About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2012
>>
[2012] ZAGPPHC 17
|
|
Value Logistics Ltd v Weinberg and Another (54119/07) [2012] ZAGPPHC 17; (2012) 33 ILJ 849 (GNP) (29 February 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
CASE
NO: 54119/07
DATE:29/02/2012
In
the matter between:
VALUE
LOGISTICS
LIMITED
.........................................................................................
Plaintiff
and
IRVIN
ARNOLD
WEINBERG
...............................................................................
First
Defendant
ANDRE
DU
TOIT
............................................................................................
Second
Defendant
JUDGMENT
MAKGOKA.
J:
[1]
This is an action for damages and recovery of profits. The plaintiff
alleges that the two defendants, its former employees,
(i) breached
their contracts of employment with it, causing the plaintiff
financial loss and (ii) intentional, alternatively negligent
disposal
or loss of the plaintiff's assets, further alternatively breaches of
the defendants' contractual obligations and fiduciary
duties,
resulting in financial loss. The essence of the plaintiff's claim
against the defendants is that the defendants disposed
of the
plaintiff's assets and received the proceeds thereof without paying
them over to the plaintiff.
[2]
The defendants are not legally represented. Their application for a
postponement was dismissed by Pienaar AJ on 14 April 2011.
The trial
commenced on 15 April 2010 until 20 April 2010, when the matter was
postponed sine die. The trial resumed on 23 May 2011
on which date Du
Toit was absent. I was satisfied that a proper notice of set down had
been served upon him. I was also informed
by Mr. Kromhout, counsel
for the plaintiff, that Du Toit had earlier during May, attended a
pre-trial conference in the company
of an attorney. Furthermore,
Weinberg conveyed to the court that he had, on the morning of the
trial date, spoke to Du Toit, who
indicated to him that he was not
coming to court. On these considerations, I was satisfied that the
trial could continue in Du
Toit's absence, which ruling I accordingly
made.
[3]
The plaintiff's main business is car, truck and forklift rental,
warehousing rental, warehousing, distribution, freight, maintenance
of vehicles and logistics, generally. The company consists of various
divisions, including the Value Car and Truck division, which
is based
in Midrand. This division is the relevant one to the present
proceedings. The two defendants were employed by the plaintiff
at the
Midrand branch. The first defendant (Weinberg) was the sales manager
and the second defendant a (Du Toit) sales representative.
Du Toit
report to Weinberg, who in turn reported to the Deputy Chief
Executive Officer of the plaintiff, Mr. Danny Marais (Marais).
[4]
Two important annexures to the plaintiffs particulars of claim are
the following: "POC3", and "POC4. "POC3"
is
a list of 23 vehicles sold to various entities and individuals named
therein. It also reflects the values of the invoice raised
for such
vehicles and the actual amounts deposited into Du Toit's accounts,
which were different. The total value of the invoices
raised was R548
371. The actual deposit into Du Toit's account was R 1 030 753,
leaving an amount of R482 383 as "under-invoiced".
Exhibit
"B", the contents of which were admitted by Weinberg and Du
Toit, reflects a revised amount of R984 627 as representing
a general
deficiency in respect of motor vehicles sold without the full
proceedings being paid over to the plaintiff. "POC4"
reflects 62 vehicles that are unaccounted for. The original claim was
for R3 030 530.56. However, this amount was by agreement
between the
parties reduced to R2 424,424.45, as per Exhibit "B".
Common
cause issues
[5]
Apart from the above, the following issues are common cause between
the parties or are not seriously disputed (appearing from
the
pleadings, the minutes of the various pre-trial conferences and
concessions made during the course of the trial):
(a)
Each of the defendants signed a contract of employment setting out
the terms of employment and their respective duties;
(b)
Weinberg was in control of the used car division at the Midrand
branch during the relevant period;
(c)
vehicles reflected in annexure "POC3" and "POC4"
of the particulars of claim were the plaintiff's property
and that Du
Toit had sold the bulk of the vehicles reflected in "POC3";
(d)
Du Toit operated three bank accounts, namely Nedbank cheque account
number 1987426649; ABSA saving account number 9104049290;
and ABSA
account number 9087263202. He made four payments from either of the
accounts to Weinberg in the amount of R72 000, on
various occasions
between January 2002 and March 2004;
(e)
The proceeds of the vehicles referred to in annexure "POC3"
and p250 of exhibit "B" were paid into one of
the bank
accounts operated by Du Toit or paid to him in cash. Du Toit in turn
made certain payments from his accounts to the plaintiff;
(f)
Du Toit had failed to pay the full proceeds from the sale of all the
plaintiff's vehicles into the plaintiff's bank account.
