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[2021] ZAGPJHC 473
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Massbuild (Pty) Ltd v Sehloho and Others (35644/2018) [2021] ZAGPJHC 473 (29 September 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO:
35644/2018
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
DATE
29/09/2021
In
the matter between:
MASSBUILD
(PTY)
LTD
Plaintiff
and
ANDRIES
SEHLOHO
First Defendant
RUSSEL
STEAD
Second Defendant
TM
ECOGLOBAL ENTERPRISES (PTY) LTD
Third Defendant
JUDGMENT
ON APPLICATION FOR ABSOLUTION FROM THE
INSTANCE
MALUNGANA AJ
[1]
The plaintiff in this matter has instituted an action against the
three defendants for damages, wherein the plaintiff seeks
to hold the
first and second defendants liable for their delictual acts as well
as breach of their employment contracts with the
plaintiff. The claim
for damages against the third defendant is solely based on delict.
[2]
At the close of the plaintiff’s case, the second and third
defendants brought an application for absolution from the instance
in
terms of Rule 39(6) of the Uniform Rules of Court.
[3]
Before dealing with the merits of the application I need firstly to
sketch out the following relevant background. It is contended
on
behalf of the plaintiff that on 28 February 2017, at or near Midrand,
Gauteng, the first and second defendants purportedly acting
on behalf
of the plaintiff concluded a written agreement with Reatha
Acquisition and Management (Pty) Ltd (herein referred to as
“Reatha”). In terms of the said agreement the plaintiff
would supply material and provide repair and upgrading services
to
Reatha in respect of certain storm damaged schools in Limpopo at a
fee of R11,442,180.00. A copy of the agreement is shown in
annexure
‘POC4.1” to the particulars of claim.
[4]
Pursuant to the conclusion of the above contract Reatha transferred
an amount of R5,018,474.69 into the plaintiff’s bank
account.
It is further contended that during March 2017, the first defendant
purported to conclude a written agreement on behalf
of the plaintiff
with the third defendant, in terms of which the plaintiff would
sub-contract its obligations in terms of the Reatha
Limpopo Contract
to the third defendant.
[5]
According to the plaintiff, in concluding the Reatha Limpopo
Contract, the first and second defendants lacked the requisite
authority, and therefore acted in breach of their respective
employment contracts. Furthermore the defendants lacked the necessary
authority to conclude the sub-contract with the third defendant
[1]
.
[6]
Essentially the plaintiff contends in paragraphs 11.2.2.1-11.2.2.2 of
its particulars of claim that the first and second defendants
failed
or rather abused the One-Time Vendor process by:
“
11.2.2.1 procuring
approval of and or approving the Third Defendant as one-time vendor
for the provision of services as opposed
to the provision of
materials; and/or
11.2.2.2 procuring the
approval and /or approving the registration of the Third Defendant as
one-time vendor when one or more of
the directors of the Third
Defendant is or are family members of the First Defendant.”
[7]
In paragraph 11.2.3 the plaintiff alleges that the first, and or the
second defendant procured payments by the plaintiff to
the third
defendant in the absence of authorised agreement and/or compliance
with the rules, regulations and policies of the plaintiff
in the
absence of the third defendant rendering the services in terms of the
alleged sub-contract.
[8]
I now turn to the merits of the application before me. When
absolution from the instance is sought at the close of the
plaintiff’s
case, the test to be applied is not whether the
evidence led by the plaintiff established what would finally be
required to be
established, but rather whether there is evidence upon
which a Court, applying its mind reasonably to such evidence, could
or might
(not should or ought to) find for the plaintiff.
[9]
It is the second defendant’s case that the plaintiff has failed
to produce a
prima
facie
evidence
concerning each of the elements required for a claim based on breach
of contract. The second defendant further contends
that the plaintiff
failed to prove damages it allegedly suffered that naturally flow
from either Reatha or his employment contract
with the plaintiff.
[2]
[10]
On Reatha contract, counsel for the second defendant submitted that
via an express decision taken by the plaintiff to uphold
the Reatha
contract, for the express purpose of not losing Reatha as a customer,
and pursuant to an audit conducted by Visagie
in terms of which the
respondent proposed a recovery contract plan, which effectively
amounted to settlement of Reatha contract,
the plaintiff had ratified
the Reatha contract.
[11]
As regards the breach premised on the employment contract, counsel
for the defendant sought to argue that plaintiff’s
conclusion
of the ‘full and final’ settlements with the second
defendant and Reatha in respect of the execution of
Reatha contract
bear significance of respondent’s condone-ment and implicit
acceptance of the Reatha contract.
[3]
[12]
The case for the third defendant on the other hand was that the
plaintiff had not made out a
prima facie
proof of its
delictual claim for damages, accordingly absolution from instance in
terms of rule 39(6) should be granted with costs.
