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[2015] ZAGPPHC 198
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Liberty Group Limited v Botes and Others (40775/11) [2015] ZAGPPHC 198 (27 March 2015)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG
PROVINCIAL DIVISION, PRETORIA
CONSOLIDATED CASE
NUMBER: 40775/11
DATE: 27 MARCH 2015
In the matter
between:
LIBERTY
GROUP
LIMITED
.............................................................................................
PLAINTIFF
and
E.B.
BOTES
......................................................................................................................
DEFENDANTS
F. VILJOEN
T. TAGGART
L. BERGH
L. KOOPMAN
JUDGMENT
WINDELL J:
Introduction
[1] This judgment
relates to five separate, but inter-related actions, in which
judgment is sought against the defendants. The plaintiff
is Liberty
Group Limited, trading as Liberty Life, a company which conducts
business as life insurers. The defendants are all experienced
insurance agents. During September 2009 to December 2009, the
defendants were headhunted to join the Liberty Group. They all joined
Liberty and were each paid a lump sum for the loss of their second
year income at their previous company.
[2] A couple of
months after the defendants joined Liberty, they terminated their
employment contracts with Liberty as they felt
that Liberty did not
fulfill its promises. The plaintiff now claims the return of the lump
sums for the loss of their second year
income and commissions earned
during their employment with Liberty. The plaintiffs claim is based
on an agency agreement. (”the
agency agreement”)
[3] Defendants
denied that they concluded the agency agreement and pleaded that they
entered into a completely different agreement
(“the Schedule”).
The defendants alleged that the Schedule was the only true agreement
between the parties. The defendants
also instituted counterclaims
against Liberty for losses suffered as a result of Liberty’s
failure to make good on their
promises.
[4] It is common
cause that the central issue between the parties is the following: is
the agency agreement as alleged by plaintiff
the contract between the
parties or is the Schedule as alleged by the defendants the contract
between the parties?
Background
[5] In the
particulars of claim the plaintiff alleged that the defendants
concluded the agency agreement (that included an addendum)
with
Liberty, when they joined the company. The material terms of the
agency agreement are the following:
1. The defendants
were appointed as agents;
2. The defendants’
remuneration is commission based;
3. Any commission
paid in advance shall be repayable on termination of the agency
agreement;
4. If any of the
premiums paid in respect of a contract are returned to the policy
holder for any reason whatsoever, or is a premium
on a contract
remains unpaid for 60 days and the contract has lapsed, the
defendants shall return the commission in respect of
such contract;
5. Liberty and the
defendants may terminate the agreement at any time for any reason;
6. The agreement is
the entire agreement between the parties and may only be amended or
modified in writing signed by both parties;
7. The agency
agreement cancels and replaces all prior agency agreements or any
such like agreements and supplementary agreements,
if any.
[6] The defendants
were all experienced insurance agents that left their previous
employer to join Liberty. Liberty averred that
the addendum to the
agency agreement was therefore specifically drawn up to make
provision for the lump sum payable to the defendants.
Liberty alleged
that the defendants agreed to the following additional terms in the
addendum:
1. The addendum
supplements the terms and conditions set out in the agency agreement;
2. Liberty shall pay
the defendants a retention fee subject to the following terms and
conditions:
a) 50% of the
retention fee shall be paid within 10 days of the opening of an
accounting code;
b) The remaining 50%
will be paid on the first, second and third anniversary of the date
of signature of this addendum;
c) The amounts are
subject to tax;
d) In the event of
the main agreement or addendum being terminated, then all amounts
paid to the defendants under this addendum
and the main agreement
shall immediately become due and payable in full;
e) It is expressly
recorded that the defendants are paid the retention fee for the loss
of second year and annuity income from other
sources.
[7] In their plea
the defendants denied all the averments in the summons. In addition,
defendants pleaded a totally different agreement
(the Schedule) which
it alleged was concluded between them and Liberty, who at the time
was represented by Ms. Fendick. They pleaded
that it was agreed that
the defendants would terminate their employment with the previous
employer and take up employment with
Liberty. It was further agreed
that Liberty will pay a lump sum together with an annual payment for
a three year period, an annual
income, a secretarial allowance , an
own office consultant allowance and a pension fund contribution
calculated on the annual income.
