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[2017] ZAGPPHC 14
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Manhattan Hotel (Pty) Ltd v South African Gymnastic Federation (59839/2014) [2017] ZAGPPHC 14 (25 January 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
25/1/2017
Case No: 59839/2014
Reportable:
No
Of
interest to other judges: No
Revised.
In
the matter between:
MANHATTAN
HOTEL (PTY)
LTD
Plaintiff
and
SOUTH
AFRICAN GYMNASTIC
FEDERATION
Defendant
JUDGMENT
D
S FOURIE, J:
[1]
The plaintiff claims payment from the defendant in the amount of R2
576 408.83 for accommodation, meals and transportation provided
to
certain delegates and gymnasts for the 12th African Gymnastic
Championships which were held from 24 March to 31 March 2014.
The
event was promoted, organised and hosted by the defendant, the South
African Gymnastic Federation.
[2]
The defendant was assisted by Algrodex (Pty) Limited and the City of
Tshwane. Algrodex was the sponsorship underwriter of the
event and
the City of Tshwane acted as the host city. A management committee
was established to oversee the event from its inception
and to manage
and guide it to successful conclusion. The members of the management
committee comprised of four stakeholders,
viz
the defendant,
Algrodex, the Department of Sport and Recreation and the City of
Tshwane ("the MANCO").
[3]
On or about 30 March 2014 two of Algrodex's employees, Mr Janse van
Rensburg and Ms De Sousa, concluded an oral agreement with
the
plaintiff, represented by Mr Rowan, in terms of which the plaintiff
would provide accommodation, meals and transportation for
certain
delegates and gymnasts who participated in the event.
[4]
The main issue between the parties relates to the question on whose
behalf did Mr Janse van Rensburg and Ms De Sousa act when
entering
into the agreement? It is the plaintiff's case that they represented
MANCO, but this is denied by the defendant. According
to the
defendant neither MANCO, nor Mr Janse van Rensburg or Ms De Sousa had
a mandate to represent the defendant when the agreement
was
concluded.
THE
PLEADINGS
[5]
In its particulars of claim the plaintiff relies on four alternative
causes of action. However, on the first day of the
trial, the
plaintiff withdrew paragraphs 13 to 15 of its particulars of claim
and thereby abandoned two of its alternative causes
of action. What
remains is a main claim based on an agreement and an alternative
claim where the plaintiff relies on the statutes
of the Federation
Internationale de Gymnastique ("FIG") as well as some other
documents such as the defendant's constitution
and the bidding and
housing of international sport and recreational events regulations.
[6]
With regard to the main claim it is alleged that on or about 30 March
2014 the plaintiff, represented by Mr Rowan and the defendant,
represented by "MANCO's Jodell de Sousa and Nico Janse van
Rensburg" entered into an oral agreement in respect of the
defendant's obligation to provide accommodation, meals and
transportation for delegates and gymnasts who participated in the
event.
[7]
In its alternative claim the plaintiff relies on a legal duty. It is
alleged that the defendant was under a legal duty to render
the
services and deliver the goods for which the plaintiff claims
payment. The plaintiff relies on the statutes, regulations and
the
ethical code of FIG (as well as the other documents referred to
above) and pleads that these documents were applicable to and
binding
on the defendant during the hosting of the championships.
[8]
In its plea the defendant denies the conclusion of an agreement as
alleged and also denies that any principal-agent, employer-employee
or similar relationship existed between the parties. It is
pleaded that Janse van Rensburg and De Sousa acted on behalf of
Algrodex and that neither of them had a mandate to represent the
defendant.
[9]
With regard to the alternative cause of action it is denied that the
defendant was under a legal duty as alleged, that the championship
was a FIG event or that any agreement was concluded between the
defendant and FIG. It is also pleaded that no valid cause of action
exists for the allegation that the defendant is liable to pay the
plaintiff.
[10]
In its replication the plaintiff relies on estoppel. It is alleged
that, if it is found that MANCO was not duly authorised
to represent
the defendant, the plaintiff was induced to its detriment, by
representations made by the defendant, to enter into
a contract "with
MANCO ostensibly as the agent of the defendant".
