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[2019] ZAGPPHC 278
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Tondolo t/a Tondolo Partnership v MJ Mboya Project Managers CC and Another (99968/15) [2019] ZAGPPHC 278 (2 July 2019)
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES/
NO
(3)
REVISED
CASE
NUMBER: 99968/15
DATE:
2 July 2019
MARY
TONDOLO t/a TONDOLO PARTNERSHIP
Plaintiff
V
MJ
MBOYA PROJECT MANAGERS CC
First Defendant
MHLAWAKHEJOELMBOYA
Second Defendant
JUDGMENT
MABUSE
J
:
[1]
This
is a claim for payment of money. By the combined summons issued by
the registrar of this court on 15 November 2015, the Plaintiff
claims, from the Defendants, payment of the sum of R7,745,851. 72
plus interest and other ancillary relief. The said amount is
in
respect of architectural services rendered by the Plaintiff to the
First Defendant. Initially the Plaintiff had claimed from
the First
Defendant payment of the sum of R9,373,276.57 in respect of the said
services. The said amount was reduced to R7,745,851.72
after the
Plaintiff had abandoned, at the beginning of the trial, a sum of
R1,727,424,85 in respect of loss of profit.
[2]
THE PARTIES
2.1
The Plaintiff is Mary Tondolo t/a
Tondolo Partnership, a professional architect duly registered in
terms of the Architectural Profession
Act 40 of 2000 ("the
Act"). She conducts business as a sole proprietor under the name
and style of Tondolo Partnership
at 200 Bram Fisher Drive, Kensington
B, Gauteng Province.
2.2
The
First Defendant, MJ Mboya Project Managers CC, is a close corporation
duly
registered as such in terms of the
Close Corporation laws of this country. Its principal place of
business is located at Unit 6,
Block C, Halfway Gardens Office Park,
Asparagus Road, Midrand, Gauteng Province. The Second Defendant is
the sole member of the
First Defendant.
2.3
Mhlawakhe
Joel Mboya, an adult male is the Second Defendant. He works at the
same place where it is the First Defendant's place
of business.
THE
BACKGROUND
[3]
The
Plaintiffs cause of action is based partly on a written agreement and
partly on an oral agreement. In or around June 2011 the
Department of
Health of the North-West Province ("the Department")
approached the Plaintiff with the view to designing
certain prototype
community health care ("CHC") centres. The prototype
designs would then be built on specific sites
designated by the
Department from time to time. The Department indicated to the
Plaintiff that such CHC centres would be built
at Mathibestadt,
Maquassi Hills, Jouberton and Sekhing ("the community health
care centres").
[4]
Before
26 July 2011, the Department appointed the First Defendant as the
project manager and principal agent in respect of all four
of the
aforementioned CHC centres.
[5]
THE PLAINTIFF'S CAUSE OF ACTION
According to the Plaintiffs
amended particulars of claim the Plaintiffs cause of action is, as
indicated supra, based partly on
an oral agreement and partly on a
written.
A.
THE ORAL AGREEMENT
According to the Plaintiff, on 26
July 2011 and at Mmabatho she, acting personally, and the First
defendant, duly represented by
the Second Defendant, concluded an
oral agreement on the following terms. that:
5.1
the First Defendant was the sole party
that had direct agreement with the Client;
5.2
the First Defendant would take full
responsibility for the planning and overseeing of the construction of
the CHCs;
5.3
the First Defendant would appoint the
Plaintiff as Architect as a consultant in Respect the design and
construction of the CHCs
according to Client's requirements;
5.4
the First Defendant would be responsible
for payment to the payment to the Plaintiff in respect of services
rendered pertaining
to the design and the construction of the CHCs.
B.
THE WRITTEN AGREEMENT
According to the Plaintiff the
written agreement consists of two documents, a Fee Structure letter
dated 22 November 2011 and a
letter of appointment dated 18 April
2012. Further, according to her, in concluding the said written
agreement, the Plaintiff represented
herself while the First
Defendant was represented by the Second Defendant.
5.2.1
Fee structure letter dated 22
November 2011
This is the letter that the
Plaintiff sent to the First Defendant. This letter, it is so pleaded
by the Plaintiff, was sent by the
Plaintiff to the First Defendant at
the specific request of the First Defendant. This fee structure
letter set out the Plaintiff's
fee schedule as prescribed by the Act.
The salient terms of this fee structure letter are the following:
"The Architectural
Professional Act Nr. 4 of 2000 prescribes the fees which are due for
the development of a project and the
subsequent professional
involvement during site construction. It also prescribes the
professional fees due for re-use of the drawings
and documentation
for any subsequent project which is based on a prototype. The fee for
re use of a prototype was considered
to be 15% of the full fee
(percentage fee and base fee taken together) based on the final cost
of each project. The fee for the
initial prototype is considered to
be a full fee as set out in the National tariffs.
The professional architectural
fee for Mathibestadt is therefore to be considered in full as it
includes all the building units
while the documentation and design
fees for the other sites are to be considered as repetitive.
For any further clarification
on our fees due please refer to Professional Fees Guidelines of South
African Council for the Architectural
Profession.
"
Copies of the PFG in respect of
the services rendered by persons registered in terms of the Act were
annexed to the Plaintiff's
particulars of claim as Annexures 'A2' to
'A4'.
The Plaintiff claims that the
First Defendant accepted the fee schedule as set out in the
aforegoing letter. According to her the
agreement in respect of the
fees she charged the First Defendant for service she was appointed to
render was concluded on the basis
of the fee structure she set out in
the letter dated 22 November. Despite having received the Plaintiff's
letter dated 22 November
2011, for inexplicable reasons, the First
Defendant did not directly respond to the letter. On the contrary,
the First Defendant
wrote and sent to the Plaintiff a Letter of
Appointment, to which I will now turn my attention.
5.2.2
The Letter of Appointment
5.2.2.1
According
to the Plaintiff's particulars of claim this portion of the parties'
written agreement was concluded by and between them
at Randburg on or
about 18 April 2012. It was written to the Plaintiff by the Second
Defendant on behalf of the First Defendant.
5.2.2.2
The
letter of appointment to which I shall refer as 'AS' for purposes of
brevity, sets out the terms on which the First Defendant
appointed
the Plaintiff as an architect. The Plaintiff accepted and agreed to
the terms of A5. It states, inter alia, that:
5.2.2.2.1
RE: Architects: Letter of Appointment:
Mathibestadt, Maquassi Hills, Jouberton Extension 21 and Sekhing
Community Health Centres;
5.2.2.2.2
that the appointment of the Plaintiff
was based on the latest Public Works fee scale including applicable
discount for repetitive
work and a 10% discount on the first
prototype;
5.2.2.2.3
the service for which the architect as
appointed were fully detailed under section 2.0 (scope of works) of
the letter of appointment;
5.2.2.2.4
that (the fees applicable payable to the
Plaintiff would be "as agreed";
5.2.2.2.5
that payment terms were to be based on
the Construction Project Management Scale;
5.2.2.2.6
disbursements would be 10% of the total
fee, otherwise pre-agreed with MJ Mboya Project Manager.
[6]
According to the plaintiffs particulars
of claim:
6.1
it
was a tacit term of the agreement that the First Defendant would
effect payment of the Plaintiffs invoices within 30 days
alternatively
within a reasonable time of receipt of any such
invoices;
6.2
the
Construction Project Management Fee Scale refers to the Guideline
Scope of Services Recommended Guideline Tariff of Fees for
persons
registered in terms of the Project and Construction Management
Professions Act 48 of 2000 ("PCMPA").
[7]
The Plaintiff pleaded further that she
has:
7.1
complied
with all her obligations in terms of the agreement;
7.2
performed
the services required of her by the First Defendant from time to time
over the course of the project of the design and
construction of the
community health care centres;
7.3
issued invoices to the First Defendant
in respect of the work done by her in terms of and in accordance with
the agreement;
7.4
the
fees of the plaintiff as reflected in such invoices were in
accordance with the Act and furthermore in accordance with the
parties' agreement.