Du Toit owed
the plaintiff a duty of care and fiduciary duties and that he was
obliged to account to the plaintiff for all the
monies and /or
profits received in respect of the suffered damages in any of its
vehicles were being received by the plaintiff
in respect of such a
vehicle.
(g)
The invoice values raised by Weinberg alternatively by Du Toit in
respect of the vehicles reflected on annexure "POC3"
were
lower than the amounts paid into one of the bank accounts operated by
Du Toit;
The
evidence
[6]
Nine witnesses testified in the plaintiffs case, namely Messrs Danny
Marais (Marais); Rory Steve Greene (Greene); Johannes Christaan
(Basie) Van der Walt (Van der Walt); Hennie Smith (Smith); Gang Zhang
(Zhang); Christian Johannes Maurits Myburgh (Myburgh); Shawn
Paxton
(Paxton); Robert Forfar (Forfar) and Ms Euodia du Toit (no relation
to the second defendant). Weinberg testified in his
own defence and
called no further witnesses. The factual and documentary evidence is
largely common cause. As a result what follows
is a brief exposition
of the salient features of the evidence.
Marais
[7]
He was the Deputy Chief Executive Officer (CEO) of the plaintiff
during the relevant period. He is presently no longer associated
with
the plaintiff, as he left the plaintiff in 2006. He was responsible
for various departments, including the Value Car and Truck
Sales
Division in Midrand, where both Weinberg and Du Toit were based. Du
Toit reported to Weinberg and Weinberg reported to him.
Apart from
their salaries and/or commission, Weinberg and Du Toit were not
entitled to obtain payment of commission directly from
any purchaser
of a vehicle.
[8]
When a motor vehicle reached a certain age, it would be "defleeted".
This is a process in terms of which the vehicle
is taken out of the
relevant rental depot and put up for sale. When a vehicle was
defleeted and put up for sale through the Midrand
branch, he and
Weinberg would agree on the sale price of that vehicle, which would
normally be between its trade and retail value.
Once a price had been
established, it would be Weinberg's responsibility to sell the
vehicle at that price. Should Weinberg and
Du Toit wish to sell the
vehicle at a price different to that agreed with him, they had to
obtain his consent first. Once a vehicle
was sold, the purchase price
had to be deposited into the plaintiff's bank account, and the
deposit slip faxed to the plaintiff's
debtors department. No other
account existed for this purpose other that the plaintiff's bank
account. Where any commission was
payable to either Weinberg or Du
Toit, such would be processed once verification of receipt of the
purchase price into plaintiff's
bank account was made. Such
commission would be paid to the individual concerned at the end of
the month as part of their salary.
[9]
When a vehicle was sold, the transfer of ownership documents had to
be signed by Weinberg. The signed change of ownership documents
would
be accompanied by the registration certificate for the particular
vehicle, which would be handed to the purchaser by either
Weinberg or
Du Toit. Ownership in a vehicle could not be transferred without a
registration and signed transfer papers. He further
testified that
Weinberg was responsible for vehicles placed out on consignment and
other dealers when those vehicles originated
or fell under the
Midrand branch, and that Weinberg had to control those vehicles at
the consignment dealerships. He further testified
that when a vehicle
was on consignment with a dealer, and the dealer had sold the vehicle
to a third party, change of ownership
could only take place when the
Plaintiff had received payment. Only then could the registration
documents be handed over and the
dealer/purchaser could obtain
ownership of the vehicle.