In particular the
third defendant argues that no evidence has been adduced to prove
that the plaintiff’s allegation that
the third defendant had
devised some scheme in the signing of the Reatha Contract.
[13]
According to the third defendant there is evidence that the latter
had made quotations to the plaintiff which were accepted,
and no
evidence was led to the effect that third defendant ought to have
known or expected to have known that people who accepted
the quotes
and issued purchase orders had no authority to do so.
[4]
[14]
The following submissions from the third defendant’s heads of
argument deserve consideration. In argument, counsel for
the third
submitted under paragraph 22 that:
“
22 It should be
indicated that the claim by the Plaintiff against the Third defendant
is not for the manner in which its director
Ms Nhlapo conducted its
affairs, but for a wrongful conduct in its dealings with the
Plaintiff’s through its representatives.
There is no claim
against Ms Nhlapo on the embezzlement of the Third Respondent’s
funds, and /or against the manner in which
she conducted the business
of the Third Defendant that led to the Plaintiff suffering any
damages. Therefore no evidence was led
showing any relevance for
those bank account statements to the Plaintiff’s case.”
[15]
The plaintiff’s response to the defendants submissions is
briefly as follows: Its causes of action arise from the scheme
which
was devised by /and or implemented by all of the first, second and
third defendants, acting individually or together. According
to the
plaintiff evidence had been led to support the critical elements
which were designed to cause the respondent to suffer the
damages
claimed in the present proceedings. , the respondent submits that
evidence has been adduced upon which this court could
or might find
for the respondent. Over and above this a case where absolution from
the instance should not be granted in that the
applicants are in
possession of the evidence against one another which is relevant for
these proceedings.
[16]
On the Reatha Contract, the plaintiff referred on the evidence of
Anthony Riley, who testified that it was not the business
of the
plaintiff to provide construction, repair or project management
services. The plaintiff’s witnesses had testified
that the
business of the respondent is that of material supply.
[5]
It is the evidence of Mr. Riley that both the first and second
defendants were not authorized to conclude the Reatha Contract.
[17]
The plaintiff further relied on the evidence of Daphine Meiring for
Reatha, who testified that the second defendant’s
signature as
Acting Branch Manager gave them peace of mind in concluding the
contract in that the first defendant was just a ‘key
account
manager’, whose role does not carry much weight. According to
the plaintiff the second respondent played a critical
role in
providing guarantees and assurances to Reatha. In support of this
argument she pointed out the letter signed by the first
applicant on
the 28 of February 2017.
[6]
[18]
Regarding the selection of third defendant) by the first defendant as
a contractor, counsel for the respondent had this to
say, inter alia:
“
36
The first defendant selected the third defendant in circumstances
where, as the director of the third defendant, Nhlapo testified:
36.1 She had formed
the third defendant after terminating her employment with Anglo Coal
in Kriel where she had been an underground
operator. The registered
addresses of the third defendant was her mother’s house in
Kriel. The second director of the third
defendant had been her sister
who was at school at the time that the third defendant had been
formed.
36.2 The first
defendant was known to her because she was her brother -in- law. She
is married to his brother. There was accordingly
a direct familial
relationship between the first defendant and the third defendant.
36.3 The third
defendant had provided virtually none of the extensive services that
were listed in its profile/brochure and
which were represented as
services which were offered the defendant. The third defendant had in
fact only supplied “more
than 20 barricades” and five or
six hoses” / lay flats to Anglo Coal.
36.4…
36.5 The third
defendant had never (1) previously performed any construction work;
(2) engaged a sub-contractor to perform
construction work; or (3)
contracted any employees who had carried out construction work.
36.6 Ms Nhlapo’s
only experience of construction work was the renovation of houses
owned by her in her personal capacity.
36.7 The third
defendant only registered with the Construction Industry Development
Board (CIDB”) on 08 March 2017 (after
the conclusion of the
Reatha Contract) and then only registered at the very lowest level
namely Grade 1GBPE and 1CEPE.Meiring testified
that Reatha required a
contractor with much higher CIBD rating because this was a
requirement of the Development Bank of South
Africa who had awarded
the contract to Reatha.
36.8 The third
defendant was contracted by the first defendant (purportedly on
behalf of the plaintiff) to supply building
materials despite the
fact that the plaintiff is itself the supplier of building materials
(something which the third defendant
accepts to be a common cause).”
[19]
Mr Visagie testified at length that the amounts quoted by the third
defendant were far in excess of the amounts contained in
the bill of
quantities issued by Reatha in respect of the Limpopo schools
project.
