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Stucco Italiano Decorators (Pty) Ltd v Nitida Wine Farm and Others (17792/2010, 17603/2007, 21488/2010) [2012] ZAWCHC 123 (22 June 2012)

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THE HIGH COURT OF SOUTH AFRICA


(WESTERN CAPE HIGH COURT, CAPE TOWN)

Case No.: 17792/2010

: 17603/2007

: 21488/2010

In the matter between:


STUCCO ITALIANO DECORATORS (PTY) LTD …...................................................................Plaintiff


and


NITIDA WINE FARM …..................................................................................................First Defendant


NOOZAL INVESTMENTS (PTY) LTD …...................................................................Second Defendant


MAASSPRUIT INVESTMENTS (PTY) LTD …..............................................................Third Defendant


LA DEVELOPMENTS (CAPE) CC ….........................................................................Fourth Defendant



JUDGMENT DELIVERED: FRIDAY 22 JUNE 2012



SALDANHA, J

[1.] The litigation between the parties under three separate case numbers was consolidated for the purposes of trial. The consolidation in part reflected the confusion that arose in respect of their contractual relationships with one another and the intractability of the positions that the parties adopted. That situation was to a large measure also compounded by the risk the parties faced to their commercial reputations. These factors have led to protracted litigation that literally became a runaway train as the legal costs soared and bears little or no correlation to the amounts claimed in the various claims.


[2.] The plaintiff, a decorative company, specializes in the application of an Italian styled cementatious overlay known as stucco. The plaintiff claimed R111 966.24 from the first, second and third defendants who for the purpose of this judgment are collectively referred to as Nitida. The second and third defendant constitutes a partnership that runs the first defendant, a wine farm. In the alternative, the plaintiff has claimed the amount from the fourth defendant, LA Developments (Cape) CC, a building construction company.



[3.] The claim arises out of the application of the stucco product to the floor of the Cassia Restaurant and Conference Centre situated on the property owned by Nitida. Nitida in its defence of the actions claimed that the plaintiff entered into the agreement for the application of the stucco floor with Nitida's main contractor, LA Developments. LA Developments for its part disputed that it was the main contractor but merely the project manager and one of the contractors in the overall construction project at Nitida and that the agreement for the application of the stucco flooring was directly entered into between the plaintiff and Nitida. LA Developments disavowed any responsibility for the payment of the claim. Nitida has also claimed that the application of the stucco flooring was defective and as a result instituted a claim for damages amounting to R580 614.25 against LA Developments. That claim forms the subject matter of conditional counter claims by both Nitida and LA Developments against plaintiff in the consolidated litigation.


[4.] In its pleadings under case number 17792/2010 the plaintiff claimed that in or about September 2007 and at Brackenfell, Western Cape, alternatively Bellville, Western Cape,

"[3.1] The plaintiff duly represented by Kleuver and/or Charlene Witte and/or Dirk Gous and/or Meyer Groenewald and/or Johan Coetzee entered into a partly written, partly oral agreement with first and second defendants duly represented by TC Conradie and/or LA Developments and/or B Veller in respect of the application of the stucco product to the floors of the Cassia Restaurant and Conference Centre and in the alternative that;



[3.2] The plaintiff duly represented as aforesaid and the third defendant duly represented by TC Conradie and/or A Mandelstam and/or Phil Stauch and/or Lucius Kriel and/or B Veller entered into an agreement referred to above."



[5.] The terms and conditions of the contract are set out in a written quotation which was provided by the plaintiff to the defendants in respect of the application of the stucco product and which quotation also included the manner of payment and various terms relating to the application of the product.



[6.] Both actions instituted by the plaintiff, against Nitida Wine Farm under case number 17603/2007, and against Noozal Investments (Pty) Ltd, Maasspruit Investments (Pty) Ltd and LA Developments Cape CC under case number 17792/2010, relate to the same cause of action. The third action instituted under case number 21488/2010 relates to a claim by Nitida Partners against LA Developments in which it is claimed that during 2007 at Cape Town, plaintiff represented by B Veller and LA Developments represented by A Mandelstam entered into a contract in terms of which LA Developments was appointed as the project manager and contractor in respect of the construction and furnishment of the Cassia Restaurant and that LA Developments was required to perform certain portions of work, including, inter alia, the main preparation of the sub­stratum upon which the flooring was to be installed. Nitida claimed that arising out of the negligence of LA Developments, listed on various grounds, the installation of the flooring was defective and as a result Nitida has suffered damages. During the course of the trial reference to the appointment of LA Developments as the project manager was removed by an amendment.



[7.] The consolidated cases initially proceeded to trial for the determination of both the disputed contractual nexus between the parties and the quantum of damages. However, some eight days into the trial the plaintiff successfully applied for a separation of the issues and an order was granted that all other issues in the actions be stayed pending the determination of the following questions;


"[7.1] the identity of the party who entered into the agreement with plaintiff?

[7.2] the identity of the party liable to plaintiff for the payment of the sum that would be owing to plaintiff for the application of the stucco on the floors of Nitida during 2007?

[7.3] the sum that would be owing to plaintiff for such services in terms of the agreement subject to any other defence raised in the pleadings?"



[8.] In the determination of these issues and in consideration of the evidence of the various witnesses who testified I was referred to the approach generally followed by the courts when dealing with irreconcilable versions as stated by Nienaber JA in Stellenbosch Farmers' Winery Group Ltd v Martell et Cie & Others 2003 (1) SA 11 (SCA) at 14-15 and in particular with reference to, inter alia, the commercial practices and customs of the parties, the communications between them, the involvement of, functions, duties and interventions of the representatives of the parties and the documentation that was placed before me.




Witnesses

[9] The plaintiff led the evidence of the following persons: Ms Charlene Witte, who during 2006-2007 was employed as a consultant by plaintiff; Mr.TC Conradie, an architect who had rendered services to Nitida; Mr. Johan Coetzee, a structural engineer and the owner and managing director of the plaintiff and other companies in the same group; Mr. Dirk Gous, a manager employed by the plaintiff; and a Mr. Meyer Groenewald, a manager employed by Solid Industrial (Pty) Ltd, a subsidiary in the same group as that of the plaintiff.



[10.] On behalf of Nitida, Mr. Bernhard Veller, the "owner" of Nitida, and a Mr. Lucius Kriel, a quantity surveyor who had previously been employed by LA Developments, testified.


[11.] On behalf of LA Developments, Mr. Anton Mandeistam, the sole member of the close corporation, testified.



[12.] Several bundles of documents were received into evidence which comprised emails, quotations, letters, minutes of site meetings, letters from the attorneys of the respective parties, copies of insurance contracts, the marketing profile of LA Developments, a copy of the project display board and a number of accounting records comprising statements of accounts, bank statements, payment advices, invoices, claims and payment receipts. The floor plans of the restaurant conference area and kitchen at Nitida and several bundles of photographs were also handed into evidence.