[8]
It
is her case furthermore that despite the Plaintiff having delivered
to the First Defendant and the First Defendant having received
such
invoices and despite furthermore lawful demand therefor, the First
Defendant has failed to comply with the parties' agreement
inasmuch
as it failed to make payment of such invoices within 30 days, or a
reasonable time, of receipt thereof. The relevant receipts
have been
fully set out in the Plaintiffs particulars of claim. They are not in
dispute:
8.1
in respect of Mathibestadt CHC the total
of such receipts is R1,695,711.59;
8.2
in respect of Sekhing CHC the total of
such receipts is R1,581,108.28;
8.3
in respect of Matlosane or Jouberton
Extension 21 CHC the total of such receipts is R2,779,871.15;
8.4
in respect of Maquassi Hills,
Wolmaranstad the total of such receipts is R1,589,160.70.
It is for that reason that the
Plaintiff claims the said amount of R7,645,851.72. May I hasten to
point out that it is not in dispute
that the First Defendant has
received the relevant invoices nor is it in dispute that the First
Defendant has admitted that it
has not paid such invoices?
[9]
THE FIRST DEFENDANT'S CASE
Although initially in its amended
plea, the First Defendant denied that it had entered into an
agreement with the Plaintiff as alleged
by the Plaintiff it admitted
subsequently in its reply to the Plaintiffs Request for Further
Particulars that an agreement was
reached between it and the
Plaintfif. It admitted furthermore that the oral part of the
agreement was reached between it and the
Plaintiff after it had
originally denied it in its amended plea.t will be recalled that the
Plaintiff had referred to the two types
of agreements, one oral and
the other written. The First Defendant disputes both. It:
9.1
denies
that it was liable and responsible to make payments to the Plaintiff
in respect of services rendered by the Plaintiff to
it relating to
the design and construction of the community health care centres.
9.2
alleges
further that the Plaintiff and the First Defendant had also agreed
orally on specific terms and conditions relating to the
basis upon
which the Plaintiff was entitled to remuneration for professional
services, the procedure for the Plaintiff to follow
in submitting
invoices to the First Defendant and the Defendants' liability for
payment.
9.3
Those
oral terms and conditions were, according to the Defendants, that:
9.3.1
the Plaintiffs fees for Sekhing,
Matlosane and Maquassi Hills projects would be based on 15% of the
Project Cost Base Fee ("PCBF")
and a Time Base Fee ("TBF")
for any part of the project that did not form part of the prototype
based on 2011 Architectural
and Construction Project Management
("ACPM") Fee Scale;
9.3.2
the Plaintiffs fee for Mathibestadt
would be on a PCBF of 5.85%, based on 2011 ACPM Fee Scale;
9.3.3
at the finalisation of each stage over
the projects the Plaintiff would submit a worksheet reflecting
services rendered, for the
First Defendant's approval;
9.3.4
upon the First Defendant's approval the
Plaintiff would submit an invoice to the First Defendant, for
architectural services rendered,
at the finalisation of each stage
over the project;
9.3.5
the First Defendant would draft an
invoice for submission to the Department. The First Defendant's
invoice would include the amount
reflected in the Plaintiffs invoice;
9.3.6
the Plaintiff would, in addition to a
10% discount of fees as agreed with Plaintiff, deduct 3% from all
payments for administration
and bank charges;
9.3.7
the First Defendant would only be liable
to make payment to the Plaintiff's invoices submitted to it upon the
Department making
payment to the First Defendant; and,
9.3.8
in the event that the Defendant was not
paid by the Department the First Defendant was not liable to pay the
Plaintiff for an invoice
submitted to it.
THE
EVIDENCE
[10] The
Plaintiff's first witness was Alexandra Nwangi Kanunyu ("Kanunyu").
This witness was
employed by the Department as the Chief Architect;
Directorate Infrastructure; Delivery Program Management. His duties
included,
inter alia, managing a program; monitoring and controlling
project managers and contractors and perusing invoices. He started
working
for the said Department in 2014.
[11]
He testified that in his aforementioned
capacity he was aware of three projects, namely, Mathibestadt,
Sekhing, and Jouberton or
Matlosane. According to his evidence
Maquassi Hills was not among those projects because there were still
some feasibility studies
and planning to be done in respect of it.
[12]
He continued with his evidence and told
the Court that the First Defendant was appointed by the Department to
render Project Management
Services. According to his testimony the
First Defendant had a downward agreement with other disciplines that
would assist him
to achieve the objectives of the various projects.
The Plaintiff, in casu, was one of such disciplines. He told the
Court furthermore
that the document at page 180 of bundle C2 was a
contract of appointment of a Project Manager entered into by and
between the Department
and the First Defendant. This document is
dated 21 June 2011.
[13]
According to his evidence the project
manager would have been expected to:
13.1
perform his duties in terms of the
schedule for such projects;
13.2
assist the employer, in other words, the
Department, to achieve its objectives to build four CHC's;
13.3
make sure that the contract was
completed within time and to the satisfaction of the end users;
13.4
make sure that the Department received
value for money;
13.5
administer all the four contracts;
13.6
certify the monthly payments and to
close out the contract. All the project manager's aforegoing tasks
are set out in the Guidelines
of Scope of Services and Tariff of Fees
("GSSTF") for Registered Project Managers ("RPM").
[14]
The payment certificates are issued by
the Department, so continued his evidence. The professional service
provider would invoice
the project manager who would then compile a
consolidated invoice and raise it with the Department. The quantity
surveyor assesses
all the work and gives his assessment to the
project manager. Each discipline has its own tariff of fees. The
project manager would
then raise a tax invoice and send it to the
Department. On receipt of the tax invoice from the project manager,
the employer or
Department would verify that the different levels or
stages of the project had been reached. If the employer is satisfied,
the
invoice would then be submitted for payment.
[15]
He testified furthermore that the
employer is entitled to rely on the project manager; that he is the
employer's trusted advisor
and that the Plaintiff was the architect
referred to. At one stage the services of the said architect were
terminated.
[16]
As far as Kanunyu was concerned, two of
the invoices submitted in 2014 in respect of Mathibestadt and Sekhing
were not paid. These
invoices were not paid because the employer had
requested certain documents from the project manager. Those documents
were still
outstanding as at June 2015 when the employer sent out a
reminder. The reasons for requesting further documents from the
project
manager were, firstly, that the invoice had increased the
amount and, secondly, there were no supporting documents.
[17]
There were four other invoices that the
employer received from the project manager in 2014. Kanunyu did not
have the information
regarding those four invoices. He expected the
First Defendant to have the details of such invoices.
[18]
Kanunyu was aware of the letter dated 9
September 2016 from the First Defendant from which he read paragraphs
8, 9 and 10 at page
401 in Bundle C2. The said paragraphs 8, 9 and 10
read as follows:
''[8] This
breach has been occasioned by the potential risk of a court interdict
suspending the construction works
as a result of the long running
dispute between the consultant and the architect regarding the
non-payment of professional fees.
Refer to Annexure ‘D’.
[9]
It is common cause that the
employer will be liable to pay contractual claims to the contractor
as a result of standing time should
a court interdict suspending the
works
being issued. This will in
turn amount to fruitless and wasteful expenditure of taxpayer's
money.
[10]
Correspondence from the employer
dated 5 July and 12 July 2016 respectively urging the consultant to
resolve the dispute with the
architect is attached. Refer to Annexure
'E:"
He also read Annexure 'E' at page
425 and paragraphs 1 and 2 at page 426. Paragraphs 1 and 2 of
Annexure 'E' stated as follows:
"The subjects above, the
ad-hoc meeting we had on Monday 30 May 2016, as well as the
correspondence of the Head of Department
to you on 31May 2016 bears
reference:
1.
THE
PAYMENTS OF ARCHITECT AND QUANTITY SURVEYOR
You were instructed by the Head
of Department in his letter dated 31 May 2016 to replace the
architect and quantity surveyor you
are using for the Jouberton CHG
project with Tondolo Partnership and MM Sakonda and Partnership as
architects and quantity surveyor
respectively. You have since
dispatch of the letter by email not responded on this matter and I am
now requesting that you respond
and confirm in writing, adherence to
the Departments request. Your response must reach the office before
close of office on Friday
8 July 2016.
2.
SETTLEMENT OF OUTSTANDING
ARCHITECT FEES
The Department has received
from the legal advisors of the architect which you have used to plan,
develop and design a new Jouberton
CHG, correspondence indicating
that you owe the architect an amount of R3, 169,053.00 (VAT included)
for professional services
rendered on this project. The Department ,
on the other hand, has paid you're company, as appointed project
managers, an amount
of R4,319,615.29 which you have claimed from the
Department for architectural services rendered believing that you
would pay the
architect involved
"
This letter was addressed by the
Acting Chief Director; Planning Services; to the First Defendant. It
is dated 5 July 2016.
