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[2018] ZAKZPHC 50
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Indiza Infrastructure Solutions (PTY) Ltd v MEC For Education of Kwazulu-Natal and Another (3320/2007) [2018] ZAKZPHC 50 (16 October 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Not Reportable
Case
No: 3320/2007
In
the matter between:
INDIZA
INFRASTRUCTURE SOLUTIONS (PTY) LTD
Applicant
And
MEC
FOR EDUCATION
OF
KWAZULU-NATAL
1
st
Respondent
MOTSWEDI
OUTSOURCING (PTY) LTD
2
nd
Respondent
And
in the counterclaim between:
MOTSWEDI
OUTSOURCING (PTY) LTD
Applicant
in Reconvention
and
INDIZA
INFRASTRUCTURE
SOLUTIONS
(PTY) LTD
Respondent in Reconvention
And
in the Rule 13 proceedings between:
MOTSWEDI
OUTSOURCING (PTY) LTD
2
nd
Respondent
and
MEC
FOR EDUCATION
OF
KWAZULU-NATAL
3
rd
Party
ORDER
1.
In respect of the second respondent’s claim in reconvention
(or
counter application), an order of absolution from the instance is
granted.
2.
Case 4957/2007 is enrolled and the interim interdict granted
in that
matter is discharged.
3.
The first respondent’s attorney of record, namely the
State
Attorney, KwaZulu-Natal, is directed to pay to the applicant all the
monies held by it in trust pursuant to the order issued
in this
matter on 4 March 2016, inclusive of interest.
4.
The second respondent is directed to pay the applicant’s costs
in case
numbers 3320/2007 and 4957/2007, such costs to include the
costs of senior counsel where employed.
JUDGMENT
Delivered on: 16
October 2018
Gorven
J
[1]
This matter has had a long and tortuous history. It concerns a tender
for an Integrated Management System to deliver learner and teacher
support materials (LTSM) to schools in KwaZulu-Natal for the
2006 and
2007 academic years. It began as an application in early 2007. In
this Indiza claimed payment of R128 million from the
Department.
Motswedi was joined as the second respondent. Motswedi brought a
counter-application against Indiza and delivered a
third party notice
to the Department. The applications were referred to trial. Despite
this, the parties continued to refer to
themselves as in the
application and I shall do the same. LTSM shall be referred to as
stationery. The applicant shall be referred
to as Indiza, the first
respondent as the Department and the second respondent as Motswedi. I
was requested to decide the counter-application.
The Department
delivered a notice that it would abide the decision of the court on
this issue.
[2]
The Department called for two tenders for the academic years in
question;
one for stationery and the other for textbooks. The closing
date for submission was 25 April 2005. Indiza and Motswedi
agreed to jointly submit tenders for both and did so. On 19 May 2005,
the Department informed Indiza–Motswedi that
their tender for
stationery only had been successful. No more need be said about the
tender for textbooks. An unsuccessful tenderer
appealed the award.
The Department suspended the tender pending the outcome of the
appeal. The appeal was resolved in December
2005. All of the parties
to this matter concur that an SLA was to be concluded before the
tender could be put into effect. It is
common ground that this did
not happen and that no work was done pursuant to the tender.
[3]
Stationery had to be delivered to schools by no later than 31 October
for each following academic year. Orders had to be placed by no later
than the end of August or beginning of September. The Department
perforce decided to conclude an interim arrangement for the 2006
academic year. It was concerned that if it did not do so, there
would
be a danger of delays in the provision of stationery. It concluded an
agreement (the interim arrangement) for this purpose
with Indiza. An
interim Service Level Agreement (Interim SLA) was signed. Pursuant to
the interim arrangement and Interim SLA,
stationery was delivered to
schools for the 2006 academic year. This extended into the 2007
academic year. Certain payments were
made by the Department to
Indiza. In January 2007, Indiza indicated an intention to terminate
any agreement with the Department.
It then claimed in this
application what it said was due to it by the Department.
[4]
In the counter-application, Motswedi claims a partnership agreement
came
into effect between itself and Indiza. It says that Indiza
breached its fiduciary duty to Motswedi arising from the partnership.
Motswedi accordingly claims an account and disgorgement of profits
made by Indiza from the interim arrangement. Motswedi correctly
accepted the onus in the counter-application and the duty to begin.