The Chronology of the Events.

[13.] Given the nature of the dispute it is necessary to provide a detailed chronology of events as they unfolded, both through the testimony of the witnesses and the documentation used in support of the evidence. The narrative does not represent that which was common cause between the parties and includes much of what was also in dispute.



[14.] Bernard Veller and his wife Peta were the sole shareholders of Noozal Investments and a related family trust is the sole shareholder of Maasspruit Investments of which Veller is the sole director. The two companies as already indicated constituted the partnership Nitida Wine Farm. Veller was intimately involved in the running of the partnership and in particular the wine farm on a day to day basis. Veller decided to expand the wine farm to include a restaurant that was to compliment the business of the wine farm and a conference centre with an appropriate landscaping for the holding of outdoor functions. He approached DHK Architects who prepared an initial conceptual design for the project but they were unable to finalize the details of the project. Veller thereafter approached Mr. TC Conradie, an architect, with whom he had previously been involved in a construction of a building on the wine estate. Conradie's brief was to provide the architectural details to the conceptual designs. Conradie was part of Works Associated Architects and in March 2007 entered into a formal Schedule of Appointment with Veller. The schedule defined a tariff of fees on a fixed basis and the work was categorized under five stages with a concomitant pro rata percentage fee payment. At Veller's instance Conradie had made provision in the plan for a cementatious flooring for the restaurant and the conference centre.



[15.] Conradie had recommended to Veller that LA Developments be approached to tender for the overall construction of the project. LA Developments listed as its accomplishments, it's membership of the Master Builders Association of fifteen years and awards by the NHBRC as home builder for the years 2003 and 2006. Its documentary profile also described it as primarily involved in the construction of upmarket projects which emphasized quality of construction and attention to detail. Its profile records that it directly employed its own skilled labour force of highly qualified artisans and that sub-stucco Italiano Decorators (Pty) Ltd v Nitida Wine Farm & 3 Other Case No: 17792/10 contracted firms that were employed were stringently controlled and overseen by an experienced foreman to ensure quality and work of a high standard. The profile highlighted the priority that the firm gave to quality and a hands-on approach of its management team that ensured the highest standards of production and administration.



[16.] Mr. Mandelstam, the sole member of LA Developments, presented a tender for the Nitida project based on the architectural specifications that had been prepared by Conradie. Mandelstam claimed that he envisaged entering into a "fixed cost contract" based on a standard JBCC (The Joint Building Contracts Committee) agreement that was commonly used in the industry. Veller however was not amenable to entering into a JBCC styled contract as he claimed that there were far too many uncertainties with regard to the project, in particular its zoning application, the tight time frames and the costs involved. He preferred to enter into what was eventually agreed to between him and Mandelstam as a 'cost plus' contract. In effect, Nitida was to be charged the actual cost of services plus a 12% mark-up as an attendance fee that was to be earned by LA Developments for the overall construction of the project and for what both Veller and Mandelstam referred to as the management thereof. Mandelstam claimed that the cost plus agreement was preferred by Veller as he wanted to retain tight control over the costs and to have a hands on approach to the project. It was also specifically agreed between Veller and Mandelstam that Veller would appoint and pay a firm Concept Creations for the joinery work on the contract and LA Developments would be entitled to charge 5% of the cost thereof for its site management of the work.



[17.] At the commencement of the project a display board was erected outside the Nitida premises which depicted LA Developments as the "Main Contractor" and TC Conradie of Works Associated Architects CC as "the Agent" and also reflected the details of the engineers on the project. A template of the board had been prepared by Conradie and it was made up and erected by LA Developments.



[18.] Part of Conradie's responsibilities was also to draft the minutes of weekly meetings between the relevant parties that were held during the construction of the project. It appeared from the minutes that LA Developments was referred to as "the contractor" and Conradie as "the agent." In this regard, Conradie claimed that he had also used a template for the recordal of the minutes.



[19.] It appeared that on Mandelstam's recommendation and suggestion that plaintiff was approached to provide and install the cementatious flooring. A minute dated 27 July 2007 reflected that Conradie was requested to approach the plaintiff to obtain a quotation for the flooring.



[20.] Mr. Johan Coetzee, the owner and managing director of the plaintiff, hailed from a background in the pre-cast decking business known as Quick Slab. In 2001 had established the plaintiff which specialized in the application of the

Italian styled stucco flooring and in the manufacturing of the products used in the flooring. He had also established an industrial flooring company, Solid Industrial Flooring. Coetzee was the Chief Executive Officer of these businesses and was involved in their affairs on a day to day basis. He attended the daily meetings with members of his staff. Prior to the Nitida project, LA Developments had been a client of both plaintiff and Quick Slab and LA Developments had an existing account with the plaintiff.



[21.] When Conradie approached the plaintiff for a quotation he initially dealt with a Ms. Charlene Witte. On 30 July 2007 she provided him with a quotation based on the architectural plans that he provided. She testified that she had also discussed the preparation of the quotation with Coetzee, Dirk Gous and Meyer Groenewald at one of their daily meetings.



[22.] Upon receipt of the quotation Conradie sent it on by email to Mandelstam, Veller and Kriel, who was at the time employed by LA Developments. It was also copied to a Phil Stauch, an administrative assistant at LA Developments. Conradie stated in the email that plaintiff was also to provide samples of proposed finishes to him later that week for confirmation and approval. Mandelstam's initial response to the quotation was in an email addressed to all of them as; "Sounds a bit expensive, will follow up with Stucco." Conradie responded that the "spec" provided in the quotation was for "Super Aqua Guard plaster floor was different from what was normally used in a plain residential context." He assumed that "what was required/suggested at a more public building with a high volume of pedestrian traffic, and where the floors were exposed to damage and spillages." Solid Industrial Flooring had recommended that a heavy duty non-slip product be used for the kitchen floor. Conradie was also required to obtain colour samples that matched those of the restaurant.



[23.] The initial quotation was costed at R132 717.09 for the flooring of the restaurant, which included the reception areas, toilets for staff and security areas with a total square meterage of 404.5. Conradie's name was reflected on the quotation under client information and his contact numbers were also listed. Various conditions and in particular "Client Instructions" were recorded on the quotation. Provision was made for the payment of 50% of the full amount on acceptance of the quotation, whereafter a date was to be scheduled for the work to commence, 40% was payable before the first layer of sealant was to be applied and the remaining 10% was to be paid upon final inspection by a representative of the plaintiff. The terms and conditions on the quotation also set out in detail the product specifications, inspections, and various work related requirements such as the starting date, provision for the protection of the product and various other conditions. Provision was made for the client to sign the quotation upon acceptance. The quotation also made provision for the application of what was referred to as a "floor repair kit" in the amount of R18 202.50 which was to be applied prior to the cementatious overlay.