The defendants alleged that Liberty
failed to perform and meet its obligations in terms of this agreement
and the defendants therefore
terminated the employment relationship.
Locus
standi
and
cession
[8] The plaintiff
sues as cessionary in respect of cessions concluded between the
plaintiff and Liberty Active Limited, Capital
Alliance Limited and
Rentmeester Assurance Limited as cedents. The defendants admitted
that the plaintiff trades by the name of
Liberty Life Group but
disputed that it conducts the business of a Life Insurer and that it
is duly registered with the provisions
of the
Long Term Insurance Act
52 of 1998
. The defendants also disputes that Liberty Active Limited,
Capital Alliance Life Limited and Rentmeester Assurance Limited ceded
their respective claims against the defendants to the plaintiff.
[9] Plaintiff
provided copies of the Certificate issued by the Registrar of
Companies confirming the plaintiffs name as Liberty
Group, its
registration number and the date of registration. CIPRO certificates
were also provided for Rentmeester Assurance, Capital
Alliance Life
and Liberty Active. Plaintiff also provided the cession agreements.
[10] The evidence
relating to the CIPRO certificates and cession were not disputed
during cross examination and no evidence was
given by defendants to
counter the evidence of the plaintiff. The parties agreed at the
outset that all documents were what it
purported to be without
admitting the contents thereof. I am satisfied that the plaintiff has
the necessary locus standi and that
the claims from Liberty Active
Limited, Capital Alliance Life Limited and Rentmeester Assurance
Limited were ceded to the plaintiff.
Evidence
[11] Mr. Oosthuizen,
the manager at the Talent Acquisition Centre at Liberty, was the sole
witness in the case. He testified that
Ms. Fendick was instructed to
“headhunt” experienced financial advisors. The five
defendants were recruited by Ms.
Fendick. Information was gathered on
each of the defendants and in order to persuade the defendants to
join Liberty, a document
(the Schedule) was prepared for each
defendant setting out figures that included a lump sum offered to the
defendants based on
previous performance. Ms. Fendick was authorized
to explain the offer contained in the Schedule to the defendants. The
Schedule
made provision for an upfront payment, a further annual
payment eveiy year for 3 years, a secretarial allowance, an own
office
allowance and pension fund contribution. It also provided for
target PCR’s (production credits). It also indicated a possible
income if the targets were met. Targets would be met by selling new
products or enhancing existing products. It specifically stated
that
the figures were illustrative and that the contract will reflect the
final numbers. Ms. Fendick did not have the authority
to enter into
any contract with the defendants or to amend Liberty’s standard
agency agreement. The Schedule was merely for
illustrative purposes
and did not constitute an agreement.
[12] Mr. Oosthuizen
testified that after the offers contained in the Schedules were
accepted, the defendants entered into the standard
agency agreement
and the addendum that was specially designed for the experienced
agents. It was only after the agency agreements
were signed that
Liberty was able to register the agents on Liberty’s FSB
register and open their commission code. Liberty
also had to remove
the defendants from their previous employer’s FSB register.
Only then did Liberty pay the defendants the
lump sums contained in
the addendum to the agency agreement.
[13] The defendants
were also paid a secretarial allowance and an office allowance
retrospectively. This was paid after the defendants
complained that
it was promised to them when they joined Liberty. The allowances were
calculated by taking into consideration a
factor of their actual
sales during a month. The addendum to the agency agreement did not
contain the allowances as reflected in
the Schedule, as these
benefits were standard to all Liberty consultants and the addendum
only provided for the extra remuneration
the defendants would
receive.
Legal
principles
[14] Before dealing
with the legal principles and the evidence, I want to say a word or
two about the pleadings. It is clear that
the defendant's plea in
this case was not a confession and avoidance - a confession that they
had signed the contract but was not
bound by its terms. The
defendant's plea was a bare denial of the agency agreement. The
plaintiff sought further particulars to
prepare for trial but was not
given any particulars.
[15]
It is trite that a person alleging a contract must prove the terms of
the agreement which he seeks to enforce. The defendants
did not plead
an additional term to an existing contract but a totally different
contract from the one the plaintiff relied upon.
The
onus
of
proving the agency agreement therefore rested on the plaintiff and
the
onus
of
proving the Schedule rested on the defendants. The plaintiff called
one witness, Mr. Oosthuizen to prove the agency agreement
and the
defendants closed their case without calling any witnesses.
