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[2013] ZAGPPHC 6
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Fidelity Supercare Services Group (Pty) Ltd v Johannesburg Metropolitan Police Department (7209/2009) [2013] ZAGPPHC 6 (16 January 2013)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case
no:7209/2009
Date:16/01/2013
In
the matter between:
FIDELITY
SUPERCARE
SERVICES
................................................................
APPLICANT
GROUP
(PTY) LTD
And
JOHANNESBURG
METROPOLITAN
................................................................
DEFENDANT
POLICE
DEPARTMENT
JUDGMENT
BAQWA
J
[1]
This is a trial of Part B of an action instituted by Fidelity
Supercare Services Group (Pty) Ltd by way of summons issued on
10
February 2009 claiming a sum of R733 418-87 for services and labour
rendered to the defendant, Johannesburg Metropolitan Police
Department.
[2]
Part B of the trial was preceded by Part A in which I gave judgment
on 15 September 2011. Part A was also preceded by other
interlocutory
applications which I propose to summarise prior to dealing with the
issues in part B of the claim.
[3]
The first application was heard by Hodes
AJ on 13 August 2010.
[4]
In that application plaintiff had
previously applied to amend its Particulars of Claim to include an
alternative claim based on
unjust enrichment.
[5]
In response defendant contended that any
such claim needed to be based upon a written contract which complied
with various statutory
provisions and more specifically section 116
of the MFMA. Defendant further contended that the prescribed tender
procedures had
not been complied with and therefore no legally
binding contract could have arisen.
[6]
In reply plaintiff contended that the
application was itself vexatious and an abuse of the court process.
Plaintiff further submitted
that defendant was seeking judgment in
the matter without a trial of the issues.
[7]
Plaintiff further sought the court’s
disapproval of defendant’s conduct through the granting of
costs on a punitive
scale.
[8]
In his judgment Hodes AJ expressed the
view, with which I concur, that the defendant was entitled, if it
deemed it appropriate,
to raise an exception to plaintiff’s
claim which it had not done.
[9]
Hodes AJ further stated that he was not
prepared to shut the door to the litigation to plaintiff before the
hearing of the matter.
In his view, with which I agree, that would
have amounted to pre-judging the matter and denying plaintiff the
right to ventilate
all of the issues at a trial in court.
[10]
The application was dismissed with the
costs reserved for determination by the trial court.
[11]
I have considered the question of costs
and for reasons stated above, I have come to the conclusion that the
defendant could have
dealt with the issues it raised by way of
exception which would have been a much simpler and less tortuous
procedure to adopt.
I accordingly accept plaintiff’s submission
that the voluminous application proceedings were vexatious and as
such created
a situation where punitive costs are appropriate.
[12]
Further plaintiff brought an application
to amend its declaration in February 2010 to include an enrichment
claim which was pleaded
in the alternative to the contractual claim.
The
application served before Willis J and was granted with costs
reserved for the trial court. Plaintiff was well within its rights
to
introduce this amendment as the issue raised was a triable issue.
Having succeeded in its application it was logical that costs
should
follow the result.
Plaintiff
submits that costs ought to be awarded on a punitive scale due to
defendant’s opposition. In my view defendant was
equally
entitled to test the validity of plaintiff’s application and I
therefore do not consider costs on a punitive scale
to be
justifiable.
[13]
Thirdly, the plaintiff lodged an
application to compel defendant to reply to plaintiff’s request
for further particulars for
trial on 20 November 2012. The matter was
unopposed and was heard by Madam Justice Carelse. Defendant had filed
a reply to that
request by the date of hearing. Carelse J reserved
the question of costs for determination by this trial court. The
application
was unopposed and the defendant complied even though he
had caused plaintiff to incur costs of the
application by its
delay. It accordingly follows that the costs ought to follow the
results.
[14]
In my judgment on Part A which I handed
down on 15 September 2011 I reserved costs for the trial court. In
that judgment, I found
that the post December 2004 agreements were
invalid for want of legality. Further, I found that the agreements
entered into by
the parties prior to December 2004 were valid and
binding. The pre-December 2004 contracts encompassed horses and dogs
but did
not include garden and ground maintenance or office cleaning.
