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[2011] ZAKZDHC 38
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Speedy Repro & Design v Khanyile and Others (8262/06) [2011] ZAKZDHC 38 (5 May 2011)
1
IN THE KWAZULU NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO. 8262/06
In the matter between:
SPEEDY REPRO & DESIGN
….............................................................................
PLAINTIFF
and
MSIZA LINCON KHANYILE
…...............................................................
FIRST
DEFENDANT
JACKSON HADEBE
…......................................................................
SECOND
DEFENDANT
ZANELE GLADNESS BUTHELEZI
…....................................................
THIRD
DEFENDANT
JUDGMENT
MURUGASEN,
J.
Introduction
[1] This is an action for the payment
of the balance of the contract price for the production of textbooks
by the plaintiff for
the defendants.
[2] The Plaintiff, Speedy Repro and
Design CC, has instituted the action against the defendants, Lincoln
Khanyile, Jackson Hadebe,
and Zanele Gladness Buthelezi alleging that
they are in breach of an oral agreement entered into by the parties
in December 2003,
in terms of which the plaintiff undertook to
produce various textbooks for the defendants who traded under the
name and style of
OBE Publishers at a contract price of R708 085.37,
which included the design, layout and printing of the books.
[3] The Plaintiff alleges that it
complied with its obligations in terms of the contract as the
textbooks were produced and delivered
to the defendants by 13 January
2004, but the Defendants had not paid the balance of the contract
price in the sum of R553 085.37
within thirty (30) days of the
date of the consolidated statement dated 31 January 2004 and were
therefore jointly and severally
liable for the payment thereof.
[4] The defendants deny personal
liability, alleging that a partly oral, partly written agreement had
been concluded in December
2003 between the Plaintiff and DBE
Publishers CC (Reg No. CK 2003/061257/23). The contract price for the
printing, binding and
delivery of the books was R213 080,
payment of which was due upon DBE Publishers CC receiving payment for
the textbooks from
the Department of Education. As DBE Publishers CC
had already paid R155 000, the balance owing was R58 080.
Summary of Facts
[5] While the principal business of
the plaintiff was layout and design, it also accepted contracts which
included printing but
outsourced the printing.
[6] The sole member of the plaintiff
was Ramesh Narungdas (‘Ramesh’) until he passed away on
25 May 2008. Thereafter
his wife Kalawathi Narungdas (‘Narungdas’)
represented the plaintiff initially in her capacity as the executrix
of
his estate and subsequently as the sole member of the plaintiff.
Narungdas was also employed by the plaintiff as an accounts clerk
cum
manageress from 1 July 1998 to 30 April 2008.
[7] Prior to July 2003 the three
defendants traded under the name OBE Publishers. On 23 July 2003, DBE
Publishers CC ( Reg No. CK
2003/061257/23) was registered with the
Registrar of Close Corporations. The three defendants were the
members of the close corporation
on date of registration, but
Khanyile resigned as a member on 29 March 2004.
[8] Prior to December 2003 the
plaintiff had undertaken other work for the defendants in the name of
OBE Publishers. The parties
had also previously shared premises.
[9] Preliminary work in respect of the
Outcomes Based Education textbooks began early in 2003 when the
defendants supplied the plaintiff
with certain manuscripts which had
to be designed and laid out as sample or draft textbooks.
[10] By July 2003, the plaintiff
produced the sample books and promotional pamphlets published by OBE
Publishers for the defendants.
Thereafter once the defendants
obtained approval from the Department of Education, they marketed the
sample books at over 2000
schools in KwaZulu-Natal between July and
August 2003. The defendants obtained a final order for the books in
December 2003.
[11] It is common cause that in
December 2003 the plaintiff, represented by Narungdas and the three
defendants entered into an agreement
in terms of which the plaintiff
undertook to perform certain work in connection with the production
Outcomes Based Education textbooks
and to have the books printed. The
books reflected the name of the publisher as OBE Publishers.
[12] The plaintiff subcontracted the
printing of the books to Universal Printers at a cost of R238 750.20
and paid for the
printing when the defendants defaulted with payment.
[13] It is also common cause that the
plaintiff produced and delivered to the defendants the books as
described and in the quantities
listed in Annexure A to the summons
together with tax invoices on 9 January 2004. The plaintiff
thereafter submitted a consolidated
tax invoice dated 31 January 2004
for the production of the books to the defendants in the sum of
R708 085.37.
[14] The defendants made three cheque
payments to the plaintiff in the total sum of R155 000. One
payment was effected by way
of a cheque dated 9 September 2004 in the
sum of R5 000 drawn on DBE Publishers CC.
Plaintiff’s case
[15] The plaintiff’s version is
that the defendants had contracted with it in their personal
capacities, as they operated
as a partnership and published under the
name of OBE Publishers. The plaintiff had done work for the
defendants trading as OBE
Publishers prior to December 2003. The
defendants had not informed the plaintiff that they had registered a
close corporation or
that the contract concluded in December 2003 was
not between the plaintiff and the defendants but between the
plaintiff and DBE
Publishers CC.
[16] Sample books had been produced by
July 2003 to enable the defendants to market their publications. But
negotiations in respect
of the contract concluded in December 2003
between the plaintiff and the 3 defendants commenced in October 2003,
when the plaintiff
obtained a quote for the price for printing the
books from Universal Printers, to whom they would subcontract the
printing of the
workbooks. However the defendants only supplied the
final specifications in respect of the type and quantity of the books
required
on or about 18 December 2003 and the contract between the
parties was concluded on 21 December 2003, for the design, layout and
printing of the books as specified in Annexure A.
[17] The plaintiff thereafter
commenced production of the books as per the defendants’
specifications and the work was completed
in January 2004. The
invoices for the books were issued in January 2004 on completion of
the production of the books and delivered
with the books to the
defendants. The plaintiff then prepared a consolidated invoice which
was uplifted by the defendants. Despite
numerous requests to the
defendants in person and per telephone by Ramesh and Narungdas, the
defendants failed to effect full payment
of the sum due to the
plaintiff. When the defendants were approached for payment, they had
not at any time denied personal liability
nor had they disputed the
sum the plaintiff had invoiced OBE Publishers for, until the action
was instituted.
[18] Narungdas, Rajen Devipersadh, the
production manager of the plaintiff and Natasha Narungdas, the
daughter of Narungdas and
her late husband testified on behalf of the
plaintiff.
