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2024
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[2024] ZAECELLC 42
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Mdazane and Another v Nene and Another (EL 799/2020) [2024] ZAECELLC 42 (29 October 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, EAST LONDON CIRCUIT COURT)
CASE
NO.: EL 799/2020
Reportable
NO
In
the matter between:
MAWONGA
MDAZANE
1
st
Plaintiff
MDAZANE
INVESTMENTS (PTY) (LTD)
2
nd
Plaintiff
and
PHUMLANI
NENE
1
st
Defendant
NUTIGENT
(PTY) (LTD)
2
nd
Defendant
JUDGMENT
Cengani-Mbakaza
AJ
Introduction
[1]
Between December 2019 and January 2020, the Chinese authorities
reported pneumonia-like illnesses
in Wuhan, China. A new coronavirus
was identified as a cause. The Republic of South Africa (RSA) went
into lockdown from midnight
on 26 March to 30 April 2020 under Alert
Level 5. This lockdown was part of the government's efforts to manage
the spread of the
virus and prevent the healthcare system from being
overwhelmed. Personal Protective Equipment (PPE) which refers to
specialised
clothing or gear was designed to protect users from
hazards or risks in various environments. The PPE included surgical
masks.
[2]
During that
time, the first plaintiff (Mr Mdazane) and the first defendant (Mr
Nene)
were
extremely close friends, serving as directors of separate companies,
namely the second plaintiff and the second defendant,
respectively.
Both companies were privately held, limited liability entities, duly
registered under the Company Laws of RSA.
[3]
The Department of Health, Eastern Cape (the Department) advertised a
tender inviting interested
parties to supply surgical masks. This was
crucial for preventing the spread of airborne infections and ensuring
public health
safety, especially in healthcare settings.
[4]
The discord between Messrs Mdazane and Nene started after the second
defendant secured the tender
to supply One Hundred Thousand (100 000)
three-ply surgical masks, adhering to the tender stringent
requirements. The issue revolves
around a contractual dispute between
the parties.
The
plaintiffs’
case
[5]
In his amended particulars of claim, the plaintiff alleges that on or
about April 2020 in East
London, the second plaintiff represented by
Mr Mdazane entered into a verbal contract with the defendants. The
material terms of
the contract provided that the parties would
collaborate as partners on a tender awarded to the second defendant
for the supply
of surgical masks to the Department. The objective of
the partnership was to conduct business for the mutual benefit of all
parties,
with the common goal of generating a profit.
[6]
Specifically, the agreement stipulated that both plaintiffs would
contribute tender projects,
in this instance surgical masks, labour,
administrative skills, and resources to the partnership. Similarly,
both defendants would
provide labour, administration and resources of
partnership.
[7]
On or about 28 April 2020, the plaintiffs fulfilled their obligations
by delivering 100,000 three-ply
surgical masks to the defendants. As
per the agreement, upon payment by the Department, the defendants
were required to pay the
second plaintiff an amount of R1 071,500
(One million Seventy-One Thousand Five Hundred Rand) which comprised
a cost price of R
895, 000 (Eight Hundred Ninety-Five Thousand Rand)
and a share profit of R176, 000 (One Hundred Seventy –Six
Thousand Rand).
[8]
The plaintiff alleges that on 15 July 2020, pursuant to the terms of
the agreement, the defendants
breached their contractual agreement by
failing to remit the stipulated payment owed to the plaintiffs. On or
about 20-21 July
2020, Mr Mdazane made a demand for payment pursuant
to the contract. In response, Mr Nene indicated via a text message
that payment
would be effected upon receipt of payment from the
Department. Notwithstanding a formal demand dated 29 July 2020, the
defendants
failed to pay the contracted amounts, thereby breaching
their obligation under the agreement.
The
defendants’ case
[9]
In the plea, it is denied that the second plaintiff and the second
defendant, or alternatively
the first plaintiff and the first
defendant ever entered into a partnership agreement or agreed to
collaborate as partners on this
matter. At all relevant times, the
understanding between the parties was that the second defendant,
having been awarded the tender,
would supply the masks directly to
the Department for its exclusive benefit.
[10]
The defendants maintain that the masks were sold to the Department at
the regulated price of R12,48 each,
as per Treasury’s
guidelines. Additionally, they allege that a specific agreement was
made that Mr Nene would purchase the
surgical masks from Mr Mdazane
at R6,50 per mask contradicting Mr Mdazane’s allegation.
Further that Mr Mdazane would receive
a payment of (Six Hundred and
Fifty Thousand Rand) R650 000. In their plea, the defendants offer a
settlement of R650,000, which
the plaintiffs reject.
The
evidence
[11]
The evidence adduced by both parties in court is sufficiently
documented and requires no recapitulation.
