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[2021] ZAGPPHC 446
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Keyhealth Medical Scheme v Glopin (Pty) Ltd (A393/2019) [2021] ZAGPPHC 446 (14 April 2021)
IN
THE HIGH COURT
OF
SOUTH
AFRICA,
GAUTENG
DIVISION,
PRETORIA
Case
number:
A393/2019
KEYHEALTH
MEDICAL
SCHEME
Appellant
and
GLOPIN
(PTY)
LTD
Respondent
JUDGMENT
MOGOTSI,
AJ (van der
Westhuizen
&
Collis,
JJ.,
concurring)
INTRODUCTION
1.
The appellant, Key Health Medical
Scheme, is a medical scheme as defined in the
Medical Schemes Act,
131 of 1998
. The respondent is Glopin (Pty) Ltd, a Financial Services
Provider
regulated
under
the
Financial
Advisory and Intermediary Services Act
37 of 2002
. It also acts as "broker" in a medical
scheme sphere
and is accredited with the Council for
Medical Schemes.
2.
On or about the 20
th
October 2004, the Appellant and the
Respondent entered into a broking agreement.
3.
At some stage during the subsistence of
this agreement,
the
Appellant accused the Respondent of having an improper relationship
with its trustees, and on the 14
th
of February 2017 furnished the
Respondent with a notice of
termination.
4.
The Appellant brought an application for
urgent interim relief. The parties reached a settlement which was
later made an order of
court on the 28
t
h
February 2017. In terms
of
the agreement the Appellant was obliged to continue making payments
due to the Respondent pending the finalization of action proceedings
to be instituted by the appellant.
5.
The Appellant, thereafter, purported to
withdraw its own disputed termination of the Broking
agreement
and revoked the mandate contained in the
broking agreement between the parties. The Respondent classified th
is revocation,
as
a repudiation
and
a second interim relief was
sought
in
terms
whereof
Fabricius
J
made
an
order preserving
the
status
quo,
pending
the
outcome
of
the
action.
6.
The Respondent then instituted an action
against the Appellant and that action is the subject matter of this
appeal. In terms of the
action proceedings,
the Respondent,
claimed the following relief:
CLAIM
A
Declarators
that:
(a)
The broking agreement dated 20 October
2004, is of
full
force and effect;
(b)
The
Key
Health
cancellation
of
14
February
2017,
is
unlawful and invalid;
(c)
The Key Health revocation of the Glopin
authority
under
clause
2.1
and 3.1 is unlawful.
2.
Confirmation of the mandamus and final
interdict in terms of the interim order of 28 February 2017 contained
in paragraph 1 and 2
of the order.
3.
Costs, including the costs of the urgent
interim interdict.
CLAIM
B
1.
In the alternative to claim A, and not withholding the revocation of
Glopin's authority in clause 2.1, 3.1, and 3.2 and the declarator
and
that Keyhealth must in respect of 'such members', continue to:
1.1
pay to Glopin all remuneration due in
terms of the
agreement;
1.2
pay to Glopin broker compensation due in
terms of the agreement;
1.3
render an account by the 25
th
day of each month recording all premiums paid by 'such members' to
Keyhealth and setting forth the commission due to Glopin consequent
thereupon;
1.4
pay to Glopin commission due to it on or
before the last day of the month.
7.
The
court
a quo
granted the following order:
1.
It is declared
that:
1.1
The written broking arrangement
entered into between the plaintiff and the defendant on 20 October
2004 is of
full
force and effect.
1.2
The defendant's revocation of the
plaintiff's authority under clauses 2.1, 3.1 and 3.2 of the
broking agreement on 21 March
2017 is unlawful and invalid.
1.3
The plaintiff is not intitled
to
any
broker compensation in respect of
the
members
of
the Retired
Municipal
Employees
Association.
2.
The
defendant
is
directed, for
so
long
as
the
broking
agreement
remains
extant between
the
parties to:
2.1
Pay to the plaintiff of
remuneration due in terms of the
broking agreement concluded
between the
plaintiff
and the defendant's predecessor, Munimed Medical Scheme, dated
October 2004.
2.2
Continue to make payment of the
broker compensation and other remuneration due under the
broking agreement to the plaintiff
to in consequences of having its
clients underwritten by the
defendant, and
for that
purpose:-
2.2.1render
an account of the plaintiff by no later than 25
th
day of each month recording all premiums paid by the plaintiff's
clients and setting forth the commission due to the plaintiff as
the
consequent
thereupon;
2.2.2pay
the plaintiff the compensation due on or before the last
working
day of
each month.