[7]
[20]
It was Ms Hlapo’s evidence that she would receive a purchase
order by email from the first defendant after she had submitted
a
quotation from him, prepare an invoice and delivery note which would
submit to the first defendant. The total sets of quotations,
invoices
and delivery notes issued by the third defendant amount to
R4,927,016.58.
[8]
[21]
The delivery notes were signed by the first defendant on the
authority of the second defendant.
[9]
[22]
The progress reports of Kayamba corroborated by the Meiring, is to
the effect that the materials listed in the delivery notes
had not
been delivered by the time that the first defendant signed the
delivery notes. According to Mohamed Bodait’s testimony
the
delivery notes were signed for the sole purpose of the respondent
making payment.
[10]
[23]
It was submitted that the second defendant used his authority as an
acting manager to request the plaintiff’s merchandise
department to approve the supply of certain products and services by
the third defendant.
[11]
[24]
It is not necessary for me do to go through the facts in greater
detail. Immediately I proceed to consider the legal principles
applicable in this matter.
Applicable
legal principles and evaluation
[25]
It is trite that the test to be applied by a court when absolution is
sought at the end of the plaintiff’s case is whether
there is
evidence upon which a reasonable person might (not should) find for
the plaintiff.
[12]
[26]
In
Gordon Lloyd Page & Associates v Rivera and Another
2001
(1) SA 88
(SCA) the Court held that:
‘
The test for
absolution to be applied by a trial court at the end close of a
plaintiff’s case was formulated in
Claude Neon Lights (SA)
Ltd v Daniel
1976 (4) SA 403
(A) at 409 G-H in these terms:
“…
(W) hen
absolution from instance is sought at the close of plaintiff’s
case, the test to be applied is not whether the evidence
led by the
plaintiff establishes what would finally be required to be
established, but whether there is evidence upon which a Court,
applying its mind reasonably to such evidence, could or might (not
should, nor ought to) find for the plaintiff.”
[27]
The test for legal causation based on the breach of contract is
succinctly explained by Corbet CJ in
International Shipping Co
(Pty) Ltd v Bentley
[1990] 1 All SA 498
,
Vision Projects (Pty)
Ltd v Cooper Conroy Bell & Richards Inc
[1998] ZASCA 63
;
[1998] 4 All SA 281.
If it cannot be shown that the loss would not have occurred but for
the breach, the plaintiff’s claim fails. If the plaintiff’s
claim passes the ‘
but- for’ test,
Corbet CJ
explains:
“
The second
inquiry then arises,
viz
whether the wrongful act [in a
contract case, the breach of the contract] is linked sufficiently
closely or directly to the loss
for legal liability to ensure or
whether, as is said, the loss is too remote. This is basically a
juridical problem in the solution
of which consideration of policy
play a part. This is sometimes called “legal causation.”
[28]
If at the end of the plaintiff’s case there is evidence upon
which a court, applying its mind reasonably, could hold
that it had
been established that either the one defendant or the other defendant
or both of them were legally liable, and is uncertain
as to which of
the alternatives claims was the correct one, the court should not
grant absolution at the suit of either defendant.
[13]
[29]
In the case of doubt as to what a reasonable court ‘might’
do, the court should lean on the side of allowing the
case to
proceed, for the plaintiff should not be lightly deprived of his
remedy without the evidence of the defendant being heard.
A defendant
who might be afraid to go into the witness -box should not be
permitted to shelter behind the procedure of absolution
from
instance.
[14]
[30]
Returning now to the facts of this case. The respondent’s
contractual claim is based on the allegation that the first
and
second defendants have breached their employment contracts by
entering into an agreement with Reatha without the requisite
authority. Evidently it is not disputed by the second and the first
defendant did not have the authority to conclude the Reatha
contract.
It emerged from the evidence adduced that the first defendant had
procured the services of the third defendant to provide
the services
stipulated in the Reatha’s Contract without the necessary
authority to do so. There is evidence for the plaintiff
that the
second defendant had acted wrongly by procuring the registration of
the third defendant as a one -time vendor’,
and instructing the
first defendant to sign the delivery notes. There is evidence that
the first defendant was authorised by the
second defendant to sign
the relevant approval in terms of the one -time vendor system as well
as the delivery notes.
[31]
One cannot turn a blind eye to Mr. Visagie’s evidence which
reveals that he conducted investigation on the Reatha project,
and
found that in most cases the work that had been invoiced had not been
done, and the priced materials and work were quite excessive
and not
in accordance with the bill of quantities. Bearing in mind that the
plaintiff’s delictual claim against the third
defendant is
based on the allegations that it manufactured quotations, invoices
and delivery notes on the instructions of the first
defendant, it is
difficult for the court find bases upon which it can absolve the
third defendant from instance of this case. There
is evidence that
the third would issue invoices against the delivery notes, and
according to Kayamba the materials which were listed
in those
delivery notes were not delivered at the time of signing. Visagie
testified that the value of work done and materials
delivered on site
where the project was being conducted was far less than the plaintiff
had paid out in terms of the invoices submitted
by the third
defendant. Consequently the respondent had to refund R4,927,750.21,
which amount the plaintiff claims the defendants
are jointly and
severally liable to the plaintiff.