[11]
The parties have also agreed in writing on certain common cause facts
and what the main issues in dispute are. It is not necessary
to refer
to these documents now, but I will do so later if it becomes
necessary. I shall now proceed to summarise the evidence.
EVIDENCE
FOR THE PLAINTIFF
Coetzer
[12]
Mr Coetzer is the managing director of Algrodex. In 2013 he was
requested to become involved as the sponsorship underwriter
of the
championships event. Algrodex displayed a keen interest and on or
about 1 October 2013 Algrodex and the defendant entered
into a
sponsorship underwriting agreement. In terms of this agreement
Algrodex was entitled to use the defendant's trade marks
in
advertising and promotional activities, to sell products and/or
services at the event hall and to have trade marks printed on
stationery, business cards and other brochures used by the defendant
in connection with the event. Algrodex undertook to secure
sponsorships in favour of the event in the total amount of R10
million, payable directly to the expenses related to the event.
It
was also agreed that in the event where a profit is realised, 70% of
that profit (after all expenses have been paid), will be
paid to the
defendant.
[13]
According to Mr Coetzer the role of Algrodex as sponsorship
underwriter was to identify various sponsors who would be prepared
to
make sponsorship payments. In the event of a shortfall, Algrodex
would be prepared to accept liability for payment thereof.
Algrodex
identified various potential sponsors, such as ABSA Africa, the
Department of Sport and Recreation and the City of Tshwane.
Algrodex
did not expect to receive any sponsorship monies into its own account
and was under the impression that all such monies
would be due and
payable to the defendant. The City of Tshwane was initially prepared
to sponsor the event in
an amount of
R15 million.
[14]
During April 2014 a host city agreement was entered into between the
defendant and the City of Tshwane. Algrodex was also cited
as a party
to this agreement, but it was never signed on behalf of Algrodex.
This agreement makes provision, among other things,
for the
establishment of a management committee (MANCO) with the purpose of
becoming the committee responsible for hosting and
staging the
championship. It was also agreed that MANCO will identify and
recommend to the defendant suitable hotels for the creation
of team
base camps throughout the host city. In terms of this agreement the
City of Tshwane was only prepared to sponsor the event
in an amount
of R3 million and according to the witness this amount was negotiated
in his absence.
[15]
During February 2014 (before the event) he attended a meeting where
the defendant and the City of Tshwane were also represented.
It was
reported that the University of Pretoria and the Manhattan Hotel are
accredited service providers. MANCO also identified
the Manhattan
Hotel, Holiday Inn and the Burgers Park Hotel as hotels suitable for
the creation of team base camps. According to
the witness
representatives of the defendant were aware of these hotels which had
been identified as service providers. According
to him no agreement
was concluded between the Manhattan Hotel and Algrodex in terms
whereof Algrodex would be liable for payment.
The defendant was the
"event owner" and Algrodex's responsibility was to stand in
for any shortfall or deficit.
[16]
In cross-examination the witness testified that Algrodex had a
mandate to represent the defendant. He was then referred to
clause 15
of the sponsorship underwriting agreement which provides that the
agreement shall not be deemed to create a joint venture,
partnership
or principal-agent relationship between Algrodex and the defendant.
The witness then conceded that in terms of this
clause Algrodex did
not have a mandate to represent the defendant. According to him he
was not aware that there was a shortfall
and was only informed about
it during the trial.
[17]
He also testified that Mr Van Rensburg and Ms De Sousa were employees
of Algrodex who acted on behalf of MANCO. According to
him they had
been mandated by MANCO to arrange for meals and accommodation. When
it was put to him that Mr Van Rensburg and Ms
De Sousa had no mandate
to represent any of the MANCO members, he disagreed. With reference
to a letter dated 20 June 2014 (paragraph
3 thereof) the witness
admitted that Algrodex had received an invoice from the Manhattan
Hotel which was made out to Algrodex.
He also admitted that he had
signed as surety for Algrodex in favour of the Manhattan Hotel.
Rowan
[18]
Mr Rowan is the managing director of the plaintiff. On or about 7
March 2014 he was requested to provide a quotation for hotel
accommodation. A quotation was prepared and sent to the City of
Tshwane, being one of the sponsors of the event. According to a
certain Ms Naude the client was the management committee responsible
for the event.
