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[2015] ZAGPPHC 1101
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Kaya FM (Pty) Ltd v Gats Tour Operations (Pty) Ltd t/a Gats Leisure (A171/13) [2015] ZAGPPHC 1101 (5 August 2015)
REPUBLIEK
VAN SUID-AFRIKA
REPUBLIC
OF SOUTH AFRICA
IN
HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENGDIVISION: PRETORIA)
Case
No: A171/13
date:
A171/13
In
the matter between:
KAYA
FM (PTY)LTD
Appellant
and
GATS
TOUR OPERATORS (PTY)LTD
tla
GATS
LEISURE
Respondent
JUDGMENT
1.
This is an appeal against the judgement and order of Tlhapi J
dismissing the respondent's urgent application for mandatory and
interdictory relief. With the leave of the court a
quo
the
appellant, to whom I shall refer as "Kaya FM", appealed
against the whole judgement and order granted against
it. The
respondent, to whom I shall refer as "Gats" failed in a
counter application but no appeal lies against that order.
2.
Kaya FM Is a private commercial radio station. Gats Is a travel and
tour agency. During April 2012 Kaya FM and Gats discussed
the
possibility of arranging a cruise aboard a luxury liner from Durban
to Mozambique and back during the 2012 December holidays.
The
idea was to promote the cruise as a jazz musical event under the name
of "Kaya FM Jazz Cruise". The whole liner would
be
chartered and listeners of Kaya FM would be targeted to buy tickets
for the cruise. Jazz artists would be contracted to provide
music
events during the cruise.
3.
Initially everybody was in high spirits and very positive that the
venture would be a success. The ship was chartered by Gats
and Kaya
FM started to market the cruise during their daily radio programs.
Initially the response from the listeners was good
but tapered down
as time went by. This went hand-in-hand with the inability of Gats to
make the required payments to the owners
of the ship. By the middle
of July the owners of the ship had given Gats notice of their
intention to cancel the charter agreement.
Meetings were held between
the parties and according to Kaya FM, Gats remained, despite numerous
requests and queries, consistently
vague about the bookings actually
received and the funds they had received from the public and the
funds that were still
due. By then Kaya FM had also expended
large amounts on promoting the cruise and securing the artists who
would perform during
the cruise.
4.
During August and September 2012 the tension between the parties had
mounted and accusations were made from all sides. Kaya FM
suggested
possible financial irregularities on the part of Gats. Kaya FM was of
the view that Gats had to account to it but failed
to do so. Gats, on
the other hand, did provide certain information and initially held
the view that same were sufficient accounting
to Kaya FM. Eventually
it became clear that Gats regarded itself as the principal of the
venture and that Kaya FM was merely the
primary marketer and the
promoter of the cruise. Gats Also held the view that it was to
receive all rewards from the venture and
would incur all the risks
and that Kaya FM's reward would only have been in the form of
publicity and the promotion of its brand.
5.
By the middle of September 2012 the parties were openly hostile
towards each other and accusations of,
inter
alia,
ma/a
tides,
were made from both sides. Gats started to
mistrust the Kaya FM's request for information and took the view, as
it was expressed
in the answering affidavit, that it is highly
irregular for a tour operator like Gats "to give full accounting
to a party
that is not involved in the implementation of the
bookings". By October attorneys had become involved and it
appears that
at that stage Gats insisted that Kaya FM had no right in
law to insist on accounting on the part of Gats.
6.
An urgent application was launched 4 October 2012 by Kaya FM and came
before the court on 23 October 2012. Judgement was reserved
and on 23
November 2012 judgement was handed down dismissing Kaya FM's
application with costs. In regard to the counter application
by Gats
the learned Judge noted that since it would appear that Kaya FM and
the owners of the ship had by then concluded a replacement
agreement
and that Kaya FM was at that stage marketing and selling packages for
the cruise, it was not necessary to make any pronouncement
in respect
of the counter application.
7.
The relief claimed by Kaya FM was, firstly, for an order directing
Gats to provide Kaya FM with a full and complete up-to-date
accounting of all its records relating to the cruise. The type of
information sought was set out in the Notice of Motion. Secondly,
an
order was sought interdicting Gats and its employees and
representatives from representing that they are in any way associated
with the cruise or represented Kaya FM in any way related to the
cruise; from marketing and/or publicising the cruise to any parties
in any way; and from taking reservations for the cruise from any
party. Costs were also claimed on an attorney and client scale.
