New Heights 1448 CC t/a Vuka Security v Premier of the Province of Mpumalanga and Others (A679/2015) [2018] ZAGPPHC 932 (27 June 2018)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: A679/2015

REPORTABLE: YES/NO

OF INTEREST TO OTHER JUDGES: YES/NO

REVISED

DATE: 2018/06/27

In the matter between:

NEW HEIGHTS 1448 CC T/A VUKA SECURITY

Plaintiff

and

THE PREMIER OF THE PROVINCE OF MPUMALANGA

1st Defendant

MEC FOR THE DEPARTMENT OF SAFETY AND SECURITY

OF THE MPUMALANGA PROVINCIAL GOVERNMENT

2nd Defendant

JUDGMENT

MNGQIBISA-THUSI, J

[1] This is an appeal against the order and judgment of the court a quo (Msimeki J) handed down on 18 January 2014 and 07 October 2014, respectively, granting absolution from the instance and refusing the appellant's claim.

[2] The appellant, New Heights 1448 CC, trading as Vuka Security, as plaintiff, instituted action against the first respondent, the Premier of Mpumalanga and the second respondent, the Mpumalanga MEG for Safety and Security, for payment of an amount of R844, 000, as damages for second respondent's alleged summary termination of an agreement for the provision of security services. The claim is for the balance of the alleged contract price for the period 16 to 31 May 2008, and notice period for the month of June 2008.

[3] The appeal is with the leave of the Supreme Court of Appeal.

[4] The parties will be referred to as they were during the trial proceedings.

BACKGROUND

[5] It is common cause tt1at the plaintiff was paid for services rendered for the period of 1-15 May 2008.

[6] The factual background leading to the institution of the action is as follows.

During December 2003 the plaintiff and the second defendant concluded a written Memorandum of Agreement[1] ("the agreement") pursuant to a tender issued by the second defendant during July 2003. In terms of the agreement the plaintiff undertook to provide security services at various sites of the Mpumalanga Provincial Government. The agreement further provided, inter alia that

6.1 the agreement will endure for a period of 36 months, i.e from 01 December 2003 to 31 December 2006 or such other date as may be agreed upon between the parties (clause 3.1[2]).

6.2 second defendant could terminate the agreement by giving the plaintiff 30 days' notice of its intention to terminate the agreement (clause 29.1[3]); and

6.3 any variation to the terms of the agreement would be binding only if reduced to writing and signed by both parties (clause 33.1[4]).

[7] Before the initial agreement expired on 31 December 2006, the parties agreed to the agreement on a month to month basis. Each extension of the agreement was effected through the first defendant's head of department each month by issuing a letter to the plaintiff advising it of such extension. One of the letters extending the agreement on a month to month basis (dated 14 March 2007) reads in part as follows:

"The Department of Safety and Security has taken a decision to extend the current contract from 01st April 2007 to the 30th April 2007. The Memorandum of Agreement of MTS 1416/2003 and any prescribed rules and regulations shall be applicable".

[8] On 31 March 2008, the first defendant's head of department informed the plaintiff in writing[5] that its services would be terminated with effect from 30 April 2008. The said letter[6] provides, inter alia:

''The Department of Safety and Security hereby informs you that it will not be renewing the contract for the tendering of security services in accordance with MTB/1416/03 and therefore, hereby gives notice in terms of clause 30 (1)[7] of the Agreement of the termination of the contract with effect from the 301h April 2008.

The Department wishes to advise that this information be communicated to your employees accordingly and further that your company is still expected to render services in accordance with the service level agreement for the remainder of the contract period".

[9] The plaintiffs claim is premised on an allegation that on 30 April 2008 and during a telephone conversation between the plaintiffs representative, Mr F Schoeman and Mr S Motsepe, second defendant's employee, the parties had entered into an oral monthly contract on the same terms as the previous monthly contracts.

[10] In its amended particulars of claim the plaintiff pleaded in part as follows:

"10. The term of the Memorandum of Agreement was extended from time to time by the Defendant and more particularly on the 31st of March 2008 notice was given by the Defendant to the Plaintiff that the Agreement would terminate on the 30th of April 2008. A copy of the letter by the Defendant to the Plaintiff dated the 31 of March 2008 is appended hereto and marked as annexure "C".

11. Despite the contents of annexure C the parties further agreed that the contract would be extended on a month to month basis after the 30th of April 2008 and a copy of a letter by the Plaintiff's duly authorised representative to the Defendant' duly authorised representative dated the 30th of April 2008 evidencing this arrangement is annexed hereto and marked annexure D[8].

