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[2016] ZAGPPHC 1238
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Hencorel & Partners v Gale Consulting (35641/2012) [2016] ZAGPPHC 1238 (7 December 2016)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 35841/2012
OF
INTEREST TO OTHER JUDGES
REPORTABLE
DATE
OF JUDGMENT:-08/12/2016
In
the matter between:
HENCOREL
&
PARTNERS
PLAINTIFF
And
GALE
CONSULTING
DEFENDANT
JUDGMENT
C
arelse
J:
[1]
The plaintiff seeks payment in the sum of R1 863 814.50 ('the
main claim') and in the alternative, payment of R 2 485
086.00
('the alternative claim') and (b) an amount of R183 996.00.
[2]
The outset of the hearing the plaintiff and the defendant sought a
separation of the main claim from the alternative claim and
all other
claims. If the plaintiff is successful in proving the main claim the
alternative claim becomes irrelevant. I accordingly
granted an order
in terms of R33 (4) of the Uniform Rules of Court separating the main
claim from all other claims. All other claims
were postponed
sine
die.
[3]
The main claim involves the interpretation of Annexure C to the
particulars of claim.
[1]
Initially the plaintiff
claimed a higher amount alternative claim). The plaintiff only seeks
judgment in the main claim (which is
based on an agreement to reduce
the amount, indicated in Annexure C.
[4]
The facts are largely common cause and are set out herein below.
1. During December 2010,
the plaintiff represented by Mr Janae van Rensburg and the defendant
represented by Ms Mogamisi entered
into an oral agreement on 6 June
2011wherein the plaintiff would provide and execute
certain services at the Intermediary
School site. The defendant was
contracted to the Department of Education of the North West ('the
employer')
[2]
. The
plaintiff in turn was contracted to the defendant. The defendant was
the main contractor and the plaintiff was the subcontractor.
2. The terms of the
contract
inter
alia
were
that the defendant would pay the plaintiff for services rendered on
presentation of the invoice by the plaintiff. Payment would
be made
within a reasonable period of time.
[3]
Some of the terms were
reduced to writing set out in Annexure C.
3. The defendant made
payment to the plaintiff on some invoices.
4. The further oral terms
were that the plaintiff would discount the amount of R2 485 086.00
[4]
by 25%. This discount is
reflected in the plaintiff's tax invoice which was signed by Ms.
Mogamisi on behalf of the defendant.
[5]
[5]
The only issue I am required to determine in this matter is whether
the plaintiff and the defendant entered into a settlement
agreement
to the extent that the amount of R2 485 086.00 would be
settled
[6]
in
full and final settlement for a lesser amount of R1 863 814.15.
[7]
[6]
To determine this issue the plaintiff called Mr Janae van Ransburg,
the sole proprietor of the plaintiff and the defendant called
Ms
Mogamisi, a 60% member of the defendant.
Plaintiff’s
evidence Mr Janse van Rensburg
[7]
The defendant was awarded a contract to build a school at Oskraal. Ms
Mogamisi on behalf of the defendant requested a quotation
from the
plaintiff to provide civil works. On the school site was an existing
vacant building.
[8]
Initially he provided quotations but that changed as the works
progressed. The first quotation
[8]
was to demolish the
existing school buildings, remove the rubble to the dump site and
prepare the school for a new building. Ms
Mogamisi required a
detailed break-down of the first quotation to reflect the cubic
metres which he did.
[9]
[9]
The defendant required the plaintiff to provide additional works that
included
inter alia
the
excavation of pit toilets.
[10]
He provided the quotation. The scope
of the work changed again, such changes are reflected in a further
quotation.
[11]
The plaintiff had to redirect its work
because water was found during the execution of the works. This
resulted in a further quotation
[12]
where 19 metres was deducted from a
previous quotation.
[13]
[10]
More earthworks were requested which is borne out by addendum 1, 2,
and 3 of the employer's engineer. This extra work is reflected
in a
quotation provided by the plaintiff.
[14]
[11]
Again the scope of the work changed. The plaintiff was required to
provide a further quotation.
[15]
The extra work changed
again. The plaintiff had to provide another
quotation.
[16]
This turned out to be the
last quotation because it became most impractical to submit
quotations on a daily basis. Mr Janae van
Rensburg explained that the
accepted Industry practice is to measure all the works done at the
end in order to determine the amount
of work done, so that he could
be paid. This was not disputed.
[12]
On 6 April 2011, all the works done by the plaintiff was measured by
the quantity surveyor of both the employer and the defendant.
That
defendant was represented by its own quantity surveyor is vigorously
disputed by Ms Mogamisi. On 8 April 2011 the plaintiff
submitted an
invoice to the defendant for an amount of R2 458 086.00. The
defendant failed to make payment for this amount.