[16] The defendants
did not produce any evidence to prove that the Schedule was the
contract between the parties. The statements
made during cross
examination are not evidence. Mr. Oosthuizen specifically testified
that Ms Fendick did not have the authority
or mandate to conclude a
contract with the defendants. Her mandate was limited to the
recruitment of experienced financial advisors.
She recruited the
defendants and was authorized to explain the offer to them, which was
contained in the Schedule. He testified
that the Schedule was not the
contract between the parties and was only for illustrative basis. The
Schedule specifically states
that the contract will reflect the final
numbers.
[17] The defendants
stated during cross examination that it was an implied term and/or a
tacit term of the agreement concluded with
Fendick, that the lump sum
for the loss of second year commission would not be paid back in the
event of termination of the agreement.
This was never pleaded and
there is no evidence to substantiate this allegation. I am satisfied
that the defendants did not prove
that the Schedule was the agreement
between the parties. There is also no evidence in support of the
counterclaim and the counterclaims
are dismissed.
[18]
The question is if the evidence of Mr. Oosthuizen proved the
existence of the agency agreement, or to put it differently; if
his
evidence constitutes
prima
facie
evidence
as to the existence of the agency agreement.
[19] Mr. Oosthuizen
testified that he was not present when the contracts were signed but
is aware of the fact that the all the defendants
concluded agency
agreements with Liberty. If they did not conclude the agency
agreement they would not be on Liberty’s FSB
register and would
not have been paid the lump sums or commissions. After perusing the
agency agreements, Mr. Oosthuizen testified
that it appeared from the
contents that Ms. Odendaal signed on behalf of the plaintiff. He also
testified that he cannot confirm
the defendants’ signatures but
that it appears as if the five defendants signed the agency agreement
and the addendum.
[20]
Prima facie
evidence
as pointed out by Stratford JA in
Ex
parte Minister Of Justice: In re R u Jacobson and Levy
1931
AD 466
at 478 is :
"Prima facie
emdence, in its more usual sense, is used to mean prima facie proof
of an issue the burden of proving which is
upon the party giving that
evidence."
[21]
If the
prima facie
evidence
or proof remains unrebutted at the close of the case, it becomes
"sufficient proof' of the fact or facts (on the issues
with
which it is concerned) necessarily to be established by the party
bearing the
onus
of
proof. In
R v
Mantle
1959 (1) SA 771
(C) ,
Bloch
J, in considering the meaning of the words
'prima
facie
evidence',
stated the following:
"Prima facie
evidence" in its customary sense is not merely "some
evidence". It must be of such a character
that if unanswered it
would justify men of ordinary reason and fairness in affirming the
question which the party upon whom the
onus lies is bound to
maintain'."
[22]
In
Senekal v Trust
Bank of South Africa Ltd
1978 (3) SA 375
(A)
it
was held that the inquiry is whether at the end of the case the
prima
facie
evidence
afforded had been so disturbed, as to prevent it becoming sufficient
proof. Miller JA stated at page 383 B-C that a court
is entitled ,
when considering that question, to take into account that the
defendant closed his case without having led any evidence
whatsoever.
[23]
In
Union
Government (Minister of Railways)
v
Sykes
1913
AD 156
at 176, it was held that less evidence will suffice to
establish a
prima
facie
case
where the matter is peculiarly within the knowledge of the opposite
party than would otherwise be required.
[24]
The defendants did not deny during cross examination of Mr.
Oosthuizen that the signatures on the agency agreement and addendum
belonged to them. They also never expressly disputed during cross
examination that they entered into the agency agreement and the
addendum to the agency agreement. This information was readily
available to the defendants. The defendant’s failure to admit
or deny the signatures and the agency agreement is suspicious
especially in light of the fact that one of the defendants, Mr. Eben
Botes, admitted in his resignation letter that there was an offer
made to him and that he signed “the contract”. As
was
pointed put by Jansen JA in
Marine
& Trade Insurance Co Ltd v Van der Schyff
1972 (1) SA 26
(A)
at
39G-H, the failure of the respondent to reply or lead evidence in
rebuttal of a fact peculiarly within his knowledge is taken
into
account when one decides whether a
prima
facie
case
has been made out.
