Badenhorst v Maluti-A-Phofung Munisipaliteit (3484/2003) [2009] ZAFSHC 19 (26 February 2009)

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[2009] ZAFSHC 19
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Badenhorst v Maluti-A-Phofung Munisipaliteit (3484/2003) [2009] ZAFSHC 19 (26 February 2009)

IN
THE
HIGH COURT OF SOUTH AFRICA
(ORAN
GE
FREE STATE PROVINCIAL DIVISION)
Case
No. :
3484/2003
In
matter
between:-
A
J BADENHORST
Plaintiff
and
MALUTI-A-PHOFUNG
MUNISIPALITEIT
Defendant
HEARD
ON
:
11
FEBRUARY 2009
JUDGMENT
BY
:
K.J.
MOLOI, AJ
_____________________________________________________
DELIVERED
ON
:
26
FEBRUARY 2009
JUDGMENT
_____________________________________________________
[1]
The
plaintiff, a farmer in the district of Harrismith, sued the
defendant, a municipality, duly established in terms of the
Local
Government: Municipal Structures Act, No. 117 of 1998
, having
juristic personality, for breach of two oral agreements. The first
agreement was for engagement of the farmer as a farm
manager and
mentor of small dairy farmers meant to empower emerging black dairy
farmers in the district. The second related to
the expenditure the
plaintiff incurred in running the project for which the defendant
failed to reimburse him.
[2] As
regards claim 1, based on the first oral agreement, the essential
allegations made are that the agreement was concluded during
or about
October 2001 at a farm Marydale in the district of Harrismith; the
plaintiff acted personally while the defendant was
represented by one
Mr. Jan Hamer. The terms thereof were that the plaintiff would
manage the defendant’s farm, Marydale, from
which the dairy farming
would be carried on for a period of five years commencing on 1
December 2001; the defendant would pay the
plaintiff a salary in the
amount of R10 000,00 per month; make a contribution of R300,00 per
month in respect of fixed line telephone
expenses and R300,00 per
month in respect of the use of his cellular telephone and make a
further contribution of an amount of
R1 500,00 per month in respect
of medical aid and pension. It was alleged the plaintiff carried out
his obligations under the
agreement for the period 1 December 2001
till 30 August 2002 but the defendant failed to honour its
obligations except making payments
for two months only and is
consequently owing an amount of R108 900,00 to the plaintiff which
amount he failed to pay despite demand.
[3] The
second claim, based on the second oral agreement, contained the
following essential averments: that it was an amendment
of the first
oral agreement concluded during October 2001 and was concluded
towards the end of December 2001 at the farm Marydale,
district
Harrismith, during which the plaintiff acted personally whilst
defendant was represented by Mr. Jan Hamer. In terms of
this
amending agreement and in the execution of his duties as dairy
farming manager, the plaintiff would apply the proceeds of
the milk
sales to pay for the expenditure he would incur in the advancement of
the project. Any shortfall between the actual expenditure
and the
proceeds of the milk sales would be payable by the defendant to the
plaintiff after submission of the invoices on a monthly
basis. In
addition the defendant would pay to the plaintiff an amount of R2,00
per kilometre travelled in the business of the
project and would also
supply diesel to the plaintiff whilst carrying out his duties in
terms of the oral agreement. It was further
alleged the plaintiff
discharged his obligations under the agreement for the period 1
December 2001 to 30 August 2002. The defendant,
however, failed to
reimburse the plaintiff the shortfall between the actual expenses and
the proceeds of the milk sales in breach
of the agreement and
consequently owed the plaintiff an amount of R112 946,79 which was
set out in a statement attached to the
particulars of claim as
annexure “A” together with the invoices.
[4] The
defendant’s plea was a total denial of the allegations made. In
particular the defendant pleaded specifically as follows:
“
2.1 The contents of these
paragraphs are denied and the plaintiff is put to the proof of each
and every allegation as if specifically
traversed.
2.2 Defendant furthermore pleads that
Mr. Jan Hammer was an independent consultant who was contracted by
defendant with instructions
to enter into negotiations with the
plaintiff amongst others. Mr. Jan Hammer was therefore only tasked
to negotiate with the plaintiff
so that an agreement between the
parties could be reached. Defendant furthermore pleads that at all
relevant times it was made
clear to the plaintiff that Mr. Jan Hammer
had no authority to enter into any binding agreement on behalf of the
defendant, and
that any preliminary agreement reached, would have to
be evaluated by the defendant, whereafter defendant had to confirm
such evaluation
at a board meeting before any binding agreement could
be reached.
2.3 Defendant furthermore pleads that
no such preliminary agreement, as pleaded above, was conveyed to the
defendant in order to
evaluate and decide thereupon at a board
meeting. In the premises defendant specifically denies that any oral
agreement whatsoever
was reached between the plaintiff and the
defendant, and plaintiff is put to the proof thereof.”
Furthermore,
the defendant refer
red
to written agreements it concluded with the plaintiff during 2002
which are irrelevant to the determination of the issues in
this
matter. If anything, those agreements would only serve to prove the
manner in which the defendant normally entered into agreements.
What
is important is that the plaintiff did not respond to the above
allegations nor did he estop the defendant in its denial
of Jan
Hamer’s authority to act on the defendant’s behalf.
[5] At
