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[2024] ZAKZPHC 65
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TWK Insurance (Pty) Ltd v Augustyn (9470/2023P) [2024] ZAKZPHC 65 (15 August 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
no:
9470/2023P
In
the matter between:
TWK
INSURANCE (PTY) LTD
APPLICANT
and
PHILLIP
FREDERICK AUGUSTYN
RESPONDENT
In re the application
between:
PHILLIP FREDERICK
AUGUSTYN
APPLICANT
and
TWK AGRI INSURANCE
(PTY) LTD
RESPONDENT
Coram
:
Mossop J
Heard
:
7 August 2024
Delivered
:
15 August 2024
ORDER
The
following order is granted
:
1.
The heading to the notice of application for leave to
appeal is amended to reflect that the party identified as ‘TWK
Insurance
(Pty) Ltd’ is, in fact, ‘TWK Agri Insurance
(Pty) Ltd’.
2.
The
application for leave to appeal is dismissed with costs to be taxed
on scale B.
JUDGMENT
MOSSOP
J
:
[1]
Notwithstanding the heading to this application for leave
to appeal,
I shall continue to refer to the parties as they were referred to in
the main application.
[2]
On 18 March 2024, I delivered a written judgment
in which I
granted judgment in favour of the applicant and ordered the
respondent to pay him the amount of R269 632.60. The
respondent
seeks leave to appeal against that judgment. The delay in hearing
this application for leave to appeal has been occasioned
by my
prolonged absence from Pietermaritzburg, having been assigned duties
in Mtubatuba for a session and, unexpectedly, Durban
for two
sessions.
[3]
Before dealing with the merits of the application, I
must first
swiftly deal with an ancillary issue. The heading to the notice of
application for leave to appeal identifies the party
seeking leave to
appeal as being ‘TWK Insurance (Pty) Ltd’. That entity
was not the entity cited as the respondent
in the main application:
the respondent in the main application was ‘TWK Agri Insurance
(Pty) Ltd’. Mr Heyns SC, who
now appears for the respondent,
submitted from the bar that this was an unnoticed typographical error
and that the respondent is,
indeed, the same party against whom
judgment was granted by me. This was not disputed by Ms Ploos van
Amstel, who appears for the
respondent, and I accordingly accept this
to be the case. The heading to the notice of application for leave to
appeal will therefore
reflect the amendment of the name ‘TWK
Insurance (Pty) Ltd’ to ‘TWK Agri Insurance (Pty) Ltd’.
[4]
The facts of the matter are comprehensively set out in
my written
judgment and I do not intend to repeat them with the same detail in
this brief judgment. They cannot, however, be entirely
ignored for
they provide the context to this judgment and I accordingly mention
them briefly.
[5]
It was not in dispute in the main application that the
applicant had
sold his insurance business in Ladysmith, KwaZulu-Natal, to the
respondent in February 2016. That sale agreement
provided for several
suspensive conditions that had to be met before the sale became
binding. One of those conditions was the following:
‘
4.1.2
Dat die Verkoper [the applicant] teen nie later nie as 31 Januarie
2016 ’n onafhanklike kontrakteursooreenkoms
met die Koper [the
respondent] aangaan …’.
An
independent contractor’s agreement was duly concluded between
the parties. It was identified as being an ‘independent
service
agreement’ (the agreement) and was attached to the applicant’s
founding affidavit. Amongst other things, it
stated the following:
‘
The
consultant [the applicant] agrees and certifies that the consultant
is not entitled in fact or in law, nor does the consultant
have any
expectation of, employment with the company [the respondent], and is
an independent consultant with, and independent contractor
to the
company.’
[6]
The applicant at some stage attended upon a farmer (the
farmer) who
sought insurance for his agricultural fields. The applicant failed to
ensure that certain fields that were planted
to soya beans (the soya
fields) were included in an insurance proposal that he prepared and
which he presented to the farmer for
his approval. The farmer, like
the applicant, did not notice the omission of the soya fields from
the insurance proposal and approved
it. The insurance proposal was
accepted by the insurance company to whom it was presented and a
policy of insurance was issued
that did not include the soya fields.
The soya fields were thereafter damaged by hail and the insurance
company, when faced
with a claim for the damage, declined to pay
because they were not covered by the policy of insurance issued by
it.
[7]
Without any legal process being issued by the farmer,
or the
applicant being consulted, the respondent accepted liability for what
occurred and agreed to compensate the farmer for his
loss. To do
this, the respondent claimed on its own insurance, which claim was
met by its insurers. The insurance payment was insufficient
to meet
the farmer’s loss, and so, after some negotiation, it was
agreed that the farmer’s claim would be reduced and
he was paid
that reduced amount, which the respondent paid utilising the
insurance pay out and other monies.
[8]
At the same time, the applicant was admittedly due certain
commissions by the respondent. The respondent declined to pay them to
him and set those commissions off against the amount that
it had been
required to pay the farmer. Aggrieved by the non-payment of his
commissions, the applicant brought the application
for their payment,
which served before me and which led to the judgment in respect of
which leave to appeal is presently sought
by the respondent.