Those agreements formed the basis of the business relationship
between
the parties which was extended further over time.
I
found that the relationship had been initiated by the defendant and
had been subsequently re-enforced through the actions of the
defendant over the years.
[15]
The plaintiff was successful in its
action in discharging the onus of proving the existence of a valid
and binding relationship
prior to December 2004 and it ought
therefore to succeed even with regard to costs.
[16]
Reverting to claim B, this is an
alternative to the original claim and it is to the effect that in the
event of the court finding
that claim A fails for non-compliance with
the formalities contained in the Municipal Financial Management Act
No 56 of 2003, the
plaintiff provided the goods and services in the
bona fide belief that it was a party to valid contract with the
defendant. The
enrichment claim was for the sum of R837, 902-50 which
has since been amended to R692, 450-61.
[17]
The matter had come before me subsequent
to an order by my brother Willis J on 12 July 2011 in which he stated
as follows:
‘’
BY
AGREEMENT BETWEEN PARTIES IT IS ORDERED THAT:
1.
When the trial between the parties commences on 29
th
August 2011 or any subsequent date to which the trial may be
postponed, the following matters will be determined first:
1.1.
Whether
any agreement as alleged by the plaintiff exist;
1.2.
whether,
if such agreement exists, the agreement is valid;
1.3.
whether,
if such agreement is valid, AJ Annandale and Gavin Graham had
authority to enter into a contract which is binding on defendant;
1.4.
the
date on which the contract was entered into;
1.5.
the
date of the commencement of the contract;
1.6.
the
duration of the contract
1.7.
services
that the plaintiff
was
required to render in terms of the contract;
1.8.
whether
during the period of 1 September 2008 to 31 March 2009, when the
plaintiff allegedly rendered services to the defendant,
any agreement
that it had concluded with the defendant
was
still valid;
1.9.
whether
rendering of services during the period 1 September 2008 to 31 March
2009 amounts to performance in terms of any contract
that was valid
and in force at the time;
1.10.
if it
is found that the agreement is valid and not binding on the
defendant;
1.10.1.
Whether
the plaintiff laboured under a mistaken belief that it had a valid
and binding agreement with the defendant;
1.10.2.
whether
such mistaken belief was reasonable.”
[18]
I gave judgment regarding Claim A on 15 September 2011 and in that
judgment I found the contracts entered into prior to December
2004
were valid whereas those contracts purportedly entered post December
2004 were invalid for want of legality. I reserved the
decision on
the question of undue enrichment (Claim B) and costs for a
determination at a later date, hence this hearing.
The
issues
[19]
The parties are the same and the issue
to be determined is whether the plaintiff has an enrichment claim
against the defendant arising
out of the provision of goods and
services to the defendant for the period September 2008 until March
2009. It is not disputed
that sea/ices were rendered by the plaintiff
to the defendant from about March 2003 until March 2009 but what has
to be determined
is whether defendant was unduly enriched as a result
thereof.
The
law
[20]
The law of unjustified enrichment is
meant to restore the economic benefits to the plaintiff, at whose
expense they were obtained
and for the retention of which the
defendant has no legal justification
1
.
The law provides recourse to the plaintiff who believes he has
unjustly enriched another person for the disgorgement of the
benefits.
More importantly, the object of the condictio indebiti is
to recover money or other property transferred in intended payment or
performance of a non existent debt
2
.
[21]
Du Plessis writing on enrichment is of
the view that, in any enrichment action the primary claim is a claim
for the transfer of
the property where that is possible. If not, the
quantum of the enrichment claim is established by determining the
extent of the
impoverishment and the extent of the enrichment. The
impoverished party is then entitled to the
lesser of the two
amounts so determined.
3
He deals with various ways of being enriched and among these is
enrichment through doing something, such as performing services
and
work, including the improvement of another’s property.
