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[2012] ZAGPPHC 345
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Abou-Zeid v Cyberlisting Services (Pty) Ltd t/a Ifind and Another (21793/11) [2012] ZAGPPHC 345; (2013) 34 ILJ 2553 (GNP) (11 December 2012)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
[NORTH
GAUTENG HIGH COURT, PRETORIA]
CASE
NUMBER: 21793/11
DATE:12/12/2012
In
the matter between :
MAHMOUD
ABOU-ZEID
.............................................................................................
PLAINTIFF
and
CYBERLISTING
SERVICES (PTY) LTD t/a IFIND
…..............................................
FIRST
DEFENDANT
FANIE
VENTER
..........................................................................................................
SECOND
DEFENDANT
JUDGMENT
SJ
MARITZ AJ
DECEMBER
2012
[1]
The Plaintiff sues the Defendants for salaries in the total amount of
R600 000.00 in terms of an employment contract. A second
claim is for
payment of the amount of R1.5 million in damages emanating from a
joint venture agreement. The Plaintiffs claims are
pleaded as follows
in paragraphs 4, 5, 6 and 7 of the particulars of claim:
“
THE
AGREEMENT
4.
During
the period October 2007 to February 2008, at Johannesburg and/or
Pretoria, second defendant (“Venter”) acting
personally;
alternatively acting on behalf of the first defendant (“ifind”);
further alternatively acting for himself
and ifind, entered into an
oral agreement with plaintiff.
5.
The
oral agreement entailed:-
a.
a joint
venture with plaintiff, for plaintiff to establish an electronic
based directory advertising business; and
b.
the
employment of plaintiff as sales and marketing manager.
6.
The
express; alternatively implied; further alternatively tacit terms of
the joint venture and employment agreement, as aforesaid,
were as
follows:-
a.
plaintiff
would be employed to manage a sales department for a fixed term of 6
months, beginning on the first day of February 2008
and ending at the
end of June 2008;
b.
plaintiffs
employer would be either Venter or ifind, alternatively both Venter
and ifind;
c.
plaintiff
would be paid a salary of R600 000-00 for the 6 months period,
payable at the end of the 6 months (30 June 2008);
d.
at the
end of the 6 month period, that is at the end of June 2008, Venter
alternatively ifind further alternatively both Venter
and ifind would
pay to plaintiff an amount of R1 500 000-00;
e.
plaintiff
would use the R1 500 000-00 as establishment costs for the
establishment of an electronic based directory advertising
business;
f.
plaintiff
would hold 85% interest in the business;
g.
Venter
alternatively ifind would hold 15% interest in the business; further
alternatively Venter would hold 7.5% of the business
and ifind would
hold 7.5% of the business.
7. Plaintiff
complied with all of his obligations under both the
employment and
joint venture agreements."
[2]
In paragraphs 8, 9, 10 and 11 of the
particulars of claim it is pleaded that the Defendants failed to pay
the salary at the end
of June 2008, alternatively, that the
employment agreement was unlawfully terminated on 11 April 2008,
which entitled the Plaintiff
to damages in the sum of R600 000.00.
[3]
In respect of the joint venture
agreement it is then alleged that the amount of R1.5 million was due
and payable on 30 June 2008,
but that the Defendants breached their
duty of payment. In the alternative it is pleaded that the joint
venture agreement was unlawfully
terminated on 11 April 2008, which
entitles the Plaintiff to the amount of R1.5 million in damages.
[4]
The particulars of claim were
subsequently amended to read that the Plaintiff was to be paid R50
000.00 per month for the 6 month
period, and that the remainder in
the sum of R300 000.00 would be paid at the end of the 6 month
period.
