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[2013] ZAKZDHC 13
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Umzumbe Municipality v Great Supply CC (118/2009) [2013] ZAKZDHC 13 (15 April 2013)
IN THE KWAZULU-NATAL
HIGH COURT, DURBAN
REPUBLIC OF SOUTH
AFRICA
CASE NO.
118/2009
In the matter between:
UMZUMBE MUNICIPALITY
.
......................................................................
PLAINTIFF
AND
THE GREAT SUPPLY CC
.....................................................................
DEFENDANT
__________________________________________________________________
J U D G
M E N T
(Delivered
on 15 April 2013)
__________________________________________________________________
BALTON J
[1] The plaintiff instituted action against the defendant in which it
claims repayment of an amount of R336 528,00, interest and
costs.
[2] It is common cause or not in dispute that -
2.1. On 27 May 2008 the plaintiff and Zanusi Trading Enterprise CC
trading as National Energy Solutions (“NES”) entered
into
an agreement in terms of which NES undertook to supply lamp oil and
fire gel to the plaintiff in an amount of R1 332 000,00
excluding
VAT. This was as a result of NES having successfully bid for the
tender.
2.2. NES had an option to deliver on their own or request a partner,
in which event an agreement of cession would be entered into
between
the plaintiff, NES and the partner.
2.3. NES would then invoice the plaintiff and indicate the amount to
be paid to the partner.
2.4. On 7 July 2008 the defendant and NES entered into a cession
agreement in terms of which the plaintiff was to pay R336 528,00
to
the defendant for lamp oil and fire gel in terms of the contract
between the plaintiff and NES. The cession agreement was signed
by
the plaintiff.
2.5. An invoice from NES
1
indicates that an amount of R574 560,00 was due to it and an
amount of R295 200,00 (excluding VAT), was to be paid to the
defendant.
2.6. The payment was processed and approved
2
and a cheque requisition
3
was made out for an amount of R574 560,00 to NES and a further cheque
requisition
4
for an amount of R336 528,00 to the defendant.
2.7. On 16 July 2008 the plaintiff paid R336 528,00 to the defendant.
2.8. On 30 July 2008 the plaintiff paid the defendant a further sum
of R336 528.00.
[3] The plaintiff alleges that the payment to the defendant on 30
July 2008 was made in a bona fide and reasonable but mistaken
belief
that a further cession agreement existed between the defendant and
NES and that the payment was
sine causa
.
[4]
Mr Mbhele
, the local municipal manager of the plaintiff at
the time, testified on behalf of the plaintiff:
4.1. That the plaintiff received a delivery note
5
from NES dated 18 July 2008 for
704 20 litres fire gel and a delivery note
6
from the defendant dated 18 July
2008 for 704 20 litres fire gel.
4.2. On 21 July 2008
7
the plaintiff received a delivery note
8
dated 18 July 2008 from the defendant for 1 440 litres lamp oil
and 736 20 litres fire gel.
4.3. A delivery note
9
dated 21 July 2008 from NES for 1 445 litres lamp oil and 736 20
litres fire gel was stamped by the plaintiff on 21 July 2008.
4.4. The defendant forwarded an invoice
10
to the plaintiff for the three delivery notes
11
.
The invoice states “as per cession agreement”.
4.5. This was a misrepresentation as there was no cession agreement
between the defendant and the plaintiff in respect of the second
delivery on 21 July 2008. The defendant was not entitled to payment.
The plaintiff then received an invoice
12
from NES for 1 445 litres of lamp oil and 2 768 20 litres of fire gel
for an amount of R500 505,00 which was paid to NES upon a
letter of
demand from NES.
4.6. He conceded that it was an error on the part of the officials of
the plaintiff as they were not supposed to have had two delivery
notes from two different companies, especially if one was not a main
contractor.
[5] Mbhele was requested to add the total of oil and gel delivered in
terms of the invoices
13
from the defendant and compare it with the amount
14
claimed.
[6] He conceded that the amounts were not the same. The total for
fire gel was 1 440 and the total for the oil was 1 200 and
that
there was a shortage of 240 litres of oil.
[7] The figures did not tally and Mbhele was able to see the problems
as per the different delivery notes and the final invoices
submitted,
but was unable to offer any explanation for the problem.
[8] He tried to explain that the officials at Umzumbe Municipality
did not have the capacity to follow the due diligence process.
[9] The plaintiff closed its case.
[10]
Mr Lesley Boulanger
, the financial manager of the
defendant, testified that the defendant had not been enriched and
that the invoices to the plaintiff
were supported by delivery notes.
[11] I will now proceed to evaluate the evidence.
[12] The plaintiff has relied on the
conditio sine causa
for
the payment made to the defendant. In terms of the
condictio sine
causa
, a plaintiff is entitled to sue a defendant where money has
come into the hands or possession of another for no justifiable
cause,
that is to say, not by gift, payment discharging a debt, or in
terms of a promise or some other obligation or lawful ground for
passing of the money to the recipient. The money may be recovered to
the extent that the recipient has been enriched at the expense
of the
person whose money it was.
15
[13] Mr Mhlanga, on behalf of the plaintiff, argued that the
plaintiff has established that the defendant was not entitled to
receive payment. The defendant took advantage of the inadequacies in
the plaintiff’s fold. Payment had been made in error
and had
been induced by the defendant.