12. On the 15th of May 2008 the 2nd Defendant orally informed the Plaintiff's duly authorised representative that despite the continuation of the Agreement on a month-to-month basis 2nd Defendant would no longer require the services of the Plaintiff with immediate effect on the 15th of May 2008.

13. This unilateral cancellation was contrary to the terms of the memorandum requiring one month written notice".

[11] It appears that on the basis of the alleged further extension of the contract, as alluded to by Mr Schoeman in his letter to the second defendant dated 30 April 2008, the plaintiff continued providing security services to the second defendant from the beginning of May 2008 until 15 May 2008 when it was instructed to leave the defendant's sites. It is the plaintiffs contention that the second defendant was, in terms of the contract, obliged to give it a month's notice, effective from 1 June 2008, before terminating their services. It is thus clear that the plaintiff was, at that stage, still relying on the original written memorandum of agreement of December 2003.

[12] In their amended plea, the defendants' make common cause with the plaintiff that after the initial period of the contract, it was further extended on a month to month basis until it was finally terminated on 30 April 2008. The defendants deny receiving the letter referred to by the plaintiff as confirmation of the oral extension of the agreement beyond 30 April 2008. In the alternative, the defendants deny that Mr Motsepe had authority to extend the agreement on behalf of the defendants beyond 30 April 2008.

[13] The plaintiff's grounds of appeal are the following:

13.1 that the court a quo failed to correctly apply the test for absolution from the instance and as a result erred in finding that there was no case for the defendants to answer in light of the fact that the plaintiff succeeded in passing the low threshold of proving a prima facie case;

13.2 that the court a quo erred in not finding that clause 33.1 of the original agreement did not survive the expiry of that agreement in December 2006.

13.3 that the defendants were not entitled to summarily cancel the agreement without giving the plaintiff a month's notice of its intention to cancel the agreement;

13.4 that the further agreement relied upon by the plaintiff was authorised (whether such authority was real, apparent, ostensible or subsequently ratified or confirmed by the defendants).

THE ISSUE

[14] The issue to be determined is whether on the facts before the court, the court a quo misdirected itself in granting absolution from the instance at the close of the plaintiff's case on the basis of non-compliance with the non-variation clause.

[15] Mr Schoeman's evidence pertaining to the alleged extension of the agreement beyond April 2008 is that: On 30 April 2008 he had received a telephone call from a certain Mr Motsepe (now deceased) who was in the employ of the second defendant, during which a request was made for the plaintiff to continue rendering its security services on a month to month basis, as the defendants were experiencing a problem with the new contractor. Mr Schoeman testified that the only difference betvveen the extensions post the termination of the initial agreement in December 2006, and the extension post April 2008, is that with regard to the latter extension, the first defendant's head of department did not confirm the extension by a letter to the plaintiff. Mr Schoeman instead sent such a confirmatory letter to the second defendant on the same day that the alleged agreement had been entered into. Mr Schoeman further testified that pursuant to the arrangement with Mr Motsepe, the plaintiff rendered services until it received a telephone call on 15 May 2008 to be off-site and not render any further services. Mr Schoeman testified that the agreement after 30 April 2008 was not a new contract but an extension of the previous contract of 2003. Furthermore Mr Schoeman denied that the services the plaintiff rendered during May 2008 were in accordance with a certain court order[9], as alleged by the defendants, as plaintiff was not part of the case in which the court order was granted.

[16] During cross-examination Mr Schoeman admitted that all the letters extending the contract had been previously signed by the first defendant's head of department but still denied that Mr Motsepe had no authority to extend the contract. Mr Schoeman further that denied that the contract could not be orally extended in view of the non-variation clause contained in the agreement.

[17] After Mr Schoeman's testimony but before the plaintiff closed its case, plaintiffs counsel applied for an amendment to paragraph 11 of the plaintiffs amended particulars of claim. The amendment reads as follows:

"11. Despite the contents of annexure C the parties further agreed that the contract would be extended on a month to month basis after the 30th of April 2008 and a copy of a letter by the Plaintiffs duly authorised representatives to the Defendant's duly authorised representative dated the 30th of April 2008 evidencing this arrangement is annexed hereto and marked annexure D".

The plaintiff replicated in order to raise estoppel to the defendants' amended plea against the allegation that Mr Motsepe did not have authority to extend the contract.

[18] After the close of the plaintiff's case, counsel for the defendants applied for absolution from the instance.

[19] The test for absolution as formulated in Gordon Lloyd Page & Associates v Rivera and Another[10] is as follows:

"[2] The test for absolution to be applied by the trial court at the end of the plaintiff's case was formulated in Claude Neon Lights (SA) Ltd v 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 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, nor ought to) find for the plaintiff. (Gascoyne v Paul and Hunter 1917 TPD 170 at 173; Ruto Flour Mills (Pty) Ltd v Adelson (2) 1958 (4) SA 307 (T).)'

