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2009
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[2009] ZAGPPHC 134
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Command Protection Services Gauteng (Pty) Ltd t/a Maxi Security v South African Post Office Limited (16945/2004) [2009] ZAGPPHC 134 (30 October 2009)

IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH AND SOUTH GAUTENG HIGH
COURT, PRETORIA)
DAT
E:
30/10/2009
CASE
NO:
16945/2004
In
the matter between:
COMMAND PROTECTION
SERVICES (GAUTENG) (PTY) LTD
t/a
MAXI
SECURITY PLAINTIFF
And
SOUTH
AFRICAN POST OFFICE LIMITED DEFENDANT
JUDGMENT
POSWA, J
INTRODUCTION
[1] This is a judgment in an
action in which the plaintiff, relying on issues raised in paragraphs
3 to 9 of its particulars
of claim, seeks determination by the Court
as to whether or not a binding and enforceable agreement was
concluded between it and
the defendant,
as the plaintiff alleges to be the
case. Based on its submission that a contract between it and the
defendant is in existence,
the plaintiff claims payment by the
defendant of a sum of R13 890 988.00, being damages it
allegedly suffered in consequence
of the defendant being in breach of
such agreement. Such breach is alleged to have arisen by way of a
letter written by the defendant
to the plaintiff, dated
30 January 2004, (annexure PC4), which is headed
“TERMINATION OF CONTRACTUAL RELATIONSHIP”.
[2] It is common cause between the
parties that, on or about 28 July 2003, the defendant
addressed and delivered a letter
to the plaintiff, a copy whereof is
attached to the particulars of claim, as annexure “PC3”.
Interpretation of the
meaning and effect of PC3 is one of the
co elements of this case, with whose interpretation this Court
is seized. Whilst
both parties are in agreement that the contents of
PC3 were accepted by the plaintiff, they differ as to the
implications of such
acceptance. Suffice it to say, for present
purposes, that, according to the defendant, PC3 provided conditional
appointment of
the plaintiff as a provider of guarding security
services, details whereof will appear more fully in the course of
this judgment.
[3] A full setting out of paragraphs 3
to 9 of the plaintiff’s particulars of claim, on the one hand,
and the defendant’s
corresponding, paragraphs 4 to 16 of its
plea, in response to the plaintiff’s aforementioned paragraphs,
on the other hand
will, in my view, facilitate a full appreciation of
the parties’ respective submissions.
[4]
Paragraphs
3 to 9 of the Plaintiff’s Particulars of Claim
“
3.
3.1 During October 2002 Defendant
caused an advertisement, a copy whereof is annexed hereto marked
‘PC1’, to be placed
in national newspapers.
3.2 In
terms of such advertisement, Defendant informed the readers thereof
as follows:
3.2.1 Defendant invited interested and
suitable companies and other entities to submit proposals for the
management of Defendant’s
guarding requirements at post office
outlets and mail centres in certain regions;
3.2.2 Contracts
would be awarded on a regional basis, and bidders were entitled to
apply for more than one region;
3.2.3 Details
of Defendant’s requirements were stipulated in a Request for
Proposal document, which would be made available
by Defendant.
4.
4.1 On or about 28 November 2002,
Plaintiff submitted a written offer to Defendant for the provision
and management of guarding
services in respect of certain regions,
described therein as (a) Central Region, (b) Kwazulu Natal, (c)
Northern Region, (d)
Witwatersrand, and (e) Western Cape Province.
4.2 A
copy of the written offer is annexed hereto marked ‘PC2’.
5.
5.1 On or about 28 July 2003,
Defendant addressed and delivered a letter to Plaintiff, a copy
whereof is annexed hereto marked ‘PC3’.
5.2 In terms of such letter, Defendant
accepted the offer of Plaintiff described in paragraph 4 above.
5.3 The
contents of the aforementioned letter were in turn accepted by
Plaintiff as is evident from the wording which appears at
the foot of
‘PC3’.
6.
6.1 On 30 July 2003, a meeting took
place at Pretoria, attended by Mr D. de Villiers, Mr S. Mowzer,
Mr S. Boulton and Mr Z
Sithole, representing Plaintiff, and Mr M.
Mngqibisa, Mrs E. Lotriet and Mr N. Els, representing Defendant.
6.2 During
such meeting, Mr Mngqibisa, representing Defendant, informed
Plaintiff, represented by the persons referred to above,
-
6.2.1 that Plaintiff had been awarded
the tender in respect of three regions, namely (a) the Western Cape
Province, (b) the Northern
Region and (c) the Central Region;
and Plaintiff, represented as
aforesaid, accepted that the agreement between the parties was
concluded on this basis.
6.3 During such meeting, Mr De
Villiers and/or Mr Mowzer, representing Plaintiff, provided and
explanation of Plaintiff’s
black economic empowerment (‘BEE’)
status, and Defendant’s representatives were satisfied with
such explanation.
6.4 During
such meeting, Mr Mngqibisa, representing Defendant, advised
Plaintiff’s representatives that a draft written contract
would
be forwarded to Plaintiff within a week, but that Plaintiff had won
the tender as described above, and that the signing of
the contract
was merely a formality.
6.5 During
such meeting, Plaintiff and Defendant, represented as described
above, agreed that Plaintiff would commence rendering
services in
terms of the agreement between the parties on 1 September 2003.
7. In the premises, and by virtue of
the facts set out in paragraphs 4 and 5 above, -
7.1 On or about 28 July 2003,
Plaintiff and Defendant concluded a written agreement in terms
whereof Plaintiff would provide
and manage regional guarding services
for Defendant, for an initial two year period.
7.2 Such
written agreement is constituted by the documents annexed hereto
marked ‘PC2’ and ‘PC3’.
7.3 The
services to be provided by Plaintiff, the regions in respect of which
such services were to be provided, and the prices
to be charged by
Plaintiff in respect of such services, are set out in annexure ‘PC2’
hereto.
8.
8.1 In annexure ‘PC3’
hereto, the following is stated:
‘This
appointment is subject to the following:
BEE improvement; and
The successful finalisation and
signing of a formal contract.’
8.2 The reference in such letter to
‘BEE improvement’ does not constitute a suspensive
condition. Alternatively, and
to the extent that it might be alleged
and found that it does, Plaintiff states as follows:
8.2.1 Such condition was fulfilled,
and accepted by Defendant as having been fulfilled, by virtue of the
facts described in paragraph
6.3 above;
8.2.2
In
the alternative to paragraph 8.2.1
,
Defendant waived compliance with such condition, in the manner
described in paragraph 6.3 above;
8.2.3
In
the alternative to paragraph 8.2.1 and 8.2.2
,
by virtue of the facts described in paragraph 6.3, Defendant
represented to Plaintiff that it was satisfied that such condition

had been fulfilled, and Plaintiff, relying on such representation,
acted to its prejudice by making preparations, and incurring

expenses, to enable it to perform its obligations in terms of the
agreement between the parties. In the circumstances, Defendant
is
estopped from denying that the condition has been fulfilled.
8.3 The reference in such letter to
‘the successful finalisation and signing of a formal contract’,
does not constitute
a suspensive condition.
Alternatively
,
and to the extent that it might be alleged and found that it does,
Plaintiff states as follows:
8.3.1 In the of the facts described in
paragraphs 6.4 and 6.5 above, (a) the parties agreed that the
relevant portion of the letter
would not
constitute
a suspensive condition
, (b)
alternatively
waived compliance therewith;
8.3.2
In
the alternative to paragraph 8.3.1
,
Defendant intentionally prevented the formal contract from being
finalised and signed, by failing to present Plaintiff’s

frequent requests that this be done. In the circumstances, the
suspensive condition should be deemed to be fictionally fulfilled.
9. By virtue of the facts described in
paragraph 6.2 and 6.5 above, the agreement referred to in paragraph 7
above was amended in
the following respects:
9.1 The regions in respect of which
the agreement would operate would be the Western Cape Province, the
Northern Region and the
Central Region (instead of all of the regions
referred to in annexure ‘PC2’)
9.2 Plaintiff’s services would
be provided as from 1 September 2003.”
[5]
Paragraphs
4 to 16 (pages 89 to 94 of the papers)
“
4.
AD
PARAGRAPH 4 THEREOF
:
4.1 Annexure ‘PC2’ to the
particulars of claim is not signed by the plaintiff.
4.2 Save for the aforegoing, the
allegations contained in this paragraph are admitted.
5.
AD
PARAGRAPH 5 THEREOF
:
It is admitted that the plaintiff’s
tender offer in terms of annexure ‘PC2’ was accepted by
the defendant in terms
of annexure ‘PC3’ and subject to
the conditions therein state.
6.
AD
PARAGRAPHS 6.1 AND 6.2.1 THEREOF
:
Save for stating that the award of the
tender to the plaintiff was at all times subject to annexure ‘PC3’,
the contents
of these paragraphs are admitted.
7.
AD
PARAGRAPH 6.2.2 THEREOF
:
7.1 The allegation contained in this
sub paragraph is denied.
7.2 The
defendant avers that Mr MNGQIBISA informed the plaintiff that, should
the plaintiff revise its pricing schedule in terms
of annexure ‘PC2’
and offer an appropriate discount, the defendant would be prepared to
consider awarding a contract
in terms of the tender for three years
instead of two years.
8.
BALANCE
OF PARAGRAPH 6.2
:
This is denied and the plaintiff is
put to the proof thereof.
9.
AD
PARAGRAPH 6.3 THEREOF
:
Save to admit that Mr DE VILLIERS
presented some description of the plaintiff’s BEE status, the
contents of this paragraph
are denied, and more particularly it is
denied that the defendant was satisfied with the plaintiff’s
BEE constitution and
profile.
10.
AD
PARAGRAPH 6.4 THEREOF
:
While it is admitted that the
defendant informed the plaintiff that a draft written contract would
be forwarded to the plaintiff
as soon as possible, the remaining
allegations contained in this paragraph are denied as if specifically
traversed.
11.
AD
PARAGRAPH 6.5 THEREOF
:
11.1 The allegations contained in this
paragraph are denied as if specifically traversed.
11.2 The defendant pleads that from
1 September 2003, it employed the plaintiff to continue
providing certain guarding
services (as it had provided prior to that
date on a limited scale) on a month to month basis.
12.
AD
PARAGRAPH 7 THEREOF
:
The allegations contained in this
paragraph, including sub paragraphs, are denied as if
specifically traversed.
13.
AD
PARAGRAPH 8.1 THEREOF
:
The
contents of this paragraph are admitted.
14.
AD
PARAGRAPH 8.2 THEREOF
:
14.1 The allegations contained in this
paragraph, including the sub paragraphs are denied as if
specifically traversed.
14.2 The defendant pleads that the
reference to ‘BEE improvement’ did constitute a
suspensive condition.
15.
AD
PARAGRAPH 8.3 THEREOF
:
15.1 The allegations contained in this
paragraph, including its sub paragraphs, are denied as if
specifically traversed.
15.2 The defendant pleads that the
reference to ‘the successful finalisation and signing of the
formal contract’ did
constitute a suspensive condition.
16.
AD
PARAGRAPH 9 THEREOF
:
The allegations contained in this
paragraph are denied as if specifically traversed.”
[6] PC3 is a response to PC2 –
the latter being dated 28 November, 2002 and addressed to
the defendant, containing
an invitation by the defendant to whoever
could provide management and guarding services to its post offices in
five specified
regions. The respective counsel for the plaintiff, on
the one hand, and for the defendant, on the other hand, gave their
factual
interpretation of the contents of both PC2 and PC3 and their
respective understanding of the implications of the interplay between

