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[2016] ZAKZDHC 60
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Millcreek Trading CC t/a Pro Arm Firearm Training Academy v Passenger Rail Agency of South Africa (PRASA) t/a Metrorail (2199/2011) [2016] ZAKZDHC 60; [2016] 2 All SA 537 (KZD) (26 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
Case
no: 2199/2011
In
the matter between:
MILLCREEK
TRADING CC T/A PRO ARM
FIREARM
TRAINING ACADEMY
Plaintiff
and
PASSENGER
RAIL AGENCY OF SOUTH AFRICA
(PRASA)
T/A
METRORAIL
Defendant
Judgment
CHETTY
J
[1]
The plaintiff instituted action against the defendant based on a
breach of contract,
claiming R489 072 for loss attributed to
what it describes in the particulars of claim as “
lost
profit and opportunity
”. The plaintiff contends further
that it sustained loss from other work that it could have undertaken
during the period it
was contracted to the defendant, as well as loss
of reputation and goodwill. A second claim is for R6580 based on
special damages
which it paid on behalf of the defendant to the South
African Police Services (‘SAPS’).
Pleadings
and background to the action
[2]
The plaintiff is a close corporation which carries on business under
the direction
of its chief executive officer, Mr K Pillay (‘Pillay’).
Its core business is in the area of firearm training, including
the
obtaining of competency certificates in terms of the Firearms Control
Act 60 of 2000 (‘the Act’). The plaintiff’s
case is essentially that in July 2008 Pillay was approached by a Mr
Ivan Chami (‘Chami’) who was employed by the defendant
at
the time, to urgently undertake work on behalf of the defendant in
securing competency certificates for its protection officers,
who are
required to carry firearms as part of their duties. The issuing of a
competency certificate is regulated by the provisions
of chapter 4 of
the Act which provides for an application to be made in the
prescribed form, which includes a full set of fingerprints
of the
applicant. The Act further provides that no licence for a firearm may
be issued to a person who does not possess a competency
certificate.
In light of the defendant’s officers not having the necessary
certification, it exposed the defendant to prosecution
under the Act.
[3]
Due to the plaintiff’s expertise in the area of processing
applications for
competency certificates, Chami verbally gave the
instruction for this work to be carried out urgently to avert a
crisis. The plaintiff
commenced work without delay on the basis of
this request by Chami, and took fingerprints as well as photographs
of the applicants
for certification. It also engaged with various
service providers for the printing of firearm manuals in respect of
each of the
firearm unit standards applicable to the protection
officers, as well as securing the services of trainers to conduct the
necessary
training. These various facets of work which the plaintiff
contends it undertook at the instance and request of the defendant,
will be considered in further detail.
[4]
It is common cause that in August 2008 the plaintiff was invited and
duly submitted
a bid in respect of a tender put out by the defendant
for training for its protection officers in terms of the new firearm
standards.
After submission of an initial quote for services, the
plaintiff amended its quote, reducing its price. Despite this,
in
December 2008 the plaintiff was informed that it had not been
successful in its bid. As it transpired the contract was awarded to
a
company called Thathe Training and Development. The plaintiff was
aggrieved at this decision and lodged an appeal, which was
unsuccessful.
[5]
The essence of the plaintiff’s claim is that in accordance with
a verbal agreement
concluded with Chami, who represented the
defendant, it carried out various work towards the acquiring of the
competency certificates,
only to have the tender allocated to a third
party. It is common cause that there is no written agreement on which
the plaintiff
relies. Its version is that at all material times
it believed that Chami was duly authorised to represent the defendant
and
that he was authorised to contract on the defendant’s
behalf. In light of the urgency of the situation, as conveyed by
Chami,
Pillay carried out visits to various railway stations to meet
with the protection officers who were to be processed for
certification.
The plaintiff acted in good faith and at all times,
paid the necessary amounts for the firearm licences to the South
African Police
Services and thereafter, made arrangements and paid
for services associated with and related to the certification
process. The
plaintiff accordingly contends that the defendant is
liable to compensate it for work done and monies paid on its behalf.
It is
trite that the onus is on the plaintiff to establish the
essential requirements for a valid contract with the defendant,
including
the authority of Chami to contract on behalf of, and bind,
the defendant.
[6]
While the plaintiff in its particulars of claim did not particularise
the amount of
damages it claimed, the computation of the loss emerged
during the course of the trial from a document (see below) prepared
by
the plaintiff. It is not disputed that despite demand, the
defendant has refused to make payment of the total amount or any
other.
DESCRIPTION
UNIT PRICE
TOTAL
94 x
Fingerprints, Completion of Application Form & Travel
R 250.00
R 23 500.00
94 x Colour
Prints – 4 Photos Per Person
R 40.00
R 3 760.00
94 x Saps
Registration
R 70.00
R 6 580.00
120 x Five Sets
of manuals = 600 manuals
(unit stds.
