(TRANSVAAL PROVINCIAL DIVISION)
DATE: 23/03/2006
CASE NO: 26978/2002
REPORTABLE
In the matter between:
KWENA PATRICK MOLEPO 1ST PLAINTIFF SESHEGO COMMUNITY PROJECT 2ND PLAINTIFF And
JOHN LESIBA PHOOKO 1ST DEFENDANT
SESHEGO COMMUNITY PROJECT CC 2ND DEFENDANT
JUDGMENT SERITI, J
The plaintiffs issued summons against the defendants wherein they claimed certain amount of money against both defendants jointly and severally.
In their particulars of claim the plaintiffs allege, inter alia that the first plaintiff is an adult male person residing at Seshego Township and also chairperson of second plaintiff. The second plaintiff is a voluntary
association of persons, a non-governmental organisation, with its place of business situated at Factory 32B Freedom Drive, Seshego Industrial Sites, Limpopo.
First defendant is described as an adult male person residing at Seshego Township, and also carrying on business at Factory 32B Freedom Drive, Seshego Industrial Sites, Limpopo.
Second defendant is described as registered close corporation carrying on business at Factory 32B. Freedom Drive, Seshego Industrial Sites, duly represented by first defendant in his capacity as a member thereof.
The particulars of claim further alleges that during the course of 1999, the first defendant, whilst still in the employment of the second plaintiff, working as a projects co-ordinator, and without knowledge of the plaintiffs registered the second defendant.
Again without knowledge of the plaintiffs, during the year 2000, the first defendant, completed certain tender documents in the name of the second defendant, and when completing the said tender documents,
the VAT number, VAT tax clearance certificate, fund raising certificate and trading address of the second plaintiff were utilised.
In utilising the abovementioned documents of the second plaintiff and its address, a false impression was created, that the said tenders were completed for and on behalf of the second plaintiff.
As a result of the abovementioned false representation by the first defendant, the Department of Health and Welfare, Limpopo awarded eight tenders to the second defendant instead of awarding same to the second plaintiff.
The tenders awarded to the second defendant were published in the Provincial Tender Bulletin No 129 dated 9 June 2000, and the value thereof was two million five hundred and fifty-nine thousand one hundred and fifty rands and thirty-eight cents (R2 559 150.38).
The abovementioned amount was paid into the banking account of the second defendant between 2 June 2000 and 3 June 2002.
Due to the misrepresentation of the first defendant and the payment made to the second defendant, the plaintiffs suffered financial loss in the sum of R2 559 150.38.
In their plea, the defendants inter alia admitted the names of the plaintiffs and stated that they have no knowledge of the further allegations made.
First defendant further admitted that during 1999, he was in the employment of the second plaintiff as a project co-ordinator. He registered a close corporation without informing the plaintiffs as he had no obligation to inform them.
He denied that he fraudulently misrepresented that he was completing the tender documents for and on behalf of the second plaintiff.
He further denied that he used the VAT number, VAT clearance certificate and fund raising certificate of the second plaintiff when completing the tender documents for and on behalf of the second defendant.
Defendants admit that he tender was awarded to the second defendant and further that, the second defendant duly performed services to the Department of Health and Welfare, Limpopo Province in terms of contracts based on the said tender and was duly paid for services thus rendered.
Defendants further denied that the plaintiffs suffered any damages.
At the beginning of the hearing, the court was handed a pre-trial minute.
The said pre-trial minute, recorded, inter alia, the following:
“3. DISPUTE OF FACTS
3.1 That the first defendant used the name, address and certificate of the second plaintiff to acquire tenders to his own personal gain and benefit, thus misrepresenting to the Department of Health that the second plaintiff and second defendant are one entity.
3.2 That the second defendant unduly enriched himself due to the misrepresentation made to the Department of Health to the detriment of the second plaintiff.
3.3 Whether the plaintiffs are entitled to money earned from the tenders.
3.4 What is the amount that the plaintiffs are entitled to.
4. FACTS NOT IN ISSUE
4.1 That the first defendant was a project manager of the second plaintiff.
4.2 That the first defendant used the VAT certificate of the second plaintiff to acquire tenders for this benefit.
4.3 That the second plaintiff was a non-profitable organisation as defined in the constitution.”
The first witness to testify on behalf of the plaintiffs is Mr Kwena Patrick Molepo. He testified that he is the chairman and founder of the second plaintiff. The aims and objects of the second plaintiff is to assist people who are not employed with training in different areas so that they can learn to survive on their own, and also assist unemployed people to seek employment at different places.