the hearing three witnesses were presented for the plaintiff:
firstly, Mr. Jan Hamer, secondly, the plaintiff and thirdly,
Mrs.
Erika van der Westhuizen. The last-mentioned was the owner of a
company called Spatial Solutions (Pty) Ltd, which, in fact,
was
contracted by the defendant and which employed and deployed Mr. Jan
Hamer to the project. In essence, all three witnesses
substantiated
in great detail the allegations contained in the plaintiff’s
claims. They all confirmed, in particular, that Mr.
Hamer dealt with
a sub-committee of the defendant tasked with the project. The
sub-committee was composed of some councillors
of the defendant, same
emerging dairy farmers and other stakeholders. They confirmed also
that Mr. Hamer took notes of the proceedings
in the sub-committee’s
meetings and the decisions made, including some aspects of the
plaintiff’s claims, particularly the
outstanding payments. They
all could not say, however, that the notes with the decisions made,
were presented to the defendant
for approval. The defendant closed
its case without leading evidence to gainsay the plaintiff’s
evidence.
[6] What
is important for the purposes of this judgment, however, is that
both, Mr. Hamer and the plaintiff, admitted in evidence
that they
both knew how the defendant was supposed to take decisions that would
bind it as a municipality; that the sub-committee
they dealt with had
limited authority to bind the defendant municipality and could only
decide on authority delegated to it by
the municipality and only to
the extent of their mandate; that they were not aware of nor could
they produce such a mandate by
the defendant to the sub-committee.
In particular, Mr. Jan Hamer, in unequivocal terms, admitted he
personally had no authority
to enter into an agreement for and on
behalf of the defendant nor did he at any stage purport to nor acted
on behalf of the defendant’s
council but for the sub-committee.
They both agreed only the municipal council could validly by
resolution enter into binding
agreements for and on behalf of the
institution like the municipality and that they both knew it all
along.
[7] Both
counsel for the parties, in their written submissions, correctly
pointed out that the court’s decision in this matter
revolved
around the determination of Mr. Hamer’s authority to contractually
bind the defendant. The plaintiff’s counsel asked
the court to
find that there was such authority by implication, i.e. ostensibly,
based on a number of aspects including the unproven
extent and scope
of the mandate of the sub-committee with which Mr. Hamer dealt, the
notes that Mr. Hamer compiled during the meetings
of which there is
no evidence that they reached the defendant’s council, the
inter-action and responses of the members of the
sub-committee and
especially the mayor, with Mr. Hamer, the plaintiff and Mrs. Van der
Westhuizen regarding the overdue payments
to the plaintiff, etc. I
am not persuaded that from these and other factors I can find that
there was ostensible authority by
the council to Mr. Hamer to enter
into those oral agreements with the plaintiff.
[8]
Section 11(1)
of the
Local Government: Municipal Systems Act, No. 32 of 2000
states as
follows:
“
The
executive
and legislative authority of a municipality is exercised by the
council of the municipality, and the
council
takes all the decisions of the municipality subject to
section 59.”
(My
emphasis.)
There can be no doubt
that the decision to enter into agreements is an executive act.
Section 59(1)
of the same Act states:
“
A municipal council must develop a
system of delegation that will maximise administrative and
operational efficiency and provide
for adequate checks and balances,
and, in accordance with that system, may-
delegate
appropriate powers ... “
and in sub-section (2)(b)
requires that such delegation
“must
be in writing”.
No
proof of such delegation to the sub-committee that Mr. Hamer dealt
with could be produced. The denial
of
Mr. Hamer’s authority to enter into agreement on behalf of the
defendant was clearly spelt out in the plea as fully quoted
in
paragraph [4] above and was known to the plaintiff as far back as 15
November 2004 i.e. over four years before the hearing.
No estoppel
was pleaded by the plaintiff against this denial.
[9] As
regards the conclusions of the said oral agreements the plaintiff’s
particulars of claim simply stated:
“
By die sluit van die ooreenkoms is
verweerder verteenwoordig deur Mnr. JAN HAMER.”
It is
trite that a party wishing to rely on agency must allege and prove,
not only the existence of the authority of the alleged
agent but also
the scope of such authority and whether it
was
express or implied. See
POTCHEFSTROOM
SE STADSRAAD v KOTZE
1960 (3) SA 616
(A);
GLOFINCO
v ABSA BANK LTD t/a UNITED BANK
2002 (6) SA 470
(SCA). Despite the defendant’s categorical denial
of authority more than four years before the trial, the plaintiff did
nothing
to amend his particulars of claim to incorporate these
allegations without which the claim could not succeed. For the lack
of
these averments and the proof of the alleged mandate of the
sub-committee Mr. Hamer dealt with or his direct mandate from the
council
of the defendant municipality to contract on its behalf, only
one conclusion can be reached by this court, namely, that no such

authority was given to Mr. Hamer.
[10] Accordingly I make
the following order:
1. Plaintiff’s claim
is dismissed.
2. The
plaintiff is ordered to pay the costs including the costs that stood
over at the previous postponement.
_____________
K.J.
MOLOI, AJ
On
behalf of the
plaintiff: Adv.
Elaine Botha
Instructed
by:
Wessels & Smith
BLOEMFONTEIN
On
behalf of the
defendant: Adv.
S.J. Reinders
Instructed
by:
Hill,
McHardy & Herbst Inc
BLOEMFONTEIN
/sp