About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2017
>>
[2017] ZAFSHC 67
|
|
Mangaung Metropolitan Municipality v Lerisa Teq (Pty) Ltd (941/2014) [2017] ZAFSHC 67 (4 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 941/2014
In
the matter between:
Mangaung
Metropolitan
Municipality
Plaintiff
and
Lerisa
Teq (Pty)
Ltd
Defendant
HEARD
ON:
28, 29 & 31 March 2017 &
11, 12 & 13 April 2017
JUDGMENT
BY:
NICHOLSON, AJ
DELIVERED
ON:
4 May
2017
Background:
[1]
The Plaintiff in this matter, the Mangaung Municipality, alleged that
on 17 March 2011 it entered into a written contract with
the
Defendant, Lesira Teq (Pty) Ltd. The contract was to endure for a
period of five months and five days from 25 January 2011
until 30
June 2011. In terms of the contract, the Defendant was to supply,
install and maintain 13 500 prepaid water meters, vending
units and a
management system for the Brandwag Flats Housing Scheme (BFHS).
[2]
The total contract price was R 34 200 188.10 and the Defendant would
invoice the Plaintiff for the prepaid water meters supplied,
installed and maintained by it. The Plaintiff undertook to make
payment on the Defendant's invoices submitted in terms of the
agreement within 30 days of date of receipt thereof.
[3]
The Defendant submitted four invoices from February 2011 to December
2011 for a total value of R 19 850 830.00. (Invoice 1 dated
25/2/2011
for R 6 395 400.00; invoice 2 dated 18/4/2011 for R 6 395 400.00;
invoice 3 dated 5/7/2011 for R 6 950 887.80; and invoice
4 for
6/10/2011 R 109 143.60).
[4]
The conclusion of the contract and the submission of the four
invoices referred to above and appearing on pages 57-60 of the
indexed pleadings are common cause, as is the fact that the Plaintiff
paid the amounts reflected on the four invoices to a total
value of R
19 850 830.00 to the Defendant.
[5]
The Plaintiff alleged that the submission of the invoices represented
to it that the Defendant had supplied and completed the
specified
work reflected on the invoices and that, relying on these
representations and in compliance with the agreement, it paid
the
four invoices in the total amount of R 19 850 830.00.
[6]
The Plaintiff alleged that subsequent to making payment, it became
aware that the Defendant had only supplied and installed
1075 of the
prepaid meters and has, to date, failed to supply and install the
balance in terms of the agreement. It is thus the
Plaintiff's
submission that the Defendant has been
overpaid by R 17 642 777.00.
[7]
It is the Plaintiff's contention that by submitting the invoices, the
Defendant fraudulently misrepresented to the Plaintiff
that it had
successfully supplied and installed the pre-paid meters claimed for
in the invoices and that the representation was
material and induced
the Plaintiff to make the payments referred to above. The Plaintiff
asserts that the Defendant knew or should
have known that it had not
supplied and installed the water meters claimed for and thus,
the Plaintiff has
suffered damages
in the sum of R 17 642
777.00 as a result of
the fraudulent misrepresentations in that it
has overpaid the Defendant in this amount.
[8]
In the alternative, the Plaintiff argues that, should the Court find
that the Defendant did not fraudulently misrepresent to
the Plaintiff
that it had completed the work reflected in the invoices, the
Defendant has been unjustly enriched at the Plaintiff's
expense in
that it was paid for the meters reflected in the invoices when in
fact, the Defendant had only supplied and installed
1075 pre-paid
water meters to the value of R 2 208 053.00. The Defendant has thus
been overpaid in the amount of R 17 642 777.00
by the Plaintiff,
which amount was neither due nor payable. The Plaintiff thus asserts
that the defendant has been unjustly enriched
in the sum claimed and
that the Plaintiff has been impoverished in this sum.
The
Plaintiff thus seeks to recover the said sum on the basis of unjust
enrichment.
[9]
The Defendant denies that it made any fraudulent misrepresentations.
It admits the agreement between the parties exists but
alleges that
the agreement extended beyond the BFHS and that the said scheme was
merely a pilot project which lent its name to
the bigger project.
[10]
The Defendant admitted in the pleadings that it submitted the four
invoices relied upon by the Plaintiff in the amounts mentioned
and
that the submission of the invoices represented to the plaintiff that
it had successfully supplied the water meters and completed
the
specified work reflected on the invoices. It further admitted that
the Plaintiff relied on the correctness of the invoices
and honoured
them in terms of the agreement. The Defendant denies that it only
supplied and installed 1075 prepaid meters, that
it made fraudulent
misrepresentations that induced the plaintiff to pay or that it was
overpaid in respect of the invoices submitted.