8.
In the appeal before this court counsel on behalf of Kaya FM
indicated that since time had overtaken the relief sought in respect
of the interdict, Kaya FM's only interest on appeal lies in respect
of the relief relating to the issue of accounting and the issue
of
costs.
9.
The appeal, as did the initial application, consequently turns on the
crisp issue as to whether the agreement between the parties
was such
that there was a duty on Gats to account to Kaya FM. The court
a
quo
also approached the matter in this fashion and, with
reference to certain aspects of the agreement between the parties,
came to
the conclusion that no partnership relationship existed
between them, nor a relationship of agency, and that Kaya FM
consequently
had no right to insist on Gats accounting to it.
10.
On behalf of Kaya FM it was submitted that the relationship between
the parties was either that of agency or mandate or partnership
and
that whichever it was, Gats was under an obligation to account to
Kaya FM.
11.
It is not necessary to refer to all the facts of the matter nor to
the detail of the disputes and the allegations and counter
allegations made by the parties at the time leading up to the
application before the court a
quo.
The parties
embarked upon a very complicated and multifaceted endeavour. Yet, as
is unfortunately so often the case, they failed
to draft a proper
document setting out all the terms and conditions of their agreement.
12.
A further fact which complicated the matter was that as time went by,
and the demands of the venture became more detailed and
intricate,
the parties had to deal with issues which they had not originally
envisaged or which had simply not been discussed between
them.
13.
On Kaya FM's version Gats was merely the booking agent for the
cruise. As indicated before, it was submitted on behalf of Gats
that
Kaya FM's role was merely to do the marketing for the cruise. In
coming to her conclusion, the Judge in the court a
quo
found
that according to the agreement between the parties, Gats carried the
sole financial responsibility and risk insofar as sales
and payment
for the cruise was concerned and that in the end it was also the one
who expected to solely benefit from the profits
of the venture. She
also found that Gats would be solely
responsible to the ship
owners for
all payments of the cruise and not Kaya FM. The court a
quo
also found that the advantage to be gained by both parties from
the exposure cannot be understood to qualify as profit-sharing in
a
partnership. It was found that without an agreement either expressly
or impliedly, allowing for the sharing of liabilities and
profits and
losses, it could hardly be said that a partnership relationship
existed between them. It was found that such an agreement
was not
proven by Kaya FM and the fact that they secured an agreement with
the ship owners later on in an endeavour to save something
of the
venture, did not entitle them to information and accounting in
respect of what Gats had done before. The court also found
that Kaya
FM was not involved at all in the original agreement between Gats and
the ship owners and no rights thus emanated from
that agreement.
Consequently, so the court found, there was also no agency agreement
between the parties.
14.
I respectfully disagree with the aforesaid findings by the court a
quo.
In the original document, annexure LR1, which was
held out to be the agreement between the parties, certain of the
terms do support
the contentions of Kaya FM. It is not necessary to
refer to all the obligations of the respective parties and only
certain thereof
may be emphasised. In respect of Kaya FM's
responsibilities it was stated in paragraph 4 of that section of the
written agreement
as follows (my emphasis):
"Accept
responsibility with Gats for reaching the minimum sales target of 1
300 passengers (which equates to 650 cabins sharing).
Should sales
fall short of 1 300 fully paid clients by final date (31 August),
half of the shortfall shall
be paid by Kaya
FM to Gats
in order to help facilitate final payment to MSC
no later than 2 weeks from the final date in full."
15.
Kaya FM also had to cover the costs of all branding on board the ship
and costs of broadcasting and promotions. Kaya FM also
had to pay all
artists and the band members directly. This included the costs of
their flights and transfers as well as any additional
accommodation
required outside of the cruise.
16.
The agreement between Gats and the ship owners was attached as
annexure LR3. In an addendum to that agreement signed by
the
ship owners and Gats, who, under their signature warranted that they
were duly allowed to do so, agreed to the following
in the
second paragraph (my emphasis):
"It
is acknowledged by both parties that MSC Starlight act as agents on
behalf of the disponent owner of the MCS Opera and
that
Gats
Leisure act as agents on
behalf of a third party
."
17.