The defence
[19] The defendants have alleged that
a partly oral, partly written agreement was concluded on or about
December 2003 between the
plaintiff represented by Ramesh and the
close corporation, DBE Publishers CC, represented by the defendants,
and not the defendants
in their personal capacity.
[20] The contract with the plaintiff
was only for the printing, binding and delivery of the books as the
lay out and design had
already been paid for. At an agreed cost of
R20.40 per book in accordance with the plaintiff’s quotation
dated 9 April 2003,
the contract price was R213 080, payment of
which was due only upon DBE Publishers CC being paid for the
textbooks by the
Department of Education. As DBE Publishers CC had
already paid R155 000 by way of three cheques the balance owing
was R58 080.
No receipts were issued for the payments.
Only Buthelezi testified on behalf of
the defendants.
The Issues
[21] The Issues that lay for
determination were whether the plaintiff had discharged its onus to
prove on a balance of probabilities
that :
1 the plaintiff had contracted with
the three (3) Defendants in their personal capacities and not with
DBE Publishers CC t/a OBE
Publishers;
2 the contract price was R708 085.37;
and that
3 the contract price was due and
payable thirty (30) days from the date of the consolidated invoice
dated 31 January 2004.
ARGUMENT
[22] On behalf of the plaintiff Mr
Khan submitted that as the plaintiff had alleged that R553 085
was owing and the defendants
alleged that they had effected payment
for repro and design, the onus was on the defendants to prove
payment. As the defendants
had failed to furnish such proof, there
was only the evidence of the plaintiff in respect of the contract
price.
On the other hand the evidence of
Narungdas was corroborated in material respects by Devipersadh and to
an extent by Natasha Narungdas.
Only Buthelezi testified on behalf of
the defendants; her evidence was unsatisfactory as she had been
unable to confirm the total
contract price for the layout and design
or the amount that was paid and compromised by the contradictions
therein. Other material
witnesses, Khanyile and Hadebe did not
testify although they had a case to answer and it was apparent that
they were avoiding crossexamination.
He concluded that although the
plaintiff had made out a prima facie case, the defendants had failed
to furnish an explanation or
answer thereto and an adverse inference
therefore lay to be drawn.
[23] In response, Mr Mdladla contended
on behalf of the defendants, that there was a dispute as to whether
there was only one contract
or two separate contracts for layout and
design and printing. The printing was not done by the plaintiff as
reflected on the covers
of the books although in terms of the
contract between the parties, the plaintiff was to print the books.
As a result of the subcontract
the cost of printing was high.
Most of the evidence adduced by the
Plaintiff was hearsay. There was no direct evidence from the
plaintiff that DBE Publishers CC
was not a party to the contract.
Therefore the wrong parties were being sued.
[24] Mr Mdladla submitted further that
Narungdas had conceded that she was not present when the contract was
concluded; she therefore
had no direct involvement in the contract
and her credibility and reliability of her evidence was eroded. She
had also conceded
that the repro and design had been paid for.
There was no corroboration by direct
evidence for the allegations relied on by the plaintiff.
In support of the defendants’
contention that the plaintiff had contracted with DBE Publishers CC,
the plaintiff had accepted
cheques drawn by DBE Publishers CC and
Ramesh Narungdas had known that the contract was with the close
corporation.
In conclusion he submitted that it did
not make financial sense for the defendant to contract at the price
claimed by the plaintiff,
considering the discount allowed to the
government even with the discount offered by the plaintiff.
Evaluation of the credibility of
the witnesses
[25] As the parties relied on two
irreconcilable versions, the following excerpt from the judgment of
Nienaber JA in
Stellenbosch Farmers’ Winery Group Ltd and
Another v Martell Et Cie and Others
2003 (1) SA 11
(SCA)
is
particularly apposite :
“
On the
central issue, as to what the parties actually decided, there are two
irreconcilable versions. So, too, on a number of peripheral
areas of
dispute which may have a bearing on the probabilities. The technique
generally employed by courts in resolving factual
disputes where
there are two irreconcilable versions before it may be summarised as
follows. To come to a conclusion on the disputed
issues the court
must make findings on
(a)
the
credibility of the various factual witnesses,
(b)
their
reliability, and
(c)
the
probabilities. As to
(a)
,
the court's finding on the credibility of a particular witness will
depend on its impression of the veracity of the witness. That
in turn
will depend on a variety of subsidiary factors such as (i) the
witness' candour and demeanour in witness-box, (ii) his
bias, latent
and blatant, (iii) internal contradictions in his evidence, (iv)
external contradictions with what was pleaded or
put on his behalf,
or with established fact or with his own extracurial statements or
actions, (v) the probability or improbability
of particular aspects
of his version, and (vi) the calibre and cogency of his performance
compared to that of other
witnesses
testifying about same incident or events. As to
(b)
,
a witness' reliability will depend, apart from the factors mentioned
under
(a)
(ii),
(iv) and (v), on (i) the opportunities he had to experience and
observe the event in question and (ii) the quality, integrity
and
independence of his recall thereof. As to
(c)
,
this necessitates an analysis and evaluation of the probability or
improbability of each party's version on each of the disputed
issues.
In the light of its assessment of
(a)
,
(b)
and
(c)
the court will then, as a final step,
determine whether the party burdened with the
onus
of proof
has succeeded in discharging it. The hard case occurs when a court's
credibility findings compel it in one direction and
its evaluation of
the general probabilities in another. The more convincing the former,
the less convincing will be the latter.
But when all factors are
equipoised, probabilities prevail.” (Paragraph [5] at
H
14I - 15E.)
It is accordingly appropriate to
evaluate the credibility of the witnesses before proceeding with an
evaluation of their evidence
and a determination of the issues.
Kalawathie Narungdas
:
[26] Narungdas was not a confident
witness; she was obviously nervous and at times became distressed
while testifying. Her nervousness
increased under crossexamination.
Although at times she became confused when faced with the
documentation and contradicted her
evidence in chief, she testified
more coherently under re-examination, explaining some of the
contradictions, thereby enhancing
her credibility.
[27] It was apparent from her evidence
that the business of the plaintiff had been under the control of
Ramesh and that Narungdas
herself was not familiar with all aspects
of the production side of the business, which was evident when she
experienced some difficulty
in responding to crossexamination on the
printing costs.
