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[2019] ZAGPPHC 155
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Concorde travel (Pty) Ltd and Another v Travel Today (Pty) Ltd (A647/16, 11780/ 2011) [2019] ZAGPPHC 155 (23 May 2019)
IN THE NORTH GAUTENG HIGH
COURT, PRETORIA
[REPUBLIC OF SOUTH AFRICA]
CASE
NUMBER: A647/16
Court
a quo
(GP):11780/ 2011
23/5/2019
In
the matter between:
CONCORDE
TRAVEL (PTY) LTD
FIRST APPELLANT
REGISTRED
NO: 1999/ 005902/07)
BIDTRAVEL
(PTY) LTD
SECOND APPELLANT
And
TRAVEL
TODAY (PTY) LTD
RESPONDENT
JUDGMENT
MAVUNDLA,
J;
[1]
The appellant appeals to this Court, with the leave of the court
a
quo,
against the whole of the
judgment and order issued with costs by Sikhwari AJ on the 1 April
2016.
[2]
The issue to be determined in this appeal is whether:
2.1
The order is appealable;
2.2
As a result of the franchise agreement, there existed contractual
relationships to
which the plaintiff was a party resulting in the
second defendant being in law obliged to render a statement of
account to the
plaintiff .
[3]
For purposes of ease and convenience the parties shall be referred to
as in their respective names and or as cited in the court a
quo,
bearing in mind that
in
casu
the first and second appellant
were the first and second defendants respectively and the respondent
the plaintiff .
[4]
It is common cause that on 4 August 1999 Travel Today (Pty) Ltd and
Concorde Travel
(Pty) Ltd concluded what is effectively a franchise
agreement which permitted Travel Today (Pty) Ltd to operate the
business of
a travel agent as part of the Concorde Group (the
franchise agreement).
[5]
Although Concorde Travel (Pty) Ltd was deregistered on 2 April 2004,
the agreement
defines the principal as the first defendant. The
defendants accepted that the second defendant was the party to the
agreement
and that it would be the liable party in so far as the
plaintiff proved its claim against the first and or second defendant.
[6]
The franchise agreement effectively permitted the plaintiff to
operate the business
of travel agent as part of the Concorde Group
(the franchise agreement). The franchise agreement provided that the
plaintiff would
be entitled to participate in the payment of defined
overrides, pro rata to its turnover, for certain products. The
franchise agreement
also provided for the use by the plaintiff of the
Galileo Southern Africa (Pty) Ltd (Galileo) computer system as the
reservation
system used by the second defendant.
[7]
In the court
a quo
the
plaintiff sought an order that the defendants render it an account
for the period 1 April 2006 to 3 March 2010 setting out the
amounts
allegedly paid in respect of the overrides by Galileo to the Concorde
Group of companies and or the second defendant for
the use of the
Galileo computer system.
[8]
The defendants denied that it was a term of the franchise agreement
that
the second defendant would make payment to the plaintiff for the
use by the plaintiff of Galileo's computer system. It was also
denied
that there was an agreement concluded between the second defendant
and Galileo for the payment of overrides and, accordingly,
no
payments were in fact made by Galileo to the second defendant in
respect of overrides. Further, the defendants alleged that
the
payments made by Galileo to the second defendant were made as
technology subsidies, which subsides did not qualify as overrides
as
defined in the franchise agreement. As a result, the defendants
sought an order that the plaintiff's claim be dismissed, with
costs.
[9]
In respect of the question of appeal ability of the court's decision,
it was submitted, quite correctly so, on behalf of the appellants
that the court
a quo
pronounced
finally upon the legal relationship between the parties and the
obligation on the part of the first defendant and the
second
defendant to the plaintiff. In the matter of
Marsay
v Dilley
[1]
the Appeal Court
per
Corbett
CJ held that the general applicable principle in regard to appeal
ability of the court's decision is that where the trial
court has
under competent procedure (such as an application under Rule 33(4))
made an order which has the effect of being a final
decision (i.e.
one which cannot be corrected or altered or set aside by the trial
Judge at a later stage of the trial and the decision
is definitive of
the rights of the parties and has the effect of disposing of a
substantial portion of the relief claimed by the
plaintiff in the
main action, then the order is a judgment (as understood in section
20(1) of the Supreme Court Act 59 of 1959
now
section 16(1)
of the
Superior Court's Act 10 of 2013
) and is appealable, despite the fact
that the main action has not been concluded.