THE
EVIDENCE OF KAGISO MOSIMANYANE
[19]
This
witness testified that he was employed by the Department as Assistant
Director Finance in Mahikeng. His duty was to provide
financial
management control in respect of infrastructure services to ensure
that projects are performed in line with the budgets.
His primary
duties included, inter alia, monitoring expenditure against allocated
budget and making sure that the payments that
the Department made
were all lawful; making follow
ups; and
attending to internal queries raised by internal control. In
addition, he manages the performance of his subordinates and
facilitates the payment process.
[20]
On receipt of such invoice from the
project manager he puts the date stamp on it. It is not in dispute.
He outlined the entire procedure
that his section follows on receipt
of any invoice up to the stage of payment.
20.1
When he was referred to Bundle '82' page
G39 he told the Court that it was a Register of Payments extracted
from the BAS System.
According to him they are able on the Bas System
to verify the payment reports; registration of payments that would
show payments
within a specific period.
20.2
Pages G39 to G41 of Bundle '82' showed
payments made to Mboya Project Managers as at 31/03/2013· .
20.3
The Standard Bank account number
420084487 into which the funds were deposited on 14 November 2011.
According to invoices G39 to
G41 pages 1 to 41 the total sum
deposited into the relevant bank account was R4,200,844.87. The name
of the account is MJ Mboya
Project Management with reference number
18218000.
[21]
Pages
G39 to G41 of Bundle 'B2' reflected payments made by the Department
to Mboya Project CC from 2011 to 2013. During this period,
the First
Defendant was paid the total sum of R34,559,549.39. All these
payments were made from the year 2011 to March 2013.
[22]
The report at page 942 to 943 of BAS
Report showed payments from 1 April 2013 to 24 April 2015. The
information with regard to these
two pages was captured on 31 March
2017. It did not reflect any payment between 24 April 2015 and 31
March 2017. All these payments
were made to the First Defendant. They
amounted to R13.3 million.
MARY
DOROTHEA TONDOLO
[23]
As indicated somewhere supra, this
witness was at the same time the plaintiff in this matter. She
testified that she is a professional
architect. She graduated in
architecture at the University of Witwatersrand. Furthermore she
studied at the Massachusetts University
of Technology where she
earned an Advanced Masters' Degree in architecture. She earned
another Masters' Degree in Urban Design
and Urban Planning from the
University of Venice in Italy. From the same University she earned a
Doctorate Degree in Architecture.
Her qualifications were not in
dispute.
[24]
She told the Court that she started
working in an architecture's office in Germiston when she was only 18
years old. After graduating
from the University of Witwatersrand she
worked in an office in Johannesburg. While she was studying at the
Massachusetts Advanced
University of Technology, she worked in
Boston. While she was studying in Italy she also worked there. She
has been having her
own practice since 1997. She is a registered
architect with the South African Council of Architects (SACA). She is
also a registered
member of South African Institute of Architects
(SAIA) and of the Gauteng Institute of Architects (GIA).
[25]
She was involved in the design of the
Health Community Centre for IDT in Bapong, North West. The Department
saw and understood the
value of the concept design and how it was
built. She was then asked to develop three prototypes along the same
concept. Each prototype
had to have the functions which were required
by the community of the places where the Community Health Centres
were to be built.
[26]
She read into the record the contents of
a document dated 22 November 2011 from Tondolo Partnership to Mr
Mboya and Mboya Project
Managers. Reference was made to North West
Provincial Government. It was proposed new CHC Centres in
Mathibestadt,
Sekhing, Jouberton and
Wolmaranstad. Professional fees for the design and repetitions were
also referred to. The document set out
the circumstances under which
Tondolo Partnership was prepared to be appointed; the purpose for
which she was so appointed and
the scope of the work or the projects
the Plaintiff had been appointed to design.
[27]
She also read the following part of said
the document:
"To develop a prototype or
prototypical Community Health Centre Project, the various building
units had to be designed individually
first and then assembled into a
coherent urban form which can be implanted on the various sites. The
Architectural Profession Act
No. 41 of 2000 ("The Act")
prescribes the fees which are due to the development of a project and
the subsequent professional
involvement during site construction. It
also prescribes the professional fee due for reuse of the drawings
and documentation for
any subsequent projects which are based on a
prototype. The fee for the reuse of the prototype is considered to be
15% of the full
fee, percentage fee, and base fee taken together
based on the final cost of each project. The fee for this initial
prototype is
to be considered a full fee as set down in the National
Tariffs.
"
[28]
She continued and read the following
paragraph of the same letter:
"The Professional
Architectural Fee for Mathibestadt is therefore to be considered in
full as it includes all the building
units while the documentation
and design for the other sites are to be considered as repetitive.
For any clarification on our fees
due please to refer to the
Professional Fees Guidelines for the South African Council for the
Architectural Profession."
According
to this witness, Mathibestadt was the first building. All three
subsequent buildings put up along Mathibestadt designs
were
prototypes. These were prototypes that had been reused. Architectural
Professions Act 41 of 2000, the SA Council for the Architectural
Profession Annual Update of the Professional Fee Guidelines enables
the Plaintiff to work out the professional fees according to
the
building costs of the project.
[29]
The Act deals with the Project Costs
Base and Time Base Fee tables. The PFG was issued in terms of s 34(2)
of the Act. The project
costs base fee tables came into effect from 1
January 2011. They superseded the Board Notice 13 of 2010.
[30]
She was appointed purely as an architect
to provide a design construction and to do site supervision.
[31]
She then relied on certain paragraphs of
'A5'. The first of such paragraphs read as follows:
"Furthermore to our
discussions we have pleasure in confirming your appointment as
architect for the abovementioned project
(the project referred to
Mathibestadt, Maquassi Hills, Jouberton Extention 21, Sekhing
Community Health Centres) based on the following
terms
and conditions.
"
Agreement
31.1
"Your appointment is based on
the latest public works, latest pre-scale in auditing applicable
discounts, for repetitive work
and a 10% discount on the first
prototype. The services for which you are appointed are fully
detailed under section 2 scope of
this letter. Your duties and
responsibilities for the above sections of the work shall, inter
alia, be as set out in the agreement
between client and architect.
"
31.2
The said letter further stated that on
15 January 2015 the Plaintiff sent the First Defendant an email with
an indication of the
outstanding payments on invoices for
Mathibestadt and Sekhing. The said email ended with:
"We urgently plead when
payment can be expected as this is long overdue and we are unwilling
to continue without any feedback
from yourself."
31.3
She testified further that on the CHC
Centres:
“
The fees would be as
agreed between the parties and payment terms would be based on the
construction project management fee scale.
The fee agreement referred
to above is set out in my letter dated 22 November 2011 that I wrote
to you. In the letter it states
that my fees would be based on the
Fee Guidelines published by the South African Council for
Architectural Profession as mandated
by the
Architectural Profession
Act
In
terms of your letter of
appointment read with the SACAP Guidelines my appointment cover SACAP
work stages 1 to 4 as well as the
specific aspects of SACAP
supervision as set out herein above. The appointment included a 10%
discount for the first design prototype
and the applicable discount
for repetitive work for the remaining design prototype.”
31.4
“
Various
invoices were submitted, some of them were late. The following
invoices have, despite the lapsed reasonable time, remained
unpaid.”
The First Defendant did not
respond to this letter.
[32]
She testified further that at a certain
stage the First Defendant terminated her services in a letter. She
was accused by the First
Defendant of failing to co-operate with the
other teams as required. As a result, no progress was made on the
project. The First
Defendant asked her, in the same termination
letter, to submit her fees and disbursements to date on the project
for submission
to the Department.
32.1
She wrote back to the First Defendant
and copied the Department. In her letter, the Plaintiff complained
that dating as far back
as 22 August 2012 to 10 October 2014 a total
of 12 invoices for professional work and disbursements undertaken
relative to Mathibestadt,
Sekhing, Matlosane and Maquassi Hills were
issued by the Plaintiff to the First Defendant and that no payment
was received in respect
of those invoices. As a consequence the
Plaintiff regularly enquired as to when payment would be
made.
No response was received from the First Defendant.