The Defendant thus
denies the Plaintiffs claim for
damages in the sum
of R
17 642 777.00 or that the Plaintiff is entitled to repayment of that
amount on the basis that it has been
unjustly enriched and Plaintiff
concomitantly impoverished in this amount.
[11]
The Defendant instituted a claim in reconvention. This claim was
abandoned and need not be explored further.
The
Plaintiff's case:
[12]
At commencement of the trial, the Plaintiff brought an application in
terms of rule 39(11) of the Uniform Rules of Court requesting
that,
in light of the pleadings, the Plaintiff has little to prove and that
the burden to begin should be shifted to the Defendant.
[13]
The Court determined that the broad onus of proof rests on the
Plaintiff to prove its case on a balance of probabilities. The
court
may however, vary the order in which evidence is presented to the
court in terms of rule 39(11) of the Uniform Rules of Court
where
such a variation would benefit the logical sequence in which evidence
is adduced before the court and thus shorten the proceedings.
This is
generally done where the Plaintiff has made out a
prima facie
case and the Defendant has raised facts that give rise to a
special defense of some type.
[14]
In this case, the Plaintiff set out a
prima facie
case in the
pleadings and the Defendant made a significant number of important
admissions, however, the Defendant's bare denial
of aspects of the
Plaintiffs case did not constitute a special defense and thus, in the
circumstances, the court was not convinced
that it should vary the
ordinary rules regarding the order in which evidence should be
adduced. The Plaintiff thus carried the
burden to begin and the rule
39(11) application was dismissed. (The court referred, inter alia, to
Mobil Oil Southern Africa (Pty) Ltd v Mechin
1965 (2) SA 706
(A) in arriving at this decision.)
[15]
The Plaintiff led two witnesses. The first, Mr. Mpho Motola is an
employee of the Plaintiff and has been so employed since
2010. He has
worked in Plaintiffs Billing Unit since 2012. At the time the
Plaintiff and Defendant contracted, and throughout
the effective
period of the contract, the witness was an intern in the finance
department of the Plaintiff, gaining experience
in all financial
aspects of the Plaintiff's business. Mr. Motola was thus not a party
to the negotiation or implementation of the
contract.
[16]
Mr. Motola was taken through the contractual terms and the addenda to
the contract by counsel. With reference to a copy of
the contract,
Mr. Motola verified the agreement, its effective dates, the
performances to be rendered in terms of the agreement,
the place of
performance and the value of the contract.
[17]
Mr. Motola also verified that according to the contract, payment was
to be made to the Defendant within 30 days of submission
of invoices
in respect of "pre-paid water meters supplied, installed and
maintained". He confirmed that the Defendant
submitted the four
invoices reflected in the papers as 881, 882, 883 and 884 and that a
total amount of R 19 850 830.00 was paid
in respect of these
invoices.
[18]
Mr. Motola testified that, based on a report compiled by Ms. Matlali
Solfafa, the Chief Risk Officer of the Plaintiff at the
time the
report was compiled, (the Plaintiff's second witness), only 1075
pre-paid water meters were supplied and installed in
terms of the
contract. Thus, based on the information contained in the report
referred to above, the Defendant had been overpaid
in
the amount of R 17 642 777.00 as the four invoices
referred to above claimed for, inter alia, 9000 prepaid
water meters.
[19]
Mr. Motola testified that the Plaintiff had made payment based on the
amounts claimed in the four invoices referred to on the
understanding
that the work reflected had been done. The witness declined to draw
any legal conclusion regarding whether or not
the invoicing amounted
to a fraudulent misrepresentation. He did however confirm that the
invoices were submitted to elicit payment
and that the Plaintiff
would not have paid had the Defendant not submitted the same. He
confirmed that the Defendant knew, or ought
to have known that the
pre-paid meters had not been installed and that the Defendant had
thus been paid for work it had not done.
The Defendant should only
have been paid for the 1075 pre-paid meters installed, and was thus
overpaid in the sum indicated above
at the expense of the Plaintiff
who was concomitantly impoverished. Mr. Motola explained how Ms.
Solfafa calculated the number
of pre-paid water meters actually
installed and the amount the Plaintiff should have paid as set out in
her report. Ms. Solfafa
also testified in this regard.
[20]
It was Mr. Motolo's testimony that in 2011, he was requested to
compile a list of users who would require pre-paid meters.
This work
took place after the effective date of the contract had expired. It
was his opinion that the Defendant would be contracted
to install
pre-paid water meters at the residences indicated on the list.