PC2 and PC3.
Counsel’s
Factual Interpretation of the Contents of Paragraphs 3-9 of the
Particulars of Claim, Read with Paragraphs 3 16
of the Plea
[7] Mr Newdigate, on the plaintiff’s
behalf, both in his heads of argument on the plaintiff’s behalf
and his submissions
during argument, emphasised the plaintiff’s
submissions in paragraph 5 of its particulars of claim, on the one
hand, and
the defendant’s response to that paragraph, in
paragraph 5 of its plea, on the other hand. He pointed out that, in
PC3,
the “defendant accepted the offer of plaintiff described
in paragraph 4 above”, which is reference to the plaintiff’s

offer to the defendant, contained in PC2. He then pointed out that,
in paragraph 5 of its plea, the defendant states that:
“
It is admitted that the
plaintiff’s tender offer in terms of Annexure PC2 was accepted
by the defendant in terms of Annexure
PC3 and subject to the
conditions therein stated.
”
He submits that what emerges from the
two documents, PC2 and PC3, is that a written offer of contract by
the plaintiff was accepted,
in writing, by the defendant.
[8] To the defendant’s
submission that PC3 constituted a counter-offer, Mr Brett replied
that the defendant’s submission
was irrelevant, for the
following reasons:
(a) There is no doubt that an offer
was made by the plaintiff and that it was accepted by the defendant;
(b) Alternatively, in the event of it
being held that there was, indeed, a counter-offer, such
counter-offer by the defendant was
accepted by the plaintiff, which
is common cause.
[9] Mr Newdigate submitted that the
conditions set out in PC3 do not negate the existence of a contract,
in consequence of the acceptance,
by the defendant, of the offer made
by the plaintiff. He subsequently addressed the Court on the legal
interpretation to be given
to the conditions contained in PC3,
an
aspect to be dealt with later in the judgment
.
[10] According to Mr Newdigate, the
ambit of the dispute is contained in subparagraphs 8.2 and 8.3 of the
particulars of claim,
on the one hand, and paragraphs 14 and 15 of
the plea, on the other hand. During his address, Mr Brett summed up
the plaintiff’s
attitude in respect of this aspect up, as
follows:
“
It is clear that the
primary
question
is whether
these provisions [in PC3] constitute suspensive conditions, as
contended by the defendant, or not, as contended by the
plaintiff.
If there are not suspensive conditions, we will submit that the
conclusion which the plaintiff seeks in these proceedings,
namely
that a valid and binding agreement
was
concluded
must be
drawn.
”
[11] It is necessary to refresh
ourselves as to what the conditions mentioned in PC3 are. The
relevant portion reads:
“
This
appointment is subject to the following:-
- BEE improvement; and
- The successful
finalisation
and signing of a
formal
contract.
”
[12] It is further submitted, on the
plaintiff’s behalf, that, if the Court should hold that one or
the other or both of the
conditions mentioned above is/are a
suspensive condition(s) or suspensive condition(s), a number of other
issues have to be determined,
viz.,
(a) waiver;
(b) estoppel;
and
(c) fictional fulfilment, as more
fully set out in subparagraphs 8.2.1 to 8.2.3 and 8.3.1 to 8.3.2 of
the particulars of claim.
[13] In those subparagraphs, the
plaintiff avers that, if the Court finds that PC3 creates a
suspensive condition or suspensive
conditions, the defendant,
firstly, waived compliance with such condition, as set out in
paragraph 6.3 of the particulars of claim.
Before dealing with that
submission, it should be pointed out that the plaintiff called only
one witness, Mr Mohammed Shaffie
Mowser, whereas the defendant called
two witnesses, viz., Mr Amos Monkie Vilakazi and Mr Nicholaas Els.
[14] Although we are not, at this
stage, dealing with the evidence of the respective witnesses, it is a
fact that Mr Mowser stated,
during his evidence, that, at a meeting
on 30 July 2003, Mr Deviliers, then employee of the
plaintiff, or Mr Mowser himself,
provided an explanation of the
plaintiff’s Black Economic Empowerment (“BEE”)
status to the satisfaction of the
defendant’s representatives
who were at such meeting. Hence the alternative submission of
waiver. At such meeting, Mr Mngqibisa,
who represented the
defendant, advised the plaintiff’s representatives that a draft
written contract would be forwarded to
the plaintiff, within a week,
but that the plaintiff had, otherwise, won the tender as described in
PC2 and that the signing of
the contract was a mere formality
(paragraph 6.4 of the particulars of claim). In fact, according to
Mr Mowser, the parties’
representatives at that meeting agreed
that the plaintiff would commence rendering services in terms of the
agreement between the
parties on 1 September 2003.
[15] Although the substantial
allegations contained in paragraph 6.3 (so also in 6.4 as will later
appear) are denied by the defendant,
it is submitted, on the
plaintiff’s behalf, that Mr Mowser’s evidence should be
accepted and that it is evident therefrom
by virtue of the defendant
expressing satisfaction with the plaintiff’s BEE status, the
plaintiff fulfilled the BEE condition
contained in PC3.
[16] In the event of the Court not
upholding the plaintiff’s submission that it fulfilled the BEE
status, it is submitted,
on the plaintiff’s behalf, that the
defendant waived compliance therewith. That submission is also based
on what was allegedly
discussed, on the plaintiff’s version at
the meeting of 30 July, 2003. I am puzzled as to how, if
the Court were
to reject the evidence of fulfilment of the BEE
requirement, based on Mr Mowser’s evidence, it would,
nevertheless, find
that there was waiver, by the defendant, of the
need to comply with that condition, based on the self same
evidence by Mr
Mowser regarding the meeting of 30 July, 2003,
that was rejected. That, however, is the submission contained in
subparagraph
8.2.2 of the particulars of claim. During argument, Mr
Brett informed the Court that the plaintiff was no longer relying on
waiver.
[17] A further alternative submission
by the plaintiff, if waiver (before it was abandoned in court)
failed, was that the defendant
was estopped from denying that that
condition had been fulfilled. This submission is also based on the
acceptance of Mr Mowser’s
version of the facts, with regard to
the meeting of 30 July, 2003. It is submitted, as outlined
in subparagraph 8.2.3,
that, because the defendant’s
representative allegedly informed the plaintiff’s
representatives, at that meeting, that
the defendant was satisfied
with the plaintiff’s BEE status, the plaintiff “acted to
its prejudice by making preparations,
and incurring expenses, to
enable it to perform its obligations in terms of the agreement
between the parties. In the circumstances,
the defendant is estopped
from denying that the condition has been fulfilled.” As I
earlier remarked, it is difficult to
understand how the Court would,
not having accepted that the defendant’s representatives
expressed satisfaction at the meeting,
nevertheless find that the
plaintiff had been misled into acting to its prejudice in the manner
alleged. I should not be understood,
however, as having made a
decision with regards to what transpired at the acceptability or
otherwise of Mr Mowser’s evidence
with regard to what
transpired at the meeting of 30 July, 2003. That decision
awaits a later stage in the judgment.
[18] With regard to the second
condition in PC3, viz., “… full finalisation and signing
of a formal contract”,
Mr Brett submits, based on the contents
of subparagraph 8.3 of the particulars of claim, that it does not
constitute a suspensive
condition, as he later argues, relying on
some authorities. Alternatively, in the event of it being held
that it does constitute
a suspensive condition, the plaintiff submits
that, in view of what Mr Mngqibisa allegedly said at the meeting of
30 July 2003,
i.e., that the plaintiff had won the tender
and that it will commence rendering services, “in terms of the
agreement between
the parties”, on 1 September 2003
(subparagraph 6.4 and 6.5), the parties had agreed that that second
condition
would no longer constitute a suspensive condition.
Alternatively, it was submitted, (in subparagraph 8.3.1), that the
defendant
had waived compliance with that condition (an aspect
abandoned in Mr Brett address).
[19] Finally and alternatively, with
regard to the condition that relates to the successful finalisation
and signing of a formal
contract, it is submitted that the defendant
intentionally prevented the formal contract from being finalised and
signed. It did
so by failing to present the plaintiff with the final
draft contract for its signature, in spite of frequent requests by
the plaintiff
that such be done. The Court is, therefore, asked to
deem such second suspensive condition as having been fictionally
fulfilled.
[20] According to Mr Newdigate, the
primary question in this case is one of contractual interpretation
with reference. In particular,
to the “BEE improvement”
and “the successful finalisation and signing of a formal
contract”, which are
contained in PC3. I have already set
out, in quite some detail, how, according to Mr Newdigate’s
submissions, that
interpretation should be, in the plaintiff’s
favour. He submits that, based on legal principles of
interpretation, which
will be discussed later in the judgment,
notwithstanding the use of the phrase “subject” to in
PC3, “the words
… are neutral, and do not indicate, in
and of themselves, that the obligations in terms of a particular
agreement are dependent
on the occurrence or non occurrence of the
uncertain future event” (paragraph 11 of the plaintiff’s
heads of argument).
The defendant does not, so Mr Vorster submits,
gain any assistance from the process of contractual interpretation
that creates
a constructive suspension out of reference to the “BEE
improvement”. I shall return to the plaintiff’s
submissions in this regard when dealing with authorities.
[21] It is further submitted, on the
plaintiff’s behalf, that there are no material disputes of
fact. As Mr Newdigate put
it, during his address,
“
The matter turns on facts