[14] Mr Tobias, on behalf of the defendant, submitted that once it is
established that the second payment was made for the supply
of goods,
then irrespective of whether there was a contract or cession, the
plaintiff’s claim must fail since the defendant
was not
enriched.
[15] It is fundamental, both in regard to the
condictio indebiti
as well as the
condictio sine causa
, that:
The
plaintiff can only recover an amount representing the extent to which
the defendant has been enriched at his expense
.
16
[16] Mr Mbhele agreed that the plaintiff’s case was that
In a bona fide and reasonable
but mistaken belief that a further cession agreement existed between
defendant and National Energy
Solutions, on 30 July 2008 plaintiff
paid to the defendant a further sum of R336 528,00 when the payment
was in fact sine causa.
17
and agreed that the payment was made as an error due to negligence on
the part of the plaintiff.
[17] It is common cause that the defendant delivered the goods and
received payment. Mr Mbhele confirmed in cross-examination that
the
defendant has not been enriched. He conceded the plaintiff’s
negligence in receiving the goods and explained that the
plaintiff’s
internal control was weak and the staff had not been exposed to a
situation like this before. He agreed that
it was possible that the
official who authorised the payment did not check whether there was a
cession. Non-enrichment is a defence
to the action.
18
[18] The plaintiff alleged that it paid because it believed a further
cession existed.
[19] Under the
condictio indebiti
, a plaintiff must prove that
the payment made by him was made
indebiti
, that is, that there
was no legal or natural obligation or any reasonable cause for the
payment. In addition, the mistake of the
plaintiff must be excusable
and not caused through grossly negligent conduct or inexcusable
slackness.
19
[20] In any event, regardless of whether the action is determined
according to the
condictio indebiti
or
condiction sino
causa
of the above, the failure to prove that the defendant has
been enriched is fatal for the plaintiff.
[21] Mr Boulanger stated in cross-examination that at no stage was he
under the impression that there was a cession for the second
payment.
He added that the fact that the cession had been mentioned on page 25
of exhibit B, was possibly because of Mr Vince,
the owner. He only
saw the first cession. In his opinion the first cession applied to
all the transactions. He understood it to
apply to four deliveries
and that each delivery would accompany the same cession document.
[22] At this point the Court raised the question as to the
whereabouts of the pro forma invoice which was mentioned in the
cession
and neither of the parties had a copy of it. Mr Mhlanga
informed the Court that a pro forma document does not exist.
[23] In his opinion the defendant delivered the goods and ought to be
paid. The instruction to pay in terms of the first delivery
would
have come from Mr Dumer, the owner.
[24] On the evidence, the plaintiff conceded that the goods were
received and that its employees were negligent in receiving the
goods. The plaintiff has failed to submit the pro forma invoice
referred to in the cession.
20
The cession specifically refers to:
....as per attached pro forma
invoice being the order placed with The Great Supply CC by [Nes].
[25] I am satisfied on the evidence that due to the negligence of the
plaintiff’s employees, the defendant has not been enriched.
If
they had acted with due diligence they would not have accepted the
goods. Mr Mhlanga’s argument that there was a concerted
effort
by the defendant to mislead the plaintiff into making payment is
without foundation.
[26] The plaintiff has failed to provide the pro forma invoice
referred to in the cession agreement. This would have obviated any
doubt as to whether the defendant was entitled to payment. Mr
Boulanger’s evidence that the cession extended to four
deliveries,
could not be rebutted by the plaintiff. The plaintiff has
accordingly failed to establish that the defendant was enriched
either
under the
condictio indebiti
or the
condictio sine
causa
.
[27] The plaintiff’s claim is dismissed with costs.
COUNSEL FOR THE PLAINTIFF: MR MHLANGA
(Instructed by:
Mhlanga
Incorporated
917
Sangro House
417 Smith
Street
DURBAN
4001.)
COUNSEL
FOR THE DEFENDANT: MR TOBIAS
(Instructed
by:
Lockhat &
Associates
P O Box
48353
QUALBERT
4078.)
DATE OF
ARGUMENT: 4 FEBRUARY 2013
JUDGMENT
DELIVERED ON: 15 APRIL 2013
1
Page
18 of exhibit A.
2
Page
19 of exhibit A.
3
Page
22 of exhibit A.
4
Page
23 of exhibit A.
5
Page
24 of exhibit A.
6
Page
25 of exhibit A.
7
As
per the stamp on page 26 of exhibit A.
8
Page
26 of exhibit A.
9
Page
27 of exhibit A.
10
Page
28 of exhibit A.
11
Pages
25 and 26 of exhibit A.
12
Page
35 of exhibit A.
13
Pages
25 and 26 of exhibit A.
14
Page
36 of exhibit A.
15
GOVENDER
v STANDARD BANK OF SOUTH AFRICA LTD 1984(4) SA 392 (C ).
16
TRAHAIR
v WEBB & CO
1924 WLD 227
at 234 [per Tindall J [as he then
was]].
17
Paragraph
3 of the Particulars of Claim on page 3 of the Pleadings.
18
AFRICAN
DIAMOND EXPORTERS (PTY) LTD v BARCLAYS BANK INTERNATIONAL LTD
1978
(3) SA 699
(AD).
19
AFFIRMATIVE
PORTFOLIOS CC v TRANSNET LTD t/a METRORAIL
[2008] ZASCA 127
;
2009 (1) SA 196
(SCA).
20
Annexure
A to the Particulars of Claim, page 6 of the pleadings.