[10]
He further testified that there was a filing system at the Midrand
premises where the registration certificates and the keys
for the
relevant vehicles were kept. Weinberg was responsible to keep the
keys of the vehicles and the registration certificates
in safe
custody. According to Marais, invoices were raised either at the
debtors department or by Weinberg. When a vehicle was
sold, the
Plaintiff would be reflected as the seller on the invoice. It could
not be anyone else. The person buying the vehicle
would be reflected
as the purchaser. Marias finally testified that from 19 November
2001, manual invoices were no longer allowed
and all invoices had to
be generated on the plaintiffs Accpac accounting system, which was a
computer-based system. Those employed
at the Midrand branch were able
to raise invoices on the Accpac system. After the implementation of
the Accpac system, Weinberg
was aware that he could no longer raise
manual invoices since, to the knowledge of Marais at the time,
Weinberg followed the new
procedures.
Greene
[11]
He was employed by the plaintiff during the relevant period as a
National Loss Control Manager. He was involved in an investigation
pertaining to the sale of the plaintiffs vehicles at the Midrand
branch. Initially it included some 1500 vehicles. On 10 December
2004
he conducted a physical audit of all the vehicles that were listed by
Weinberg as being in stock at that branch. Armed with
such list, he
did a physical stock count. Out of the 104 vehicles that were
supposed to be in stock, only 10 were physically present.
When he
enquired from Weinberg as to the whereabouts of the remaining 94
vehicles Weinberg handed to him consignment documents,
indicating
that some vehicles were on consignment with various dealers. On
further investigation of that information, he could
only locate about
five vehicles at the dealerships. The rest of the vehicles could not
be accounted for by Weinberg, as the dealers
supposedly in possession
thereof, denied knowledge of the consignment documents handed to him
by Weinberg.
[12]
Back at the Midrand branch, he located a stock book wherein was
recorded a list of the vehicles that were received into stock
at that
branch. That list included the missing 94. On further investigation,
it emerged that those vehicles had been sold to third
parties and
that the purchase prices had been paid directly to Du Toit. It also
emerged that several payments were received Du
Toit, exceeding the
amounts reflected on the invoices raised on the plaintiff's
accounting system. Weinberg's signature appeared
on several of the
offers to purchase documents. A transaction involving motor vehicle
with registration number CSZ 186 EC is a
case in point. On 18 March
2002 Weinberg signed an offer to purchase in terms of which the
vehicle was sold to Airport Motor for
R24 350. On 20 March 2002 an
invoice was raised on the plaintiff's system. On 31 July 2002
ownership of the vehicle was transferred
to the purchaser. On 7
August 2002 Du Toit issued an invoice to the purchaser for R28 000.
The following day, Du Toit banked a
cheque in the amount of R28 000
into his personal cheque account. Greene further testified about a
list of some 62 vehicles which
he was unable to find invoices for,
except 3 vehicles which he was able to trace as sold but for which
there were no invoices for
cash were raised on the plaintiff's
system.
[13]
During the investigation in early December 2004, he found a number of
used and unused manual pre-printed invoice books in a
cabinet in the
offices of Value Car
&
Truck Sales at the Midrand depot. Out of the used ones two were
missing, with sequential invoice numbers from 900 to 1000.
There were
50 invoices per book, so the two books contained sequentially
numbered invoices 901 to 950 and 951 to 1000, respectively.
He
noticed that a manual tax invoice was utilised by Weinberg in order
to sell a vehicle with registration number CVR 578 GP. Invoice
number
967 was utilised, which came from one of the invoice books that was
missing. The same applies to invoice number 965 in terms
of which a
vehicle with registration number PCH 014 GP was sold to Mr Hennie
Smith of Wonderboom Car & Truck. He also established
that a
vehicle with registration number HSZ 294 GP was sold to a Mr Zhang,
who purchased the vehicle from Weinberg and paid Weinberg
an amount
in cash. A significant fact pointed out by Greene was that certain of
the consignment notes did not tally with the objective
facts
available. For instance, a consignment note in respect of a vehicle
with registration number CVR 578 GP was dated 27 October
2004.
However, this vehicle had in fact been sold already in January 2004
to Mr. Hennie Smith of Wonderboom Car & Truck during
which
Weinberg received cash in the amount of R37 400.00 for the vehicle.
Nicoll
[14]
He was an internal auditor of the plaintiff during the relevant
period. His duties included fixed assets verification, general
auditing and procedures. He was requested to verify the presence of
104 vehicles supposedly at the Midrand Branch. He found only
10, and
asked Weinberg of the whereabouts of the rest of the vehicles.