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 the absolution because without such evidence no court could find for the plaintiff (Marine & Trade Co Ltd v Van der Schyff 1972 (1) SA 26 (A) at 37G-38A; Schmidt Bewysreg 4th ed at 91-2). As far as inferences from the evidence are concerned, the inference relied upon by the plaintiff must be a reasonable one, not the only reasonable one (Schmidt at 93). The test has from time to time been formulated in different terms, especially it has been said that the court must consider whether there is evidence upon which a reasonable man might find for the plaintiff' (Gascoyne (Joe cit)) - a test which has its origin in jury trials when the "reasonable man" was a reasonable member of the jury (Rufo Flour Mills). Such a formulation tends to cloud the issue. The court ought not to be concerned with what someone else might think; it should rather be concerned with its own judgment and not that of another "reasonable" person or court. Having said this, absolution at the end of the plaintiff's case, in the ordinary course of events, will nevertheless be sparingly granted but when the occasion arises, a court should order it in the interests of justice".

[20] In granting absolution from the instance the court a quo concluded as follows:

"[14] It is clear from annexure D that there was an attempt at extending the contract. This, according to the contents of annexure D, was done orally and then confirmed by this letter dated 30 April 2008. Indeed, Mr Schoeman in his testimony confirmed that there was nothing in writing on the side of the defendant to extend the contract.

[15] Even if an authorised person had done it, as Mr Motepe correctly submitted, that would not have extended the contract.

The evidence, in this regard, as Mr Motepe further submitted, is inadmissible in the face of the non variation clause namely Clause 33.1. The cases support this, There is, indeed, no prima facie case calling for a response by the defendants".

[16] The estoppal that was raised in the replication, in my view, does not assist the plaintiff. The application, in my view, should succeed.

[21] It is the plaintiffs contention that after the initial agreement expired at the end of December 2006, the parties did not sign an agreement extending the initial agreement. Each month the parties agreed, orally, on the extension of the terms of the initial agreement. Counsel for the plaintiff, argued that new agreements were concluded on a month to month basis, there was nothing to vary and as a result the non-variation clause lapsed when the initial agreement expired at the end of December 2006. It was argued that as the defendants had given the plaintiff's a month's notice of its intention to terminate the contract at the end of April 2008, the same principle should apply with regard to the oral agreement concluded at the end of April 2008. Once more the plaintiff relies on the written memorandum of agreement.

[22] In support of the submission that new oral agreements were concluded each month after December 2006 and only the terms of the initial agreement were extended, plaintiff relied on the decision of Golden Fried Chicken (Pty) Ltd v Sirada Fast Foods CC[11]• In Golden Fried Chicken (supra), after the expiry of a franchise agreement, the franchisee did not, as provided for in the franchise agreement, apply for the extension of the contract but continued to trade as before. Furthermore, despite the fact that the franchise agreement was not extended, the franchisor hqd instructed the franchisee to implement certain renovations to its premises. The court held that the franchise agreement expired and that there was a tacit relocation of the terms of the franchise agreement in the way the parties conducted themselves after the expiry of the initial agreement. In other words, a new agreement was concluded and the non-variation clause in the initial agreement did not survive the expiry of that agreement.

[23] On behalf of the defendants, counsel correctly in my view submitted that the agreement expired at the end of April 2008. This is borne out firstly by the fact that the plaintiffs pleaded case is that the memorandum of agreement was extended at the end of 2006 and that each monthly extension was confirmed by a letter received from the second

respondent's head of Department. Mr Schoeman admitted that with regard to the alleged extension post 30 April 2008, no such letter

was received from the head of Department by the plaintiff. Secondly, the plaintiff based its claim on the fact that it was entitled to be given one month's notice before the agreement was terminated in compliance with the provisions of the contract. This claim is based on clause 29.1 of the agreement. Mr Schoeman in his evidence did not dispute the fact that the non­variation clause was applicable. His main concern was that the defendants did not want to implement the provisions of clause 29.1 in favour of the provisions of 33.1. Clause 29.1 can only be taken into account if one is satisfied that a valid agreement had been in existence when the plaintiff was told to vacate the second defendant's premises.

[24] The plaintiff did not present any evidence indicating that after the expiry of the contract at the end of April 2008 the parties had concluded a tacit or oral agreement as contended by the plaintiff in this appeal for the first time. This contention was never pleaded nor did Mr Schoeman testify to that effect. As correctly pointed out by counsel for the defendants, the plaintiffs are now raising a new case which was never raised either in its pleadings or in evidence in the court a quo.