[21]
Mr. Motola testified that it was his opinion that the Defendant
should only have been able to claim payment in terms of the
contract
once the specified work had been completed. When questioned on
whether or not this would have included the maintenance
work provided
for in the contract he responded in the negative stating that as
maintenance is continuous this would not be required
before payment
could be claimed.
[22]
Mr. Motola indicated that on his reading of the documentation, the
defendant's invoices 881- 884 were, inter alia, for the
supply of
9000 water meters. He conceded that nowhere on the said documentation
was there any suggestion that these meters had
been installed. Based
on this, he stated that the invoices did not contain any lie and, in
his opinion, if the Defendant could
prove it had delivered the 9000
meters alleged, it would be entitled to payment for the same. He
remained adamant, however, that
the invoicing should not have taken
place before installation had been completed, despite each element of
the work having an individual
cost as reflected on the schedule to
the contract, found at page 54 of the indexed bundle of pleadings. He
based his conviction
in this regard on clause 5.1 of the contract
which specified that the Plaintiff would compensate the Defendant
"... after
the satisfactory completion of the specified piece of
work and the submission of an invoice".
[23]
The Plaintiff's second witness, Ms. Solfafa, was a former employee of
the Plaintiff who took up employment with the Plaintiff
on 1
September 2012 and retired from the Plaintiff on 1 September 2016.
She was employed as the Plaintiffs Chief Risk Officer whose
responsibilities included the investigation of all reported cases or
allegations of fraud, corruption, irregular expenditure and
the like.
She created a report in respect of the matter before the court, which
report was presented to the court and about which
she testified. The
report was dated 11 July 2013 and related to possible irregular
procurement and delivery of goods and service
to the Plaintiff and an
assessment of whether or not the Plaintiff received value for money
from the Defendant. She reviewed certain
documents, conducted certain
interviews and made certain site visits in compiling the report. She
explained in her report how she
calculated the number of pre-paid
water meters actually installed and how she arrived at the amount of
money that should have been
paid to the Defendant and, by
extrapolation, the extent of the Plaintiffs alleged overpayment to
the Defendant.
[24]
Ms. Solfafa, could not find any
relevant documentation other than the
contract
dated 17
March 2011 (without its annexures) between the Plaintiff and the
Defendant, in the Plaintiff's records. She thus relied
upon this
document, some information reflected on the computerized system of
the Plaintiff (the Venus system}, oral information
imparted to her by
various employees of both the Plaintiff and the Defendant and a visit
to the Defendant's Pretoria factory in
finalizing her report. The
senior staff of the Plaintiff who could have informed the
investigation had all left the employ of the
Plaintiff by the time
the investigation took place and were uncooperative with the
process.
[25]
Ms. Solfafa testified that the contract required the Defendants to
supply, install and maintain pre-paid water meters, vending
units and
a management system for the BFHS. Only 1075 prepaid water meters were
supplied and installed according to the records
available to Ms.
Solfafa when she compiled her report. Ms. Solfafa raised certain
questions in her enquiries and her report. She
indicated that the
Defendant failed to supply her with the purchase orders or delivery
notes in respect of the meters allegedly
supplied and that the
Defendant did not satisfy her as to why they would have continued to
supply pre-paid meters knowing the Municipality
did not have sites
ready for installation or storage facilities to accommodate the
pre-paid meters. She found their explanation
that they felt pressure
to comply with their contractual undertakings to be unconvincing and
stated under cross-examination, that
she had not previously seen the
installation schedule appended to the contract.
[26]
As regards the delivery notes and waybills discovered by the
Defendant, Ms. Solfafa indicated that although she could not possibly
know all the employees of the Plaintiff, some signatories on the
delivery notes and waybills were unknown to her and she was certain
that Daniel (from the Plaintiff's finance department) was not an
appropriate signatory to sign for receipt of pre-paid water meters,
that the address in Lessing street that appeared on a Waybill did not
belong to the Plaintiff and that she was uncertain about
the Vickers
street address on one delivery note. She also stressed that certain
of the documents were not correctly signed and
none of them bore the
Municipal stamp. She was adamant that an official municipal stamp was
required on delivery notes for goods
supplied to the Municipality at
the time the water meters should have been supplied although she
could not confirm by whom she
had been given this information. She
did state however, that she had verified this by checking other
delivery notes from this time.
