CT International Property Investment CC v Mienie and Another (1006/2008) [2011] ZANWHC 64 (10 February 2011)

NORTH WEST HIGH COURT, MAFIKENG

CASE NO. 1006/2008

In the matter between:

CT INTERNATIONAL PROPERTY INVESTMENT CC …...................................PLAINTIFF

and

MARTIN MIENIE ….............................................................................1ST DEFENDANT

MASTERCON CC ….........................................................................2ND DEFENDANT

____________________________________________________________________________

JUDGEMENT

MPSHE AJ.

A. INTRODUCTION

[1] This is an application for absolution from the instance. The reasons therefore being that the plaintiff has failed to prove a prima facie case with reference to all the claims.

B. BACKGROUND

[2] The plaintiff, a close corporation with limited liability, duly incorporated as such in accordance with the Close Corporation Law of the Republic of South Africa sued the first and second respondents jointly for damages in the amount of R2 505 348.01, the one paying the other to be absolved.

[3] The cause of action appears from the following paragraphs of the particulars of claim:

“4. During or about February 2004 and at Cape Town, alternatively Rustenburg, the Plaintiff, represented by Mr D Fyfe, and the First

Defendant personally, concluded an oral agreement (hereinafter referred to as the “principal agent agreement”), the

express and material terms of which included the following:

4.1 The First Defendant agreed to act in the capacity of principal agent for the building works being undertaken at CTI Business Park, 69 Vasco Boulevard, Goodwood, Western Cape;

4.2 The First Defendant undertook to provide project management services as well as to act as consulting engineer for the building project;

4.3 The First Defendant would secure all professional services required for the project, including those of an architect and draughtsman;

4.4 The First Defendant would be entitled to a fee calculated at 7½ percent of the total contract value as per a prepared Bill of Quantities, payable in draws from time to time as the works proceeded.

5. It was an implied term of the principal agent agreement referred to above that the First Defendant would conduct himself in all respects and undertake all work and services in a manner that was professional, proper and of a generally accepted standard.

6. During or about May 2004, the Plaintiff and the Second Defendant, represented by the First Defendant, concluded an oral agreement

(hereinafter referred to as the “construction agreement”), the material and express, alternatively implied, terms of which included the following:

6.1 The Second Defendant was appointed as the building contractor to undertake the building works on site at a total contract value

(including a contractor’s fee) of R6 169 989.64 (excluding Value Added Tax);

6.2 The building works would be undertaken and completed in accordance with the plans and specifications and would be undertaken in all respects in a manner that was professional, proper and of a generally accepted standard.

First claim

7. During or about May 2004, the First Defendant, both personally and in his capacity as authorised representative of the Second Defendant, orally warranted to the Plaintiff, represented by Mr D Fyfe, that the total building costs would not exceed the agreed contract value of R6 169 989.64 (excluding Value Added Tax).

8. The total building costs upon completion of the building works on site amounted to the sum of R7 302 225.18 (excluding professional

fees and Value Added Tax), which sum the Plaintiff has expended.

9. The First and Second Defendants accordingly breached the warranty furnished to the Plaintiff in causing the total building costs to over-reach the warranted total cost by the sum of R1 132 235.54 plus VAT.

10. The Plaintiff has accordingly suffered damages as a result of the First and Second Defendants’ breach as aforesaid, in the sum of R1 132 235.54 plus VAT, which damages flow naturally from the breach, alternatively were in the contemplation of the parties at the time that the warranty was furnished.

11. In the alternative to the aforegoing:

11.1 it was an express, alternatively implied or tacit, term of the construction agreement that the building costs would not exceed the agreed total contract value of R6 169 989.64 (excluding Value Added Tax) and that, should the Plaintiff have effected payment of an amount in excess of such sum, the Plaintiff would be entitled to recover the excess;

11.2 the total building costs upon completion of the building works on site amounted to the sum of R7 302 225.18 (excluding professional

fees and Value Added Tax), which sum the Plaintiff has expended.