[24.] Solid Industrial Flooring quoted the amount of R44 520 for the flooring of the kitchen area of 120m2. The quotation provided the same terms and conditions of payment as that for the stucco flooring.



[25.] At a site meeting held on 02 August 2007 the following decision was recorded: "contractor (in reference to LA Developments) to follow up on Stucco costing/metres squared rate". It also appeared that there were various interactions between Conradie and Veller and his wife Peta with regard to the colour choice and texture of the flooring. Veller had also raised a concern about the need for the "floor repair kit" on the newly laid floor. Conradie claimed that Veller had also raised a concern about the amount quoted.



[26.] Coetzee claimed that at the time of the first quotation it was brought to his attention concerns of his staff about the suitability of the stucco product for the restaurant floor. Coetzee therefore requested Groenewald to personally attend at Nitida and discuss the suitability of the stucco product for the restaurant and conference areas. Witte and Groenewald attended a site meeting at which Groenewald presented his concerns to Veller, Conradie and Mandelstam. Groenewald suggested that a polyurethane product such as that which was to be used in the kitchen as more appropriate for the restaurant and conference area. Veller's direct response was to insist on the stucco product and stated that Nitida would take responsibility for proper housekeeping to protect the stucco flooring.

[27.] Prior to a second quote being provided by the plaintiff Mandelstam telephoned Coetzee to discuss the flooring and a discount on the price. Coetzee agreed to a 7.5% discount and he claimed that he had specifically informed Mandelstam that the plaintiff had recently acquired machinery that could "grind and polish" surfaces and suggested that as an alternative to the stucco product for the restaurant and conference centre. Coetzee also explained that the 7.5% was a discount that he normally gave architects and interior decorators and he specifically gave it to Mandelstam because of the plaintiffs previous association with LA Developments. Mandelstam's pointed response to the "polish and grind" option was that the client, in reference to Nitida, had gone through a lengthy process in choosing the stucco product and that they had already set their minds on it.



[28.] On 21 August 2007 a revised quote for R111 966.24 was emailed to Conradie by Kleuver. No provision was made for a floor repair kit and the amount had accordingly been reduced. On 22 August 2007 Kleuver indicated that a discount of 7.5% had been agreed to with Coetzee and that the discount was to apply to the quotation. Mandelstam on the same day informed Conradie and Kriel in an email that he had also spoken to Meyer Groenewald and the 7.5% discount was to apply to the entire quotation and that included the flooring to the kitchen.



[29.] In the light of the concerns raised by the plaintiff about the suitability of the stucco flooring for the restaurant and conference area the plaintiff recorded in the second quotation under the heading "Client Instructions" that "stucco was not suitable for industrial traffic but domestic traffic only" and further recorded that the plaintiff had explained "this to the client and plaintiff took no responsibility for damage" caused to the floors. A number of other issues were also recorded in the Client Instructions and in particular that l_A Developments was to provide the plaintiff with the schedule as to when the work on the floors was to be executed.



[30.] A consolidated minute of the site meetings which were held on both 30 August 2007 and 4th September 2007 recorded under the sub-heading "Costing," the following: "the stucco screed floors-quote approved-kitchen epoxy floor quote to be confirmed. Spec. plus, colour approved." Recorded as present at the meeting were Veller, his wife Peta, Conradie, Kriel and Stauch with an apology noted from Mandelstam. Conradie had however at about 8h48 on the 30 August 2007 communicated by email to Kleuver the following, "The stucco floors for both kitchens/scullery area must be as per the original/first quote spec supplied- Epoxy hi-build + self-leveling range. Colour: Dark grey. The rest as per sample in "Scottish highlands." Please contact LA Developments to confirm spec, screed preparation, and time frame." Conradie's email appeared to have been a response to an email which Kleuver had sent to him on 23 August 2007 in which she enquired as to when he wanted the installation of the flooring to commence. She advised that due to a high number of clients that accepted quotations on a daily basis the plaintiff needed to know more or less when to schedule the Nitida job.

[31.] On 30 August 2007 Stauch had sent an email to Kleuver and attached a program for the installation and indicated that if she had any further queries she should not hesitate to contact him. The program set out in detail the number of days and the time frame with regard to the application of the flooring. Kleuver in response asked Stauch if the quotation which Solid Industrial Floors had provided for the kitchen was to be accepted or not. She advised that she was also responsible for the planning for Solid and needed to know who the person was that "needs to sign the quotation and send it back. I need signed documentation to book the dates given by you." Stauch in response informed her that the specifications for the kitchen floor had been changed at a meeting which had been held the previous week and that she would already have received an email from Conradie in which he indicated that they awaited a revised quotation. Stauch queried whether a revised quotation had been sent as they needed confirmation as soon as possible. Stauch also sent to Kleuver a copy of the email which Conradie had earlier that morning sent to her with regard to the colour of the floor of the kitchen and remaining areas. In what appears to have been the last email correspondence for that day between the parties, Conradie requested Kleuver to change the specifications for the kitchen as per an earlier communication in which he assumed that the "epoxy high build... " was the CPU floor that she had referred to. He again attached a copy of the first email he had sent to her that morning. Conradie's email was also copied to both Stauch and Kriel. Kleuver responded on the morning of 31 August at 07.22am and informed Conradie that she would send him a revised quotation. She did so later that morning. Conradie sent the revised quotation on to Veller, Stauch, Kriel and Mandelstam. The revised quotation by Solid Industrial Flooring related specifically to the kitchen area of 120m 2 and was for "a power cpu medium in mid grey."



[32.] At 11h25 on 3 September 2007 Kleuver emailed Stauch in which she stated, "now I just need the signed quotations back." Stauch in response claimed that he did not have the revised quotation with the corrected materials. On 4 September 2007 Kleuver informed him that she had already sent it through and attached a further copy. Stauch acknowledged receipt a short while later and Kleuver reverted and stated that she understood from Witte that she was required to set up an appointment to meet with Stauch and Groenewald. She suggested Friday 7 September 2007. It appeared that on 5 September 2007 Kleuver had again made revisions to the quotation and in an email to Stauch expressed her hope that it was the last time that she needed to amend the quotations.



[33.] On 20 September 2007 the plaintiff invoiced LA Developments for the stucco flooring in the amount of R111 966.24. On the invoice, LA Development's account number, LAD 05, was reflected. On the same day Solid Industrial Flooring invoiced LA Developments for the application to the kitchen floor in the amount of R29 736.90 and the account number of LA Developments was also reflected on the invoice. On the same day LA Developments in turn invoiced Nitida for a globular amount in respect of various claims from contractors that included the amounts for which they had been invoiced by both the plaintiff and Solid Industrial Flooring. Kriel in his testimony explained that the invoice to Nitida had been prepared by the accounts department of LA Developments on receipt of what was referred to as the 'claims per trade statements' which Kriel had compiled and which included a breakdown of both the stucco flooring to the restaurant and conference centre and the flooring in the kitchen. The schedules that Kriel prepared reflected that the full amount (100%) was due and was supported by copies of the quotations LA Developments had received from the plaintiff. Kriel also explained that the 12% "mark-up" as reflected on the invoice to Nitida was also in respect of the stucco and kitchen flooring.



