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[2008] ZASCA 127
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Affirmative Portfolios CC v Transnet Ltd. t/a Metrorail (473/2007) [2008] ZASCA 127; 2009 (1) SA 196 (SCA) ; [2009] 1 All SA 303 (SCA) (30 September 2008)
Links to summary
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No: 473/2007
In the matter between:
AFFIRMATIVE PORTFOLIOS CC
APPELLANT
v
TRANSNET LIMITED t/a METRORAIL
RESPONDENT
Neutral citation:
Affirmative
Portfolios v Transnet
(473/2007)
[2008] ZASCA
127
(30 September 2008).
Coram: HARMS ADP, CAMERON, JAFTA, MAYA JJA, et
BORUCHOWITZ AJA
Heard: 22 August 2008
Delivered: 30 September 2008
Corrected: 06 October 2008
Summary: Claim based on written agreement –
whether prior oral agreement enforceable – application of the
parol evidence
rule - counterclaim based on unjustified enrichment –
condictio indebiti
–
whether the requirement that error not be excusable satisfied –
error found not to be excusable.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from:
High Court,
Durban (Tshabalala JP sitting as court of first instance).
The following order is made:
(1) The appeal succeeds to the extent set out hereunder:
(a) The appeal against the judgment on the appellant’s
claim of
R833 660.87 is dismissed;
(b) The appeal against the counterclaim is allowed;
(c) The respondent is to pay the costs of the appeal,
including those occasioned by the employment of two counsel.
The order of the court a quo is set aside and the
following is substituted in its stead:
‘
(a) The plaintiff’s claim for R883 660.87
is dismissed;
(b) The defendant’s counterclaim for the amount of
R515 317.45 is dismissed;
(c) Each party is to pay its own costs.’
______________________________________________________________
JUDGMENT
______________________________________________________________
BORUCHOWITZ AJA (HARMS ADP, CAMERON, JAFTA, MAYA JJA
concurring):
[1] The appellant instituted action against the
respondent in the Durban High Court in which it claimed, among other
relief, payment
of the sum of R883 660.87. The essential basis of the
claim was that the respondent had underpaid the appellant in respect
of certain
services that had been rendered. The respondent, in turn,
instituted a counterclaim for re-payment of an amount of R515 317.45
on the basis of unjustified enrichment. The matter came before
Tshabalala JP who dismissed the claim and upheld the counterclaim.
The appellant appeals against these orders with leave of the court a
quo.
BACKGROUND
[2] The appellant is a labour broker. In November 1999
the Metrorail Tender Board invited tenders for the supply of access
controllers
who were to be deployed on station platforms under the
control of the respondent. Their function was to ensure that
passengers
boarding trains had tickets authorising them to do so. The
appellant was notified of the acceptance of its tender on 29 March
2000.
[3] Pursuant thereto a written agreement was entered
into between the parties in terms whereof the appellant was to supply
200 access
controllers for a period of 36 months commencing on 1
April 2000 at a monthly rate of R358 800 plus VAT. Although not
specifically
spelled out, it is common cause that this figure was
based on an hourly rate of R15 for a maximum of 104 hours per month
per controller,
plus an administration fee of 15 per cent (making a
total of R17.25 per hour). The agreement was signed by the respondent
on 3
May 2000 and by the appellant on 5 May 2000. It should be
mentioned that the appellant had already been providing the services
in question to the respondent since September 1999.
[4] Clauses 10.1 and 16.1 of the agreement which are
relevant for present purposes provide as follows:
‘
10.1 No deviation from
the scope, pricing or programme of Service contained herein shall be
permitted unless the Client has given
prior written consent . . .’
‘
16.1 Unless specifically
stated otherwise in the Pricing Schedules, all prices are fixed as
per the formula agreed upon in Annexure
B, for the duration of the
Contract and shall not be subject to any variation, except in terms
of Clause 10 in particular, shall
include all applicable taxes,
duties and fees, except for Value Added Tax which is to be stated
separately.’
[5] With effect from 1 April 2000, the appellant
increased the charge to R17.25 per hour plus the administration fee
of 15 per cent.