No such notes were presented to the
court. Ms. Solfafa also pointed out discrepancies between the
contents of certain delivery
notes and the alleged corresponding
waybills before the court. Ms. Solfafa concluded in her report that
proper procedure for receipt
of goods by the Plaintiff had not been
followed and that the expenditure was irregular. She stated that the
contract for 13 500
prepaid meters for BFHS was odd in that there
were not sufficient units in the BFHS to accommodate so many meters
and this in itself,
tended to indicate there was some problem with
this contract.
[27]
In conclusion, Ms Solfafa opined that the procedure for the delivery
of the meters and other items was irregular as the parties
who
purported to sign for receipt of the goods for the municipality were
not authorized to do so and no Municipal stamp was affixed
to the
invoices to verify their authenticity. Delivery notes should have
been signed for by someone from water and sanitation in
the technical
division. It appears from the documentation that 11Daniel"
from finance signed for some, an unknown H
Steyn for others, Mabaleng
and Mangaung and an employee of the Defendant ("Khotso")
for receipt of others.
[28]
Under cross examination, the poor state of the Plaintiffs record
keeping was exposed, as was the insufficient nature of the
investigation undertaken. Ms. Solfafa was not in the employ of the
Plaintiff when the contract was entered into or acted upon and
those
who had been so employed were uncooperative, leaving Ms. Solfafa to
draw conclusions based on extremely limited and sketchy
information.
Despite the limited scope of the investigation, Ms.Solfafa was
actively engaged with the legal department of the Plaintiff
in the
initiation of litigation in this matter based upon her recommendation
that the monies paid to the Defendant should be recovered.
[29]
During cross examination, Ms. Solfafa conceded that the Plaintiff had
no record of the transactions beyond the contract and
what was
reflected on the Venus system and that she had to rely on
documentation supplied by the Defendant. She also conceded that
she
was aware that the invoices were paid out for the supply of 9000
prepaid meterst not for their installation and that where
installation was claimed for, it appeared separately on the invoice.
Ms. Solfafa also conceded that there were problems associated
with
installations.
[30]
The Plaintiff closed its case after Ms. Solfafa's evidence without
leading any witness who had been party to the negotiation
or
implementation of the contract between the parties.
The
Defendant's case:
[31]
The Defendant led five witnesses. The first of these, Mr. Andile
Meke, is an employee of the Defendant and has been in the
Defendant's
employ since 2008. In 2011 he was employed to do Human Resources (HR)
work and to act as Dispatch Manager for the company.
Mr. Meke
explained the normal process that would be followed when a purchase
order was received by the Defendant. This process
was:
On
receipt of a purchase order, the Defendant would contact the meter
suppliers who would prepare the order and, once ready, the
meters
would be received from the supplier by the Defendant on the
Defendant's factory floor. The Dispatch Manager would then contract
with an independent courier company, Discovered Integrated Couriers,
(the courier company) to load the meters on the
factory
floor and to deliver them to the client. For this purpose, a delivery
note would be generated by the Defendant and that
delivery note would
contain the details of the delivery address and the client's contact
details. This delivery note and a document
with a detailed list of
the description and serial numbers of all the water meters in the
shipment would be given to the courier
company and would accompany
the shipment to the delivery address. The courier company employee
would generate a waybill for each
shipment transported.
[32]
The Dispatch Manager would follow up telephonically to confirm the
shipment had arrived at its destination. The client would
sign for
receipt of the shipment on the delivery note as well as on the
waybill. The signed delivery note would be returned to
the defendant
and the waybill to the courier company which would use that document
to generate an invoice for payment by the Defendant.
The list of
serial numbers of the water meters contained in the shipment would be
retained by the recipient as the Defendant would
have a copy of this
on their records.
[33]
Mr. Meke indicated that the courier company had been used to
transport four or five shipments of pre-paid water meters and
related
items to the Plaintiff in Bloemfontein. As the Plaintiff had not yet
identified installation sites for the meters, after
the first
delivery, the balance of the Plaintiff's water meters were taken to a
storage facility hired by the Defendant in Bloemfontein
and were
later returned to the Defendant's Koedoespoort, Pretoria warehouse
where they are currently stored for the Plaintiff.
The meters were
brought back to Koedoespoort as the Defendant had been renting
storage in Mangaung to accommodate same but this
had proven so costly
that a decision was taken to move the meters back to the Defendant's
own premises and to store them there
on the Plaintiff's behalf.
[34]
Mr. Meke confirmed that Ms. Solfafa visited the Factory floor in
Koedoespoort, Pretoria for purposes of her investigation on
behalf of
the Plaintiff but indicated that she did not interview him. He did
however, point out the water meters that the Defendant
alleged were
those of the Plaintiff to her and that Ms. Solfafa then took
photographs of these with her tablet before leaving.