The first defendant is well-known to him and he attended the same high school with him.
During 1998 the first defendant, who is also one of the residents of their target area, Seshego Township, approached them seeking for employment as he was unemployed. When the first defendant approached them, they were looking for a person whom they could employ as a project manager. After speaking to him, they employed the first defendant as a project manager.
His job description included funds raising, co-ordinating jobs, creation of projects, seeking tenders and completing tender documents and submitting same to the relevant authorities.
Second plaintiff was established in March 1995. During 1997 the tender board members visited their offices and advised them about possibilities which existed in the tender industry. Later, members of the Local Tender Advice Centre also visited them and advised them about how to complete tender forms and other requirements.
Prior to first defendant working for the second plaintiff, they had already obtained certain tender documents which had to be completed and submitted to the Tender Board.
When first defendant joined the second plaintiff, the first defendant alleged that he knew how to complete tender documents.
He, (the witness), gave the tender documents which had to be completed to the first defendant, after he (the witness) had filled in the physical address and the VAT number of second plaintiff on one of the said tender documents. He also gave him a copy of the second plaintiff’s VAT registration certificate which had to be attached to the said tender documents. He gave him a copy of the VAT registration certificate and VAT clearance certificate because people from the Tender Advise Centre advised him that a completed tender documents, not accompanied by
copies of the said certificates, would not be considered by the Tender Board.
First defendant completed the tender documents and submitted them to the relevant authorities.
The second plaintiff has a fund raising certificate which was issued to the second plaintiff by the Department of Welfare on 25 November 1996. The objects of the second plaintiff are described as follows on the said certificate:
“To promote development of human beings through
1. Job creation.
2. Skills Training.”
Whilst still employed by the second plaintiff, first defendant was completing all tender documents, ostensibly on behalf of the second plaintiff and submitting them at the relevant authorities. During that period, they did not receive any response from the relevant authorities regarding the tenders they had submitted.
The first defendant left the employment of the second plaintiff during March 2000. When he left, he told them that he is going to start his own security business.
Almost two months after the departure of the first defendant, officials from the Tender Board together with an official from Department of Health and Welfare came to their offices. They asked how the second plaintiff is going to deal with the tenders awarded to them. He was surprised to learn that there are tenders awarded to them as they knew nothing about the said tenders. The said officials advised them to go and buy Tender Bulletin to ascertain which tenders were awarded to the second plaintiff.
They went to buy the said Tender Bulletin and they discovered that several tenders were awarded to the second plaintiff. On close scrutiny of the Tender Bulletin, it turned out that the tenders were awarded to the second defendant instead of the second plaintiff.
An exhibit “D” was handed to the court. The said document is a tender document issued by the Department of Health and Welfare. The closing date of the said tender is indicated as 22 February 2000. The
tender was for the supply and delivery of perishables to Warmbaths Hospital for the period 1 March 2000 to 28 February 2002.
The said tender document was completed by the first defendant on 27 January 2000, in his capacity as manager. The name of company tendering is described as “S. C. Project” whilst, physical address of tenderer is given as “Factory No 32B, Zone 6 Seshego, Freedom Drive”.
The VAT registration number is given as 493064498, and the postal address is given as “Suite 249, Postnet X9307, Pietersburg 0700”, and the contact person is given as “John”. Furthermore where it is written
“Describe principal business activities”, the following is inserted: “Job creation for the PDI, woman empowerment, supplier”.
There is a further question in the tender document which reads as follows:
“TOTAL NUMBER OF YEARS THE FIRM HAS BEEN IN BUSINESS and the answer given is ’10 years’.”
The second plaintiff’s VAT Registration Certificate and Fund Raising Certificate were attached to the said tender document.
At some stage, they started investigating how the first defendant was dealing with the awarded tenders. During November 2002, their attorneys received a letter from the Limpopo Provincial Government, wherein they were advised that the second defendant was paid an amounts of R1 898 186.24 and R660 964.04 making a total of R2 559 150.38. Copy of the said letter, which was handed to the court further reads partly as follows:
“2. Copies of tender documents completed by Seshego community project to which tax clearance certificate were attached.”