which are ‘[a] common cause on the pleadings … or [b]
which are not in dispute, having regard
to the evidence’ [
page
7 of the addresses
].
”
In this regard, Mr Newdigate alludes
to Mr Vorster’s criticism of Mr Mowser as a witness and submits
that criticism of witnesses
– whether Mr Mowser or the
defendant’s witnesses – is unnecessary, on the facts of
this case. He makes this
submission in the following form:
“
We submit to your Lordship
in the first place, [a] that all of the relevant issues are common
cause and that, [b] there are no material
disputes of fact; [c] that
the exercise embarked on by our learned friends is a nitpicking one.
”
(… numbering is added)
As Mr Newdigate puts it in his
address, it is not a credibility case at all. “One is not
weighing up the evidence of Mr Mowser
against the evidence of Mr Els,
for example.” [
Page 9
]
[22] The
defendant’s
submissions
, as summarised
by Mr Vorster, based on the defendant’s plea, are as follows:
1. In terms of PC3, the defendant
accepted the plaintiff’s offer, in PC2.
2. On the face of PC3, the
appointment
of the plaintiff was, as the document says:
“
subject
to the following: -
- BEE Improvement; and
- The successful finalisation and
signing of a formal contract.”
3. The letter of appointment itself
could not, in law, constitute acceptance of the plaintiff’s
offer, but constituted a counter offer,
which counter offer
was accepted by the plaintiff, so submitted Mr Vorster. He draws the
Court’s attention to the bottom
of PC3, where the portion
provided for acceptance or non acceptance is completed, on the
plaintiff’s behalf, with an
indication that the counter offer
was accepted.
4. Mr Vorster alludes to the
plaintiff’s heavy reliance on clause 5 of the “REQUEST
FOR PROPOSAL DOCUMENTS”, more
specifically the following
portion thereof:
“
Acceptance of our proposal
will be communicated to us by letter order through the post. The
post office shall be regarded as our
agent and delivery of such
acceptance with the post office shall be treated as delivery to us.
”
The plaintiff have submitted that, by
communicating PC3 through the post office, as stipulated in PC2, the
defendant had accepted
the plaintiff’s proposal. Mr Vorster
submits that, notwithstanding the provisions of clause 5, it is
common cause that PC3
contains a qualification which renders PC3
itself not to constitute an unqualified acceptance of the plaintiff’s
offer as
contained in PC2. He submits that PC3 constitutes a
counter offer with new provisions.
5. By accepting PC3, the plaintiff
accepted the conditions set out therein.
6. It is common cause that, after
acceptance of PC3 by the plaintiff, parties continued being involved
in negotiations, with a view
to successfully finalising and signing a
formal contract, as required by PC3.
7. The final paragraph in PC3 bears
great significance, in that it sets out a clearly defined process to
be followed after acceptance
of PC3 by the plaintiff.
8. Like Mr Newdigate, Mr Vorster
relies on a number of decisions, which will be discussed later in
this judgment.
FACTS
[23] As mentioned in the Introduction
section, this is an action for damages, in which the plaintiff sues
the defendant for payment
of the sum of R13 890 988.00, it
being damages allegedly suffered by the plaintiff when the defendant
allegedly breached
a contract that allegedly existed between the two
of them. According to such contract, the defendant had awarded a
tender to the
plaintiff, to provide guarding services for post
offices in three regions, viz., the Western Cape Province, the
Northern Region
and the Central Region. The existence of such
contract is based on the plaintiff’s aforementioned
interpretation of PC3.
[24] The alleged breach of contract
flows from a letter of “TERMINATION OF CONTRACTUAL
RELATIONSHIP”, dated 30 January, 2004,
written by the
defendant to the plaintiff. The following is stated in paragraph 1
of that letter:
“
1. As you are aware, the
South African Post Office (‘the Post Office’)
conditionally appointed your company to render
guarding security
services in 3 operational regions as delineated by the Post Office
for its purposes. This appointment was on
a
month-to-month basis
from
01 September 2003, subject, to and until finalisation of
negotiations and the conclusion of the written agreement
as
contemplated in paragraph 3 hereof
.”
(Emphasis added)
In
paragraphs 3, 4 and 5, the letter read as follows:
“
3. It was a term and
condition of the appointment that your company and the Post Office
(collectively referred to as ‘the
parties’) would
conclude and sign a written agreement between a reasonable period
from the date of award of the said tender
to accompany you.
4. It was a further term of the
agreement between the parties that the relationship between them
would be one of
utmost
good faith
, giving
the nature of the services procured by the Post Office from your
company.
5. Regrettably, whilst negotiations
towards conclusion of a written agreement were in progress, your
company engaged in conduct
that has materially and seriously
undermined the trust and utmost good faith between the parties.
”
The letter then lists a number of
examples of conduct that the plaintiff allegedly engaged in and which
“materially and seriously
undermined the trust and utmost good
faith relationship between the parties”, according to the
draft.
In
paragraph 6 of the letter the following is stated:
“
6. Your company has engaged
in conduct that has tarnished the good name of and image of the Post
Office, and has put the Post Office
in disrepute
.”
The letter then list a series of
alleged examples of the conduct mentioned in paragraph 6.
[25] Paragraphs
7 to 9 of the letter read as follows:
“
7. These incidents, and
others that are not mentioned herein, have materially affected the
trust and utmost good faith relationship
between the parties. You
company’s conduct is clearly irreconcilable with a continued
intention to maintain the month to month
contractual
relationship, nor to enter into any further contractual relationship
with the Post Office. The incidents constitutes
(
sic
)
a clear breach of the basis of the existing relationship between the
parties. The Post Office therefore hereby exercises its
rights and
gives your company notice that: -
7.1 it will not continue with any
contractual
negotiations
with
your company as envisaged in the award of the tender to your company;
and
7.2
the
month to month contractual relationship
between the parties will come to an end on 29 February 2004,
on which date your company must vacate all premises of the
Post
Office.
8. Kindly note that although the
Post Office is giving your company 30 [thirty] days notice notice
(
sic
)
of termination. I shall, this is on the understanding that your
company will maintain proper standards of service in accordance
with
the current ISO quality standards. Should your company lower the
service standards in any way, the Post Office will terminate
notice
period and the relationship on 24 hour notice.
9. With immediate effect, kindly
direct all oral and written communication arising from this letter
and the provision of services
to the Post Office to Mr Siviwa Mapisa,
Acting Senior General Manager: Security and Investigations.
”
(Emphasis added)
The paragraph ends with details
relating to a manner of communication thereafter. This letter is
referred to as PC4. It will have
been noted that the defendant has,
from the onset of the conflict, been of the view that there was a
month-to-month contract between
the parties, independent of the
contract that is now the subject of the dispute.
[26] In a letter dated 27 May 2004,
addressed to the defendant, the plaintiff’s attorneys wrote as
follows in paragraphs 1
to 3 thereof:
“
1. During July 2003, our
client’s written offer (dated 28 November 2002) for
the provision and the management of
guarding services was accepted in
writing by yourselves,
resulting
in the conclusion of an agreement
between our client and yourselves.
2. It was subsequently agreed that
our client was to provide guarding services in respect of three
regions … and that the
contract was to endure for a period of
three years.
3. However, by means of a letter
dated 30 January 2004, the South African Post Office
Limited has seen fit to repudiate
the agreement between the parties,
and has persisted in such repudiation. Your repudiation is hereby
accepted.
” (Emphasis
added)
The letter then sets out damages
allegedly suffered by the plaintiff, in consequence of such alleged
repudiation of the alleged
agreement between the parties, claiming,
in the letter, an amount of R20 836 482.00, and not the
R13 890 988.00
claimed in the summons. This letter is
referred to as PC5. It will be noted that the plaintiff has, from
the commencement of
the action, approached the dispute on the basis
of the existence of a single contract of provision of guarding
services by the
plaintiff to the defendant. That is the contract
which is the subject of dispute before the Court. There is not as
much as mention,
in the plaintiff’s letter of 27 May,
2004, of the month-to-month contract mentioned in PC5. In his
evidence, however,
Mr Mowser acknowledged that the plaintiff provided
the defendant with guarding services, on a month-to-month basis,
before and
whilst awaiting signing of what the plaintiff regards a
contract.
[27] On 27 February, 2004, the
plaintiff brought an urgent application in which it sought to have
the “purported termination
of the contract between the parties
in terms of the Respondent’s [the defendant’s] letter of
30 January 2004
declared unlawful. It also sought that the
parties be ordered to perform in terms of “the agreement”
described above,
in this judgment, and that the respondent (the
defendant) be ordered to “forthwith seize and desist from
negotiating with
and/or appointing another party in substitution of
the applicant (the plaintiff) as provider of guarding services in the
three
regions. That application was dismissed for lack of urgency
and was not pursued in the ordinary motions court thereafter. A
bundle
containing papers meant for such application has been placed
before the Court in, the present action and has been referred to in