[25] In his evidence, Schoeman admitted that he had not received any written confirmation of the extension of the agreement which expired at the end of April 2008. A party relying on the existence of an implied or tacit authority of an agent, bears the onus of showing that a tacit and new agreement was concluded after 30 April 2008. In the absence of such evidence, the plaintiff has not made out a prima facie case that a valid oral agreement to extend the previous agreement was concluded and that therefore the defendants were liable to give it a month's notice.

[26] Up until the end of the trial but before argument was made, it was the plaintiff's case that from the beginning of 2007 the initial agreement had been extended on a month to month basis and that the terms of the original contract applied to the parties. Up to that stage it was common cause that the initial agreement had been extended. However, during argument counsel for the plaintiff argued that the initial agreement expired at the end of 2006 and that only the terms of the agreement were extended except for the non-variation clause. This argument is untenable. On appeal it is now argued that the initial agreement terminated at the end of 2008. Thereafter the parties entered into a tacit agreement on the same terms as the initial agreement. Counsel for the plaintiff argued that the non-variation clause was not applicable. However, neither in its pleadings nor during Mr Schoeman's evidence was any reference made to the existence of a tacit agreement. A party has to clearly set out its case in the pleadings to enable the other party to adequately respond to it.

[27] It was common cause that post 2006 the monthly extensions were in terms of the original agreement and that the parties were in agreement that the terms of the memorandum of agreement would be applicable, including in particular, clauses 29.1 and 33.1. The court a quo was correct in its finding that the initial agreement could not be orally or tacitly extended in the light of the non-variation clause.

[28] In the result the following order is made:

'The appeal is dismissed with costs, including the costs of senior counsel'.

NP M QIBISA-THUSI

Judge of the High Court

I agree

C PRETORIUS

L M MOLOPA-SETHOSA

Appearances:

For Plaintiff: Adv Geach SC (Instructed by Klagsbrun Edelstein Bosman)

For Defendant: Adv Motepe SC (Instructed by Lingenfelder & Baloyi Inc)

[1] In terms of the tender documents the initial agreement is described as 'MTB 1416/2003'.

[2] Clause 3.1 of the agreement reads as follows: "This agreement shall, notwithstanding the date of signature, commence on 1st Dec 2003 or such other date as may be agreed upon between the parties (hereinafter referred to as the effective date), and shall

continue for a period of 36 monthsuntil 31 Nov 2006 or such other date as may be agreed upon between the parties, unless terminated

earlier as provided for in this agreement".

[3] Clause 29.1 provides that: "Notwithstanding anything to the contrary contained in this agreement the Client shall be entitled to cancel a portion or any part of this agreement or the agreement as a whole on one (1) month's written notice to the Contractor: Provided that such cancellation by the Client shall not be considered to be a dispute as intended in clause 30 and shall not form the subject of arbitration".

[4] In terms of clause 33.1"No addition to, amendment, consensual cancellation or novation of this agreement and no waiver of any right arising from this agreement or its breach or termination shall be of any force or effect unless reduced to writing and signed by the parties".

[5] Letter is attached to the amended particulars of claim as annexure "C".

[6] The letter is attached to the plaintiffs amended particulars of claim as annexure "C".

[7] Clause 30(1) of the agreement reads as follows: "Should any dispute arise between the parties in connection with or which in any way relates to- 30.1.1 the implementation of this agreement; 30.1.2 the interpretation or application of the provisions of this agreement; 30.1.3 the respective rights and obligations of the parties in terms of or arising out of this agreement or its breach or termination; 30.1.4 the rectification, termination or cancellation, whether in whole or in part, of this agreement;

30.1.Sany documents furnished by the parties pursuant to the provisions of this agreement; or 30.1.6 any matter affecting the

interests of the parties in terms of this agreement, that dispute shall, unless resolved between the parties, be referred to and be determined by arbitration in terms of this clause: Provided that a cancellation of the agreement as provided for in clause 29 shall not be considered to be a dispute for the purposes of this clause and shall not form the subject of any arbitration".

[8] Annexure "D" is a letter from the plaintiffs Mr Schoeman and addressed to second defendant's head of department but for the attention of Mr Motsepe and reads in part as follows: "We refer to the telephonic conversation between your Mr S Motsepe and our Mr F Schoeman on 30 April 2008 and confirm that your Mr Motsepe informed us that the current contract is further extended on a month to month basis until further notice. We confirm that we shall provide the said service on a monthly basis as requested".

[9] The matter of Kusile African Guards & Others v The Minister of Safety and Security and Others (case number: 20553/08), aattached to the parties' pre-trial minute dated 17 August 2012.

[10] 2001 (1) SA 88 (SCA).

[11] 2002 (1) SA 822 (SCA).