[5]
In response to a request for particulars
for purposes of trial the Plaintiff furnished the following relevant
further particulars:
the purpose of the joint venture was to
establish an electronic based directory advertising services which
would be run through
a company, and all the parties would benefit
from the establishment thereof. The parties would also hold shares in
the company
in the proportions pleaded in the particulars of claim
(see paragraphs 6(f) and 6(g) quoted above). It was further alleged
that
the joint venture commenced on 1 February 2008 and that it would
terminate at the end of June 2008. To the question “Who was
to
manage the joint venture?” the Plaintiff replied as follows:
“All parties were entitled to their input; generally
however,
the plaintiff would manage the day-to-day affairs of the joint
venture.” In response to a question as to what the
Plaintiff
brought into the joint venture the response is that the Plaintiff
brought his knowledge of media sales and marketing
and his knowledge
of electronic media sales and marketing into the joint venture.
Further, as to the question what the Defendants
would bring in the
answer is capital, products and bundled products. In response to a
further question the Plaintiff pleaded that:
"... the plaintiff
manage(d) the day-to-day running of the joint venture with the second
defendant. ”
[6]
From the aforegoing it immediately
becomes apparent that there is a material flaw in the claims
presented by the Plaintiff. In essence
the joint venture pleaded by
the Plaintiff is a partnership (See Countertrade Establishment (Ptv)
Ltd v EBN Trading (Pty) Ltd
1995 (1) SA 762
(N) at 768B), which is
entirely inimical to the legal figure of employment. In law the
relationship between partners is governed
by the terms of the
partnership agreement and partners cannot serve one another in an
employer/employee relationship. The position
of the Plaintiff is made
clear in the pleadings, i.e. that the joint venture partnership
commenced on 1 February 2008 and was to
have terminated at the end of
June 2008; and that the Plaintiff was to manage the day-to-day
affairs of the joint venture partnership.
[7]
Whatever the basis for the payment of
the said amount of R600 000.00 may have been, it certainly could not
have been an employment
agreement. For this reason alone the
Plaintiff’s claim for payment of the sum of R600 000.00 in
salaries must fail. At the
commencement of the trial the Plaintiff
withdrew his claim for damages in the sum of R1.5 million.
[8]
As I understood the evidence, the First
Defendant marketed and sold products individually to customers.
Towards the end of 2007
the Plaintiff approached the First Defendant
through the Second Defendant with the proposition that products could
be bundled together
in differing proportions for sale to customers
according to their needs. As I further understand the evidence, this
was a novel
concept which found favour with the Defendants. The
entire concept was that a new business would be established to market
the bundled
products. A new marketing structure was therefore to be
established, headed by the Plaintiff, and sales representatives were
to
be recruited by the Plaintiff for that purpose.
[9]
The concept was in fact implemented
during February, March and the first part of April 2008. A dedicated
call centre was also established
for marketing purposes. What is also
clear from the evidence, is that the Plaintiff did not serve the
First Defendant in any of
its existing business enterprises, but that
he devoted all his efforts to the establishment of the new business
enterprise.
[10]
Media 24, a listed company, is the
controlling shareholder of the First Defendant. The First Defendant
did not have the funds to
launch the new business venture, and it was
dependant upon Media 24 for funding. It was therefore necessary to
obtain the approval
of Media 24 of the new business venture, as well
as its willingness to provide the necessary funding. A budget, drawn
by the Plaintiff
in conjunction with the Second Defendant, was duly
presented to Media 24, which approved the project and the funding.
What is glaringly
absent in the budget, is any provision for
remuneration of whatever description for the Plaintiff. The payment
of R600 000.00 over
a period of 6 months to the Plaintiff is
certainly not insignificant, and if it was in the offing, I find it
impossible to accept
that Media 24 would not have been informed
accordingly. If the contentions advanced by the Plaintiff were to be
correct, it would
mean that he and the First Defendant wilfully
misled Media 24 as to the cost of the project for no apparent
beneficial reason.
On the contrary, the failure to budget any form of
remuneration for the
Plaintiff
inexorably leads to the conclusion that no such remuneration was
agreed upon at any time.