32.2
The said letter further stated that in
January 2015 the Plaintiff sent the First Defendant an email with an
indication of the outstanding
payments on invoices for Mathibestadt
and Sekhing. The said email ended with "We urgently plead when
payment can be expected
as this is long overdue and we are unwilling
to continue without any feedback for yourself."
32.3
She testified furthermore that on 4
February 2015 the Plaintiff sent another email with the same
underlying intent. The First Defendant
failed to respond to all such
emails.
32.4
The Plaintiff received payment for some
invoices. According to her evidence the Plaintiff made reasonable and
diligent progress
in the execution of its duties as was necessary in
the circumstances of the project as required by the letter of
appointment and
has therefore discharged its obligations.
32.5
In terms of the payment terms as set out
in the Letter of Appointment, Tondolo Partnership was entitled to
proportional payment
of fees as the services were rendered in stages.
According to her evidence it was a tacit term of agreement that
payment should
be made within 30 days or within a reasonable time
after the First Defendant received the invoices and that the First
Defendant
has, in that regard, defaulted.
32.6 On 8 June
2015 the Plaintiff addressed the following letter to the First
Defendant:
"On or about 18 April 2012,
Tondolo Partnership was appointed by MJ Mboya Project Managers CC as
architects to undertake the
design development and in certain aspects
relating to site supervision on the above four Community Health
Centres. The fees would
be as agreed between the parties and payment
terms would be based on the construction project management fee
scale. The fee agreement
referred to above is set out in my letter
dated 22 November 2011 that I wrote to you. In the letter it states
that my fees would
be based on the Fee Guidelines published by the
South African Council for the Architectural Professions as mandated
by the Architectural
Professional Act.
32.7
In terms of your letter of appointment
read with SACAP Guidelines my appointment cover SACAP work stages 1-4
as well as the specific
aspects of SACAP supervision as set out
herein above. The appointment included the 10% discount for the first
design prototype
and applicable discount for repetitive work for the
remaining design prototype.
32.8
Various invoices were submitted and some
of them were paid. The following invoices have, despite the lapse of
a reasonable period,
remained unpaid."
Then the Plaintiff set out all
those invoices that remained unpaid. They are not in dispute. The
First Defendant did not respond
to this letter.
[33]
The Plaintiff testified further and:
33.1
denied that the determination of her fee
scale was made orally. She was adamant that it was made in writing;
33.2
testified that the Plaintiff's fees for
Sekhing, Matlosane and Maquassi Hills projects would be based on 15%
of the Project Cost
Base Fee and a Time Base Fee for every part of
the project that did not constitute part of the prototype based on
the SACAP Guidelines.
She was not hired as a project manager. For
that reason her fees could not be based on the ACPM Fee Scale;
33.3
in respect of Mathibestadt she testified
that it was not correct that the Plaintiff's fee would be a project
cost base fee of R5.85%.
According to her, there was no fixed
percentage at the beginning because the final fee would be based on
the final contract costs
of the project. The percentage was to be
calculated on that final amount according to SACAP tariffs;
33.4
she denied that she was supposed to
submit a worksheet. She testified firstly, that there was no
agreement between the parties that
the Plaintiff should submit a
worksheet and secondly, that the Plaintiff had not been told how to
submit a worksheet. Thirdly and
finally, she told the Court that she
never received any request to submit a worksheet;
33.5
she denied that she was obliged to
submit her invoice only after completing the worksheet. This was so
for the reasons mentioned
in point 3 above;
33.6
she admitted that she and the First
Defendant had agreed that there would be a 10% discount on fees. She
also admitted that they
had agreed that there would be a 3% deduction
from payments made to her for administration and bank charges;
33.7
she admitted furthermore that the
parties had agreed that the First Defendant would only be liable to
make payment to the Plaintiff
once the Department had made payment to
it but that once the Department had paid the Project Manager the
Plaintiff would be paid
within a reasonable amount of time. In other
words, the Plaintiff was prepared to wait until the Department had
paid the Project
Manager as long as the Plaintiff would be paid
within a reasonable period of time after the First Defendant received
such payment.
[34]
Project per project and starting with
Mathibestadt she testified how the invoices, forming the subject
matter of the Plaintiff's
claim, were formulated. She charged the
Project Manager with a professional fee for the new kitchen and
laboratory buildings. According
to her evidence, these two buildings
were initially not included in the scope of the Mathibestadt CHC
Project. Their scope of work
in respect of this project involved
starting drawings and construction drawings from phase 1 to 4 for
both the new kitchen and
laboratory buildings. The construction of
the new kitchen was to start. A contractor had been issued with
drawings when the Department
decided to stop the construction of both
the kitchen and the laboratory. So this work which was done from
phase 1 to phase 4 was
based on a time fee schedule. In fact it was
based on a percentage of the cost of the building. The cost of the
building was worked
out at R3,063,710 million. They then looked at
the statutory tariff for a building of this nature and worked out the
professional
fee. Since they had only started from phase 1 to 4 they
could only claim 70% of the total fees. That was the fee allowed in
terms
of SACAP tariffs. An invoice in respect of this work was
submitted to the Project Manager but the Plaintiff received no
feedback
from the First Defendant.
[35] When
the Plaintiff requested the First Defendant to furnish it with
further particulars, to enable
it to prepare for trial, the First
Defendant raised new defences. In respect of the Mathibestadt CHC
Project invoice, the First
Defendant stated that the sum of
R276,093.98 should actually be R235,033:
35.1
the reason for this, as stated by the
First Defendant, was that the provisional sum should be deducted from
stage 1 to 4 for fee
calculation purposes. Therefore the fee
should,
according to the First Defendant, be around R75,210.47subject to full
completion of activities in the stages mentioned;
35.2
the approval of the drawings by the
Council has not been done;
35.3
the drawings have not been coordinated
with other consultants.
35.4
Finally, the final account has not been
agreed as the Plaintiff had resigned from the project. These are
therefore the reasons that
the First Defendant gave for failing or
refusing or neglecting to pay the Plaintiff's invoices in respect of
services rendered
by the Plaintiff to the First Defendant for the
Mathibestadt CHC Project.
[36]
The Plaintiff disputed these new
defences on the ground that:
36.1
they were never discussed or taken up
with the Plaintiff;
36.2
the calculations in respect of stages 1
to 4 cannot be deducted for the purpose of calculating the
professional fee due to the Plaintiff
because the service rendered
was in respect of two buildings outside the main tender. The
Plaintiff's fee was calculated on the
actual construction cost
amount;
36.3
with regard to the approval of the
drawings, she disputed the First Defendant's new defence and
testified, on the contrary, that
the Plaintiff submitted the plans
for approval to Mathibestadt Town Council and that such approval was
obtained. The Plaintiff
has copies of the plans in her offices;
36.4
she denied the statement by the First
Defendant that the drawings have not been fully coordinated with
other consultants. She disputed
this statement and testified that if
the drawings had not been fully coordinated with other consultants
the buildings would not
be standing up due to structural reasons.
Furthermore the electricity and water would not be available.
[37]
About the second invoice she testified
that it was for disbursements for travelling time. Travelling time
was calculated from the
office to the site. It included the expenses
of the motor vehicle and the toll fees. She worked out the number of
kilometres for
each inspection and the number of trips. Her
travelling time was 3 hours. The invoice in respect of these
disbursements set out
above was submitted to the First Defendant and
the First Defendant never rejected or in any way questioned it. The
invoice included
the printing costs.
[38] In
respect of the Plaintiff's request for further particulars, the new
defences that the First Defendant
raised were firstly, that payment
in respect of the relevant invoice had not been received by the First
Defendant from the Department
and secondly, that the parties must
still agree on a final account.
[39]
The next invoice in respect of
Mathibestadt CHC was dated 30 June 2015 for RS?,240.54. This invoice
was for professional fees for
architectural work. It was a
reconciliation of fees
for services
rendered during construction. They represent estimates of the final
reconciliation fee. The final construction cost
was estimated at
R80m. According to SACAP fee tariffs based on the estimated
construction cost of R80m they worked out the Plaintiff's
final fee
at R4,690m. These fees represent only 97% of the work done because
they had not completed all the works of the project.
An allowance of
3% was made and another one of 10% discount was also made.
[40]
In regard to this invoice, the First
Defendant raised the following defences in its further particulars.
The First Defendant stated
that the fees were not paid because the
Plaintiff did not attend tenders and compulsory briefing meetings and
other site meetings.
