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South Africa: Kwazulu-Natal High Court, Pietermaritzburg
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2012
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[2012] ZAKZPHC 18
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Union Shipping CC v EIS Engineering and Industrial Supplies CC and Another (AR 610/11) [2012] ZAKZPHC 18 (29 March 2012)
In
the KwaZulu-Natal High Court, Pietermaritzburg
Republic
of South Africa
Case
No : AR 610/11
In
the matter between :
Union
Shipping CC
….......................................................................................
Appellant
and
EIS
Engineering and Industrial Supplies CC
…....................................
First
Respondent
Constantinos
Dranias
….................................................................
Second
Respondent
Judgment
Lopes J
[1] The first respondent in this
appeal was the plaintiff in the court a quo and the present appellant
was the first defendant.
The second respondent was the second
defendant. I shall refer to the parties as they were referred to in
the court a quo.
[2] The plaintiff sued the first
defendant for payment of the sum of R36 000 allegedly due, owing and
payable to the plaintiff when
it gave the first defendant a cheque
for that sum expecting to obtain services in return. As the services
were never forthcoming,
the plaintiff sued the first defendant for a
declaratory order confirming the cancellation of the agreement and an
order for return
of the R36 000,00.
[3] The second defendant was joined
later in the proceedings. He was joined because the plaintiff alleged
that he had acted as the
agent of the second defendant. As the first
defendant denied his authority, he was joined in the action.
[4] In her judgment the learned
magistrate found that the second defendant had indeed acted on behalf
of the first defendant in
concluding the alleged agreement and that
the plaintiff was entitled to be repaid the sum of R36 000. The
learned magistrate then
gave the following order :-
‘
Judgment for the plaintiff as
claimed in the amended Particulars of Claim together with interest
thereon as claimed. Cost of suit
are awarded to the plaintiff. Such
costs to include costs of preparation for trial and all reserved
costs.’
[5] Unfortunately the order is not a
model of clarity because the amended particulars of claim seek the
following relief :-
‘
WHEREFORE
the Plaintiff prays for judgment against the First Defendant
alternatively
the Second Defendant
alternatively
the First and Second Defendants jointly and severally, the one paying
the other to be absolved for :-
an order confirming cancellation of
the agreements (sic);
Payment of the sum of R36 000;
Interest on the said sum at the rate
of 15,5% per annum calculated from the 7
th
June 2006 to
date of final payment; and
Costs of suit on a party and party
scale;
…
.’
[6] Only the first defendant appeals
against the judgment of the learned magistrate. Both sets of
attorneys accept that the judgment
was against both defendants. I
accordingly do not deal with the judgment against the second
defendant.
[7] The first defendant denies having
concluded any contract with the plaintiff and avers that the second
defendant had no authority
to act as its agent in concluding any
agreement with the plaintiff.
[8] As a determination of the
authority issue is determinative of the action against the first
defendant, I deal with it firstly.
In her judgment, the learned
magistrate, in dealing with the question of agency, stated :-
‘
I agree with Mr
Prior
’s
submission that there is indeed a strong inference and probability
that the second defendant was provided with a vehicle
for his
exclusive use whilst he was contracted to the first defendant in
providing security services. He was therefore in a position
to
represent the first defendant.’
[9] In my view this finding by the
magistrate is a misdirection. In assessing the evidence in the
record, the following extracts
are relevant :-
(a) in a request for further
particulars dated the 31
st
October 2006, the first
defendant asked the plaintiff :-
‘
1.1 On what basis does the
Plaintiff allege that the Plaintiff (sic) was represented by Costa
Drainias (sic)?’
That request obviously intended to
enquire on what basis the plaintiff alleged that the first defendant
was represented by Dranias
(who was later joined as the second
defendant).
(b) The plaintiff replied in further
particulars dated the 14
th
March 2007 :-
‘
At all material times Costa
Drainas (sic) represented to the Plaintiff that he acted for and on
behalf of the Defendant’.
(c) In the plaintiff’s request
for further particulars dated the 16
th
March 2011 the
defendants were requested to state :-
‘
(a) On what basis in law or
fact did the Defendant’s (sic) rely to support their assertion
that despite the Wesbank account
being in the name of the First
Defendant, that the Second Defendant was liable for the Hire Purchase
Agreement?
