaintiff had been
authorised by Mr. Bosch and that Mr. van der Merwe could safely load
the payments.
Two
hours later Mr. Barnetson received a telephone call from Mr. van der
Merwe who informed him that Mr. Bosch denied having authorized
the
payment to the Plaintiff and that he was upset by the conduct of Mr.
Barnetson.
In
an effort to clarify the issue with Mr. Bosch, Mr. Barnetson
telephoned Mr. Bosch. However, Mr. Bosch was not willing to discuss
the matter with Mr. Barnetson and slammed the phone down on him. That
was the last conversation the two parties ever had with each
other.
[14]
According to Mr. Barnetson the payment that he released was for the
work done and the amount
was due and payable to the Plaintiff. Over
and above that the payment was duly approved by Mr. Bosch.
For
the previous three months the Plaintiff received its payments for
work done even though the SLA was not signed. He could not
understand
why at that stage, in June 2018, the signing of the SLA was a
precondition to the payment of the Plaintiff’s remuneration.
[15]
Mr. Barnetson explained that after the altercation on the 29 June
2018 he sent numerous
e-mails and attempted to have a discussion with
Mr. Bosch, but the e-mails were ignored and the requests for a
meeting simply disregarded.
After the aforesaid altercation he has
never managed to again discuss the matter with Mr. Bosch and even
though there was an arrangement
that they meet after some e-mail
correspondence, Mr. Bosch refused to again discuss the matter with
Mr. Barnetson.
[16]
On the 26 September 2018 the Plaintiff's attorneys wrote a letter to
the Defendant advising
that the Plaintiff accepts the repudiation as
a breach of contract and cancelled the agreement.
[17]
Mr. Barnetson, a 78 year old businessman was a credible and reliable
witness whose version easily withstood
cross-examination. During
cross- examination Mr. Barnetson’s version remained unaltered
and he stood steadfast in denying
any agreement concluded on a month
to month basis.
[18]
Mr. Barnetson emphatically stated that the signing of the SLA was
never a prerequisite
for receiving payment of the amount agreed upon
and, in any event no such condition has been pleaded by the
Defendant.
[19]
Mr. Kobus van der Merwe was called as a witness for the Defendant
mainly for the purpose
of giving evidence on the incident of the 29th
June 2018.
Mr.
van der Merwe conceded that verbal discussions took place between Mr.
Barnetson and Mr. Bosch and that even though a written
document was
never signed by both parties, he conceded that an agreement came into
existence.
On
the incident of the 29
th
June 2018, Mr. van der Merwe
conceded that the services were indeed rendered and that the
Plaintiff was entitled to payment. Furthermore
Mr. van der Merwe
conceded that in the preceding months payments were made to the
Plaintiff in the absence of a signed SLA and
accordingly the signing
of an SLA was never an impediment against payment being made to
Plaintiff.
[20]
Mr. Bosch confirmed in his evidence that after he initially met Mr.
Barnetson regarding the expansion
of a hotel, and upon learning about
the extensive career of Mr. Barnetson, he agreed to engage Mr.
Barnetson services for the Cleantech
Group (i.e. his group of
Companies).
[21]
In his evidence in chief, after dealing with the different versions
of the SLA and the amendment
thereof, Mr. Bosch was asked
“
but in the
meantime, despite the fact that there is no signed SLA there have
been service rendered and Tinbar has been paid.
What was the basis for
that?”
Mr. Bosch’s answer
was
“
the
common
cause
is
that
there
was
a
verbal
agreement as far as the services
are concerned.
And
upon conclusion of a signed SLA”
On the much debated
e-mail dated 15th June 2018, Mr. Bosch explained his intention as
follows:
“
The intention
is
that
it
would
be
a
verbal
agreement
upon
conclusion
of
a signed Service Level Agreement.”
[22]
The Court wanted Mr. Bosch to clarify such e-mail (of the 15
th
June 2018) as same appeared to contain a proposal. The Court wanted
to know whether the parties agreed on a month to month contract.
Mr. Bosch answer was not
satisfactory and seemed to suggest that as CEO he could unilaterally
agree to this. When pressed for an
answer Mr. Bosch indicated that
Mr. Barnetson “
never
objected
to it”
and
when further asked by the Court whether Mr. Barnetson agreed, Mr.
Bosch answered:
“
I
assumed
he
agreed
because
he
continued
working
with
me"
Mr. Bosch again
reiterated his aforesaid assumption and stated that:
“
I will assume
that was
the
nature of our
relationship, it is
on a month to month”.
[23]
Mr. Bosch could not recall whether
initially a five year period was agreed upon between the
parties.
On
the duration of the agreement, the Court wanted clarification on
exactly what was agreed upon between the parties.
Mr. Bosch then indicated
that he proposed a period of twelve months and his recollection was
that there was a counter proposal of
fifteen months. The Court
thereafter asked a pertinent question:
“
And
ultimately what did you agree upon?”
to which Mr. Bosch
answered:
“
Ultimately was
12 months.”
On the basis of the
answers proffered by Mr. Bosch above, I make a finding that a twelve
months’ period has been established
and not a month to month
agreement.