117705,119649,123515,119652,123514)
See attached
invoice
R 75 992.40
120 x Stationery
Packs (incl. Five formative & five Summative assessments)
R 295.00
R 35 400.00
120 x Venue &
Shooting Range for 32 days (four groups of 30)
R 1 500.00
R 48 000.00
Facilitator fees
for 32 days
R 1 750.00
R 56 000.00
Moderator &
Travel x 8 days
R 2 100.00
R 16 800.00
Range Officer x
8days
R 1 500.00
R 12 000.00
Ammunition
(Handgun & shotgun)
Combined
R 25 740.00
Meals &
Refreshments
No cost incurred
No cost incurred
Total
R303 772.40
[7]
The defendant’s case is that in July 2008 its protection
officers were required
to attend a firearm training course in order
to comply with new laws and regulations relating to the possession of
firearms. The
defendant does not concede that it was behind schedule
or in a situation of crisis, and contends that it had until 2010 to
comply
with the applicable standards under the Act. It denies that
any delays in the process of certification or training of its
officers
would have prejudiced it in any way. Consequently, in August
2008 the defendant invited tenders for the firearm training and
certification
process, of which the plaintiff was among these.
[8]
In September 2008, the defendant cancelled the tender process as new
specifications
in the Act emerged, and it invited service providers
to tender afresh. The plaintiff submitted a new bid and after
consideration
of the bids the tender was awarded to Thathe Training
and Development.
[9]
In so far as the plaintiff’s contention that it contracted with
a duly authorised
representative of the defendant, this is denied by
the defendant. It is contended that even if the plaintiff did engage
in discussions
or concluded an agreement with Mr Chami, the latter
had no authority to enter into any agreements binding the defendant
or to make
promises of any kind on behalf of the defendant. As to the
contention of the plaintiff that it carried out work on behalf of the
defendant, this is denied by the latter which pleads that it was not
aware of any work being done by the plaintiff during and after
the
tender process, and had it been so aware, it would have stopped the
plaintiff from carrying out such work.
[10]
Accordingly, the defendant contends that no legally binding and
enforceable agreement had been
entered into between it and the
plaintiff, and even if the plaintiff contracted with Mr Chami, the
latter lacked the necessary
authority to do so on behalf of the
defendant. The defendant further specifically pleaded that the
procurement of services and
goods by the defendant, as a state
entity, is regulated by the provisions of the Public Finance
Management Act 1 of 1999 (‘PFMA’)
read with s 217
of the Constitution of the Republic of South Africa, 1996.
Accordingly, the procurement of goods and services
by the defendant
in excess of R350 000 had to be undertaken via a competitive
bidding process involving the approval of the
bid document by a
committee; the advertisement of the bid in the Government Tender
Bulletin and thereafter, the consideration of
the bids by an
evaluation committee.
[11]
The defendant contends that the plaintiff’s CEO, Mr Pillay, was
fully aware of the procedures
required to contract with the
defendant, and knew or ought to have been aware that when it
contracted with Chami, that such contract
was in inevitably concluded
in breach of the PFMA and that it would accordingly be
unenforceable.
[12]
The plaintiff filed a replication contending that the urgency of the
certification process made
it impractical for a competitive bid to be
undertaken and this justified a departure from the norm. This urgent
situation caused
the plaintiff to engage specialist expert assistance
to resolve the defendant’s predicament. In the event of the
Court finding
that Chami did not have the authority to bind the
defendant, the plaintiff pleads that the defendant held out that
Chami had the
ostensible authority to bind the defendant. In light of
the defendant being a large state owned entity, by reason of the
turquand
rule, the plaintiff presumed that internal procedures
had been met for Chami to have been given the authority to contract
with
the plaintiff. In so acting, the plaintiff contends that it was
induced by Chami to render its services and therefore the defendant
is estopped from asserting that there had been no statutory
compliance in concluding the contract, or that Chami had not been
properly authorised. As a last resort, and in the event of all other
grounds failing, the plaintiff relies on unjust enrichment
in respect
of the amount of R489 072 in respect of expenses paid on behalf
of the defendant.
Analysis
of the evidence
[13]
Mr K Pillay was called as the plaintiff’s key witness. His
evidence was that in July 2008
he was contacted by Chami, whom he
knew to be second in charge of the defendant’s protection
services. Chami informed him
that he needed to speak to him urgently
and met him at the plaintiff’s offices. He informed Pillay that
the defendant urgently
required assistance in having its protection
officers become compliant in terms of the recent amendments to the
Firearms Control Act, effective
from January 2008. Although these
amendments to the regulations were not produced by either party
during the course of the trial,
as I understood the position, prior
to 2008 entities such as PRASA employed security guards or protection
officers and issued them
with firearms in order to carry out their
duties. These were made available on the basis of daily permits
issued to the officers.
The firearms remained at all times the
property of the defendant, but were issued out to protection officers
from the defendant’s
armoury as and when the need arose, and
for a period not exceeding the particular shift work by the
protection officer.
[14]
As I understood the evidence, the new legislative amendments required
each protection officer
to be individually certified as competent to
possess a firearm. There is obviously good reason for this in light
of the high number
of crimes committed with firearms more
importantly, I would assume, to ensure that the person to whom a
firearm is entrusted is
suitably competent and responsible to possess
such a weapon. Accordingly an application process, contemplated in s
6 of the Act
had to be undertaken, with each protection officer
applying in his or her own name.
[15]
According to Pillay, in light of the defendant’s protection
officers not having the necessary
certification, the defendant ran
the risk that its officers could be in unlawful possession of
firearms, and therefore liable to
prosecution in terms of the Act. On
the face of it, that contention appears to reflect a correct
interpretation of the Act. However,
no evidence was led as to whether
all of the officers were new applicants, or whether they were
applying for a renewal of existing
certificates or licences. Pillay
testified that he arranged for Chami to meet with the Designated
Firearm Officer (‘DFO’)
at Durban Central police station,
whereupon the DFO confirmed that it was necessary for the protection
officers to be urgently
certified. Pillay stated that Mr Chami
reverted to him with instructions to commence the application
process.