Continue
to accept new business that the plaintiff will seek to place with
the defendant from
time
to time.
2.2.4
Continue to permit the
plaintiff the access it enjoyed immediately prior to the
cancellation letter to the plaintiff's database
administered by
the contracted administrator of the scheme, so as to allow the
plaintiff to render service to the plaintiff's
clients without
interruption or hindrance.
3.
The defendant shall pay the
plaintiff's cost of suit, including the costs of two counsels, on the
attorney client
scale,
and further such costs shall include the reserved costs of the urgent
application brought by the plaintiff as applicant against
the
defendant as respondent in this court
under case number 11645/17.
ARGUMENTS
ADVANCED BY APPELLANT
8.
On behalf of the appellant, the
following arguments were
advanced.
Firstly, that the agreement
in casu
is a nominate
contract
of
mandate.
Counsel
further
submitted
that
the
phrases
1
1
Glopin
wishes
to
introduce
and
admit
new
members to Munimed"
in
clause 2.1,
11Munimed
agrees
to accept the appointment of Glopin"
in
clause
2.2
and
11Glopin
is
authorised"
in
clause
3.1 of
the
Broking
Agreement indicates that the agreement
in
casu
is a mandate
simpliciter.
He
further
submitted
that
clause
3.1 of the Broking Agreement authorizes
the Respondent to submit to the Applicant, on behalf of the
Respondent's clients, application
for the products for the benefit of
the Respondent's clients and to provide ongoing broker services.
Counsel argued, that this clause
must be read in conjunction with
clause 2.1 which stipulates that Glopin wishes to introduce and
admit
new
members
to
Keyhealth. Furthermore, it was submitted that the court
a
quo
conflated the issues and created
a defence which was at variance with the pleadings. Consequently, the
court
a quo
lost
sight of the fact that the
revocation
of
the
mandate on 31 March 2018 preceded the alleged repudiation
of February
2018. He further
submitted that the court
a
qou
erred in finding that the
revocation of 31 March 2018 was unlawful and invalid.
ARGUMENTS
ADVANCED
BY
THE
RESPONDENT
9.
Counsel for the Respondent, on the other
hand, submitted
that
the contractual relationship between the parties is not
an instance of a nominate contract of
mandate. According
to
counsel, the concept "mandate" is not applied with
precision. From the analysis of the Broking Agreement
in
casu
the
Appellant did not authorise the Respondent to enter into contracts on
its behalf, it merely endowed the Respondent with authority
to find
potential members for the appellant.
10.
Counsel for the Respondent further
submitted that clause 4 of the Broking Agreement does not allow for
the free termination of the
broking agreement by revocation of
the mandate contained therein. He
submitted that the duration of the Broking Agreement is dependent on
the accreditation of the Respondent
by the Council for Medical
Schemes (CMS) by virtue of clause 4.1.
11.
He further submitted that the Appellant
does not pay the Respondent
for
services rendered
by the Respondent
to
the
Appellant. The appellant is a neutral
payment functionary. The role of the Appellant is to pass fees
payable by the consumers, who
are its members to different FSPs,
inclusive
of
the Respondent.
12.
Counsel for the Respondent further
submitted that from
his
analysis of the Broking Agreement, the Appellant did not authorise
the Respondent to enter into contracts on its behalf. It did
not
confer upon the Respondent an authority
to enter into contracts that would bind
the Appellant.
ISSUE
ON APPEAL FOR DETERMINATION
13.
The issue for determination before us,
is whether clauses 2.1, 2.2 and 3.1 of the Broking Agreement is a
mandate simpliciter, or a
binding contract. In this regard the
following clauses require consideration.
14.
Clause 2.1 reads as follows:
"Glopin
wishes to introduce and admit new members
to Munimed and provide ongoing
services in relation
to
the
products of Munimed for the
benefit of
Glopin's
clients".
Clause
2.2 reads as follows:
"Munimed
has agreed to accept the appointment of Glopin, subject to the terms
and conditions of this agreement".
Clause
3.1
reads
as follows:
"Glopin
1s authorised, with
effect
from the
,
commencement
date, to submit
to
Munimed, on behalf of Glopin's
clients, applications for the product for the benefit of Glopin's
clients and provide ongoing broker
services".
