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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION,

JOHANNESBURG

 

(1)    REPORTABLE: NO

(2)     OF INTEREST TO OTHER JUDGES: NO

(3)     REVISED.

 

Case Number: 2016/17680

18/12/2019

 

In the matter between:

 

DV8 CONSULTING CC                                                                                                  Plaintiff

 

and

 
AIRPORTS COMPANY OF SOUTH AFRICA SOC LTD                                          Defendant

JUDGMENT

MOKOSE J

Introduction

[1]        The plaintiff, an IT consulting services provider was appointed in writing by the defendant to render "internet, intranet and website" services in exchange for the fees as set out in a Service Level Agreement ("SLA"). The plaintiff was appointed during April 2012 but the execution of the SLA being the document which underpins the contract was only executed in December of that year. That notwithstanding, the plaintiff began rendering services to the defendant.

[2]          Despite the existence of this agreement, the plaintiff alleges that a separate oral agreement was concluded during January 2013 in which the plaintiff was to redesign and redevelop the defendant's existing website and launch it as a new website ("the additional project").

[3]          The plaintiff alleges that it delivered the services associated with the additional project until the defendant repudiated the oral agreement in November 2013. The plaintiff claims the sum of R2 094 750,00 being the damages it suffered as a result of the repudiation and subsequent termination of the said agreement.

[4]        The plaintiff claims the said amount from the defendant on two bases:

(i)         as damages suffered as a result of the defendant's repudiation of the oral agreement; and

(ii)        that this amount represents the defendant's alleged enrichment as a result of such repudiation.

 

[5]          The defendant denies the existence of an oral agreement and contends that the services associated with the additional project formed part of the plaintiff's obligations as contemplated in the SLA. Accordingly, the additional services were part of the plaintiffs obligations and no additional project ln terms of an oral agreement as alleged was delivered.

 

Factual Context

[6]          The defendant issued a Request for Quotations ("RFQ ") during March 2012 for the provision of certain IT related services it required. The RFQ set out in some detail what services the successful bidder would have to perform. It was stated that the successful bidder would provide the "web content management services" as fully explained in the RFQ. It was furthermore stated as a condition that the successful bidder would provide "140 hours of work a month".

[7]          On 17 April 2012 the plaintiff was appointed in writing by the defendant to render "internet, intranet and website" services to it. Pursuant to the appointment and after the commencement of the rendition of the said services, the parties concluded a written SLA in which the plaintiff would render support services for 140 hours a month to be spent in maintaining and supporting the existing infrastructure for a fixed monthly fee of R87 500,00 per month, excluding VAT. Furthermore, ad hoc services would be charged at R625,00 per hour excluding VAT if there were any such services to be rendered.

[8]        The terms of the contract were inter alia, the following:

(i)        the plaintiff was to furnish the defendant with services in respect of website and intranet support;

(ii)       the defendant appointed the plaintiff, who accepted the appointment from the effective date until termination date to render the services in accordance with the terms and subject to the conditions of the agreement;

(iii)      subject to the agreed fee payable to the plaintiff, it undertook to perform a continuous system support function for the defendant as per the agreement;

(iv)      the agreement constituted the whole agreement between the parties and would supersede all previous communications or representations between the parties.

 

[9]          Prior to the conclusion of the SLA but after the appointment of the plaintiff, the plaintiff was advised by the defendant that it owned the intellectual property for the software utilized for the existing support services carried out by the plaintiffs predecessor, Flux and that Flux would furnish them with the full source code that would enable them to carry out a handover which would allow the plaintiff to continue its services unabated.

[10]       A 'kick-off meeting was held, the purpose of which was to introduce the teams from both the plaintiff and the defendant and specifically to determine a way forward pertaining to the hand over and transfer of the source code, inter alia, from Flux to the plaintiff. Concern was expressed that the ASP version of the system was outdated and would need to be replaced. It was at this point that the plaintiff was informed of the intention by the defendant to use MS Sharepoint. However, this was envisaged to be a project to be undertaken at some date in the future.

[11]       It was subsequently ascertained by the plaintiff that the defendant did not in fact hold the intellectual property in relation to the support services software. Furthermore, Flux refused to hand over the source code to the plaintiff and also refused to assist with the handover, which left the parties in a predicament as the plaintiff was unable to carry out the support services it had been contracted to perform.

