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IN THE HIGH COURT OF SOUTH AFRICA

(NORTH WEST, MAFIKENG)

CASE NO: 1052/2007

In the matter between:

H R NETWORK SERVICES CC PLAINTIFF

AND

ROYAL BAFOKENG NATION DEFENDANT

CIVIL MATTER

____________________________________________________________________________

JUDGMENT

____________________________________________________________________________

KGOELE AJ.

[A] INTRODUCTION

[1] The plaintiff H.R Network Services CC is a Closed Corporation with limited liability duly registered and with its principal place of business at E 480 Malla Section, Phokeng.

[2] The defendant is The Royal Bafokeng Nation a universitas personarum with its domicillium citandi et executandi at Legato offices, Luka Road, Phokeng.

[3] On the 24 October 2006 and at Phokeng, North West Province, the plaintiff and the defendant entered into a written consultancy agreement in terms whereof plaintiff would provide project management services for the defendant’s Annual Excellence Awards. The plaintiff was represented by Ms Lerato Ditsele and defendant by Boitshoko Senne.

[4] The material terms of the agreement which are relevant to this action were:

1. The defendant engaged the plaintiff to render project management services for the Royal Bafokeng Nation’s Annual Excellence Awards;

2. The agreement would commence on the 1^st October 2006 and will continue until mid November 2006 or as soon as the plaintiff has delivered the services.

3. The services were to be performed at the premises of the defendant, the premises of the plaintiff or elsewhere as determined by the defendant from time to time.

4. As remuneration for the rendering of services, the defendant will pay the plaintiff fees and disbursements stipulated as appearing on the approved budget of the event.

[5] In the particulars of claim the plaintiff alledges that plaintiff duly complied with its obligation and rendered project management services to the defendant as agreed during October 2006 and November 2006. Plaintiff further alleges that defendant effected payments to the plaintiff for the services rendered as set out in the summary of payments annexed to the particulars of claim as Annexure “HR2”. However, according to plaintiff, a balance in the amount of R687 378 – 74 was still due by defendant to the plaintiff. The plaintiff issued summons against the defendant based on this outstanding payment.

[6] The defendant is disputing the claim. It raised two defences, one is based on a settlement agreement allegedly concluded between the parties. According to the defendant, on or about the 22 December 2006, the plaintiff and the defendant settled the dispute which is the subject matter of the present claim.

[7] According to the defendant, defendant agreed to pay the plaintiff an amount of R213 942, 00 in full and final settlement of any claim that the plaintiff had/may have against the defendant arising out of or in connection with the consultancy agreement. The defendant duly paid the said amount.

[4] The matter initially appeared before Landman J of this court who made an order in the following terms:

4.1. THAT: The following issued are to be decided separately before any issued in the action are decided:-

4.1.1 The issue arising out of paragraph 1,/2/,2.1/2.2 and 2.3 of the applicant’s (defendant’s) Plea in the action instituted by the plaintiff (respondent);

4.2. THAT: All further proceedings are stayed pending the final determination of the issued set out in paragraph 1 above.

4.3. THAT: Costs of this application are costs in the cause.

[9] During the opening address both counsels indicated to the court that they were ad idem that the following were common cause between the parties:

- That a meeting took place on the 22/12/2006 in which payment of H.R Network Services account was discussed.

• That Annexure “RBN 3” an invoice generated by the plaintiff was presented for payment on the 22/12/2006.

• and that is was duly paid

[10] Therefore the only issue which this court had to deal with was:

“Whether the payment that was made in respect of this invoice was a settlement agreement/compromise or not which was intended to be a full and final settlement of a dispute between the parties?”

[B] THE EVIDENCE

[11] The onus rested on the defendant and the following witnesses were called in support of its defence.

Mr Senne

Mr Senne who was at that time a Corporate Planning Executive of the plaintiff testified about the conclusion of the consultancy agreement, the execution thereof and the problems encountered. According to him he experienced difficulties with the manner in which Ms Ditsele, an official representing the plaintiff managed the project. He indicated that he had previously tried to resolve the problems, with his efforts eventually culminating in an e-mail he addressed to all parties involved in the project. After this e-mail, the plaintiff withdrew from the project. Plaintiff later rejoined but subject to new terms which were agreed upon but not signed for by the parties.