Vide
also in this regard a recent and as
yet unreported judgment in the matter of
SA
Eagle Versekeringsmaatskappy Bpk v Harford
[2]
.
[10] The court
a
quo,
tersely put, essentially
ordered the defendants to,
inter
alia,
account to the plaintiff,
which order is definitive, although not dispositive of all the
issues. It was conceded by the defendants,
that the order will lead
to a just and prompt resolution of the real issues between the
parties as envisaged in section 17(1) (c)
of the Superior Courts Act.
The parties are
ad idem
that
the order is appealable and therefore the only remaining issue is
whether as the result of the franchise agreement, there existed
contractual relationships to which the plaintiff was a party
resulting in the second defendant being in law obliged to render a
statement of account to the plaintiff.
[11] At the
hearing the plaintiff called two witness and the defendants called
one.
11.1 the
plaintiff's first witness, Mr Clive Heighway
(Heighway), had been
employed by Galileo over the period 2006 until the beginning of 2010
as a key accounting manager. During his
evidence he provided a bundle
of documents in response to a
subpoena
duces tecum,
which was marked as
Exhibit A.
11.2
He testified that Galileo, when it decided to
move into a platform
independent mode, then instead of supplying technology, which meant
software line connectivity and software
application, which is quite
expensive, negotiated that the customer could be supplied with a
revenue based or whatever they had
in their agreement now replaced
technology. Whatever money would be paid on the basis of productivity
measured in sectors. It was
to supply them with the actual funds. In
total during the period 2006 to 2010, Galileo paid to Bidtravel an
amount of R118 million
.
11.3
the plaintiff's second wit ness, Mrs Magda Pretorius
(Pretorius), is
a shareholder and director of the plaintiff.
11.4
The defendant's witness, Mr Dawood Tangari (Tangari)
was employed by
the second defendant from approximately 1993 to 2007 as the financial
accountant; IT manager; IT director and managing
direct or. He is
currently the IT director of Bidtravel Group.
11.5
Tangari testified that "in the context of
override to product s,
leaving aside the Galileo subsidy for the time being, the plaintiff
received the payments as it was entitled
to from Concorde... As would
be standard practice they would have paid all their franchisees
according to this. The benefit would
assume to individual .... Such
as South African Airways is; that payment of override commissions is
an incentive to the travel
agent to buy their product... so that
everybody made money out of it. He was substantially in agreement
with the summary of Heighway.
11.6
According to Tangari, the subsidies paid by Galileo
were not limited
to technological support, but there was also an element of bonus.
When there was a change from Turnkey to platform
independent, the
second defendant rolled out computer software and hard ware to its
subsidieries, contending that the plaintiff
and other Concorde
franchisees were not subsidiaries and were not using any proprietary
systems of the second defendant. However,
the plaintiff and Concorde
franchises and others assisted in generating income for the second
defendant.
[12]
It was submitted on behalf of the defendants that in order to succeed
with a claim of debatement,
the plaintiff had to allege and prove
that it has either a contractual or statutory right thereto and that
the other party stands
in a fiduciary relationship to it, entitling
it to such a statement and debatement and referred the court to the
following decisions:
Rectifier and
Communication Systems (Pty) Ltd B Harrison and Others
[3]
; Absa Bank Bpk v Janse Van
Rensburg.
[4]
[13]
In its pleadings the plaintiff's case was that as a result of the
franchise agreement, the Bidtravell
Galileo agreement, there existed
contractual relationships to which the plaintiff was a party
resulting in the second defendant
being entitled to participate in
the expense subsidies. obliged to render to it a statement of
account.
It was
also
Pretorius's evidence that those agreements were the source of the
plaintiff's entitlement to participate in the expense subsidies
.