Weinberg told him that they were at various dealerships
who were
selling them on the plaintiff's behalf. He asked Weinberg to contact
the dealerships and request those dealerships to
fax him the details
of the vehicles in their respective possession. When he received the
faxes towards the end of October 2004
they came from Weinberg and
related to about 9 or 10 dealerships.
Van
der Wait
[15]
He was the Group Project Manager responsible for accounting
procedures. He wrote a letter dated 19 November 2001 wherein he
set
out that with effect from December 2001 the plaintiff would covert
from manual accounting system to an electronic one. The
letter was
electronically transmitted by e-mail to a number of recipients,
including Weinberg. The letter also instructed that
all deposit slips
had to bear reference to both the vehicle registration number and the
invoice number. He visited the Midrand
branch before and after the
implementation of the new system and he was satisfied that the system
was smoothly implemented. He
personally discussed the conversion with
Weinberg both before and after implementation. The only issue raised
by Weinberg was a
problem relating to one of the printers, which was
sorted out.
Smith,
Zhang and Myburgh
[16]
These three witnesses' evidence is almost identical. Each one
purchased a vehicle from Weinberg and paid cash directly to Weinberg.
Smith testified that he was the owner of Wonderboom Car & Truck,
a second hand motor dealer. He sourced vehicles from various
sources,
including companies like the plaintiff. He purchased three vehicles
from the plaintiff, represented by Weinberg on different
occasions in
June and July 2003. On each occasion he made cash payment for a
vehicle. One of the three vehicles was taken by him
on consignment.
Weinberg issued and signed manual tax invoices of the vehicles paid
for cash, which manual tax invoices also served
as receipts, since
Weinberg recorded the purchase price on these invoices and endorsed
"Pd/Paid" on these manual invoices.
The registration and
transfer documents were handed to him by Weinberg against cash
payment to Weinberg. Zhang purchased a vehicle
from Weinberg for R51
500 under the same circumstances as those of Smith. Cash payment was
made to Weinberg and no receipt issued,
except an endorsement "pd"
on the manual tax invoice. Myburgh was Smith's partner at Wonderboom
Car & Truck. He testified
that he was present when Smith paid
cash to Weinberg for the three vehicles which Smith testified about.
He further confirmed that
Weinberg handed the manual tax invoices to
Smith.
Paxton
[17]
He was the plaintiff's senior internal auditor, responsible for the
auditing of branches nationally. He confirmed Van der Walt's
evidence
that with effect from December 2001 manual invoices were not allowed
and invoices could only be raised on the plaintiff's
computer system.
Paxton's evidence is also by and large confirmation of what Marais
and Greene testified about. He further testified
that there were no
unallocated deposits in the plaintiff's banking accounts which could
possibly relate to any of the missing 62
vehicles. According to him,
Weinberg could not give any sufficient indication or explanation as
to the whereabouts of the 62 vehicles.
He also pointed a continuous
delay in invoicing by Weinberg. He also testified about the
allocation of payments to invoices, where
Weinberg would allocate
payment received from one purchaser to an invoice raised in respect
of another purchaser. There were also
substantial discrepancies
between the actual date of payment by the purchaser and the actual
date of allocation of payments to
the purchaser's invoice.
Forfar
[18]
He testified as an expert. He is a forensic accountant. He compiled a
report after conducting a forensic accounting investigation
into the
activities of the plaintiff's Midrand branch. In his report, he
highlighted a few aspects. He concluded that from his
investigation,
the modus operandi of Weinberg and Du Toit was for Du Toit to secure
the sale of the plaintiff's vehicles, with
the proceeds then
deposited into Du Toit's personal bank accounts. Weinberg would
subsequently raise sales invoices for the sold
vehicles when he and
Du Toit planned to pay funds to the plaintiff, which collectively
over the period under investigation amounted
to substantially less
than the proceeds of the vehicle sales deposited into the accounts of
Du Toit. He submitted that the fact
that Weinberg would receipt and
allocate the amounts paid to the plaintiff from Du Toit's bank
accounts supports the conclusion
that he was aware of the practice
passing the sale proceeds through the bank accounts of du Toit.