(b)The Defendants are requested to
stipulate what the relationship between the Defendants were
inter
se
?’
(d) In reply the defendants stated :-
‘
(a) The Agreement between the
First and Second Defendant was that the First Defendant would
purchase a vehicle for the exclusive
use of the Second Defendant
whilst the Second Defendant was contracted to the First Defendant.
The Second Defendant exercised his
option to purchase the vehicle
once his contract with the First Defendant expired.
The Second Defendant was contracted
to the First Defendant to provide Security Consulting Services.’
(e) In the plaintiff’s
replication it states at paragraph 3 :-
‘
In the event that the
Honourable Court finds that Dranias was not so authorized the
Plaintiff replies that the Defendant is estopped
from denying
Dranias’ authority due to the fact that :-
The factual position is evidenced by
the Wesbank contract;
At all material times Dranias
represented to the Plaintiff that he was duly authorized to act for
and on behalf of the Defendant;
Dranias has represented the Defendant
in other business transactions requiring transport to be provided to
the latter by the Defendant;
The Wesbank account into which the
R30 000 was deposited is in the name of the Defendant;
That the Plaintiff relying on the
correctness of those representations was induced to enter into the
agreement with Dranias to
its detriment ostensibly as the agent of
the Defendant.’
[10] The above extracts set out the
basis upon which the plaintiff intended to establish its case. Only
one witness was led of behalf
of the plaintiff, Mr H J da Silva who,
in relation to the question of agency, or the ability of the second
defendant to represent
the first defendant, stated in
cross-examination :-
‘
Did you ever have any document
issued by Union Shipping stating that he was an agent or a
representative of Union Shipping ? ---
No.
Have you ever discussed it with any
other representatives of Union Shipping to say that the second
defendant was in fact the owner
of Union Shipping? --- No.
In fact the only thing you have to say
that he has any connection to Union Shipping is what you say is his
own version? --- That
is correct.
…
The evidence of the defendants will be
Mr da Silva, that Mr Dranias the second defendant was not an agent or
an employee or a representative
or a member or director of any entity
trading under the name of Union Shipping. You can’t deny that
can you? --- Well, can
I answer why, basically speaking I knew his
cousin very well and I trusted him and I had met and I trusted him as
well. And I had
no reason to not believe that he in fact did own
Union Shipping which he told me. If I hadn’t known him from a
bar of soap
I would have in fact done further investigation. So I did
believe that he was in fact the owner of Union Shipping as he had
told
me.
…
But if I were to tell you now that the
evidence of the first defendant, that is Union Shipping will be to
the effect that he was
not an employee, agent or a representative or
a member or director of any entity trading as Union Shipping, you
can’t deny
that can you? --- No, I can’t deny that.’
[11] Thus, on the evidence of the
plaintiff’s only witness, it accepted that the second defendant
was not an agent of the
first defendant, nor was he entitled to
represent the first defendant.
[12] The second defendant’s
evidence makes it clear that he had no authority to represent the
first defendant and that is
confirmed by Paul Kotras who was a
director of the first defendant at the time. It emerges from the
evidence of the defendants’
witnesses that the relationship
between the first defendant and the second defendant was that Kotras
and Dranias had known each
other for a long time. Dranias wished to
purchase a motor vehicle, and as a favour to him Kotras concluded an
instalment sale agreement
with Wesbank in the name of the first
defendant to enable the second defendant to get the contractual
benefits which would inure
to the first defendant because of its
position as a creditworthy company. Kotras did not view this as being
potentially prejudicial
to the first defendant because he trusted
Dranias and because Dranias had put down approximately 70% of the
cost of the motor vehicle
when it was purchased. It was agreed
between Kotras and Dranias would continue to maintain and pay off the
motor vehicle account.
[13] The learned magistrate has
assumed from the further particulars provided by the plaintiff that
the second defendant was employed
by the first defendant. The learned
magistrate, however, then makes the quantum leap from that fact to
find that the second defendant
was entitled to represent the first
defendant in the agreement claimed by the plaintiff. That is a
non-sequitur because it does
not follow from the fact that the second
defendant may have at some stage been employed by the first
defendant, that he had the
authority to represent the first defendant
in contractual dealings. No evidence was led by the plaintiff to
substantiate the allegation
in its replication that the second
defendant had represented the first defendant in other business
transactions requiring transport
to be provided by the first
defendant. Indeed, it is the clear evidence of Mr da Silva that the
only source of his belief that
the second defendant was authorized to
represent the first defendant came from statements made by the second
defendant himself.