I will, however,
underscore key facets of the parties’ testimonies that are
significant although they are already captured
in the pleadings. Mr
Mdazane testified that he and Mr Nene jointly submitted a bid as
business partners and they had immediate
access to surgical masks
obtained from a supplier in Cape Town at a cost of R8,95 per unit.
[12]
When asked about the partnership he explained that it was essentially
a profit-sharing arrangement. This
was not the first collaborating
venture, as they had previously worked together on other projects as
partners. He also mentioned
that during their interaction, Mr Nene
claimed to have received no payment from the Department on 15 July
2020 which raised serious
concerns about Mr Nene’s honesty.
Through his independent investigation, he discovered that the
Department effected Mr Nene’s
payment. With this evidence, the
plaintiffs closed their case.
[13]
After the closure of the plaintiff's case, the defendants applied for
an absolution from the instance.
[1]
The details of the presentation are unnecessary for this discussion.
It suffices to state that the application for absolution from
the
instance was dismissed due to the
prima
facie
evidence presented by Mr Mdazane. Notably, this evidence included:
the admission of an oral agreement and Mr Nene’s involvement
in
the contractual agreement, stemming from his role as director of the
second defendant.
[14]
Ms Emba Moseline Exford (Ms Exford), an employee of the second
defendant, testified about her role in preparing
a document related
to the bid. She submitted an order form specifying the quantity of
the masks to be ordered and delivered to
the Department. Ms
Exford denied any partnership between the plaintiffs and defendants.
Supporting this Mr Nene stated that
Mr Mdazane's financial
difficulties presented an opportunity to procure masks from him,
rather than outsourcing from an external
company.
[15]
Mr Nene further testified that if he had known that Mr Mdazane would
demand a higher price than agreed, he
would not have bought the
surgical masks from him, especially since in some companies they were
priced between R6, 90, R6,50 and
R4,95 each at the time.
[16]
When questioned about not paying the R650,000 he had offered, he
testified that Mr Mdazane was insisting
on a higher amount. Despite
his attempts to explain that litigation costs were already
substantial, Mr Mdazane declined to settle.
That was the case for the
defendants.
The
law
[17]
In
civil proceedings, the plaintiff must, in order to succeed, prove his
case on a balance of probabilities. In
National
Employers General Insurance Limited v Jagers
,
[2]
the court held:
“
[I]t
seems to me with respect, that in any civil case, as in criminal
case, the onus can ordinarily only be discharged by adducing
credible
evidence to support the case of the party on whom the onus rests. In
a civil case, the onus is obviously not as heavy
as it is in a
criminal case, but nevertheless where the onus rests on the plaintiff
as in the present case, and where there are
two mutually destructive
stories, he can only succeed if he satisfies the court on a
preponderance of probabilities that his version
is true and accurate
and therefore acceptable, and that the other version advanced by the
defendant is therefore false or mistaken
and falls to be
rejected……..”
[18]
In the present instance, I am faced with two irreconcilable versions,
therefore, I have to follow the approach
that is typically adhered to
by our courts in resolving factual disputes. This is outlined in
Stellenbosch
Famers’ Winery Group Ltd & Another v Martell ET Cie &
Others
[3]
.
The approach involves three prolonged analyses where the court
assesses witnesses’ credibility, their reliability and
probabilities.
[19]
To pursue this approach, several factors, while not decisive may
still play a significant role. This encompasses
various
characteristics including the witness’s honesty and behaviour
while testifying, hidden biases, inconsistencies within
their
testimony or with previously stated facts, the probability or
improbability of specific aspects of their account, the credibility
of their performance compared to other witnesses testifying about the
same incident.
[4]
[20]
According to the tone set by the landmark case
[5]
,
witnesses’ reliability hinges on two key factors: their
opportunity to experience the event in question and the quality,
integrity and independence of their recall.
The
parties’ contentions and the evaluation of evidence by the
court
[21]
Regarding partnership as claimed by the plaintiffs,
Mr
Kotze
,
counsel for the defendants referenced to the case of
Joubert
v Tarry & Co
[6]
,
where the court settled the essentials of partnership. The court held
that each of the partners brings something into the partnership
and
that the business is carried on for joint benefit with the object of
making the profit for a legitimate purpose.
[22]
During cross-examination, Mr Mdazane’s admission that the
defendants secured the tender independently,
directly contradicted
his earlier testimony of joint participation in the bid process.
Moreover, Ms Exford’s direct involvement
in preparing the
tender documents discredited Mr Mdazane’s claims of
participation, which he had attributed to his purported
partnership
with the defendants.
Additionally,
when Mr
Kotze
denied the partnership’s existence during cross-examination, Mr
Mdazane’s repeated refusal to comment undermined his
previous
testimony, in which he had claimed that a partnership existed.
[23]
It was further suggested to Mr
Mdazane that prior to the bid process in question, he had attempted
to formalise his understanding
with Mr Nene into a partnership.