From the aforesaid it is clear, firstly, that Gats did not carry the
sole financial responsibility and risk insofar as sales
and payment
for the cruise was concerned. Kaya FM would,
inter alia,
have
been responsible for marketing, the direct costs of the transport,
housing and performance of the artists, and would also have
been
liable for half of the loss if all the tickets or bookings were not
taken up. It was mentioned in the founding affidavit that
at one
stage Kaya FM had spent close to R 10 million promoting the cruise
through various forms of media.
18.
I also respectfully disagree with the finding that Gats would have
been the only party who would have benefited financially
from the
venture. This issue was not specifically addressed in the written
part of the agreement but in my view it has to be presumed
that Kaya
FM would also have benefited from the income derived from the
bookings and the profits of the venture. It may very well
be that a
successful cruise would have enhanced the name and reputation of Kaya
FM but it remained a once off enterprise and the
income surely would
have been used to defray the costs thereof - also that of Kaya FM and
not only that of Gats. Furthermore, to
suggest that Gats would have
been the only party to benefit from any profits, also seems highly
improbable. There was never a dispute
that Gats became entitled to
their normal fees as tour operators. Those costs would have been paid
from the income. It is not clear
on what basis it can be said that
they would have been entitled to all the profits, if that had been
the case. This is especially
so if regard is had to the provisions of
the same Addendum to the Agreement referred to above. The third and
fourth paragraphs
of that addendum reads as follows:
"it
is agreed that the price quoted to Gats in terms of the contract
include a payment of a third party commission in the amount
of R 739,
000 (Seven hundred and thirty nine thousand Rand).
On
receipt of all the payments referred to in the main agreement, MSC
Starlight undertake to pay Gats leisure the commission agreed
no
later than 4 (four days) after the cruise undertaken by their client
has returned. The date of payment is agreed to be by no
later than
18th December 2012."
19.
From the above it is clear that Gats would, over and above the
remuneration for their services, have received a commission of
R739
000,00. To suggest, therefore, that they would over and above their
fees and the said commission also have been entitled to
receive all
the profits of the venture, seems, on the probabilities, to be highly
unlikely.
20.
Consequently, in my view, both parties had obligations to make a
success of the venture. Both had to expend effort and
time but
also money. Both would have benefited, if the venture had been a
success, in the enhancement of their good name and reputation.
But
both also would have shared in the income and the profit of the
venture. Gats had its own fees plus expenses. Kaya FM had its
expenses to cover. Furthermore Kaya FM became entitled, in terms of
the written agreement, to a number of cabins on the ship free
of
charge. The costs of these cabins could only have been paid from the
profits of the venture. On the probabilities both would
have been
entitled not only to defray such fees and expenses from the income of
the venture, but also to share in the profits.
To what degree they
would have been entitled to share in the profits is not clear but it
does not matter for present purposes.
21.
It was submitted on behalf of Kaya FM that the relationship between
the parties was either that of agency or of mandate or of
partnership, all of which would entitle Kaya FM to the relief sought.
According to Professor JC de Wet (LAWSA Volume 1) under the
title
"Agency and Representation" the expression "agency"
is used in such a wide variety of meanings that it
cannot be regarded
as a term of art denoting a specific branch of the law. He then
continues as follows:
"One
of the meanings in which the expression is employed is that of an
agreement in terms of which one person, styled the agent,
performs
some task for another, called the principal, in connection with the
conclusion of a juristic act by or for the principal.
In this
meaning "agency" is simply a contract by which the
principal and the agent create rights and obligations
inter
se.
As such it belongs to the category of contracts
known as mandate or mandatum in Roman-Dutch law. Even if the task to
be performed
by the agent is the conclusion of a juristic act on
behalf of or in the name of the principal the contract remains a
contract of
mandate governed by the rules applicable to contracts of
mandate in general. "Agency" is also used to denote the
phenomenon
of one person, called the agent, concluding a juristic act
on behalf of or in the name of another, called the principal. In this
meaning "agency" is an instance of representation. It has
been suggested that "agency" in the meaning of
representation
is confined to representation of a person who is
competent to act for himself."
22.