Any representation could have been made by Dranias
to entice the plaintiff to pay the cheque into the account of the
first defendant
but it would not, without authority, bind the first
defendant.
[14] Mr
McIntosh
who appeared
for the plaintiff, submitted that by allowing the second defendant to
operate the Wesbank account in the name of the
first defendant, the
first defendant made a representation to the public at large. But the
evidence does not substantiate this
– it was an account dealing
only with the repayment of the instalments owed on the motor vehicle
to Wesbank, in the first
instance, by the first defendant, but
ultimately by and for the benefit of the second defendant.
[15] With regard to the estoppel
alleged in the plaintiff’s replication there is no evidence
produced of any representation
made by the first defendant. Insofar
as the postulated employment of the second defendant by the first
defendant at some stage
(which was not proved on the evidence),
Schutz JA said in
NBS Bank Ltd v Cape Produce Co (Pty) Ltd and
others
2002(1) SA 396 (SCA) at paragraph 28 :-
‘…
Where an estoppel is
sought to be derived from the appointment of an agent to a particular
position, the principal is considered
to represent no more than that
the agent has the authority
usually
associated with this position … The extent of such authority
has to be proved by evidence or established by custom …’
[16] With regard to any representation
by the first defendant arising from the second defendant’s
employment with it, there
are no allegations in the pleadings nor any
statements in the evidence which set out the time period during which
the second defendant
was employed by the first defendant or that it
coincides with the period when the plaintiff allegedly concluded a
contract with
the second defendant acting on behalf of the first
defendant.
[17] In all the circumstances there
was no valid basis for the learned magistrate to have found that the
second defendant acted
as the agent of the first defendant in
concluding the contract with the plaintiff. In those circumstances
the plaintiff’s
action against the first defendant could not
succeed..
[18] The only other cause of action
alleged by the plaintiff against the first respondent was based on
unjust enrichment. The learned
magistrate correctly found that that
alternative claim had to fail because there is no law of general
enrichment, and the plaintiff
was obliged to plead the unjust
enrichment category into which its claim against the first defendant
fell. This it did not do.
See :
Nortje en ‘n
andere v Pool NO
1966(3) SA 96 (A) at 140 A – B.
[19] In an enrichment case the
plaintiff bears the onus in respect of every element of the cause of
action relied upon.
See
Senwes Ltd and others v
Jan van Heerden & Sons CC and others
[2007] 3 All SA 24
(SCA)
[20] Even were it to be arguable that
enrichment in the circumstances alleged by the plaintiff could
properly be considered under
the heading of a general enrichment
action (see
Komissaris van Binnelande Inkomste v Willers
1994(3) SA 283 (A) and
McCarthy Retail Ltd v Shortdistance
Carriers CC
2001(3) SA 482 (SCA) paras 8 – 10) what the
plaintiff has not established is that the first defendant was
enriched as a result
of the conduct of the second defendant. Mr
McIntosh
submitted that because the first defendant owed a
debt to Wesbank, Paying off that indebtedness enriched the first
defendant. But
that is to ignore the involvement of the second
defendant. The evidence is clear that the ultimate liability for the
debts owing
to Wesbank were those of the second defendant and not the
first defendant. This was not disputed by the plaintiff and in the
circumstances
of the transaction alleged by the plaintiff, the second
defendant was the person who was enriched and not the first
defendant.
Once Wesbank was paid, the second defendant’s
obligations to the first defendant were extinguished, and the second
defendant
obtained the motor vehicle free of encumbrance. No benefits
accrued to the first defendant.
[21] That accordingly disposes of the
action against the first defendant. I would accordingly make the
following order :-
the appeal succeeds;
the order of the court a quo is
amended to read :-
‘
With regard to the first
defendant, it is absolved from the instance with costs.’
(c) the first respondent is to pay the
appellant’s costs of the appeal.
Swain
J : I agree.
Date
of hearing : 26
th
March 2012
Date
of judgment : 29
th
March 2012
Counsel
for the Appellant : M Stewart (instructed by S R Maharaj Attorneys)
Counsel
for the Respondent : K C McIntosh (instructed by Prior & Prior)