[32]
Where one party is possessed of knowledge the other party does not
have, lesser evidence is required of the party not having
the
knowledge to establish a
prima facie
case. See
Union
Government (Minister of Railways) v Sykes
1913 AD at 173-4.
Colman AJ was confronted with a similar kind of situation in
Putter
v Provincial Insurance
referred to
supra.
He summarised
his decision to grant absolution from instance by referring to the
English case of
Hummerstone and Another
[1921] 2 KB 664
and
summed up the effect of his decision as follows:
“
The action there,
like the present action, was one under the Rule of Court entitling
the plaintiff, who was uncertain which of the
two persons was
responsible for damage sustained by him, to sue them both in the
alternative, and in that case the Court was concerned
with an
application by one defendant for absolution from the instance at the
close of the plaintiff’s case. It was held that
as long as
there was some evidence indicating negligence on the part of one of
the defendants neither of them should be dismissed
from the case but
the matter be decided on the evidence as a whole, namely all the
evidence that might be placed before the Court
by all the parties.”
[33]
In light of the facts of this case, it seems to me that the
Hummerstone’s
case is applicable to the current case.
The three defendants
in casu
are being sued together in the
same suit, and from the evidence placed before either of the parties
possesses the so called knowledge
the other party does not have.
Evidence reveals that the second and first defendants cooperated with
each other to ensure that
the Reatha contract is signed despite their
apparent lack of authority to sign such a contract. The other facts
emerging from the
evidence, is that proper procedure leading up to
the conclusion of the Reatha Contract and the sub-contract with the
third defendant
were not adhered hereto in contravention of the
plaintiff’s standard rules and regulations, policies and
procedures. As per
Visagie ‘s testimony, uncertified delivery
notes were issued and monies were paid to the third defendant for
work not actual
done or material being supplied. Consequently the
respondent had to refund an amount of R4, 927, 750.21 to Reatha. To
my mind,
this evidence leads one to conclude that there is at least
prima facie
case for the defendants to answer.
[34]
Having heard considerable submissions from counsels, and considered
the relevant authorities referred to by all the parties
involved in
the application, I am of the considered view that there is evidence
on which a reasonable court might give judgment
in favour of the
plaintiff.
[35]
The following order is accordingly made:
(1)
The application for absolution from the instance by the second and
third defendants is refused.
(2)
The second and third defendants are to pay the costs occasioned by
the application.
P
H MALUNGANA
Acting
Judge of the Gauteng Division, Johannesburg
APPEARANCES
Counsel
for the Plaintiff:
Adv. P Bosman
Instructed
by:
Edward Sonnenbergs Inc
For
the Second Defendant:
Adv. Francious Slabbert
Instructed
by:
David Mey and Partners
For
the Third Defendant:
Adv. G. Mashimbyi
Instructed
by:
Makobe & Associates
[1]
Particulars
of Claim para.11. Case- lines 082-15
[2]
Second Defendant’
s
Heads of Argument, para 15-16, Case- lines 054-8
[3]
Second
Defendant’s Heads of argument, para 27, Case- lines 054-11
[4]
Third Defendant’s Heads of argument, para.18, Case-lines
054-108
[5]
Plaintiff’s
Heads of Argument, para.22 Case-lines 054-250
[6]
Plaintiff’s
Heads of argument, para.33 Case lines 054-253
[7]
Plaintiff’s
Heads of Argument, para 054-260
[8]
Plaintiff’s
Heads of Argument, para 51-52, Case-lines 054-260
[9]
Plaintiff’s
Heads of Argument, para 56, Case-lines 054-261
[10]
Plaintiff’s
Heads of Argument, para 60, Case lines 054 262
[11]
Plaintiff’s
Heads of Argument, para 74, Case lines 054-266
[12]
Gascoyne
v Paul and Hunter,
1917 T.P.D, 170
at para.173, Ruto Flour Mills
(Pty) Ltd v Adelson (2), 1958 (4) SA 307 (T).
[13]
Mazibuko
v Santam Insurance Co Ltd and Another
1982 (3) SA 125
(A), Putter v
Provincial Insurance Co Ltd and Another 1963 (4) SA 771 (W).
[14]
Supreme
Services (1969) (Pvt) Ltd v Fox and Goodridge (Pvt) Ltd
1971 (4) SA
90
(RA) at 93H, and 93G