Numbi Training & Research Consultants v Soweto Retired Professional Society and Others (69609/10) [2015] ZAGPPHC 1040 (6 October 2015)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG PROVINCIAL DIVISION, PRETORIA)

CASE NO: 69609/10

DATE: 6 OCTOBER 2015

In the matter between:

NUMBI TRAINING & RESEARCH CONSULTANTS...........................................................Plaintiff

(CK no. 2003/110595/23)

AND

THE SOWETO RETIRED PROFESSIONAL SOCIET …........................................First Defendant

MEC FOR HEALTH AND SOCIAL DEVELOPMENT …....................................Second Defendant

MINISTER OF HEALTH............................................................................................Third Defendant

JUDGEMENT

MADIMA AJ

[1] The plaintiff is a private company with limited liability incorporated in accordance with the laws of the Republic of South Africa, with its place of business at Office No.3,

Thohoyandou Showground, Thohoyandou, Limpopo Province. The first defendant, also known as Footprint, is an organization not for profit, registered as such in terms of the Non- Profit Organisation Act No.71 of 1997, with its registered office and principal place of business situate at 673 Letsatsi Street, Orlando East, Johannesburg, Gauteng Province.

[2] The second and third defendants are the Member of the Executive Committee for Health and Social Development, Gauteng Province and the national Minister of Health respectively. The second defendant has offices at 37 Sauer Street, Marshalltown, Johannesburg, Gauteng Province. The third defendant’s address is c/o the State Attorney, Salu Building, 316 Thabo Sehume Street, Pretoria, Gauteng Province. No relief is sought against the second and third defendants.

[3] The plaintiff, in its particulars of claim states that on or about 26 October 2007, the second Defendant advertised a tender with RFP Description "Tender for accredited service provider to train caregivers as community healthcare workers on the NQF level 1 and 3”, and with RFP number GT/GSH/140/2007. The total value of that tender was in the amount of R4 420 000.00 (four million four hundred and twenty thousand).

[4] During the month of October 2007, the plaintiff, represented by Ms. N.S. Masindi (“Ms Masindi”), and the first defendant, represented by Ms. M.N. Jwaai (“Ms Jwaai”), entered into an oral partnership agreement. The rationale thereof was to jointly submit a proposal for the above tender.

[5] . The express, alternative tacit, further alternative implied terms of the oral partnership agreement were, inter alia, the following:

[5.1] . The parties would submit, jointly and as a partnership, the proposal for the aforesaid tender for the training of community healthcare workers;

[5.2] . The first defendant would be the principal contractor, in that, amongst others, all correspondence, invoices and payments between the first defendant and the service provider would be done through the first defendant, with the specific understanding that the first defendant would account and/or consult the plaintiff on all matters relevant thereto;

[5.3] , The first defendant, as the principal contractor, would be entitled to 5% of the contract fee for administrative purposes;

[5.4] . The parties would each hold a 50% stake in the tender, and be entitled to share the balance of the contract price on an equal basis, after the deduction of the said 5% administrative fee in favour of the first defendant;

[5.6] . The parties also agreed to share equally the workload, with the plaintiff responsible to run Roodepoort and Baragwanath centres, whilst the first defendant would be responsible for Johannesburg and Orlando;

[5.7] . The parties agreed to jointly present a written proposal for the tender to the second defendant in the first defendant’s name.

[6] . The plaintiff further claims that the plaintiff and the first defendant produced a proposal for the tender, and submitted it to the second defendant, which tender was subsequently awarded in the first defendant” name.

[7] . The plaintiff claims further that the existence or creation of the partnership

with regard to the above contract/tender was confirmed in a tetter dated 25 September 2009. written to the plaintiff on behalf of the first defendant.

[8]. The Plaintiff, in its particulars of claim, states that it contributed immensely to the first defendant’s proposal, which proposal included the particulars of the plaintiffs directors, curriculum vitae of the plaintiffs staff members, and the South African Revenue Services documents.