[34.] On 26 September 2007 Stauch informed Kleuver by email that they would pay the deposit by the end of the month but that they were "just not sure of the details of the recipient." In response Kleuver furnished him with the details of the plaintiffs cheque account number and branch code.



[35.] On 28 September 2007 Nitida paid to LA Developments the full amount which had been claimed, which included those amounts reflected in the invoices of the 20th September 2007 from the plaintiff and Solid Industrial Flooring.



[36.] It appears that on 4 October 2007, problems were noticed for the first time in respect of the work on the floors. Andre Smith of the plaintiff informed both Kleuver and Gous that it appeared that the security personnel on site the night before had walked over the floors in the restaurant and the two bathrooms. It also appeared that water had leaked onto the floors in the bathroom. Smith undertook to investigate the matter. On 8 October 2007 Stauch requested in an email to both Groenewald and Kleuver that the plaintiff stop the work and reschedule it for completion by 18 October 2007.



[37.] The accounting records of LA Developments reflected that on 12 October 2007 the invoice of Solid Industrial Flooring was settled in full. Kriel confirmed the payment in his testimony.



[38.] On 13 October 2007 Smith sent a formal letter to Mandelstam and referred to the damage to the floors and suggested that to prevent any further damage they should seal the floors. Smith also explained that as a result of the damp and mud spots there would be colour variations and that the plaintiff was unable to guarantee that the floors would have an even colour throughout. The plaintiff had also disclaimed any responsibility for any scratches and chip marks on the floor which had been caused by scaffolding erected by painters. Smith claimed that the delay in the completion of the floors was caused by "sub­contractors" of LA Developments and not the plaintiff. He stated that despite their schedule having been affected the plaintiff would endeavour to do its utmost to complete the floors on time and awaited LA Developments supervisor Sean to inform them when they were to proceed with the project. On 19 October 2007 Smith reported to Kleuver by email that there was a lot of repair work that had to be done on the Nitida project, none of which, he claimed, was the fault of the plaintiff. He referred to a burst water pipe, the damage to the floors where the security personnel had walked over, and damage caused by scaffolding. All of the flooring had to be redone and it was recorded that the plaintiff would prepare a quotation for the repair work.



[39.] On 29 October 2007 Conradie emailed Mandelstam and Kriel and copied Veller in which he stated that Veller had requested a "written guarantee" from the plaintiff of a completion date and that "a penalty of R25 000.00 per day" would be paid for the non-completion before any further remedial work was to be undertaken on the floor. Veller had also claimed that such work was to take place without affecting the completion of work by any of the "other sub­contractors" on site. Conradie sought confirmation from both Mandelstam and plaintiff of the guarantees sought by Veller.



[40.] On the very same day Kriel on a formal letterhead of LA Developments wrote to Gous and referred to their previous discussions with regard to the incorrect colour applied in the main restaurant area. He also stated that the plaintiff was required to complete the flooring by no later than 4 November 2007. Kriel informed Gous that "the client" would "be billing LA Developments R25 000.00 per day penalty charges for delayed work, which will be for your account." He requested Gous to sign the letter as an acknowledgement and return it to him. Later that day Stauch also addressed Gous with regard to an earlier discussion in which they sought written confirmation that the remedial work on the floors was to take place on the Friday and was to be completed on the Saturday.

[41.] On 30 October 2007 Gous responded to Stauch in an email (which was copied to Nitida, Conradie and Kriel) in which he claimed that repair work of approximately R40 000.00, that had been effected by the plaintiff had not been passed on to LA Developments because of the extremely good business relationship LA Developments had with their mother company Quick Slab. Plaintiff sought to build on that relationship. He also responded to the complaint about the incorrect colours and pointed out that in the terms and conditions of the quotation it had been stated that stucco was a natural product and colour variation may occur. The plaintiff therefore eschewed any responsibility for variations in the colour. Gous also referred to the damaged caused by other parties on the work and that the application had to be redone. He claimed that the plaintiff was aware that it had not been working in a perfect environment due to the fact that the construction site was overpopulated by other workers and parties. He stated "it was also noted in our acceptance letter to yourself and the architects that the job would take place during normal hours." He referred to the various complaints that staff of the plaintiff had not arrived for one day of work and the claim that their absence had thrown the schedule out. The plaintiff had undertaken to work overtime in order to bring the project back on track. He also stated that at their meeting earlier that day in response to his explanation as to the cause of the colour variation Veller stated that he was not interested "in their problems" and only in a solution and that he wanted a constant colour throughout the entire building. If that did not occur before 4 November 2007 Veller stated that "he will not pay for the floor and you (Lucius) replied that if he does not pay you won't pay us." Gous claimed that the only way to resolve the colour problem was to enable them to work uninterrupted for a seven day period. Veller responded that it was not possible as the restaurant had already been booked. It appeared to Gous that it was Veller's intention not to pay for the floor and Gous therefore stated that they would cease all work until they received written confirmation of an intention to pay.



[42.] In response Mandelstam immediately telephoned Coetzee and persuaded him to proceed with the work. He assured Coetzee that LA Developments had always paid their accounts with the plaintiff and Coetzee thereafter instructed Gous to continue with the work.



[43.] On 5 November 2007 Veller in an email addressed to Conradie stated, "please also note that with the crap that Stucco has dished out I want no further floors done in stucco." Shortly thereafter Conradie sent Kriel and Mandelstam a copy of Veller's email in which he indicated that Veller wanted the stucco flooring to the gatehouse to be stopped and cancelled.