12. The First and Second Defendants are accordingly liable jointly and severally alternatively the Second Defendant is liable, to effect payment to the Plaintiff of the sum of R1 132 235.54 plus VAT, but despite demand, fails and refuses to do so.

Second claim

13. The Second Defendant, in breach of the terms of the construction agreement, failed to complete the works on site in accordance with the plans and specifications or to ensure that the works were undertaken in all respects in a manner that was professional, proper and of a generally accepted standard.

14. The details of the Second Defendant’s failing in this regard appear more fully from the reports of Van Gysen Consulting Engineers (dated 19 April 2007), Mr Jonathan Mitchell (report no 2061) and 4em Consulting (Pty) Limited (dated 3 May 2007), copies of which are annexed hereto, marked “CT1”, “CT2” and “CT3” respectively.

15. As a result of the breaches committed by the Second Defendant, the Plaintiff has suffered damages in the sum of R1 373 112.61, being the reasonable cost of remedying and repairing the defects.

16. The damages claimed flow naturally from the Second Defendant’s breaches, alternatively were in the contemplation of the parties at the time of concluding the construction agreement.

17. It was furthermore an implied term of the principal agent agreement that the First Defendant would supervise and monitor the work undertaken on site by the Second Defendant so as to ensure that the works on site were completed in accordance with the plans and specifications and to ensure that the works were undertaken in all respects in a manner that was professional, proper and of a generally accepted standard.

18. The First Defendant breached the terms of the principal agent agreement in that he failed to supervise and monitor the works on site properly or at all, thereby allowing the works to be undertaken and completed in a manner that was defective and of an unacceptable standard. The further details thereof appear from paragraph 14 above.

19. As a result of the aforesaid breach committed by the First Defendant, the plaintiff has suffered damages in the sum of R1 373 112.61, being the reasonable cost of remedying and repairing the defects.

20. The damages claimed flow naturally from the First Defendant’s breach, alternatively were in the contemplation of the parties at the time of concluding the principal agent agreement.”

[4] The defendants duly filed their pleas to the claims.

[5] In this application, the defendants allege that the plaintiff did not tender evidence relating to all elements of the claim. I will therefore deal with those aspects allegedly not proven by the plaintiff. In so doing, I will not analyse the evidence to an extent of accepting or rejecting the same.

C. EVIDENCE TENDERED

[6] In support of its claim, the plaintiff led the evidence of three witnesses, Mr Dirk Fyfe, for the plaintiff, Mr Ian van Gysen, the structural engineer and Mr Mitchell, a building consultant.

[7] I will not restate the witnesses’ evidence in toto. To avoid deciding on the credibility and acceptance or otherwise of the evidence, I will use the evidence only by way of illustration.

[8] The evidence led is to the effect that the respondents promised to complete the project and make savings of R1m.

[9] The evidence of Mr Fyfe, for the plaintiff, is clear with regard to the R1m saving. This, according to Mr Fyfe, was agreed upon between the plaintiff and the second defendant upon conclusion of the oral construction agreement. I need to mention herein that the first and second defendants admitted the oral construction agreement in their plea.

[10] The defendants’ argument is that there was no warranty given to the plaintiff. Further that such warranty, if it ever existed, was not reduced in writing by the parties. The surprising feature introduced by counsel for the defendants, Mr Steyn, is that under cross-examination of Mr Fyfe, a written agreement was introduced. This relates to the JBCC contract entered into in Cape Town.

[11] Mr Steyn argued that the JBCC contract cancels the oral agreement entered into in Rustenburg and further that it does not embody the said warranty. I do not want to entertain this argument. It suffice for me to state that there is evidence tendered by the plaintiff on the issue of a warranty calling on the defendants to respond. I may add that an inference may be drawn from the behaviour of the parties. See the case of Naude v Harrison 1925 CPD.