[19]
He was then introduced to a Mr Van Rensburg and Ms De Sousa of the
management committee who was responsible for the finalisation
of
certain arrangements. According to him the invoice had been made out
to the City of Tshwane because he was informed by Mr Van
Rensburg and
Ms De Sousa that the City of Tshwane would be responsible for the
payment of the plaintiff's account. They did not
mention the name of
Algrodex and he first became aware of this company when he received a
letter from it on 24 March 2014 indicating
that they will assist to
obtain payment from the City of Tshwane. At a later stage he also
sent a statement to the defendant in
an attempt to obtain payment
because he had been sent from pillar to post. On 28 March 2014 he was
requested by Mr Coetzer to provide
an invoice made out to Algrodex as
he was not aware to whom the City of Tshwane had made the payment.
[20]
A booking was made to accommodate gymnasts and delegates who
participated in the event and Mr Mogotsi of the defendant provided
him with a comprehensive list in this regard. He was not present at
the meeting which was held on 24 March 2014 and is also unaware
of
resolutions which were adopted at this meeting. He was made to
believe that the plaintiff's account would be paid and it was
not
important to him who will make payment at the end of the day.
[21]
In cross-examination he testified that Mr Van Rensburg and Ms De
Sousa were representatives of MANCO. They did not say that
they
represented the defendant, although they were there to discuss a
booking for the defendant. He also did not ask them who their
employer was, but he assumed that they could have been employees of
MANCO or the defendant.
[22]
He was also referred to a transcript of a telephonic discussion which
he had with Ms Smith-Cameroon of the defendant on 13
June 2014. He
conceded that during this telephonic discussion he did not put it to
Ms Smith-Cameroon that the defendant is liable
for the payment of the
plaintiff's account. According to him the agreement was concluded
between the plaintiff and MANCO, representing
the defendant.
[23]
He was then referred to an affidavit, signed by him on 26 January
2015, in support of an application between the plaintiff
and the
defendant for the delivery of certain documents relating to the
championships event. In paragraph 11.2 he explained that
Mr Van
Rensburg and Ms De Sousa were representatives of Algrodex and in that
capacity also members of MANCO. According to this
affidavit he
accepted, at the time when the accommodation for the championships
was negotiated with him, that they were acting
on behalf of Algrodex.
It was then put to him that this can only mean that they had
concluded an agreement with the plaintiff on
behalf of Algrodex. His
response was "I have no evidence to prove that".
EVIDENCE
FOR THE DEFENDANT
Mogotsi
[24]
Mr Mogotsi is the Chief Executive Officer of the defendant. During
2014 he was the performance manager and the responsible
person for
attending to the accommodation arrangements of the championships
event. He testified that the defendant concluded an
agreement with
the Holiday Express Hotel for accommodation. According to him
Algrodex was responsible for payment of all expenses,
including that
of hotel accommodation. He was therefore under the impression that
Algrodex will accept responsibility for payment
of the Holiday
Express Hotel account.
[25]
On 11 March 2014 there was a MANCO meeting. There are no minutes of
this meeting. No mandate was given to anybody at this meeting
to
negotiate or enter into a contract with the Manhattan Hotel. After
this meeting Ms De Sousa requested him to provide her with
information regarding delegations. She was given the information and
on 13 March 2014 she was supposed to supply accommodation
lists to
the Holiday Express Hotel. Ms De Sousa then submitted a reduced
list to make provision for certain guests to be
accommodated
elsewhere. He then requested Ms De Sousa to communicate directly with
the agent who was responsible for doing the
bookings.
[26]
He also testified that the defendant had entered into an agreement
with the University of Pretoria, but not with the plaintiff.
According to him the members of MANCO did not have a mandate to
represent each other and he is not aware of a mandate which
authorised
a person to represent the defendant. This was also not an
official event of FIG and no representation had been made that either
MANCO or Ms De Sousa and Mr Van Rensburg could represent the
defendant. He and Ms Smith-Cameroon were both members of MANCO. He
was aware of the fact that a booking was made for accommodation at
the Manhattan Hotel, but was unaware that Mr Van Rensburg and
Ms De
Sousa had discussions with the plaintiff on 13 March 2014 to make
these bookings.