[16]
According to Pillay, his mandate entailed the taking of fingerprints
of the applicants, their
photographs and the completion of
application forms for certification. In addition, the defendant would
have to give each of the
officers the necessary training, which
entailed lectures, and thereafter, practical shooting at its range.
Once
this process was complete, they would be issued with their competency
certificates. During Pillay’s testimony on the
mandate given to
him by Chami, there was nothing placed before me as to what amount
the defendant had agreed to pay in respect
of the certification for
each applicant, or for that matter, how many applicants would have to
be processed. This was not pursued
under cross examination either.
[17]
In my view, this is a crucial omission, as it would suggest from the
plaintiff’s perspective
that it was given an open mandate,
without any budgetary constraints, which is a most unlikely scenario.
When pressed for details
as to the number of applicants changing from
120 to 110, Pillay attempted to avoid blame and stated that this was
the duty of Ms
R Pillay, his administrative assistant. The absence of
any evidence from the plaintiff as to pricing (other than in the
submission
of its tender) is also relevant to the defendant’s
contention that any contract in excess of R350 000 was required
to
follow a competitive bidding process.
[18]
Mr Pillay testified that the DFO, after discussion with him and Mr
Chami, agreed for Pillay to
carry out the task of fingerprinting all
of the applicants, where after, all of the prints would be brought to
the offices of the
DFO, to be downloaded onto the database of the
SAPS. In this regard Pillay testified that he had visited the north,
south and central
depots of PRASA where the protection officers were
made available for the taking of fingerprints. In other instances,
arrangements
were made with the heads of the regional depots for the
remaining applicants to be sent to the defendant’s head office,
where
the fingerprinting exercise continued. Once all the
fingerprints were taken, Pillay took them to the DFO, and upon
payment
of the prescribed fee of R70 per applicant, each applicant’s
details were logged on to the database, to be processed for their
competency certificates.
[19]
During the course of the trial, I enquired whether the DFO would be
called to testify as Pillay’s
evidence had sought to attribute
various components of the fingerprinting exercise to what had been
said by the DFO. As it turned
out neither the DFO nor anyone from the
Firearm Registry office was called upon to testify in relation to the
process followed,
and the Nett results of any work allegedly carried
out by the plaintiff.
[20]
Equally important is that the Act calls for applications for
competency certificates to be submitted
in the “prescribed
form”. The sum total of the evidence by Pillay in this regard,
if one is to accept his version as
being probable, is that he took
the fingerprints of each officer as well as their photographs and
took these to the office of the
DFO where they were captured.
No evidence was led by the plaintiff from which it can be ascertained
whether what was provided
to the DFO was sufficient for the purposes
of an application in terms of s 9(2) of the Act. The Court was not
given the benefit
of sight of any one of the numerous application
forms that ought to have been completed on behalf of the applicants.
[21]
It is prudent to point out that despite Mr Pillay’s prior
employment in the SAPS and his
numerous qualifications through the
Safety and Security Sector Education and Training Authority
(‘SASETA’) and the
South African Qualifications Authority
(‘SAQA’), no documentation was placed before the Court
which confirms that he
is authorised, even as a peace officer, to
take fingerprints of applicants for competency certificates. Mr
Madlala, who appeared
for the defendant, pointed out that there is no
legislative provision for this task to be outsourced by the police
services. I
am in agreement with that submission and even if, as Mr
Pillay indicated, the DFO had authorised him to take fingerprints of
the
defendant’s protection officers in light of the urgent
predicament which the defendant faced, the DFO is bound by the
provisions
of the Act and any action contrary thereto would be
ultra
vires
. The obvious reason for the police to take
fingerprints is so that they can be satisfied as to the identity of
the
person applying for a competency certificate or firearm licence,
and that the applicant is not someone who is prohibited, for one
or
more reasons set out in s 9(2) of the Act.
[22]
In any event, Pillay confirmed that he had taken the fingerprints of
all of the protection officers
who were required to be registered for
certification. As he did not keep a list of the persons who were
processed by him, the plaintiff
put up a reconstructed list of 94
protection officers whom he fingerprinted. Under cross
examination, it was put to him that
of the persons on this list, 31
joined the defendant’s employ after January 2010, and
accordingly could not have been part
of the group of officers for
whom he was required to obtain certification as at July 2008. The
witness pointed out that the list
relied upon was reconstructed for
the benefit of his attorneys, but conceded that 31 names on that list
were not employed by the
defendant at the time when he was contacted
by Mr Chami.
[23]
This concession by Pillay has significant implications for the
plaintiff’s case, as the
plaintiff is unable to substantiate
the basis of its claim, in that it cannot contend to have processed
applications for 110 applicants,
as 31 of those have been shown to
not have been in the defendant’s employment at the time.