[28] But under re-examination
Narungdas testified without hesitation that although the printing was
outsourced, a great deal of
work had to be done by the plaintiff, for
which the plaintiff levied an additional charge to the cost of the
printing. Her evidence
to this effect was supported by Devipersad.
[29] However while she initially
testified that she was present when the contract was concluded
between the parties, it was apparent
from her testimony that she was
not present on 21 December 2003 when the contract was concluded by
Ramesh and the defendants, which
she conceded.
[30] Nevertheless her evidence that
the contract price agreed on by the parties was per the consolidated
quotation which was uplifted
from her and the invoices submitted to
OBE Publishers, the manner in which she had pursued the defendants
for payment, and that
they did not query either the contract price or
the balance owing had the ring of truth to it as despite her
nervousness and the
prolonged crossexamination, she remained
consistent in her testimony.
[31] Although she was initially
confused when asked by Mr Mdladla which document the plaintiff relied
on, she pointed out Exhibit
B13/14 as the documents which embodied
the contract as it reflected the work done by the plaintiff. Although
the plaintiff relied
on Annexure A to the summons, Narungdas was
correct as Exhibit B13/14 also lists all the details of the books
produced by the plaintiff
as listed on annexure A, except for the
prices. Her failure to find Annexure A in the bundles of documents
before her does not
therefore detract from her credibility.
[32] Narungdas responded very
confidently when she was faced with the document alleged by the
defendants to be the written portion
of the contract between the
parties. She declared the document contained quotations for the
printing of samples provided at the
request of Khanyile, referring
knowledgeably to the weight of the paper, the option of the colour of
the print and the number of
pages of the samples as compared with the
books produced at the end of the year.
[33] While Narungdas agreed under
crossexamination that the contract was concluded between the
plaintiff represented by Ramesh and
OBE Publishers, that she and
Ramesh communicated with the three defendants as OBE Publishers and
that payment was being pursued
against OBE Publishers and not the
individuals of the company, under re-examination she clarified that
OBE Publishers was in effect
the three defendants. This is in any
event evident as the action has been instituted against the three
defendants and not OBE Publishers.
Rajen Devipersadh
[34] Devipersadh was a clear, coherent
and credible witness. He testified in a frank manner without
hesitation and was obviously
fully involved in the operation of the
plaintiff’s business, and was particularly knowledgeable about
the production of the
textbooks for the defendants. He was confident
about when, how and what textbooks were produced for the defendants,
as well as
how the contract price reflected on the invoice (exhibit
B12) was computed. His evidence remained uncontroverted under
crossexamination.
[35] However his evidence that the
invoice was uplifted before the repro and design was commenced is
incongruent with the details
contained therein which presupposes that
the production was complete when the invoice was finalised.
Natasha Narungdas
[36] While the evidential value of her
testimony was limited because she only assisted the plaintiff on a
casual basis, Natasha
testified in a frank and coherent manner and
her evidence was not undermined in crossexamination. There was no
reason to doubt
her honesty although her outburst during the course
of her testimony indicated that she was deeply upset about her
father’s
death and believed that the financial stress caused by
the failure of the defendants to pay adversely affected her father’s
health.
Zanele Gladness Buthelezi
[37] Buthelezi, who is an educator
with a Masters Degree and 20 years experience at the time of the
trial, fared very poorly as
a witness. She contradicted herself
frequently, one example being her initial allegation that the
defendants had not received payment
from the Department of Education
and had made a loss on the contract; but under crossexamination she
admitted that only a small
sum of the payment due by the Department
of Education was still outstanding.
[38] Her credibility was further
undermined when she was unable to furnish details in support of her
allegations. She alleged that
there were two contracts between the
parties but was unable to provide any details of the first agreement,
particularly the cost
for the work and the payments therefor.
Although she claimed that the three defendants had each contributed
to the payments made
to the plaintiff and that some payments were
made in her presence, she had no idea how much her contribution to
the payments had
been, and was unable to compute her one third share,
alleging that payments had been in ‘bits and pieces’. Yet
she
is a businesswoman and she confirmed that the intention of the
defendants was to make a profit from the contract.
[39] Her evidence that the defendants
were not aware that the printing was outsourced was also not
credible. It was common cause
that the defendants visited the
plaintiff’s premises which were laid out in an open plan.
Further the defendants regularly
checked progress with the production
of the books and conducted inspections; the plaintiff had also
produced work for the defendants
previously and they had also shared
premises. It is highly improbable that they would not have known that
the printing was outsourced.
[40] Despite her level of education
she was unable to testify how the cost of the books was calculated
from the quote the defendants
relied on. She got herself into great
difficulties trying to compute the cost in accordance with the
document relied on by the
defendants, claiming that the cost was
agreed per book despite the discrepant sizes and pages, and later
alleging that the cost
was computed per page. She was unable to
explain how either of those computations was compatible with the
books produced per annexure
A to the summons (and B12), which was
undisputed.
[41] It was apparent that the evidence
of Buthelezi was opportunistic and fabricated. Her credibility was
seriously compromised
and undermined under crossexamination. Her
ignorance, confusion and inability to respond directly to questions
on the defendants’
own version or to furnish support for her
answers from the document relied on by them lead the court to
conclude that her evidence
was unreliable and improbable.
The issues for determination
The parties to the contract
[42] The plaintiff alleges that the
three defendants had contracted with it in their personal capacities
and are therefore jointly
and severally liable for payment of the
contract price.
The following is common cause :
1 The three defendants traded as OBE
Publishers and published books under that name prior to December
2003. Buthelezi testified
that the contract with the Department of
Education in 2002 was in the name of OBE Publishers.
2 The defendants were regular clients
of the plaintiff prior to 2003 and the plaintiff had produced
products for them in the name
OBE Publishers. The parties had also
previously shared premises. All the sample books and promotional
pamphlets for the books which
were produced prior to the contract
concluded on 21 December 2003, were produced pursuant to contracts
with the three defendants
in their personal capacities trading as OBE
Publishers.
3 The defendants continued to trade as
OBE Publishers at all material times even after the registration of
the close corporation
in July 2003 of which the defendants were
advised in mid August 2003.
4 The workbooks produced by the
plaintiff pursuant to the contract concluded in December 2003 were
published in the name of OBE
Publishers. The name of DBE Publishers
CC or its registration number did not appear on any of the textbooks.