The appellant says it did so because Mr Naicker, the
contracts manager of the Durban region of the respondent had informed
Mr Xaba,
the sole member of the appellant, that Mr Mncube, the Durban
regional manager of the respondent, had agreed to this increase. The
respondent however disputes having agreed or instructed the appellant
to effect the said increase.
[6] The appellant paid the increased charge without
complaint for the months of April to September 2000, both months
inclusive.
[7] At a meeting between the representatives of the
parties held on 20 December 2000 Xaba, was told that the appellant
had been
charging in excess of what was allowed in terms of the
agreement and that henceforth the appellant was to revert to charging
R15
per hour per controller plus a 15 per cent administration fee.
Xaba reluctantly agreed to this but reserved the appellant’s
rights in regard thereto. From the date of that meeting the appellant
resumed charging the specified rate of R15 per hour plus
15 per cent.
[8] In April 2002 the respondent purported to summarily
terminate the agreement. The appellant treated this as a repudiation
of
the agreement and accepted this. The respondent accepted before
trial that its repudiation was unlawful and an amount of damages
was
agreed. The appellant thereupon instituted the action forming the
subject matter of the present appeal.
THE CLAIM
[9] The primary question is whether the written
agreement was varied so as to provide for the payment of an increased
remuneration
calculated on the basis of R17.25 per hour plus the 15
per cent management fee.
[10] The crux of the appellant’s case is to be
found in para 6 of the particulars of claim where the following
allegations
are made:
‘
6. During the month of
May 2000 the aforesaid written agreement was varied orally, or
tacitly or by conduct by the parties in the
following respects:
[clause 10.1 of the agreement
was deleted];
the defendant would pay to the
plaintiff an increased remuneration calculated on the basis of
R17,25 per hour (for normal hourly
rates) worked by each access
controller plus the 15% management fee, such increase to be paid
from the date of such variation.
Clause 16(1) was varied by the
deletion of the words following on the words “all prices”
where they appear in the
first line of such paragraph up to and
including the words “clause 10 in particular” where such
words appear in the
third line of such clause.’
[11] There is no evidence to support the allegations in
para 6 of the particulars of claim concerning an oral variation. None
of
the appellant’s witnesses testified that the parties had
agreed to delete clause 10.1 or the alleged portions of clause 16.1.
Nor was there evidence that it was orally agreed during May 2000 to
increase the applicable rate.
[12] What the evidence in fact establishes is that an
oral agreement authorising the increased rate may have been entered
into during
April 2000. Mr Baxter, who managed the accounting and
administrative affairs of the appellant, testified that if there was
an agreement
to increase the rates this must have occurred during
April 2000 because such rate was first reflected in the appellant’s
invoice which was generated by 30 April 2000. Support for Baxter’s
contention is to be found in the appellant’s letter
to the
respondent dated 20 December 2000 in which it is stated that the
appellant increased the access controllers’ wages
in the same
month that the new rate was communicated to the appellant.
[13] The appellant is precluded from relying on the
alleged oral agreement by virtue of the so-called ‘parol’
evidence
or ‘integration’ rule. The oral agreement for
which it contends would have been entered into before the signing of
the written agreement and also contains terms which are at variance
therewith. It is a well established principle that where the
parties
decide to embody their final agreement in written form the execution
of the document deprives all previous statements of
their legal
effect. See
National Board (Pretoria) (Pty)
Ltd v Estate Swanepoel
1
and cases there cited. As was stated by Watermeyer JA in
Union
Government v Vianini Ferro-Concrete Pipes (Pty) Ltd
:
2
‘
. . . this Court has
accepted the rule that when a contract has been reduced to writing,
the writing is, in general, regarded as
the exclusive memorial of the
transaction and in a suit between the parties no evidence to prove
its terms may be given save the
document or secondary evidence of its
contents, nor may the contents of such document be contradicted,
altered, added to or varied
by parol evidence.’
[14] Not all oral or collateral agreements are
necessarily deprived of legal effect. The parol evidence rule applies
only where
the written agreement is or was intended to be the
exclusive memorial of the agreement between the parties. Where the
written agreement
is intended merely to record portion of the agreed
transaction, leaving the remainder as an oral agreement, then the
rule prevents
the admission only of extrinsic evidence to contradict
or vary the written portion without precluding proof of the
additional or
supplemental oral agreement. This is often referred to
as the ‘partial integration’ rule. See
Johnston
v Leal
3
and the cases there cited.