The Plaintiff disputed this allegation. On
behalf of the Plaintiff Ms Tondolo testified that the Plaintiff
attended these meetings.
Up to 2015 the Plaintiff had attended 75
such site meetings. She concluded by saying that all the other
invoices were calculated
on the same basis. Not a single one of these
invoices was sent back for correction.
ELIZABETH
YOLANDA VAN DER VYVER
[41]
She was called to testify as an expert.
That she was one, was not in dispute. She was a registered architect
with a Master's degree
in that field. She has been in practice since
1996. She had prepared a report on the tasks she had been given. In
compiling her
report she had regard to certain documents, in
particular, the drawings that the Plaintiff had prepared. Her
evidence at first
touched upon the drawings by the Plaintiff, in
other words, whether such drawings were of the required standard. It
touched furthermore
on whether the statutory requirements had been
complied with and what was expected of an architect when he or she is
given work.
When she was referred to the Board Notices she testified
that it was a document that related to the work stages.
[42]
According to her own assessment, the
drawings were of high quality. They had been prepared according to
the old style with full
specifications. The four stages being
inception stage, the first stage; the concept and viability, the
second stage; design development,
the third stage; and documentation
and procurement, being the fourth stage. The Plaintiff had done
everything set out in the letter
dated 22 November 2011 from the
Plaintiff to the First Defendant. Everything was according to
schedule of the Board Notices. The
Government Gazette requirements
and the architectural work stages had been fulfilled.
[43] From
the inspection of Ms Tondolo's drawings, the drawings were detailed
to such an extent that they
went beyond the scope of duty for the
work stages involved.
[44]
Having been referred to the said letter dated 22 November 2011 in
respect of the four projects she
testified that Ms Tondolo's
appointment, according to the said letter, was for professional
services to design and supervise construction
and to take the
projects all the way to conclusion. The said letter sets out the
tasks the Plaintiff was to perform and in particular
the fee
structure. Everything was done according to schedule and Board
Notices.
[45]
According to her testimony it is common cause to charge according to
work stages. If the
work
stages take rather too long to complete, an architect can send
invoices which are based on the percentage of work stages. In
this
respect the architect estimates the fees. On the basis of the 2011
PFG, the first thing to do is to determine the building
costs before
the final price can be determined by the quantity surveyor or after a
tender procedure. It is normal to use a price
per square meter.
[46]
It is not correct that the provisional
sum should be excluded from the invoice. A final account does not
have to be agreed at the
conclusion of the work because a final
account is fixed by the agreement at the beginning.
[47]
She testified furthermore that she had
gone through all the invoices in respect of which the Plaintiff
claimed payment and was satisfied
that all such invoices were
prepared accordingly.
[48]
She continued to testify that an
architect is required to do an inspection as this is a statutory
requirement; that there is no
requirement in the PFG that an
architect must attend site meetings. This is compulsory for the
contractors though. It is also not
necessary for the architect to
attend any coordination meetings. The architect can always obtain
information from the contractors.
She has not seen any lack of
coordination from the works.
THE
EVIDENCE OF ZOE SCHOLTZ
[49]
She started her evidence by confirming
the contents of her report. She is a chartered accountant with a Bcom
Accounting Degree.
She had been mandated by the Plaintiffs attorneys
to list payments received by the First Defendant from the Department;
to quantify
what the Plaintiff had claimed from the First Defendant
for architect fees, based on the Department's Register of Payments;
the
First Defendant's bank statement and the First Defendant's
invoices. She had also been asked to quantify the amount that the
Plaintiff
had invoiced the First Defendant, based on the Plaintiffs
invoices; to quantify what the First Defendant had paid to the
Plaintiff
based on the First Defendant's bank statements description
and supported by the Plaintiff's bank statements.
[50]
In compiling her report she had she had
access to the following documents:
50.1
Mboya CC Bank Statements;
50.2
Mboya CC Money Market Call Account Bank
Statements;
50.3
a letter from Tondolo Partnership to
Mboya CC dated 22 November 2011;
50.4
a Letter of Appointment from Mboya CC to
Tondolo Partnership dated 18 April 2012;
50.5
Mboya CC invoices to the North West
Department of Health;
50.6
The North West Department of Health
Register of Payments;
50.7
An email dated 9 December 2017;
50.8
Tondolo Partnership Bank Statements and;
50.9
An email dated 28 July 2015.
[51]
The first part of her mandate was to
consider the payments that the First Defendant, Mboya CC, had
received from the Department.
For the purposes of this exercise she
had:
51.1
Mboya CC's current account bank
statements;
51.2
invoices that had been issued by Mboya
CC to the Department;
51.3
the register of payments from the
Department.
She reconciled these payments from
the bank statements to the invoices.
[52]
Her first task was to consider what
payments the First Defendant, Mboya CC, had received from the
Department. In this regard she
had the bank statements of the First
Defendant. In addition she had statements that she received from the
Plaintiffs attorney.
[53]
According to her evidence:
53.1
the First Defendant issued invoices to
the Department amounting to R47,862,234.91 between 21 October 2011
and 10 December 2014.
All these invoices, according to evidence, were
paid in full by the Department. This fact is clear from table 1 of
her report.
To be precise the relevant invoices commenced on 21
October 2011 and ended on 15 October 2015.
53.2
the First Defendant issued to the
Department architect fees invoices amounting to R15,114,267.25;
53.3
as at 28 July 2015 the Plaintiff
invoiced the First Defendant R13,846,556.59 including VAT. This
amount was less than the amount
that the First Defendant had invoiced
the Department by R1,267,710.66;
53.4
as at 28 July 2015, the First Defendant
paid the Plaintiff a total sum of R8,648,287.00. This resulted in an
outstanding amount
of RS,198,269.49, according to the Plaintiffs
calculations or R6,456,958.00 according to the First Defendant's
invoicing;
53.5
after 28 July 2015, the Plaintiff
invoiced the First Defendant an additional amount of R2,434,241.93.
In total for the period from
November 2011 until August 2015, the
Plaintiff invoiced the First Defendant R16,280,798.53, which amount
is more than the amount
the First Defendant invoiced and received in
respect of architect fees from the Department by R1,166,531.27;
53.6
as at 5 August 2015, the First Defendant
had paid the Plaintiff a total sum of R8,648,297.0,0 based on the
Plaintiff’s calculations
the outstanding amount was
R1,632,511.40or R6,456,980.00based on the First Defendant's
calculations·,
53.7
the Department made its last payment to
the First Defendant on 30 April 2015. The First Defendant made its
last payment to the Plaintiff
on 30 May 2015;
53.8
she corrected the amount that is
outstanding to R?,645,851.73 hence the Plaintiff's claim for payment
of such an amount.
THE
EVIDENCE OF ROELF NEL
[54] This
witness was the Plaintiff's attorney of record. Before he testified,
he had been sitting in Court.
No issue though was made about the fact
that he had been sitting in Court before he testified. He only
testified in the matter
simply because of a statement that had been
put to Ms Tondolo by counsel for the Defendants. That statement was
that the second
defendant had wanted to meet with the Plaintiff in an
attempt to settle the disputes between the Plaintiff and the First
Defendant
and that the Plaintiff was unwilling to have such a meeting
and finally that she took no steps to convene such a meeting.
[55] Mr
Nel, testified that he was the one who requested a meeting with the
Defendant; that such a meeting
took place between him and the Second
Defendant on 17 August 2015. He proceeded with this evidence and
testified that at such a
meeting he asked the Second Defendant, who
was at all material times speaking for the First Defendant, why he
did not make a tender
for the outstanding payments owed by the First
Defendant to the Plaintiff. He further asked the Second Defendant to
furnish reasons
why the Second Defendant did not pay the Plaintiffs
outstanding fees.
[56]
The Second Defendant asked him to hand
over the drawings. Mr Nel told him that they would not hand over the
drawings to the First
Defendant. The Second Defendant then promised
to revert to Mr Nel on 27 August 2014. The date came and passed but
the Second Defendant
never reverted to Mr Nel. Mr Nel then reported
to his client telephonically.
[57]
Mr Mboya, the only member of the First
Defendant, gave evidence on behalf of the First Defendant. The First
Defendant led, in addition,
the evidence of a certain Isaac Phiri.
Through its sole member the First Defendant testified that, as the
preference of the Department,
the First Defendant appointed the
Plaintiff as an architect for certain projects at Mathibestadt,
Sekhing, Jouberton, otherwise
known as Matlosane and Maquassi Hills.