This calls into question
the probity and value of the evidence of
Pillay, who relied on was reconstructed to me his claim,
[24]
Apart from the taking of fingerprints and payment of the prescribed
fee, Pillay testified that
he had to make the necessary arrangements
for the printing of handbooks or training manuals for each protection
officer on the
five new unit standards and regulations in terms of
the Act. For this purpose he ordered 120 learner guides or training
manuals
from Sleek Signs and Safety CC . Each applicant was to be
handed a pack comprising of five training manuals. In addition, he
placed
a request for a quotation for stationery packs comprising of
pens, pencils, rulers, and exam pads as well as the printing of what
is referred to as the Formative and Summative Assessments in respect
of each of the unit standards applicable.
[25]
Pillay dispatched a request to Sleek Signs and Safety on 3 September
2008 requesting them to
provide a quote for the items referred to
above. When questioned as to how he arrived at the quantity of items
required, he stated
that his administrative assistant was responsible
for those aspects. She was never called to testify. The request for
the quotation
indicates that the manuals were required for
training in December 2008, which raises the question why the manuals
were procured
as early as September 2008.
[26]
On 11 September 2008 the plaintiff wrote to Sleek Signs and Safety
advising that it was satisfied
with their quote. This quote was not
placed before the Court. What is before the Court are two invoices
dated 24 September 2008
from Sleek Signs and Safety for R35 400
for the stationery packs including the formative and summative
assessments and,
R75 992,40 in respect of the learner guides.
Both invoices were paid in cash in the amount of R111 392,40. As
proof for
this payment the plaintiff relies on a handwritten
acknowledgment of receipt, on two numerically consecutive pages
bearing the
name and details of Sleek Signs.
[27]
Pillay was cross examined as to why Sleek Signs had been paid in
cash, without there being any
independent method of verification of
the payment, which considering the amount of the invoices, should
generally be paid by cheque
or via an electronic funds transfer
(‘EFT’). Pillay stated that these are small enterprises
and he was committed to
empowering their development. For this
reason, the plaintiff kept a significant amount of cash on its
premises, which it used to
pay for services to small business.
[28]
The plaintiff called Mr Sewlall Rampershad, the owner of Sleek Signs
and Safety to testify in
support of its case. Rampershad confirm the
version given by Pillay, that he was paid in cash for the stationery
and workbooks
which he supplied. Under cross examination Rampershad
testified that he paid Value Added Tax in respect of the revenue from
his
business, but was unable to provide a plausible answer as to how
he would account for his earnings from the plaintiff, as he ran
a
cash business. When confronted with this question, he responded that
these questions could be answered by his accountant.
[29]
I considered Rampershad to be evasive in his answers on the method of
payment, especially as
his regarded himself as a “small
business”. What I also found surprising is that the witness
received a request to
quote from Pillay on 3 September 2008. He
testified that he had not printed firearm training manuals previously
and was given the
material on a compact disc. The request to quote
from Pillay on 3 September 2008 refers only to 120 manuals to be
printed. It contains
no reference as to the number of pages for each
manual, nor did either Pillay or Rampershad testify in relation to
this. It therefore
seems that a quote was generated by Rampershad
without any regard for the number of pages required to be printed for
each manual.
This, one would think, would be an intrinsic ingredient
for any printer or publisher to have in order to formulate a
quotation.
[30]
Rampershad’s answers were also evasive when questioned as to
the existence of his receipt
book in which he allegedly recorded the
payment received from Pro Arm Firearm Training Academy. He said he
had no need to keep
his receipt book for five years. Similarly, when
asked of the whereabouts of his quotation given to Pillay, he
remarked that this
could have been verbal, but if it was submitted in
writing, he would not have a copy after the passage of time from
2008. He further
testified to paying his suppliers and overheads with
the cash received from the plaintiff.
[31]
When Pillay was questioned regarding the stationary packs ordered
from Sleek Signs, he conceded
that these had not been used by the
defendant, but was unable to explain why this had been recorded as a
loss, as it could have
been easily used for another of the
plaintiff’s client’s. At first, Pillay responded that the
manuals “expire”
or are valid for a specific period,
although no expiry date could be ascertained from the exhibits before
Court. It was then discovered
that he had testified with regard to
the incorrect exhibits before Court. When Pillay was recalled to
testify to introduce the
correct set of manuals into evidence, it was
found that these were not branded or compiled using or making
reference to the defendant’s
corporate logo or branding, such
that would make them unsuitable for use by other companies wanting to
have their staff trained
in the use of firearms. Pillay’s
response that he had no other clients who could use the training
manuals is unconvincing,
particularly as it was found that the
manuals were valid until 2011. It should also be pointed out that no
evidence was led to
indicate that the plaintiff had tendered the
delivery of the stationary packs and firearm manuals to the defendant
against the
claim for the costs their production.
[32]
The next component of the plaintiff’s claim was the expense it
incurred for engaging the
services of Mr AS Bam (‘Bam’)
of Rapid Dawn 1086 CC trading as Indlovana Firearm Training Academy
of Greytown, KwaZulu-Natal.
In this regard, Mr Pillay testified that
he directed a request on 4 November 2008 to Mr Bam for a quotation
for facilitating and
moderating the training sessions, as well for
serving the function of a range officer. In total, he required the
service provider
to be available for a total of 32 days, commencing
from 8 December 2008 until 28 January 2009.
[33]
On 7 November 2008 Pillay received a letter from Bam confirming that
he (Bam) was available for
training on the dates mentioned in the
letter from the plaintiff. On 8 November 2008 an invoice was sent by
Bam to the plaintiff
for the rendering of services as a facilitator
for 32 days; as a moderator for eight days and as a range officer for
eight days.