5 The defendants did not raise any
queries in connection with the invoices for the production of the
books, the delivery notes and
the consolidated invoice dated 31
January 2004 although they were all issued to OBE Publishers, and not
DBE Publishers CC (Reg
No.CK 2003/061257/23).
6 The specifications of the books to
be produced in terms of the contract which were provided by the
defendants to the plaintiff
(B13 –B14) also reflected the name
of OBE Publishers only.
[43] Narungdas testified that she and
Ramesh had always known that the three defendants personally traded
as OBE Publishers. The
defendants had not informed her to the
contrary or about the close corporation when she called them for
payment. On one occasion
Khanyile had told her that he was not a
signatory to the joint bank account and, although he could make
arrangements for the payment
with her, he could not commit to a date
when he would get a cheque from Hadebe or Buthelezi. But she had not
queried which joint
account he was talking about because to her mind
the three defendants had represented OBE Publishers.
[44] Devipersadh, who was the
production manager for the Plaintiff since 1998, testified that he
knew that the customers referred
to as Lincoln, Jackson and Mrs
Buthelezi represented OBE Publishers and that they had requested that
the name “OBE Publishers”
appear on all the workbooks
produced for them. While he had only met Buthelezi twice, he knew the
other defendants well.
[45] He had no knowledge of DBE
Publishers CC, and as far he was concerned the work was done for OBE
Publishers represented by the
three defendants. Hadebe had provided a
list which contained specifications of various books and discussed
the production of the
books with Devipersadh and other members of the
staff. The name of DBE Publishers did not appear on any of the books
produced for
the defendants.
[46] The evidence of Narungdas and
Devipersadh was supported by the facts which were common cause.
[47] In support of the defendant’s
version, Buthelezi testified that she was part of a ‘company’
or ‘entity’
which had a contract with the government. At
its inception, the three defendants operated as OBE Publishers. The
defendants were
upset when they were advised on or about 30 July 2002
that they were unable to reserve the name OBE Publishers, as the name
OBE
Publishers was popular and catchy and they had already commenced
working under that name. They had already submitted material to
the
government reflecting the name OBE Publishers, and their contract
with the department of Education was in the name of OBE Publishers.
Consequently they continued with the attempt to register the name OBE
Publishers. But eventually the close corporation was registered
on 23
July 2003 as DBE Publishers, of which the defendants were informed by
letter dated 30 July 2003 which reached them about
mid –
August.
[48] Therefore when the defendants
secured the contract with the government at the end of 2002 and
commenced discussing the layout
and design with the Plaintiff in
February 2003, the defendants were still operating as a partnership
trading as OBE Publishers
as the close corporation had not yet been
registered. When the layout and design was finalised by the
plaintiff, the defendants
were still operating as OBE Publishers.
[49] Buthelezi alleged that the change
in name was communicated to Ramesh after the close corporation was
registered as DBE Publishers,
about mid-August but ‘because the
change of name on the books would have been expensive, Ramesh did not
have a problem with
the change to DBE Publishers’.
[50] Consequently the meetings held on
19, 20 and 21 December 2003 were held between the plaintiff
represented by Ramesh and DBE
Publishers CC trading as OBE
Publishers, represented by the 3 defendants.
As the design and layout had been
completed by the end of June 2003, the contract entered into in
December 2003 was for printing.
[51] The Department of Education had
been informed of the name of the close corporation, and that the
contract with the department
was in the name of DBE Publishers CC
trading as OBE Publishers. However there was no written agreement
with the Department of Education
as only certain forms and the
manuscripts were submitted.
[52] Under cross examination,
Buthelezi confirmed that OBE Publishers was a partnership of the
three defendants, which the defendants
‘owned’ equally.
[53] She confirmed further that there
would have been tax payable by OBE Publishers because of the large
transaction with the plaintiff.
But she was unable to furnish any
information in respect of taxes or financial statements of the close
corporation or OBE publishers,
responding that Khanyile had been
responsible for the accounting, nor could she explain how the
requirements in respect of taxes
were going to be complied with.
[54] By the defendants’ own
version they had traded as OBE Publishers prior to the registration
of the close corporation and
had continued to do so thereafter.
Therefore unless the defendants specifically informed parties they
had previously contracted
with that they were now operating as a
close corporation, those parties would remain ignorant of the change
in corporate identity.
It was accordingly incumbent upon the
defendants to advise those that they contracted with that they acted
in a representative
capacity as members of the close corporation.
[55] Although Buthelezi testified that
Ramesh was advised about the change in name, there was no
corroboration of her evidence,
particularly as the other defendants
failed to testify. There was also no corroboration of her evidence to
be found in any documents.
[56] Further, the explanation offered
by Buthelezi about why the name of the close corporation was not
reflected on the books and
that ‘Ramesh did not have a problem
with it’ makes little sense.
[57] The decision to display the name
of the close corporation as the publisher lay with the defendants. It
was not for Ramesh to
make any decision about the insertion of the
name. As the books were not printed until January 2004, it is
improbable, even on
the defendants’ version that the layout was
completed before July 2003, that the insertion of the name would have
been expensive
or caused the entire layout to be affected materially,
as the number of times the name of the publisher appeared on the
books inspected
by the court was extremely limited, and did not
affect the contents of the books, only the cover and cover page.
[58] A perusal of the invoices
indicates that VAT was charged on the contract price. There would
therefore have been Value Added
Tax (VAT) implications for the
defendants. But they had not queried the name on the invoices nor had
they requested that invoices
in the name of DBE Publishers be issued.
[59] Although payments in the sum of
R155 000 had also been effected by way of three cheques drawn on
the account of DBE Publishers
CC, the reliance of the defendants on
Ramesh’s failure to object or query the cheque to prove that he
was aware that he was
dealing with a close corporation and not
individuals, is misplaced as the cheques were issued subsequent to
the conclusion of the
contract on 21 December 2003.
[60] In any event, as Devipersadh
testified, even when the defendants paid with a cheque drawn on the
account of DBE Publishers
CC, it was not unusual or remarkable as
payment was frequently tendered by their customers by way of cheques
drawn by third parties.