[19]
He also analysed the movements in Du Toit's bank accounts. He noted a
high frequency of ATM withdrawals, and concluded that
Du Toit and
Weinberg early on in the scheme, were unable to make the payments
meant to offset the invoices raised by Weinberg in
the accounting
records of the plaintiff. In an attempt to catch up on the cash flow
shortage, Weinberg would delay the preparation
of the invoices, even
where the vehicles were no longer in his possession. In his view, the
"cash rolling" had a snowball
effect which never allowed
Weinberg and Du Toit the opportunity to make up on the shortage.
Consequently Weinberg had to resort
to not raising invoices at all,
for vehicles disposed of. This resulted in the general deficiency
amounting to R984 627 and the
62 unaccounted for. Forfar opined that
had Weinberg Properly implemented the invoicing procedure of the
plaintiff, he would have
ensured proper control over the plaintiff's
vehicles. In that way, ownership of a vehicle would not pass to a
third party unless
the vehicle had been paid in full, an invoice
properly raised and payment allocated against the invoice.
Du
Toit
[20]
Mrs Du Toit was the administration manager of the plaintiff at the
relevant time. She was responsible for the raising of invoices,
collecting monies and deposit thereof, as well s reconciliation of
accounts. She worked under Weinberg for approximately two months
before she was promoted and moved on to another division. Of
particular importance in her evidence is her confirmation that that
from end November 2001 the new accounting system was fully
implemented and manual invoices were no longer to be raised. There
were multiple users and invoices could be raised at different
branches, the Midrand branch included. Offer to purchase books and
manual tax invoice books were kept at the lsando branch and signed
for when those documents were issued. She further testified
that she
was never contacted by Weinberg to reinstate vehicles on the stock
lists. She did not have access to the assets as these
were managed at
lsando. She was in charge of invoice books from May to September
2001, after which they were given to Weinberg,
who became responsible
therefor. She further denied sending any invoice books instead of
offer to purchase books to Weinberg, stating
that it would have been
highly irresponsible to do so, and she would never have given such an
instruction. She further denied the
suggestion by Weinberg that only
Pretoria and lsando branches could raise invoices for vehicles,
pointing out the initials "RVD"
which appeared on the
invoices raised at Midrand Branch, which she identified as those of
Ronnell van der Westhuizen, who was based
at Midrand.
Paxton
and Van der Walt recalled
[21]
Two witnesses, Paxton and Van der Walt were recalled with leave of
the court. Paxton submitted a schedule reflecting the agreed
value of
20% below trade of the missing 62 vehicle. Furthermore, he handed up
unused two offers to purchase books which were indicative
of the fact
that during 2003 there was no shortage of offer to purchase books
necessitating the use of manual invoices and that
Weinberg had in
fact continued to use the normal offer to purchase books. Van der
Walt's recall was necessitated by Weinberg's
allegations that he (Van
der Walt) had removed certain deposit books and other documents
during an audit. That concluded the evidence
on behalf of the
plaintiff.
[22]
Weinberg then took the witness stand in his own defence. He outlined
his general duties and responsibilities as the plaintiff's
sales
manager. With regard to the missing vehicles, he testified that there
were a few occasions where vehicles were invoiced but
not paid for.
He had warned of vehicles which went missing. During a period when Du
Toit was on leave, one of Du Toit's clients
phoned and asked for two
specific vehicles. He then phoned another dealer to locate those
vehicles. He ultimately established that
the vehicles were not at any
of the dealers. When Du Toit returned from leave the following day,
he confronted him about this issue
and phoned more customers, which
led him to perceive that there were problems. He then contacted the
loss control department of
the plaintiff. When Du Toit realized this,
he tendered his resignation and just "disappeared". He was
not satisfied with
the way in which possession of the vehicles was
controlled.
[23]
Eventually he got hold of Du Toit and they met, during which Du Toit
admitted to having being involved in fraudulent activities
regarding
the plaintiff's vehicles. Du Toit also admitted that he had abused
his (Weinberg's) trust of him. A month prior to his
resignation he
(Weinberg) perceived that he was a suspect. As a result, he gathered
substantial evidence in his favour, in case
there was a court case
against him. These documents were later confiscated by Greene on the
day he was requested to leave the employ
of the plaintiff. He denied
any involvement in the missing vehicle of the plaintiff. With regard
to the two payments made to him
by Du Toit, he testified that those
had nothing to with the plaintiff. They related to two motor vehicles
that he had sold to Du
Toit in 2000 before he was employed by the
plaintiff. That concluded the evidence as Weinberg did not call
further witnessed on
his behalf.