[9]
When the
application for leave to appeal was argued before me, there was
agreement between Mr Heyns and Ms Ploos van Amstel that
the test for
leave to appeal has been developed and is now at an elevated level
compared to the past. Section 17(1) of the Superior
Courts Act 10 of 2013 (the Act) now regulates applications for
leave to appeal from a decision of a high court and it provides
as
follows:
‘
Leave
to appeal may only be given where the judge or judges concerned are
of the opinion that -
(
a
)(i)
the appeal would have a reasonable prospect of success; or
(ii)
there is some other compelling reason why the
appeal should be heard, including conflicting judgments on
the matter
under consideration;
(b)
the decision sought on appeal does not fall within the ambit of
section 16(2)
(a)
;
and
(c)
where the decision sought to be appealed
does not dispose of all the issues in the case, the appeal would lead
to a just and prompt
resolution of the real issues between the
parties.'
[10]
Prior to
the enactment of the Act, the applicable test in an application for
leave to appeal was whether there were reasonable prospects
that an
appeal court may come to a different conclusion than that arrived at
by the lower court. The enactment of the Act has changed
that test
and has significantly raised the threshold for the granting of leave
to appeal.
[1]
The use of the
word ‘would’ in the Act indicates that there must be ‘a
measure of certainty that another court
will differ from the court
whose judgment is sought to be appealed against’.
[2]
[11]
It
appears therefore that leave to appeal should only be granted where a
court is of the opinion that an appeal would have a reasonable
prospect of success, and which prospects are not too remote.
[3]
As
was stated by Schippers AJA (as he then was) in
MEC
for Health, Eastern Cape v Mkhitha and another:
[4]
‘
An
applicant for leave to appeal must convince the court on proper
grounds that there is a reasonable prospect or realistic chance
of
success on appeal. A mere possibility of success, an arguable
case or one that is not hopeless, is not enough. There must
be a
sound, rational basis to conclude that there is a reasonable prospect
of success on appeal.’
[12]
The applicant’s notice of application for leave to appeal is a
substantial
document covering some 11 pages. I have read and
considered it and the heads of argument prepared by Mr Heyns and Ms
Ploos van
Amstel. I also listened carefully to the arguments of both
counsel.
[13]
Ms Ploos van Amstel categorised the application for leave to appeal
in her
heads of argument as falling, broadly speaking, into one or
more of four separate grounds identified by the respondent. I find
that classification to be helpful and I propose to adopt it in this
judgment.
[14]
The first ground is that I erred in concluding that the respondent
was not
in law liable for the acts and omissions of the applicant.
There was no dispute by the respondent that the applicant was not an
employee of the respondent. But the argument now pressed by Mr Heyns
is that the applicant was an agent of the respondent and the
respondent was therefore in law liable for his conduct.
[15]
I have already made reference earlier in this judgment to an extract
from the
agreement that identifies the applicant as being an
independent contractor to the respondent. In addition thereto, the
agreement
recorded that the applicant undertook:
‘…
to
pay income tax, if any, as independent contractor.’
[16]
The true nature of the legal relationship between the parties is to
be determined
from the precise wording of the agreement. The parties
agreed to the words in the two extracts to which reference has been
made.
There are other similar references in this regard in
communications between the respondent and the applicant. On
concluding the
agreement, the respondent wrote to the applicant on 6
July 2018 and referred to the agreement as an ‘onafhanklike
kontrakteursooreenkoms’
(independent contractor’s
agreement). In terminating the agreement on 15 March 2023, the
respondent indicated in a letter
to the applicant that the letter
referred to:
‘
Die
verkoop van besigheid en onafhanklike ooreenkomste en addendums
aangegaan tussen uself en TWK …’.
[17]
There can
therefore be very little doubt that the parties viewed the applicant
as an independent contractor to the respondent. In
Niselow
v Liberty Life Association of Africa Ltd
,
[5]
the Supreme Court of Appeal addressed the issue of an independent
contractor as follows:
‘
An
independent contractor undertakes the performance of certain
specified work or the production of a certain specified result.
An
employee at common law, on the other hand, undertakes to render
personal services to an employer. In the former case it is the
product or the result of the labour which is the object of the
contract and in the latter case the labour as such is the object
(see
Smit v Workmen's Compensation Commissioner
). Put differently,
“
an employee is a
person who makes over his or her capacity to produce to another; an
independent contractor, by contrast, is a person
whose commitment is
to the production of a given result by his or her labour”.’
(Citation omitted)
[18]
In this
matter, it is clear that a result was desired and it was identified.
That was the sourcing of new clients for the respondent.
That is what
the agreement required of the applicant. Lest this be unclear in this
regard, the agreement forbade the applicant
from dealing with any
existing clients of the respondent. Indeed, if he approached any
existing clients of the respondent, he suffered
the risk of the
respondent terminating the agreement.