[12]      It became clear to the parties that the Content Management System ("CMS") in use was inadequate to support the programs and would require an extreme revision. It was then agreed by the parties that the only solution available to them was to develop new software which would allow for the support for the services to be delivered. However, it would come at great cost which had not been contemplated by either party.

[13]      A new CMS, which is a filing system in the internet cloud and the backend of an existing website software, was eventually agreed upon by the parties. The evidence of the plaintiff was that to change to a CMS clearly does not mean that a website needs to change. For changes to a website to be effected the front end look and feel only would be modified. In this instance, the only modification required was to the existing backend.

[14]       A written proposal was sent by the plaintiff to upgrade the CMS program which was accepted by the defendant. The agreed fee was calculated on the ad hoc sum of R625,00 per hour excluding VAT. This resulted in a requisition for goods and services and a purchase order being created by the defendant in the sum of R446 700,00, an invoice for that amount having been issued.

[15]       The support function by the plaintiff was ongoing so too was the agreed CMS development which was completed in December 2012. During the implementation of the project the parties discussed the design of a new website for the future. The plaintiff contends that it was at a meeting in December 2012 where it was agreed that they would re-design the defendant's website and intranet and prepare to 'go-live' with effect from March 2013. A high level Digital Communications Strategy was prepared by representatives of the plaintiff with input from the defendant. The plaintiff further averred that the remuneration for the said project would be based on the resources and the time spent but that the rates would be based on the ad hoc rates agreed to by the parties in the SLA. The plaintiff also contended that it was understood by them that they would be remunerated in full at the end of the project. This agreement was regarded by Mr. Tlhagwane as the 'second agreement', an agreement outside the scope of the SLA.

[16]       The plaintiff commenced its obligations under the second agreement being the re­ design of the defendant's website and continued to do so until the defendant prevented the continuation of the project during October 2013. At this time, numerous and continuous reports had been furnished to the defendant in respect of this additional project. The plaintiff had redesigned and installed the new website and made it ready for launch as proposed and agreed. The services under this second agreement were rendered during the period January 2013 to October 2013.

[17]       During October 2013 the plaintiff received an instruction from Dionne Jacobs of the defendant's Communications Department not to launch the new website nor continue working on its development until further notice. She indicated that the reason for this decision was that there was a misalignment between the new website and the defendant's IT Department Microsoft SharePoint rollout.

[18]       The plaintiff contends that it construed the defendant's instruction as a repudiation of the agreement during October 2013 and accepted it as such. The plaintiff agreed not to go ahead with the launch of the website but demanded payment for the work done thus far.

[19]       The plaintiff sues for the sum of R2 094 750,00 being the reduced contract price in respect of services carried out in the second agreement, alternatively, in the event that this court finds that the second agreement is invalid or unenforceable against the defendant, claims the sum of R2 094 750,00 for the extent of the work done to give effect to the second agreement being a fair and reasonable amount. Furthermore, that the defendant has been unjustly enriched at the expense of the plaintiff in that amount.

[20]       The defendant denies the conclusion of the second agreement and contends that the services associated with the additional project formed part of the plaintiff's obligations as contemplated in the SLA.

 

Issue

[21]       The issue in this matter is whether on a proper reading of the agreement and proper analysis of all the relevant facts it could be said that the plaintiff discharged his onus to prove the conclusion and existence of a second oral agreement.

[22]       With these principles in mind I will not delve into all the evidence presented by the parties in evaluating it but will highlight the common cause facts, corroborated evidence and discrepancies.

 

The evidence

[23]       It is common cause that during March 2012 the defendant issued an RFQ for the provision of certain IT related services it required. The RFQ set out in detail what services the successful bidder would have to perform. In particular, it stated that the successful bidder was required to provide "web content management services". It fully described the services in paragraph 1.2 which contained subsections describing particular services and responsibilities. Of particular importance is the list of additional services the successful bidder would have to perform which are contained in paragraph 1.9 and 1.10 of the RFQ which read as follows:

"1.9     Revamp of new digital platforms

After finalization of phase 4 of the implementation, taxonomy and redesign will follow and will include:

•        Content audit to ensure correctness ......

•        Design review, structure, look and feel of digital solutions to be compliant with Corporate Identity and brand guidelines

•       implementation of the digital solutions .....

•       Quality assurance and user acceptance testing before approval for 'go-live'

 

1.10      'Go-live' and launch

In this phase awareness and monitoring would be important and include:

•        Advertising and media campaigns to market and create awareness of new digital platforms.

•       Digital platform usage analysis with specific event tracking and reporting.”