When it closed its case, Indiza applied for absolution on the
counter-application. This judgment deals with the question of
absolution. The test is uncontroversial:
‘
(W)hen
absolution from the instance is sought at the close of plaintiff's
case, the test to be applied is not whether the evidence
led by
plaintiff establishes what would finally be required to be
established, but whether there is evidence upon which a Court,
applying its mind reasonably to such evidence, could or might (not
should, nor ought to) find for the plaintiff.’
[1]
[5]
Any claim is founded on pleadings and evidence. Two aspects of
Motswedi’s
pleaded counter-application are relevant; the terms
of the partnership and the alleged breach of fiduciary duty. The
relevant terms
pleaded are as follows:
‘
6.2.1 Indiza
and Motswedi would conduct business with the department in
partnership with each other.
6.2.2 The
name of the partnership would be
Indiza–Motswedi
.
6.2.3 Indiza
and Motswedi would pool their expertise in
Indiza–Motswedi
to provide the following goods and render the following services . .
. to the department.
6.2.4 Indiza
would:
6.2.4.1
provide its expertise to render supply chain and project management
services and to procure, manage and
distribute (stationery) to the
department . . .; and
6.2.4.2
be responsible for the day-to-day management of
Indiza–Motswedi
and communication with the department; and
6.2.4.3
attend to the operations side of the partnership, such as management
and delivery of (stationery).
6.2.5
Motswedi would provide its expertise to customise, install,
implement, maintain and support a computerised (stationery)
system
for the department and, if and when required to do so, train users
thereof . . . .
6.2.6
Indiza–Motswedi
would tender to provide the goods and
render the services as set out in the department’s request for
tender . . . .
6.2.7
Indiza–Motswedi
would comply with such requirements as
the department may have, including the preparation and timeous
submission of a tender.
6.2.8
Indiza–Motswedi
would be a 50/50 joint venture
partnership alternatively, Indiza would provide management services
and Motswedi would provide IT
services and the net profit earned
would be shared equally, further alternatively Indiza would receive
the net profit earned in
respect of the management services and
Motswedi would receive the net profit earned from the IT services.’
It
appears from this that the agreement between Indiza and Motswedi
related to the submission and performance of the tender. It
was
submitted on behalf of Motswedi that it went beyond the tender to
include any agreement with the Department concerning stationery.
Assuming, but without deciding, that this was the case, the question
is whether the evidence of Motswedi supported that the agreement
extended this far.
[6]
The only witness for Motswedi was its managing director, Mr Matsoso.
I
will base my discussion of this aspect of the matter on what he
said in his evidence in chief. As will appear later in this judgment,
his later evidence contradicted material aspects of that given in
chief. He testified that he and Mr Maboso, the managing director
of
Indiza, were introduced to each other by a mutual associate. This
person knew that Motswedi was involved in IT and that Indiza
was
looking for an IT partner so as to submit the tenders to the
Department. An oral agreement was reached between the parties.
He
testified that he and Mr Mabaso agreed on the structure of their
response to the request for tenders. They would tender as a
joint
venture known as Indiza–Motswedi. The tender essentially
comprised two aspects; an integrated management system and
procurement services. Motswedi would supply the system. It was a
shareholder in Motswedi IFS (IFS), a company held by IFS AB of
Sweden. IFS dealt in top tier enterprise management software. This
could be customised to meet the specific needs of the project
in
question. Motswedi would licence the software, customise it, train
users from Indiza and the Department and maintain and back
up the
system. Indiza would provide users of the system. It would perform
all the procurement roles assigned to the successful
tenderer. It
would capture information concerning stationery, place orders with
suppliers, manage warehousing and deliveries and
account to the
Department for all the financial aspects of the project. It was
further agreed that each party would recover the
direct costs
incurred in the performance of their duties. After they had recovered
the direct costs, Indiza and Motswedi would
share profits on a 50-50
basis. The detailed operational requirements of the Department would
subsequently be included in an SLA.
Such an SLA would need to be
concluded before the tender could be given effect to. If this
required one party to incur higher costs,
they could renegotiate the
50/50 profit share.
[7]
The evidence in chief of Mr Matsoso on what was done under the
agreement
was as follows. Indiza and Motswedi each prepared an
estimate of their direct costs. They combined these in a management
fee included
in the tender of approximately R19 million for each of
the two academic years. They completed the tender documents,
including a
self-assessment of their ability to fulfil its
requirements by rating their ability to perform in the areas included
in annexure
‘A’ to the tender document. Both parties were
involved in presentations in support of the tender. The tender was
submitted
on time. Some training of Indiza personnel took place
before they were told that the tender had been suspended pursuant to
the
appeal.