[27]
In cross-examination he conceded that MANCO had the overall
responsibility for the hosting and staging of the event. He persisted
in his view that neither Mr Van Rensburg, nor Ms De Sousa was
authorised or mandated by the defendant to enter into the agreement
with the plaintiff. He further testified that the defendant had paid
the Holiday Express Hotel's accommodation account because
it had
entered into an agreement with it and also had a longstanding
relationship with this hotel.
[28]
He was also aware of the fact that delegates and gymnasts would stay
at the Manhattan Hotel. According to him Algrodex initiated
this
arrangement and it was also indicated that Algrodex would accept
responsibility for payment of the account. According to him
it was
Algrodex who entered into the agreement with the plaintiff and not
the defendant.
DISCUSSION
[29]
Before considering the issues, it is not only appropriate but also
necessary to say something about the credibility and reliability
of
the witnesses. Counsel for the plaintiff criticised the witness for
the defendant by pointing out that in cross-examination
he was
uncomfortable and nervous, suggesting that his evidence should be
approached with caution. An assessment of the credibility
and
reliability of a witness has to take into account the general
context, the witness's memory and the ability to express him-
or
herself properly. It is a well-known fact that sometimes witnesses do
make mistakes and even contradict themselves. One should
therefore
distinguish between
bona fide
errors and an intentional
untruth. I have had the opportunity to observe the demeanour of all
the witnesses and to listen carefully
to their evidence. I did not
get the impression that any of them intentionally tried to mislead
the Court or knowingly told an
untruth. It is possible that their
evidence with regard to some incidents is not so reliable, I shall
later refer to it again.
Notwithstanding my observations in this
regard, I have no reason to conclude that they were untruthful. This
is a matter that should
be decided on the evidence and the
probabilities.
The
main claim
[30]
It is common cause between the parties that the only dispute with
regard to the main claim is whether an agreement was entered
into
between the plaintiff and the defendant. It is alleged in the
particulars of claim that on or about 30 March 2014 the
plaintiff,
represented by Mr Rowan and the defendant, represented by "MANCO's
Jodell de Sousa and Nico Janse van Ransburg"
entered into an
oral agreement in respect of the defendant's obligation to provide
accommodation, meals and transportation for
delegates and gymnasts
who participated in the event. This is denied by the defendant and it
is pleaded that Janse van Rensburg
and De Sousa acted on behalf of
Algrodex and that neither of them had a mandate to represent the
defendant.
[31]
It was contended on behalf of the plaintiff, having regard to the
evidence and the objective facts, that an agreement as alleged
has
been proven. On behalf of the defendant it was argued that the
plaintiff bears the onus of proving, not only that an agreement
was
concluded, but also who the parties to the agreement were. The
plaintiff therefore bears the onus of proving that Algrodex
had a
mandate to act on behalf of the defendant, alternatively that MANCO
had a mandate to represent the defendant.
[32]
According to the evidence of Mr Coetzer the role of Algrodex was to
identify various sponsors who would be prepared to make
sponsorship
payments. It was only in the event of a shortfall that Algrodex would
be liable for payment. According to his evidence
the defendant was
the "event owner'' and Algrodex had a mandate to represent the
defendant.
[33]
In cross-examination he was referred to clause 15 of the sponsorship
underwriting agreement which was entered into between
Algrodex and
the plaintiff during October 2013. It provides as follows:
"This agreement
shall not be deemed to create
a
joint
venture, partnership, principal-agent, employer-employee, or similar
relationship between SAGF and sponsorship underwriter."
When
this was put to him Mr Coetzer conceded that in terms of this clause
Algrodex did not have a mandate to represent the defendant.
[34]
It is common cause that Mr Janse Van Rensburg and Ms De Sousa were
employees of Algrodex. Mr Coetzer testified that they had
been
mandated by MANCO to arrange for meals and accommodation, suggesting
that they represented MANCO when the agreement was concluded
with the
plaintiff. This implies, as I understand his evidence, that the
defendant was represented by MANCO and that Algrodex was
not a party
to this agreement. However, in cross-examination he admitted that
Algrodex had received an invoice from the Manhattan
Hotel which was
made out to Algrodex. He also admitted that he had signed as surety
for Algrodex in favour of the Manhattan Hotel.