He stressed that
during her visit, Ms. Solfafa was accompanied by the Defendant's
employee, one Lydia
Mashoane, to whom
she addressed her questions. He stated further, under
cross-examination, that there were
between seven and eight thousand
meters belonging to the Plaintiff in the warehouse at the time of the
visit and that these were
all new meters despite Ms. Solfafa's
assertions that some looked as though they were used. He stressed
that the Defendant had not
gathered the meters together quickly when
they heard about the visit so they would have something to show Ms.
Solfafa. He denied
he had any prior knowledge that the visit would
take place.
[35]
Under cross-examination, Mr Meke was asked about the various delivery
notes and the two waybills that were discovered by the
Defendant. He
denied that the requirement that deliveries had to be authenticated
by the stamping of the delivery note with an
official municipal stamp
had ever been communicated to him. For this reason, he was not aware
that he needed to check for such
a stamp.
[36]
Mr. Meke confirmed that the delivery notes and waybills for shipments
should correspond with each other. He was unable to explain
the
discrepancies between the relevant delivery notes and the
corresponding two waybills that were discovered. Nor was he able
to
explain the absence of waybills for all the delivery notes discovered
or the discrepancies in the contents of the delivery notes
themselves. He could not explain why the items delivered differed in
their descriptions from delivery note to delivery·note
or why
one waybill used the descriptor "1500 parcels". He was
unable to identify the places for delivery indicated on
the various
delivery notes and waybills or the persons to whom delivery had
allegedly been made on behalf of the Plaintiff and
referred the court
to witnesses from the Defendant's local office in Bloemfontein in
this regard.
[37]
Mr. Meke identified the Defendant's employees in Bloemfontein as
Lydia Mashoene, Jerry Shinners and Khotso Mahlonoko. These
persons
were, according to his evidence, tasked with facilitation of the
arrival of the shipments in Bloemfontein. (Mr Shinners
testified
before the court.)
[38]
Mr. Meke was questioned about an amendment to one delivery note where
the number of pre-paid water meters had been changed
from 5000 to
3550. He could not recall why or by whom the change had been made and
stated that Simon, the truck driver would be
able to deal with
this discrepancy. (Simon did indeed
testify but could shed no
light on this discrepancy)
In re
examination he stated that it could have been that some of the
shipment was sent on a second truck or in a trailer
but he could not
recall. Mr. Meke could also not offer any explanation why, if only
3550 water meters were on the truck, 5000 spindle
keys would still
have been delivered. It was
also noted
during his cross
examination that the waybills did not list additional items such as
spindle keys or installation
seals, thus their delivery could not be
verified.
[39]
Mr. Meke did not find 11Khotso's11 signing for a shipment
to be odd as he was in Bloemfontein to receive shipments.
This was
however irregular as Khotso was an employee of the Defendant and
could thus not receive the shipment on behalf of the
Plaintiff.
[40]
The second witness for the Defendant was Mr. Simon Mbenzi, a driver
for the courier company contracted by the Defendant. In
his evidence,
Mr. Mbenzi indicated that he recalled making a number of trips to the
Plaintiff in Bloemfontein to deliver prepaid
water meters on behalf
of the Defendant. He testified that he collected from Mr. Meke in
Pretoria and delivered to Mr. Shinners
in Bloemfontein.
[41]
It was Mr. Mbenzi's testimony that on arrival in Bloemfontein he
would phone Mr. Shinners who would meet him and he would follow
Mr
Shinners to the delivery point in Bloemfontein. He said after meeting
Mr. Shinners they would deliver at City Storage which
he was advised
was the Plaintiff's storage facility.
[42]
Mr. Mbenzi verified that he signed a number of delivery notes
presented to him and that the receipt of the deliveries were
signed
for by different people for the Plaintiff.
[43]
Mr. Mbenzi stated that he collected shipments from the factory floor
and that he counted the items as they were loaded on the
truck. He
also indicated that he would also count the items when he offloaded
them. He could not offer any clarity on the delivery
note for 5000
meters that had been altered to 3550.
[44]
Under cross examination, Mr. Mbenzi confirmed that he was the only
driver by the name of Simon in the employ of the courier
company at
the time. When confronted with the discrepancies in the signatures he
affixed to the various delivery notes he confirmed
that it was indeed
he who had signed the documents in all instances. He also recalled
one instance where he signed regarding a
discrepancy in the items
listed on the delivery note and those actually counted but he could
not remember when exactly this happened.