4
[22]
The condictio indebiti is used to
reclaim performance made in terms of an invalid contract if
invalidity is due to failure to comply
with the prescribed
formalities but not if the contract is void because it is unlawful.
See Legator Mckenna v
Shea
(2009) 2 All SA 455
SCA
[23]
The essential elements are that:
23.1.
The defendant must be enriched
23.2.
The plaintiff must be impoverished
23.3.
The defendant’s enrichment must be
at the expense of the plaintiff; and
23.4.
The enrichment must be sine causa
See: McCarthy Retail Ltd
v Shortdistance Carriers CC
(2001) 3 All SA 236
(A),
2001 (3) SA 482
SCA
[24]
The burden of proof in respect of these
elements is on the plaintiff.
See: Willis Faber
Enthoven (Pty) Ltd v Receiver of Revenue
(1992) 4 All SA 62(A)
1992(4) SA 202 (A) 224 Senwes Ltd v Jan Van Heerden and Sons CC
(2007) 3 All SA 24
(SCA)
[25]
Transfer must be made in the bona fide
but mistaken belief that it was owing. Stated differently the error
must be reasonable or
excusable. In the Willis Faber Enthoven (Pty)
Limited decision (supra) it was held that there is no logic in the
distinction between
mistakes of fact and mistakes of law in the
context of condictio indibiti. In that case the Jaw was stated as
follows:
‘’
All
that need to be said is that, if the payer’s conduct is so
slack that he does not in the court’s view deserve the
protection of the law, he should, as a matter of policy not receive
it. There can obviously be no rules of thumb; conduct regarded
as
inexcusably slack
in
one case need not necessarily be so regarded in others, and vice
versa. Much will depend on the relationship between the parties;
on
the conduct of the defendant who may or may not have been aware that
there
was
no debiium and whose conduct may or may not have contributed to the
plaitiff's decision to pay; and on the plaintiff’s
state of
mind and the culpability of his ignorance in making the payment.
(Consider for example, the case of a person who, whilst
in doubt as
to whether money is legally due
;
pays it not caring whether it is and without bothering to find out).
These are only a few considerations that come to mind; others
will no
doubt manifest themselves with a passage of time...
”
[26]
The Willis Faber decision (supra)
effectively altered the position as earlier stated in the case of
Rahim v Minister of Justice
1964(4) SA 630(A) in which the Appellate
division had held that an amount of money paid indebiti in mistake of
fact could not be
recovered by means of the condictio indebiti where
the conduct was found to have been ‘’inexcusably slack”.
In
Willis Faber the finding was that mistakes of law and mistakes of
fact should be treated in similar manner.
[27]
In casu, plaintiff called the evidence
of Heather Dietrich, Delmaine McDougall and Alan Wintermeyer. Heather
Dietrich had testified
in the earlier trial and she confirmed and
stood by her evidence at that stage. Heather Dietrich was employed by
the plaintiff
as a regional director.
She
testified that services had been rendered by the plaintiff to the
defendant at the latter’s special instance and request.
[28]
She testified that plaintiff rendered
invoices to defendant monthly and that those had to be accompanied by
an order number which
was generated by defendant’s procurement
department. Later, plaintiff had been issued with a vendor number
which thereafter
served as a form of identification when plaintiff
submitted invoices for payment.
[29]
Delmaine McDougall was employed by
plaintiff as an area manager and her duties entailed visiting various
sites at which plaintiff
rendered services. Some of those sites were
the areas where plaintiff rendered services for defendant. If there
were concerns in
any of the sites, she would see to the resolution
thereof. She had during the cause of business regular meetings with
Gavin Graham
and Alan Annandale who were defendant’s employees
and who functioned as contact persons during the duration of the
relationships
between defendant and plaintiff.
[30]
McDougall testified how she had to
follow up with Gavin Graham where payments were delayed and these
would be resolved in due course
without difficulty.
[31]
Four categories of services were
rendered and these included grounds, gardens and maintenance; office
cleaning; dogs and kennels
and horses and stables. Mcdougall had to
ensure that there were sufficient numbers of people to render these
services in between
shifts or leave of absence by any of the
employees.