evidence, from time to time. A large number of other documents used
for the parties are contained in a bundle, Exhibit A.
[28] A very interesting question, as
to whether the defendant has, in fact, repudiated the contract that
the plaintiff has in mind
– and not a month to month
contract – was not argued or even raised before the Court. The
issue before me
is one of interpreting the condition set out in PC3.
The question of the existence or otherwise of the alleged
month to month
contract is, however, not an unimportant
consideration, in my view.
[29] As earlier stated, the plaintiff
relied on the oral evidence of a single witness, Mr Mohammed Shaffie
Mowser, who, like the
defendant’s witnesses, relied heavily on
documentary evidence, in support of his own evidence. Mr Mowser is
the Chief Executive
Officer and also Director of a company known as
Command Holdings Limited. He is also the plaintiff’s Director,
the plaintiff
being a wholly-owned subsidiary of Command Holdings
Limited, trading as Maxi Security. At the time of the bringing of
the action,
the former director of the plaintiff, Mr Danie De
Villiers, and Mr Mowser were having a hostile relationship.
Consequently, Mr
De Villiers was not called as a witness, although he
featured in a large number of important aspects of the case. Mr De
Villiers
is said to have misappropriated company funds and, as at the
time of the action being heard in court, such funds were the subject

of an action for recovery in another High Court matter. Mr Steven
Boulton, one of the plaintiff’s project managers, whose
name
figures prominently in evidence, had a very close relationship with
Mr De Villiers and, consequently, he also could not be
called as a
witness for the plaintiff. There are other often-mentioned employees
of the plaintiff who were not called as witnesses,
for reasons not
stated. It is not far fetched to surmise that they also were
influenced against the plaintiff by their having
worked closely with
Mr De Villiers.
[30] Mr Mowser spent some time in his
evidence dealing with the plaintiff’s Black Economic
Empowerment (BEE) credentials.
This was, no doubt, due to the fact
that BEE features prominently in PC3. In that regard, Mr Newdigate
asked Mr Mowser to “describe
… the basic structure of
the Command Group and this particular plaintiff in this respect”,
to which question Mr Mowser
replied as follows:
“
Your Lordship, Command
Holdings Limited is listed on the Johannesburg Stock Exchange, it is
controlled by two tasks, essentially
the Inkwezi Investment Trust.
”
He
went on further to elaborate as follows:
“
Command Holdings Limited is
the only black
controlled and managed security service provider in the country
listed on the Johannesburg Stock Exchange.
”
(Emphasis added)
By that he meant that “the
shareholding is in the hands of historically disadvantaged
individuals”.
[31] It is common cause that the
“SPECIFICATIONS AND REQUIREMENTS” clause in the “Request
for Proposal by the
South African Post Office Ltd, for Guarding
Services at Post Office Outlets and Mail Centres”, contains the
following with
regard to BEE:
“
(2) Objectives
:
The management of the Regional
Service will be responsible for:
2.1 …
2.2 …
2.3 …
2.4 …
2.5 …
2.6 Ensuring that Black Economic
Empowerment targets are achieved.
”
Concerning
evaluation criteria, the following is stated:
“
(3) Evaluation
Criteria
:
Builders
will need to illustrate:
3.1 …
3.2 BEE status and contribution to
BEE and SMME development as well as corporate and social
responsibility.
”
[
Page 19 of exhibit A
]
[32] It is common cause further that,
according to the defendant’s ratings, the plaintiff scored very
poorly with regard to
the BEE requirement, a mere 13%. According to
the defendant’s evidence, the plaintiff was the lowest scoring
of three successful
service providers with regard to BEE. As will
appear more fully during discussion of evidence, the plaintiff was
extremely aggrieved
by this rating and disputed it. This explains
why it is mentioned early in Mr Mowser’s evidence.
[33] Mr Mowser states that the
plaintiff responded to the defendant’s proposal in PC1, in late
November 2002. On 27 June 2003,
the defendant approached
the plaintiff, requesting it to supply temporary guarding services.
On 30 June 2003, the plaintiff,
in a letter that appears on
page 97 of annexure A, responded to the request as follows:
“
We hereby … …
of your telefax dated 27 June 2003 in respect of the supply
of temporary guarding services.
As requested we have undertaken a
review of the scope and the required services and … wish to
advise that we are able to
supply them at the following rates: …
NB
:
We would like to draw your attention to the fact that should we be
favoured with the envisaged work we are able to commence on
72 hours
notice if required.
”
Once more, no mention is made of
temporary guarding services, on a month to month basis
provided by the plaintiff, before
28 July 2003.
[34] Mr Mowser then referred to both
PC2, the plaintiff’s written offer to the defendant for the
provisions and management
of guarding services in respect of five
regions, and PC3, the defendant’s response to the offer. I
deliberately use the
word “response” because the
pertinent issue before me, between the parties, is precisely whether
this was an unconditional
acceptance of the offer in PC2, as
submitted by the plaintiff, or a counter offer, as submitted by
the defendant. Mr Mowser
stated that he was surprised, on reading
PC3, to see reference being made to BEE Improvement by the plaintiff.
In that regard
he elaborated further as follows:
“ …
I
was always aware that BEE credentials were necessary for the
successful tenderer, because that was set out in the initial
document,
but what I was not aware [of is] that it was of [
sic
]
the concern of the Post Office that Command required an improvement
in their BEE credentials. It was only brought to my attention
when I
received this letter [PC3].
”
So important was the question of BEE
status of a service provider that it covered pages 56 to 67 of the
document on rating proposals.
[35] It is common cause that a meeting
took place on 30 July 2003, between representatives of the
respective parties.
Whereas, as will later transpire when discussing
cross examination of Mr Els, one of the defendant’s
witnesses, that
such meeting was in due course, Mr Mowser asserts
that it was in consequence of his reaction, with surprise, to
reference, in PC3,
to the need for improvement in the plaintiff’s
BEE status. He testifies as follows in that regard:
“
The moment this letter [PC3]
was faxed to me by Mr De Villiers, I raised, I was actually shocked
to see an improvement on BEE, because
I could not understand, I mean
we are the real business, I cannot understand how we must improve.
We cannot change where we come
from, and we cannot change who we are,
so I had the concern.
This
resulted in a meeting a couple of days later with the Post Office
procurement section to resolve the matter
.
…
we then
arranged a meeting to see the Post Office
,
because they had a time limit to accept this offer, this award.
”
(Emphasis added)
Meeting
of 30 July 2003
[36] Mr Mowser attended the meeting on
30 July 2003, at the defendant’s procurement offices.
He was with the following
people from the plaintiff’s side, Mr
De Villiers, Mr Boulton and a Mr Sithole. The defendant was
represented by Mr Mongezi
Mngqibisa, Mr Els and Ms Emma Lotriet.
Asked by Mr Newdigate as to whether it was correct that it was
agreed, at that meeting,
that the plaintiff had been awarded the
tender in respect of three regions, the Western Cape, Northern Region
and Central Region,
Mr Mowser replied:
“
Quite correct, in actual
fact we were congratulated and the Post Office was looking very
forward to us being a service provider
that was BEE (
sic
),
because I gave a brief overview which they (
sic
)
gave to the court
earlier on as to what we were and how Command was structured. …
Ms Lotriet was actually thrilled that
we could provide the service as
a BEE entity.
”
It is common cause that Ms Lotriet was
the defendant’s project manager of the guarding services. Mr
Mowser concludes this
aspect of the meeting as follows:
“
In actual fact we were never
questioned or requested to provide any explanation. I was introduced
by Mr De Villiers, and I gave
a brief overview where I came from, who
the company was
and
BEE was not raised ever again after that
.
Open in remarks (
sic
)
they were satisfied. … Well, the fact that I had informed
the meeting at the outset of how Command was structured and
who the
role players were and how the shareholding worked out,
there
was (sic) no further questions regarding our BEE status or a request
for an improvement thereof
.
”
[37] Although Mr Mowser concludes that
aspect with the statement “they never did raise it again”,
it is not clear to
me whether he refers to never again at that
meeting or never ever. I mention that because it is common cause
that, as late as
October, as will appear more fully later, the
defendant was still concerned about the plaintiff’s BEE status.
[38] Other aspects discussed at the
meeting include the date of commencement. Mr Mowser says it was
mentioned that “the commencement
date of
the
contract
” was
1 September 2003. From Mr Mowser’s evidence, it is
evident that the details contained in the tender
were likely to be
changed in a number of respects. For instance:
“
Emma Lotriet indicated that
the schedule that was submitted in the proposal may have to change
because there are a number of Post
Offices that were not included in
the tender, and that would be finalised soon, and that they had
sufficient time … the
month of August to finalise those for
commencement date on 1 September 2003.
”
That date was agreed upon. Mr Mowser
says Ms Lotriet also expressed concern about the defendant’s
budget, referring to a
practice in the past in which the Post Office
was under budgeted, often resulting in it taking money from other
departments to
subsidise the guarding services budget. She was
actually addressing Mr Mngqibisa:
“
Her concern was basically
that there could be more guards required for more sites than had been
envisaged in the tender.
”
[39] Mr Mowser further stated that the
defendant’s representatives at the meeting on 30 July 2003
stated that
the contract
would be ready in a weeks time and
would
be finalised and signed
within a week, and that we must continue
as
though we have go the contract would be ready
.
(Emphasis added)
[40] It appears to me that, although
Mr Mowser was aware of, and had actually mentioned in his evidence,
the arrangement between
the plaintiff and the defendant for provision
of temporary month to month guarding services, he had
forgotten about that
when he gave his evidence with regard to the
commencement of the bid on 1 September 2003. This emerges,
in my view,
from his answers to questions by both the Court and Mr
Newdigate in that regard. His evidence regard goes thus:
“
COURT
: ‘He
must continue as though he had a contract? --- Yes.
So
were
you already working
?
---
No
,
we were to start on 1 September.
And
you were going to
start
without a contract. --- Without a contract
.
Mr Newdigate
: Could
I just clarify, sorry … (intervenes).
COURT
: Now
that was the, … (inaudible) of the 30
th
of ? ---July.
…
As [early as] 30 July there was
already a possibility of your starting in September
without
a contrac
t. ---
Correct
It
takes long. --- Correct, in actual fact, we started in August already
on certain sights
at
the request of the Post Office
.
You are right, but as you are
talking to one another on 30 July you
had
not started anywhere. --- No, we had not started
.
But are you saying subsequent to
that meeting was (
sic
)
further discussions. --- Further discussions.
Which
caused you to start in August
.
In
August before the 1
st
of September.
”
[41] When that line of evidence was
further pursued by Mr Newdigate (on pages 52 and 53), after he
referred to receipt of PC3,
by the plaintiff, Mr Mowser’s
evidence went as follows:
“ …
but
when you received this letter, what was your attitude and by you I
mean the plaintiff, as to whether you had an agreement or
not? ---
No
we
had an agreement
we
were told that we must start on the 1
st
,
we must recruit, we must acquire equipment, vehicles, we must start
on 1 September.
…
the
plaintiff after that try and start making preparations to implement
the agreement? ---Yes.
”
[42] Mr Newdigate then asked Mr Mowser
whether, if he had been told by the defendant’s
representatives, at the meeting of
30 July, 2003:
“
The defendant had problems
with the plaintiff’s BEE explanation and that, as far as the
defendant was concerned, unless the
plaintiff sorted out BEE
improvements, there as no agreement, the plaintiff would have
proceeded to implement the course.
”
Mr Mowser replied that he would not
have gone on with the contract in those circumstances.
[43] Mr Mowser then referred the Court
to a document forwarded by the defendant to Mr De Villiers, on
14 August 2003,
which accompanied a, in Mr Mowser’s
words, “draft agreement”. The following evidence was
accused by Mr Mowser,
in … questions by Mr …, in that
regard:
“
Thank you, and the point I
think Mr Mowser, was that this was the
draft
agreement
provided
after the meeting. --- That is quite correct.
Now as we see at page 110, the
document is not complete, for example the names of the parties are
not in.
It is not
ready for signature
.
--- No
But I would like nonetheless to
deal with certain pages with you. Page 115, paragraph 1.8.
Effective date is
give[n] as 1 September 2003
.
--- Correct.
How does that reference relate to
your discussion on 30 July? --- Exactly the way it was discussed
at the meeting.
”
(Emphasis added)
[44] Seeing that both Mr Mowser, on
behalf of the plaintiff, and Mr Vilakazi, on behalf of the defendant,
were referred, extensively,
to clause 39 of the draft agreement, on
page 160 of annexure A, it is prudent to quote the entire clause.
It reads:
“
39.
BLACK
ECONOMIC EMPOWERMENT (‘BEE’)
39.1 The Contractor acknowledges
that it has been informed of the BEE policy and requirements of the
Post Office;
39.2 The
Contractor agrees to comply with the said BEE policy and requirements
and shall at all times maintain not less than the
required BEE
component in the fulfilment of this Agreement.
39.3 It is a critical aspect of
this Agreement at all times that the Contractor ensure[s] real,
effective and measurable skills
transfer to the previously
disadvantaged persons and entities controlled by such person.
39.4 In this regard the Contractor
shall ensure that by the end of 3 (three) years from the Signature
Date, 40% of its voting shares
are held by persons and/or entities
from previously disadvantaged background.
39.5 Notwithstanding the Effective
Date, the Post Office reserves the right to carry out a due diligence
exercise on the Contractor
at six (6) monthly intervals to monitor
the Contractor’s compliance with such BEE policy and may take
whatever action is
deemed necessary in terms of this Agreement
including termination for the subsequent failure of the Contractor to
maintain such
compliance.
”
[45] Mr Mowser was then asked, by Mr
Newdigate, whether, if clause 39 had been part of the contract, the
plaintiff and Mr Mowser
himself would have had any problem with
signing that contract. Mr Mowser answered that there would have been
no problem. A request,
by the Court, for clarification of that
answer led to the following comment by Mr Newdigate:
“
Your Lordship will recall
that there is a dispute as to what the reference, the chronic (?)
reference in PC3 to BEE improvement
is. And in particular the issue
is, is it a suspensive
condition
.
…
”
He went on to explain that paragraph
39 is part of a document that “is simply a draft”.
“
It is a clause
in
a draft
put up by
the defendant indicating, we argue in due course,
the
way the defendant saw BEE improvement
.
In other words
as a
term of the agreement, not a suspensive condition
.
And the question is really directed at this inasmuch as this is what
the defendant said is the way that it would be trashed out,
would Mr
Mowser and the plaintiff have seen it in the same way. And the
answer is a simply yes.
”
[Emphasis added]
[46] Whilst the discussion above,
between the Court and Mr Newdigate, is more about legal
interpretation, it is, nevertheless, significant
in that it indicates
the relevance of Mr Mowser’s evidence, in the plaintiff’s
view. As earlier pointed out in the
judgment, Mr Newdigate submitted
that it is not necessary to rely on evidence in this case, for one to
arrive at a correct interpretation
which, according to the plaintiff,
is that PC3 does not contain a suspensive condition. He, however,
submitted that, in the event
of the Court holding that the wording of
PC3 is not unambiguous, evidence on surrounding circumstances
indicates how PC3 should
be interpreted. It is in this context,
therefore, that Mr Mowser’s evidence is of significance
according to Mr Newdigate.
[47] Although Mr Mowser gave evidence
with regard to a number of other events that occurred after
30 July 2003, he had
no direct knowledge thereof and relied
on reports given to him by people like Mr De Villiers and Mr Boulton.
He also relied on
e mails and other documents that he was
referred to from the bundles. As I have already stated, no other
witness was called
on the plaintiff’s behalf. During Mr
Vilakazi’s evidence, on the defendant’s behalf, he
alluded to a meeting
of the parties on 17 October 2003, wherein
a number of things were allegedly said. Mr Mowser did not attend
that meeting.
Consequently, his evidence with regard to what was not
said at that meeting does not assist either the plaintiff or the
Court.
[48] During cross examination, Mr
Mowser did not shift from his essential averments during his
evidence-in-chief. He was,
however, a much poorer witness during
cross examination than he was during his evidence in chief.
Because of the
view I have as to how this case should be approached,
I do not find it necessary to give examples in support of my view
that Mr
Mowser was a poorer witness during cross examination.
Suffice it to say, in his favour, that he occupied the witness box
for a very long time. His 365 pages of evidence are over four
volumes of transcription. It is not unusual for a witness who is