[14]
The Court
a quo
found
that the fact that the relationship between the plaintiff and the
second defendant is contractual does not oust the fiduciary
nature of
the relationship. It was submitted on behalf of the defendants that
this conclusion by the trial court is correct but
effectively in
context amounts to the fact that the plaintiff had not established a
contractual basis for the second defendant
to render an account to
the plaintiff. The plaintiff did not plead that a fiduciary
relationship existed between it and the second
defendant which
obliged the latter to render an account to the plaintiff. Although
there are cases in which a party may expand
the issue on pleadings by
manner in which they conduct the proceedings, or by way of amendment,
in casu,
the
amendment was sought only during the application for leave to appeal,
and same has not been formally brought nor granted. It
is for the
parties to identify the issue of dispute and for the court to
determine that dispute; in this regard relying in the
matter of
Fischer and Another v Ramahlele and
Others
[5]
;
Minister of Justice and Constitutional Development and Others v
Southern Africa Litigation Centre and Others
[6]
.
[15]
It was further submitted that in the absence of any contractual basis
for an accounting by the
second defendant , the court
a
quo
erred in finding that "there
existed a fiduciary relationship between it and the plaintiff based
on trust. It has all the material
elements of fiduciary
relationship."
[16]
It was further submitted that the plaintiff failed to prove that a
fiduciary relationship existed
between it and the second defendant
that the second defendant stood in a position of confidence involving
a duty to protect the
interest of the plaintiff.
[17]
It was further contended on behalf of the defendants that it was not
available to the court
a quo
to
determine the plaintiff's entitlement to a statement and debatement
of the account on the basis of a so called fiduciary relationship
in
circumstances in which that legal entitlement was neither alleged nor
proven.
[18]
It was further submitted on behalf of the defendants, relying on the
authority of
McDonald
v Young
[7]
that the plaintiff had
itself negotiated for segment discount, therefore the plaintiff could
not rely on the Bidtravel /Galileo
agreement in support of override
commission, particularly regard being had to the fact that these
segments would not result in
any payment being made by Galileo to the
plaintiff, but rather in reduction of the plaintiff's lease fees for
the Galileo software.
[19]
It was further submitted that the defendants were not parties to the
plaintiff/ Galileo agreement and
derived no right or obligations
therefore. The agreement was therefore of no assistance to the
plaintiff in proving its claim,
so it was contended for the
defendants. Neither the franchise agreement nor the plaintiff/Galileo
agreement contained an express
term that obliged the second defendant
to make payment to the plaintiff for the use by the plaintiff of the
Galileo computer system;
nor to render an account to the plaintiff
for anything other than the actual overrides/ products expressly
defined in the franchise.
[20]
It was further submitted that whereas in the particulars of claim the
plaintiff pleaded that the second
defendant had acted as an agent for
and on behalf of,
inter
alia
the
plaintiff when concluding the Bidtravel / Galileo agreement and
receiving the overrides, the resultant allegations being that
the
second defendant was obliged to render an account to the plaintiff
for the amounts the second defendant received from Galileo
pertaining
to the overrides from Galileo:
20.1 the
Bidtravel / Galileo agreement did not include the Concorde Group or
the second defendant,
the plaintiff sought to circumvent this
difficulty by relying on the Bidtravel / Galileo agreement, by
relying on the document
headed "Quotation-Hardware and Software"
which form the integral part of the agreement number Bid/069 which
identified
the Bidtravel / Galileo agreement;
20.2 The hardware
and software quotation is dated 27 July 2006 and recorded an
agreement between Galileo
and Bidtravel (the latter purporting to be
acting on behalf of the Concorde Franchisees contract to Concorde-one
of which is the
plaintiff defined with Galileo Code 3RI) for service
to be installed and rendered at the various branches sites from 1
April 2006.
[21]
Without traversing the rest of the points raised by the defendants,
it suffices to state
that they submitted that the decision of the
court
a quo
stands
to be set aside and the plaintiff's claim be dismissed with costs.
[22] On
behalf of the plaintiff it was submitted that it is not in dispute
that the plaintiff
through its efforts generated an income to the
second defendant. Other entities (not subsidiaries of the second
defendant) have
also through their efforts generated an income to the
second defendant. Absent the plaintiff' s efforts the second
defendant would
receive less. The reading of the two agreements in
question made it clear that the plaintiff is entitled to receive
payment and,
thus an account.