[61] It is noteworthy that a letter
dated 13 May 2005 on a letterhead reflecting the name DBE Publishers
has been furnished by the
defendants. However the name is not
followed by ‘CC” nor is the registration number of the
close corporation or the
names of its members reflected anywhere on
the letter.
[62] From a consideration of the
aforegoing, I remain unpersuaded that the defendants did bring their
change in status or corporate
identity to the attention of the
plaintiff. In the premises they cannot rely on the existence of the
juristic entity to avoid personal
liability in respect of the
contract concluded with the plaintiff as the plaintiff would have
continued to contract personally
with the three defendants trading as
OBE Publishers as it had done previously.
[63] I am consequently satisfied on a
balance of probabilities that on 21 December 2003 the contract was
concluded between the plaintiff
on the one part and the three
defendants in their personal capacities on the other. As the
obligations of the defendants thereunder
include the payment of the
contract price, the defendants are jointly and severally liable for
the payment of the balance of the
contract price.
The contract
[64] The plaintiff has alleged that
the contract between the parties was for the complete production of
the books including design,
layout and printing per annexure A to the
summons and the price agreed therefor was R708 085.37. It relies
on the individual
invoices and the consolidated invoice dated 31
January 2004 issued to OBE Publishers and delivered to the
defendants, as well as
the evidence of Narungdas, Devipersadh and
Natasha.
[65] Narungdas testified that the
Khanyile had provided the plaintiff with a document reflecting the
books to be produced for OBE
Publishers on 18 December 2003 and
prices. But the next day Hadebe had taken the price list away from
Narungdas. On 20 December
2003, the same document with the prices
erased (Exhibit B13-14) was telefaxed to the plaintiff.
[66] Subsequent to the conclusion of
the agreement was between Ramesh and the three defendants on 21
December 2003, Ramesh showed
Narungdas annexure A, which contained
details of the work that the plaintiff had to complete in terms of
the contract and the agreed
contract price of R708 085.37.
[67] Both Narungdas and Devipersad
testified that the design and layout of the thirty one (31) books
were commenced after the contract
was concluded and that the
plaintiff’s employees worked long hours both day and night to
ensure that the books were produced
timeously.
They were both adamant that the only
work that had been undertaken for OBE Publishers in connection with
its contract with the department
of education previous to December
2003 was the production of sample books and promotional pamphlets.
[68] Natasha Narungdas also testified
convincingly that she was present in December 2003 when the
plaintiff’s employees worked
night and day shifts and even over
the weekends to get the books ready for the defendants. She recalled
that one night when she
and Devipersadh had both worked late, until
10 or 11pm. She confirmed that the plaintiff had attended to the
layout and design
of workbooks for approval by the defendants, and
proofreading, which she had assisted with. She described how she had
proofread
a Zulu workbook from the manuscript provided.
[69] If the books were laid out and
designed by June 2003 as alleged by the defendants, there would have
been no need to proofread
the books from manuscript versions in
December 2003.
[70] Narungdas testified that although
the printing was outsourced, a great deal of work had to be done by
the plaintiff, for which
the plaintiff levied an additional charge to
the cost of the printing. She was also aware that the printer only
invoiced the plaintiff
in January 2004 and that the plaintiff’s
invoices were prepared thereafter. Narungdas’ evidence was
supported by Devipersadh
who confirmed that although the printing was
outsourced, the plaintiff had to prepare the proofs and check the
printed products
and therefore debited a charge to the customer for
this.
[71] Devipersadh also testified that
the defendants knew that the printing was not done by the plaintiff.
He was aware that a quote
for the printing was obtained as early as
October 2003 as the negotiations for the production of the books had
commenced then.
His evidence accords with the evidence of Buthelezi
that the marketing of the books was completed by September and the
defendants
awaited the confirmed order from the Department of
Education.
[72] The evidence of Narungdas and
Devipersadh that the three defendants had called on the plaintiff’s
premises on numerous
occasions while the books were being produced to
check on the work, was not denied. It would therefore have been
apparent that
the printing was not done by the plaintiff.
[73] Although it initially appeared
from the questions posed in crossexamination that the defendants were
going to deny that the
printing was part of the contract, as it was
put to witnesses that the defendants had their own printing
facilities, this was not
pursued. It was in any event incongruent
with the allegation by the defendants that the contract was for
printing only.
[74] Narungdas also testified that as
a result of the failure of the defendants to effect payment, the
plaintiff was under pressure
for payment from Universal Printers. She
eventually used her personal money and took loans to pay off
Universal Printers.
[75] Although the defendants received
the tax invoices reflecting the cost of the books and the
consolidated invoice dated 31 January
2004 reflecting the total
contract price as R708 085.37, the defendants did not query the
cost on the invoices or dispute
the total contract price on the
consolidated account, when Narungdas telephoned each of them for
payment.
Nor did they query the balance of
R553 085.37 when she telephoned them for payment on numerous
occasions even after the three
payments were made, nor did they
allege that the sum owing to the plaintiff was only R58 080. The
only response she received
from the all three defendants was that
they were waiting to collect payment from their own customer. As far
as she was aware, the
defendants had not disputed the amounts with
Ramesh either.
[76] She was adamant that the meetings
between Ramesh and the defendants were about payment only and not any
dispute relating to
the invoices or quotations, as the defendants
only response to the repeated requests for payment was that they were
waiting for
payment whereupon they would pay the plaintiff. Khanyile
had also told her that he was not a signatory to the joint bank
account
and, although he could make arrangements for the payment with
her, he could not commit to a date when he would get a cheque from
Hadebe or Buthelezi. She had not queried which joint account he was
talking about because to her mind the three defendants had
represented OBE Publishers.
[77] Narungdas was nevertheless very
confident when she testified that the documents relied on by the
defendants as being the written
part of the contract between the
parties, was not issued in connection with the work done by the
plaintiff in December 2003 but
were merely quotations for the
printing of samples provided in April 2003 in response to Khanyile’s
request for an estimate
of the cost of printing only. The estimate
was for printing in one and two colours only.
[78] She referred knowledgeably to the
details on the document such as the weight of the paper and the
option of the colour of the
print to substantiate her evidence. She
also pointed out that as the books that were produced in terms of the
contract concluded
in December 2003 had a differing number of pages,
there could not have been one agreed price viz R10.50 for all the
books.
[79] Devipersadh testified that the
invoice, Exhibit B12, had been prepared by Ramesh but was checked,
finalised and printed by
him. It was collected by Hadebe from Ramesh
in Devipersadh’s presence.