Under cross-examination, he said prior to their employing first defendant, they had already completed and submitted several tenders without success.
The next witness to testify is Mr Jacob Mabitsela.
He testified that at the material time, he was the vice chairperson of the second plaintiff. He confirmed the aims and objects of the second plaintiff.
He also confirmed that first defendant came to work for the second plaintiff. When they employed the first defendant, the latter told them that he has experience of completing tenders.
First plaintiff completed first few pages of one tender documents and gave same to first defendant to continue and complete other tenders.
He confirmed the evidence of the previous witness relating to the visit to their offices by officials of the Tender Board and Department of Health and Welfare, and their discussions with the said officials.
He further testified that the amount of R2.5 million mentioned in their summons, is not for all tenders that were supposed to have been dealt with by second plaintiff. The amount of all such tenders is well over R11.0 million. The amount of R2.5 million relates only to the tenders that came to their knowledge at the time when summons were issued.
After cross-examination of the witness, plaintiffs closed their case.
Defendants closed their case without leading any evidence.
It is apparent from the facts of this case that:
1. First defendant was employed by the second plaintiff as a project manager or co-ordinator.
2. Part of his responsibilities was to complete tender documents, which had to be submitted to the relevant authorities.
3. The said tender documents had to be accompanied by VAT clearance certificate and fund raising certificate.
4. Whilst still employed by the second plaintiff, first defendant formed the second defendant which incidentally has exactly the same name as the second plaintiff. The only difference is that second defendant has the alphabets “CC” at the end of the name, which is not the case with second plaintiff.
5. When completing the tender documents on 27 January 2000, whilst still employed by the second plaintiff, first defendant utilised the physical address, VAT registration certificate together with the fund raising certificate of the second plaintiff. The contact details and telephone numbers
provided in the said tender document, are his personal details, and not those of the second plaintiff.
6. Officials of the Tender Board and the Department of Health and Welfare, were under the wrong impression that the tenders were awarded to the second plaintiff.
7. The Department of Health and Welfare paid an amount of R2.5 million to second defendant for a tender awarded, by error, to the second defendant.
In this case, the plaintiffs bear the onus of proof. The plaintiffs must prove that the defendants committed an act which caused them damages and they must also prove the said damages.
The plaintiffs have succeeded to prove that the defendants committed certain acts which caused them damages. However, they did not prove the said damages.
The amount of money that was paid to the second defendant represents gross payment and not nett profit.
The plaintiffs, in order to prove what they would have earned as nett profit had to establish what expenses were incurred by the second defendant when performing in terms of the said tender.
As stated earlier the defendants closed their case without tendering any evidence.
In Eskom v First National Bank of Southern Africa Ltd 1995 2 SA 386 (AD) 392C-E, GROSSKOPF JA said the following:
“It has often been said that determining the incidence of the onus of proof is merely a question of policy and fairness based on experience in the different situations. ...
As a matter of fairness and sound judicial policy it seems reasonable that, where one party has the means of establishing a particular fact and his opponent not, the onus should rather be on the former than on the latter.”
In Mabaso v Felix 1981 3 SA 865 (AD) 872G, the court said:
“But in civil law, as will presently appear, considerations of policy, practice and fairness inter parties, may require that the defendant should bear the overall onus of averring and proving an excuse or justification for his otherwise wrongful conduct.” See also National Media Ltd & Others v Bogoshi 1998 4 SA 1196 (SCA) 1215D-F.
In Nieuwoudt v Joubert 1988 3 SA 84 (SECLD) 91B – MULLINS J said:
“A litigant is not entitled to conceal material allegations in order to obtain the advantage of placing the onus on his opponent. The onus must be determined on genuine and not artificial allegations in the pleadings, and if the onus should be on a particular party, he must accept it. Litigation is not a game where a party may seek tactical advantages by concealing facts from his opponents and thereby occasioning unnecessary costs.” (My own emphasis.)
The question of expenses incurred when executing the tender are solely within the knowledge of the defendants.
In the summons, the plaintiffs alleged that they suffered damages in the sum of R2 559 150.38 as a result of the fact that a tender which should have been awarded to them was awarded to the second defendant because of the misrepresentation made by the first defendant.
In their plea, the defendants merely stated that contents of above paragraph are denied.