He attempted to deal with
numerical inconsistencies in the delivery notes and waybills by
explaining that on occasions the loads
were split across vehicles or
between the truck and a trailer but he could add little to clarify
the issues.
[45]
The third witness for the Defendant was Mrs. Prescilla Nel from City
Storage. She testified that she has been in the employ
of City
Storage since July 2011 and that the storage facilities are located
at 1O Lessing Street Estoire, Bloemfontein. She stated
that City
Storage use a Pastel accounting system and that from the system she
could verify that the Defendant rented storage
facilities from
City Storage from March 2012 to May 2013. She stated that the records
do not go further back although she
stated she was aware that City
Storage did business with the Defendant before that date.
[46]
Ms. Nel indicated that when she took up employ at City Storage the
Defendant had more than one storage unit, she thought they
had two
but that by May 2013 they only had one such unit.
[47]
Ms. Nel testified that she had never seen the contents of the storage
unit(s) and could thus not verify what the Defendant
had stored
there, if anything, save to say that the items were not permitted to
be flammable.
[48]
The fourth witness for the Defendant was Mr. Jerry Shinners who had
been an employee of the Defendant since 2003 and worked
as a
technician and was also responsible for receiving goods. He was
transferred to Bloemfontein by his employer to receive the
pre
paid water meters and to assist with technical matters in late 2010.
He remained in Bloemfontein until 2013.
[49]
It was Mr. Shinners' testimony that when a shipment of pre-paid water
meters was dispatched by the Defendant from Pretoria
to Bloemfontein,
he was notified by Mr. Meke when it was scheduled to arrive in
Bloemfontein and he would meet the truck and direct
it to the correct
place to offload the contents. He would accompany the delivery and
he, the driver and others would count the
contents of the truck as
they were being offloaded.
[50]
Mr. Shinners confirmed that the various persons whose names appeared
on the delivery notes discovered were indeed the Plaintiff's
employees, save where Khotso signed.
[51]
Mr. Shinners also confirmed that initially the water meters were off
loaded at the Plaintiff's department of water and sanitation
but,
when there was no further space for meters there, later shipments
were taken to storage facilities at City Storage hired by
the
Defendant for the storage of the Plaintiff's meters. It was his
testimony that the Plaintiff had to notify the Defendant where
to
install the meters and, without such instructions, they could not
install the meters and they were thus placed in storage.
[52]
Mr. Shinners acknowledged the discrepancies in the various documents.
He could not shed any light on these.
[53]
Mr. Shinners also testified that he did not know of any requirement
that the Plaintiff's representative receiving the meters
had to
endorse the delivery note with an official stamp. He stated that the
signatories were, to the best of his knowledge, authorized
to receive
the shipments and that there were occasions where Defendant's
employees would sign for the deliveries and then take
the delivery
note to the Plaintiff.
[54]
The final witness for the Defendant was Mr. Edwin Sibiya, the
Managing Director of the Defendant. Mr Sibiya was personally
involved
in the negotiation of the contract and its implementation. He
testified that he has worked at the Defendant since 2003.
[55]
Mr. Sibiya was involved in the pilot project with the Plaintiff in
2010 when pre-paid water meters were supplied and installed
in the
BFHS and later in the project that gave rise to the current
proceedings. He stated that the contract that led to the current
action was for installation of prepaid water meters throughout
Bloemfontein as the 2010 pilot project in BFHS was completed in
2010
and further meters were not required there.
[56]
Mr. Sibiya confirmed that the contract was, inter alia, to supply,
install and maintain the meters. The Defendant was obliged
to supply
meters in accordance with a schedule of delivery annexed to the
contract and thus it continued to supply meters despite
not having
been given locations for installation. He remained firm in this
interpretation of the contract despite the Plaintiffs
assertion that
the delivery schedule was for supply and installation as delivery
related to delivery of the services in terms of
the contract and not
delivery of the meters only.
[57]
Mr. Sibiya also testified that when meters were invoiced for, the
invoice was accompanied by the relevant delivery note(s).
He could
neither confirm nor deny that the invoices sent to the Municipality
were accompanied by such notes as he does not work
in the finance
department of the Defendant.
[58]
As with the other witnesses for the Defendant, Mr. Sibiya was unable
to explain the absence of certain documentation, discrepancies
in the
information in the available documentation and the absence of a
municipal stamp on the delivery notes showing that they
were received
by an authorized person on behalf of the Plaintiff. He too, testified
that the use of a stamp to authenticate the
signatory's authority to
accept the goods on behalf of the Plaintiff was not communicated to
him or, to the best of is knowledge,
to the Defendant.