[80] The evidence of Buthelezi was to
the effect that there were two agreements or contracts between the
parties. The first was
the agreement in terms of which the plaintiff
would do the layout and design for thirty one (31) different types of
books. In accordance
with the agreement, as soon as the layout and
design for a particular set of books was completed Ramesh would give
them a price
and the defendants would pay him in cash, because the
close corporation did not have an account at that time.
[81] On one occasion only did the
defendants pay by cheque in the sum of seven thousand eight hundred
rand payable to Narungdas,
drawn on the account of Mrs Hadebe, the
wife of the second defendant. Ramesh had requested the cheque be
drawn in favour of his
wife rather than the plaintiff because of tax
implications.
[82] The plaintiff did not submit any
quotations for the layout and design which was finalised by the end
of June. Payments were
made in cash while the work was in progress
and by the end of September all the payments due for the layout and
design had been
paid in full. Buthelezi did not remember seeing any
receipts for the payments. Payments were effected in cash as Ramesh
had requested
cash. In any event they were unable to pay by cheque as
the close corporation had not yet been registered and therefore did
not
have a bank account from which cheques could be issued.
[83] The plaintiff was thereafter
requested by the defendants to design promotion pamphlets for the
marketing of the workbooks between
the period mid-July to September.
The defendants then waited for the orders to be placed so that the
quantity of the workbooks
that needed to be printed could be
ascertained by the government. The printing was done around 21
December 2003.
[84] Buthelezi testified that in terms
of their contract the plaintiff was to print the books; she was not
aware that the printing
was to be outsourced; if the defendants had
known, they would have dealt directly with the printers. There was no
agreement that
the plaintiff was to levy an administration fee, nor
had the plaintiff furnished her with any documentation reflecting her
indebtedness
to Universal printers.
[85] Payment for the printing, binding
and delivery of the books in the sum of R155 000 had also been
effected by way of cheques
drawn on the account of DBE Publishers CC
held at First National Bank. No objection to or query about the
cheque had been raised
by Ramesh as he was aware that he was dealing
with a close corporation and not individuals.
[86] Buthelezi testified that the
meetings which took place in December 2003 were only in connection
with the printing and the quantity
of the textbooks to be printed.
She declared that it would have been impossible to complete the
design, layout and printing in
ten days, especially as the layout for
the mathematics textbook alone took over 2 months. (This was not put
to the plaintiff’s
witnesses.)
[87] Buthelezi denied that a quote was
telefaxed to Hadebe on 24 January 2004, alleging that the printing
was done according to
the only quotation that they had received from
the plaintiff dated 9 April 2003. The contract price was calculated
according to
that quotation at R20.40 per book. She also confirmed
that 21 900 books were produced as reflected on Exhibit B12 –
B13.
[88] She also denied that Ramesh or
Narungdas had telephoned her about monies owing to the plaintiff. She
initially testified that
the first time she had become aware of the
plaintiff’s claim was when she received the summons, but later
testified that
before she received the summons, Khanyile and Hadebe
had informed her per telephone that it was alleged the defendants
owed a large
sum of money to the plaintiff.
[89] She admitted that the price list
which was left by Khanyile with the plaintiff was removed by Jackson
because they did not
want the plaintiff to know the prices at which
OBE Publishers was selling the books. However Ramesh was aware that
they had to
give the government a 30% discount of the tendered price.
[90] The sum of R58 080 had not
been paid to the plaintiff because Ramesh had disputed that balance
owing was only R58 000
when the defendants met him to discuss
the outstanding debt. The balance had not been tendered to the
plaintiff.
[91] The evidence of the plaintiff in
respect of the work undertaken and the agreed price is very
persuasive.
Although Narungdas was not present
when the contract was concluded, she testified convincingly about the
telephone calls she had
made to the defendants for the payment based
on the invoice submitted to the defendants and that her request for
payment was not
met with disputes or denials that the money was owed,
but assurances that the money would be paid in due course. She
specifically
testified that Khanyile had assured her that payment
would be effected once the signatories to the bank account had drawn
and signed
a cheque. This was not controverted under crossexamination
and there was no evidence to the contrary by the defendants.
[92] Her evidence was supported by
Devipersadh who testified that he had frequently heard both Ramesh
and Narungdas telephone the
defendants for the payment of
R533 085.37. Khanyile had also often popped into the office
after the delivery of the books
to assure them that he was going to
effect payments. He had told Ramesh in Devipersadh’s presence
that they were waiting
to receive payment to pay the plaintiff. He
was also present when Ramesh told Khanyile that he had only paid
R155 000 and
they needed to discuss the settlement of the
balance of approximately R500 000. Khanyile did not dispute that
the amount owed
was approximately R500 000, but said that some
arrangements would be made about payment.
[93] Narungdas’s viva voce
evidence that the invoice dated 9 April 2003 was a quotation, is
corroborated by the fact that
none of the books reflected on the
invoices were listed on Annexure A to the summons, which the
defendants admitted was proper
and complete list of the books
produced by the plaintiff. The prices were clearly for printing only
as the invoice expressly exclude
repro and design costs. Devipersadh
also confirmed that a quotation had been provided to the defendants
in April 2003, but the
books quoted for had not been actually
produced.
[94] Further the contract price
alleged by the defendants would not have been feasible or profitable
for the plaintiff, given the
cost of printing and the work that went
into the production.
It is common cause that the amount
paid to Universal Printers for the printing was R238 750.20. It
is highly improbable that
the plaintiff would have agreed to a
contract price less than that viz R231 080, for printing,
binding and delivery as alleged
by the defendants.
[95] Furthermore the explanation
offered by Narungdas and Devipersadh for the higher price the
plaintiff had debited the defendants
with was reasonable. Devipersadh
evidence was that the price charged by the printer was not the price
the plaintiff charged the
customer, as the plaintiff had to provide
the printer with the positives for the printing and then check that
the numbering sequence
and other details were correct. The
plaintiff’s employees then had to go the printers to check the
finish of the book for
example the colour, pages size and quality.
[96] On the other hand Narungdas’s
evidence that the plaintiff waited for the written quote from the
printers dated 5 January
2004 before it finalised its own invoices to
OBE Publishers is credible. She also testified that when the
quotations were completed,
they were signed by Khanyile and Ramesh.