The First Defendant appointed the Plaintiff in a letter of
appointment dated 18 April 2012.
[58]
It is the First Defendant's case that it
appointed the Plaintiff as an architect on the terms and conditions
contained partly in
a letter dated 22 November 2011 written by the
Plaintiff to the First Defendant and partly in terms of 'A5', its
letter dated 18
April 2012, to the Plaintiff and finally on certain
oral terms. The letter dated 22 November 2011 set out several terms
on the
basis of which the Plaintiff was appointed. He stated, inter
alia, that:
58.1
that Tondolo Partnership was appointed
through the First Defendant's Project Management Consultancy Firm by
the Department as architect
to undertake the design, development and
site supervision of certain four community health centres;
58.2
the scope of the project or the design
of the prototype typical centres, what they were expected to reflect;
58.3
the fees and the rates payable by the
First Defendant to the Plaintiff for the services that the Plaintiff
would render; and
58.3 the
deductions and percentages thereof that the Plaintiff was going to
make.
[59]
As indicated above, Mr Mboya testified
that the appointment of the Plaintiff was based on 'AS'. Mr Mboya
testified that 'AS' constituted
one part of the written agreement
between the First Defendant and the Plaintiff and that the Plaintiffs
letter dated 22 November
2011 constituted another part of such an
agreement.
[60]
He confirmed that the parties had agreed
that the fees payable by the First Defendant to the Plaintiff would,
according to the Plaintiff's
letter dated 22 November 2011, be as
agreed. Furthermore he agreed that in terms of clause 8.8 of the POC,
the payment terms were
to be
based on
the construction project management scale.
[61]
He disputed the Plaintiffs averment, as
contained in clause 8.9 of the POC, that it was a tacit term of the
agreement that the First
Defendant would effect payment of the
Plaintiffs invoices within 30 days from receipt of any such invoice,
alternatively, within
a reasonable time upon receipt of any such
invoice. According to him, the First Defendant and the Plaintiff had
agreed that the
First Defendant would only pay the Plaintiffs
invoices within 30 days after the Department had paid the Defendants'
consolidated
invoices which would include the Plaintiff's relevant
invoice.
[62]
When it was pointed out to the Second
Defendant that the Plaintiff had stated in the POC that she had
complied with all its obligations
in terms of the agreement and had
performed the services required of her by the First Defendant, from
time to time over the course
of the project design and construction
of the community health centres, the Second Defendant disputed it. On
the contrary the First
Defendant testified that there were drawings
that had not been approved by the council of the Local Authorities.
As the Plaintiff
had resigned from the project, the First Defendant
was compelled to appoint a new architect. It was this new architect
who got
the drawings, in particular in respect of Jouberton,
approved. As far as Sekhing was concerned, the drawings were never
approved
until the First Defendant was removed from the Project. The
Second Defendant denied, on the aforegoing basis, that the Plaintiff
had solely complied with all its obligations. He testified
furthermore that the Plaintiff had failed to attend all the mandatory
site meetings which included compulsory site meetings.
[63]
Mr Mboya admitted that the First
Defendant has not paid any of the invoices constituting the
Plaintiff's claim and added that it
was so because the Department had
not paid anyone of them. He added that the other reason was that the
First Defendant and the
Plaintiff had not agreed on a final account.
He gave a variety of other reasons why the First Defendant has not
paid the Plaintiff.
He actually raised all sorts of complaints about
the manner in which the invoices were prepared by the Plaintiff. He
conceded,
on a question by the Court, that he never went back to the
Plaintiff to draw her attention to the incorrectly prepared invoices.
[64]
In summary, it was testified, on behalf
of the First Defendant that the First Defendant would prepare an
activity schedule. From
the activity schedule the First Defendant
would then generate an invoice. The invoice would then be sent to the
Department. Then
after the Department had paid, the First Defendant
would then notify the other service providers that it had received
the money.
The First Defendant would then tell the service providers
how much to invoice him for. According to the First Defendant the
Plaintiff
did not follow protocols. The First Defendant received
correspondence from the Plaintiff's attorneys and the Second
Defendant agreed
to a meeting with the Plaintiff's attorney. This
aspect already has been testified about by Mr Nel.
[65]
The Department has still not paid the
First Defendant notwithstanding a lawful demand by the First
Defendant's attorney. It is for
that reason that the First Defendant
has issued summons against the Department for payment of an amount of
R42 million in respect
of the outstanding payments.
[66]
Mr Isaac Edson Phiri ("Mr Phiri")
was the First Defendant's second witness. According to his testimony,
he is a quantity
surveyor. He qualified in June 1995 from Copperbelt
University. At the time he testified he was studying for his master's
degree
in property management through Witwatersrand University in
Johannesburg. Mr Phiri is self employed and runs a business
called
Third Dimensions Quantity Surveyors.
[67] He
testified that he knew all the projects involved in this action. He
was involved in the relevant
project abovo, from 2010 until the First
Defendant dispensed with his services. Any reference in the First
Defendant's papers to
a quantity surveyor refers to him. His role was
to provide project management services to the First Defendant, in
particular to
advise the First
Defendant
with regards to the costing of the projects. He was referred to a
document contained at page 36, bundle D. About the said
document, he
testified that it was a determination of professional fees for the
whole team for project Mathibestadt CHC, in particular
for the
kitchen and laboratory. This document was required by the First
Defendant. The laboratory and the kitchen of Mathibestadt
CHC were
not part of the original project. The First Defendant required
additional fees.
[68]
The document at page 37 of bundle D was
the fee estimates for the project management for the First Defendant.
These were the estimated
costs for the kitchen and laboratory of
Mathibestadt CHC. The fee was based on the value of the works. Page
38 of Bundle D constituted
the architectural fee calculation for the
Mathibestadt CHC's kitchen and laboratory. The architectural fee was
based on the value
of the works. The recommended fees were based on
the gazetted fees as at 2011. He testified furthermore that the table
on page
38 of Bundle D was an extraction from the architectural fees
on page 32, Board Notice 173 of 2010 of Bundle A. This is the annual
update of the PFG issued in terms of section 34(2) of the Act. He
used it to calculate the architectural fees.
[69]
He pointed out in his evidence that the
Plaintiff was not the principal agent and furthermore that the
principal agent was the First
Defendant. Referring to page 37 of
Bundle A he testified that the diagram on that page represents the
apportionment of fees between
stages. He explained how the
calculation of fees according to work stages was made.
ASSESSMENT
OF THE EVIDENCE
[70]
Before dealing with the evaluation of
the evidence that the onus lies on the Plaintiff to prove her case.
This is a principal of
law better set out in Pillay v Krishna and
Another
1946 AD 946
, 952. Citing voet, the Court, per Davis A.J.A.,
as he then was, had the following to say:
''But there is a third rule,
which voet states in the next section as follows:
He who asserts, proves and not
he who denies, since a denial of a fact cannot naturally be proved
provided that it is a fact that
is denied and that denial is
absolute. This rule is likewise to be found in a number of places in
the Corpus lurus: I again give
only one version: 'ei incubit probatio
qui dicit, non qui negat' (D: 22.3.2). The onus is on the person who
alleges something and
not on his opponent who merely denies.
"
Accordingly the burden to prove is
cast upon the Plaintiff to satisfy this Court that she is entitled to
succeed on her claim. In
the ordinary cause of events, no burden of
proof is, in this case in particular, cast on the First Defendant who
merely denies
the Plaintiffs allegations.
[71] In
this regard the Plaintiff has a duty not only to allege but also to
prove the terms of the parties'
agreement on which she relies. The
plaintiff has an added onus to prove that the First Defendant has
received payment from the
Department. It is not in dispute that:
71.1
the
parties herein had concluded an agreement both in writing and oral;
71.2
in
terms of the said agreement the First Defendant had appointed the
Plaintiff to provide architectural services to the First Defendant;
71.3
the
First Defendant was obliged to pay the Plaintiff her fees for such
services rendered;
71.4
the First Defendant has not paid the
Plaintiff all the fees for the services rendered;
71.5
in principle the First Defendant has not
paid the Plaintiff the fees she claims in her amended particulars of
claim;
71.6
it is also not in dispute that the First
Defendant owes the Plaintiff the sum of R7,645,851.72.