[32]
Dietrich’s evidence was largely
supplementary to McDougall’s with regard to the number of
employees on the ground, their
pay and pay increases. She also
testified about how they had to eventually abandon government
business because of difficulties
they had experienced with regard to
settlement of their accounts.
[33]
It is common cause that the services
rendered by plaintiff to defendant particularly for the period 2005
to 2009 were rendered without
the existence of a valid written
contract. In that regard the requirement that the enrichment must be
unjustified or sine causa
is satisfied without much ado.
[34]
Regarding the other elements, namely,
defendant’s enrichment, plaintiff’s impoverishment and
whether or not defendant’s
enrichment was at the expense of the
plaintiff, these are more particularly dealt with in the discussion
of the evidence of Alan
Wintermeyer who was plaintiff’s
accountant and who was called to testify in this regard and the
evidence of Rhajan Silal
'who was called by the defendant.
[35]
In an enrichment action, the primary
claim is a claim for the retransfer of the property if that is
possible. The quantum of the
enrichment claim is established by
determining the extent of the impoverishment and the extent of the
enrichment. The impoverished
party is then entitled to the lesser of
the two amounts so determined
5
.
[36]
One of the categories of enrichment
which the learned authors refer to is one where there is a
non-decrease in the assets or patrimony
where a decrease would have
taken place but for the enrichment.
[37]
In casu the evidence showed that animals
such as horses and dogs were a costly asset to the city in which huge
efforts are invested
not only to ensure that they are trained to the
required standard but also that they are kept in a hygienic and clean
environment.
The evidence showed that the service was rendered on a
continuous basis all year round. Needless to say, had there been any
interruption
of the service of maintaining these assets in a good
state there would have been an
immediate and serious decrease
in the city’s assets or patrimony. According to the evidence
before me this never occurred.
[38]
Allan Wintermeyer was called by
plaintiff to give direct evidence as plaintiff’s accountant and
expert evidence as far as
his qualifications and experience would
support such expert evidence. He stated that he was a B.Compt Honours
and Certificate in
the Theory of Accounting graduate who possessed
years of experience as an accountant for large companies. He
confirmed that in
terms of the expert notice filed he was responsible
for the administration function for the North and South Gauteng
regions ’which
comprise 60 percent of plaintiff's turnover, the
total of which is closely approaching R1 billion.
[39]
Cost accounting formed part of his
studies and was also an important component of the operational side
of plaintiff’s services.
He was involved with the defendant
from the accounting point of view and was ultimately responsible for
the billing and collection
of accounts. His department was also
responsible for payment of wages and the allocation of payments from
the customer.
[40]
In considering Wintermeyer’s
evidence I have had to consider the cautionary statement of the law
in the case of Singh v Ebrahim
All South African Law Reports July(2)
2010 210(3) All SA 187
D para 34.
‘
The
general approach to expert evidence is trite. Receiving the opinion
of an expert is an exception to the basic rule that opinion
evidence
is in admissible-
Ruto
Flour Mills Ltd v Adelson(1) 1958(4) SA 235 (T) at 237A
[also
reported at
[1958]
4 All SA 198(T)~ed]
and R v David 1962(3) SA 305 (SR) at 306H
Ultimately,
it is for the Court to decide whether an opinion is in fact correct
to be relied upon- see
Van
Wyk v Lewis
1924 AD 438
at 448, R v Mbongwe
1954 (3)
SA
1016(T)
at 1019 and S v Gouws
1967 (4) SA 527(E)
at 528D
[also
reported at
[1967]
4 All SA
438(E)-Ed]
”
..................................................................