[23] The
agreement was the result of Galileo (a division of South African
Airways) bringing
about a new dispensation in terms of which it would
financially assist the travel agency. Galileo would no more provide a
so
called "turnkey solution" to the industry in terms
of which computer hard-and software and connectivity were made
available
at the expense of Galileo. The new dispensation (called
"Platform independent") (regulated by the July 2008
agreement
in respect of second defendant) would put money into the
pocket of various entities within the travel agency industry. There
were
two provisos laid down by Galileo, i.e. that agents should
utilise the Galileo Booking System (not e.g. Amadeus System) and also
provided it brings enough business. The threshold was laid down in
that regard.
[24] The
Court
a quo,
held
that:
"[11] the
plaintiff relied on the existence of a contract between itself and
the second
defendant, the fact that the relationship between the
plaintiff and the second defendant is contractual does not oust the
fiduciary
nature of the relationship. Each case is determined on its
own merit."
[25] It is
now trite that a court of appeal is reluctant to upset the findings
of the trial
court, which is in a better position to estimate what is
probable or improbable,
inter alia.
The court of appeal will only
reverse the trial court's findings where the reasons for its findings
are unsatisfactory;
vide Rex v
Dhlumayo and Another.
[8]
[26] I must
hasten to point out that clause 12 of the agreement between first
defendant and
plaintiff dated 29 July 1999, attached as annexure A to
the pleadings provides,
inter alia
that:
"subject to the provisions of
clause 12.2 and 12.3 the associate shall be entitled to participate
in respect of certain products
which such overrides relate to pro
rata to the associate's turnover in respect of such products if-
12.1.1 the
associate meets its target in respect of such products;
12.1.2 the
third parties who undertake to pay overrides to the ·concorde
group of
companies in respect of such product in certain
circumstances, agree thereto;
12.1.3 The
principal shall be entitled, at any time, to terminate the
association's participation
in all or any overrides if the
associates' turnover in respect of the products to which such
overrides relate or the associate's
other acts or omissions are such
as to prejudice the payment of any overrides, or the amount of
payment of any override, to the
Concorde group of companies. In the
event of such termination, the associate shall not be entitled to any
compensation whatsoever."
[27]
In my view, clause 12.3, implicitly mean that the associate's
turnover in respect of the
products to which such overrides relate
should be such that they enhance positively the payment of overrides
to the Concorde Group
of companies. Put differently, the associate's
turnover must reach a certain minimum threshold to enable payment of
any overrides
to the Group of companies. This interpretation accords
with the contextual interpretation as advocated in the matter of
Lis
v Jungers
[9]
,
and correctly relied upon by the
court
a quo
namely
that : "a legitimate field of interpretation should not be
restricted as a
result of excessive peering at the language to be
interpreted without sufficient attention to the contextual scene."
Vide Jago v Donges NO and
Another.
[10]
[28] I am mindful
of the contention of the defendants that in its pleadings, the
plaintiff did not
allege:
(a)
his
right to receive an account, and that the basis of such right,
whether by contract or by fiduciary relationship;
(b)
any
contractual terms or circumstances having a bearing on the account
sought;
(c)
the
defendant's failure to render an account;
vide
Field and Another NNO v Compuserve (Pty) Ltd
1991
(4) SA 490
(ZHC) at 4958-C where Doyle and Another v Fleet Motors P.E
(Pty) Ltd
1971 (3) SA 760
(A) -is cited. The court
a
quo
was very much alive to the
principle referred to herein above.
[29] I am
inclined to agree with the submission made on behalf of the plaintiff
in casu,
relying
on the decision of
Doyle
&
Another v Fleet Motors PE (Pty)
Ltd,
[11]
inter alia,
that
the basis of a right to an account whether by contract or a fiduciary
relationship, there are other basis as well and also
that: "In
general the Court should not be bound to a rigid procedure, but
should enjoy such measure of flexibility as practical
justice may
require." In my view, the following is apposite in this matter,
as was held in the matter of
Brown
&
Others v Yebba CC t/a Remax
Tricolor
[12]
that:
"In the instant case it seems
to me that practical justice does require that the debatement of the
account and its sufficiency
should take place at one hearing."