[8]
That is what the agreement between the parties encompassed and what
was
done under it according to the evidence in chief of Mr Matsoso.
He did not testify that any agreement was reached on matters outside
of the submission and performance of the tender, if awarded. If the
pleaded terms can be said to go beyond the submission and performance
of the tender, this was not supported by that evidence.
[9]
The
agreement was pleaded as being a partnership. In
Pezzutto
v Dreyer & others
,
[2]
the
essentialia
of a partnership set out by Pothier were accepted as correctly
stating our law:
‘
The three
essentials are (1) that each of the partners bring something into the
partnership, whether it be money, labour or skill;
(2) that the
business should be carried on for the joint benefit of the
parties; and (3) that the object should be to make
a profit
(Pothier
A
Treatise on the Contract of Partnership (Tudor's
translation)
1.3.8). . .’.
[3]
Pezzut
went on to hold:
‘
The business need
not be a continuous one; a joint venture in respect of a single
undertaking can amount to a partnership provided
the
essentialia
of a partnership are present . . .’.
[4]
Accepting the evidence in
chief of Mr Matsoso at face value, it is clear that the partnership
goes no further than one in respect
of the single undertaking of the
submission and performance of the tender. It concerns no activity
conducted outside of the tender.
It does not extend to any other
contractual arrangement concluded by the Department concerning
stationery for the academic years
in question.
[10]
In
Robinson
v Randfontein
Estates
Gold Mining Co Ltd
,
[5]
Innes CJ dealt with the basis for an action arising from the breach
of a fiduciary duty:
‘
Where one man
stands to another in a position of confidence involving a duty to
protect the interests of that other, he is not allowed
to make a
secret profit at the other's expense or place himself in a position
where his interests conflict with his duty.’
[6]
And, he went on to
explain:
‘
For it rests upon
the broad doctrine that a man, who stands in a position of trust
towards another, cannot, in matters affected
by that position,
advance his own interests (
eg
.,
by making a profit) at that other's expense.’
[7]
This is not limited to
traditional examples of principal and agent, guardian and ward and so
on:
‘
Whether a
fiduciary relationship is established will depend upon the
circumstances of each case.’
[8]
[11]
The parties could not perform the tender until an SLA was concluded.
This was accepted
to be the position at the time the interim
arrangement was concluded and throughout. The crisp question is
whether, that being
the case, Motswedi had any interest in the
interim arrangement. Only if it did, would Indiza have had ‘a
duty to protect
the interests’ of Motswedi in it. In other
words, did Indiza stand in a position of trust toward Motswedi
concerning the
interim arrangement?
[12]
Clearly if Indiza had concluded the SLA required by the tender after
the award was finalised
and performed the obligations of the
partnership testified to by Mr Matsoso in his evidence in chief under
the tender and made
a profit without involving Motswedi, this would
amount to a breach of fiduciary duty. On this basis, I would have no
difficulty
finding that Indiza had a duty to protect the interest of
Motswedi in the tender once it was finalised and put into effect. Any
action on the part of Indiza to frustrate or delay that process would
amount to a failure to protect this interest and, accordingly,
a
breach of this fiduciary duty. Mr Matsoso disavowed any contention
that the failure to conclude an SLA required to perform the
tender
could be laid at the door of Indiza. He said that it was the
Department which delayed this.
[13]
However, I do not see how the duty extends beyond protecting the
interest of Motswedi to
submit and perform the tender once it was
able to be performed. In my view, any fiduciary duty on the part of
Indiza was limited
to the submission and performance of the tender.
Even based on the version of the agreement testified to by Mr Matsoso
in chief,
I cannot see how a duty extended to the interim
arrangement.
[14]
This approach is borne out by the manner in which Motswedi pleaded
that Indiza had breached
its fiduciary duties. It pleaded a number of
conjunctive breaches, meaning that all of them together constituted
the breach relied
upon. The first of theses was that ‘Indiza
carried out the awarded tender to the exclusion of
Indiza–Motswedi
and for its own benefit . . .’. In other words,
the alleged breach is that Indiza performed the tender to
the
exclusion of Motswedi. But the tender was not performed. As already
mentioned, it could not be put into effect without an SLA
being
concluded. This did not happen. No work was done pursuant to the
awarded tender. This much is common ground and was accepted
by
counsel for Motswedi in argument. The only work done was in terms of
the interim arrangement between the Department and Indiza.