[15] A court may look to surrounding circumstances,
including the relevant negotiations of the parties, in order to
determine whether
the parties intended a written contract to be an
integration of their whole transaction or merely a partial
integration. See
Johnston
supra
945D-E. The fact that the parties specifically refer to a topic or
subject in the wording is generally an indication that
the writing
was intended to be conclusive as to that aspect of the transaction.
This point is aptly made in the following passage
in Wigmore on
Evidence
, s 2430:
‘
(3) In deciding upon this
intent, the chief and most satisfactory index for the judge is found
in the circumstance whether or not
the
particular
element of the alleged extrinsic negotiation is dealt with at all
in the writing. If it is mentioned, covered, or dealt with in the
writing, then presumably the writing was meant to represent all
of
the transaction on that element; if it is not, then probably the
writing was not intended to embody that element of the negotiation
.
. . .’
[16] The question of prices and the pricing structure is
a matter that was specifically dealt with in the written agreement.
The
preamble expressly states that ‘. . . the Contractor
undertakes to carry out the work described in the contract
specifications
at the price or prices quoted, and subject to the
general conditions of contract attached hereto’.
C
lause 16.1 provides that ‘. . . unless
specifically stated otherwise in the Pricing Schedules, all prices
are fixed as per
the formula agreed upon.’
It follows that the written agreement must be
regarded as conclusive in regard to the applicable rate in respect of
the appellant’s
services.
[17] If it was indeed the common intention of the
parties that the rates be varied the appellant could have availed
itself of the
equitable remedy of rectification. In the event,
however, it chose not to do so and is bound to the terms of the
written agreement.
[18] Reliance cannot be placed on the allegation in para
6 of the particulars of claim to the effect that the agreement was
varied
tacitly or by conduct in the light of the aforegoing.
Furthermore clause 10.1, which is in effect a non-variation clause,
entrenches
the pricing provisions against oral or tacit variation.
The binding nature of such a provision was emphasised in
SA
Sentrale Ko-Op Graanmaatskappy Bpk v Shifren en andere
4
and affirmed more recently in the case of
Brisley v Drotsky
.
5
Clause 10.1 may be varied otherwise than in writing (as to which see
Clemans v Russon Brothers (Pty) Ltd
).
6
However there is no evidence that the parties agreed or even applied
their minds to the question of deleting the clause. It accordingly
remains of force and effect.
[19] It was further argued that the respondent’s
letter dated 1 September 2000 constituted sufficient written
authority to
increase the rates. This argument is without merit. The
letter, in its terms, does not purport to address such issue. The
author,
Mr Pillay, who was the then financial manager of the Durban
region of the respondent, testified that when he wrote the letter he
was not aware of any rate increase. He addressed the letter to the
appellant because it was experiencing cash flow problems.
[20] In yet a further attempt to neutralise any reliance
on the non-variation provision, the appellant sought refuge in the
principles
of estoppel. It was argued that the appellant had relied,
to its prejudice, on Naicker’s representation that Mncube had
authorised
the charging of the increased rate. In order to succeed
with a plea of estoppel it had to be shown that Naicker’s
representation
could reasonably have been expected to mislead the
appellant. See
Monzali v Smith
.
7
The representation made could not in my view have misled the
appellant in view of the formal tender process which was then not
yet
completed. In these circumstances the appellant could not reasonably
have believed that either Naicker or Mncube had authority
to increase
the rates without the approval of the Tender Board. There was also no
representation emanating from the respondent
itself that either
Naicker or Mncube had authority to vary the rates.
[21] Lastly, and on the assumption that the
non-variation clause was applicable, it was argued that the
appellant’s invoices
which were supported by documents signed
by officials of the respondent constituted sufficient written
authority to vary the rates.
This argument cannot be sustained.
Clause 10.1 plainly provides that no variation would be permitted
unless the respondent had
given its ‘prior written consent’.
The signed invoices or payments certificates do not purport to give
consent and
even if one were to construe them in that manner such
consent was not given prior to any increase.
