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[2007] ZAWCHC 88
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Circuit Environmental Engineering (Pty) Limited t/a Circuit Publishing v Pedal Power Association (5353/2003) [2007] ZAWCHC 88 (8 August 2007)
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE:
5352/2003
In
the matter between:
CIRCUIT
ENVIRONMENTAL ENGINEERING
(PTY)
LIMITED T/A CIRCUIT PUBLISHING
PLAINTIFF
Versus
PEDAL
POWER ASSOCIATION
DEFENDANT
JUDGMENT
DELIVERED:
08
AUGUST 2007
MOTALA
J
[1]
Plaintiff, a company, claims payment of damages it suffered as a
result of the alfeged repudiation of a contract by defendant,
a
voluntary association of cyclists.
[2]
Plaintiff avers that:-
(a)
during September 2002, plaintiff, represented by Mr Ryan Beswick,
submitted a written tender to defendant to publish a magazine
entitled "Life Cycle" for a period of three years;
(b)
on 19 September 2002, defendant accepted the tender and a contract
was thereby concluded resulting in plaintiff being appointed
the
publisher of the magazine for three years,
(c)
during or about February or March 2003, defendant repudiated the
contract by appointing another company, Touchline Media (Pty)
Ltd
("Touchltne") to publish, the magazine;
(d)
plaintiff accepted the repudiation and cancelled the contract.
[3]
Defendant admits receipt of the tender and that it responded
thereto. It avers, however,
(a)
that its response did not constitute an unconditional acceptance of
the tender, more particularly in that the tender was accepted
subject
to the following two conditions:
(I)
that
the October/November 2002 edition of the magazine be successfully
published and distributed by 4 October 2002;
(ii)
that a written contract be drawn up by defendant's attorney,
Lawrence Whittaker, including escalation clauses and signed
by the
parties.
(b)
that plaintiff lacks
focus
standi
in
that the tender was submitted by Ryan Beswick acting in his persona!
capacity, and not as the duly authorised representative
of plaintiff.
[4]
It is common cause that the November/December 2002 issue of the
magazine was successfully published and distributed by Mr Beswick
and
that a written contract was never concluded.
[5]
The basic dispute in regard to the contract is whether defendant's
response to the tender resulted in the conclusion of a three
year
contract
In
order to assess the cogency of the evidence on that issue, the
history of the relationship between Mr Beswick and defendant priorto
the submission of the tender is of considerable importance.
During
or about August or September 2001, in terms of an oral agreement,
defendant appointed S.A. Cycling (Pty) Ltd, whose name
was
later changed to Purple
Hat
{Pty} Ltd,
("Purple
Haf)
and which was operated by Mr Beswick, to publish the magazine. The
magazine was regularly published thereafter.
On
30 July 2002, defendant learnithat Purple Hat would not be able to
pay the printers of the magazine and that the August/September
issue
of the magazine would not be published. Defendant was obliged to pay
about R30 000.00 to the printers in order to have the
magazine
published. Purple Hat was liquidated in August, 2002 and defendant
was left without a publisher.
During
the period between the conclusion of the oral agreement until the
said liquidation, no less than seven written agreements
were drafted
by Mr Whittaker. None were signed as there were numerous provisions
in the agreements drafted by Mr Whittaker which
were unacceptable to
Mr Beswick, especially a provision requiring him to be a surety for
Purple Hat's obligations to defendant
[6]
Mr Beswick testified that he attended the annual
general
meeting
of defendant on 12 September 2002. He asked Mr Frans Foucbe,
defendant's then chairman, whether he could submit a tender
to
publish the magazine again,
Mr
Fouche
referred him to
Mr
Anthony
Roberts who was then defendant's administrative manager. Subsequently
Mr
Beswick
discussed the matter with Mr Roberts and tofd him that if
he
were
given a three year contract
he
would
ensure that the October/November 2002 issue, which was due in
two
weeks
time, woufd be timeously published. Mr Beswick thereafter submitted
the tender to
defendant
[7]
The tender was considered at a meeting of the executive committee of
defendant
on
19 September 2002. The relevant portion of the minutes of the
meeting, which
were
drafted
by Mr Roberts, reads as follows:-
'After
debate the tender
was
accepted
subject to the October/November edition being successrutly
puDiished,
printed
and distributed, and a formal contract being drawn up by Lawrence
Whittaker, including any escalation clauses, and signed
by both
parties."