and at para 35:
“
n
particular in the context of expert evidence, Addelson J in Meday v
Protea Assurance Co Ltd 1976(1) SA 565 (E) at 569E-H commented
that:
However
eminent an expert may be in a general field, he does not constitute
an expert in a particular sphere unless by special study
or
experience he is qualified to express an opinion on that topic. The
dangers of holding otherwise- of being overawed by a recital
of
degree and diplomas-are obvious; the court has then no way of being
satisfied that it has not been blinded by pure
‘
theory'
untested by knowledge or practice. The expert must either himself
have knowledge or experience in the special field on which
he
testifies (whatever general knowledge he may also have in pure
theory) or he must rely on the knowledge or experience of others
who
themselves are shown to be acceptable experts in that field... When,
therefore, an expert relies on passages in a text book,
it must be
shown, firstly, that he can. by reason of his own training, affirm
(at least in principle) the correctness of the statements
in that
book; and, secondly, that the work to which he refers is reliable in
the sense that it has been written by a person of
established repute
or proved experience in that field. In other words, an experience
with purely theoretical knowledge cannot in
my view support his
opinion in a special field (of which he has no personal experience or
knowledge) by referring to passages in
a work which has itself not
been shown to be authoritative. Again the dangers of holding the
contrary are obvious. ”
[41]
Wintermeyer testified that labour costs
were loaded onto the computer system through the payroll system and
that it is possible
to tell the percentage or proportion of a
particular invoice which made up certain costs. This would enable the
company to identify
whether or not it was making a gross profit on a
particular contract or not.
[42]
He stated that plaintiff had embarked on
a drive to obtain government contracts which is a highly competitive
source of work. Towards
this end, plaintiff had quoted at much lower
gross profit margins. Ultimately
it had found problems with
receiving payment from government which eventually led to abandonment
of business in the public sector
and pursuit of commercial business.
[43]
Wintermeyer had overseen the compilation
of a spreadsheet which was handed into court and marked exhibit 1. He
explained that the
cost of labour on exhibit 1 reflected the cost of
UIF contributions of the staff based at the plaintiff. Eighty two
(82) percent
is the norm for government contracts and the labour
component of each invoice was calculated by him at eighty two (82)
percent.
[44]
Similarly he explained the percentages
applied to chemicals and uniforms. He explained that the reason for
choosing each set of
percentages was that these were finked to the
type of contracts and services provided to the defendant. In this
case the chemicals
were especially suited for dogs and horses and the
associated hygiene and the cost of uniforms represented a higher
percentage
owing to the fact that gumboots, safety shoes and other
type of equipment was needed for the handling of horses and dogs.
These
uniforms represented a far higher cost than those used for
simple office cleaning.
[45]
He stated the flat rate of R129-00 for depreciation of equipment
supplied for use at the defendant such as lawnmowers, weed-eaters
and
equipment related to the horses and dogs. These were capitalised over
five years. Gaps appear in the spreadsheet for purely
labour charges
which would not attract depreciation.
[46]
The component relating to fuel was in
respect of the plaintiff having to utilize the defendant’s own
tractor but being responsible
for the funding thereof.
[47]
In this manner and by a detailed
breakdown and analysis of costs, he was able to conclude that the
average gross profit percentage
in each of the invoices was in the
region of 5.7 percent. Further, he confirmed
that the total
costs incurred by the plaintiff for the running of the contract was
arrived at by totalling the total cost of all
invoices on the
spreadsheet (exhibit 1) and arriving at a figure of R692, 450-61.
Plaintiff amended the quantum of its enrichment
claim by reducing the
initial amount claimed to this figure.
[48]
Under cross-examination he confirmed that exhibit 1 was prepared by
an accountant who worked underneath him with accounting
experience
and under Wintermeyer’s supervision. The two had sat together
to verify the spreadsheet details regarding labour,
supervision,
chemicals and uniform.
[43]
After weighing all the aspects of Wintermeyer s evidence, I am
satisfied that he cannot be categorised as a textbook expert
witness.
He had wide-ranging industry experience gained not only from working
for the plaintiff but also for other companies. His
expertise and
evidence can therefore not be said to be theoretical. He is an
employee of the plaintiff but I cannot only by reason
of such
employment deem his evidence to be biased. He has sufficiently
supported his testimony by reference to the relevant facts
and
figures.