[22] For these reasons the appeal in respect of the
appellant’s claim cannot succeed.
THE COUNTERCLAIM
[23] The respondent seeks by means of the
condictio
indebiti
to recover payment from the
appellant of the amounts that were overpaid during the period April
to September 2000.
[24] The central requirement of the
condictio
indebiti
is that the payment or transfer must
have been effected in the mistaken belief that the debt was due. It
is also an established
requirement that the mistake, whether of fact
or of law, must be excusable:
Willis Faber
Enthoven (Pty) Ltd v Receiver of Revenue and another
.
8
[25] That there was no obligation on the respondent to
pay the amounts claimed and that the payments had been made in error
can
admit of no doubt. The respondent’s officials overlooked
the unauthorised increase in the rates charged by the appellant and
failed to check the rates stipulated in the appellant’s
invoices against the written agreement.
[26] The court a quo found that although the defendant’s
conduct was incompetent and negligent it could not be characterised
as inexcusable as to be unworthy of the protection of the court.
Reliance in this regard was placed on what was stated by this
Court
in
Bowman, De Wet and Du Plessis NNO and
others v Fidelity Bank Ltd
.
9
[27] For the appellant it was argued that the court a
quo had erred in finding that the excusability requirement had been
satisfied
as the evidence showed that in effecting payment the
respondent’s officials had been grossly negligent. It was also
argued
that the court a quo’s reliance on
Bowman
was misplaced as the claimant in that case was an executor who fell
within one of the recognised exceptions to the excusability
principle
(see
Bowman
at
44H-45F).
[28] Despite strident calls for its abolition, the
excusability requirement has been maintained and applied in a long
line of cases
beginning with
Rooth v The
State
.
10
[29] It was authoritatively settled by this court in
Willis Faber
that a
plaintiff seeking to invoke the
condictio
indebiti
must prove sufficient facts to
justify a finding that the error that gave rise to the payment was
excusable. This requirement is
not immutable and admits of exceptions
particularly in cases involving payments made by persons in a
representative position: see
Bowman,
supra (at 40A-C).
[30] Recently there have been renewed calls by academic
authors to abolish the requirement. See Daniel Visser
Unjustified
Enrichment
11
and Helen Scott, ‘The Requirement of Excusable Mistake In The
Context Of The Condictio Indebiti: Scottish and South African
Law
Compared’.
12
The present matter is clearly not an appropriate case in which to
deviate from existing authority since the question of abolishing
the
excusability requirement was neither pertinently raised nor argued by
the parties.
[31] This court has been reluctant to lay down rules or
formulations in order to circumscribe what is excusable and what is
not.
See
Bowman
supra
at 44D-E. One is however able to discern certain general principles
that have emerged from the decided cases. Grossly negligent
conduct
or inexcusable slackness in the conduct of one’s own affairs is
generally (but not necessarily) regarded as inexcusable
conduct. This
has been derived from the statement of Voet 16.2.7 that the ignorance
of fact should appear to be ‘neither
slack nor studied’
(
nec supine nec affectata
)
or of a fact concerning the plaintiff’s own affairs.
[32] Whether the defendant had induced the mistake in
the plaintiff has often played an important part in the court’s
view
of what constitutes an excusable error. See for example the
facts in
Willis Faber
and
Bowman
.
[33] In
Willis Faber
(at
224E-G) Hefer JA provided the following indications as to what
factors might determine the excusability of a particular error:
‘
It is not possible nor
would it be prudent to define the circumstances in which an error of
law can be said to be excusable or,
conversely, to supply a
compendium of instances where it is not. All that need be said is
that, if the payer’s conduct is
so slack that he does not in
the Court’s view deserve the protection of the law, he should,
as a matter of policy, not receive
it. There can obviously be no
rules of thumb; conduct regarded as inexcusably slack in one case
need not necessarily be so regarded
in others, and vice versa. Much
will depend on the relationship between the parties; on the conduct
of the defendant who may or
may not have been aware that there was no
debitum
and
whose conduct may or may not have contributed to the plaintiff’s
decision to pay; and on the plaintiff’s state of
mind and the
culpability of his ignorance in making the payment.’