ANALYSIS
15.
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4)
SA 593
(SCA)
para
18
Wallis
JA said:
'Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed, and the material known to those
responsible for its production. Where more than one
meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not subjective.
A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose
of the
document. Judges must be alert
to,
and guard against, the
temptation to substitute what they regard as reasonable, sensible, or
business-like for the words actually
used. To do so
in regard to a statute or
statutory instrument is to cross the divide between interpretation
and legislation; in a contractual context
it is to make a
contract for the parties other
than the one they in fact made. The 'inevitable point of departure is
the language of the provision
itself, read in context and having
regard to the purpose of the provision and the background to the
preparation and production
of
the
document.'
16.
In the matter of
Novartis
South Africa
(Pty)
Ltd
and Maphil Trading (Pty) Ltd
case
no. {20229/2014)
[2015] ZASCA 111(3 September 2015)
the Supreme Court
of Appeal discussed
the
issue of interpretation of contracts
and
held as follows:
"I
do not
understand
these
judgements
to
mean
that
interpretation is a
process
that
takes into account
only
the
objective meaning of the words (if that is ascertainable), and does
not have regard to the contract as a whole or the circumstances
in
which it was entered into. This court has consistently held, for
many decades, that the
interpretative process is one of ascertaining the intention of the
parties
-
what
they meant to achieve. And in doing that, the court must consider all
the circumstances surrounding the contract to determine
what their
intention was in concluding it. KPMG, in the passage cited, explains
that parol evidence is inadmissible to modify, vary
or add to the
written terms of the agreement, and that it is the role of the court,
and not witnesses, to interpret a document. It
adds, importantly,
that there is no real distinction between background circumstances,
and surrounding circumstances, and that a
court should always
consider the factual matrix in which the contract is concluded
-
the context
-
to determine the parties'
intention'.
17.
The unchallenged version of Mr Johannes
Jakobus Crawford, which is common cause, is that the Appellant
collected the premiums from
the
clients
and
paid
the portion thereof to the Respondent
for the services rendered by the latter to the clients shared by
both. These monies are fees
earned by the Respondent for the services
it
rendered
to its clients who are also clients of the Appellant and the
appellant is merely a neutral payment functionary. Consequently,
the
Respondent is not on the pay roll of the Appellant.
18.
It well established principle that the
parties' subsequent common conduct 1s admissible evidence in the
interpretation of a contract.
It is a demonstration of how the
parties conducted themselves in implementing the terms of the
contract.
19.
The Respondent on one hand, and Johannes
Jakobus Crafford and Retired Municipal Employee Association on the
other hand, entered into
an agreement. In terms of this
agreement the Respondent was
to provide broker services
to
the
Retired
Municipal Employees Association (RMEA) and
its members. That contract is an
agreement between the Respondent, Johannes Jacobus Crowford and the
Retired Municipal Employees Association
only. The Appellant is not
mentioned in this contract. In the premises, it is our view that the
Respondent, in its dealings with
the clients shared
by both parties, did not create an
illusion that it represented the Appellant. In our view, Counsel for
the Respondent was correct
in submitting that the Broking Agreement
did not authorise the Respondent to enter into contracts that are
binding on the
Appellant.
20.
Clause 4 of the Broking Agreement deals
with the issue of
duration
and termination
and it
reads
as
follows:
"This
agreement shall commence on 1 September 2004 and shall continue for a
period of accreditation of Glopin by the Council
for Medical Schemes
and may be terminated by either party hereto, pursuant to
the terms contained
on
the
agreement".
21.
In our view, clause 4 is unambiguous and
unequivocal. For as long as the Respondent is accredited by the
Council for Medical Schemes,
the Broking Agreement cannot be revoked
by either party. Mr Johannes Jakobus Crawford testified that the
Respondent was so accredited.
Counsel for the Respondent, correctly
submitted, that the life of the
agreement
in
casu
is linked to accreditation of
the Respondent
with
the Council
for
Medical Schemes.
22.
In our view, the Broking Agreement read
in its entire context, the following clauses thereof are apposite to
the determination of
the issues
in
casu.
23.
Clause 3.2 reads as follows:
â
Gl
o
pin1s
authority in terms
of
this
agreement is limited
to
what
is set
out
in
3.1 abo
ve1
without limiting
the
generality
of
the
a
fo
re
going1
Glopin
is
not appointed as agent or representative of Munimed
and is not authorised
to
or purport to:
3.2.1
Contract on behalf
of
or
in any way bind
Munimed;
3.2.2
Incur any debts or liability or
accept any
insurance
risk on Munimed's behalf".