[11]
The Defendants deny the existence of a
joint venture partnership, and pleads as follows in paragraph 2.2 of
their amended plea:
“
2.2
Without derogating from the aforesaid denial the Defendants plead
that:
2.2.1 The
Plaintiff and the First Defendant represented by the Second
Defendant, entered into an oral agreement during or about
November
2007 with the following terms:
a)
The
First Defendant would assist the Plaintiff into establishing an
independent business, which would be conducted through a company
(“the new business venture”);
b)
The
First Defendant would make available office space during the initial
phase (“the pilot phase”) to assist the Plaintiff
in
establishing the new business venture;
c)
The
First Defendant would also give backup such as making its facilities
and personnel available;
d)
The
First Defendant would in its discretion advance monies to the new
business venture against initial sales being done by the new
business
venture;
e)
The
First Defendant would do all the invoicing and receive all monies
from sales of any product sold by the new business venture.
2.3
The
Defendants therefore deny that any joint venture agreement
was
entered into;
2.4
The
Defendants therefore also deny that the Plaintiff was ever employed
by any of the Defendants;”.
[12]
In my view it is immaterial whether a
joint venture partnership was established, or whether the First
Defendant assisted the Plaintiff
in establishing a new business
venture, and I do not have to decide the issue. However, what is
clear, is that in both concepts
the concept of employment is a legal
impossibility.
[13]
It remains to explain the significance
of the date 11 April 2008. It is common cause that during February
and March 2008 the Plaintiff
recruited sales representatives of an
entity known as Easy-lnfo. At the time there was a non-solicitation
agreement between Media
24 and Easy-lnfo. In the view of Media 24
such agreement was being breached, and on 11 April 2008 Media 24
instructed the First
Defendant to sever its ties with the Plaintiff,
which instruction was unceremoniously complied with. This brought an
end to the
joint venture partnership alleged by the Plaintiff, or the
new business venture alleged by the First Defendant, the difference
being immaterial. In the ensuing months the Defendants attempted to
assist the Plaintiff in preserving the initial concept of bundled
sales in a re-seller agreement, which failed. Given the state of the
pleadings and the abandonment of the claim for payment of
R1.5
million, I find it unnecessary to discuss these events or to decide
any issue emanating therefrom.
[14]
The final consideration is a letter
dated 18 June 2008 by the Plaintiff’s attorneys of record to
Hofmeyr Herbstein & Gihwala
Inc. Although the letter was never
sent, the factual contents thereof could only have emanated from the
Plaintiff. The relevant
portion thereof reads as follows:
“
For
the purposes of clarity, I am setting out hereunder the facts on
which my client engaged with your client and the resultant
consequences.
Your
client
was
aware that my client
was
previously employed by Interface Media. My client's contract with
Interface Media was subject to a 6 (six) month restraint and
after
this period had expired my client approached Mr. Fanie Venter, the MD
of IFind, which was an SMS directory service, to join
them. My client
at this stage was advised that IFind is 85% owned by Media 24 and the
remaining 15% by Cyber listings of which
Fanie Venter is the owner.
My client reached an agreement with Fanie Venter regarding the
following.
1.
The
products sold would be the IFind SMS directory, the IFind online
directory, My Week Lifestyle Magazine, 24.com search, latitude
email
branding, website development and ewheels gps point of interest.
2.
The
costing of the products that were agreed on was that each of the
products would be at a cost price and a markup would be added
to it.
3.
Fanie
Venter in his capacity as shareholder of another company called Media
in Africa, suggested that a new company called Media
in Africa
Communications be registered, and that my client would be the major
shareholder and would be the MD of this company and
that Fanie Venter
would be a minority shareholder and a director of same.
4.
My
client drew up the financial projections for the year and this was
presented to Media 24. Media 24 agreed to finance the project
as a
pilot project for 6 (six) months and if so proved, to grow on a
larger scale.
5.
It was
agreed that all billing would be passed through IFind.
6.
The
project commenced and all administration and delivery to clients
occurred through IFind. My client’s main objective
was to
get the sales going and IFind would take care of the rest.
7.
It
was
agreed that my client would be remunerated at the rate of R100 000-00
(One Hundred Thousand Rand) per month and that my client
would only
receive R50 000-00 per month in the initial stage and that once the
project had taken off and all parties were comfortable
with the
numbers then the shortfall would be paid to my client.
8.
To date
my client has not received any money from IFind or any other entity.