[72]
The dispute between the parties is
centred on the following allegation made by the Plaintiff in her
amended particulars of claim:
''8.9
It was a tacit term of agreement that the First Defendant would
effect payment of the Plaintiff's
invoices within 30 days from
receipt of any such invoice, alternatively within a reasonable time
upon receipt of any such invoice.
"
Where a party relies on the tacit
contract, in the same manner as the current plaintiff does, it is
necessary to plead that the
contract is tacit. The Plaintiff has, in
my view, satisfied this requirement.
ASSESSMENT
OF THE EVIDENCE
[73]
Kanunyu
admitted during cross examination that as far as he could remember,
the First Defendant was paid around R47.8 million for
all the four
projects. He was unable though to give any indication as to what
portion of the said amount was in respect of architectural
services.
He told the Court that without the tax invoices he could not tell how
much of the R47.8 million constituted architectural
fees.
[74]
It will be recalled that Mr Kanunyu told
the Court that, in his aforementioned capacity, he was also involved
in the process of
approving the First Defendant's invoices. He
testified furthermore that he recalled that there were two invoices
from the First
Defendant that were submitted in December 2014 for the
disbursement claims in respect of Mathibestadt and Sekhing CHC's.
They perused
those invoices and in January 2015 the Department
requested the First Defendant to furnish it with supporting
documentation. The
Department received no response from the First
Defendant as a consequence of which during June 2015 the Department
sent a reminder
to the First Defendant. These invoices were only
resubmitted during September 2017. It will be recalled furthermore
that Mr Kanunyu
testified that if there was an error in one invoice
the whole invoice would not be paid. That the said
invoices
were submitted to the Department by the First Defendant is not in
dispute. However, what is not very clear is whether or
not Ms Scholtz
took them in account when she executed her task. She has not made any
mention of such invoices in her evidence or
report.
KAGISO
MOSIMANYANE
[75]
The purpose of Mosimanyane's testimony
was to show the total amount paid by the Department to the First
Defendant for the period
2011 to 2013. These payments were in respect
of invoices 1 to 88 of Bundle B2. According to his evidence the
report at pages 42
to 44 of the BAS Report showed payments from 1
April 2013 to 31 March 2017. All these payments were made to the
First Defendant.
They amounted to R13.3 million.
[76]
His evidence was intended to assist the
Plaintiff to prove her claim. He had no knowledge of the working
relationship between the
First Defendant. Mainly he is preoccupied
with the processing of invoices in the finance section of the
Department. Despite the
fact that he dealt mainly with the processing
of invoices, he was not in a position to testify whether the invoices
that constituted
the Plaintiff's entire claim were paid by the
Department or not.
[77]
That this witness's evidence could not
support the Plaintiff's case is clear from the following
circumstances. His evidence covered
payment of invoices from 2011 to
2015 although the details of such payments were captured in 2017.
THE
PLAINTIFF
[78]
Ms Tondolo stated that the agreement
between the Plaintiff and the First Defendant was actually one where
the fees were discussed.
That agreement or discussion was then
followed by a letter which she submitted and which stated what her
fees as an architect were
going to be. She was adamant that the
agreement had been concluded at this stage; that the letter that
followed was not an agreement
and that the Plaintiff was claiming
fees as an architect.
[79]
She was adamant furthermore that despite
what 'A5' stated, she was never appointed as a project manager but as
an architect.
[80]
Under cross-examination she admitted:
80.1
that the parties had agreed that the
First Defendant would only be liable to make payment of the
Plaintiffs invoices submitted upon
the Department making payments to
the First Defendant;
80.2
secondly, that the parties had agreed
that in the event that the First Defendant was not paid by the
Department the First Defendant
was not liable to pay the Plaintiff
for the invoices submitted to the First Defendant.
[81]
Despite the admission that she made as
pointed out in paragraph 80 supra it was pointed out to her that in
the replication she denied
even the admission she made as set out in
paragraph 80 supra or set out in paragraph 4.3.8 of her replication.
In other words,
while she admitted that:
(1)
the
parties had agreed that the First Defendant would only be liable to
make payment of the Plaintiffs invoices submitted to the
First
Defendant upon the Department making payment to the First Defendant;
and,
(2)
in
the event that the First Defendant was not paid by the Department,
the First Defendant was not liable to pay the Plaintiff for
any
invoice submitted by the
Plaintiff, for
its replication, Ms Tondolo denied that she had agreed so with the
First Defendant.
81.1
When
it was put to her that in her replication she denied the whole of the
First Defendant's plea, she disputed it;
81.2
She
admitted that when
" he gets
paid I will get paid'.
She admitted
paragraph 4.3.7 of the First Defendan'ts amended plea, which is the
one that states that the First Defendant would
only be liable to make
payment of the Plaintiff's invoices submitted to it upon the
Department making payment to the First Defendant
and in the event
that the First Defendant was not paid by the Department, the First
Defendant was not liable to pay the Plaintiff
for an invoice
submitted to it.
[82]
Although the Plaintiff had stated in the
particulars of claim that:
"It was a tacit term of
the agreement that the First Defendant would effect payment to the
Plaintiff's invoices within 30 days
from receipt of any such invoice
alternatively within a reasonable time upon receipt of any such
invoice:
she
conceded that the real term of the parties' agreement about payment
was that the Defendant would pay once it has been paid by
the
Department.
[83]
To make sure that there was no
misunderstanding she admitted during further cross examination
by Mr Nalane that:
83.1
''the
First Defendant would only be liable to make payment of the
Plaintiff's invoices submitted to the First Defendant upon the
Department making payment to the First Defendant:·
83.2
she
agreed furthermore, still under cross-examination, that it was a term
of the parties' agreement that in the event that the First
Defendant
was not paid by the Department, the First Defendant was accordingly
not liable to pay the Plaintiff for any invoice submitted
to it by
the Plaintiff.
[84]
The evidence of the Plaintiff
contradicts paragraph 8.9 of the POC. In fact the Plaintiff concedes
that the contents of paragraph
8.9 of the POC do not reflect the
agreement between the Plaintiff and the First Defendant. Contrary to
paragraph 8.9 of the POC,
Ms Tondolo confirmed during
cross-examination that the agreement between the Plaintiff and the
First Defendant with regard to when
the First Defendant should make
payment of the Plaintiffs invoices was only after the Department had
paid the First Defendant.
[85]
The testimony of Ms van der Vyver, Mr
Nel and Ms Scholtz does not in any way assist the Plaintiff with what
the parties had agreed
upon. If anything the evidence of Ms Scholtz
assists in confirming the amount due by the First Defendant to the
Plaintiff. That
amount was, after adjustment of some figures,
R7,635,511.43. The First Defendant, through Mr Mboya, the Second
Defendant, gave
evidence that was dissatisfactory in several
respects. It is, however, of paramount importance to point out that
the fact that
Mr Mboya's evidence was in many respects
dissatisfactory, and I will demonstrate this part by reference to
such unsatisfactory
evidence, did not assist the Plaintiffs case. It
is equally of paramount importance to point out that on the crucial
point of when
the First Defendant was obliged, in terms of the
parties' agreement, to make payment of the Plaintiffs fees, the
Second Defendant's
evidence is consonant with the Plaintiffs version.
The Plaintiff and the First
Defendant
were ad idem on this point.
[86]
Before dealing with the unsatisfactory
portions of the Second Defendant's evidence, it is only proper to
refer to the argument by
Ms Joubert. It is correct that the First
Defendant claimed that there was no obligation on its part to pay the
Plaintiffs invoices
as it had not received any payment from the
Department. Ms Joubert's argument was that this defence by the
Defendants was irrelevant
because it was clear that the First
Defendant had received payment
in
ful
l
from
the Department in respect of the invoices submitted by it, including
the amounts in respect of the Plaintiff's architectural
fees. In this
regard Ms Joubert relied on the report of Ms Scholtz and also on the
evidence of Mr Mosimanyane.
[87]
Ms Scholtz, it will be recalled, had
prepared an expert report for the Plaintiff from various sources that
were made available to
her. On the basis of such sources she came to
a conclusion that:
"4.6.16
Mboya CC received payment in full from the NWDOH for its invoices
whichincluded architect fees of R15,114,267 25.11
And
"4.6.19
...
however as set out in our findings above, the NWDOH paid all
the Mboya CC invoices in full which included architect fees of
R15,114,267
25.”