questioned for that long to have lapses of concentration, in my
experience.
[49] As I have already stated, the
defendant called only two witnesses, Mr Vilakazi and Mr Els. Like
the plaintiff, the defendant
was unable to call quite a number of
witnesses, on account of the fact that they had parted company with
the defendant in an unhealthy
manner and could not be relied upon to
give supportive evidence. However, unlike the plaintiff, the
defendant had a witness with
regard to each of two very important
meetings, the one of 30 July 2003, alluded to by Mr Mowser, and
another of 17 October 2003.
The first witness, Mr
Vilakazi, did not attend the meeting of 30 July 2003, which
was attended by Mr Els, who, in turn,
did not attend the meeting of
17 October 2003, which was attended by Mr Vilakazi.
[50] Save to indicate what each of the
witnesses, Mr Vilakazi and Mr Els, are in relation to the scheme of
things and their positions
with the defendant, it is, in my view,
unnecessary to state their evidence in detail. Mr Vilakazi is an
attorney by profession
and also the defendant’s attorney in
this action. He told the Court that he received instructions from
the defendant, through
one Ms Kanthi Nagiah, who was in charge of the
defendant’s legal department, the Investigations Audit
Department. His mandate
was to draft a guarding contract and a cash
in transit contract (CIT) on its behalf. The following day, on 21
February 2003, Ms
Nagiah furnished him with a template for a guarding
contract, still awaiting further information in respect of the CIT
contract.
Ms Nagiah’s e-mail read as follows:
“
Hi Amos (that being Mr
Vilakazi’s first name) – our discussion yesterday refers
concerning the drafting of a guarding
contract and cash in transit
contract. I am forwarding the guarding contract to you – I
shall await the info on the CIT
contract – as mentioned both
contracts must be thorough and detailed – most importantly I
want an early termination
clause, penalty clause (which must not
prevent us from terminating should we so wish) and other protection
for the PO built into
the contract. Must look at authority to
represent in future amendments and the BEE component. Before you
commence the mandate,
PLS advise me what your fee would be for the
drafting of the contracts. I trust it will be reasonable.
”
On 4 March 2003, Mr Vilakazi sent his
e-mail to Ms Nagiah, which reads as follows:
“
I just wanted to remind you
that we agreed on the following course …:
1. Your (
sic
)
forwarded us a draft guarding contract for immediate perusal and
commencement with preliminary work on it;
2. You are supposed to forward us
information regarding the CIT contract. When you think you will be
able to do this?
3. We need to have a meeting with
internal stakeholders, as agreed. As you know the meeting should
have been held already, but
was twice cancelled. In light of the
fact that there is a
tight
deadline
to this
job, it is critical that this meeting be held within this week. We
are able after 13:00 on Thursday 06 instant, otherwise
it has to be
next week. The difficulty is that the time
pressure
is mounting and may result in the deadline being compromised
.
Please do let us know how to proceed.
4. We will liaise with you on both
contracts once we have all identified the requirements of internal
stakeholders. Delivery of
the
final
product
will be made
to you. Please do revert on these issues so that we are able to
satisfy your internal clients.
”
(Emphasis added)
[51] In his evidence, Mr Vilakazi
stated that he had already received oral instructions from Ms Nagiah
on 20 February 2003
and had accepted the mandate. What is
evident from his e-mail are his emphasis on speedy action and that
what he was given by
Ms Nagiah was only a draft and not “the
final product”.
[52] Mr Vilakazi had been made to
understand that the situation in the defendant’s practice,
before he was instructed, was
untenable. He describes it as follows,
at page 440 of the transcript:
“
My understanding at the time
was that the defendant had a lot of small service providers
throughout the country. The contract that
they had with these
service providers were by and large presented to the defendant by
those service providers, they were not drawn
up by the defendant or
the defendant’s lawyers. The defendant had the problem that it
could not readily manage these contracts
and it wanted to appoint
three service providers who had to be appointed to provide services
in three different regions of the
country. … [The defendant]
sought to appoint three service providers, each one of them to
provide guarding services in
a designated region of the country.
”
Mr Vilakazi stated, in evidence, that
the original source of the
e mail
sent to him by Ms Nagiah, on 21 February 2003
,
was actually Mr Nicholas Els. Indeed, this is reflected at the
bottom of the e mail from Ms Nagiah. The relevance of this
part
of his evidence will become apparent when I allude to Mr Els’
evidence later in the judgment.
[53] Asked what the rational was
behind the defendant’s insistence on a “thorough and
detailed contract” of the
manner described above, Mr Vilakazi
replied as follows (at page 442):
“
M’Lord, I was
instructed that [a] the Post Office had been engaged in some cases
where service providers had either taken
them to court or to
arbitration and that [b] on occasion the defendant had lost some of
these cases and [c] the real reason being
because the contracts on
which those disputes were based, did not give the Post Office the
protection that it required. As a result,
[d] having lent from such
experiences, the Post Office wanted to have
its
own contract which would provide the protection that it would need
,
so that in the event of future legal disputes it would be able to
then successfully defend itself.
”
[Emphasis and insertion of subparagraph numbering is mine.]
From this quotation, it is evident
that the defendant’s approach was that there were terms
favourable to it still to be built
into the future agreement with
service providers – guarding and CIT services alike – by
Mr Vilakazi and to be agreed
to by the service providers.
[54] Asked to “elaborate on what
[his] instructions were with specific reference to the BEE Component
that we see in this
message [from Ms Nagiah]”, Mr Vilakazi
replied as follows, on page 443:
“
M’Lord, as far as the
BEE Component, issue was concerned, my instructions was that the
plaintiff in this matter or rather
before we get to the plaintiff, at
the stage my instructions were that [a] the Post Office had a BEE
policy; … [a] and that
[b] it required the services providers
who would be appointed
in
terms of this contract I was to prepare
to comply with that BEE policy; [c] [p]art of the BEE policy was that
[i] the service provider had to not only meet a bench mark,
a
BEE bench mark at the beginning of the contractual relationship
between the services provider and the Post Office, but that
[ii] such
BEE component, composition had to be sustained through the
contractual relationship and [c] I was therefore required
to build
into the contract a provision that would entitle the Post Office from
time to time to make audits of the BEE compliance
or BEE status of a
service provider throughout the life of the contract.
”
[Emphasis and the insertion of numbered subparagraphs are mine.]
[55] Mr Vilakazi explained the
significance of consulting with internal stakeholders in the
defendant’s establishment. Firstly,
he pointed out that there
was a large number of departments that were considered internal
stakeholders, which had their special
requirements in respect of
services provided. For instance, the very Investigations and Audit
Department headed by Ms Nagiah had
its own requirements with regard
to the provision of guarding services. The procurement section,
i.e., the Supply Chain Management,
stakeholder needed to be
consulted, so also the Legal Services division. He concludes that
aspect as follows:
“
As I have already indicated
there was a history to this issue of provision of guarding services
and because of this history and
the problems that had been
experienced by the Post Office, there was need for various people to
give their inputs into the contract drafting
process, so that
their experiences would be taken into account in developing a
standard contract
”
(emphasis added)
[56] The initial deadline for the
provision of a standard contract was the end of March 2003. Mr
Vilakazi has instructed that a
number of individual contracts were
coming to an end and that there was need for the standardised
contract to be developed and
be ready for signature by the end of
March. They were to be signed by both the defendant and the people
“that would be appointed”.
He and Ms Nagiah would represent the
legal services stakeholder, with him being given the task of leading
discussions between the
defendant, on the one hand, and service
providers such as the plaintiff, on the other hand.
[57] Although the first version of the
draft contract, Version 1 was ready by 16 March, 2003, it
was not ready for signature.
Due to the need for consultation with
stakeholders, which entailed holding a number of meetings with them,
countrywide, it simply
was not possible to meet the end of March
deadline. On 28 July, 2003, Version 3 was finalised. It
should be pointed
out that Mr Vilakazi kept adding inputs from the
various stakeholders into the draft contract and then sending the
document around
for further comments. In the interim, however, there
was an ongoing month to month arrangement between the
defendant
and the plaintiff, for provision of guarding services by
the plaintiff – just as was ultimately conceded by Mr Mowser.
[58] The significance of Mr Vilakazi’s
evidence, with regard to the reasons for the delay in finalising the
draft contract
is, in my view, not simply anecdotal. It is relevant
to part of the plaintiff’s claim in its particulars of claim,
where
it is stated, in subparagraph 8.3.2, as an alternative
submission, that the defendant:
“
intentionally prevented the
formal contract from being finalised and signed by failing to present
plaintiff with the final document
for signature, notwithstanding
plaintiff’s frequent request that this be done. In the
circumstances, the suspensive condition
should be deemed to be
fictionally fulfilled.
”
Mr Vilakazi’s evidence, if
accepted, suggests that the delays in finalising the draft contract
were unavoidable.
[59] Another problem, with regard to
the question of delay in the finalisation of the draft contract,
relates to reported comments
by Abelard Underwriting Agency, the
plaintiff’s underwriters. Those comments are set out in full
on pages 164 to 169 of
annexure A. The underwriters were commenting
on the contents of Version 3. Incidentally, Mr Vilakazi points out
that the version
in question is incorrectly referred to, elsewhere,
as Version 1. It is significant to note that these comments by
Abelard were
forwarded on 1 September 2003, at which time there
was still no finalised draft contract for signature. As this is
documented,
the plaintiff must have been aware that the draft
contract was still not finalised by 1 September, 2003 and that
it contained
some clauses that were objectionable to the plaintiff.
Mr Vilakazi’s approach to Abelard’s comments is as
follows:
“
M’Lord, having gone
through these comments, I was or I had three general views in regard
to these comments, I characterised
these comments into three broad,
general views, one could say categories, for want of a better word.
[a] The one was that there
were some comments in this document that
were actually merited, they had merits and those I believed should be
entertained readily.
[b] There were other comments which I felt were
a complete no no, they were unacceptable, simply unacceptable
and [c] in
between there were comments, one could call them the grey
area comments, which I believed through negotiation there was a
possibility
that agreement could be reached to resolve those other
comments, either one way or the other. So there were three broad
views
I held in regard to the comments by Abelard.
”
Mr Vilakazi dealt with these comments
one by one and prepared a confidential attorney and client memorandum
dealing with them, which
was for the consumption of internal
stakeholders. An e mail sent on 16 October 2003, by
Mr Vilakazi, to Ms Nagiah
and Ms Lotriet, refers to a discussion
document which Mr Vilakazi had prepared and which was privileged and
meant only for his
client’s eyes.
[60] As I am not following the pattern
in which the evidence of the defendant’s witnesses was given, I
move on to indicate
that, during his cross examination by Mr
Newdigate, Mr Vilakazi stated that he understood the merit contained
in quite a number
of the objections raised by Abelard in their
comment. For instance, they were unhappy about the penalty clauses.
He agrees that
such penalty clauses are onerous on the part of the
plaintiff and favour the defendant. He states, however, that he
deliberately
inserted such contentious clauses in the draft because
he meant to provide precisely that kind of protection to the
defendant.
It is clauses like those that also created further delay
in the finalisation of the draft contract whereas the objections
thereto
were raised by Abelard, they were in a standard draft
contract that affected other service providers who were not,
necessarily,
dealing with guarding services and others, who were
operating in other regions and dealing with guarding services. None
of the
other service providers objected. It was not possible,
therefore, to finalise a draft that accommodated only the plaintiff
whilst
not accommodating the other service providers. Moreover,
seeing that these were not accidentally introduced, Mr Vilakazi, as
the
defendant’s attorney, felt very strongly about them,
especially bearing in mind the message that was given to him in the
e mail of 21 February 2003 from Ms Nagiah.
[61] Although Mr Vilakazi had not
attended the meeting of 30 July 2003, he had been informed,
as the person that was to
finalise the draft contract to be signed
by,
inter alia
,
the plaintiff, that, at such meeting, the question of the plaintiff’s
poor BEE status and the need, therefore, for the plaintiff
to improve
had been raised. This aspect was confirmed by Mr Els, although he
had attended the meeting more, as he describes himself,
as “a
spare wheel”. He describes himself in that fashion because,
whereas he had, before 30 July 2003, been
running the
process, he was, so to speak, toppled, and the process was now to be
run by a combination of Mr Vilakazi, Ms Nagiah
and Mr Mngqibisa, the
latter being the Acting General Manager and the person who led the
Post Office delegation at the meeting
of 30 July, 2003.
[62] Because Mr Els attended the
meeting 30 July, 2003 more as an observer than one directly
involved, he did not have
written official notes of the deliberations
at the meeting. He did, however, present a copy of a piece of paper
on which he made
certain notes and signs that helped him remember
what had transpired. Whilst his evidence, with regard to the events
at that meeting,
is weaker than Mr Mowser’s, he is, in my view,
heavily supported by objective factors, such as events that
transpired after
that meeting. The main difference between him and
Mr Mowser is that, having seemingly conceded that the defendant’s
party
at that meeting accepted Mr Mowser’s explanation of the
plaintiff’s BEE status, which was certainly far above the
recorded
13%, his evidence, viewed holistically, amounts to a denial
of their having been such acceptance and, more specifically, that the