[9]. As the principal contractor, the first defendant signed with the second defendant a service level agreement with the following terms, amongst others namely:

[9.1]. The plaintiff and the first defendant were service providers to the second defendant, even though, in terms of the written agreement between the plaintiff and the first defendant, the first defendant would ensure to the second defendant that a venue for training was secured;

[9.2]. The venue would be within the learners’ reach, or the service would be taken to the learners;

[9.3]. The venue would be conducive to training, that is, well-ventilated and free from noise and disturbance;

[9.4]. The classes would be well-equipped for training, with projectors, writing-boards and flip-charts;

[10]. The plaintiff had subsequently, in terms of the oral agreement with the first defendant, secured accommodation facilities and logistics for Roodepoort and

Baragwanath centres, while the first defendant did the same arrangements for Johannesburg and Orlando;

[11]. The parties agreed that, on a monthly basis, the first defendant would, on behalf of the parties, submit invoices to the second defendant in the form of a claim for monies which would be shared equally between the parties, minus the 5% in the first defendant’s favour for administrative disbursements.

[12].The plaintiff claims further that the first defendant attempted to change the identity of the service provider, and also hindered the plaintiff from conducting training in the Roodepoort and Baragwanath centres, and disrupting the accommodation secured by the plaintiff.

[13]. The first defendant, so claims the plaintiff failed to account or to consult and/or to forward to the plaintiff all or any correspondences, invoices, payments received from the second defendant and/or made by the second defendant. Further, the first defendant failed to pay to the plaintiff the 50% of the profit after deduction of the 5% for administration, as agreed. The first defendant was, accordingly in breach of the agreement.

[14]. The plaintiff claims that it had complied with the terms of the oral agreement between itself and the first defendant. Further, the plaintiff claims that, as a result of the improper termination and/or hindrance of the plaintiffs participation in the tender, the plaintiff has suffered damages in the amount of R2 099 500,00, which includes disbursements for setting up the venues, catering equipment, salaries and logistics for training.

[15]. According to the plaintiff, the first defendant had unjustifiably enriched itself by failing to share with the plaintiff the money it received from the second defendant, and the first defendant has, despite demand for payment, failed, neglected or refused to pay the plaintiff what is due to it.

[16]. For its part the first defendant denies ever entering into an oral partnership agreement with the plaintiff. The first defendant alleges that the plaintiff was advised by the first defendant to apply for the West Rand region part of the tender, based on the fact that the plaintiff had offices in the West Rand, and further based on the fact that, that part of the tender had 120 prospective learners, who would be suitable for the plaintiffs capacity. Each party was to submit their own tender, as per the specifications.

[17]. The first defendant also denied that the proposal for the tender submitted by the first defendant to the second defendant was on behalf of a partnership. Each organization submitted their own tender documents separately. Further, the first defendant claims that the plaintiff was only verbally sub-contracted after the second defendant awarded the tender to the first defendant in October 2009, and the plaintiff was requested to manage two of the training facilities or centres of the first defendant. The plaintiff was sub-contracted after it was not appointed as a service provider for the West Rand region. In terms of the sub-contracting agreement, the plaintiff was to be remunerated per learner, as indicated in the tender specifications issued by the second defendant.

[18]. The first defendant denies further that the letter, described as Annexure “A”, is not a confirmation of the partnership. In fact, this letter was requested by Ms.

Masindi, as she needed overdraft facilities with the bank in order to cover the salaries of her staff, as she believed she would get the tender applied for, that is, the tender for the West Rand region. The first defendant further claims that the tender was awarded to it alone, and not to a partnership. Further, the first defendant pleaded that the plaintiff did not undertake any training, and that when the first defendant inspected the work sub-contracted to the plaintiff, the first defendant discovered that no training ever took place, and that the learners complained to the first defendant, as a service provider to the second defendant, to intervene and rescue the situation.

[19].The plaintiff was, according to the first defendant, contacted to attend to the complaints by the students, but the plaintiff refused. It was then that the first defendant, as a service provider, took the responsibility and transferred the learners to the Orlando East training centre.

The partnership agreement

[20]. Annexure “A” dated 25 September 2009 and entitled Partnership Acknowledgment Letter. Contract GT/GHD/140/2007: Training of Caregivers as Community Health Care Workers, Period:01 September 2009 to 31 August 2010 referred to in the particulars of claim reads thus: “This letter serves to acknowledge the Partnership between Soweto Retired Professional Society with Numbi Training and Research Consultants with regard to the above mentioned contract pending a partnership agreement between the two organisations. Each of these two organisations has a 50% ownership of the contract. SRPS will retain 5% of the contract fee for administrative purposes as a principal contractor”. Annexure “A” was signed by Ms Jwaai in her capacity as a representative of the Soweto Retired Professional Society.

[21]. The first defendant states in its plea that Annexure “A” was requested by Ms. Masindi, as she needed overdraft facilities with the bank in order to cover the salaries of her staff, as she believed she would get the tender applied for, that is, the tender for the West Rand region.