The fact
that the work which was done overlapped or was even entirely
coextensive with that required under the tender does not
mean that
the tender was ‘carried out’. Apart from bearing out the
evidence in chief of Mr Matsoso that the agreement
between the
parties extended only to the tender, the pleaded breach was thus not
established. It cannot, accordingly, constitute
an actionable breach
of fiduciary duty on the part of Indiza.
[15]
In case it was found that the conclusion of, and performance under,
the interim arrangement
constituted a breach of fiduciary duty,
Indiza pleaded that Motswedi consented to this or waived its right to
participate. I will
deal with this point in case I am wrong on the
issue of the scope of the fiduciary duty of Indiza based on Mr
Matsoso’s evidence
in chief.
[16]
The onus on this issue rests in Indiza. In relation to agency, the
test is that:
‘
There
is only one way by which such transactions can be validated, and that
is by the free consent of the principal following upon
a full
disclosure by the agent.’
[9]
This
applies equally to all fiduciary duties.
[10]
Indiza thus has to show that it made a full disclosure concerning the
interim arrangement and that Motswedi consented to it.
[17]
Mr Matsoso initially claimed that he was kept in the dark by Indiza
that it was performing
work included in the tender. The persistent
complaint by him was that Mr Mabaso should have let him know that it
substantially
overlapped the work to be done under the tender. He
claimed that all that he was told that, on an interim basis, Indiza
was doing
work for the Department which was entirely unrelated to the
tender. Mr Mabaso had approached him to tell him this and to enquire
whether Indiza could acquire only the accounting module of the IFS
system. However, this enquiry came to nought. After exhaustive
cross-examination, Mr Motswedi conceded that, after receiving a
letter dated 1 July 2005 from Indiza, he had known that
the
latter was doing much of the work required to be done under the
tender. All of the documents referred to in evidence bear out
this
later version.
[18]
As indicated, after the suspension of the tender pending the appeal,
Indiza had been requested
by the Department to ensure the delivery of
stationery for the 2006 academic year. The interim arrangement was
concluded. The Interim
SLA was signed by Indiza on 29 June 2005
and by the Department on 7 July 2005. On 30 June 2005,
Messrs Matsoso
and Mabaso met. There is a dispute as to what took
place at that meeting. The following day Mr Mabaso addressed a letter
dated
1 July 2005 to Motswedi and to Mr Matsoso in
particular. It purported to record an agreement reached between them
concerning
Motswedi participating in the interim arrangement.
[19]
It will lend clarity to quote extensively from the letter:
‘
We
refer to your meeting of yesterday with Mr Jabulani Maboso . . .
where agreement was reached on the scope of Motswedi’s
involvement in providing software and back office solutions to Indiza
for the entire stationery implementation project in the province
of
KwaZulu-Natal, the general principles and basic terms of which are
set out below:
1.
The parties acknowledge and confirm that this arrangement is a
separate interim
arrangement that falls completely outside of what
was initially awarded to the parties in the form of a Joint Venture
relating
to the supply and distribution of stationery to schools for
the KZN Department of Education.
.
. .
3.
For purposes of clarity and with specific reference to this
arrangement, hardware
may be excluded. Motswedi will however be given
an equal opportunity to submit quotations for the hardware component
of this project.
.
. .
5.
Motswedi is required to supply software and back office solutions,
incorporating
the IFS based software, including certain
customisations for Indiza to manage the entire stationery
implementation process effectively.
.
. .
7.
A comprehensive project plan will be agreed upon. In the interim, the
business
processes supported by this solution and the software
capabilities required are:
7.1
General HR and finance;
7.2
Database administration;
7.3
School administration;
7.4
Requisitions;
7.5
Distributing agent management;
7.6
Stationer management;
7.7
Supplier orders;
7.8
Stationer and other potential payments;
7.9
Inventory management;
7.10
Reporting functionality; and
7.11
Support services.
8.
The above list is not intended to be exhaustive and may be subject to
change
depending on the requirements of Indiza, which will only be
confirmed at a later stage.
9.
Finally, it is agreed that Indiza is responsible for capturing
certain catalogue
data in a generic Excel database which can be
imported and tailored for use in the IFS software.
10.
Therefore, should all information contained in this correspondence be
agreeable, it is understood
that this arrangement will be amplified
in a legally binding agreement.