The evidence adduced in this case, clearly indicates that the dispute of facts as contained in the pre-trial minute, must be decided in favour of the plaintiffs, with the exception of the determination of the amount which the plaintiffs are entitled to, which latter fact plaintiffs were unable to proof.
The amount that the plaintiffs are entitled to, in my view, is the nett profit made by the defendants from the tender in question.
The plaintiffs succeeded to prove the gross amount paid by the Department of Health and Welfare pursuant to the tender awarded, but they did not proof the expenses incurred.
The expenses incurred are solely within the knowledge of the defendants, but the defendants closed their case without leading any evidence.
In this particular case, in my view, the onus to prove expenses incurred shifted to the defendants, but they failed to discharge the said onus.
Applying the principles enunciated in the abovementioned cases, my view is that the defendants had a duty to prove the expenses which they incurred when executing the tender in question, but they elected not to lead any evidence.
In Esso Standard SA (Pty) Ltd v Katz 1981 1 SA 964 (AD) 969H-970A DIEMONT JA said the following:
“Before considering these contentions it is necessary to make some reference to the principles applicable to the assessment of damages in this type of case. These principles have been conveniently summarised by DE VILLIERS J in Lazarus v Rand Steam Laundries (1946) (Pty) Ltd 1952 3 SA 49 (T).
It has long been accepted that in some types of cases damages are difficult to estimate and the fact that they cannot be assessed with certainty or precision will not relieve the wrongdoer of the necessity of paying damages for his breach of duty.”
At 970H, the learned judge went further and said:
“The critical question then is whether the plaintiff, having successfully proved that he suffered damage through the loss of petrol and that that damage was caused by the defendant, has produced all the evidence that he could reasonably have produced to enable the court to assess the quantum of damage.” See also Minister of Community Development and Another v Koch 1991 3 SA 751 (AD) 764B-H.
In Mkwanazi v Van der Merwe 1970 1 SA 609 (AD) 631H, VAN WINSEN AJA said:
“Die algemene benadering dat die hof met die getuienis tot sy beskikking sy bes moet doen om die bedrag van gelede
skade te bereken is aan dergelike voorbehoud onderhewig gestel in die saak van Klopper v Mazoko 1930 TPD 840 op bl. 865, waar Reger Tindall opgemerk dat:
‘... when a plaintiff is in a position to lead evidence which will enable the court to assess the figure he should do so and not leave the court to guess the amount.’”
My view is that, seeing that the plaintiffs have succeeded to show that they have suffered damages, the court should endeavour to estimate the damages of the plaintiff in order to be fair to the plaintiffs – see also Stolte v Tietze 1928 SWA 51-52.
This court is entitled to assess the damages on the basis of the available evidence, as given the defendant’s attitude, it is almost impossible for the plaintiffs to adduce evidence about the overheads expenses incurred by the defendants. The said information is only known to the defendants who failed to lead any evidence.
The business conducted by the defendants in regard to the tender in question, is that of a commodity trader. Once a tender has been awarded,
the products are sourced from various suppliers and delivered at the relevant places.
According to Statistics South Africa, 23 November 2004, Statistical Release P8001, Economic Activity Survey 2001, 2002, 2003:
Table 5(a): selected income and expenditure items: trade industry P16, the nett profit before tax in commodity trading business is generally 15.9% of gross profit.
In order to arrive at a fair assessment of the damages of the plaintiffs, using the abovementioned statistics, I will assume that the plaintiffs, in all probability, if they had executed the tender under discussion, their nett profit would have been 15.9% of the gross profit, and the said figure constitutes their damages.
The court therefore makes the following order:
1. Judgment is granted in favour of the second plaintiff for payment by the first and second defendants, jointly and severally of the sum of R406 904.91, with interest at the rate of 15% per annum as from the date of this judgment to date of payment.
2. The defendants are ordered, jointly and severally to pay the costs of the plaintiffs.
W L SERITI
JUDGE OF THE HIGH COURT
26978/2002
HEARD ON: 10/02/2004
FOR THE PLAINTIFFS: ADV M M MOKADIKOA
INSTRUCTED BY: MESSRS M G PHATUDI INC c/o A P LEDWABA INC, PRETORIA
FOR THE DEFENDANTS: ADV MOKWENA
INSTRUCTED BY: MESSRS RAMOTHWALA LENYAI INC c/o MESSRS M L MASHEGO ATTORNEYS, PRETORIA
DATE OF JUDGMENT: 23/03/2006