There is also the evidence of Mr
Mosimanyane, on which Ms Joubert relied, for the conclusion that the
First Defendant has received
payment in respect of
all invoices
submitted for the period 2011 up to 2017.
[88]
For the following reason, the evidence
of both Ms Scholtz and Mr Mosimanyane is, on this point, unreliable.
While both of them testified
that "
all
invoices
" submitted by the
First Defendant were paid, there is the uncontroverted evidence of
Kanunyu that he sometimes scrutinised
invoices; that tax invoice no
2014/10 dated 10 October 2014 (page 93 of Bundle A) and another
invoice whose details he could not
recall were not paid. In respect
of these two invoices the Department had, according to his evidence,
requested to be furnished
with supporting documents to substantiate
the amount claimed. It will also be recalled that Mr Kanunyu
testified, in response to
a question by the Court, that where even a
single item in an invoice was questioned, the whole invoice would not
be paid. These
two invoices remained unpaid up to the end of June
2015. It find it surreal that Mr Mosimanyane did not testify about
these invoices.
It is even more surreal that it was never drawn to
the attention of Ms Scholtz. She did not testify about them. That
these two
invoices were submitted by the First Defendant to the
Department is not in dispute. When both Mr Mosimanyane and Ms Scholtz
referred
to "
all the invoices"
submitted by the First Defendant to the Department were paid, both of
them referred also to these two invoices. The Court accordingly
finds
it difficult to rely on the evidence of both Mr Mosimanyane and Ms
Scholtz.
[89]
As I indicated earlier, there are
portions of the Second Defendant's evidence that are unsatisfactory.
An example of such dissatisfaction
emanates from the manner in which
the First Defendant pleaded its case, in particular, the reasons that
it gave for failing or
refusing or neglecting to pay the Plaintiff's
fees. According to Ms Joubert's heads of argument, the
Second
Defendant deposed, on behalf of the First Defendant, to an affidavit
opposing the Plaintiff's application for summary judgment.
In the
said affidavit, the Second Defendant raised certain defences as
reasons why the First Defendant did not pay the Plaintiffs
invoices.
These defences were neither raised in the affidavit opposing the
application for summary judgment nor in the First Defendant's
plea.
Instead they were raised only in the Plaintiffs second request for
further particulars to prepare for trial.
[90] It is
not proper to litigate in that manner. It leaves doubt in the mind of
the Court whether the First
Defendant's defences are genuine. The
only observation one can make with regard to such defences is that,
as I have stated earlier,
they do not assist the Plaintiff to
discharge the onus that rests her. Consequently the Plaintiff has
failed to proof the vital
term of the agreement and finally that the
First Defendant has received payment in respect of the invoices on
which her claim is
predicated.
[91]
The Plaintiff's claim against the Second
Defendant is predicated on the provisions of ss 64 and 65 of the
Close Corporations Act
69 of 1984 ("the CCA"). In respect
of this claim it is pleaded in the alternative by the Plaintiff that:
91.1
at all material times the Second
Defendant, the sole member of the First Defendant, received and
submitted the Plaintiff's invoices
to the Department;
91.2
he received payments from the Department
in respect of the relevant invoices;
91.3
knowing that such payments were not due
to the First Defendant;
91.4
acted fraudulently, alternatively
recklessly and further alternatively grossly negligently;
91.6
that such a conduct constituted
the abuse of the corporate juristic personality of the First
Defendant; and
91.7
thereby attracted personal
liability to the Second Defendant as contemplated by the provisions
of the said sections of the CCA.
[92]
S 64 of the CCA provides as follows:
“
(1) If
at any time appears that any business of a corporation was or is
being carried on recklessly, with gross
negligence or with intent to
defraud any person or for any fraudulent purpose, a Court may on the
application of the Master, or
any creditor, member or liquidator of
the corporation, declare that any person who was knowingly a party to
the carrying on of
the business in any such manner, shall be
personally liable for all or any such debts or any liabilities of the
corporation as
the Court may direct, and the Court may give such
further orders as it considers proper for the purpose of giving
effect to the
declaration and enforcing that liability.”
Section 65 provides as follows:
“
Whenever a Court on
application by an interested person, or in any proceedings in which a
corporation is involved, finds that the
incorporation of, or any act
by or on behalf of, or any use of, that corporation, constitutes a
gross abuse of the juristic personality
of the corporation as a
separate entity, the Court may declare that the corporation is to be
deemed not to be a Juristic person
in respect of such rights,
obligations or liabilities of the
corporation
or of such member or members thereof, or of such other person or
persons, as are specified in the declaration, and the
Court may give
such further order or orders as it may deem fit in order to give
effect to such declaration.”
[93]
In order to succeed with this claim, or
the alternative claim, the onus lies on the Plaintiff to prove, in
terms of s 64 of the
CCA, that:
93.1
the business of the corporation was or
has been carried on with gross negligence;
93.2
or with intent to defraud any person or
in this case the plaintiff;
93.3
or any fraudulent purpose.
In addition, with particular
reference to this matter, the Plaintiff must prove that the First
Defendant received from the Defendant
payment in respect of invoices
the Plaintiff submitted to the First Defendant; that the Second
Defendant knowing that such payment
did not belong to the First
Defendant, recklessly used the said money for purposes totally
unconnected with the business of or
the corporation.
[94]
The Defendants denied the Plaintiff's
allegations based on ss 64 and 65 of the CCA. In particular the-
First Defendant pleaded that
it did not receive from the Department
any payment in respect of the invoices on which the Plaintiffs claim
is based. Relying on
the oral agreement, the First Defendant pleaded
that it is accordingly not liable for payment to the Plaintiff until
it had received
payment from the Department which included payment in
respect of the Plaintiffs invoices. Based on the First Defendant's
denial
the Second Defendant denied that he conducted himself in the
fraudulent, reckless or grossly negligent manner that constituted an
abuse of the First Defendant's juristic personality.
[95]
Ms Joubert argued, with reference to
some authorities, that the Second Defendant abused the First
Defendant and that the Second
Defendant should accordingly be held
liable towards the Plaintiff jointly and severally with the First
Defendant. Furthermore she
submitted that it has been established
that the Second Defendant conducted the business of the First
Defendant recklessly and that
he disregarded the separate juristic
personality of the First Defendant. It is for this reason that Ms
Joubert argued that the
Second Defendant should be made to pay for
the First Defendant's debts.
[96]
The most important questions are
firstly, whether the Plaintiff has proved that the monies which the
Second Defendant withdrew from
the bank account of the First
Defendant belonged to her and secondly, whether the monies were paid
by the Department for her benefit.
It is not in dispute that the
Second Defendant used the First Defendant as an extension of himself.
It must be borne in mind though
that the Second Defendant was the
sole member of the First Defendant. He was therefore at large to use
the money in the First Defendant's
bank account at his pleasure. It
was argued by Mr Nalane in his heads of argument that the Plaintiff
has failed to prove that the
monies the Second Defendant used from
the First Defendant's bank account belongs to her or that his or some
of it was destined
to her or that these were monies paid by the
Department in respect of her invoices to the
First
Defendant. In short she has not proved that the Department has paid
the First Defendant in respect of the invoices she had
submitted to
the First Defendant. It goes without saying that in the absence of
proof that the Department has paid the First Defendant
the aforesaid
monies there cannot be a complaint based on s 64 of the CCA simply
because of the use by the sole member of the funds
of the
corporation.
[97]
In my view, the Plaintiff has failed to
prove:
97.1
the tacit term on which her claim is
predicated;
97.2
that the Department has made payment to
the First Defendant in respect of the invoices she submitted to the
First Defendant;
97.3
that the money in the First Defendant's
bank account was money destined to her;
97.4
that the conduct of the Second Defendant
was conduct envisaged by the provisions of s 64 of the CCA.
[98]
Accordingly the Plaintiff's claim cannot
succeed.
It is accordingly dismissed
with costs.
P.M.
MABUSE
JUDGE
OF THE HIGH COURT
Appearances:
Counsel
for the Plaintiff:
Adv I Joubert
Instructed
by:
Roelf Nel Inc.
Counsel
for the Defendants: Adv J Nalane
Instructed
by:
Ntanga Nkuhlu Inc.
Dates
heard:
7-9 Feb. 2018, 11-13 Apr. 2018, 25-26 Jun 2018,
8 Oct.
2018
Da7te
of Judgment:
2 July
2019