plaintiff was congratulated for his BEE status. Whilst there might
still have been a doubt as to the correctness of his evidence
in that
regard, Mr Vilakazi’s unchallenged evidence that he was
informed that he had to await further inputs from the plaintiff,
with
regard to its BEE status being much higher than the rating by the
defendant, makes it unlikely that the defendant would have
accepted
such an explanation at the meeting of 30 July, 2003. It
would have been senseless to give the person tasked
with producing a
document to be signed by all service providers with information that
contradicted the defendant’s stance
at the meeting.
[63] Moreover, the following internal
e mails, i.e. between Danie (Mr De Villiers) and one Shaffie (Mr
Mowser) in the e-mail
of 20 October 2003, and between Mr De
Villiers and a Mr Zac Sithole, also for the attention of Mr Mowser,
on 22 October 2003,
indicate beyond doubt, that the
plaintiff’s BEE status was still an issue of concern inside the
plaintiff’s administration
in October, 2003. They read as
follows:
“
From Steve to Dannie,
‘
I
refer to our discussion relating to the
BEE
status required by the Post Office.
It
was again raised at the meeting on Friday [it is common cause that is
the meeting on 17 October 2003, attended by Mr
Vilakazi and
not by Mr Mowser). The points set down by Steve are the issues that
were raised during the diligence conducted by
both the Post Office
and Transnet. We scored 72% during the Transnet due diligence.
The problems we are currently
experiencing
is due
to the incompetence of the woman who conducted the Post Office
enquiry. It has subsequently been established that the suspensions