The amount of the invoice was for R84 800. The plaintiff
testified that this amount was paid in cash to Bam. When Bam was
called
to testify in support of the plaintiff’s version he
stated the amount was collected over a period of two days due
to
the vast sum involved. He testified that although his invoice
indicated his company’s banking details, he preferred payment
in cash as a result of having had negative experiences regarding
payment in the past.
[34]
Under cross examination, Pillay conceded that as a result of his
tender to the defendant being
unsuccessful, the services of Bam or
his company were never utilised. There was no evidence of a
cancellation fee being charged
by Bam, against a refund of the
balance of the amount paid to him. When Bam testified, he simply
stated that he had been paid for
the facilitation a month in advance,
and that he had set aside time for this purpose. He further stated
that no one called him
to notify him of the cancellation of the
training.
[35]
Under cross examination, Bam did not fare well as a witness. When
asked to provide details of
his experience or qualifications as a
moderator and trainer in firearms, Bam stated that he had left his
certificates at home in
Greytown, and was not aware that this would
be an issue in dispute. The request for training from Pillay to Bam,
dated 4 November
2008, does not contain a facsimile or email address.
Similarly, Bam’s response as to his availability, his invoice
and his
acknowledgment of payment reflect no indication of him having
transmitted these documents to the plaintiff by facsimile.
Furthermore,
if the plaintiff had been in possession of these
documents, it would be relatively easy to prove the manner of their
transmission.
The underlying thrust of the questioning by the
defendant’s counsel was to sow doubt that these documents were
ever transmitted
between the parties, the contention being that the
plaintiff had manufactured these expenses, which were never incurred
in the
first place.
[36]
The pattern of paying service providers in cash is a recurring theme
throughout the plaintiff’s
evidence. As with Rampershad before
him, Bam too was paid a substantial amount of money in cash. In my
view, it is inconceivable
and improbable that the plaintiff would pay
an amount of R84 800 within three days of receiving an invoice
where the only
“benefit” received by the plaintiff was
the securing of Bam’s services as a facilitator and moderator.
There
was no evidence placed before the Court as to why 32 days
specifically were required for training, and how many officers would
be trained per day. All of these permutations are placed under
scrutiny in light of Pillay’s concession that at least 31
persons he fingerprinted, only joined PRASA in 2010.
[37]
It was also apparent from Bam’s evidence that he suffered no
direct loss as a result of
the training not taking place. He
testified that he owned a tavern in Greytown and would certainly have
been busy over the December
2008 festive period, including a public
holiday of 16 December 2008, when he was scheduled to do training.
[38]
In so far as the payment which he received from Pillay, Bam’s
answers as to how he was
paid, when and why he was paid in cash were
unconvincing and certainly cast doubt as to whether he was paid at
all. The circumstances
of the hurried request to do training, the
speedy confirmation of availability, followed by payment of the full
amount three days
after confirmation, cannot resist the glare of
suspicion. Bam was unable to state why, as someone who is VAT
registered,
he would accept payment in cash for work done, if his
intention was to avoid paying tax on this amount, especially at the
quote
of R84 800 clearly states “Taxes included”. It
also seems improbable that despite a supplier providing its banking
details on the invoice; it would nonetheless seek payment in cash.
Unlike in the case of Sleek Signs, there was no evidence to
suggest
that a cash payment was intended to “empower” Rapid Dawn,
nor was there any evidence to suggest that it was
a “small
business”. Bam conceded that there was no independent “paper
trail” which could establish that
he had indeed been paid and
what this money was subsequently used for. Bam also stated that in
2008 he was invited by the
defendant to quote for the same services
for which he charged the plaintiff.
[39]
The last component of the plaintiff’s claim relates to the
purchasing of ammunition for
the practical training of the
defendant’s protection officers. Pillay testified that his
company directed a request on 26
September 2008 to Pronto Security
Consultants to quote for the supply of 1 200 shotgun rounds and 6 000
9mm handgun rounds. The
total spent on the purchasing of ammunition,
according to Pillay, was R25 740. This amount was paid in cash
to a Mr Mkhize,
who signed an acknowledgement of receipt of payment
on the plaintiff’s letterhead. It bears noting that as with the
three
other suppliers of goods or services to the plaintiff, all of
the vendors have been paid in cash without there being any
independent
verification of the payments. As with the other three
vendors whose evidence has been canvassed above, the period from the
date
of a request for a quote to the date of final payment was
remarkably short, suggesting an urgency to conclude business. Payment
to these service providers was always made in cash.
[40]
In my view, it is inconceivable that a supplier of ammunition will
not issue a receipt for payment,
even if it were in the form of cash.
Chapter 7 of the
Firearms Control Act imposes
particular obligations
on a dealer trading in the sale of ammunition, including the keeping
of a register to record all transactions
(see s 39(5) of the Act).
This register could easily have been produced and would have
dispelled any suspicion as to the
sale of the ammunition. In light of
the absence of any independent verification, counsel for the
defendant cast doubt over this
transaction suggesting that no
ammunition had been bought and paid for by the plaintiff.
[41]
Pillay testified that despite the plaintiff not having secured the
tender for the certification
process, the ammunition purchased for
the intended training sessions was not returned to the supplier.
Instead, although the bullets
would not have reached an expiry date
until a few years from the date of their purchase, Pillay and others
in the employ of the
plaintiff “shot up” this
ammunition.