The
submissions
[24]
Mr Kromhout, for the plaintiff, submitted that the totality of the
evidentiary material before court, including the oral evidence,
establishes on a balance of probabilities that both Du Toit and
Weinberg made secret profits from the sales and/or disposal of
the
plaintiff's missing vehicles. He argued that Du Toit operated a
scheme which was in direct breach of his responsibilities as
a sales
representatives and his contractual duty of towards the plaintiff.
Weinberg, on the other hand, contended that he was an
innocent party,
and was unaware of the scheme operated by Du Toit. He only became
aware of such scheme shortly before Du Toit resigned.
He also blamed
the loss on inadequate security measures and Mr Marais (former Deputy
CEO)'s iron-fisted managerial approach. He
stated that this led to a
situation where he did not receive important policy guidelines from
the plaintiff's head office, unless
those came from Marais himself,
for example the e-mail in which new managerial procedures where set
out. He further bemoaned the
fact that Marais was not joined in the
proceedings as a defendant as, according to him, some of Marais
decisions led to the losses.
At the end of day, Weinberg argued that
the plaintiff's claim against him should be dismissed.
The
law
[25]
I am grateful to Mr Kromhout for providing me with a comprehensive
overview of case law in his helpful heads of argument. The
point of
departure is that an employee is under a duty at all times to take
reasonable care and exercise expertise in the handling
of the
property and business of his or her employer. See Wallace v Rand
Daily Mail Ltd
1917 AD 472
at 482.
[26]
In Premier Medical & Industrial Equipment (Pty) Ltd v Winkler
1
it was held that once an employer - employee relationship is
established, there exists ex lege a fiduciary relationship between
the two parties. When rendering his or her services the employee must
ensure that his or her services are executed in good faith
and that
they in no way detract from the relationship of trust. Flowing from
the above, it goes without saying that secret commissions
received by
an employee in the course of his employment or by means of his
employment in breach of his fiduciary duty to the employer
are deemed
to have been received for his employer. See Games v Telecom Namibia
Ltd
2004 (3) SA 615
(SCA) paras 25 - 29.
[27]
The principle is that an employee cannot make a secret profit out of
anything which belongs to the employer which he possesses
merely in a
fiduciary capacity. Where he does this, the employer has a remedy
against the employee for such profit. It is not necessary
that loss
or harm or damage should be proved. This is even so though, but for
such activity, the employer would not himself made
or received the
profit in question. See Uni - Erection v Continental Engineering Co.
Ltd
2
where Nestadt J made a useful overview and exposition of the general
principles on this point.
[28]
It follows that the employer is entitled, in addition to cancelling
the employment contract, to claim damages which he or she
may have
suffered as a result of the conduct of the employee: See Atlas
Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd
3
.
In this regard, the employer's damages would be the difference
between his or her present position and the position he or she
would
have been in had the employee not committed the breach of contract:
See Victoria Falls & Tvl Power Co Ltd v Consolidated
Langlaagte
Mines
1915 AD 1
and Versfeld v SA Citrus Farms Ltd
1930 AD 452.
[29]
In Mukheiber v Raath
1999 (3) SA 1065
(SCA) para 31, the Supreme
Court of Appeal restated the test enunciated in Kruger v Coetzee4 in
light of subsequent developments
that:-
"For
the purposes of liability culpa arises if -
(a)
a reasonable person in the position of the defendant-
(i)
would have foreseen harm of the general kind actually occurred;
(ii)
would have foreseen the general kind of causal sequence by
which
that harm occurred;
(iii)
would have taken steps to guard against it, and
(b)
the defendant failed to take those steps."
Issue
for determination and discussion
[30]
From the above, it is then clear that the issue for determination is
whether Weinberg and Du Toit have breached their fiduciary
duties as
employees of the plaintiff, either intentionally or negligently. It
is common cause that the 62 vehicles went missing.
It is further
clear that those vehicles were under the direct control of Weinberg
and Du Toit as sales manager and salesman, respectively.