[8]
The
decision
of the executive committee was communicated telephonicaliy to Mr
Beswick on the 20
th
September, 2002 by Mr Roberts. He did so before drafting the minutes.
Mr
Roberts was unable to recall the precise words he used during the
conversation with Mr Beswick. He was adamant, however, that
he wouid
have read from the notes he had taken at the meeting, as it has
always been his practise to do so during a long career
of negotiating
contracts as a purchasing
manager.
He
later
used
the
notes to draft the minutes. He has no doubt that he must have
communicated the gist of what is set out in the extract of the
minutes quoted in paragraph 7 above.
Mr
Roberts was a good witness.
[9]
Mr Fouche confirmed that at defendant's annua! general meeting, he
was asked by Mr Beswick whether he couid submit a tender
to publish
the magazine again. Because of the defendant's recent experience with
Purple Hat he felt uncomfortable and referred
Mr Beswick to Mr
Roberts.
Mr
Fouche presided at the meeting on 19 September, 2002. He testified
that not everyone at the meeting was happy to have further
deaJings
with Mr Beswick and that from the outset he was absolutely adamant
that a written contract be concluded. He was emphatic
that the
requirement of a written contract was, in his words "a
very,
very big condition with many, many clauses and many, manyifs and
buts"
The
furnishing of guarantees was of particular importance.
Mr
Fouche confirmed that the extract of the meeting, quoted in paragraph
7 above, correctly reflected the decision taken at the
meeting.
Mr
Fouche confirmed that Mr Whittaker had not been asked to draft the
contract He could not explain that omission.
Mr
Fouche denied that when Mr Beswick came to see him alter he had
learnt that the publishing contract had been awarded to Touchline,
he
agreed with Mr Beswick that he had a three year contract with
defendant.
Mr
Fouche was an excellent witness. Indeed, Adv Katzew, who appeared
for plaintiff did not criticise him or his evidence in any
respect
whatsoever
[10]
Mr Lawrence Whittaker an experienced attorney who acted at ail times
for defendant, testified as to Mr Beswick's refusaf to
sign any one
of the seven draft agreements referred to in paragraph 5 above. Upon
the refusal of Mr Beswick and his co-director
to provide personal
suretyships, Mr Whittaker, asked for Purple Hat
1
s
financial statements. Those were unsatisfactory. He then inserted a
clause guaranteeing performance by Purple Hat That clause
was also
unacceptable to Mr Beswick,
Mr
Whittaker denied drafting, or even seeing a draft, of an addendum to
a contract concluded by Mr Beswick with Primedia, another
publisher.
He
also denied that he told Mr Beswick, during a telephone conversation,
that Mr Beswick should tell Mr Fouche that he had a contract
with
defendant and should hold defendant thereto.
Mr
Whittaker confirmed that at no stage after the meeting of the
executive committee on 19 September 2002 was be asked by either
Mr
Beswick or defendant to draft a written contract between the parties.
In fact, he was asked by defendant to see Mr Dave Beilairs,
a member
of defendant's executive committee and Mr Ingpen, a representative of
Touchltne, in order to negotiate and to draft a
written contract
between defendant and Touchiine to publish the magazine.
Mr
Whittaker was a good witness.
[11]
Mr Beswick testified that he could not recall the exact words used by
Mr Roberts during the telephonic discussion referred
to in paragraph
8 above. He said that what Mr Roberts conveyed to him was that his
tender had been accepted but that defendant
required the
September/October issue of the magazine to be published by 4
October'
and
"wariied'
"a"wriHeh
agreeTnen'f
to be drawn up" by iVIr Whittaker.
Mr
Beswick averred that Mr Roberts did not convey to him that acceptance
of his tender was conditional upon the conclusion of a
written
contract. He testified that the previous agreement between defendant
and Purple Hat, (which seems to be a reference to
one or other of the
seven draft agreements), was 20-40 pages long and contained many
provisions which he could not set out in his
tender but
"obviously
needed to be in a written document"
after
further negotiations.
He
added that he had asked Mr Whittaker to draft a written agreement.
Mr
Beswick emphasised that he would not have undertaken to publish the
September/October issue of the magazine without a three year
contract
or a higher fee.
Mr
Beswick said that Mr Whittaker had either drawn up the addendum to
the contract he had concluded with Primedia or had looked
at it on
his behalf.