Narungdas recalled that she had highlighted the signatures in pink on
the quotations.
But the original quotations had been handed to
Khanyile by Ramesh when he was pursuing the defendants for payment,
and no copies
had been retained.
Her evidence that the quotations had
been signed by Khanyile and handed to him was not disputed.
[97] The evidence of Devipersadh that
the invoice, Exhibit B12 was uplifted by Hadebe also remained
uncontroverted. The contract
price on this invoice is the same as the
price on the consolidated statement dated 31 January 2004 and
annexure A to the summons.
But more significantly, this invoice
contains a breakdown of the costs for ‘repro and design’
and ‘printing’.
This undermines the defendants’
denial that the contract included the layout, design printing of the
books.
[98] Further, Natasha Narungdas
confirmed that when she wrote out a large number of tax invoices to
OBE Publishers for repro design
and printing in 2004, she had done so
with the assistance of her father who had dictated the prices to her
from the invoice (Exhibit
B12). This supports the evidence of
Devipersadh not only that the invoice was prepared prior to the
finalisation of the invoices
submitted to the defendants, but more
significantly, that the prices thereon were the prices that Ramesh
had agreed with the defendants.
[99] It is common cause that the all
the books produced in terms of the contract between the parties were
delivered with tax invoices
and delivery notes. Each set of books had
a delivery note and a tax invoice specifying the details thereof
inter alia quantity,
number of pages, unit price, VAT and the total
price. Acceptance thereof was signified on each delivery note by
signature on behalf
of the company, OBE Publishers. Hence the prices
were specified and accepted by the defendants, even on date of
delivery. There
is no allegation or evidence that the prices were
disputed with the plaintiff when the invoices were delivered to them.
[100] Narungdas was not aware that
Ramesh had offered the defendants a discount and notes on certain
invoices were pointed out to
support the allegation that Ramesh had
offered the defendants a ten per cent (10 %) discount on the price
reflected on the invoices.
This is in fact destructive to the
defendants’ version as such discount would not have been
offered if the price on the invoices
was incorrect, as the mere ten
percent (10%) offered in discount would not have satisfied the
defendants who were alleging that
the contract price was far less
than the amount claimed by the plaintiff.
[101] the evidence of Buthelezi on the
other hand was not convincing or coherent but implausible and
contradictory.
Her evidence that the payment for the
layout and design of thirty one books was effected in cash while the
work was in progress
because the close corporation did not have a
bank account at that time does not accord with the date of
registration of the close
corporation viz 23 July 2003 and the date
that the defendants were notified thereof, mid- August 2003.
According to her, the work
was finalised by the end of June 2003 and
payment for that service was effected in full by the end of
September. She later contradicted
herself saying that payments were
made in cash because Ramesh had requested cash.
[102] Firstly according to the dates
relied on by the defendants, the contract for layout and design could
not have been with the
close corporation but the defendants. Secondly
she was unable to provide any documentation or details in connection
therewith,
be it a quotation or invoice. She relied only on the
cheque of R7 800 payable to Narungdas as proof of payment
towards the
costs of the layout and design. She did not explain why
this payment was by cheque when Ramesh had requested cash. But more
significantly,
the acceptance of a cheque drawn by a third party by
the plaintiff for services rendered to the defendants, confirms the
evidence
of Devipersadh that customers often paid with third party
cheques, and therefore a cheque drawn by DBE Publishers would not
have
been questionable or remarkable.
[103] However as the defendants had no
idea until November as to which books would be ordered, it is highly
improbable that they
would incur the expense of layout and design of
all the books. The version of the plaintiff that the defendants had
requested some
sample books only is more credible.
[104] Further it is improbable that if
payment, even in cash, had been effected that the defendants would
have no record of it.
They were operating a business, and it would
have been essential to keep a record of disbursements in order to run
a viable business.
[105] Buthelezi was unable to testify
convincingly in support of the defendants’ allegation that the
contract price of R213 080
was calculated in accordance with the
quotation dated 9 April 2003 and experienced serious difficulties
with the calculations.
[106] When faced with two books of
varying size and dimensions, a numeracy workbook for Grade 1 and a
numeracy teacher’s guide
for Grade 2, she was unable to explain
how the contract price was to be calculated from the quotation as
there was no quotation
for the smaller book; the quotation was only
for books of A4 size. She then replied that they had only used the
larger size and
thereafter claimed to be confused. This was clearly
because she could not offer a satisfactory explanation of how the
contract
price was calculated by the defendants.
[107] Similarly she could not explain
how on the defendants’ own version the balance owing of R58 080
was calculated.
It was common cause that 21 900 books were
produced. The defendants alleged that the books were charged at
R20.40 each. At
that price the total cost would be R446 760,
which less the payment of R155 000 would leave a balance of R291
760, and
not R58 080 as pleaded.
[108] When she was asked to explain
why the cost of R20.40 was accepted when no books of 148 pages were
in fact produced, she then
alleged that the defendants had decided to
use a flat rate irrespective of the size or dimensions of the book or
the number of
pages of the A4 mathematics workbook because it had the
most pages, although books which were much smaller or had fewer pages
would
have cost less, and such decision was prejudicial to their
interests and would have depleted their profit. They had made this
decision
as the printing was done in December and the price may have
increased since they received the quotation.
[109] When faced with the fact that
the book she had relied on to justify the cost of R20.40 had not been
produced in terms of the
contract entered into on 21 December 2003,
she then testified, in contradiction to the defendants’ plea
and her earlier testimony,
that the parties had on 21 December 2003
agreed to cost the pages which was calculated by dividing the quoted
cost of R20.40 by
148 pages which worked out at 13.7 cents per page
rounded off to 14 cents.
[110] Buthelezi claimed that she had
been unable to testify to this effect previously as she did not have
the figures and documentation
with her. She had no explanation for
this failure or why she in fact needed any documentation when the
computation could have been
illustrated from the quotation.
[111] When asked about the charge for
the printing of the covers for the books, she admitted that the
covers would have pushed the
prices up, which she had not included in
her computation but she could not recall what the arrangement was in
respect of the covers,
nor did she have any notes that to remind her.
[112] When asked to explain why the
printing cost of R327 169.01 reflected on Exhibit B12 was not queried
as it exceeded R213 080,
she responded that the queries had been
raised verbally with Narungdas by all three defendants and then
embarked on an incoherent,
contradictory and implausible explanation.