[42]
There was nothing which stopped Pillay from offering the ammunition
to the defendant, which could
have been used by it. Alternatively, no
plausible explanation was provided for why this ammunition could not
be lawfully sold off
to other licensed firearm owners or sold to
users at the plaintiff’s range. The version that they were
“shot up”-
all 7 200 rounds of ammunition –
seems to me to be highly improbable. There was no evidence before the
Court as to whether
this ammunition had reached an “expiry
date” or even if it had, what that entailed for their
usability. Although no
expert evidence was led, as I understand the
position, ammunition does not
per se
expire, but the potency
of the gunpowder may be lost over the years. In respect of the
payment for the ammunition, no evidence
was received from Mr Mkhize
to confirm the version of Pillay. According to him, payment for the
ammunition was made by Ms P Pillay,
an employee of the plaintiff. As
such, Pillay’s testimony on this aspect is unhelpful as he was
not present at the time.
[43]
The plaintiff also called Mr Chandres Sigamoney (‘Sigamoney’),
a retired former employee
of the defendant, who was employed as the
area supervisor of the Redhill Station on the north coast depot. He
testified that Chami,
whom he described as the Administration and
Training Co-ordinator at PRASA’s head office, informed him that
the plaintiff
would be calling at his station to take fingerprints
for firearm competency certificates, and that he (Sigamoney) should
make the
necessary arrangements for the process to take place.
[44]
Sigamoney testified that he together with his officers complied with
the request and had his
fingerprints taken by Pillay. His photograph
was taken later at the head office of the defendant. What is
significant is that Sigamoney
had no knowledge of whether his
officers were licenced to possess firearms at the time and was unable
to shed any light on the
contention of Pillay of the crisis situation
supposedly confronting the defendant in respect of outstanding
compliance with the
new firearm regulations.
[45]
Sigamoney’s evidence corroborates that of Pillay with regard to
the taking of fingerprints
and the taking of photographs of the
defendant’s protection officer. Beyond that, Sigamoney’s
testimony offered
little or no corroboration for the plaintiff’s
case of a contract concluded with the defendant through Chami. He was
also
unable to dispute the defendant’s contention that some of
the applicants whose fingerprints were taken, were part of a learner
ship programme and not security officers applying for firearm
competency certificates. Sigamoney also did not keep a list
of
persons who were part of the group who had their fingerprints taken.
As such, he was unable to corroborate Pillay’s evidence
as to
the number of applicants processed.
[46]
This concluded the evidence of the plaintiff after which, the
defendant applied for absolution,
which application was refused. Mr
Madlala then proceeded to close his case without calling any
witnesses.
[47]
The essence of the plaintiff’s case is that Pillay was called
upon by Chami, who represented
the defendant, to undertake urgent
work relating to firearm certification in terms of the Act. While the
plaintiff contends that
the scope of the work extended to the
securing of competency certificates in terms of the Act, no evidence
was led by the plaintiff
to establish what precisely the mandate from
Chami was. All that the evidence establishes, on the plaintiff’s
version, and
which is not common cause, was that the plaintiff was
contracted to secure firearm certification for the defendant’s
protection
officers.
[48]
There is no evidence as to what steps had to be taken in securing the
certificates, and most
importantly, how much the defendant was
prepared to pay for the successful delivery of the certificates.
There was no evidence
from Pillay as to what Chami may have said
regarding costs of the contract, or alternatively, whether he was
given an open ended
mandate without any budgetary constraints. The
latter scenario seems too far-fetched as the defendant, being a state
owned entity,
is governed by the provisions of the
Public Finance
Management Act despite
Mr Manikam, who appeared for the plaintiff,
not wanting to make this concession at the outset of the trial.
No basis in law
was advanced for an interpretation to the contrary.
[49]
The arguments advanced by Mr Madlala in the application for
absolution were very much the same
in respect of his arguments on the
merits after closing the defendant’s case. The fundamental
difficulty with the plaintiff’s
case was that it bore the onus
to establish that Chami had the necessary authority to contract with
Pillay and to conclude a contract,
binding on PRASA, in the process.
The plaintiff’s woes were compounded by the fact that Chami was
no longer in the defendant’s
employ, but this did not stop the
plaintiff from securing his attendance in Court via a subpoena. The
defendant adopted the stance
that there was no obligation on it to
assist the plaintiff with its case. To the extent that the plaintiff
was relying on these
representations as the basis for its contract,
it bore the onus to ensure that Chami testified.
[50]
The evidence as to the existence of a contract between the plaintiff
and the defendant rests
on the sole evidence of Pillay. There are
remarkably no letters or emails exchanged between the two
representatives of the contracting
parties. Moreover, it is the
plaintiff’s contention that by the time it had been asked by
Chami to submit a bid in response
to the tender put out by the
defendant, it (the plaintiff) had already completed most of the work
in respect of the certification
process and incurred
significant expenses towards the completion of the contract. This
contention is factually incorrect
as the payment for ammunition to
Pronto Security was in made September 2008; the printing of training
manuals and the stationary
packs by Sleek Signs was made in September
2008 and the reservation of Mr Bam to facilitate training in the new
unit standards
was made and paid for in November 2008. These were
expenses that were incurred after the notice of invitation to tender.
[51]
Even if the plaintiff believed that it was entitled to proceed with
work on the basis of a verbal
agreement with Chami, that belief would
have been interrupted upon the receipt of the invitation to
tender on 8 August 2008.