From the
evidence, it is clear that Du Toit operated a fraudulent scheme in
terms of which invoices were manipulated to give a
false impression
that all vehicles sold by him could be accounted for. He admitted to
have sold the plaintiff's vehicles and thereafter
deposited the
proceeds thereof into one of his three bank accounts, and later made
payments from those accounts to the plaintiff,
which proceeds he
failed to pay in full to the plaintiff. I therefore harbour no doubt
that Du Toit was behind the plaintiff's
losses and he is therefore
liable for the damages suffered by the plaintiff.
[31]
The position of Weinberg is not much different from that of Du Toit.
He has not offered any credible explanation for his role
in raising
invoices lower than the amounts paid into one of the bank accounts
operated by Du Toit. With regard to the 62 missing
vehicles, there is
direct evidence against him (Weinberg) by Smith, Myburgh and Zhang
that he was involved in the cash sales of
vehicles to them without
raising invoices on the plaintiff's system. This is the most direct
and damning evidence against Weinberg.
He did not seriously challenge
it. Much of his evidence was totally discredited and proved to be
false. For example his initial
total denial of the fact that invoices
were raised at the Midrand branch was proved not only to be wrong,
but intentionally misleading.
The other false assertion he made was
to the effect that there was a shortage of offer to purchase books.
This was proved false
by the extracts from the plaintiff's offer to
purchase book with serial numbers 0951 - 1000. Furthermore, his
allegation that Ms
Du Toit had provided him with manual invoice books
to be used after November 2001 was vehemently and emphatically
refuted by Ms.
Du Toit. Ms Du Toit could, in any event, not have done
that as she was not in control of any manual invoice books during the
relevant
period. With regard to the general deficiency, Weinberg
signed the bulk of the offers to purchase, and was therefore clearly
involved
in those transactions. It is inconceivable that Du Toit
could have operated the scheme without Weinberg's approval/ knowledge
or
participation. Either way, Weinberg was either complicity in the
scheme or he was clearly negligent in failing to timeously detect
Du
Toit's scheme.
[32]
There are other unsatisfactory aspects of Weinberg's evidence. For
example, he failed to explain his delay in invoicing; he
failed to
explain the incorrect and delayed allocation of deposits; he failed
to explain how vehicles had been transferred into
the names of third
parties long before invoices had been raised on the plaintiffs
system; he failed to explain how a vehicle sold
to a third party(CVR
578GP sold to Wonderboom Car & Truck) during 2003 still appeared
on a consignment note furnished by him
during late 2004. The very
manner in which Weinberg raised invoices belatedly and allocated
payments belatedly and to incorrect
invoices is strong indicator that
he was not only aware of the cash rolling scheme that was taking
place, but that he was an active
and willing participant. In the
light of all these, his evidence that the four payments received from
Du Toit were innocent and
for something else, is not probable.
Conclusion
[33]
Having regard to the totality of the evidence, I am satisfied that
the plaintiff has established its case against both Weinberg
and Du
Toit respectively, on a balance of probabilities. The amounts of the
plaintiff's quantum have been agreed upon.
Order
[34]
In the result I make the following order against the first and second
defendants, jointly and severally, in favour of the plaintiff,
the
one paying the other to be absolved:
1.
In claim "A", payment of the amount of R984 627.00;
2.
In claim "B", payment of the amount of R2 242 424.45;
3.
Interest on the above amounts calculated at the rate of 15.5% per
annum from 21 November 2007, being the date of service of summons,
to
date of final payment;
4.
Costs of the suit.
TM
MAKGOKA
JUDGE
OF THE HIGH COURT
DATES
OF HEARING : 15 APRIL 2010 - 20 APRIL 2010;
:
23 - 27 MAY 2011 & 15 JULY 2011
JUDGMENT
DELIVERED : 29 FEBRUARY 2012
FOR
THE PLAINTIFF : ADV E KROMHOUT
INSTRUCTED
BY : RIDGEWAY MERRY & WELDHAGEN
INC,
BEDFORDVIEW, AND EMMA NEL ATTORNEYS, PRETORIA
THE
DEFENDANTS IN PERSON
(No
appearance by the second Defendant as from 23 May 2011).
1
1971 3 SA 866
(w) 867-868
2
1981
(1) SA 240
(W) at 252 -253
3
1981 (2) SA 173
(T).