With that the
defendant sought a meeting. On 6 June 2011, the defendant and the
plaintiff met at the plaintiff's offices to discuss
the defendant's
failure to pay. Mr Janae van Ransburg said that at the meeting all
previous invoices and quotations were reconciled
and Ms Mogamisi was
satisfied that the amount of R2 458 086.00 was due and payable, but
sought a discount. He agreed to give the
defendant a 25% discount on
condition that:
''NB!
This invoice which has a discount of 25% will replace the previous
invoice 11/03 only if the total payments of all the invoices
due on
the project are received successfully."
[13]
The discount has the effect of reducing the rate of R100 per m
2
to R75.00 per m
2
.Immediately below the words, Ms Mogamisi
signed the tax invoice under the words;
"By
agreement for the reduced amount of R1 863 814.50. The defendant did
not pay this reduced amount.
[14]
He said that both of them attended a meeting at the IDT offices. At
the meeting he explained the basis for the invoices and
left. With no
resolution in sight, the defendant refused to pay and told the
plaintiff to sue her. Whilst he was on the phone with
Ms Mogamisi he
switched off the machines because of non-payment. Ms Mogamisi begged
him to continue with the work and promised
that he would be paid. He
resumed work on this basis. He denied that Ms Mogamisi said she would
pay if the employer paid. He would
never settle on this basis.
[15]
Under cross-examination the plaintiff categorically denied that he
told Ms Mogamisi that he reached an agreement with the defendants’
employer to pay the outstanding amounts. He further denied that he
told Ms Mogamisi that if she took the invoice to the employer,
the
employer would pay the outstanding amount.
[16]
He denied that the meeting on 6 June 2011 related to the invoice
reflecting an
amount
of R1 240 696.20.
[17]
This
invoice was paid in full. Therefore there was no dispute in so far as
this amount is concerned. He insisted that while he was
talking to Ms
Mogamisi on the telephone he stopped the machines because of
non-payment. He denied that the only time the machines
were switched
off was when water was discovered. He said that the tax invoice was a
settlement agreement. He did not need to sign
the Invoice because the
invoice was directed to the defendant.
[17]
That concluded the evidence for the plaintiff.
Defendant's
evidence - Ms Mogamisi
[18]
She said that she asked Mr van Ransburg for quotations and only paid
what was set out in the Invoices. She requested quotations
to see if
it was less than the amount that she billed the employer for. No
quotations were attached to the Invoices reflecting
an amount of R2
485 086
[18]
and
R1 863 814.50. Therefore she was not liable for these amounts. She is
only aware of four quotations. She effected a total payment
of R 1
240 696.20. When she received the invoice reflecting an amount of R 2
485 086, 00 she did not owe the plaintiff any money.
Therefore this
amount was not owed to the plaintiff. She was surprised when she
received the invoice with an amount of R2 485
086.00.
[19]
She did not call a meeting on 6 June 2011, it was Mr van Ransburg who
called the meeting. She did not have any quotations relating
to the
disputed amount. Despite her not owing any money she signed the
invoice
[19]
because Mr van Ransburg
reassured her that the engineers said they would pay if they received
the invoice. Mr van Ransburg did not
ask her to sign the invoice. She
did so out of her own volition. She signed only to record that she
would take the Invoice reflecting
the discounted amount,
R1 863 814.50 to the employer and only if she was paid by
the employer would she then channel
this money to the plaintiff. She
took this invoice to the consultant who refused to pay.
[20]
She denied that she asked for a discount. In fact she insisted that
the 25% discount was a unilateral act by the plaintiff.
It bears
mentioning that nowhere during cross-examination was this put to the
plaintiff. It was raised for the first time during
her testimony. She
was adamant that she did not attend the meeting between the plaintiff
and the IDT. Neither did she believe that
the plaintiff attended such
a meeting.
[21]
She said that she took the disputed invoice
[20]
to
the employer because Mr van Ransburg did not have access to the
employer. She conceded that the plaintiff did not enjoy any
relationship with the employer. He subcontracted to the defendant and
not the employer. She said that she has no idea whether the
plaintiff
did the extra work which formed the basis for the invoice which
resulted in the reduced amount of R1 863 814.50.
[22]
She said that the plaintiff stopped working because of blasting in
the area and not because of non-payment. She took the invoice
to the
consultant because she had no proof that the work had been done.
[23]
Under cross-examination she insisted that she did not request a
discount. She conceded that she did not have a mandate from
the
employer to negotiate a discount on its behalf.
[24]
Despite her evidence that the discount was a unilateral act on the
part of the plaintiff she failed to explain her contradictory
plea to
the extent that the discount was by agreement between the two of
them.
