Company Unique Finance (Pty) Ltd and Another v Johannesburg Northern Metropolitan Local Council and Another

• Jurisdiction: South Africa
• Judge: Blieden J
• Judgment Date: 13 August 2010
• Docket Number: 14581/99
• Hearing Date: 10 May 2010
• Counsel: GD Harpur SC (with A Coutsoudis) for the plaintiffs. AE Franklin SC (with DL Wood) for the first defendant. Second defendant in person.
• Court: South Gauteng High Court, Johannesburg

Blieden J:

[1] Between October 1998 and January 1999 three sets of agreements, each bearing the heading 'Master Rental Agreement', were concluded by the first plaintiff (Compufin), then trading as Compufin Finance, and the first defendant (the council). J

Blieden J

A [2] Each of these sets of documents constituted a contract for the rental of certain equipment by the council from Compufin over a period of 60 months. The three agreements are annexed to the plaintiffs' particulars of claim and marked A, B and C, respectively.

[3] Annexure A, which is dated 2 December 1998, is for the lease of a B copier for a total rental of R971 703,96.

[4] Annexure B, which is dated 21 January 1999, is for the lease of certain radiophones for a total rental of R6 272 032,80.

[5] Annexure C, which is dated 21 January 1999, is for the lease of C certain radiophones for a total rental of R6 272 032,80.

[6] On behalf of the council the three agreements were signed by Johannes Jacobus du Plessis (Du Plessis), who is the second defendant in these proceedings. At all relevant times he was employed by the council D as an acting senior superintendent: support services, within the council's security subcluster. He was described as 'executive officer (acting) security' in each of these three agreements, and signed each under that title.

[7] The second plaintiff, FNB, is the cessionary of Compufin's rights in E terms of annexure C, and it makes common cause with Compufin in its claim against the council. The plaintiffs will be referred to collectively as such.

[8] It is the plaintiffs' case that the council unlawfully repudiated its obligations as contained in the agreements by way of a letter dated F 19 March 1999, a copy of which is annexed to the plaintiffs' particulars of claim. This letter reads:

'PURPORTED RENTAL AGREEMENTS: NORTHERN METROPOLITAN LOCAL COUNCIL

I refer to the four rental agreements which were purportedly entered G into between yourselves and a certain Mr J Du Plessis, who allegedly acted on behalf of my Council. The agreements were signed by Mr Du Plessis on 30 October 1998, 18 January 1999 (two agreements) and on 29 January 1999.

I wish to record, however, that my Council was unaware of the H existence of these agreements. Neither did my Council at any stage authorise the relevant transactions, nor was Mr Du Plessis authorised to sign the said agreements on behalf of my Council. From this it follows that the four purported agreements are null and void.

From my records it further appears that three payments of R77 520 each have been paid into yourselves via bank debit orders on I 15 February 1999, 22 February 1999 and 15 March 1999 respectively, which payments were irregular for the reasons set out above.

As a result I shall appreciate it to receive payment of the amount of R232 560 within seven days from date thereof, as well as payment of all other amounts which may have been made to you in respect of the abovementioned purported agreements and which may have not yet J come to my attention.

Blieden J

Your urgent attention is appreciated. A

Yours faithfully

RG Bosman

Strategic Executive Corporate Services'

It is not in dispute that only three agreements were involved, and the B writer of the letter was incorrect in referring to four agreements.

[9] This repudiation has been accepted by the plaintiffs and they have cancelled each of the contracts as a result thereof, and their claims arise out of this cancellation. The council disputes the validity of this cancellation, since it is the council's case that it was not at any stage bound by any of these contracts, as Du Plessis was not authorised to act C on its behalf, as claimed by the plaintiffs.

[10] As an alternative claim against the council, Compufin (and not FNB) has sued Du Plessis and the council in delict. This claim is confined to the goods reflected in annexures A and B. It is claimed that D in the event of the plaintiffs not proving their claim in contract, Du Plessis had, in signing the agreement, warranted that he was authorised by the council to do so. That warranty constitutes a representation which was false to the knowledge of Du Plessis, and was made in the course and scope of his employment with the council, therefore making it vicariously liable for any claim for damages based on his wrongful conduct in acting E as he did. This claim is for delictual damages.