[59]
Mr. Sibiya corroborated that most of the water meters that were
delivered to the Plaintiff were placed into storage pending
notification from the Plaintiff regarding where their meters were to
be installed. The storage costs eventually became too high
and the
Defendant then moved the meters back to their own property in
Koedoespoort, Pretoria where they have been stored on the
Plaintiffs
behalf. He testified that the water meters have been tendered to the
Plaintiff on a number of occasions and that the
Plaintiff has failed
to collect its pre-paid meters or to make arrangements to take
possession of them. He stated that he could
not account for the
absence of a waybill or the details of the meters returned to
Koedoespoort as he is not in Operations.
[60]
Mr. Sibiya stated that the Defendant had ordered the meters from the
manufacturer according to the schedule it had to meet
and that it
billed the Plaintiff on delivery as it was obliged to pay the
manufacturer for the meters they had supplied.
[61]
The witness remained firm in his testimony that he was entitled to
bill for delivery of the meters, even before installation
and that,
as the meters had been delivered, the Defendant was entitled to claim
payment for the meters in terms of the invoices
submitted.
[62]
After Mr. Sibiya's testimony, the Defendant closed its case.
The
issues and the law:
[63]
The Plaintiff has relied upon allegations of fraudulent
misrepresentation and unjust enrichment to found its two claims in
the alternative.
[64]
In order for the Plaintiff to succeed with its claim based on
fraudulent misrepresentation, the Plaintiff must show that the
elements of fraudulent misrepresentation are present. This means
the
Plaintiff must establish that the Defendant made material
representations to it that induced it to act in a manner that caused
it to suffer damages in circumstances where the Defendant was
aware
or ought to have been aware that the representations were not true.
[65]
Unjust enrichment is a subsidiary remedy. (DuPlessis, J
The
South African Law of Unjustified Enrichment
2012 Juta at 6-7) For
this reason, the Plaintiff relied upon the remedy in the alternative.
Although it is not essential that the
specific
condictio
relied
upon be named in the pleadings, (Du Plessis
supra
at 2)
counsel for the Plaintiff indicated that the
Plaintiff1s claim was based on
the
condictio indebiti.
[66]
As no general enrichment action exists in South African law, despite
repeated statements that such an action may be desirable1
(Norlje
v Pool NO
1966(3) SA 96 (A);
Kommissaris van Binnelandse
lnkomste v Willers
1994 (3) SA 283
(A);
1999 (3) SA 19
(SCA);
McCarthy Retail Ltd v Shortdistance Carriers
CC
2001 (3)
SA 482
(A)) the Plaintiff must rely on a specific
condictio.
For
the Plaintiff to succeed with the enrichment action, more
particularly with the named
condictio,
it must establish: That
the Defendant had been enriched at the expense of the Plaintiff who
had been concomitantly impoverished;
that the payment made by the
Plaintiff to the Defendant had not been due and payable; and that the
payment was made
sine causa.
[67]
It is also of value to note here that the Plaintiff's financial
matters are regulated by the Municipal Finance Management Act
(56 of
2003),(MFMA) which Act places an obligation on the accounting officer
to manage the expenditure of the entity and, to that
end, to take all
reasonable steps to ensure: "the entity11 has and
maintains an effective system of expenditure
control including
procedures for the approval, authorization, withdraw and payment of
funds"; (Section 99(1) & (2)(a);
that a management,
accounting and information system is maintained that , inter alia,
accounts for payments made by the entity;
(Section 99(2)(c) and that
a system of internal controls is maintained in respect of creditors
and payments.(Section 99(2)(d).
Application
of the law to the facts:
[68]
In the present case, it is clear that the documentary records of both
the Plaintiff and the Defendant with regards to the implementation
of
the contract between the parties are inadequate. The Plaintiff relies
upon the ability of the Defendant to provide documentation
upon which
it can prove its case and the Defendant's documentation
is incomplete
and
littered with procedural irregularities and
discrepancies. In light of the provisions of
the MFMA set out abovel
it would appear that the Plaintiffs accounting officer has failed to
deliver on his mandate.
[69]
It is for the Plaintiff to prove its case on a balance of
probabilities. With regards to claim 1 which is founded upon an
allegation of fraudulent misrepresentation, the Court must assess
whether or not the onus has been discharged with regards to the
various elements of fraudulent misrepresentation referred to above.