[25]
She conceded after extensive cross-examination that she did not
believe that the plaintiff did the extra work warranting payment.
Pertinently she did not see the quotation.
[26]
She was unable to explain why she did not record that she was not
liable for the reduced amount. She said that the plaintiff
did not
ask her to sign the agreement. She did it out of her own. She could
not explain why it was never put to the plaintiff that
they were not
present at the IDT meeting. Neither could she explain why it was not
put to the plaintiff during cross-examination
that there was no
telephone conversation relating to work stoppage between the
plaintiff and the defendant.
[27]
That concluded the evidence for the defendant.
The
Issue
[28]
This case turns on two mutually destructive versions on the question
of whether or not Exhibit A (annexure C)
[21]
is a settlement agreement to the
extent that the defendant agreed to pay the reduced amount of R1
863 814.50.
The
Law
[29]
The approach adopted by courts when faced with two mutually
destructive versions has been laid down in the well-known case
of
Stellenbosch Farmers Winery Group Ltd and Another v Martell et Cle
and Others
[22]
where the Supreme Court of Appeal held
that;
"To
come to a conclusion on the disputed issues a court must make
findings on (a) the credibility of the various factual witnesses;
(b)
their reliability; and (c) the probabilities. As to (a), the court's
finding on the credibility of a particular witness will
depend on its
impression about the veracity of the witness. That in turn will
depend on a variety of subsidiary factors, not necessarily
in order
of importance, such as (i) the witness' candor and demeanor in the
witness box, (ii) his bias, latent and blatant , (iii)
internal
contradictions in his evidence, (iv) external contradictions with
what was pleaded or put on his behalf, or with established
fact or
with his own extracurial statements or actions (v) the probability or
improbability of particular aspects of his version
, (vi) the caliber
and cogency of his performance compared to that of other witnesses
testifying about the same incident
or events. As to (b), a
witness' reliability will depend, apart from the factors mentioned
under (a) (ii), (iv) and (v) above,
on (i) the opportunities he had
to experience or observe the event in question and (ii) the quality,
integrity and independence
of his recall thereof. As to (c), this
necessitates an analysis and evaluation of the probability or
improbability of each party's
version on each of the disputed issues.
In light of its assessment of (a), (b) and (c) the court will then,
as a final step, determine
whether the party burdened with the onus
of proof has succeeded in discharging it. The hard case, which will
doubtless be the rare
one, occurs when a court's credibility findings
compel it in one direction and its evaluation of the general
probabilities in another.
The more convincing the former, the less
convincing will be the latter. But when all factors are equipoised
probabilities prevail.
Evaluation
of the Evidence
[30]
The plaintiff was a good witness and did not contradict himself in
any way. The defendant on the other hand did not impress
the court.
She contradicted herself materially in a number of aspects but the
most pertinent was her evidence that the discount
proffered by the
plaintiff was taken unilaterally by the plaintiff. This flies in the
face of her plea where she admitted that
the discount was by
agreement. Another difficulty for the defendant is her version that
the discount was a unilateral act was mentioned
for the first time
during her evidence in chief. This was never put to the plaintiff
during cross-examination. During the defendant’s
evidence she
insisted that she did not call a meeting to discuss the Invoice
reflecting an amount of R 2 485 086.00.
This was never
contested during the cross-examination of Mr van Ransburg. Her
failure to do so has consequences. The constitutional
court has said
In President of Republic of South Africa v South Africa Rugby
Football Union,
[23]
"[61] The
institution of cross- examination not only constitutes a right, it
also imposes certain obligations. As a general
rule It is essential,
when it is intended to suggest that a witness is not speaking the
truth on a particular point, to direct
the witness's attention to the
fact by questions put in cross examination showing that the
imputation is intended to be made and
to afford the witness an
opportunity, while still in the witness-box, of giving any
explanation open to the witness and of defending
his or her
character. If a point in dispute is left unchallenged in cross
examination, the party calling the witness is entitled
to assume that
the unchallenged witness's testimony is accepted as correct. This
rule was enunciated by the House of Lords in Browne
v Dunn and has
been adopted and consistently followed by our courts.
[62] The rule in Browne v
Dunn ls not merely of professional practice but is 'essential to fair
play and fair dealing with witnesses'.
It is still current in England
and has been adopted and followed in substantially the same form in
the Commonwealth jurisdictions.
[63] The precise nature
of the imputation should be made clear to the witness so that it can
be met and destroyed, particularly
where the imputation relies upon
inferences to be drawn from other evidence in the proceedings. It
should be made clear not only
that the evidence
is
to be challenged but also
how
it
is to be challenged. This is so because the witness must be given an
opportunity to deny the challenge, to call corroborative
evidence, to
qualify the evidence given by the witness or others and to explain
contradictions on which reliance is to be placed.