[35]
Mr Rowan testified that he was introduced to Mr Janse Van Rensburg
and Ms De Sousa of the management committee who was responsible
for
the finalisation of certain arrangements. They did not mention the
name of Algrodex and he was informed by them that the City
of Tshwane
would be responsible for payment of the plaintiff's account. He
confirmed that on 28 March 2014 he was requested
by Mr Coetzer to
provide an invoice made out to Algrodex as he was not aware to whom
the City of Tshwane had made the payment.
[36]
In cross-examination he testified that Mr Van Rensburg and Ms De
Sousa were representatives of MANCO. They did not say that
they
represented the defendant, although they were there to discuss a
booking for the defendant. He assumed that they could have
been
employees of MANCO or the defendant. When he was referred to a
transcript of a telephonic discussion which he had with Ms
Smith-Cameroon of the defendant on 13 June 2014, he conceded that he
did not put it to her that the defendant was liable for the
payment
of the plaintiff's account. However, he indicated in
cross-examination that according to him the agreement was concluded
between the plaintiff and MANCO, representing the defendant.
[37]
He was then referred to an affidavit, signed by him on 26 January
2015, in support of an application between the plaintiff
and the
defendant for the delivery of certain documents. In paragraph
11.2 he explained that Mr Janse Van Rensburg
and Ms De Sousa
were representatives of Algrodex and in that capacity also members of
MANCO. He said the following:
"The
accommodation for the championship was negotiated with me by Nico van
Rensburg and JodellI de Sousa. Both these persons
were members of
MANCO whose duty was to ensure that the championships are
successfully concluded.
...
These
two persons were also representatives of Algrodex and are in that
capacity members of MANCO. I accepted at the time
that they
were acting
on behalf
of Algrodex but since being informed of the contents of this
directive and the obligations of the first respondent to
pay the
accommodation and transport costs. The applicant has been seriously
and intensively defrauded by Algrodex. The SA Police
is investigating
serious fraud charges committed by Algrodex and I have been informed
that
...
will in all
probabilities be arrested and charged."
[38]
According to this paragraph it appears that Mr Rowan accepted that
"at the time" Mr Janse Van Rensburg and Ms De
Sousa were
acting on behalf of Algrodex. That also explains why he took a firm
stand against Algrodex by alleging that he had been
defrauded. When
it was put to him that this could only mean that they had concluded
the agreement with the plaintiff on behalf
of Algrodex, his response
was only "I have no evidence to prove that".
[39]
Mr Mogotsi of the defendant testified that it had entered into an
agreement with the University of Pretoria, but not with the
plaintiff. According to him the members of MANCO did not have a
mandate to represent each other and he is not aware of a mandate
which authorised a person to represent the defendant. There is, to a
certain extent, corroboration for this version. The host city
agreement which was concluded between the City of Tshwane and the
defendant (Algodrex was intended to also be a party, but never
signed
it), contains a similar clause to that in the sponsorship
underwriting agreement. Clause 9.13 of the host city agreement
provides as follows in this regard:
"Neither this
host city agreement nor the course of the dealing between the parties
shall create
a
joint
venture, partnership, agency or similar relationship between SAGF,
Algrodex and MANCO and the host city. The host city shall
not act or
purport to act
as a
partner
or agency of SAGF, Algrodex or the MANCO. This host city agreement
shall not be deemed to give either party general authority
or power
to act on behalf of SAGF, Algrodex or the MANCO except to the extent
expressly provided in this host city agreement. The
parties are in
all respects independent contractors, and have separate financial
interests under this host city agreement."
[40]
Taking into account the evidence referred to above, it seems to me
that the plaintiff is confronted with the following difficulties:
First, Mr Coetzer conceded that in terms of clause 15 of the
sponsorship underwriting agreement Algrodex did not have a mandate
to
represent the defendant. He also admitted that Algrodex had received
an invoice from the plaintiff and that he also had signed
as surety
for Algrodex in favour of the plaintiff. One must now consider the
obvious question: why would the plaintiff expect the
managing
director of Algrodex to sign a suretyship, if the plaintiff believes
that it contracted with the defendant? Furthermore,
why would Mr
Coetzer be willing to sign a suretyship if the agreement was in fact
concluded with the defendant and not with Algrodex?