He
said also that after the alleged repudiation both Mr Whittaker and Mr
Fouche assured him that he had a binding contract with
defendant.
[12]
Counsel for
the
parties
have
referred
to several authorities which considered whether
an
oral
agreement or a provisional or an interim agreement, which
the
parties
thereto agreed was to
be
reduced
to writing was a binding agreement or lacked legal efficacy
until
the
written agreement was concluded.
See
for example:-
Goldblaft
v
Freemantfe
192Q AD 123
at 129;
Oe
Briun v Brink
1925 AD 63:
OK
Bazaars v
Bioch
1929 WLD 37
at
First
National Bank v Avtioalou
2000(1) SA 989(c);
Pitout
v Northcape Livestock Co-operative Ltd
1977(4) SA 842(A) at 850-851;
Lamburq
(Edms) Bpk v BMW (Suid-Afrika)(Edms) Bpk
1997(4) SA 141 (SCA).
Malcofus
v Cooper Mothers
1974(4) SA 52(C) at 56D-57B;
Cell
C (Fty)fLtd v Zulu
2006(4) All SA 417 (SCA) at 421-d-e;
CGEE
Airshorn Equipment v GKN Sarley
(PMLtti
1987(1)
SA 81(A);
MV
Mavigator (No, 1) Wellness International Network Ltd v MV
-
iSfavigate-r-and
-AR0th6r
-2QQ4fS>-SA-1-OfCV:-
South-African-Bua.gulaxi
Association v Cape of Good Hope Bank
1987(4) SA 315(C).
A
perusaf of the above authorities indicates
thai
the
learned
judges
in each case were applying a well-established principle -
that
the
court must determine the intention of the parties on the basis of the
facts of each case.
[13]
Mr Beswick was not a satisfactory witness, i cannot accept those
portions of his evidence which conflict with the evidence
of
defendant's witnesses. Nevertheless, I accept, that he has at all
times honestly believed that he had a three year contract,
the period
for which he had tendered. During the telephonic conversation with Mr
Roberts, it is reasonably possible that he concluded
that the tender,
including, the three year provision, had been accepted by defendant.
[14]
However, in my view, he was wrong in coming to that conclusion. The
minutes of the meeting of defendant's executive committee
on 19
September 2002, quoted in paragraph 7 above, are unambiguous -the
tender was accepted subject to two conditions, one of which
was that
a formal contract be drawn up by Mr Whittaker and signed by the
parties. Any" doubt as To the" 'effect "tnefeof
Ts
"eTfrnTriateft" by "ih'S evidence of Mr Fouche, who
presided at the meeting that, because of the damage suffered
by
defendant as a result of Purple Hat's liquidation, it was essential
that a written contract which included the provision of
a suretyship
or guarantees, be concluded.
It
follows that a three year contract did not come into existence and
plaintiff was entitled to conclude a contract with Touchline.
[15]
In view of the above conclusion, it is not necessary to consider
defendant's denial of plaintiffs
locus
standi.
[16]
This matter was originally set down for hearing on 4 April 2006. The
learned judge to whom the matter had been allocated refused
to hear
the matter on that day as plaintiff had neglected to comply with the
provisions of Rule 62(4). Accordingly, defendant contends
that the
costs occasioned by the postponement should be borne by
plaintiff-Plaintiff contends, however, that it would have succeeded
in an application forthe matter to be postponed at defendant's
expense as defendant had discovered several documents at a late
stage
-
only
a
few days before the trial date.
Mr
Beswick was familiar with most but not all of those documents.
The
above information was placed before me by the parties' attorneys
after the conclusion of the trial.
I
am
unable on the basis of that information to determine, with any degree
of confidence, whether or not defendant would have succeeded
in the
said application. However, it is reasonably possible that the matter
would have stood down, at least for a few hours, to
enable
defendant's legai representation to consider the documents they had
not seen previously.
It
is clear, however, that both parties have failed to comply timeousiy
or adequately with the rules of Court, an occurrence which
increasingly hampers the efficient functioning of the courts.
In
my view, faking
all
the
factors into account, each party should bear its own costs in this
respect.
[17]
Plaintiffs claim is dismissed with costs, including the costs of two
counsel save and except that each party shall bear its
own costs
occasioned by the postponement of this matter oh 4~April 2006'.
A.M.
MOTALA
Judge
of the High Court