in the procurement department was (
sic
)
as a result of
paying the firm of attorneys … 00 000 [the e-mail has a
portion of the amount thus cut] per BEE audit
they conducted. They
were apparently paid over 7 million in 6 months!!
We have requested that
our
BEE status be revisited since it is causing serious problems with the
payment process and is an issue that has to be resolved
for the
contract to be finalised
.
It should be conducted by their internal department who, given the
circumstances will conduct an in depth evaluation.
’”
[Emphasis added]
That e-mail was from Mr De Villiers to
Mr Mowser. One between
Mr
De Villiers and Mr Sithole, on 22 October 2003
,
reads thus:
“
Evening
Zack
I refer to our discussion on
Wednesday 22 October with regards to the BEE review we are
preparing for, the Post Office
.
We have not been registered as a BEE company and this is causing us
problems with both
the
finalisation of the contract
and our payment terms. I have forwarded the requirements to Shaffie
but it should most probably be better to drive from Johannesburg,
and
get you involved with the process. The requirements that we
identified are set out in the mail sent to Shaffie on Monday and
are
set out below. In addition we are
awaiting
(sic) for the criteria that the Post Office is going to evaluate us
on
. The minutes of
the resolution passed by the Command board to issue shares to the
guards is an important element
that
we can use during the evaluation
.
Please contact me as soon as possible so that we can be well
prepared for the
evaluation
.
”
[Emphasis added]
[64] What clearly emerges from both
21 October, 2003 and 22 October, 2003 e mails,
inside the plaintiff,
is that (a) the plaintiff was aware that the
defendant was unhappy with the plaintiff’s BEE status; (b) the
plaintiff needed
to prepare information with which to convince the
defendant that the plaintiff’s BEE status was of acceptable
level; (c)
the plaintiff’s BEE status was still to be (further)
evaluated by the defendant; and (d) the BEE status issue was delaying

“the finalisation of the contract”.
MR
ELS
[65] Although, at the time of his
giving evidence, he was Group Compliance Officer, Mr Els used to be
Senior Manager, Contract and
Licensing, i.e., in the Supply Chain
Management Division. The latter division is, in his own words:
“
tasked with all the
procurement for the Post Office. There was a formal document in
terms of tenders and what we also refer to
as informal procurements
in terms of RFQ, that is a request for quotes.
”
Before Ms Nagiah and Mr Vilakazi took
over from him, his job entailed the following;
“
The intention was that once
the contracts had been finalised between the parties, I would then
take over my formal responsibilities
of getting the documents signed
and then do the compliance check to ensure that they comply with the
original Board approval and
then obviously, once they were signed,
get copies to the respective parties and then file it in the
database, which was part of
my management responsibility to maintain
.
”
Mr Els is evidently knowledgeable
about contract matters, even if he may be inaccurate about what
happened at the meeting of 30 July, 2003
– about
which I have already expressed my view.
[66] Mr Els’ evidence supports
that of Mr Vilakazi, with regard to the delay in the finalisation of
the draft contract. Referring
to the practice in that regard, he
says the following:
“
I had become aware in the
past, because of the long length of time that it took to finalise
tenders, often the spec and this is
specifically where we refer to
services that had to be provided, with change. As was indicated by
the process that was followed
over here, that at the time the tender
was awarded quite a number of sites, this is now Post Offices, had
been closed or new ones
had been opened and that would more likely
have impacted on the actual roll-out of the provision of services in
the Post Office.
”
[67] If there were, indeed,
intentional delays on the defendant’s side, so as to, for
whatever reason, frustrate the plaintiff
and delay the finalisation
of a formal contract, such evidence has not been tendered by the
plaintiff. On the evidence of Mr Vilakazi
and numerous objective
factors emerging from documents, there was no malicious intention on
the part of, at least, Mr Vilakazi
and Ms Lotriet, the project owner,
in the delaying the finalisation of the draft contract.
[68] There are numerous areas of
evidence where both Mr Vilakazi and Mr Els, respectively, refer to
the draft contract that still
had to be signed by the parties, on
completion thereof. I have already alluded to portions in Mr
Mowser’s own evidence,
wherein he clearly speaks with the
understanding that the document that was being prepared by the
defendant was the ultimate contract
to be signed by the two parties.
I also referred to they internal e mails of 21 and 22 October,
2003, within the plaintiff’s
administration.
THE LAW
[69] It is common cause between the
parties that, if the words “This appointment is subject to the
following”, in PC3,
created a suspensive condition, then such
condition has not been fulfilled. The parties differ, however, as to
how to arrive at
a decision as to whether or not a suspensive
condition was created by PC3. According to Mr Newdigate, on the
plaintiff’s
behalf, the proper approach is to follow the
elementary principles of contract, viz., with regard to offer and
acceptance. He
submits that it is quite patent from the relevant
documentation, PC1, PC2 and PC3, that the plaintiff made an offer to
provide
guarding services to the defendant. The plaintiff further
indicated how the defendant was to indicate its acceptance of that
offer,
viz., by way using the Post Office. Because this was an
acceptance and not a counter offer, it cannot, in law, create a
suspensive
condition. It is only if the submission is not sustained
by the Court that, according to Mr Newdigate, reference can be made
to
evidence.
[70] From the evidence tendered by Mr
Mowser as well as various documents referred to in evidence, it has,
according to Mr Newdigate,
circumstantially been established that the
defendant could not have intended to create a suspensive condition.
After all, so Mr
Newdigate submits, the draft contract whose various
versions were placed in evidence makes it clear that the defendant’s
intention was to make the BEE provision part and parcel of the
contract and not something that was to happen later. There cannot,

therefore, have been a condition that was to be fulfilled later
which, if not fulfilled, would render the contract impossible.
In
paragraph 7.3 of the plaintiff’s heads of argument, the
following submissions are made:
“
7.3 In the case of a
resolutive condition, the obligations in terms of the agreement are
immediately enforceable, but such obligations
fall away in the event
of the uncertain future event taking place.
”
Because this, in my view, is a correct
description of a suspensive condition, I find it unnecessary to
repeat the many authorities
cited by the plaintiff in that paragraph.
It is not clear, however, whether the plaintiff submits, in the
paragraph and in the
alternative, that the relevant words in PC3
created a suspensive condition. If the words created a suspensive
condition, it obviously
must be on the basis of acceptance of Mr
Mowser’s evidence that, at the meeting of 30 July, 2003,
whatever the
defendant’s perception might have been until then,
with regard to the plaintiff complying or not complying with the
required
BEE status, that problem disappeared at the meeting. That,
of course depends upon the Court accepting Mr Mowser’s evidence

that the BEE requirement was put to bed at that meeting. I have
stated why that evidence is unacceptable.
[71] Mr Newdigate correctly points
out, in the plaintiff’s heads of argument, that authorities
after
Vizir Gianakis v Karp
1965 3 SA 145
(W), no longer accept that the words “subject to”
are necessarily indicative of a suspensive condition and now accept

that they may indicate either a suspensive condition or a resolutive
condition. (See
Badenhorst
v Van Rensburg
1985 (2) SA
321
(T) 335I-336D;
Pangbourne
Properties Ltd v Gill and Ramsden (Pty) Ltd
1996 (1) SA 1182
(A) 1187H 1188B;
Premier
Eastern Cape and Another v Sekeleni
2003 (4) SA 369
(SCA) 375G J;
Parsons
Transport (Pty) Ltd v Global Insurance Co Ltd
2005 JOL 1560
(SCA).
[72] In support of the defendant’s
submission that the BEE agreement has a suspensive condition, Mr
Vorster relies, primarily,
on the wording of PC3, which he submits is
unambiguous. He initially, as I understood him, submitted that the
mere presence of
the phrase “is subject to the following”
creates a suspensive condition, as opposed to a resolutive condition.
Subsequently,
however, referring to authorities, he conceded that
whether or not such words create a condition or a term of a contract
depends
on the particular facts of the case in question. He then
submitted that, on the facts of the present case, those words do,
indeed,
create a suspensive condition. In so saying, he emphasised
that PC3 has to be seen as a counter offer, rather than a
straightforward
acceptance of the plaintiff’s offer contained
in PC2. Like Mr Newdigate, Mr Vorster cited a number of authorities
in support
of the defendant’s case. Whilst I have read all of
them, I do not find it necessary for me to discuss each and everyone
of them.
Summary of Factual Background
for this Judgment
[73] The
court’s decision in this matter is given in the context of the
following summary of the factual position:
1. At the end of 2002, the defendant
invited offers from,
inter
alia
, service providers of
guarding services, to apply for providing such services at its Post
Offices countrywide. The defendant had
divided the country into six
regions but had seemingly sought offers in respect of only five of
such regions.
2. The plaintiff responded to the
invitation by making an offer, during November 2002, as contained in
PC2.
3. In view of its previous legal
problems concerning its relationship with service providers, the
defendant had resolved to create
a national or standard contract that
would be used by all service providers, even those that were not
involved with guarding services.
4. The unchallenged evidence of both
Mr Vilakazi and Mr Els, on the defendant’s behalf, leaves no
doubt that the defendant
wanted a thorough contract – one that
would ensure that the defendant was indemnified by the service
providers in a number
of respects, which indemnification had hitherto
been non existent. According to Mr Vilakazi, the idea was to
bring an end
to the then common occurrence of the defendant finding
itself on the losing side when involved in court action against
service
providers, due to inadequate protection by the contracts then
in use. Moreover, there is no doubt, from the same evidence, that