11.
In the interim and in order not to delay progress unnecessarily, we
request that you confirm
your agreement with, and acceptance of all
information, including terms and conditions contained in this
document, by initialling
each page and signing in the space
provided.’
[20]
Mr Matsoso accepted that the letter related to the interim
arrangement. He was aware that
the tender could not be given effect
to and that this letter did not relate to the tender. This must be
correct. There is repeated
reference to the interim arrangement
encompassing ‘the entire stationery’ project or process.
By this time the parties
had suspended any work done pursuant to the
tender. Mr Matsoso also accepted that, even if it was not clear from
the letter whether
this was entirely coextensive with the work
required under the tender, it mentioned that the interim arrangement
concerned a substantial
part of that work. In the light of this
letter, his concession that he knew of this at this stage was
correct. He response was
that no agreement as recorded had been
reached in that meeting. He testified that, instead of attempting to
deal with his points
of disagreement, he decided to meet with
Mr Maboso.
[21]
Indiza thereafter addressed a letter to Motswedi dated 29 July 2005.
Two different letters
of that date were included in the bundle. It
was accepted that only one of the two was sent. Each letter, however,
complained that
no response had been received to the letter of 1 July
2005. Also that a meeting had been arranged by the office of Mr
Matsoso for
28 July 2005 but that this had not been attended by him.
Prior to that, numerous attempts had been made to contact Mr Matsoso
and
extract information from him but that nothing had been
forthcoming. It was indicated that, if Indiza had not received a
draft agreement
from Motswedi by 1 August 2005, Indiza would have no
option but to make alternative arrangements.
[22]
Indiza then addressed a letter dated 2 August 2005 to Motswedi. It
referred to a meeting
held the previous day. It conditionally
withdrew the correspondence of 29 July 2005. It confirmed again that
the arrangement was
a separate interim arrangement falling outside of
the tender. The intended partnership would resume when the tender
resumed. It
requested acceptance of the matters dealt with in the
letter, including a draft agreement setting out Motswedi’s
costs, by
noon on 3 August 2005. Should this not take place, Indiza
would have to make alternative arrangements. No acceptance was
forthcoming.
[23]
By letter dated 15 August 2005, Indiza referred to a meeting of
10 August 2005.
It sought to confirm various points arising
from that meeting dealt with in the following paragraphs:
‘
2.
Having considered the draft options presented to Indiza prior to and
in the above-mentioned
meeting, we hereby confirm our withdrawal and
immediate cancellation of the proposed interim arrangement for
reasons, amongst others,
that at this point it is not commercially
viable for Indiza to proceed given the potential financial
constraints and non negotiable
delivery deadlines.
3.
It must be stressed that this is the withdrawal of the interim
arrangement only
and our partnership will resume in full, pending the
outcome of the tribunal and once the tender has “resurrected”
itself.’
[24]
By letter dated 23 August 2005, Indiza confirmed that a further
meeting would take place
between itself and Motswedi on 31 August
2005. By letter dated 31 August 2005, Motswedi addressed the
Department in the following
terms:
‘
Indiza–Motswedi
consortium was awarded tender
ZNT1373E
, which was subsequently
put on hold. Meanwhile, we have learnt from Indiza that the
Department has entered into a separate arrangement
(agreement) with
Indiza and that Indiza is participating in the procurement of
stationery for the schools. This was also confirmed
by an official in
the department.
How
does this arrangement between the Department and Indiza impact on
tender
ZNT1373E
. What is the status of the tender? Please
advise.’
It
should be noted that this is the only correspondence generated by
Motswedi during the entire period.
[25]
Minutes of a meeting on 28 September 2005 between Motswedi
and Indiza were prepared.
These included the following excerpts:
‘
(Jabulani Maboso)
started by giving a background since their last meeting and the
reasons for Indiza being contracted outside of
the tender with a
separate agreement. JM stated that he wanted Motswedi involved, even
in the interim or separate arrangement.’
and
‘
JM made it clear
that the interim temporary arrangement now excluded the technology
side of the system and the client’s requirements.’
A letter dated 7 October
2005 was sent by Indiza to Motswedi concerning that meeting. It
requested a price for Indiza to purchase
a system customised by
Motswedi to date together with support services. Mr Matsoso testified
that no such agreement to purchase
the system was reached.