[34] The nature of the mistake perpetrated by the
respondent when each payment was made is clear, but the reason is
not. The respondent
has failed to explain why the mistake occurred
and why it occurred repeatedly over a seven month period.
[35] The written agreement was readily accessible to the
respondent’s officials. It originated from a formal tender
process.
Its terms were approved by the Metrorail Tender Board and
were a matter of public record. The failure by the respondent’s
officials to detect the unauthorised increase and to check the rates
stipulated in the appellant’s invoices with the written
agreement can only be attributed to extreme slackness or negligence
on their part.
[36] It was argued on behalf of the respondent that the
overpayments were induced by the fact that the appellant had
submitted invoices
claiming the increased rate of R17.25 per hour
plus the 15 per cent administration fee. That submission cannot be
sustained. The
evidence of both parties was to the effect that there
was a careful checking of invoices and supporting documentation
before any
payment was made.
[37] Having regard to all the circumstances I am of the
view that the respondent’s conduct was culpable to a degree
rendering
same inexcusable, and for that reason the trial court ought
to have dismissed the counterclaim.
[38] There is yet a further reason why the counterclaim
cannot be sustained. It is clear from the evidence that most of the
moneys
that the appellant received from the respondent were paid to
the appellant’s employees and the relevant regulatory
authorities.
The appellant only retained a small percentage thereof
in respect of its administration fee. The extent of the appellant’s
enrichment was therefore minimal. What finds application in the
present case is the defence of non-enrichment as enunciated by
this
court in
African Diamond Exporters (Pty) Ltd v
Barclays Bank International Ltd
,
13
which essentially amounts to this. Where the receiver has lost or
disposed of part of that which has been paid to him, he will
only be
liable for what remains in his hands at the time when the action is
instituted. See
Senwes Ltd v Jan van Heerden &
Sons CC
;
14
J G Lotz
Enrichment
, 9
Lawsa
(2 ed), para
213. As the counterclaim ought, for the reasons stated, to be
dismissed it is unnecessary to determine the extent
of the
appellant’s enrichment.
CONCLUSION
[39] It follows that the appeal should be allowed only
to the extent of the counterclaim. As the appellant has achieved
substantial
success on appeal it is entitled to its costs including
those occasioned by the employment of two counsel. As far as costs in
the
court below are concerned these should be borne equally by the
parties as each achieved a comparable measure of success.
THE ORDER
[40] The following order is made:
(1) The appeal succeeds to the extent set out hereunder:
(a) The appeal against the judgment on the appellant’s
claim of
R833 660.87 is dismissed;
(b) The appeal against the counterclaim is allowed;
(c) The respondent is to pay the costs of the appeal,
including those occasioned by the employment of two counsel.
The order of the court a quo is set aside and the
following is substituted in its stead.
‘
(a) The plaintiff’s claim for R883 660.87
is dismissed;
(b) The defendant’s counterclaim for the amount of
R515 317.45 is dismissed;
(c) Each party is to pay its own costs.’
________________________
P BORUCHOWITZ
ACTING JUDGE OF APPEAL
Appearances:
For Appellant: D J Shaw QC
E A Matthis
Instructed by
J H Nicholson Stiller & Geshen, Musgrave
Symington & De Kok, Bloemfontein
For Respondent: C J Pammenter SC
Z P Pungula
Instructed by
A P Shangase & Associates, Durban
Mthembu & Van Vuuren Inc, Bloemfontein
1
1975 (3) SA 16
(A) at 26A-D.
2
1941 AD 43
at 47.
3
1980 (3) SA 927
(A) at 944B-E.
4
1964 (4) SA 760
(A).
5
2002 (4) SA 1
(SCA).
6
1970 (3) SA 686
(E) at 689E-F
.
7
1929 AD 382
at 386.
8
[1991] ZASCA 163
;
1992 (4) SA 202
(A).
9
1997 (2) SA 35
(A) at 44C-G.
10
1888 (2) SAR 259.
11
(2008) 316-318
12
(2007) 124
SALJ
827.
13
1978 (3) SA 699
(A) at 713F-H
14
[2007] 3 All SA 24
(SCA) para 34.