 

[24]       On the evidence before the court, several issues pertaining to the new website are not in dispute, being that:

(i)        the defendant does not dispute that the new website was constructed and implemented by the plaintiff;

(ii)       the defendant does not dispute the fact that the new website was ready for launch; and

(iii)      the amount claimed by the plaintiff for services rendered is market related and/or fair and reasonable.

 

[25]       Mr Karabo Tlhagwane, a director of the plaintiff who represented the company at all material times testified as a factual witness. In evidence, he confirmed that the plaintiff replied to the RFQ on the basis that it would have to perform the services related to the maintenance and support of the defendant's existing website. He expressed the view that the RFQ related to the support of an existing website only and did not relate to the design and launch of a new website. He testified further that in addition to the support services and the implementation of the CMS, the parties mooted and ultimately agreed that a new front end website be developed and implemented for the defendant. The development and implementation of the new website was unrelated to the CMS. The design and launch of a website was seen as an additional project.

[26]       Mr Tlhagwane testified further that the terms and conditions pertaining to the additional project were that it would build and implement the new website and that it would be paid upon its completion at the usual rate. However , in cross-examination, Mr Tlhagwane suggested that the RFQ did not contemplate the services associated with the additional project because those services were not specifically mentioned directly under clause 1.2 of the RFQ.

[27]       Mr Tlhagwane testified that the oral agreement was concluded 'around November going to the holidays'. Later in his evidence, he testified that it was in November.r The defendant is of the view that the plaintiff is unconvincing in his testimony when precisely the oral agreement was concluded and as such, the evidence does not establish the conclusion of an oral agreement.

[28]       Mr Thlagwane further testified that whilst the support services and CMS were being implemented, a document titled "High Level Communication Strategy" was prepared by the defendant which document spoke to the redevelopment of the website in the future. A discussion ensued about the envisaged project and in Mr Thlwagane's mind, the 'usual fee' would be charged and raised on the completion of the project.

[29]       The defendant, on the other hand, was of the view that Mr Tlhagwane's contentions were unsustainable in view of Para 1.2 of the RFQ in that the services contained therein are clearly not the only services a successful bidder was required to perform. It was intended that the tasks as enunciated in paragraphs 1.5 to 1.10 would be "carried out in phases and they would form part of the mandate of the appointed service provider ... ".

[30]       Mr Makgale, the defendant's former Group Communications Manager, testified that he was no longer an employee of the defendant having left in May 2003. His responsibilities whilst in the employ of the defendant included managing the website and the internet. He also had the responsibility of appointing a service provider to assist in the redevelopment of the website and the internet. As the sponsor, he had signed off on the RFQ. He testified that the kick-off meeting with the plaintiff was intended to introduce them to his team as well as the IT team with whom they would be working closely. The meeting was also to discuss the deliverable of the project and raise any relevant issues pertaining to the project.

[31]      Mr Makgale testified further that the RFQ was always intended to include the services associated with the second agreement. He testified that the services enunciated in paragraphs 1.5 to 1.10 related inter alia, to the new website the defendant envisioned would be redesigned and launched by the successful bidder. Mr Makgale further testified that the additional project was not out of scope nor did he ever intimate to Mr Tlhagwane that it was out of scope.

[32]      In cross-examination , Mr Makgale testified that on his departure from the company, he had drawn an 'exit report' which he had handed over to Ms Stacey Subramoney who took over from him. He recalled registering concerns with the implementation of the project and the 'go live' date. He testified that the report was intended to set the record straight and does not recall having singled out the website in particular. He agreed that the recordal was an important document in the context of the matter on hand.

[33]      Mr Makgale pointed out to the court that he had no knowledge of arbitration proceedings between the parties and had never seen the copy of the Statement of Claim which had been presented at such proceedings. He confirmed further that he had no dealings nor discussions with anyone from the defendant until about 6 weeks prior to the trial when he was asked to appear as a witness in the matter. He had had no input in the drawing of the statement of Claim submitted for the arbitration at all. He also denied having advised the defendant to amend its plea.

[34]      Mr Makgale conceded that there was no mention of the development of a new website in the RFQ heading nor was there any such mention in the introduction to the RFQ. He also conceded that there was nothing in clause 1.2 of the RFQ being the schedule of services which included the development of a new website but insisted that it was contained elsewhere in the RFQ. He failed to indicate where in the document it was contained.