[24]
During cross- examination it was clear that Mr. Bosch was evasive and
refused to make simple concessions.
In my view Mr. Bosch was an
evasive and unreliable witness who contradicted himself on various
occasions and also attempted to
change his version as his evidence
progressed. I agree with Counsel for the Plaintiff’s submission
that Mr. Bosch’s
version is highly improbable and makes no
commercial sense whatsoever. I agree that Mr. Barnetson would surely
not have concluded
an agreement on a month to month basis in
circumstances where he already, during the course of 2017, spent an
enormous amount of
time and energy on the project. It is only logical
and makes business sense that an extended agreement had to be
concluded between
the parties in order for Mr. Barnetson to recoup or
recover such time and energy spent.
[25]
The Court accepts the version of Mr. Barnetson pertaining to the
incident of the 29 June 2018
and rejects the version of Mr. Bosch in
so far as it purports to justify the termination of the agreement
between the parties.
My reason for the acceptance and rejection of
the respective parties' version is based on the credibility and
reliability of the
parties as witnesses
See
Stellenbosch
Farmers’ Winery Group Limited v Martell et cie.
[2]
Duration of Agreement
- fixed term of 1(one) year or month to month?
[26]
The Plaintiff’s version is that a partly written, partly oral
agreement was concluded in terms
whereof the Plaintiff was appointed
as consultant for a fixed period of one year from 1 March 2018.
According to the Plaintiff,
the written portion of the agreement is
the document attached to the particulars of claim as Annexure “POC1”
(the SLA
referred to above) excluding clauses 11, 14.1 and 14.2.
It
is recorded in clause 4.1 of Annexure “POC1” that the
agreement shall commence on the commencement date and shall
endure
for a period of 1(one) year and may thereafter be renewed on an
annual basis.
[27]
The Defendant’s version is that it was agreed partially orally
between the parties on 16 June
2018 at Polokwane, alternatively
Magoebaskloof that the Plaintiff would continue to render services to
the Defendant on a month
to month basis, against payment of R 80
000-00 per month to the Plaintiff by the Defendant.
[28]
Seemingly the Defendant avers that an e-mail of dated the 16
th
June 2018 discussed above in this judgment, retrospectively converted
the agreement that was concluded between the parties to be
on a month
to month basis. This does not make sense at all. Mr. Bosch’s
evidence in this regard is highly improbable and
makes no commercial
sense.
Already
as at 16 June 2018 when the aforesaid e-mail was sent out, there was
an existing oral agreement between the parties which
commenced on 1
March 2018. The latter agreement was for a fixed term of one year. It
is incomprehensible that the e-mail of the
16 June 2018 could operate
retrospectively to 1 March 2018 and thereby convert the existing one
year agreement to a month to month
agreement.
[29]
The contents of the aforesaid e-mail of the 16 June 2018 has been set
out in paragraph
[9] above.
The
contents of the aforesaid e-mail is unambiguous and can only be
interpreted to convey that until such time that the parties
have
reached consensus on the written SLA, the parties will have to agree
(which presupposes that no agreement has been reached
in this regard)
that the agreement henceforth continues on a month to month basis.
The evidence of Mr. Barnetson is clearly that
he never agreed to this
proposal or suggestion.
The email, by no stretch
of the imagination, demonstrates any agreement, expressly, tacitly or
impliedly on a month to month basis.
It simply says that the parties
will have to, in future, rather agree to continue on a month to month
basis.
In
any event and according to the evidence on record, Mr. Bosch wrongly
made an assumption that Mr. Barnetson agreed to his proposal
or
suggestion of entering into a month to month agreement.
[30]
It is trite that when interpreting a contract a sensible meaning is
to be preferred to
one that leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document.
[3]
[31]
In the matter of
Novartis
SA Ltd v Maphil Trading (Pty) Ltd
[4]
the
Supreme Court of Appeal stated:
“
But in the
process of
interpreting the
meaning of
the language of a commercial document the Court ought generally to
favour a commercial sensible construction. The reason
for this
approach is that a commercial construction is
likely to
give effect to the intention of the parties. Words ought therefore to
be interpreted in the way in which the reasonable
person would
construe them. And the reasonable commercial person can safely be
assumed to be unimpressed with technical interpretations
and undue
emphasis on niceties of language.”
See also:
Bothma-Bathi Transport
(Edms) BPK v S Botha & Seun Transport (Edms) BPK
[5]
and
Northeast Finance
(Pty) Ltd v Standard Bank of South Africa Limited
[6]
[32]
On the basis of the interpretation ascribed to the e-mail of the 16
June 2018 and considering
the evidence on record, I make a finding
that the parties entered into an agreement for a fixed period of
1(one) year and not a
month to month agreement.
Breach of Contract -
repudiation or cancellation.
[33]
On the 26th September 2018 the Plaintiff’s attorney enquired
from the Defendant’s
attorney to clarify whether it is the
Defendant’s case that:
33.1.
the agreement never came into being; or
33.2.
the agreement came into being but terminated by the Defendant;
or
33.3.
if an agreement existed, whether same had been repudiated by
the Defendant. In the same letter the Plaintiff’s attorney
notified
the Defendant, through its attorney, that the Plaintiff
accepts the repudiation as a breach of contract and cancels the
agreement.