The plaintiff must have realised as at that
date that any work done by it to date was being done at risk, as it
had not been formally
appointed in terms of a competitive bidding
process. Pillay ought to have reasonably foreseen, irrespective of
whatever assurances
were given to him by Chami, that he was part of a
competitive bid and that there was likelihood that another company
might secure
the contract despite Chami’s assurance to the
contrary. In these circumstances, the plaintiff proceeded to
incur expenses
(if it did) in a manner reckless as to the outcome of
the tender, and without due and proper consideration as to whether
any expenses
incurred by it could be enforceable against the
defendant.
[52]
Pillay’s evidence of the urgency to obtain the certification,
on his version alone, extends
only to the taking of fingerprinting
and photographs. All of the other expenses were incurred after the
plaintiff submitted its
bid for the contract, in September 2008,
thereby undermining the claim of urgency. Even the testimony of
Sigamoney did not bolster
the claim of Pillay on this aspect.
There was also no evidence led as to whether what the plaintiff did
in respect
of protection officers, either directly or indirectly,
contribute towards their certification. One does not know whether the
plaintiff’s
contribution was incidental and minimal to the
process as another service provider, Thathe, was appointed following
the tender
process. There is no certainty as to when, or if all, of
the applicants processed by the plaintiff received their competency
certificates.
Application
of legal principles
[53]
Mr Manikam for the plaintiff submitted that the evidence presented by
the plaintiff establishes
that there was an offer made by Chami of
certain work to be undertaken urgently, and a corresponding
acceptance by Pillay to do
the work. This is evidenced by the
endorsement given to the fingerprinting exercise carried out Pillay.
In this regard the plaintiff
relies on the supporting evidence of
Sigamoney, who confirmed that Chami had asked him to make his
protection officers available
to have their fingerprints done by
Pillay.
[54]
As set out above, the defendant disputes the authority of Chami to
enter into a binding contract
on behalf of the defendant. The
plaintiff failed to call Chami to prove its claim that he had the
necessary authority to enter
into contracts on behalf of the
plaintiff. In this regard see
Rand Cold Storage & Supply Co
Ltd v Alligianes
1968 (2) SA 122
(T) the Court held at 124D-E
that:
‘
It
is axiomatic that a party need not, and cannot be blamed if he does
not, call all the witnesses who may give pertinent
evidence; he
is entitled to take the risk of offering less than all the evidence
available to him if he is of the opinion that
what he has offered
would suffice to win.
’
[55]
Notwithstanding, the burden of proving lack of capacity lies on the
party setting it up as a
defence (see
Fick & others v R
1904 ORC 25
;
Serobe v Koppies Bantu Community School Board
1958 (2) SA 265
(O)). In support of its contention that Chami did not
have the requisite authority to bind the defendant, it was pointed
out to
the plaintiff’s witness that Chami was not the second in
charge of the security matters at the defendant. Even the tender
documents to which the plaintiff submitted a bid described Chami as
a “technical officer”. There is no communication
between Pillay and Chami from which one can establish or infer that
Pillay was justified in believing that Chami had the requisite
authority to bind the defendant. Moreover, as the defendant is a
state owned enterprise, its procurement of services is regulated
by
the PFMA and s 217 of the Constitution as well as Treasury
Regulations requiring procurement to take place by way of competitive
bidding. It is improbable that one employee of the defendant can have
the authority to bind the defendant where he decides to act
of his
own accord (see
President of the Republic of South Africa &
others v South African Rugby Football Union & others
2000 (1)
SA 1
(CC) para 198).
[56]
To the extent that the plaintiff contends that Chami was an agent or
representative of the defendant,
counsel for the plaintiff referred
to
Standard Bank v University of the North
[2006] JOL 16229
(T) which sets out the following at 59-60:
‘
I
agree with the following submissions made on behalf of the plaintiff:
1.
The defendants have
to prove actual authority on the part of Nashua Bethlehem or that the
plaintiff is precluded from denying such
authority by virtue of the
principles of estoppel.
2.
Actual authority may
be either express or tacit/implied and may be established by direct
proof of an express authorisation by the
principal to the agent to
conclude the particular agreement, or by way of inference, on a
balance of probabilities on all the admissible
facts given in
evidence.”
3.
To establish an
estoppel the defendants have to establish:
3.1
a representation;
3.2
that
it reasonably acted or relied upon the representation;
3.3
that
it acted or relied upon the representation to its detriment; and
3.4
that
the person who made the representation could bind Technofin by means
of a representation.’
[57]
On the other hand, the defendant correctly submitted in my view that
there is nothing from the
evidence presented, being that of a sole
witness in the form of Pillay, from which it can be inferred that a
valid contract was
concluded with the defendant. It was submitted by
the defendant that the plaintiff, through its witnesses, sought to
disavow reliance
on facts pleaded in the summons. The particulars of
claim aver that despite the applicability of the tender processes,
Chami insisted
that Pillay commence work because of the urgency of
the matter. He also promised Pillay that it was “almost
impossible”
for him not to be awarded the tender. This is
critical to the plaintiff’s case as it presupposes that Pillay
had knowledge
that procurement of services by the defendant was
subject to a tender process. He relied on the assumption that the
tender would
be awarded to him at a later stage. It is for this
reason that I have stated earlier that the plaintiff, to the extent
it relied
on Chami’s assurances, did so at its peril, fully
aware that a tender process involving other entities would eventually
take
place.