[35]      Mr Makgale confirmed that he gave input in July 2012 into the High Level Communication - Strategy document which was a discussion document in respect of the new proposed website and in particular the activities relating to the upgrade or redevelopment of the new website. He however did not recall any meeting where an oral agreement was concluded about the redevelopment of the new website and denied that he would ever have concluded such an agreement as he was not responsible for procurement in the company.

[36]      In cross-examination he testified although he was the author of the RFQ and was familiar with the project and the services to be rendered by the plaintiff, he was not sure where in the document it was stated about the services associated with the additional project but he assured the court that it was contained elsewhere in the RFQ and as such formed part of the plaintiff's obligations. He admitted that as an author of the document, he shouldered the responsibility for its recordals. In cross-examination he conceded that the plea was not a reliable document and confirmed so when asked several times by Counsel for the plaintiff.

 

Relevant Legal Principles

[37]      The causes of action are contractual and in the alternative, are a claim for enrichment. It is trite that the plaintiff bears the onus of proving the existence of the oral agreement and the terms of such agreement. The defendant denies the conclusion of the oral agreement on the terms alleged or at all. Accordingly, a factual dispute exists regarding the existence of the second agreement and the contents of its terms.

[38]      When a court is faced with two contradictory and mutually destructive versions, it is obliged to resolve dispute in accordance with the technique set out in the matter of SFW Group Limited & Another v Martell et Cie & Others[1] where the court summarized the technique as follows:

“To come to a conclusion on the disputed issues, a court must make findings on:

(a)           The credibility of the various witnesses;

(b)          Their reliability;

(c)           The probabilities.

 

As to (a) the court's findings on the credibility of a particular witness will depend on its impression about the veracity of the witness. That, in tum, will depend on a number of subsidiary factors not necessarily in order of importance such as:

(i)       The witnesses' candour and demeanour in the witness box;

(ii)      His bias, latent or patent;

(iii)     Internal contradictions in his evidence;

(iv)     External contradictions in what was pleaded or put on his behalf, or with established fact or with his own extracurial statements or actions;

(v)      The probability or improbability of particular aspects of his version;

(vi)      The caliber and cogency of his performance compared to that of other witnesses testified about the same incidents or events.

As to (b), a witness' reliability will depend, apart from the factors mentioned under (a) - (ii), (iv) and (v) above, on

(i)              The opportunity he had to experience or observe the events in question; and

(ii)             The quality, integrity and independence of his recall thereof.

 

As to (c), this necessitates an analysis and evaluation of a probability or improbability that each parties' version of the disputed issues. In the light of its assessment of (a), {b) and (c) the court will then, as a final step, determine whether the party burdened with the onus of proof has succeeded in discharging it. The hard case, which will doubtless be the rare one, occurs when a court's credibility findings compel if in one direction and its evaluation of the general probabilities in another. The more convincing the former, the less convincing will be the latter. But when all factors are equipoised the probabilities will prevail.·

 

[39]      The preference of one or the other version by the court will depend on the outcome of the evaluation of the evidence using the technique as espoused in the Stellenbosch Farmer's Winery case (supra).

[40]      Before I evaluate the evidence of both the plaintiff and the defendant, Counsel for the plaintiff brought to the court's attention that Mr Makgale had been in court while the plaintiffs' witnesses gave evidence. As such, Counsel for the plaintiff requested the court to draw an inference that Mr Makgale obtained an unfair advantage and was able to doctor his own evidence to cure it.

 

Evaluation of evidence

[41]      Counsel for the defendant denied that Mr Makgale purposefully sat in court to hear the evidence of the plaintiffs' witnesses. He was not present for the entire period that the plaintiffs' witnesses gave evidence. Furthermore, he had simply followed instructions to be at court. As such, the criticism of Mr Makgale being in court at that time must be rejected as unwarranted.

[42]      As a general rule witnesses are not permitted to sit in court whilst they are not giving evidence. The rationale for the rule is that there is a risk that the witness would tailor his evidence to either exonerate himself or lend support to the party for whom he gives evidence. The court in the matter of C/K Alliance (Pty) Ltd t/a Greenland v Mosala N.O. & Others[2] confirmed the general rule that witnesses should not be permitted to sit in during the proceedings but raised that this would not necessarily disqualify that witness from testifying. The witness should be allowed to testify but evaluate at the end of proceedings whether the evidence he has given was influenced by the version of others who testified before him. The court further held that the probative value of the evidence of such witness would depend on the extent to which the witness may have sought to tailor his evidence with those who testified before him.