the defendant regarded the provision of such a contract as one of
urgency. The end of March was the deadline by which, if things
had
gone according to the defendant’s expectation, the first draft
of the standardised contract, Version 1, would have been
ready,
seemingly also for signature. The internal e mails, between the
plaintiff’s senior administrators sufficiently
indicate the
defendant’s concern about the plaintiff’s BEE status:
5. For reasons previously stated in
this judgment, which do not appear to have anything to do with a
desire on the defendant’s
part to frustrate the plaintiff with
regard to the finalisation of a formal contract, the deadline of
31 March 2003 could
not be achieved. The reasons include
the plaintiff’s BEE status, as perceived by the defendant, and
the plaintiff’s
objection to some clauses in the draft
contract.
6. As at 27 July, 2003, when
PC3 was provided to the plaintiff, there still was no final draft of
the envisaged contract.
In fact, Version 3, which had been finalised
on 16 March, 2003 and which is erroneously referred to as
Version 1 on
page 109 of exhibit A, was forwarded to the plaintiff
only on 14 August 2003. According to Mr Vilakazi, the
delay in
that regard had been caused by the plaintiff’s failure
to provide information that it had undertaken to furnish the
defendant
with, in support of its alleged higher BEE status than what
alleged by the defendant.
7. As at the time of the meeting of
17 October, 2003, with regard to which the plaintiff has
not been in a position to
tender evidence, there still was no final
draft contract for signature. At that meeting, the plaintiff’s
BEE status was,
once more, raised (see the internal e mails
previously referred to in this judgment, amongst Messrs De Villiers,
Mowser and
Zac Sithole, where there is reference to the BEE status
that “was again raised at the meeting on Friday
[17 October 2003]”.
8. For reasons that included the
plaintiff’s BEE status and the underwriter’s comments
that either required further
discussion or were unacceptable, there
still was no contract ready for signature by December, 2003.
9. For the above reasons Mr Mowser’s
evidence that Mr Mngq ibisa stated, at the meeting of 30 July
2003, that the signing
of the contract was a mere formality must be
rejected. It should be borne in mind that, although none of the
defendant’s
representatives who attended that meeting was
called in evidence, Mr Vilakazi stated under oath, that that
statement by Mr Mngqibisa
is improbable, unlikely, in the light of
the objective situation as described by Mr Vilakazi and documentary
evidence placed before
the Court.
[74] When the defendant wrote the
letter of “TERMINATION OF CONTRACTUAL RELATIONSHIP”,
annexure PC4, on 30 January, 2004,
the “BEE
improvement” and “successful finalisation and signing of
a formal contract”, referred to in PC3,
had still not happened.
Whilst there is a dispute with regard to the first issue, the second
one is common cause. I have already
stated that I find that Mr
Vilakazi’s evidence, with regard to the BEE status issue not
having been finalised, correct.
[75] During his address, Mr Vorster
submitted that, in the light of the case of
Premier
Free State and Others v Firechem Free State (Pty) Ltd
2000 (4) SA 413
(SCA), he had come to the conclusion that his
submission that the tender was subject to a suspensive condition was
incorrect.
It simply was a nullity. The following appears in
Firechem
,
at paragraphs [35],
431F:
“
As Christie the Law of
Contract in South Africa
3
rd
ed at 152 explains, it is somewhat of a solecism to describe a
conditional contract as one in which the condition is purely
potestive
(
Sivolam of
Roman Law
), as such
a provision is destructive of any enforceable agreement. Nor does it
matter if the provision is cast as a term; and
Christie
(
op
cit
at 109). The
result is the same. Accordingly, if the provision is potesthive it
does not matter for present purposes whether
it is classified as a
condition or a term. In either case enforcement is dependent upon
the will of all parties … An agreement
that the parties will
negotiate to conclude another agreement is not enforceable, because
of the absolute discretion vested in
the parties to agree or
disagree
: Scheepers v
Vermeulen
1948 (4) SA 884
(O) at 892, Putco Ltd v TV and Radio
Guarantee Co (Pty) Ltd and Other Related Cases
1985 (4) SA 809
(A) at
828I
. Such a
discretion was vested in the parties as they were to sign ‘a
contract’ the precise terms of which were not
fixed in the
letter of acceptance, which … did not refer to annexure B [a
contract that was subsequently concluded with
the parties]. …
there was, according, room for a breakdown in negotiations before a
contract was concluded. The position
is similar to that described in
Namibian Minerals
Cooperation Ltd v
Benguela Concessions
Ltd
[1996] ZASCA 140
;
1997 (2) SA 548
(A) at 567A/C
‘
Since
this provision was couched as a suspensive condition, it cannot in my
judgment, be said that the parties could have intended
to have had a
binding agreement simply upon the exercise of the option. They had
expressly agreed that only a fuller arrangement
will have bound them
to the joint venture. Fulfilment of the condition was necessary and
the condition required
consensus
of the parties. It is thus not a case where the exercise of the
option would have given rise to a contract and that other terms
would
merely have been left for late negotiation and agreement. I
therefore am of the view that the exercise of the option could
not
have give rise to a contract with certain or ascertainable terms and
that on this ground “farm in” clause
is void for
vagueness.’
”
(Emphasis added)
[76] In
Putco
Ltd v TV and Radio Guarantee
the relevant parts of the agreement between the parties read as
follows:
“
This letter serves to
confirm that we have granted to your company (or its nominee) the
sole and exclusive rights with regard to
all buses operated by our
company. … This letter, although binding upon both of us, is
intended to be a temporary interim
arrangement, and we confirm that,
in due course, a detailed agreement will be concluded between us as a
result of the negotiations
which we have been conducting.
The purpose of this letter is to
enable you to satisfy all said parties that you have been granted
these exclusive rights and that
there is a current
binding
arrangement
between
us. …
”
(824A-E, emphasis added)
[77] The
judgment continues, thus at 824G:
“
During the period 1976 to
1981 various attempts were made by Putco and TV to conclude the
detailed agreement contemplated, including
the preparation and
exchange of several draft proposals for such an agreement, but to no
avail. The result was that
no
detailed agreement was ever concluded
.
”
(Emphasis added)
[78] Whilst it has repeatedly been
stated that each case has to be determined on its own facts, facts in
the case before me are,
with necessary adjustments, similar to those
in
Putco Ltd and TV v Radio
and Guarantee
. This is
more so with regard to “a detailed agreement” to be
concluded between the parties (824D). The following
appears at
829D-G
.
“
In the alternative it was
contended on
Putco’s
behalf that the agreement had been entered into on the assumption
that
a detailed
agreement would be concluded later and
,
as no such agreement was entered into, the assumption had failed and
the agreement was accordingly at an end. This contention
is without
substance. It has not been established in the present matter that
the parties would have refrained from entering into
the agreement had
they known that a detailed agreement would not be concluded later.
The agreement envisaged that
the
parties would negotiate and conclude a detailed agreement in future.
Had such a later contract eventuated the agreement would
have
terminated but there is no indication to be found in the agreement
that it would terminate on the failure to conclude the
envisaged
detailed agreement
.
Putco’s
attentive contention therefore cannot succeed.
It was accepted on behalf of
Putco
that if its contentions in respect of summary termination failed, the
agreement was terminable on reasonable notice. All that
therefore
remains to be considered is whether a valid and reasonable notice of
termination was given.
”
[79] In my interpretation of
Putco
and applying the judgment on the facts of the case before me, it
ought to be said that the agreement contained in PC2 and PC3 is

terminable on the signing of the contemplated future contract
referred to in PC3. Otherwise, the defendant could have terminated

it on reasonable notice. That would entail determining whether the
notice give in PC4 is reasonable. I am reluctant to go that
route
for two reasons. Firstly, it seems to me the approach in
Firechem
is different from that in
PUTCO
,
Firechem
being the more recent of the two cases. Secondly, it appears to me
that the defendant, has not, in any case, attempted to cancel
the
agreement in PC2 and PC3. It dealt with the month to month
agreement.
[80] In my view, the interpretation
given in
Firechem
,
fifteen years after
Putco
,
is how this case should be decided. The second requirement in PC3,
“the successful finalisation and signing of a formal
contract”,
is the unenforceable provision in an agreement that is described in
Firechem
,
“because of the absolute discretion vested in the parties to
agree or to disagree” (431H). The impasse created by
Abelard’s
comments, for instance, is the sort of problem that arises where the
finalisation of a formal contract depends
on the will of the parties.
There is no knowing whether Abelard would ever yield its resistance
in respect of all or some of the
clauses raised in its letter. From
Mr Vilakazi’s evidence, on the other hand, and from his letter
of instruction by the
defendant, it is quite evident that protection
of the defendant was paramount in the creation of the standard
contract. It seems,
therefore unlikely that the impasse would ever
be overcome.
[81] Even if the correct position was
that described in
Putco Ltd
v TV and Radio Guarantee
,
it would appear to me that the notice given by the defendant to the
plaintiff, in the absence of evidence and/or a submission
to the
contrary, is reasonable. This, of course, is on the assumpotion that
the letter, PC4, was intended to terminate the proposed
long term,
and not the month to month, agreement.
[82] If the
interpretation in
Putco
Ltd v TV and Radio Guarantee
is
the appropriate one, it may well be that the bid remains, in that the
defendant has not challenged it. In that event, however,
the
plaintiff will have the problem that it will have come to court for
relief when nothing had been done by the defendant to disturb
the
existing arrangement between them. I leave this aspect open, however,
because I have arrived at the conclusion that the case
should be
resolved on the basis of the decision in
Firechem.
[83] In the circumstances I make
the following order:
1.
The tender awarded to the plaintiff by the defendant's Tender Board,
on 28 July 2003, as contained in annexure PC3, is null and
void;
2.
The tender award is, consequently, set aside;
3.
The plaintiff is ordered to pay costs of this action.
J
N M POSWA
JUDGE OF THE NORTH GAUTENG HIGH
COURT
16945/2004/sg
Heard on
:
08.11.2005
For
the Applicant
:
Adv Newdigate, SC & Adv Howe
I
nstructed
by
:
Messrs Gross, Papadopulo and Associates
For
the Defendant
:
Adv Vorster, SC & Adv Ramawele
Instructed
by
:
Messrs A M Vilakazi
Tau
Attorneys
op
Date of
Judgment
:
30.10.2009