[113] There were other inherent
improbabilities in her evidence. Buthelezi could not confirm what the
total price was for the books
supplied in respect of the manuscripts
produced by the Plaintiff, saying that there was a price list but she
had no idea of even
an approximate value for the contract. She
alleged that the defendants had made a loss on the contract, but she
had no idea what
the loss amounted to. According to her version, the
defendants were prepared to accept prices which were prejudicial to
their interests,
in particular the profit to be made by them.
[114] Her dishonesty was also apparent
when in response to the proposition that Ramesh had advised them of
the full contract price
in the sum of R708 085.37 and not just
the printing costs to which she replied, “We were not agreeing
to the calculation;
we disputed everything”. When asked when
the dispute occurred, she responded that it was after the invoice
(Exhibit B12)
was telefaxed to them after the printing had been
completed; they first had a telephonic discussion and then met to
discuss the
account; but no agreement was reached. She had prior to
this denied that any quote had been telefaxed to the defendants. But
she
now contradicted herself, admitting that the document which had
been telefaxed to Hadebe had reflected a large figure of
approximately
R700 000 although she was uncertain it was the
same document.
[115] Her evidence that the defendants
were not aware that the printing was outsourced was also not
credible. It was common cause
that the defendants visited the
plaintiff’s premises which were laid out in an open plan.
Further the defendants regularly
checked progress with the production
of the books and conducted inspections; the plaintiff had also
produced work for the defendants
previously and they had also shared
premises. It is highly improbable that they would not have known that
the printing was outsourced.
[116] Having weighed the evidence
presented on behalf of the plaintiff and the defendants, I am
satisfied that despite the contradictions
in the evidence of
Narungdas, the contract between the plaintiff and the defendant was
for the complete production of the books
as specified in Annexure A,
while the uncorroborated evidence of the Buthelezi was improbable,
implausible and did little to substantiate
the defendants’
version. I am also satisfied that the agreed contract price was the
sum of R708 085.37 as reflected
on Annexure A to the summons.
When was payment of the contract
price due
[117] The plaintiff has alleged that a
material term of the agreement between the parties was that the
defendants would collect
a statement or statements for work done in
terms of the contract from the plaintiff and that payment of the
contract price was
due thirty (30) days from the date of the
statement. The plaintiff alleges further that a consolidated
statement of account dated
31 January 2004 was collected on the same
day and that payment was therefore due on or about 3
February
2004.
[118] The particulars of claim were
not a model of clarity, in particular which statement or statements
were being referred to therein.
This was exacerbated by the date of
payment being specified as 3 February 2004. But as the only statement
that was collected was
the consolidated statement dated 31 January
2004, on the plaintiff’s version, the thirty day period in
terms of the agreement
payment would have been due on 3
March
2004.
[119] Narungdas testified that the
consolidated statement dated 31 January 2004 was collected by
Khanyile on the same day. Her evidence
remained uncontroverted under
crossexamination and Khanyile himself did not testify. Payment was
thereafter pursued in terms thereof.
[120] While the consolidated statement
does not state the terms of payment or when payment was due, the tax
invoices made to OBE
Publishers which accompanied the delivery notes,
state ‘NB Terms strictly 30 DAYS NETT’.
This inclusion of this term of payment
in the invoices lends credence to the plaintiff’s allegation
that a material term of
the oral agreement between the parties was
that payment was due thirty (30) days from the date of the
consolidated statement, as
it would appear that the plaintiff’s
usual practice was to allow thirty (30) days for payment by its
debtors.
[121] Further the settlement terms on
the tax invoices submitted by Universal Printers to the plaintiff
state “30 days nett
from date of statement”. It is
improbable that being aware of its own obligations to pay the
printers a substantial sum of
R 238 750.20 which had been
factored into the contract price within thirty (30) days, the
plaintiff was unlikely to allow
the defendants an indefinite period
to effect payment of the contract price. Such a term would be highly
prejudicial to the financial
stability of the plaintiff, and does not
make commercial or business sense.
[122] There was evidence to this
effect as Narungdas testified that the plaintiff was placed under a
great deal of pressure to effect
payment to the printers and
eventually she took loans to supplement her personal resources to
settle the debt.
[123] The defendants have contended to
the contrary that payment to the plaintiff was due only on receipt by
DBE Publishers CC of
payment from the Department of Education.
Buthelezi testified that some payment
had been received for the books but was unable to furnish specific
figures and alleged that
the defendants had not made a profit. But
even on the defendants’ own version they were obliged to pay
the plaintiff the
contract price as they had been paid albeit not in
full (as alleged). Another anomaly was why three payments had been
effected
to the plaintiff despite the allegation that the payment was
due only on receipt of payment from the department of Education.
[124] The probabilities therefore
favour the plaintiff’s version that payment was due by the
defendants thirty (30) days after
receipt of the consolidated
statement dated 31 January 2004.
[125] The defendants closed their case
without Hadebe or Khanyile testifying, which compromised the
defendants’ case as they
had both interacted significantly with
the plaintiff not only in the conclusion of the contract but in the
events preceding and
following on the conclusion thereof.
[126] Arising from the aforegoing
evaluation of the credibility of the witnesses and the conspectus of
evidence, I am persuaded
that the probabilities prevail in favour of
the plaintiff, and that as the plaintiff has discharged the onus on
it a balance of
probabilities, it is entitled to the relief sought.
Order :
Judgment is granted for the plaintiff
against the defendants jointly and severally, the one paying the
other to be absolved, in
the following terms :
Payment in the sum of R553 085.37
Interest thereon at the rate of 15.5%
per annum from 3 March 2004 to date of payment.
Costs of suit
____________________________
Counsel for the Plaintiff: Adv S Khan
Instructed by: Arshana Shyam Nirhoo &
Associates
C/O Messers Ebrahim Ameer & Co.
Suite 1309, 13
th
Floor
Durdoc Centre
460 Smith Street
DURBAN
Counsel for the Respondent: Adv SKD
Mdladla
Instructed by: ME Mbhele & Co.
C/O Nhlanhla Mnculwane Incorporated
Suite 72(B), 7
th
Floor
Mercury House
320 Smith Street
DURBAN
Date Delivered: 5 May 2011