However, Mr Nene clarified that these were two separate entities,
emphasizing that there was no
partnership between them. Mr Mdazane
subsequently acknowledged this statement as accurate and this
contradicted his earlier version
on the same issue.
[24]
In addition, the evidence presented by Ms Exford and Mr Nene,
corroborated by Mr Mdazane's concession during
cross-examination,
which contradicts his initial testimony, demonstrates on a balance of
probabilities that no partnership existed
in this matter.
While
it is acknowledged that Messrs Mdazane and Nene shared a remarkably
close relationship, a comprehensive examination of the
evidence
reveals that there was no partnership between the two parties and the
respective companies prior to the court proceedings.
[25]
The proceedings further reveal ambiguity in Mr
Vapi’s
presentation on behalf of the plaintiffs. Notably, he simultaneously
argues for the first defendant’s personal liability
when the
evidence reveals that the surgical masks’ procurement stemmed
from a bid involving the second defendant. Again,
this contention
lacks merit.
[26]
It has now been established that Mr Nene entered into a verbal
agreement with the plaintiffs on behalf of
the second defendant. The
dispute centres on the cost of each surgical mask that the plaintiffs
were supposed to charge the second
defendant.
[27]
In his testimony, Mr Mdazane
revealed that he had unilaterally secured the surgical masks from a
Cape Town-based company prior to
the commencement of the bidding
process. Nevertheless, he failed to substantiate the purchase price
of R8, 95 per surgical mask.
His earlier insistence that
surgical masks cost between R12 to R15 each at the time failed to
support his case. His argument, based
on the logical premise that
purchasing a surgical mask at R8,95 each and reselling them at R6,50
would have been unprofitable,
lacks credibility without invoices to
support this claim. Therefore, one concludes on the totality of the
evidence tendered that
Mr Mdazane’s testimony lacks credibility
and as such
renders his evidence
unreliable.
[28]
Therefore, the argument positing that Mr Nene is personally liable to
pay the plaintiffs an additional amount
of (Four Hundred and
Twenty-One Thousand Rand) R421 000 is not supported by the facts. In
this regard, the plaintiffs’ claim
cannot succeed.
Costs
[29]
The general rule is that costs follow the result. Generally, the
question of costs requires individual considerations,
taking into
account the unique characteristics and complexities of the issues
involved.
[30]
In this matter, the defendants submit that if the court dismisses the
plaintiffs’ claims, except to
the extent admitted by the second
defendant, the defendants should be awarded costs. This is due to
their substantial success in
(a) absolving the first defendant from
the proceedings; and (b) defeating the plaintiffs’ claims
against the second defendant
who ought to be entitled to costs of
suit in the trial.
[31]
The defendants overlook that an application for absolution from the
instance was dismissed, thereby implying
that the plaintiffs
succeeded in that application. Moreover, the first defendant’s
status as a director of the second defendant
renders him an
interested party in the proceedings, Additionally, given the verbal
nature of the contract, the first defendant
was inherently a
participant in the agreement.
[32]
Considering that neither party has achieved substantive success in
these proceedings, I exercise my discretion
and hold that neither
party is entitled to costs.
Order
[33]
The following order shall issue:
1.
The cancellation of
the oral agreement between the plaintiffs and the defendants entered
into on or about April 2020 is hereby confirmed.
2.
Judgment is granted in favour of the plaintiffs in the amount of R650
000 (Six Hundred and
Fifty Thousand Rand) as tendered by the
defendants, jointly and severally the one paying the other to be
absolved.
3.
The plaintiffs’ claim for breach of contract against the
defendants in the amount of
R421 000 (Four Hundred and Twenty-One
Thousand Rand) is dismissed.
4.
There shall be no order as to costs.
N
CENGANI-MBAKAZA
ACTING
JUDGE OF THE HIGH COURT
APPEARANCES:
For
the Appellant:
Mr
S Vapi
Instructed
by:
c/o
Siyathemba Sokutu Attorneys
East
London
Counsel
for the Respondent:
Adv.
Kotze
Gravett
Schoeman Inc.
Instructed
by:
East
London
Heard
on:
17
July 2024
Judgment
Delivered on:
29
October 2024
[1]
The test for absolution to be applied by a trial court at the end of
the plaintiffs’ case was formulated in
Claude
Neon Lights (SA) Ltd v Daniel
1976 (4) SA 402
(a) where the court stated the following: ……when the
absolution from the instance is sought at the close of the
plaintiff’s case, the test to be applied is not whether the
evidence led by the plaintiff establishes what would finally
be
required to be established, but whether there is evidence upon which
a Court, applying its mind reasonably to such evidence,
could or
might ( not should or ought to) find for the plaintiff.’
[2]
1984
(4) SA 437
(E) at 440 D-G.
[3]
2003(1)
SA 11 (SCA) para 141J-15 A-D.
[4]
Fn 2 above.
[5]
Fn 2 above.
[6]
1915
ZATPD 47.