[22]. There is little doubt that Annexure “A” is an acknowledgment of a partnership between the plaintiff and the first defendant with specific reference to the tender or contract. Any other interpretation will not hold. It does not avail the first defendant to say that Annexure “A” was requested and then used by the plaintiff to request overdraft facilities at a bank for whatever purpose. The plaintiff was at liberty to use Annexure “A” as it deemed meet.

[23]. Annexure “A” further states that the partnership between the parties shall be subject to a partnership agreement between the two organisations. Again there is no doubt as to the existence of a partnership.

[24]. There are further documents that lead me to arrive at the conclusion that there indeed was a valid partnership between the parties. In the Tender Submission Form with Ref: GT/GDH/140/2007 (EU01-04/2007CHW-GAUTENG) and entitled “To contract accredited training provider/s to train 1500 caregivers appointed by NPOS contracted through the EU funded PDPHC programme and Gauteng Health Department as “community health care workers” in accordance with the standards and curriculum approved by the HW SETA and SAQA to NQF Level 1 and NQF Level 3 in the six districts in the province of Gauteng”, both Ms Jwaai and Ms Masindi are depicted therein as leader and second partner respectively. It thus is not correct of the first defendant to say that each party was to submit a separate bid for the tender.

[25]. in another letter dated 5 December 2007 addressed to the second defendant, Ms Jwaai stated thus: “We are submitting an application for the above tender in collaboration with Numbi. As indicated in our proposal we are applying for two reigns (sic) as follows: City of Johannesburg - 520 learners. West Rand - 350 learners. Our intention is that Soweto Retired Professional Society will train in Johannesburg Metro as has been the case and Numbi whose domicillium is in Region C (Roodepoort) next to West Rand would train in West Rand..

[26] . Yet again in their apparently undated proposal to the second defendant for the training of community health care workers Ms Jwaai gives, as background information the foiiowing: The Soweto Retired Professional Society - NPO-023-439 and Numbi Training and Research Consultants entered into an agreement in November 2006 for the purpose of joint training and development of community health care workers....Both organisations are registered with the Health and Welfare Seta for Ancillary Health Care NQF Level 1 ”

[27]. On 18 August 2009 Ms Jwaai addressed a letter to Ms Masindi. In this letter Ms Masindi was informed of the specific requirements of the second defendant. These included the accessibility of the venues by the learners, meals and that the facilitators needed to be professional nurses, inter alia.

[28] . In response to Ms Jwaai’s letter of 18 August 2009, Ms Masindi stated the

following in her Setter of 21 August 2009: “I am writing to acknowledge your letter dated 18

August 2009, regarding the partnership between Soweto Retired Professional Society and Numbi Training and Research Consultants (Numbi Training) in respect of the contract mentioned above. I hereby acknowledge Numbi Training’s commitment to operate in accordance to the conditions you highlighted in the letter, which are stipulated on the Gauteng Department of Health’s Draft Service Level Agreement (SLA) ....”

[29] . On 27 August 2009 Ms Jwaai sent a letter to Ms Masindi informing her that she was sending her the service level agreement from the second defendant and requesting her to read it before their next meeting.

[30]. The first defendant claims to have had a sub-contractor relationship with the plaintiff. There is nothing in the pleadings that point in that direction. Instead what is evident is a paper trail that establishes the existence of a partnership as claimed by the plaintiff. Indeed Ms Jwaai conceded during cross-examination that she did not have an oral or written agreement with the plaintiff about the sub-contract relationship between the parties.

Is first defendant liable to plaintiff

[30] . I am satisfied that there indeed existed a valid partnership agreement between the plaintiff and the first defendant. The various correspondences between the two parties do not lie. The next question then is to what extent is the first defendant liable to the plaintiff.

[31] . The total tender amount was in the order of R4 420 000 (four million four hundred and twenty thousand rand). The agreement between the parties was that 5% shall go to the first defendant for administrative costs. The balance was to be shared equally between the plaintiff and the first defendant. 5% of the tender amount equals R221 000.00. This leaves a balance of R4 199 000.00. This therefore means that the plaintiff and the first defendant must ordinarily each get R2 099 500.00.

[32]. The first defendant submitted evidence that the plaintiff failed to accommodate the learners at a suitable venue. The learners were also not provided with the learning manuals as per the requirement of the second defendant and the Health and Welfare SETA.

[33]. Theresa Thembi Msimang (“Msimang”) deposed to an affidavit with the police wherein she stated that the learners that came from the plaintiff had not written a single test or pre-test as is required by the SETA for the period they were with the plaintiff. Msimang stated further that they had to give the learners additional hours of tuition per day to make up for the lost time.

[34]. There was further evidence by way of affidavit by another of the tutors. Edith Busisiwe Khathi (“Khathi”) also stated that they moved the learners from the plaintiff to Pimville. They provided the learners with learning materials supplied by the first defendant. Their salaries were also paid for by the first defendant. This is not entirely correct as there is evidence that the plaintiff paid for part of Khathi’s salary.

[35]. A partnership is a contract uberrimae fidei. Weqner v Surgeon 1910 TPD 571, 579. See also Truter v Hancke 1923 CPD 43. 49; Purdon v Muller 1961 (2) SA 211 (A) 231E. It would appear from the affidavits deposed to by Msimang and Khathi that the plaintiff failed to comply as expected with its side of the bargain. The duty to observe good faith extends to persons negotiating for the establishment of the partnership. As part thereof, every partner must accept and fulfil all the obligations imposed by the partnership agreement. Purdon v Muller.

231B.

[36]. There is some indication that the plaintiff performed some work albeit not to the required standards of the first and second defendant, and the SETA. There is also some evidence that the plaintiff indeed did incur some costs during the course of the partnership. There is documentary evidence that Mokgosi Joseph Mathibe (“Mathibe”), a driver was paid about R10 000.00 by the plaintiff, for the period October to December 2009.Tebogo Ernestine Modise was paid R12 500.00 during the same period. Joyce Legoete was paid R6 250.00. Khathi was paid R13 000.00. Poppi Mokoena was paid R17 500.00.Sharon Tshivhango was paid R3 750.00. Humbulani Maemu was paid R3 750.00. The plaintiff appears to have paid R66 750.00 in total with respect to the training of health care workers.

[37]. There is no doubt that the plaintiff would have incurred other expenses over and above those referred to above. It is however difficult to arrive at an amount that is fair and due to the plaintiff.

[38]. I shall also take into account the fact that the learners were on holiday between December and January and there was little or no learning taking place during that period. This therefore means that the plaintiffs share of the tender cannot be more than the work performed over a period of less than three months.

[39]. I have already stated above that the total tender amount was R4 420 000.00 per annum. 5% was to go to the first defendant for administration costs. This was agreed to by the parties. This leaves the amount of R4 199 000.00 to be shared between the plaintiff and the first defendant equally. Each of the parties should thus get R2 099 500.00. However this would not represent fair value with respect to the work performed by the first defendant. This because the plaintiff did less than three months in a twelve month cycle.

[40]. The plaintiff, as already alluded to above performed some work for the partnership between October and December 2009. In this period the plaintiff incurred certain costs amounting to R66 750.00 in total. It would be grossly unfair if the plaintiff were not to recover the said amount.

[41]. I am also inclined to grant to the plaintiff an amount equal to two and a half months, that is, a proportionate share for the months of October, November and part of December 2009. These amounts are calculated as follows: The plaintiff is entitled to the amount of R174 958.33 for the month of October, R174 958.33 for the month of November and the amount of R87 479.00 for part of the month of December 2009. Added to these amounts should be the disbursements of R66 750.00, making an overall total due to the plaintiff in the amount of R504 145.66.

[42] . With regard to the costs, it is trite that the costs should follow the result. The plaintiff did not recover the full amount claimed, however it cannot be argued that it has succeeded nevertheless.

[43] . In the circumstances I make the following order:

[43.1] A partnership agreement existed between the plaintiff and the first defendant.

[43.2]. The plaintiff did not perform to the full extent of the agreement between the parties;

[43.3]. The plaintiff is only entitled to the amount of R504 145.66;

[43.4]. The first defendant to pay the costs of the plaintiff on a party and party scale.

TS MADIMA: AJ

ACTING JUDGE OF THE HIGH COURT

On behalf of the Plaintiff: Adv M Malowa

Instructed by Mokgobi Attorneys

Pretoria

Tel: 012 760 6169

On behalf of the Defendant: Mr S. Mafuyeka

Instructed by: Mafuyeka Attorneys

Sunnyside

Tel: 012 343 2187

Dates of Trial: 12 February 2015

Date of Judgment: 6 October 2015