[26]
All of the above shows that Indiza was doing its level best to
include Motswedi in the
interim arrangement. It also shows that
Motswedi was frustrating agreement on any form of participation in
the interim arrangement.
With the full knowledge that Indiza was
giving effect to the interim arrangement, Motswedi at no stage
demanded from Indiza or
the Department that this cease because it
contravened the partnership agreement. No such letter was addressed,
no verbal demand
was made and no application to court was brought.
Correspondence was addressed in one direction only. In my view, it
can only be
concluded that, fully aware of the fact that there was
major overlap between the interim arrangement and the tender,
Motswedi freely
consented to Indiza proceeding. It abandoned any
right it may have had to participate.
[27]
What I have said concerning the terms of the agreement took at face
value the evidence
in chief of Mr Matsoso. However, Mr Matsoso and
this version did not fare well under cross-examination. He had been
adamant that
the agreement between Indiza and Motswedi was that of a
50/50 profit share partnership. In document after document, however,
Motswedi
itself referred to Indiza as the ‘Prime’
contractor and Motswedi as the sub-contractor. Mr Matsoso initially
described
this as being totally inaccurate but could proffer no
explanation for why he, in affidavits, his attorney in
correspondence, he
in correspondence and Motswedi in a document
describing the respective work to be done during the tender on a
draft Term Sheet,
described Motswedi as the sub-contractor. He also
conceded that, in fact, it was agreed that Motswedi would sell to
Indiza the
system from IFS and not that this would be a cost to be
jointly recovered from the Department within the joint venture for
the
tender. In none of the documents is the word ‘partnership’
used to assert or describe the relationship between Indiza
and
Motswedi. This Mr Matsoso was also constrained to concede.
[28]
A meeting was held between Mr Matsoso and Mr Gwala, an official of
the Department on 24
January 2007. A few days thereafter, Mr Gwala
wrote to Mr Matsoso, recording what he considered to have been
discussed at the meeting.
One of the main items recorded related to
the question of Indiza being the prime contractor and managing agent,
and Motswedi being
the sub-contractor. He recorded that Mr Matsoso
told him this at the meeting. His response was that he had not
understood it that
way and had perused the tender document, finding
no such reference. He requested Mr Matsoso to confirm in writing that
Motswedi
was a sub-contractor.
[29]
Mr Matsoso denied that this had been raised in the meeting. However,
later in his cross-examination,
he confirmed that the letter had
correctly recorded that Mr Matsoso told Mr Gwala:
‘
that
you never intended as Motswedi to be the prime contractor, Indiza was
the prime contractor.’
‘
Your
role was to provide the IT system and never intended to be part of
the operational issues. Your understanding was that the
tender
documents provided that Indiza was the prime contractor.’
In
addition, the letter of Mr Gwala said the following:
‘
However
I requested you to write a letter to us confirming that you are not
the prime contractor. You advised me that you would
contact your
legal adviser on this issue and would come back to me.’
‘
I
further confirm that we agreed that if it was found that you were not
the sub-contractor your position in relation to KZN DoE
and Indiza
would change.’
This
prompted a response by Motswedi’s attorneys including the
following:
‘
.
. . it was always understood that Motswedi would install and
implement the LTSM Software System and Indiza would be the managing
agent.’
‘
The
question of prime vs sub-contractor was to be finalised when the
tender award was presented and SLA concluded.’
‘
.
. . Indiza would be the managing agent dealing with the processing of
requisitions, procurement and distribution of stationery.’
All
of the above is entirely at odds with the earlier testimony of Mr
Matsoso.
[30]
What eventually emerged from his testimony, after long and
excruciating questioning, is
that Indiza was to invoice the
Department and Motswedi was to invoice Indiza for work done. He
conceded that Motswedi was, in fact,
to be regarded as a
sub-contractor and Indiza as the prime contractor and managing agent.
Motswedi would have no direct claim against,
or contract with, the
Department. This clearly does not amount to a partnership in which
the two parties were to contract as a
partnership with the
Department. This position is consistent with a document prepared by
Motswedi as early as 23 June 2005 concerning
the work to be done by
Indiza and Motswedi. In it, Indiza is described as the entity
appointed as the managing agent by the Department.
It also refers to
Indiza as the prime contractor. It was to raise a purchase order to
Motswedi for the work to be done by Motswedi.