A claim for the immediate payment of damages in an amount
of R 736 000-00 was made.
The Defendant’s
attorney never clarified the aforesaid.
[34]
A party wishing to claim damage resulting from repudiation of an
agreement must allege
and prove:
34.1.
the agreement relied on;
34.2.
repudiation of a fundamental term of contract;
34.3.
an election by the innocent party to terminate;
34.4.
communication of the election to the repudiating party; and
34.5.
damages
On the evidence before me
I am satisfied that the Plaintiff has succeeded in proving the
aforementioned elements. I accept that
Mr. Barnetson rightly released
the payment to the Plaintiff on the 29 June 2018 because Mr. Bosch
had duly authorized such payment.
The statement by Mr.
Bosch during his altercation with Mr. Barnetson in a telephonic
conversation on 29 June 2018 to the effect
that
“
You paid
yourself
Our
journey
ends
here.
I
can
no
longer
continue
in
a
relationship with you.”
amounts to a repudiation
of the agreement between the Plaintiff and Defendant.
[35]
It is trite that where one party to a contract, without lawful
grounds, indicates to the
other party in words or by conduct a
deliberate and unequivocal intention to no longer be bound by the
contract, he is said to
“repudiate” the contract. Where
that happens, the other party to the contract may elect to accept the
repudiation and
rescind the contract. If he does so, the contract
comes to an end upon communication of his acceptance of repudiation
and rescission
to the party who has repudiated.
[7]
[36]
The Defendant avers that it became entitled to cancel the agreement
as the Plaintiff breached
the agreement. Specifically, that the
Plaintiff’s representative, Mr. Barnetson, unilaterally, and
without the knowledge
and approval of Mr. Bosch informed the
Defendant’s director, Mr. Kobus van der Merwe, on 29 June 2018,
that the Plaintiff’s
remuneration could be released. According
to the Defendant this conduct was not in good faith and in breach of
the tacit, alternatively
implied terms of the agreement.
[37] The
evidence on record does not support the aforesaid averment by the
Defendant. Mr. Barnetson
was found to be a credible and reliable
witness in his evidence relating to the incident of the 29 June 2018.
On
the other hand, the evidence of Mr. Bosch was rejected. Mr. Bosch was
found to be an evasive and unreliable witness.
It
is surprising to note that after the alleged breach of contract by
the Plaintiff, the Defendant never put the Plaintiff on terms
to
remedy the alleged breach failing which the agreement would be
cancelled.
The
Defendant did not even communicate the alleged cancellation of the
agreement to the Plaintiff.
Conclusion
[38]
I come to the conclusion that the Plaintiff has discharged the onus
of proof regarding:
38.1. the
conclusion of the agreement for a 1 (one) year fixed term.
38.2. the terms thereof;
and
38.3. the Defendant’s
repudiation of the aforesaid agreement.
[39]
As a consequence of the Defendant’s repudiation of the
agreement and the subsequent
termination thereof the Plaintiff
suffered financial loss (damages) in the amount of R 690 000-00,
calculated as follows:
39.1.the remuneration of
the Plaintiff would have received for the remaining period of the
agreement, being the period from July
2018 to February 2019 (being a
period of eight months), is the amount of R 736 000-00(inclusive of
VAT);
39.2. as a consequence of
not performing the services during the period July 2018 to February
2019, the Plaintiff saved expenses
in the form of travelling costs in
the aggregate amount of R 46 000-00 to be
deducted from the amount
of R 736 000-00.
[40]
In the result I grant the following order:
40.1. Judgment in
the favour of the Plaintiff for payment of the amount of R 690
000-00.
40.2. Payment of
interest on the aforementioned amount of R690 000-00 a tempore morae
at the prescribed rate of interest
40.3. Costs of
suit.
E M
MAKGOBA
JUDGE PRESIDENT OF THE
HIGH
COURT,LIMPOPO DIVISION
POLOKWANE
APPEARANCES
Heard
on by
:9
& 10 February 2021
:5
March 2021
Judgment
delivered on
:
16 March 2021
For
the Plaintiff
:
Adv. JA Venter
Instructed
by
:
Bredells Attorneys
c/o
Kampherbeek
& Pogrund
Attorneys
For
the Defendant
:
Adv. D.
Prinsloo
Instructed
:
Becker Attorneys
[1]
See Bundle 2 pages 149-150
[2]
2006(5) SA 548 (SCA) at para [30]
[3]
Natal Joint Municipality Pension Fund v Emdumeni Municipality 201
2
(4) SA 593(SCA)
at para [18]
[4]
2016 (1) SA 518
(SCA) at para {30}
[5]
2014 (2) SA 494 (SCA)
[6]
2013(5) SA 1 (SCA)
[7]
See Datacolor International (Pty) Ltd v lntamarket (Pty) Ltd 2001(2)
SA 284 (SCA); Highveld 7 Properties (Pty) Ltd and Others
v Bailes
1999 (4) SA 1307
(SCA)