[31]
The defendant often tailored her evidence to suit the questions and
found it difficult to answer simple questions.
[32]
The defendant submitted during argument that the tax invoice which
was only signed by the defendant below the words agreement,
is not a
settlement agreement because the plaintiff' signature is not
appended. This submission is ill conceived. Firstly, there
are no
prescribed formalities as to how settlements are to be concluded.
Secondly, the defendant in fact pleaded that it entered
into a
settlement agreement. That the tax invoice is not a settlement
agreement is contrary to its own pleadings. Thirdly, that
there was
never a meeting of the minds was also never pleaded. Again this is
contrary to what was pleaded that a settlement agreement
was
concluded between the parties.
[24]
The defendant's
submissions on the merits primarily revolve around the time prior to
the settlement agreement, which in my view
is irrelevant for the
purposes of this judgment.
Probabilities
and improbabilities
[33]
It is highly probable that the defendant called for a meeting to deal
with the invoice reflecting an outstanding amount of
R2 485 086.00
because she knew that she was indebted to the plaintiff and wanted a
reduction. She did not have a mandate to
negotiate a discount on
behalf of the employer and therefore it is highly improbable that she
did not seek a discount which would
have had the effect of reducing
her liability. It makes no sense whatsoever that Ms Mogamisi would
sign the tax invoice which on
the face of it makes her liable for a
substantial amount of money, if she was not liable. Pertinently she
was never asked to sign
yet she did because in all probability she
knew she was liable. On her own version after extensive
cross-examination and questions
by the court she believed that the
plaintiff before and during the meeting was not owed a cent.
Therefore it is highly improbable
that she would agree to take an
invoice to the employer if she knew nothing was owed. This would be
tantamount to fraud. If she
was merely the messenger, it is
inexplicable why the plaintiff would discount the invoice by such a
substantial amount.
[34]
It is common cause that the employer had nothing to do with the
plaintiff, therefore it is incomprehensible why the employer
would
commit to pay the plaintiff. Ms Mogamlsi after extensive questioning
insofar as the only role that she played was to deliver
the 'tax
invoice' was met with a lame excuse that the plaintiff did not have
access to the employer.
[35]
The defendant was unable to explain why she wrote to the plaintiff
indicating her concern that she may be liquidated. She did
so in all
probability because she knew that she owed the plaintiff the money.
According to the defendant by 6 June 2011everything
was resolved
therefore it is highly improbable that she would have harboured the
fear that the plaintiff would sue her.
[36]
It is undisputed that the nature and extent of the work kept
changing. Therefore it was highly probable that it became difficult
to produce quotations on a daily basis and the accepted practice
which was not disputed, le after completion of the work, the work
would be measured and invoiced, is highly probable. It is undisputed
that the disputed invoice amounts were not reflected in previous
invoices and further supports the probability that the plaintiff did
the extra work.
[37]
In my view on the probabilities, I accept that the plaintiff entered
into a settlement agreement with the plaintiff and negotiated
a
reduced amount which she signed liability for and I reject her
version that despite her signature her only role was to submit
to the
employer and once the employer paid she would pay. In fact her
version is so far-fetched that it must be rejected out of
hand.
[38]
In the result I make the following order:
1.
The
defendant is to pay the plaintiff an amount of R 1, 863,814.50
(settlement
amount
with costs, which costs include the costs of senior counsel.
CARELSE
J
Judge
of the High Court of The Republic of South Africa
APPEARANCES
:
Counsel
for Plaintiff: Adv T.A.L.L Potgieter SC
Instructed
by: Andre Grabler Prokureurs
Attorney
for Defendant: TS Lekokotla
Instructed
by: Van Vaiden-Duffy I nc.
[1]
Exhibit A page 18.
[2]
Pleadings bundle page 18 par 3.4
[3]
Pleadings bundle page 18 par4.5
[4]
Annexure A particulars of claim
exhibit A page 17.
[5]
Exhibit A page 18;Annexure C
[6]
Annexure A to the particulars of
claim p 17 Exhibit A
[7]
Annexure C to the particulars of
claim p18 Exhibit A
[8]
Exhibit A p 6
[9]
Exhibit A p7
[10]
Exhibit A p8
[11]
Exhibit A p9
[12]
Exhibit A p10
[13]
Exhibit A p7
[14]
Exhibit A p11.
[15]
Exhibit A p12
[16]
Exhibit Ap13
[17]
Exhibit A page 16
[18]
Exhibit A page 17
[19]
Exhibit A page 18
[20]
Exhibit A page 18
[21]
Exhibit A page 18
[22]
2003(1) SA 11 SCA
[23]
2000 (1) SA 1
(CC) p36-37
[24]
par 17 p23 pleading bundle.