My client has requested on several occasions to finalise
the
Agreement so that he could be paid. My client is
aware that the
sales for the month of April far exceeded the expectations and was
expecting to be paid.
9.
It
was
agreed further between the parties on putting together 2 (two) teams,
an outbound sales team and a call centre operation. The
outbound
sales teams would sell packages to clients face to face and the call
centre would sell the remaining products.
10.
It was
agreed further that the staff were to be hired to assist my client
and he was charged with attending to this.
11.
The
call centre was running from One Cali Solutions, a call centre
situated in Midrand whilst the outbound representatives were
running
from IFind’s office in Pretoria.
12.
At
the time all of the above had been finalized. My client had been out
of work for 6 (six) months and
was
eager to start. The agreement, although reached, was not yet reduced
to writing.
”
[15]
It is glaringly obvious that no reliance
was placed on any agreement of employment. As a matter of fact it
would appear from paragraphs
7 and 8 that the so-called
“remuneration” was entirely dependant on the success of
the venture and the sales realised.
This may have formed part of the
joint venture partnership alleged by the Plaintiff, but the letter
itself lacks any allegation
to substantiate a separate employment
agreement.
[16]
The bulk of the Plaintiff’s
evidence in chief was directed at the applicability of Section 83A of
the Basic Conditions of
Employment Act, Act No 75 of 1997, which
reads as follows:
“
83A.
(1) A person who works for or, renders services to, any other person
is presumed, until the contrary is proved, to be an employee,
regardless of the form of the contract, if any one or more of the
following factors is present:
(a)
The
manner in which the person works is subject to the control or
direction of another person;
(b)
the
person’s hours of work are subject to the control or direction
of another person;
(c)
in the
case of a person who works for an organisation, the person is a part
of that organisation;
(d)
the
person has worked for that other person for an average of at least 40
hours per month over the last three months;
(e)
The
person is economically dependent on the other person for whom that
person works or renders services;
(f)
the
person is provided with tools of trade or work equipment by
the other
person; or
(g)
the
person only works for or renders services to one person.
”
[17]
Reliance was placed on features such as
providing the Plaintiff with office accommodation, providing him with
a computer, an iFind
e-mail address and iFind business cards, paying
the salaries of the sales representatives for the marketing of the
First Defendant’s
bundled products, at least three of whom were
in fact employed by the First Defendant, that the Plaintiff worked
regular office
hours, and that the Plaintiff was required to report
his activities to the Defendants.
[18]
In my view
these considerations apply equally to the joint venture partnership,
which commenced on 1 February 2008, the day to day
affairs of which
were managed by the Plaintiff. Indeed, the managerial skills and
expertise of the Plaintiff is exactly that which
he brought into the
partnership, and it was his function to manage and promote the sales
concept which he brought to the table.
What the First Defendant
brought into the partnership was to provide the infrastructure and
funding of the new business enterprise,
at least in the initial 6
month period. It is therefore evident that all the features relied
upon by the Plaintiff apply equally
to the joint venture partnership.
In my view it matters not whether all these features apply to the
joint venture partnership relied
upon by the Plaintiff, or the new
business venture relied upon by the Defendants. Accordingly I find
that the Plaintiff’s
reliance upon the provisions of Section
83A of the Basic Conditions of Employment Act is misplaced.
[19]
Consequently, I find that the Plaintiff
has failed to prove his claim.
[20]
Should I be wrong in my findings above,
f deal briefly with the evidence of the respective parties. The
Second Defendant testified
on behalf of himself and the First
Defendant. Although there could be minor criticisms, on the whole I
found him to be a satisfactory
witness. As to the Plaintiff, he found
himself in a dilemma because of the state of the pleadings. He was
therefore constrained
to rely on the factors which would establish
the presumption provided for in Section 83A of the Basic Conditions
of Employment
Act. At the very best for the Plaintiff the evidence is
evenly balanced, and I hold that in this respect the Plaintiff has
also
failed to discharge the onus of proving his claim.
[21]
In the result I find that the
Plaintiff’s claim must fail, and I make the order that the
Plaintiff’s claim is dismissed
with costs.
SJ
MARITZ AJ
6
DECEMBER 2012