[44.] On 7 November 2007 Gous addressed a formal letter to both Mandelstam and Veller in which he referred to a meeting which had been held at 16h00 on 5 November 2007 at the premises of Nitida. Gous stated that plaintiff had completed all the work as per the quotation except for the guardhouse, roof lockers and restaurants which had been cancelled by LA Developments. The area of approximately 48.5m2 was to be deducted from the quotation and Gous attached a revised quotation for the amount of R91 294.39 marked for immediate payment. Gous claimed that Mandelstam, Kriel and Sean who had been present at the meeting had agreed that the floor had been "in order except by the damage caused by the other party." Gous stated that Veller and his wife Peta thereafter joined the meeting. The meeting became acrimonious and degenerated into abuse with threats and insults by Veller. He was of the view that Veller had no intention of resolving the issue. He also claimed that Veller and his wife Peta in the presence of other professionals in the construction industry accused him of being a liar and had made rather crude comments about him. He claimed that Veller had also on the Saturday 3 November 2007 made derogatory statements about the plaintiff and that such comments had been repeated by both Veller and his wife Peta on numerous occasions during the meeting of 5 November 2007. Gous claimed that he had taken Coetzee to the premises after the meeting for his professional opinion and Coetzee was also of the view that the finished product was "fully acceptable" and in line with their standards. Gous stated that plaintiff was a company of integrity and strong values and conducted its business in an honest and a fair manner. They had also spent a large amount of money in international advertisement and could therefore not afford Veller nor his wife Peta abuse the name of the plaintiff by conducting themselves in such uncontrollable outbursts as they did on that Monday. Gous also placed on record that there had been no formal response to his earlier letter of 30 November 2007 and that the interruptions and damage was caused by other contractors. He stated that the plaintiff "had never doubted the ability of LA Developments to pay for work done by ourselves, but the raised concerns to the intentions of Nitida in terms of payment." He placed on record that at the meeting of 29 October 2007 Kriel said that should Nitida not pay for the floors installed by the plaintiff, "LA Developments would not take responsibility" He claimed that plaintiff had complied with its obligations in terms of the contract and that all outstanding monies had to be paid within seven working days of the letter or they would seek to protect their rights. He also demanded a written apology from Veller for the abuse that he had been subjected to.



[45.] Veller in an email response addressed to Kriel stated that Gous "was guaranteed that he would not get an apology from him." Veller claimed that it was in fact the plaintiff that should apologize to him "for having messed them from the word go." He claimed that Gous had done nothing but aggravate the situation and that he "will happily go and stand in a court of law and defend his utterances." Veller also denied "half of the allegations made by Gous. He stated that as far as he was concerned the plaintiff 7s not due for payment of anything until at least 60 days of him having completed the flooring to our satisfaction." He "needed to be assured that there would be no defects" as a result of what he referred to as "shoddy workmanship from the beginning." Veller stated in the email that he did not "see any recourse if I do not withhold the payment" and "they can sue us till the cows come home."



[46.] It appeared from the testimony of Gous and Kriel that they had orally agreed that the plaintiff would repair the damage caused by the other parties and that LA Developments would pay for the costs of such repair. Such cost was equivalent to the price quoted for that part of the contract which had been cancelled by Nitida in the amount of R11 640.00.



[47.] On 5 November 2007 Gous sent an email to Kriel in which he attached a revised quote for the amount of R103 568.77 payable immediately.




[48.] The restaurant opened on 13 November 2007.



[49.] On the morning of the 22 November 2007 a meeting was held at the premises of Nitida attended by Veller, Coetzee, Gous, Mandelstam and Conradie. Veller complained about marks on the floor of the restaurant that had been made by a high heeled shoe worn by a client. Coetzee explained that such damage was to be expected and for that reason plaintiff had at the outset cautioned about the importance of housekeeping. Gous claimed that he attempted to explain that the damage was caused by a heel that itself was damaged and which had a protruding point. Veller however was not interested and told Gous to speak to his representatives. Coetzee thereafter implored both Mandelstam and Conradie to show their mettle and remind Veller that the plaintiff had warned him prior to the quotation being accepted about the feasibility of the stucco floor in the restaurant and conference area and that alternate products should have been used and precautionary measures had to be taken by Nitida to prevent damage to the floors. Mandelstam confirmed that Veller had been so informed. Coetzee at that stage insisted on payment and Mandelstam informed him for the first time that it was Nitida who was responsible to the plaintiff for payment.



[50.] Later that day, in an attempt to mediate a settlement of the dispute between Veller and Coetzee, Mandelstam put a written proposal to them. He prefaced the proposal as a conciliatory attempt at finding common ground between Veller and the plaintiff, "to avoid a legal dispute being declared." He proposed that upon signature of the settlement agreement Veller would pay 50% of the final contract value to the plaintiff by no later than the 23 November 2007 and recorded that the amount as been R51 784.00. The plaintiff for its part would guarantee to repair the indentations to the floor caused by the high heel shoe and would by the 28 November 2007 repair the joints. The plaintiff would also attend to the repair of defects in the installation of the floor except that caused by normal wear and tear. The plaintiff was also to provide Veller with a twelve month guarantee that the floor would remain in a reasonably acceptable state. Veller for his part would appoint Qualy Tech, a national independent watchdog that specialized in the building trade, to conduct an investigation and assess the actual tensile stress of the floor coating. Should Qualy Tech conclude that the floor coating was less than 15mpa and the matter was not resolved between the parties by 7 December 2007 the dispute would be referred to arbitration. The proposal made provision for signature by Veller as employer and J Coetzee on behalf of the plaintiff.

[51.] Veller addressed his response to the proposal to Stauch. He stated that he had been under the impression that there was a revised quote for the entire floor for R83 000.00 and not R103 000.00 as the work in respect of the floors, the toilet and staff block were stopped. He claimed that he was also "not certain why I had to forward the money to Stucco I am under the impression that I have already been fully invoiced for the floor by you." He further raised concerns about certain damage to the floor and queried the extent of the proposed repair work. He expressed his appreciation to Mandelstam for the attempt at finding an amicable solution and that subject to clarification of the issues that he had raised he was happy to accept the proposal. In response, Mandelstam informed him that he was correct about the amount of the contract and that the difference in the amount was that of the damage to the toilets which was "not for Nitida's account." He stated that plaintiff was still due 50% of the original amount of R103 000 .00 which Nitida had forwarded to LA Developments and claimed that "we will pay it over under your instruction." He claimed that Kriel would reconcile the account with their next payment. Various other issues were also raised in the response.



[52.] Gous responded to the proposal on behalf of the plaintiff and referred to the meeting which had been held on 22 November 2007 at the premises of Nitida. He placed on record that payment had been due by 14 November 2007. He further claimed that LA Developments had requested that the plaintiff assist with the repair of the 50.5m2 to the damaged floors, in the toilet area. They attended to it and had presented a revised quotation which was on the 15 November 2007 forwarded to LA Developments.



[53.] In response to the proposal by Mandelstam, Gous stated that 50% of the final contract should have been paid to the plaintiff on acceptance of the quotation and before the commencement of the work. With regard to the repairs he stated that at the meeting of the 22 November 2007 Veller had chosen not to speak to the representatives of plaintiff but referred them to Conradie and had said it was "a waste of my time to listen to all of this." There was therefore no agreement reached about the repair work and no amicable solution was found. The plaintiff would not commence with any repair work before payment was received for the full amount and claimed that the plaintiff had been accommodating throughout the project. He also denied that there were any other defects to the floor and referred to their prior discussions about the suitability of the stucco flooring. In conclusion he claimed that the plaintiff required immediate payment of the full amount and that it would not entertain any further correspondence or arbitration and that unless payment was received by close of business they would proceed with immediate legal action.