It also indicated that
Indiza would enter into a SLA with Motswedi defining the type of
support and response times for the operational
phase. As a
consequence of this evidence of Mr Matsoso, it is not possible to
find that the agreement between Motswedi and Indiza
constituted a
partnership agreement as he testified in his evidence in chief.
[31]
I am aware
of the test for absolution set out above. I am also aware that this
seldom involves an assessment of the acceptability
or otherwise of
the evidence of the plaintiff. However, when the evidence has shifted
from one form of agreement to another, it
cannot be held that a court
might find that the subsequently contradicted earlier testimony is
sufficient.
[11]
This, in
particular, when that earlier evidence is entirely inconsistent with
the documents referring to the events, without those
documents having
been challenged at the time. It seems to me that there is no basis on
which a court, applying its mind reasonably
to the evidence, could or
might find for Motswedi.
[32]
In summary, therefore, the following is the position. Taking the
evidence in chief of Mr
Matsoso at face value, it does not establish
that the partnership contended for extended beyond the submission and
performance
of the tender. That being the case, even if that version
of Motswedi’s case is to be accepted, no fiduciary duty arose
in
relation to the interim arrangement. Even if such a duty arose,
Motswedi had full knowledge of the alleged breach and failed to
challenge the conduct of Indiza or the Department. In addition, it
was invited to participate in the interim arrangement but declined
to
do so. These together amounted to free consent for Indiza to pursue
the interim arrangement alone. Finally, taken as a whole,
the
evidence of Mr Matsoso at the end of the case contradicted his
earlier assertion of there having been a partnership. The
relationship
was that Indiza was the principal contractor with the
Department and Motswedi was a subcontractor to Indiza. No direct
contractual
relationship was to come into effect between Motswedi and
the Department within a partnership structure. Certainly no basis
remained
for contending that the two together were to contract with
the Department. In the result, there must be absolution from the
instance
on the counter-application brought by Motswedi against
Indiza.
[33]
Motswedi obtained an order under case no. 4957/2007 interdicting the
Department from making
any payment to Indiza pending the outcome of
this application. This interdict must be discharged because the
effect of absolution
from the instance on the counter-application
finalises the present application. The costs in case no. 4957/2007
were reserved for
decision in this application. An order was made in
the main application that a certain sum of money be deposited in
trust with
the State Attorney pending the outcome of this matter.
This must be paid out to Indiza since I have found that Motswedi has
not
succeeded in its counter-application. There is no issue that the
costs of the two applications should follow the result or that,
where
senior counsel was used, those costs should be allowed. Both parties
utilised senior counsel at the trial.
[34]
In the result:
1. In
respect of the second respondent’s claim in reconvention (or
counter application), an order of absolution
from the instance is
granted.
2.
Case 4957/2007 is enrolled and the interim interdict granted in that
matter is discharged.
3.
The first respondent’s attorney of record, namely the State
Attorney, KwaZulu-Natal, is directed
to pay to the applicant all the
monies held by it in trust pursuant to the order issued in this
matter on 4 March 2016, inclusive
of interest.
4.
The second respondent is directed to pay the applicant’s costs
in case numbers 3320/2007 and 4957/2007,
such costs to include the
costs of senior counsel where employed.
Gorven
J
Dates
of Hearing:
8, 9, 10, 11, 12, 15 & 16 October 2018
Date
of Judgment:
16 October 2018
Appearances
For
the Applicant:
GME Lotz SC
Instructed by Norton Rose
Fulbright South Africa Inc.
Locally represented by
Tatham Wilkes Inc.
For
the 2nd Respondent:
JP Coetzee SC
Instructed by Ellis Coll
Attorneys.
Locally represented by
Hay & Scott Attorneys.
[1]
Claude
Neon Lights (SA) Ltd v Daniel
1976 (4) SA 403
(A) at 409G-H.
[2]
Pezzutto
v Dreyer & others
1992 (3) SA 379 (A).
[3]
Pezzutto
at 390A-C.
[4]
Pezzutto
at 390D-F.
[5]
Robinson
v Randfontein Estates Gold Mining Co Ltd
1921
AD 168.
[6]
Robinson
at 177.
[7]
Robinson
at 179.
[8]
Robinson
at 180.
[9]
Robinson
at 178.
[10]
Phillips
v Fieldstone Africa (Pty) Ltd and Another
2004
(3) SA 465
(SCA) para 31.
[11]
South
Coast Furnishers CC v Secprop 30 Investments (Pty) Ltd
2012 (3) SA 431
(KZP) para 15.