From the pleadings it appeared that Plaintiffs allegations
of
fraudulent misrepresentation were founded on the basis that by
invoicing for 9000 pre-paid water meters, the Defendant represented
these had been both supplied and installed. It had in fact delivered
but not installed these and the Defendant had thus deliberately
misled the Plaintiff to pay for work not yet done. During the trial
it however, became apparent, that the Plaintiff was in fact
presenting the argument that the Defendant had delivered and
installed only 1075 water meters and that the balance of the water
meters for which the Plaintiff had been invoiced had not in fact been
delivered.
[70]
It was the Plaintiff's position that the onus was on the Defendant to
prove it had delivered the water meters invoiced for
and that, given
the unsatisfactory state of the documentation supplied by the
Defendant with regards to the various alleged deliveries,
such
deliveries could not be proven to have taken place.
[71]
The onus of proving that the water meters had not been delivered in
fact falls upon the Plaintiff and this onus has not been
discharged.
The Plaintiff depended almost entirely upon a report drafted by
Ms. Solfalfa to found its allegations.
This report was inadequate and
did not reflect any inputs from any employee of the Plaintiff who was
involved with the negotiation
and implementation of the contract. The
witnesses called by the Plaintiff could offer no first-hand evidence
with regards to the
circumstances attached to the contract.
Furthermore, Ms. Solfafa was not familiar with all the signatories to
the delivery notes
who purported to accept deliveries on behalf of
the Plaintiff but this did not exclude the possibility that they were
so authorized.
[72]
Despite the irregularities, inconsistencies and discrepancies found
inthe paperwork supplied by the Defendant, there was no
evidence that
any or all of the parties who participated in the generation or
completion of the documentation acted in a dishonest
manner
calculated to defraud the Plaintiff.
[73]
The Defendant's witnesses substantially corroborated the information
each supplied and, if the totality of the evidence is
weighed, it
would appear more probable than not that the Defendant delivered
water meters to the Plaintiff over the period regulated
by the
contract and that these meters could not be installed because the
Plaintiff was unable to give installation sites.
[74]
The Defendant certainly contracted with a courier company to
transport something to Bloemfontein on a number of occasions.
It
hired office space and placed personnel in Bloemfontein to effect
some work in Bloemfontein and it hired storage facilities
at City
Storage for some purpose. Why would the defendant have incurred such
costs If not to service the contract?
It
seems extremely improbable that all of this was done with
the intention to defraud the Plaintiff.
[75]
In terms of its own controls, it would be unlikely that the Plaintiff
would pay out such substantial invoices, running into
millions of
Rands, without verifying that the goods being charged for had in fact
been delivered. If this is indeed the case, this
would be grossly
negligent on the part of the Finance Department of the Plaintiff. The
plaintiff is unable to produce any independent
documentation of their
own and fails to explain why they would pay out on invoices without
first verifying the performance in respect
of which the invoices
claimed re-imbursement.
[76]
The Plaintiff has argued quite convincingly that the deliveries from
the Defendant and the supporting
documentation they have
supplied
to the court is questionabl.e The fact that
the delivery
notes
were riddled with inconsistencies, lacked certain signatures and
stamps which should, allegedly have appeared on them does
raise some
questions as to how many meters were actually delivered. The Court
cannot, however, on the evidence before itt find
that the meters were
not delivered although exactly how many, remains somewhat obscure.
[77]
Fraudulent misrepresentation in this case would have required a
conspiracy between the Defendant's employees in Bloemfontein,
the
Dispatch Manager in Pretoria and the employees of the courier company
who were responsible for the transportation of the goods
from
Pretoria to Bloemfontein.
[78]
On the matter of the claim in the alternative, the Court finds the
Plaintiff's reliance on the
condictio indebiti
to be
inappropriate. For the Plaintiff to succeed on this
condictio,
the
payment made by the Plaintiff to the Defendant would need to have
been made
sine causa.
In this case the payment was made in
terms of a valid contract between the parties. To allow the Plaintiff
to pursue an enrichment
action to recover a portion of the monies
paid in these circumstances would be to allow the enrichment action
to be used to achieve
contractual restitution. The Court thus finds
that the
condictio
indebiti cannot be relied upon in this
case.
In
light of the above, the court orders that:
The
Plaintiffs claims 1 and, in the alternative 2, for repayment of the
sum of R 17 642 777.00 are both dismissed with costs.
___________________
C.
NICHOLSON, AJ
On
behalf of the Plaintiff: Adv. AH
Burger SC
Instructed
by:
Moroka Attorneys (Bfn)
Suite 19, Reitz Park
74-80 Pres Reitz Ave
Westdene, Bloemfontein
On
behalf of the Defendant: Adv. A Ayayee
Instructed
by:
Madise, Madise Inc.
47 1st Ave, Suite 17
Westdene Centre,
Bloemfontein