[54.] The plaintiffs attorneys on the 23 November 2007 sent a letter of demand to Nitida for the payment of R103 568.77 "in respect of goods sold and delivered and services rendered at Nitida's special request and instance in and during 2007 at the Nitida Wine Farm."

[55.] On 30 November 2007 Nitida's attorneys responded and claimed that their clients denied the allegations made by the plaintiff and disputed that it was liable to the plaintiff for any amount claimed on any basis. They further stated that their instructions were that the work performed by the plaintiff was defective and that their client would be required to incur substantial costs in rectifying same and their client reserved their rights with regard to a counterclaim.



[56.] On 30 November 2007 the plaintiff issued the summons under case number 17603/2007 against Nitida Wine Farm. On 10 August 2010 the plaintiff issued summons out against Noozal Investments (Pty) Ltd, Maasspruit Investments (Pty) Ltd and LA Developments. The plaintiff alleged that the contract in question had been concluded with first and second defendant alternatively with the third defendant and save for the identity of the parties with whom the plaintiff had contracted the applicant's cause of action was the same as pleaded in case 17603/2007. In or about November 2010 Nitida partners issued out the summons against LA Developments under case number 21488/2010.



[57.] On 7 July 2008 plaintiffs attorneys addressed a letter to LA Developments in which it claimed that their client had issued summons out against the Nitida Wine Farm in November 2007 in respect of work at the Nitida Restaurant. They claimed that it was their instructions that Conradie and LA Developments had acted as representatives of Nitida when their client was contracted to do the work as well as during the execution of the contract and that Nitida in their pleadings expressly denied that they had contracted with plaintiff. LA Developments was therefore required to provide plaintiffs attorneys with proof that they had only acted as the representatives of Nitida when they entered into the contract with the plaintiff. They also requested that LA Developments provide them with copies of all the relevant documents, including agreements and correspondence between LA Developments and TC Conradie and with Nitida, including any letters of appointment. They further requested that LA Developments avail themselves to consult with them and their counsel and, if necessary, to testify on their clients behalf at the trial. They claimed that a failure by LA Developments to assist their client would force them to join LA Developments in the action. A similar letter dated 7 July 2008 was sent to TC Conradie. On 24 July 2008 TC Conradie responded to the plaintiffs attorneys in which he provided a copy of his Schedule of Appointment and claimed that his involvement was limited to the terms as listed under stage five of the letter of appointment. He also claimed that his involvement as far as the stucco flooring was limited to obtaining colour samples and quotations on behalf of and for the approval by Nitida. He denied that he was involved in the appointment of Stucco and "assumed that the contractor appointed Stucco on instruction from the client."



[58.] On 29 October 2008 plaintiffs attorneys again wrote to Mandelstam in which they referred to a meeting which they had held with him on 24 October 2008. They also attached a copy of a subpoena duces tecum, which was also to be served on him by the sheriff. They required copies of various documentation for the purposes of trial. Mandelstam in response indicated that he referred their earlier letter to his attorney who would respond in due course. LA Developments' attorneys on 7 November 2008 informed plaintiffs attorneys that they were under instructions from their client not to respond to the letter and expressly reserved their client's rights.



[59.] The trial commenced on 20 April 2011. During the course of the trial various amendments to the pleadings were sought by the parties. Third party notices were also issued out by both Nitida and LA Developments.




The Law

[60.] Arising from the disputes between the parties on the separated issues, questions of law arise with regard to:(i) The identity of the parties to the contract and; (ii) Agency.



[61.] It is an accepted rule that a party that sues on a contract must prove the terms of such contract. In this regard the plaintiff under case 17603/2007 bore the onus of proving on a balance of probability the contractual nexus between the parties it claimed had entered into the contract and, further the terms of such contract. Under case 17792/2010 where plaintiff claimed that it had contracted with Nitida and in the alternative with LA Developments, it likewise bore the onus on a balance of probability to prove the contractual nexus. So too under case number 21488/2010 where Nitida alleged that LA Developments was the main contractor that had entered into the contract with the plaintiff, Nitida bore the onus of proving on a balance of probability the existence of the contract and its terms.



[62.] In respect of the question of onus Nienaber JA remarked in Africa Solar (Pty) Ltd v Divwatt (Pty) Ltd 2002 (4) SA 681 (SCA) the following, at 698B: "The onus was on the plaintiff to prove the contract on which it relied. Proof of the terms of the contract included proof of the anterior question whether both


parties had the requisite animus contrahendi If, at the end of all the evidence,

there is uncertainty as to whether animus contrahendi on the part of both parties had been established, the plaintiff, on that particular issue, had to lose."



[63.] In the context of the various cases which have been consolidated the crucial questions arise as to the identities of the parties to the contract and whether each had the requisite animus contrahendi. Regarding the determination of the element of consensus that constitutes the basis of a contract, Van den Heever JA in Estate Breet v Peri-Urban Areas Health Board 1955 (3) SA 523 (A) at 532E stated that;

"Consensus is normally evidenced by offer and acceptance."



[64.] In the circumstances, Mr. Webster (SC) who acted on behalf of LA Developments submitted that a determination must be made as to between which parties there occurred "a meeting of minds" that constituted the basis of the contract. In determination of this question the constituent parts of the contract, that is, the offer and the acceptance, had to be established. Offer has been defined as "... a statement of intention to which the offerer sets out to the person to whom the offer is made, what performance and what terms he or she is prepared to bind him-or herself to." Joubert ,et al, LAWS A (Vol. 5 Part 1) at para 375.

Acceptance on the other hand is defined as "..a statement of intention in which the offeree signifies assent to the proposal embodied in the offer. An acceptance, like on offer, can be tacit, that is by conduct. The conduct must, however, speak unequivocally of an intention to accept." See LAWSA (vol. 5 Part 1) at para 379.



See also the comments of Christie in Law of Contracts in South Africa Vol 6 at 71;

"Communication of Acceptance

As a general rule, a contract is not concluded until the offeree has not only decided in his own mind to accept the offer, but has communicated his acceptance to the offeror. Whatever doubts the old Roman-Dutch writers may have had on this point, our courts have had none, and indeed it must follow logically from the fact that our law of contract is founded on agreement that, in general, there can be no contract until the offeror knows that he and the offeree are ad idem- the offeree already knowing this from the terms of the offer and the fact of his own acceptance."

[65.] In respect of the issue of acceptance Mr. Webster pointedly referred to the remarks of Van Blerk JA in Driftwood Properties (Pty) Ltd v McLean 1971 (3) SA 591 (A) at 597 D:

"It is trite that an offeror can indicate the mode of acceptance whereby a vinculum juris will be created, and he can do so expressly or impliedly."