24.
Clause
9.2
reads
as
follows:
"Glopin
agrees that Glopin shall be liable for all damages (including all
legal costs incurred, determined on the attorney and
own client
scale) suffered by Munimed owing
to
any breach
of
the
provisions of
this clause".
25.
Clause
12.1
reads
as
follows:
"Should
Munimed institute legal actions against Glopin for the recovery of
any money owing to it arising from the terms and conditions
of this
agreement, Glopin undertakes to pay the cost of such action on the
scale as
between
attorney and
own
client".
26.
A contract of mandate is a consensual
contract between
one
party, the mandator, and another, the mandatary, in terms of which
the mandatary undertakes to perform a mandate or commission
for the
mandator. This agreement
may
be revoked at any time by either party.
27.
A contract
of mandate is defined in LAWSA
as -
"A
contract of mandate is a consensual contract between one party, the
mandator, and another, the mandatory, in terms of which
the mandatory
undertakes to perform a mandate or commission for the mandator. In
essence the mandatory undertakes to do something
at the request or on
the instruction of the mandator.
Although
the mandate ,s usually performed gratuitously, provision may be made
for the payment of a reward or remuneration, Because
the word
"mandate" suggests an instruction or "command"
given by
the
mandator, the
impression
may be created
that a mandate is
constituted by the unilateral act of the mandator in
giving the mandate. Such impression is erroneous,
since the
contract of mandate requires consensus between the parties thereto.
There must hence be an agreement between the parties
brought about,
by an identifiable offer, in the form of a request that the mandate
in question be performed, and an acceptance of
that offer in the
sense of acceding to that
request, together with an
undertaking to carry out the mandate and to perform the various
duties imposed by it. For the rest, the
agreement must comply with
all the requirements for a valid and enforceable contract. A mandate
should be distinguished from an authority
or power of attorney. An
authority gives the authorised party the power to
perform juristic acts in the
name, or on behalf of the grantor
of the authority, while a mandate does not necessarily include any
power to represent the
mandator
legally."
28.
Having
regard
to
the conspectus
of
evidence
placed
before us,
we therefore, conclude that
the Broking
Agreement
in
casu
falls squarely within the
definition a contract. It is not a mandate simpliciter. It creates
obligations between the parties, it is
legally enforceable, and
cannot be terminated by either party unless clause 4 is triggered
which is not the case
in casu.
Clause
3.2 unequivocally states that the Respondent is not an agent of the
Appellant and the former, during
the
subsistence of the
agreement
acted accordingly. The Appellant does not remunerate the Respondent
for services rendered by the latter to the former.
29.
The court a quo reached a correct
decision on the issue. The argument that this Broking Agreement is a
mandate simpliciter is rejected,
and the appeal stands to
be dismissed.
COSTS
30.
Counsel for the Appellant submits that
the court a quo should have ordered the Respondent to pay costs of
the suit including costs
of two counsels. He further submits that the
court
a
quo
should
have
ordered
the
Appellant
to
pay
the reserved costs in respect of the
urgent application under case number 11645/17 instituted by the
Respondent, including costs of
two
counsels.
31.
Counsel for the Respondent submits that
the punitive costs order awarded by the court a quo should not be
interfered with.
32.
In our view, the court
a
quo
was correct in awarding the
punitive cost order given the manner in which the Appellant
approached the entire issue. The Plaintiff
cancelled the agreement
and this resulted in the Kollapen,
J.,
order and endeavoured to remedy the
situation by raising the revocation issue and the consequential
Fabricius,
J.,
order.
The conduct of the Appellant is deserving of a punitive cost order.
ORDER
1.
The
appeal
is dismissed;
2.
The appellant is to pay the costs,
including the costs consequent upon the employ of two counsel, on the
scale as between
attorney
and client.
MOGOTSI
ACTING
JUDGE
OF THE
GAUTENG
DIVISION
PRETORIA
Heard
on:
14
April
2021
For
the
Appellant:
A F Arnoldi SC
A Thompson
Instructed
by:
Kotze & Roux Attorneys In.
For
the
Respondent:
P F Louw SC
D Vetten
Instructed
by:
Edward S Classen & Associates
Date
of Judgment: