IN THE HIGH COURT OF SOUTH AFRICA 
WESTERN CAPE HIGH COURT, CAPE TOWN

CASE NO: 1041/2009

In the case between:

And

MEER, J

1. The crisp issue that this judgment is concerned with, is whether an erstwhile principal agent, appointed in terms of a building contract, is under an obligation once its mandate is terminated, to furnish further explanations about the contract as are reasonably required by the employer. Put simply, is an agent under an obligation to provide information to his principal, upon the termination of his mandate. Applicant, the employer as identified in a building agreement ("the JBCC agreement") seeks a declaration that the First Respondent who was principal agent in terms of the contract, until December 2008, is obliged to account to Applicant for his administration of the project and his actions as principal agent, and for purposes of such accounting
to -

"deliver such further explanations of the contract administration and the performance of its function as principal agent as are reasonably required by the Applicant."

Background facts
3. In 2006 the Applicant concluded a written contract, namely a JBCC Series 2000 Principal Building Agreement ("the JBCC agreement") with Naumann Construction ("the contractor"), in terms of which the latter was engaged to construct a dwelling on Applicant's property in Llandudno, Cape Town..
4. The Second Respondent, an architect was initially appointed in 2004 to provide the required architectural services for the project in the name of his then firm, Studio Kruger Roos. The Second Respondent subsequently left Studio Kruger Roos and started the First Respondent. When the Second Respondent, Martin Kruger, began practising through the First Respondent as Martin Kruger Associates CC, the latter became both the Applicant's architect and the principal agent under the JBCC agreement. At all material times the Second Respondent was the person who performed the functions of principal agent, initially on behalf of Studio Kruger Roos and subsequently on behalf of First Respondent.

5. In December 2008, the Applicant terminated the First Respondent's appointment as principal agent, and a new principal agent, SBDS Western Cape (PTY) Ltd ("SBDS") was appointed in its stead.

7. The Applicant initially also sought certain documentation and all architectural plans, drawings and diagrams prepared by Respondents. The Respondents eventually provided these after the institution of legal proceedings. The remaining issue pertaining to the relief sought on this aspect, is one of costs.

Preliminary issues

10.Mr Burger, for Respondent argued with reference to paragraph 12 of the founding affidavit that on Applicant's version a different contract appointing First Respondent as architect, was concluded and came into being between Studio Kruger Roos, (First Respondent's predecessor), and Mr Thaxton, (who subsequently became a director of Applicant, and is the deponent to Applicant's founding affidavit), in 2004, with a letter of appointment dated 23 November 2004, appointing Studio Kruger Roos. It is common cause that the rights and obligations of Studio Kruger Roos were assigned to Firsts Respondent and that much is not disputed by Respondents. It is also common cause that in November 2004 Thaxton was not a director of Applicant but became one shortly thereafter. Respondents contend that in November 2004 it was Thaxton and not Applicant who was the contracting party with First Respondent.

ll.With regard to Applicant's standing in relation to Second Respondent, Respondents, argue that as it was Studio Kruger Roos and not Second Respondent that was appointed as architect in November 2004, Applicant has no claim against Second Respondent. There is no basis, so the argument goes, to find that there was an appointment of Second Respondent in his personal capacity. The JBCC contract, contend Respondents, cannot confirm rights and obligations upon Respondents because they are not a party to it. Nor does the law of agency apply, as no obligations on the part of Respondents flow from the contract.

12.Paragraph 12 of Applicant's founding affidavit does not suggest to me that it is Applicant's version that a contract was concluded in 2004 between Thaxton and the First Respondent and that the letter of 23 November 2004 being annexure MT3 to Applicant's founding affidavit constituted such contract. The status attributed to the letter, in Applicant's founding affidavit, is at best that of a purported letter of appointment. On close scrutiny Annexure MT3 is a letter from Studio Kruger Roos addressed to Thaxton thanking him for considering the firm as architects. It sets out the fees of Studio Kruger Roos and requests Thaxton to sign "this document if you decide to appoint us". At best MT3 is a letter discussing an appointment and expressing First Respondent's willingness to be appointed.

13.It is to be noted also that Thaxton in his replying affidavit stated that at all times he intended to act and acted not in his personal capacity but on behalf of Applicant. It is not disputed that Applicant was in existence on 23 November 2004 and that Thaxton became a director of Applicant approximately two weeks thereafter.

"No formalities are in general prescribed by law for the conclusion of construction contracts.   They can be concluded, like agreements generally, expressly or tacitly, by implication or incorporation, by conduct, and orally or in writing"

5.0. EMPLOYER'S AGENTS
5.1. The employer shall appoint the principal agent as stated in the schedule. The employer warrants that -

5.1.1 The principal agent has full authority and obligation to act in terms of the agreement".

It is not disputed that First and Second Respondents did indeed perform as principal agents under the contract.

17.Given that Applicant's allegations regarding the appointment of the principal agent in terms of the contract, and the respective roles of the First and Second Respondent thereunder are not denied, the Applicant's version that Respondents as principal agent appointed by Applicant, had obligations under the JBCC agreement and were bound thereby to Applicant as employer under the contract, must be upheld. See Plascon-Evans Paint v Van Riebeeck Paints 1984 (3) SA 623 AD at 634 I.

Application to strike out

19.Respondents applied to strike out the replying affidavit of Michael Thaxton and the confirmatory affidavit of Clinton Bush in their entirety on the basis that they were filed three months late, consist largely of argument and contain new matter. Alternatively, Respondents sought an order that the affidavit of Bush and the following paragraphs of the affidavit of Thaxton be struck out-Paragraph 8 (new matter), paragraph 10 (new matter), paragraph 12 & 13 (new matter) paragraph 17 (last sentence new matter), paragraph 22 (new matter), paragraphs 23-26 (new matter), paragraph 31 (new matter), paragraph 33 (new matter) paragraph 34 (new matter, scandalous and vicarious) paragraphs 56.1 and 56.2 (new matter).

20.Respondents however conceded that if the affidavits were allowed, there would be no prejudice to them apart from the fact that they had not responded to them. On perusal of the affidavits, none of the matter objected to appears to be new matter, but comprises instead averments which were entitled to be made in response to allegations in the answering affidavit. Nor do I find the contents of paragraph 34 to be scandalous and vexatious. I note that the confirmatory affidavit of Bush is relevant to matters raised in Thaxton's replying affidavit concerning the contents of a CD-Rom furnished by Second Respondent. The averments made by Thaxton in reply, in turn respond to those made by Second Respondent in his answering affidavit, concerning the production of documents.

21.In view of the above the application to strike out cannot succeed.

22.The replying affidavits were due to have been filed and served on 10 August 2009 in accordance with the provisions of an agreed order taken on 11 June 2009. These affidavits were however only served on 1 October 2009. Respondents seek condonation for the delay, explaining that such was not wilful and occurred in the following circumstances -
1. The documentation ultimately provided to Applicant by Respondents was voluminous and required the input of the new principal agent and architect, a time consuming exercise.
2. The situation was compounded by the fact that Thaxton, the deponent to the principal replying affidavit filed on behalf of the Applicant, resides in Los Angeles and it is often difficult to obtain urgent instructions from him. The filing of affidavits by Thaxton is in addition a complicated undertaking at the South African Consulate General in Los Angeles.

23.Applicant submits also that Respondents were not prejudiced by the late filing of the replying affidavits which they received some 19 ordinary days before the hearing of the application, and that both Applicant and Respondents were able to file heads of argument timeously.

24.I am satisfied from the above that there is just cause and condonation is accordingly granted.

Urgency

25.Respondent seeks the costs of the postponed urgent hearing on 11 June 2009, as against Applicant. The notice of motion issued on 25 May 2009, seeking the urgent set down for 11 June, called for the filing of opposing affidavits by 5 June 2009. As Mr Kruger was out of the country he filed a provisional answering affidavit on that date. He was in effect given only one week to file such affidavit. Respondents contend it was unfair to put Kruger under such pressure given that the hearing on an urgent basis was postponed on 11 June. Respondents also emphasise that Applicant took three months to launch these urgent proceedings.

26.Applicant counters that the urgent set down for 11 June 2009 and the costs thereof were necessitated by Respondent's refusal to produce documents and account to Applicant as requested before the commencement of these proceedings. On that date, by agreement the application was postponed to 20 October 2009 and Respondents were given the opportunity to file further answering affidavits by 20 July 2009 which, they did.

28.I note that Respondent does not attack the urgency of the application. The period of one week to file an answering affidavit in the urgent application, was in all of the circumstances not unfair, especially given that Respondents were afforded an opportunity to file a further affidavit which they did. I am accordingly not inclined to award costs in favour of Respondents for the postponed hearing of 11 June 2009.

Is the relief framed in paragraph 4 of the notice of motion competant? Is First Respondent obliged to account to Applicant and furnish further explanations as are reasonably required by Applicant?

30.It30.It is trite that a principal is entitled to be informed by an agent of matters which are of his or her concern. See Mead v Clarke 1922 EDL 49 at 51.

"That obligation to provide an accurate account in the fullest sense arises by reason of the fact that the agent has been entrusted with the authority to bind the principal to transactions with third parties and the principal is entitled to know what his personal contractual rights and duties are in relation to those third parties as well as what he is entitled to receive by way of payment from the agent. He is entitled to be provided with those records because they have been created for preserving information as to the very transactions which the agent was authorised by him to enter into. Being the participant in the
transactions, the principal is entitled to the records of them	"

The rights and obligations arising as a matter of law from the existence of duty-creating relationships... are not in principle displaced by contractual rights and obligations unless the contract provides that such rights and obligations are to be excluded or includes terms which are inconsistent with the duties attributable as a matter of law to the relationship..

the agent's duty to keep and produce records of his transactions on behalf of his principal can co-exist with a contract of agency".

34.Logic dictates that the same principles should hold true of instructions issued by an architect as principal agent under a building contract, to relevant construction companies and others in the exercise of his or her mandate as project manager. Such instructions potentially bind the principal to the construction company. The information is therefore pertinent to the successful completion of the project. If the agency agreement with the architect is terminated prior to the completion of the project, the principal, due to the nature of the architect's duties in terms of the agreement, is entitled to full disclosure of all relevant instructions and decisions. The Respondents as architects on the project, thus have a duty to account to Applicant for the work they did on the project as principal agent.

36. Finally I reject also the argument that further services of Respondents are not covered by the agency mandate and that such   cannot be obtained free of charge under the guise of a duty to account. As the further explanations required pertain to what occurred during the currency of the mandate, Respondents are, as stated above, under an obligation to account and explain, and to do so for no additional payment.

Costs

39.I accordingly grant the following order-

1. The First Respondent is obliged to account to the Applicant for its administration of the building project on Applicant's property in Llandadno and its actions as principal agent, and for purposes of such accounting to: Llandadno and its actions as principal agent, and for purposes of such accounting to:

1.2 deliver such further explanation of the contract administration and the performance of its function as principal agent as are reasonably required by the Applicant.

2. The costs of this application including the costs of two counsel shall be paid by First and Second Respondents jointly and severally, the one paying the other to be absolved.