[11] Du Plessis in his plea has denied that he lacked authority, as claimed by the council, and consequently has denied any liability to the plaintiffs on their claims. F

[12] The plaintiffs have replicated to the council's plea, and in the alternative pleaded that the council represented that Du Plessis had authority and that the council is therefore estopped from denying his authority, as pleaded by it.

[13] The facts relied upon by the plaintiffs for establishing these representations are pleaded as follows: G

1.

Willem van Wyk (Van Wyk), in his capacity as head of security for the council, signed an extract of a meeting, recording that a resolution was taken by the council, authorising Du Plessis to enter into contracts and to sign contracts and give effect to the resolution.

2.

The council caused or allowed the contents of the above extract to H be published to the plaintiffs.

3.

Van Wyk was appointed by the council as head of security and the council allowed him to act as such in circumstances where a person in such position usually has the authority to —

3.1

sign extracts of minutes of the council and to furnish or communicate them to third parties; I

3.2

instruct Du Plessis in relation to the operations of the council;

3.3

arrange for the use of equipment and supplies for the council's operations; and

3.4

conclude contracts for the use of equipment and supplies for the council's operations. J

Blieden J

4.

A The council appointed Du Plessis to a position of manager in circumstances where a manager usually has authority to —

4.1

act in accordance with instructions from a person with authority such as that of Van Wyk;

4.2

arrange for the use of equipment and supplies for the council's B operations;

4.3

conclude contracts for the use of equipment and supplies for the council's operations.

5.

The members of the council and its authorised representatives —

5.1

knew that Du Plessis, alternatively Van Wyk, alternatively other C unknown officials, were involved in negotiations in relation to the use of equipment by the council and allowed it to so continue;

5.2

accepted delivery of the equipment;

5.3

used the equipment;

5.4

D failed to return the equipment or raise any objection to its delivery until a stage after the plaintiffs had already suffered prejudice;

5.5

failed to warn the plaintiffs of internal formalities necessary for the exercise of the authority of the council or the authority of E Du Plessis, or the authority of Van Wyk, in relation to the conclusion of the contract or the communication of resolutions of the council;

5.6

caused or allowed payments to be made through the council's bank account;

5.7

failed to request a reversal of payments or to raise an objection F until after the plaintiffs had already suffered prejudice;

5.8

made insurance arrangements for the equipment;

5.9

made arrangements for the provisions of supplies or services relating to the equipment;

5.10

failed to safeguard against the unauthorised use of the council's G official stamp, thereby making it available for use in documents used to induce the plaintiffs to act to their detriment;

5.11

failed to take steps to safeguard the details of the council's finances and budgetary allocation and to prevent their unauthorised use, thereby making them available for the purpose of H inducing the plaintiffs to act to their detriment, as they did.

6.

The plaintiffs allege that they acted on the correctness of the above representations to their detriment, with the result that the council is estopped from denying the authority of Du Plessis and Van Wyk to act on its behalf and, in particular, the authority of Du Plessis to sign I contracts on its behalf.

7.

By the time each of the parties had closed its case, the plaintiffs' case based on contract was confined to one based on Van Wyk and Du Plessis' ostensible authority, since it was conceded that the plaintiffs had no case based on actual authority, because it was accepted that J the representation made in the resolution was untrue.

Blieden J

The evidence before the court A

[14] The status of the documents in the bundles, being exhibits A1, A2 and A3, which were handed up to court, was agreed as follows:

[14.1]

Copies of the documents could be used instead of the originals, save where any party elected to use an original. B

[14.2]

The documents were what they purported to be.

[14.3]

There was no admission that what was contained in the documents was true.

[14.4]

Correspondence was admitted as having been sent by the addressor and received by the addressee on or about the date reflected in such correspondence. C

[14.5]

What was said by witnesses, as appears from the records of the disciplinary enquiries of Du Plessis and Colin Lehmkuhl contained in the council's discovery documents, had been accurately transcribed and those records could be received into evidence, without any admission as to the truth of what was said, upon their mere production. D

[15] Since the evidence relating to the events which are the subject-matter of this case occurred some 11 years ago, it is hardly surprising that the witnesses who gave evidence were constrained to rely on reconstructions, often based on inferences drawn from the record of what must E have...