[66.] With regard to the question of agency, Kerr in the 4th Edition of Law of Agency, page 5 states that the aim of an appointment of an agent is for the performance of a service of the principal. The ordinary manner in which actual authority is given or conferred upon another is normally by contract, see Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed and Hurwitz v Vomer Investments (Pty) Ltd 1984 (3) 155 (A) at 166 C to D. The authorization is defined as an expression of the will by one person that another has the power to conclude juristic acts on his/her behalf. Ms. Dicker SC who acted on behalf of Nitida also argued that agency is not as suggested at times, a contract between principal and representative but rather a unilateral juristic act in which the principal creates the legal machinery by means of which legal relationships can be created, altered or extinguished between himself/herself and third persons through a representative. (See Lawsa 2nd Edition Volume 13 Part 1 para 108). In the context of a building contractor Ms. Dicker referred to the notion of an "independent contractor" which is used to mean "conductor operis," where the contractor is required to produce certain finished work and where the contractor does so without the supervision of the employer. In such circumstances the independent contractor would also contract with other persons in order to produce the finished work independent of the contractor's relationship with the employer. In such a situation there is no privity of contract between the employer and sub-contractors. See Minister of Public Works & Land Affairs v Group Five Building Ltd 1999 (4) SA 12 (SCA) at 17.



[67.] The onus of proving agency rests on the party that claims that it acted as another's agent and it must prove the existence of the agency relationship. In this regard see the remarks of Marais J in Golden West Flooring and Waterproofing (EDMS) BBK v Franck 1972 (4) SA 144 (T) in which reference is made to the American Restatement of the Law on Agency in relation to the question of onus and also Kerr's (The Law of Agency) reference to Voet on this issue.



The oral contract for the remedial work.

[68.] It is common cause on the evidence and in the documentation that Gous on behalf of plaintiff had entered into a separate oral agreement with Kriel on behalf of LA Developments that LA Developments would be contractually responsible for the payment of R11 640 (plus VAT) to plaintiff. Mandelstam for his part eventually conceded that. However, as was pointed out by Mr. Van Rooyen (SC) who acted on behalf of the plaintiff, that Mandelstam did so rather belatedly and only on the penultimate day of the trial. The significance of the accounting records of LA Development in respect of this amount will be considered in the context of the contract for the stucco flooring.

Evaluation of the Evidence.

The identity of the parties to the contract in respect of the application of the stucco product-

[69.] The position adopted by Mandelstam was that LA Developments was not the main contractor to Nitida in respect of the project but was merely appointed as the project manager and that it had also conducted certain construction work on the project. In this regard Mandelstam relied heavily on the fact that there was no standard JBCC contract entered into between LA Developments and Nitida and that at the specific instance of Veller they had specifically chosen a cost plus contract. Mandelstam claimed that LA Developments was not directly responsible for the appointment of any of the sub-contractors on site. Mandelstam described the responsibilities of the project manager as two fold; on the one hand, dealing with the administrative aspects of the contract, such as the accounting and payment of claims, and, on the other hand, that of the site management of the other contractors employed to carry out various works. In this context Mandelstam claimed that LA Developments would invoice Nitida for any claims made by other contractors and that LA Developments would only make payment upon express approval having been obtained from Veller. However, in cross examination Mandelstam conceded that it was not necessary for LA Developments to have received approval for payment in all cases. In fact he was not able to point to any instance except for the Concept Creations contract where approval had been sought and obtained from Veller. Initially Mandelstam had also claimed that he was not entirely familiar with the responsibilities of a project manager and it was quite apparent from his testimony that he was not at all aware that he was required by law to have been registered as a project manager with a the statutory council for Project Managers. It appeared that the uncertainty about the nature of the contractual relationship between LA Developments and Nitida in the project was compounded by the fact that, notwithstanding it having been Mandelstam's responsibility to have drafted the contract between LA Developments and Nitida, he had simply not done so, despite the assignment of the task to him being recorded in the minutes of successive site meetings. Veller, however, did not insist upon the production of a written contract as he claimed the work had progressed smoothly and that there was a good relationship between Nitida and LA Developments.



[70.] Veller was also adamant that except for Concept Creations which was appointed as a sub-contractor by him, he assumed no further responsibility for the appointment of any other sub-contractors and that LA Developments was responsible for their appointments and payment. Veller also denied that he was required to have approved payment to any of the sub-contractors. From the evidence and documentation it appeared that no authorization was in fact obtained or required from Veller for any payment other than that of Concept Creations. Mandelstam's claim for such authorization rang hollow and was clearly not substantiated by the evidence or any of the documentation.



The Stucco Flooring Contract.

[71.] Mandelstam claimed that he had played a minuscule role and was at best peripheral in obtaining the quotations from the plaintiff for the stucco flooring.

That responsibility he claimed was given directly by Veller to Conradie and that it was also reflected as such in the minutes of the site meetings. Both Conradie and Veller for their part claimed that Conradie's role in obtaining the quotations and samples from the plaintiff was because of Veller and his wife Peta's direct interest in the aesthetics and "feel" of the floor that they wanted in the restaurant and conference area. It was apparent from the evidence and the emails between Conradie and the plaintiffs staff that Conradie played a central role in obtaining the quotations and specifications from the plaintiff and that he had directly conferred with both Veller and his wife Peta with regard to the eventual product that was chosen. Conradie however denied that he had formally accepted the quotation on behalf of Nitida but that he had merely communicated the acceptance of the colour and finish of the product that was to be applied in the restaurant, the conference area and in the kitchen. The plaintiff for its part claimed that it was not unusual for quotations to be sought by and provided to persons other than that which it would eventually contract with.



[72.] The quotation for the stucco flooring was not signed by either LA Developments or Nitida and it was also common cause that there was no formal communication by either Mandelstam or anyone at LA Developments to the plaintiff of a formal acceptance of the quotation or an acceptance on behalf of Nitida. It is clear though that an essential term of the proposed contract by the plaintiff as contained in the quotation was the payment of a deposit of 50% with the remaining amounts of 40% and 10% to be paid thereafter. The plaintiff was firmly of the view that it would not have proceeded to install the floor if Nitida, with whom it had no prior business relationship, was the client and had failed to pay a deposit. Coetzee claimed that it was because the plaintiff regarded and saw LA Developments as the contracting party with whom it had had a pre-existing relationship with that the contract was proceeded with without the payment of the deposit and signature of the quotation. In this regard it is significant that on receipt by Mandelstam of the first quotation from Conradie his initial response was that the quoted price appeared "too high" from his previous experience of a contract with the plaintiff in which LA Developments was involved. He immediately undertook to take up the costing with the plaintiff. He did so and obtained a 7.5% discount on the quotation which Coetzee readily gave to him. I am of the view that Coetzee was willing to do so because of their long standing relationship and on the basis of his belief that the client was LA Developments. Mandelstam did or said nothing to disabuse Coetzee of such a view and in all probability Mandelstam knew that Coetzee had given the discount because of his long standing relationship with LA Developments.