[41]
Second, the affidavit signed by Mr Rowan on 26 January 2015 is not in
support of the plaintiff's case. In that affidavit he
accepted, at
the time when the accommodation for the championships was negotiated
with him, that Mr Janse Van Rensburg and Ms De
Sousa were acting on
behalf of Algrodex. There appears to be a contradiction between his
evidence on affidavit and his evidence
in Court when he testified
that, according to him, the agreement was concluded between the
plaintiff and MANCO representing the
defendant. This apparent
contradiction could have been explained by either Mr Janse Van
Rensburg or Ms De Sousa, but neither of
them was called to testify.
Put differently, there is no direct evidence to indicate on whose
behalf did Mr Janse van Rensburg
and Ms De Sousa act when entering
into the agreement.
[42]
The plaintiff's reliance on estoppel is also not without
difficulties. A party relying on estoppel must prove, among
other things, a representation by words or conduct which caused him
to act to his or her detriment. If regard is had to what Mr
Rowan
stated under oath in his affidavit, it is clear on a proper
interpretation thereof that, to his mind, the plaintiff was
contracting with Algrodex and not with the defendant. This appears
from the fact that he accepted that, at the time, Mr Janse van
Rensburg and Ms De Sousa were acting on behalf of Algrodex. If this
were in fact the position then no misrepresentation was made
by or on
behalf of the defendant. Having regard to all these considerations, I
am unable to find that the plaintiff has proven
that an agreement was
concluded between the plaintiff and the defendant.
The
alternative claim
[43]
In its alternative claim the plaintiff relies on a legal duty. This
cause of action is premised on FIG's statutes (and the
other
documents referred to above) which the plaintiff contends places an
obligation on the defendant to pay the travel and accommodation
expenses. I shall assume (without deciding) that such an obligation
exists
inter partes,
i.e. between the respective members of
FIG or the bodies affiliated to it. Assuming the existence of such an
obligation, the question
is whether it also applies between the
defendant and a third party, such as the plaintiff?
[44]
It should be pointed out that it is not the plaintiff's case that FIG
documents (such as its statutes or other documents referred
to above)
constitute a
stipulatio alteri
(a contract for the benefit of
third parties) or that these documents enjoy the status of
legislation in South Africa. It was therefore
contended on behalf of
the defendant that the legal status of the statutes of FIG is
analogous to a constitution of a voluntary
association. In the
absence of any other proposition, I have no reason not to accept this
submission. It therefore appears that
these statutes, read with all
the other documents upon which the plaintiff also relies, should be
regarded as an agreement between
the respective members of FIG,
binding on each other
inter partes.
It is also common cause,
or at least not in dispute, that the plaintiff is not a member of
this association or organisation.
[45]
The doctrine of privy of contract is well established in our law. The
learned author Christie
(The Law of Contract in South Africa,
5th
Ed, p 269) describes it aptly as follows:
"The basic idea
of contract being that people must be bound by the contracts they
make with each other it would obviously be
ridiculous if total
strangers could sue or be sued on contracts with which they were in
no way connected. The doctrine which prevents
this ridiculous
situation arising is usually known
as
the
doctrine of privy of contract: parties who are not privy to
a
contract cannot sue or be sued on it."
[46]
Christie then goes on to list several examples to illustrate this
principle. One of them is that a sub-contractor cannot sue
or be sued
by the party with whom the main contractor has contracted. The
plaintiff may be regarded to be in an analogous position
of a
"sub-contractor" in this case. Having regard to these
considerations, I am of the view that the plaintiff was unable
to
prove a transaction or underlying cause giving rise to liability.
ORDER
In
the result I make the following order:
1.
Absolution from the instance is granted on both
the plaintiff's main and alternative claim;
2.
The plaintiff shall pay the costs of suit.
____________________
D
S FOURIE
JUDGE
OF THE HIGH COURT
PRETORIA
Date:
25 January 2017