[25]
In
Hasselbacher
Papier Import and Export ( Body Corporate) and Another v MV Stavroula
1987(1) SA 75 ( C)
it
was found that it is proper to put the failure to deny into the scale
before one decides that a
prima
facie
case
has been established. To hold otherwise would have the effect of
making the inference to be drawn from the failure redundant.
Burger J
stated at p 79-80 that :
“
The
respondent's failure to reply does not by itself prove the
applicants' case; this fact must obviously be taken with the evidence
provided by the applicants together with such considerations as to
whether the relevant information is or is not readily available
to
the applicants or the respondent. In the Galante case cited by Jansen
JA supra the requirement was that, if there are two reasonable
alternatives, the adverse inference can then be drawn in favour of
the plaintiff. In the present case one could hardly speak of
two
alternatives unless one regards the absence of control as an
alternative; possibly one should rather say that, if the applicant
has shown that according to all the information available to him it
is a reasonable possibility and that there are no facts to
the
contrary, then the Court is entitled to hold that a prima facie case
has been established if the respondent has failed to place
a denial
on record when it could easily do so. As was aptly pointed out by
Wigmore in the passage referred to above, to hold otherwise
would
tend to obscure the truth and create an artificial situation. In fact
a respondent would adopt the attitude: 'It may be correct
what you
say, but you can’t prove it. ’
[26]
I believe Oosthuizen and I accept his evidence. In the absence of any
evidence to the contrary, there is no reason why the
Court should not
accept that the defendants concluded the agency agreement and the
addendum with the plaintiff. In my opinion in
the light of the
evidence and the pleadings, the
prima
facie
case
has ripened into proper proof. The whole tenor of the
cross-examination was directed to create a suspicion that the parties
also entered into another agreement with Liberty. The defendant did
at his own peril refrain from giving or leading evidence to
counter
the
prima facie
proof
of the existence of the agency agreement between the plaintiff and
the defendants. A court should be loath to retreat into
a formalism
which provides an escape route to a party which no longer considers
it expedient to abide the agreement. See
Owner
of the MV “Snow Crystal” v Transnet Ltd t/a National
Ports Authority
[2007] 2 All SA 416(C).
[27] In terms of the
agency agreement and addendum thereto the plaintiff is entitled to
the return of the lump sums and the commissions
earned.
Quantum
[28] The plaintiff
and the defendants agreed on the following amounts in the event of
the plaintiff proving the agency agreement.
a) Mr. L. Bergh:
Upfront payment: R 294 897.77. Commission : R 75 805.58
b) Mr. T. Taggart:
Upfront payment: R 287 713.55. Commission : R 116 487.27
c) Mr. E.B Botes:
Upfront payment: R 321 706.66. Commission : R 103 111.16
d) Mr. F. Viljoen:
Upfront payment: R 375 429.99. Commission: R 20 105.56
e) Mr. L. Koopman:
Upfront payment: R 482 559.98. Commission: R 30 619.32
[29] In the result
the following order is made:
1. Judgment is
granted against L. Bergh in the sum of R 370 703.35 with costs.
Interest payable at 15, 5 % per annum from date of
service of summons
to date of final payment.
2. Judgment is
granted against T Taggart in the sum of R 404 200.82 with costs.
Interest payable at 15, 5 % per annum from date
of service of summons
to date of final payment.
3. Judgment is
granted against E.B Botes in the sum of R 424 817.82 with costs.
Interest payable at 15, 5 % per annum from date
of service of summons
to date of final payment.
4. Judgment is
granted against F. Viljoen in the sum of R 395 535.55 with costs.
Interest payable at 15, 5 % per annum from date
of service of summons
to date of final payment.
5. Judgment is
granted against L. Koopman in the sum of R 513 179.30 with costs.
Interest payable at 15, 5 % per annum from date
of service of summons
to date of final payment.
L.WINDELL
JUDGE OF THE HIGH
COURT
Attorney for the
plaintiff: R C Christie Incorporated
Counsel for
plaintiff: Adv. C.D. Roux
Attorney for
defendants: Renee S Naidoo Attorneys
Counsel for
defendants: Adv. V. Garvey
Date matter heard:
16 February 2015 - 17 February 2015
Judgment date: 27
March 2015