[59]
The test to be applied in determining whether a valid contract was
concluded between the plaintiff
and the defendant is to determine
whether it has been established ‘. . . by a process of
inference . . . that the most
plausible probable conclusion from all
the relevant proved facts and circumstances is that a contract came
into existence.’
(See
Joel Melamed & Hurwitz v
Cleveland Estates (Pty) Ltd; Joel Melamed & Hurwitz v Vorner
Investments (Pty) Ltd
[1984] ZASCA 4
;
1984 (3) SA 155
(A) at 165B-C and
discussion in R H Christie
The Law of Contract in South Africa
6 ed (2011) at 87.) The Court must consider the facts of the
matter, the conduct of the parties and the circumstances, and
‘
.
. . unless that conduct and those circumstances were so clear, so
unequivocal, so unambiguous that the parties must have regarded
themselves as being in agreement there is no contract.’
(See
Christie
above at 89, referring to
Boerne v Harris
1949
(1) SA 793
(A).) As stated in
Reid Bros (SA) Ltd v Fischer
Bearings Co Ltd
1943 AD 232
at 241 what is required to create a
binding contract:
‘
.
. . is that acceptance of an offer should be made manifest by some
unequivocal act from which the inference of acceptance can
be
logically drawn.’
[60]
Having regard to the evidence of the witnesses and the documentary
evidence relied on by the
plaintiff, I am unable to conclude that a
valid contract was concluded with the defendant, or that Chami was
authorised to contract
on its behalf in respect of the process for
securing firearm competency certificates. Of utmost significance is
the realisation
on the part of the plaintiff of the tender processes
applicable to the defendant when entering into a contract. This is
evident
from the particulars of claim.
[61]
Whatever the exigencies of the situation, Pillay in my view proceeded
at risk before the tender
could be awarded in respect of the
contract. Even after commencing work (on his version), when he was
sent an invitation to tender,
he duly submitted a bid. This bid was
rejected. The plaintiff appealed that decision unsuccessfully, but
took no further steps
to set aside the award of the tender to Thathe
Development and Training. Instead, it chose to sue the defendant for
work which
it would have otherwise claimed had it been awarded the
tender.
[62]
The plaintiff’s evidence suffered from several difficulties,
the most glaring of which
was the pattern of cash payments, made in
much haste, after the service providers had supposedly supplied goods
and services associated
with the completion of its mandate. This
entire thread of evidence, leads me to agree with the submission of
the defendant’s
counsel, that on a balance of probabilities,
the evidence of such goods and services having been rendered cannot
be sustained.
It is too much of a coincidence that parties would be
engaged at short notice to produce goods, paid for in full in cash,
within
a few days of the request being generated.
[63]
All of the evidence of the service providers, as well as that of
Pillay, had a hollow ring to
it. The absence of a “paper trail”
against which one can test whether payment was made, is telling.
The
C
ourt
must determine whether they were truthful witnesses and whether their
version must be preferred over that of the defendant.
In assessing the
credibility of a witness, Mahomed J (as he then was) in
Hees
v Nel
1994 (1)
PH F11 (T) said the following at 32:
‘
Included
in the factors which a Court would look at in examining the
credibility or veracity of any witnesses, are matters such
as the
general quality of his testimony, (which is often a relative
condition to be compared with the quality of the evidence of
the
conflicting witnesses), his consistency both within the content and
structure of his own evidence and with the objective facts,
his
integrity and candour, his age where this is the relevant, his
capacity and opportunities to be able to depose to the events
he
claims to have knowledge of, his personal interest in the outcome of
the litigation, his temperament and personality, his intellect,
his
objectivity, his ability effectively to communicate what he intends
to say, and the weight to be attached and the relevance
of his
version, against the background of the pleadings.’
[64]
The plaintiff, in the alternative relied on unjust enrichment. In
light of the plaintiff conceding
that at least 31 of the names of
persons whom it contends it took fingerprints of, not being in the
employ of PRASA at the time,
the claim of unjust enrichment in
respect of amounts paid by the plaintiff to the SAPS is thrown into
doubt. In any event, I am
not satisfied that the plaintiff has made
out a case for unjust enrichment, and I am accordingly not disposed
to accede to the
request for judgment on that basis in the sum of
R489 072, or any other amount. There was no evidence before me
of what benefit
was derived from the fingerprinting exercise carried
out by the plaintiff, and to what extent (if at all) it lead to the
competency
certificates being issued. Moreover, there was no evidence
led as to which of the defendant’s officers were successful in
securing their competency certificates and whether this was
attributable in any manner to the actions of the plaintiff.
[65]
In the result, I make the following order:
a.
The plaintiff’s
action is dismissed with costs.
____________
JUDGE
MR CHETTY
Appearances:
For
the Plaintiff
:
Adv M
Manikam
Instructed
by
: Reg Thomas
Attorney
c\o
: Excel
House, Durban
Ref:
MRTHOMAS\NP\S0153\4
For
the Defendant
:
Adv S.K
Mdladla
Instructed
by
: A P Shangase
& Associates
Durban- 031 307
7200
Ref: PS\L1757\nd
Date
of Hearing
: 7
th
to 11
th
September 2015
Date
of Judgment
:
26
February 2016