D. SECOND CLAIM

[12] The second claim reads as follows:

“Second claim

[13] The plaintiff brought the first defendant under the second claim in the following terms:

“17. It was furthermore an implied term of the principal agent agreement that the First Defendant would supervise and monitor the work undertaken on site by the Second Defendant so as to ensure that the works on site were completed in accordance with the plans and specifications and to ensure that the works were undertaken in all respects in a manner that was professional, proper and of a generally accepted standard.”

[14] The fulcrum of the defendants’ argument herein is that the agreement used at the trial is not the oral construction agreement

but the written one referred to as the JBCC.

[15] The series of e-mails in the plaintiff’s bundle, at pages 109–110, clarify the type of contract and the purpose thereof. It is then that in order to cater for items as listed on the e-mail dated 01 June 2004 from Essop, the JBCC came into existence.

[16] This, in my opinion, does not do away with the oral construction agreement entered into in Rustenburg.

[17] I need to state that the matter is before this Court’s jurisdiction on the basis, strictly of the oral agreement. In my mind, I hope I am correct, the matter before me is an oral agreement. The very oral agreement is admitted by the defendants in the pleadings. I am enjoined to adjudicate this matter on the basis of that which gives this Court jurisdiction.

[18] Regarding the second claim, the record reveals that evidence was tendered. I refrain from analysing and accepting or otherwise of the evidence. I have given reasons for my attitude supra. What I need to be satisfied with is the presence of prima facie evidence supporting the claims.

[19] I have perused the record, particularly the evidence of Mr Fyfe. I am satisfied that there is a prima facie case made.

E. QUANTIFICATION OF THE CLAIM

[20] The argument herein is to the effect that the evidence as tendered by Mr Mitchell is basically hearsay. This is based on the fact that a Mr Calitz is the one who entered information into the computer and forwarded the results there from to Mr Mitchell.

[21] Hearsay evidence freely stated means evidence that someone other than the witness has stated. Watermeyer J in Estate De Wet v De Wet 1924 CPD 341 states:

“. . . evidence of statements made by persons not called as witnesses which are tendered to prove the truth of what is contained in the statement.”

[22] It is so that Mr Calitz was instructed by Mr Mitchell to produce the said information. However, of importance herein is the fact that Mr Mitchell worked closely with Mr Calitz, who is a qualified quantity surveyor. Whatever was provided by Mr Calitz was well-known and understood by Mr Mitchell.

[23] Mr Mitchell’s evidence is as follows:

“I understand. --- Once he has done the quantification exercise he then brings it to me and I then go through the whole thing, firstly by myself and then I call him in and I will either explain that he has not done something correctly or has not done something that I wanted to be done or I am not satisfied with a rate, I think it is too high or too low, whatever the case may be, and so I will direct him until I have got it fine tuned to the way I want it. I then check it finally and it then gets incorporated as this document which is presented to me.”

“ADVOCATE WELGEMOED: To clarify the matter, Mr Mitchell, you have heard my learned friend’s objection. Which of the items that you have instructed

Mr Calitz to calculate, did you check? --- I checked all of these items.

All of them? --- All of them.

And in these items, let us say a calculation came back, and in your experience is not acceptable to you or looks incorrect, what would you do? --- I would send it back and say this is not correct or this is not the way I want it to be. It must be the way I want to present this document. Calitz may argue with me. He may say ja but it should be done this way, it should be done that way. I will hear an argument but I am the one who is presenting the document and I will say no, I do not want it like that that, I want it like this. He is going to do it like this and that is what then gets done.

Who is the author of this report? --- I am the author of this report.

Who accepts responsibility for this report? --- I do.

Who has direct knowledge of the information that led to the drafting of this report? --- Me.”

[24] It is clear to me that Mr Mitchell was involved in the quantification and did not only receive an end-product from Mr Calitz. I do not find substance in the submission of Mr Steyn. Mr Steyn further submitted that the costing figures were incorrect. It lies with the defendants to rebut that by way of evidence.