[6]
[19]
It appears to me that one of the essential differences between an
independent
contractor and an agent is the degree of control that the
principal has over the conduct of the independent contractor or
agent.
The more control that exists, the more likely that the
relationship is one of agency. It is so that the agreement contains
certain
general clauses requiring the applicant to perform in a bona
fide fashion and use his best endeavours to carry out his duties. But
as to control over how he performed, the agreement provided as
follows:
‘
It
is however recorded that any control and supervision exercised by the
company in respect of the consultant shall be solely for
the purposes
of ensuring that the consultant properly discharges his duties in
terms of this agreement, and not for the purposes
of establishing or
indicating the existence of any employment relationship between the
parties.’
[20]
Ms Ploos
van Amstel drew my attention to the following extracts from
Mohun
and another v Phillips NO obo S and another
,
[7]
where the Supreme Court of Appeal stated the following:
‘
Our
law is clear that the principal is not liable for the civil wrongs of
an independent contractor, except where the principal
was personally
at fault.’
[8]
And:
‘
The
matter must be determined on the basis that as a fact, the first
appellant was an independent contractor. In this regard, Nugent
JA
clearly stated in
Chartaprops
16 (Pty) Ltd and another v Silberman
that it is well established that the relationships to which vicarious
liability applies do not include the relationship of a principal
and
an independent contractor. The party who appointed the independent
contractor could only be liable in delict for its own failure
to take
reasonable steps to guard against foreseeable harm.’
[9]
(Footnote omitted.)
[21]
The general position in our law is thus that a principal is not
responsible
for the delicts of an independent contractor save for the
limited grounds mentioned in the extract above. In my view, that is
unlikely
to be viewed differently by another court.
[22]
I have considered afresh the agreement and I remain of the view that
it was
intended to produce a contract of work. The applicant was,
therefore, an independent contractor and the respondent was not in
law
ordinarily liable for his conduct.
[23]
The second ground of appeal is that I erred in finding that the
applicant did
not become indebted to the respondent. By virtue of the
fact that the respondent is not in law liable for the conduct of an
independent
contractor such as the applicant, it follows that as a
matter of logic, the applicant did not automatically become indebted
to
the respondent as contended for by the respondent. Which is not to
say that such liability categorically does not exist. It may
exist if
determined to exist by the decision of a court of law. That was
lacking when the respondent purported to apply set off.
There was
thus no mutual indebtedness at the time when set off was invoked.
[24]
The third ground of appeal relates to the amount which the respondent
was ordered
to pay relating to the applicant’s accrued
commissions. The respondent asserts that the amount of R269 632.60
found by me
to be due to the applicant ought to be reduced by some
R29 660.64. I explained my conclusions in this regard in my judgment
that
is sought to be appealed against, and there is no merit to this
ground.
[25]
The final ground of appeal is that I ought to have dismissed the
application
with costs. As Ms Ploos van Amstel points out, this is a
conclusion and not a ground. She is clearly correct.
[26]
After reflection, and taking into account the submissions
made
by both legal representatives, I remain unpersuaded that another
court would come to a different conclusion than the one to which
I
came. In the circumstances, I make the following order:
1.
The heading to the notice of application for leave to
appeal is amended to reflect that the party identified as ‘TWK
Insurance
(Pty) Ltd’ is, in fact, ‘TWK Agri Insurance
(Pty) Ltd’.
2.
The
application for leave to appeal is dismissed with costs to be taxed
on scale B.
MOSSOP J
APPEARANCES
Counsel
for the applicant:
Mr
G F Heyns SC
Instructed
by:
Seymour
Du Toit and Basson Inc
12
Murray Street
Mbombela
Care
of:
Tatham
and Wilkes Incorporated
Office
F008, First Floor
Athlone
Circle
1
Montgomery Drive
Pietermaritzburg
Counsel
for the respondent:
Ms
Z Ploos van Amstel
Instructed
by:
Jacques
Roos Attorneys
Care
of:
Viv
Greene Attorneys
132
Roberts Road
Clarendon
Pietermaritzburg
[1]
Public
Protector of South Africa v Speaker of the National Assembly and
others
[2022] ZAWCHC 222 para 14.
[2]
The
Mont Chevaux Trust v Goosen and others
[2014]
ZALCC 20
; 2014 JDR 2325 (LCC) para 6.
[3]
Ramakatsa
and others v African National Congress and another
[2021]
ZASCA 31
para 10.
[4]
MEC
for Health, Eastern Cape v Mkhitha and another
[2016] ZASCA 176 para 17.
[5]
Niselow
v Liberty Life Association of Africa Ltd
1998 (4) SA 163 (SCA).
[6]
Clause
13.10 of the agreement reads as follows: ‘The Parties agree
that the consultant will refrain from rendering service
to any
existing client of the Company, in the event of the consultant
rendering service to any existing client of the company,
this
agreement will terminate without any further notice.’
[7]
Mohun
and another v Phillips NO obo S and another
[2022]
ZASCA 186.
[8]
Ibid para 34.
[9]
Ibid para 37.