An agent consequently creates a legal relationship not for himself
but for another. A contract of mandate can take the form
of an
undertaking to perform a task for another for reward. In this form it
generally relates to an undertaking to complete a particular
task,
project or function without the mandatary being subject to the
directions of the mandator as to the time, place or manner
of
carrying out the mandate. Although the mandatary is not necessarily
under the control of the mandator, he would be bound to
follow the
instructions given by the mandator at the time the contract is
concluded. (See DJ Joubert and DH van Zyl in LAWSA, second
edition,
volume 17, Part 5, page 6). A mandatory must carry out his mandate
and not exceed the terms of his mandate. He must act
in good faith
and with reasonable care and the mandator is entitled to be informed
as to the progress of the mandatory and can
from time to time call
upon him to furnish the relevant information.
23.
A partnership is a legal relationship arising from contract between
two or more persons each contributing to a business or undertaking
carried on in common, with the object of making and sharing profits.
The requirements of the partnership is therefore, firstly,
that each
of the partners bring something into the partnership, or bind himself
to bring something into it, whether it be money
or his labour or
skill. Secondly, the business should be carried on for the joint
benefit of both parties. Thirdly, the object
should be to make a
profit. Finally, the contract between the parties should be a
legitimate contract. Where all these essentials
are present, in the
absence of something showing that the contract between the parties is
not an agreement of partnership, the
court must come to the
conclusion that it is a partnership. Each partner who is entrusted
with the management of partnership affairs
is obliged to render an
account of his administration of the partnership business. See LAWSA
second edition, volume 19, page 197-247.
24.
Having regard to the aforesaid the relationship between the parties
can in my view fit into either of the aforesaid two types
of
contract. But I agree with the submissions on behalf of Kaya FM that
it is not necessary for present purposes to finally decide
this
issue. There can be no doubt that wherever the idea for the cruise
originated, both parties agreed that it should sail under
the banner
of Kaya FM. It was Kaya FM which drove the project in its own name as
far as the outside world was concerned. There
is much to be said for
its view that Gats merely had to arrange the chartering of the ship
and to handle the bookings. This may
not have been an easy feat but
Gats would have been well remunerated for its services.
25.
In my view, especially later on in the venture, as more and more
issues had to be dealt with, it may be argued that the relationship
between the parties changed somewhat in the sense that Gats took on
more responsibilities which may not necessarily have derived
from the
initial agreement. It may thus very well be said, in my view, that at
some point the contract of mandate evolved into
that of partnership.
Both parties contributed to their undertaking. Both expended time,
effort and money and the facilities available
to them. The venture
was also carried out for the joint benefit of both parties. Both
would have increased their reputation
and goodwill with
their clients and prospective clients. Both would have shared in the
gains and the profits. After all, as I have
found above, they would
have defrayed their fees and/or expenses from the income of the
venture and as far as any possible
profits were concerned, such would
have been used in respect of expenses for cabins free of
charge or for any other
purpose. It is not a requirement that the
shares in the profits have to be equal in value. Furthermore, the
venture had as its
object the making of gain or profits. This in fact
seems to be common cause between the parties. The venture was clearly
capable
of making profits. It is not a requirement that it
should be distinctly clear that profits will actually ensue.
26.
On the papers before me it might be said to be debatable whether
the contract between the parties was one of mandate
or one of
partnership. What is clear, however, is that it would be either one
of the two or, as I have indicated, the one evolving
into the other.
But whatever the case may be, Kaya FM at all times had the right to
insist on Gats accounting to it in respect
of its part in the
arranging of the business of the venture.
27.
Consequently Kaya FM has shown a clear right in respect of the
relief claimed. I am also satisfied that Kaya FM complied
with all
the other requirements of a final order against Gats. Since the ship
has proverbially and literally sailed, it is not
necessary to refer
to the relief prayed for in paragraph 3 of the notice of motion and
neither is it necessary to make any ordered
in that regard.
28.
As far as costs are concerned, there is no reason why costs should
not follow the event. I am satisfied that in the circumstances
of
this case a special order of costs should not be made.
29.
In the result the following order is made:
1.
The appeal succeeds and the Respondent is ordered to pay the costs of
the appeal.
2.
The order of the court
a quo
is set aside and replaced with
the following order:
"An
order is made in terms of paragraph 2 of the notice of motion and the
Respondent is further ordered to pay the costs of
the application."
_____________________
C.P.
RABIE
JUDGE
OF THE HIGH COURT
I
agree:
_____________________
L.M.
MOLOPA-SETHOSA
JUDGE
OF THE
HIGH
COURT
I
agree:
_____________________
K.E.
MATOJANE
JUDGE
OF THE
HIGH
COURT
5
AUGUST 2014