[25] As to the submission that the plaintiff did not prove the exact amount as claimed, I can only state that a party will be entitled to that which he shall have proven.

[26] In support of this application, it was further submitted by Mr Steyn that the claim has actually prescribed. It is argued that

prescription commences on breach of the contract.

[27] I cannot gainsay this. However, I do not find anywhere in neither the documents nor evidence stating that damages were determined on 07 March 2005.

[28] Mr Steyn referred to the letter dated 07 March 2005 from the plaintiff to the first defendant. It the letter is read in its

entirety it will become clear that the spirit of the letter is to receive more information pertaining to expenditure so far. This is crystal clear from the sentence that states:

“The analysis referred to above would help me in identifying where things stand and what the correct picture is.”

[29] This is further supported by the evidence of Mr Fyfe at pages 251–252 of the record which I do not intend quoting herein for fear of being prolix. I find no basis for the prescription submission.

[30] Section 14(2) of the Close Corporation Act No. 69 of 1984 as amended is clear, it states that:

“A certificate of incorporation given by the Registrar in terms of subsection (1) or section 27(4)(c), or a copy thereof, as the case may be, shall upon its mere production, in the absence of proof of fraud or error, be conclusive evidence that all the requirements of this Act in respect of registration of the corporation concerned and of matters precedent and incidental thereto have been complied with, and that the corporation concerned is duly incorporated under this Act.”

[31] The defendants disputed the existence of the plaintiff and put the plaintiff to the proof thereof.

[32] Mr Fyfe testified as to the existence thereof. He is the Director of the plaintiff. After this evidence, no cross-examination followed disputing the same. This is a civil trial in which the burden of proof is on preponderance of probabilities and not beyond a reasonable doubt. Absence of production of a certificate in the face of evidence cannot be seen to be fatal to the proceedings.

[33] In conclusion, I find it apposite to refer to the case of Gordon Lloyd Page and Associates re Riviera & Another 2001 (1) SA 88 SCA at 92 states that:

“The test for absolution to be applied by a trial court at the end of a plaintiff’s case was formulated in Claud Neon Lights SA (Ltd) re Daniel 1976 (4) SA 403 (A) at 409G–H in these terms:

‘When absolution from the instance is sought at the close of 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 is evidence upon which a court, applying its mind reasonably to such evidence, could or might, not should nor ought to, find for the plaintiff.’

This implies that a plaintiff has to make out a prima facie case.

. . . in the sense that there is evidence relating to all the elements of the claim to survive absolution because without such evidence no court could find for the plaintiff.

As far as the inference from the evidence are concerned the inference relied upon by the plaintiff must be a reasonable one. Not the only reasonable one. The test has from time been formulated in different terms especially as has been said that the court must consider whether there is evidence upon which a reasonable man might find for the plaintiff. This is a test which had its origin in jury trial when the reasonable man was a reasonable member of the jury. Such a formation tends to cloud the issue. The court ought not to be concerned with what someone might think. It should rather be concerned with its own judgment and not that of another reasonable person or court. Having said that, absolution at the end of a plaintiff’s case in the ordinary sense of events will nevertheless be granted sparingly only when it is in the interest of justice.”

[34] I consequently order as follows:

(a) The application for absolution from the instance is refused.

__________________

M.J. MPSHE

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING : 28 SEPTEMBER 2010

DATE OF JUDGMENT : 10 FEBRUARY 2011

COUNSEL FOR PLAINTIFF : ADV D. WELGEMOED

COUNSEL FOR DEFENDANTS : ADV J.F. STEYN

ATTORNEYS FOR PLAINTIFF : SMIT STANTON INC.

(Instructed by C K FRIEDLANDER SHANDLING VOLKS)

ATTORNEYS FOR DEFENDANTS : VAN ROOYEN TLHAPI WESSELS

(Instructed by COUZYNS INC.)