[50]
As stated earlier, the onus is on the
plaintiff to prove enrichment. Once it has proven a transfer
indebite, if the defendant has
pleaded non-enrichment as a defence
then the onus shifts to the defendant to prove that the transfer did
not enrich it. The defendant
may adduce evidence in rebuttal of the
allegation that it was enriched and thereby indicate that the claim
must fail.
[51]
The plaintiff’s burden of proof of
enrichment and its measure is facilitated by a presumption that the
defendant was enriched
if the plaintiff can prove that the defendant
received a transfer of money, property or services.
See
FNB v Perry 2001(3) SA 960 SCA at para 31
Kudu Granite
Operations v Caterna Limited 2003(5) SA 192 SCA at para 21.In the
present case defendant received neither money nor
property but
services.
[52]
It is not enough merely to deny
enrichment. The defendant has to plead facts justifying a finding of
enrichment less than that which
has been received. A failure to
adduce such evidence gives rise to a duty to restore the full value.
See
Hardaker
v Phillips 2005(4) SA 515 SCA para 14
[53]
The defendant called one witness, one
Rajhan Silal 'who confirmed that plaintiff was no longer rendering
services to the defendant.
He further testified regarding other
companies which are currently rendering services similar to the ones
previously rendered by
plaintiff.
[54]
According to Silal, defendant is paying
less for similar services than what was charged by plaintiff. It is
not clear to me whether
this evidence was meant to suggest that
defendant was overcharged by plaintiff. If this was the intention, no
sufficient basis
was set to enable the court to draw such a
conclusion. Similarly the evidence of Silal does not rebut the
evidence given by Wintermeyer
regarding the extent to which plaintiff
was impoverished and defendant enriched. The performance by the other
companies was ex
post facto and can therefore not be conftated into
this claim.
Defendant
did not plead non enrichment nor did it call any evidence to
demonstrate that it was not enriched.
[55]
I cannot but come to the conclusion that
defendant was well aware that no valid tender process had been
followed prior to establishing
a business relationship with
plaintiff. Plaintiff had offered a written contract to defendant but
this offer was not taken up.
There was
accordingly
no written contract in place and the relationship was
sine
causa
in the absence of compliance with
the requirements of the MFMA post December 2004. To impute the
omission to the plaintiff would
be nothing short of expecting
plaintiff to take over defendant’s operational
responsibilities.
The
consistent conduct of not only accepting the services rendered by
plaintiff, accepting their invoices and paying over a number
of years
established a pattern of behaviour. It can therefore by any stretch
of imagination be suggested that plaintiff’s
conduct was
‘inexcusably slack’ to the extent that it does not
deserve protection of the court.
See
Willis
Faber Enthoven Pty Limited (supra)
[56]
Taking the conspectus of the evidence
into account, I am persuaded that plaintiff has succeeded to prove
its case on a balance of
probabilities.
[57]
In the result the following order is
made;
57.1.
Judgment is granted in favour of
plaintiff in the sum of
R692, 045-61
57.2.
Defendant
to pay the wasted costs including the costs incurred in:
57.2.1.
February
2010
57.2.2.
13 August 2010 (on an attorney and
client scale)
57.2.3.
July 2011
57.2.4.
15 September 2010
57.2.5.
20 November 2012
S.A.M
BAQWA
(JUDGE
OF THE HIGH COURT)
Plaintiff’s
attorneys: Salant Attorneys
Counsel
for the plaintiff: Adv W.B Bank
Defendants
attorneys: Lennon Moleele & Partners
Counsel
for the defendants: Adv F.R Memani
1
V'isser L) Unjustified Enrichment (200K) 4
2
See
Visser (supra) 5 and LAWSA 9(2) 211
3
J
Du P less is ‘'The South African Law of Unjustfiable
Enrichment"
4
Supra
para 2.2.6.2 p36
5
Eiselen
& Pienaar '‘Unjustified Enrichment: A Casebook” (3ld
Ed. 2008) para 1.3.2 p29