[30] In the
matter of
ReLlams (Pty) Ltd v James
Brown
&
Hamer
Ltd
[13]
the court held that: "The plaintiff's cause of action is founded
on a contract of agency with the defendant whereby a fiduciary
relationship between them came about....." "That a
fiduciary relationship exist between a principal and agent leaves
no
doubt" (at 561A) and at 562A:" Their relationship is
founded on a fiduciary relationship goes beyond the point where
the
plaintiff simply has to accept a correct statement submitted to it by
the defendant; to hold otherwise would have the effect
of vesting the
defendant with a sole right to· decide which transaction
attracted commission and which not and of making
it judge in its own
case. The plaintiff as a party to a fiduciary agreement is entitled
to know what transactions had taken place
and the circumstances
surrounding these transactions to decide whether or not to persist in
its claim for an account and where
necessary to assist it in
debatement."
[31]
In
casu,
the relationship between the
plaintiff and the defendants is premised on a franchise agreement. In
my view, such agreements by their
very nature are, in a way, not
dissimilar to those of a principal and an agent. The franchisee
although it undertakes to conduct
its business on the basis of
franchise agreement commodity, it is bound by the principle of
fiduciary duty as it is beholden to
the franchisor. The contrary also
attains in respect of the franchisor to the franchisee. I am in
agreement with the authority
in the matter of
Rellams
(supra)
and accordingly, find that
the defendants had a fiduciary duty to account to the plaintiff, who
was an associate, thus entitled
to know, belated so after the
defendants initially tried to frustrate and refused to disclose
whatever payments that were made
by the Concorde group to all the
associates. It is irrelevant that a fiduciary relationship was not
specifically pleaded, but because
of the nature of contractual
relationship of the parties, the defendants were obliged to account
to the plaintiff.
[32]
The Court
a quo,
in
my view, quite correctly held that the plaintiff joined the Concorde
group of Companies for the sole purposes of making profit
and
benefitting from the advantage of being part of a chain of similar
travel agency and to access goodwill and experts. The second
defendant also entered into a contract and with Galileo for the sole
purpose of making profit for both companies; being the Concorde
of
Companies and Galileo . Galileo had great interest in the effective
running if the travel agencies using its technology and
the agencies
were also benefitting from the subsidy in the software technology for
the sole purpose of rendering effective and
profit-making travel
agency business. This relationship of Galileo and the second
defendant was intended to achieve the same business
objective.
[33]
Accordingly, the findings of the court
a
quo,
cannot be faulted nor
disturbed. In the premises the appeal stands to be dismissed.
[34]
It is trite that costs ordinarily follow the result . Both parties
employed the services of senior
counsel, befittingly so regard being
had to the complexity of the issues
in
casu,
as well as the magnitude of
the potential quantum claim the plaintiff would have depending on the
outcome of the debatement.
[35]
In the result the following order is issued:
1
That the appeal is dismissed;
2.
That the defendants are jointly and severally, the one paying the
other to be
absolved, ordered to pay the costs of the appeal, such
costs to include the costs of the employment of two counsel and or
senior
counsel where applicable.
N.M.
MAVUNDLA
JUDGE
OF THE HIGH COURT
I
agree
C.P.
RABIE J
JUDGE
OF THE HIGH COURT
I
agree
M.
J. MOSOPA
ACTING
JUDGE OF THE HIGH COURT
DATE
OF JUDGMENT: 23 / 05 /2019
APPELLANT'S
ADV : ADV. A.R.G. MUNDELL SC with ADV CL ROBERTSON
INSTRUCTED
BY : GLN MARAIS INCORPORATED
RESPONDENTS'
ADV: ADV. Q . PELSER SC
INSTRUCTED
BY : SWANEPOEL & PARTNERS
[1]
1992 (3) SA 944 (AD)
[2]
17 March
[1992] ZASCA 42
;
1992 (2) SA 786
(A)-E
[3]
1981 (2) S A 283at
286c-h; 287J-288.
[4]
2002 (3) SA 701
(SCA) at 708 para 15.
[5]
2014 (4) SA 614
(SCA) at para 13 and 14.
[6]
2016 (3) SA 317
(SCA) at para 24.
[7]
2012 (3) SA 1
(SCA)
at para 23
[8]
1948 (2) SA 677
(A).
[9]
1979 (3) SA 106
(A) at page 120D-F.
[10]
1950 SA (4) 653 (A) at 662G-H.
[11]
Supra
at 763C-D.
[12]
2009 (1) SA 519
(D&CLD).
[13]
1983 (1) SA 556
(NPD) at 560H-561A.