[12] Mr Senne testified that he was presented with a schedule of payments

including plaintiff’s invoice. He was unhappy about the amount

claimed therein and that he made this be known to plaintiff. He

testified that he knew that plaintiff was going to disagree about the

amount issue.

Mr Tsitsi

[13] Mr Tsitsi who was at that time employed by the Nation and was in charge of the staff and assisting Kgosi Leruo Molotlegi with the day to day running of the Nation testified about the feedback and the progress of the project he had been receiving from Mr Senne. He said that on 22 December 2006 he was called into the office of Kgosi Leruo Molotlegi. Entering the office of Kgosi he saw Ms Ditsele and Mr Lesomo at the reception area. He was then asked to sit in a meeting with Kgosi. Kgosi related the problems regarding the payment of the plaintiff and asked him to intervene. He then met with Ms Ditsele in his office and then indicated to her that there were problems with the payment to her. The history of the matter was then discussed with Ms Ditsele. He categorically stated that Kgosi instructed him to intervene and finalise the matter on that day.

[14] He further discussed the matter with Mr Lesomo and Ms Ditsele about what needed to be done at that time. Ms Ditsele then produced a list of other contractors who were to be paid also.

[15] They then drove to the Civic Centre to meet with Mr Mafatshe who is the finance manager of the defendant. The contractors were then paid. He then called Mr Senne because he had been in charge of the awards. Mr Senne indicated to him that the plaintiff should not be paid at all. Mr Tsitsi indicated to Ms Ditsele that she would have to wait until the new year for the return of Mr Senne so that the issue could then be discussed. According to Mr Tsitsi Ms Ditsele insisted that payment should be made on that day as it would be unfair on her not to be paid when all other contractors were. She indicated that she wanted to be paid as she had other commitments to settle. According to Mr Tsitsi, Ms Ditsele further indicated to him that it would not be a problem to come up with a figure that in her opinion was due to her. Ms Ditsele then called a lady whom she brought along to the Civic Center and then the two went to a separate room to prepare the invoice. Plaintiff presented invoice no. 31 Annexure “RBN 3” to him.

[16] Mr Tsitsi then called Mr Senne. He Mr Senne was still adamant that plaintiff should not be paid. Mr Tsitsi pleaded with Mr Senne because he had been instructed by Kgosi to finalise the matter. This was when he approved the invoice for payment. He then instructed Mafatshe to effect payment. During cross-examination it was put to him that infact the amount paid as per the generated invoice was part payment of the amount due to the plaintiff as agreed on that day. According to Mr Tsitsi when Ms Ditsele provided him with the invoice she did not say that it was part payment of the amount due to her. She indicated that, that was the total amount that was due to her in terms of the agreement.

[17] Mr Tsitsi insisted that the amount agreed on that day was intended to be a full and final settlement of the dispute between the parties and further that Ms Ditsele was aware of that fact. He further stated that although he discussed the terms of the agreement that were ultimately reflected in the invoice, he did not dictate the amounts as Ms Ditsele alledge. He says that he was actually surprised when the matter then resurfaced in March 2007.

Mr Mafatshe

[18] Mr Mafatshe who is a finance Manager of the defendant testified that he attended a meeting wherein Mr Senne, Mr Tsitsi, and Kgosi were present. The thrust of the discussion was the finalisation of all outstanding payments regarding the Excellence Awards. He had already on the 21^st December 2006 addressed a memorandum regarding outstanding payment to Kgosi. On the 22^nd December 2006, after their meeting in the morning, Kgosi endorsed a handwritten remarks to him on the said memorandum in which he was given specific instructions as to what had to be done. The said handwritten instructions read thus:

“MOTHUSI

Payments direct to sme’s are approved on the basis that our meeting of 22

december 2006 finalised.

1. a contract between rba and hrns be provided to yourself,

2. you ensure that hrns has no obligation to pay sem’s,

3. that hrns is owed 20% of R2,3 m, as a total amount, as was discussed.

Please pay sme’s immediately.

SIGNED:”

[19] He testified further that Ms Ditsele accepted payment of the amounts she reflected in the invoice and that he, Mafatshe, did not help her to generate the invoice. His only involvement in as far as the generating of the invoice is concerned was offering Ms Ditsele a computer when she requested to use his office printer. He testified further that Mr Tsitsi did not assist Ms Ditsele in any manner with the preparation of the invoice and that Mr Tsitsi approved the invoice and instructed him (Mr Mafatshe) to pay the amount as reflected in the invoice which was ultimately paid.

[20] He confirmed that Ms Ditsele did not attend the meeting with them when they were at Kgosi’s office. He further confirmed that at the Civic Centre Mr Tsitsi explained to Ms Ditsele the discussions around the dispute with the payment, the proposed terms of the intended agreement in full and final settlement of the plaintiff’s claim against the defendant. He testified that the following was explained to her:-

“That the Kgosi had instructed that the matter be finalised; that all the accounts outstanding must be settled; that the SME’s must be paid directly and the amount that would be paid to the plaintiff was in respect of the services that she had rendered”.

[21] He testified that according to Mr Senne plaintiff was only entitled to a percentage of half of the work done since other service providers were called in to complete part of the work that the plaintiff was supposed to have done. He further said that nothing was said about another payment being made in the New Year. He confirmed that the issue of payment had to be finalised on that day as Ms Ditsele insisted that payment should be done. He further confirmed that Ms Ditsele prepared the invoice based on the discussions she had with Mr Tsitsi.

[22] Ms Ditsele, who is the managing member of the HR Network Services also testified. Her testimony was to the effect that on the 22/12/2006 she received a telephone call to come to a meeting to attend to the finalisation of payments of the Excellence Awards. When she arrived at the defendant’s offices, she was made to sit at the reception area and not called to the meeting. Mr Mafatshe, Mr Lesomo and Mr Tsitsi had a meeting with Kgosi whilst she remained at the reception area. After that, Mr Lesomo, herself and Mr Tsitsi went to Mr Tsitsi’s office. When she enquired why she was not called in the meeting with Kgosi, Mr Tsitsi could not give her the answer but only said that there were problems with her payment. Mr Tsitsi then told her that Mr Senne insists that she only did half of the work and should only be paid half of the amount reflected in the invoice. She refused to accept the said proposal.

[23] According to her testimony the agreement was that the matter will be revisited in January when Mr Senne was back. Mr Lesomo then said it was going to be unfair that nothing is paid to her when she had done some work. They then agreed to go to the Civic Centre to go and check how much was already paid to her as the question as to how much she should be paid in the meantime came into the picture. She agreed that she is the one that generated “Annexure RBN 3” based on what she was told by Mr Tsitsi to put in the invoice. She denied that it was a settlement agreement which was supposed to be a full and final agreement, and further that nothing to that effect was ever said. She denied the fact that Mr Mafatshe was present when the negotiations about the amounts took place. She denied also the presence of the other lady Mr Tsitsi talked about who according to Mr Tsitsi helped her generate the invoice. She then after the 23/01/2007 issued the invoice claiming the outstanding balance. She did not receive a response. She then instituted summons proceedings.

[24] During cross-examination she maintained that Mr Tsitsi is the one that dictated to her what to write and even gave her what figure to write in the invoice. She further admitted all the correspondence between herself and Mr Senne about the problems the project was having.

[C] EVALUATION OF THE EVIDENCE

[25] Mr Senne’s evidence is basically about the problems the defendant encountered with the plaintiff in as far as executing its obligations in terms of the consultancy agreement between the parties. What comes out clear from his evidence and from what plaintiff admitted is that there was a dispute as to the amount the plaintiff last claimed and that the two could not agree as to whether the plaintiff should be paid or not.

[26] According to Mr Tsitsi’s evidence, he was requested by Kgosi to intervene in the problem which Mr Senne and the Ms Ditsele had about payment of the outstanding amount. He did that and an agreement was reached whereby payment was made.

[27] Mr Mafatshe’s evidence corroborated that of Mr Tsitsi materially in as far as the meeting of the 22/12/2006 is concerned. His evidence, although he maintained that he was at all the times present when Mr Tsitsi and plaintiff discussed the amount as per the generated invoice, differs slightly with that of Mr Tsitsi in as far as the presence of the other lady that was alleged to have been present that helped Ms Ditsele to generate the invoice. This contradiction is not material at all.

[28] Ms Ditsele’s evidence is to the contrary. She does not deny the fact that she generated an invoice on the 22^nd and that payment thereof was made. The crux of her contention is to the effect that the payment made was not a full and final settlement agreement as the defendant alledges. It was part-payment of the amount due to her as there was a dispute and he was told that there will be another payment in January the following year when Mr Senne comes back from leave.

[29] All the witnesses that testified including Ms Ditsele were not shaken during cross-examination, they stuck to their evidence in chief. Their credibility cannot be attacked.

[D] SETTLEMENT AGREEMENT/COMPROMISE INTENDED OR NOT

[30] There is nothing on the face of Annexure “RBN 3” that indicates that the payment that was approved by Mr Tsitsi was a full and final settlement of the dispute between the parties. On the other hand, there is also nothing on the face of “RBN 3” that indicates that it was part-payment of the amount owed to the plaintiff. What makes this matter worse is that, the parties also gave mutually destructive versions on the content of the meeting/discussions that took place on the 22/12/2006 regarding the said generated invoice Annexure “RBN 3”. Unfortunately the said meeting with its discussions is the central issue around the question this court has to decide upon.

[31] It is therefore essential and indeed fundamental to the decision in this matter, in order to establish whether there has been an intention that the said payment be a settlement and/compromise or not, to examine and weigh up all the relevant facts which prevailed at the time the discussion took place. This court has therefore the duty to determine what, on a balance of probabilities, was the dominant, operative or effectual intention in substance and in truth of the party that made the payment. This requires the court to determine a question of fact. It is so because, the court, in drawing inferences from the proved facts, acts on a preponderance of probabilities. In civil cases, if the facts permit of more than one inference, the court must select the most “plausible” or probable inference. If this favours the litigant on whom the onus rests, he is entitled to judgment. If on the other hand, an inference in favour of both parties is equally possible, the litigant upon whom the onus rest will not have discharged it. (Cooper and another NNO v Merchant Trade Finance Ltd 2000 (3) SA 1009 SCA). A wholistic evaluation of the evidence in this matter is therefore peremptory.

[32] Counsel for the defendant made submissions that in fact “RBN 3” constituted a compromise. In his heads of argument he made an exposition of what a compromise is. He further pointed to the court that the evidence of the three witnesses called on behalf of the defendant clearly points to the probability that a settlement agreement/compromise was intended by the defendant, was proposed and discussed between the parties and was agreed upon, and further that, payment was effected in accordance with the agreement and the defendant was released from any and all obligations towards the plaintiff.

[33] Counsel for the plaintiff on the other hand submitted that according to clause 10.6 of the consultancy agreement, no waiver of any right shall be effected unless reduced in writing. His contention is that if parties wanted to settle, the settlement/compromise agreement should have been in writing. There is no formal, written agreement in the form of a settlement/comprise before this court. He further argued that the signature of Mr Tsitsi that appears on “RBN 3” only signifies that he had authorised payment not that it was a settlement/compromise. Counsel for the plaintiff further argued that, before an agreement can be reached, there should be a meeting of the minds. Defendant in this matter failed to prove that there was a meeting of the minds and therefore there was no consensus on the agreement.

[34] A compromise is a settlement by agreement of disputed obligations, whether contractual or otherwise. According to the case of Mathey v Kregor 1883 - 1885 ORC p173, an oral agreement is sufficient to constitute a compromise. If there is no dispute there can be no compromise (Kerson v Minister of Public Works 1996 (1) SA 887 (E) 893F – 894I). The onus is on the party alleging that a compromise has been effected and because compromise is a form of novation and it involves the waiver of existing rights (or claimed rights) it must be as clearly and unambiguously proved as any other waiver or novation (Christie, The Law of Contract in South Africa, page 529, 4^th Edition). The essence of a compromise is a final settlement of the dispute or uncertainty (Jonathan V Haggie Rand Wire Ltd 1978 (2) SA (N) 38 F).

[35] From the evidence that is before this court, the following proven facts can be found:

• that there was a dispute/disagreement about the amount that was in the last invoice submitted by Ms Ditsele on behalf of the plaintiff to Mr Senne.

• Mr Tsitsi and Kgosi intervened to solve the problem/dispute.

• a meeting was held on the 22/12/2006 to finalise payments of outstanding claims regarding the Excellence Awards.

• An invoice marked Annexure “RBN 3” was generated by the Ms Ditsele, approved by Mr Tsitsi and was ultimately paid.

• there is no inscription on Annexure “RBN 3” that it represent a full and final settlement of the amount owed, or a compromise, novation nor that it is part-payment of the amount owed.

[36] Ms Ditsele in her own testimony said she was called to the office of Kgosi for a meeting to finalise payment of the Excellence Awards. Although she was not part of the meeting when Mr Tsitsi and others were with Kgosi, as she remained outside, it comes out clear that she was aware that she was called so that payment of the invoice submitted by her can be finalised as she had a dispute with Mr Senne.

[37] Mr Tsitsi testified that he normally does not deal with payments of accounts. He was called in by Kgosi on this particular day so that the matter can be solved and finalised. He further said that Kgosi also does not under normal circumstances deal with payments of accounts. The fact that Kgosi himself intervened, (called Mr Tsitsi and everybody else involved in this matter, Mr Mafatshe, Mr Lesomo including plaintiff herself to his office on the same day) clearly points to the probability that he (Kgosi) wanted the matter to be finalised on that day.

[38] Although Kgosi did not give evidence, fortunately for this court there is a memorandum attached to the papers before the court dated 21/12/2006. The said memorandum was written by Mr Mafatshe to Kgosi about the Excellence Awards. On it appears an inscription of the date when the memorandum was allegedly faxed to Mr Mafatshe. The said date is the 22/12/2006 Friday, time 09:19. This clearly signifies that indeed the memorandum was faxed to Mr Mafatshe on the date of the meeting as he alleged in his testimony. This memorandum contains uncontested handwritten instructions /directions made by Kgosi to Mr Mafatshe. Of importance are the following directives from the said inscriptions:

“Payments direct to SME’s are approved on the basis that our meeting of 22 December 2006 finalised (my own emphasis);

That HRNS is owed 20% of 2.3 m, as a total amount as was discussed (my own emphasis again).”

I am of the view that these inscriptions further strengthens the

probability that Kgosi wanted the matter to be finalised on that day

and ordered it to be finalised. The inscriptions further corroborates Mr

Tsitsi’s evidence that the matter needed to be finalised on that day

that is why he was called and instructed to do so.

[39] According to Mr Tsitsi he communicated the fact that Kgosi had realised that there was a problem with the payment to the plaintiff

and that he had received instructions to speak to her in order to finalise the matter. Mr Mafatshe also corroborated Mr Tsitsi on this fact. In my view, it is highly improbable that Mr Tsitsi on that day only

approves part payment of the amount owed to the plaintiff and promise Ms Ditsele to get the other money in January, contrary to the specific verbal instructions given to him by Kgosi, and again against the directives inscribed by Kgosi on the memorandum.

[40] Ms Ditsele alleges in her testimony that although she generated the invoice Annexure “RBN 3”, the amounts reflected therein were dictated to her by Mr Tsitsi. If one accepts this version, then it means that Mr Tsitsi’s ability to calculate equals that of a “Rockert Scientists” as he managed to quickly at that time come up with the specific amount that was to be used to calculate 20% that was owed to plaintiff from the approved budget, and further what will then be the amount to be paid, despite him not dealing with accounts payments at all. What compounds this point further is the following:

In the said invoice “RBN 3”, there are payments that were authorised to pay the judges, award winners and other contractors. A question is, could Mr Tsitsi at that point in time also come up with the specifics and amounts that were also included in the invoice that were to be paid to judges, award winners, and 15 Runners up? I find it indeed highly unlikely that Mr Tsitsi also dictated this information too that were also included in the invoice as the Ms Ditsele alledges. The probabilities favours that, indeed Ms Ditsele generated the amounts herself after working it out of her computer and came up with the agreed amount equalling the 20% ordered by Kgosi in the memorandum.

[41] The figure claimed by the plaintiff in the main matter, further renders the version that the R213, 942 -00 paid in December 2006 as per “RBN 3” invoice was half of the amount owed to the plaintiff of the balance claimed and that the other half was supposed to be paid in the new year on Mr Senne’s return to the office highly improbable. I am saying this because, the amount claimed and which is indicated in the subject matter of the main litigation between the parties is R687 378, 74 plus payment of interest at a rate of 15% per annum according to the particulars of claim. When one looks at this amount it is exactly the same amount as the one reflected in invoice no 034 which was annexed to the papers in court as Annexure “HR3”. Infact, this Annexure “HR3” is the same invoice that Mr Senne testified about when he said he did not agree with the amount claimed therein and that caused the dispute between the parties. On the face of this invoice the following inscription appears: “balance of the management fees for the Bafokeng Excellence Awards” (my own emphasis). What comes out of this is the following: If one accept the version of Ms Ditsele that the payment made on the 22/12/2006 was only part payment of what is owed to the plaintiff and the remaining money (half) will be paid in the new year, then surely what would have been paid in the new year and claimable by the plaintiff at the present moment is supposed to be an amount equalling a different figure and obviously not the same original amount of R687378-74 which was the subject matter on the 22/12/2006. The plaintiff claims the same original amount reflected in the invoice that led to the dispute between the parties as if no payment or part payment as Ms Ditsele alledges was ever made.

[43] Lastly, I am of the view that the words “total amount” found in the memorandum containing directives from Kgosi to Mr Mafatshe which I hereby quote:

“HRNS is owed 20% of 2.3 m, as a total amount as was discussed.” (my own emphasis)”.

speaks for itself and puts the last nail to the coffin that, the amount that was paid was intended to finalise the matter.

[44] When one consider the uncontradicted evidence of the defendant’s witnesses, together with the several improbabilities as depicted above from the testimony of the representative of the plaintiff Ms Ditsele, the probabilities weigh far more unfavourable against the version of the plaintiff. I am also of the view that it is highly unlikely that Ms Ditsele was not during the discussions aware that a settlement agreement was intended and was reached.

I find the following remarks by Malan AJA in the case of Be Bop A Lula Manufacturing & Printing CC V Kingtex Marketing (Pty) Ltd 2008 (3) SA 327 (A) par D – E equally applicable in this matter.

“Although, generally, a contract is founded on consensus, contractual liability can also be incurred in circumstances where there is no real agreement between the parties but one of them is reasonably entitled to assume from the words or conduct of the other that they were in agreement”.

The submission by the counsel of the plaintiff that there was no meeting of the minds between the parties therefore falls away.

[45] All the aforementioned points to the most probable inference that, because there was a dispute between the parties, a settlement agreement was intended by the defendant on the 22/12/06, was proposed and discussed between the parties and was agreed upon. Payment was effected and accepted in accordance with the agreement. The defendant was released from any and all obligation towards the plaintiff.

[46] I come to the conclusion that the defendant managed on a balance of probabilities to discharge the onus it had that indeed a settlement agreement/“Compromise” was intended and concluded between the parties on the 22^nd December 2006 as per Annexure “RBN 3”in terms of which the plaintiff’s claim against the defendant was settled fully and finally.

[E] ORDER

[47] Consequently the following order is made:

1. The defence raised by the defendant based on a settlement agreement concluded between the parties in terms of which the plaintiff’s claim was settled in full and final is hereby upheld with costs.

2. No pronouncement is made in regard to the main claim as the proceedings thereof were stayed pending the final determination of the issue before me.

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A.M. KGOELE

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING : 03 JUNE 2009

DATE OF JUDGEMENT : 07 AUGUST 2009

COUNSEL FOR APPLICANT : Adv. A.R Trusler

COUNSEL FOR RESPONDENTS : Adv. B.L Makola

ATTORNEYS FOR APPLICANT : Du Plessis Van Der Westhuizen Inc

ATTORNEYS FOR RESPONDENTS : Kgomo Mokhetle & Tlou Attorney

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