[43]       Whilst I accept that Mr Makgale's presence in court may not be attributable to him and could have occurred as a result of a miscommunication with the defendant's legal team, I must however approach his evidence with caution.

[44]       The court is faced with two mutually destructive versions of the events which fall to be resolved in accordance with the technique as enunciated in the case of Stellenbosch Winery (supra). Mr Makgale 's evidence in chief was in respect of two particular issues: he said that there was no reason for the parties to canvass anything about costings, or any other items in relation to the new website development as the new website was part and parcel of the retainer and as such, no need to traverse this matter and secondly, in relation to the 'look and feel' that it was reference to a new website.

[45]       Whilst the court is apprised of the fact that the plaintiff never testified who on behalf of the defendant represented it, it he had inferred the understanding from the conclusion of the SLA, the purchase order and the work done to that point in time.

[46]       During Mr Makgale's cross examination, an application was sought by the plaintiff to use a one-page document which emanated from the defendant and which Counsel for the plaintiff was of the view should have been discovered by the defendant and had just been found by the plaintiff. Counsel for the plaintiff was of the view that this document would assist the court in considering the evidence of Mr Makgale and his submissions under oath and his credibility per se. Counsel for the defendant strenuously opposed such application as he was of the view that his client was being ambushed in respect of the trial and was prejudicial to his client. The court accepted the document conditionally upon ascertaining its relevance.

[47]       Whilst Mr Makgale admits his involvement in the RFQ he was evasive when questioned about the details in the RFQ. Furthermore, he denied any involvement in the preparation of the amended plea which was filed on 13 November 2017, a couple of weeks prior to the trial and at a time that he had admitted he had been contacted by the defendant to give evidence at the trial. In cross-examination, he also admitted to the court that the plea itself could not be relied upon. He could not explain under cross-examination why Section 1.2 of the RFQ was silent pertaining to the mention of the words "new website". He was also unable to explain the silence of the provision of a new website, this being a glaring omission on the part of the author of the document. Mr Makgale was also unable to explain the omission of the said words in the SLA.

[48]       I am of the view that Mr Makgale was an unreliable witness who made many concessions in cross-examination including a concession that work on the website was ready for launch and that services contracted had been delivered as the system had been tendered and ready for launch, conceded that the purchase order does not speak to website development and also conceded that the latest amendment to the plea cannot be relied upon. This list is not exhaustive. Overall, his evidence was poor with many inconsistencies.

 

Conclusion

[49]       The overall burden of proving the existence of a new website project agreement rests with the plaintiff. In view of the evidence as stated above, it is evident that the defendant conceded on occasion the existence of such an agreement. It also did not dispute that the work was done and the value to be attributed to such work. I am therefore of the view that the plaintiff discharged such onus.

[50]       I am of the view that Mr Tlhagwane was a reliable witness whose evidence was forthright, clear and unshakeable even when it was traversed several times .

[51]       In support of whether the amount claimed is a reasonable amount, Mr Mathibe was called by the plaintiff as an expert witness. He provided evidence about the extent of the work carried out by the plaintiff which had been conceded by Mr Makgale as also, the value that ought to be attributed to the work under consideration. His evidence was not refuted by any expert on behalf of the defendant. His evidence therefore remains uncontested. His formulation of the value of the work reflected that the hours expended by the plaintiff was fair and reasonable and market related.

[52]       On an application of the technique in the Stellenbosch Winery and the evidence before the court, I am of the view that the plaintiff's version is highly probable and consistent with the existence of an oral agreement.

[53]      Accordingly, I am of the view that the plaintiff has established that an agreement pertaining to the new website was concluded. It is uncontroverted that the work was carried out, the defendant derived a benefit therefrom in that they could use the website should they wish, the plaintiff had expended resources to carry out the work and that the fee charged by the plaintiff is fair and reasonable.

 

Order

[54]      Accordingly, the following order is granted:

(i)          payment of the sum of R2 094 750,00 which amount is inclusive of VAT;

(ii)         interest on the aforesaid amount at the rate of 10% per annum a tempore morae to the date of payment;

(iii)       costs of suit.

 

 

MOKOSE J

Judge of the High Court

of South Africa Gauteng

Division, Pretoria

 

 

For the Plaintiff:

Adv K loulianou

on instructions of

Fluxmans Inc

 

For the Defendant:

Adv M Seape

on instruction of

Bowman Gilfillan

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