[73.] Coetzee further claimed that the plaintiff regarded LA Developments as the client as it was to LA Developments that the invoice had been sent. He had also not been told by Mandelstam that LA Developments was not the client or that LA Developments was merely a "project manager" on the Nitida project. Coetzee also regarded LA Developments as the contractor on the Nitida project as that was what was displayed on the board outside the premises when he had driven past the premises. The plaintiff also commenced the installation of the flooring without securing any signature on the quotation as they considered LA

Developments with who they had a pre- existing relationship as the client. Once again, Mandelstam did nothing to indicate otherwise to the plaintiff. Mandelstam's staff had also in terms of the contract scheduled the installation of the flooring directly with the plaintiff. It appeared that following the discount that Coetzee had communicated to Kleuver for the flooring she thereafter communicated directly with Stauch of LA Developments in respect of the quotation(s) and the scheduling of the work.



[74.] During the course of the trial and in argument much emphasis was placed by LA Developments on the contents of the email sent by Conradie on the morning of 30 August 2007 to Kleuver. LA Developments claimed that the email effectively constituted the acceptance by Conradie on behalf of Nitida of the quotation and was therefore proof that Nitida was the party to the contract with the plaintiff. Nitida for its part disputed it. However, the email must be considered within the context of Conradie's ongoing liaising with the plaintiff in respect of the colour and texture of the application to both the kitchen and the restaurant floor. The communication related specifically to the type of product; "epoxy high build plus a self leveling range" "Colour: Dark grey" in respect of the kitchen and that the rest was to be as per sample, "Scottish Highlands." The email, in my view, does not constitute an acceptance of the contract by Conradie on behalf of Nitida of all the terms and conditions as set out in the quotations in respect of both the stucco flooring to the restaurant and conference area or for that matter for the kitchen flooring that was to be installed by Solid Industrial Flooring. Veller in his testimony also confirmed that Conradie had been requested by him at a site meeting to convey the acceptance of the colour and texture to the plaintiff. Thereafter it appeared a slew of correspondence ensued between Kleuver on behalf of the plaintiff and Stauch with regard to further revised quotations, the scheduling of the work and Kleuver's request for the quotation to be signed. It is clear from these emails that Stauch on behalf of LA Developments played a key role in finalizing the arrangements for the implementation of the contract. LA Developments however chose not to call Stauch as a witness to explain or refute the role that LA Developments played in the finalization of the contract and the basis on which Stauch had acted. The inescapable inference is that Stauch did so as a representative of a contracting party to the contract. In the absence of a formal acceptance (whether in writing or orally) by LA Developments of the terms of the contract the conduct of Mandelstam and his staff in the circumstances provides sufficient proof that LA Developments had tacitly accepted the contract with the plaintiff as opposed to either Veller or Conradie. This view was confirmed by Kriel, who at that stage was employed by LA Developments and had played a leading role in the implementation of the contract from the side of LA Developments.



[75.] Further, as soon as problems began to arise in the flooring the plaintiff directed its complaints and concerns directly to LA Developments. This appears to have been done in the context in which LA Developments was held responsible for the management and overall supervision of other parties on site. It appeared from the correspondence of Gous that the plaintiff looked to LA Developments to resolve the concerns it raised. He also claimed in his testimony that he regarded plaintiff to have contracted directly with LA Developments. It appeared however that as problems arose about the damage to the floors and the colouring, Veller increasingly became involved in the disputes by raising his concerns and unhappiness directly with members of the plaintiffs staff. Veller had also aroused Gous's concern about whether the plaintiff was going to be paid for the work despite all the expenses that it had incurred in having attended to the repairs. Gous therefore demanded that the plaintiff receive written confirmation that it would be paid, failing which he would stop any further work on the site. Mandelstam's immediate response was to contact Coetzee. He persuaded him that the work should continue and he relied on the reputation of LA Developments for payment to persuade Coetzee. Coetzee claimed that he regarded the intervention by Mandelstam as consistent with the role that LA Developments had played as the party with whom the plaintiff had contracted, as opposed to Veller with whom the plaintiff had no prior association. Coetzee claimed that it was only because of Mandelstam's assurances about payment that he overrode Gous's decision not to proceed with the flooring and instructed his staff to continue with the contract.



[76.] LA Developments paid the Solid Industrial Flooring invoice as early as 28 September 2007. Groenewald in his testimony claimed that he had contracted directly with LA Developments despite Mandelstam's denial thereof. LA Developments had also not sought Veller's approval when making payment of the Solid Industrial Flooring account, and did so of it's own accord which was a clear indication that they regarded Solid Industrial Flooring as their sub-stucco Italiano Decorators (Pty) Ltd v Nitida Wine Farm & 3 Other Case No: 17792/10 contractor. It is clear that LA Developments' relationship with Solid Industrial Flooring was in the circumstances no different to its relationship with the plaintiff, with whom it had simultaneously contracted for the work on the restaurant and conference floors. It is difficult to understand though on what basis Mandelstam attempted to hold out that Solid Industrial Flooring was not its sub-contractor or that its relationship with Solid Industrial flooring should be considered to be any different to that which it had with the plaintiff.




The attempt at mediation and the intervention of the lawyers

[77.] Mandelstam also relied on the role that he played as the mediator in support of LA Developments contention that it was not the contracting party with the plaintiff and that he had merely sought the resolution of the dispute between Nitida, and the plaintiff. Mandelstam pointed to the proposed agreement which made specific provision for signature by Veller as "the employer" and Coetzee as 'the contractor."



[78.] Mandelstam further relied on the letters of demand by the plaintiff's attorneys to Nitida and the responses of Nitida's attorneys in further support for his assertion that Nitida was the party with whom the plaintiff had contracted. I_A Developments also relied on what appears to have been the confusion in the litigation between the parties in which the plaintiff referred to LA Developments as being "the agent" of Nitida with whom it contracted and in which Conradie was also referred to as an "agent" of Nitida. Moreover, reliance was placed on Nitida's pleadings in which LA Developments was referred to as the "project manager" and to whom a "project management fee" had been paid. It appeared though that the confusion which had been generated in the pleadings was compounded by a substantive application which had been brought by the plaintiff to consolidate the two actions, under case numbers 17792/2010 and 17603/2007 and the postponement of the trial under case number 17603/2007. In an affidavit deposed to by Coetzee in support of the applications he specifically referred to a change of tact by the plaintiffs lawyers in holding LA Developments responsible as the contracting party on the basis of what plaintiffs lawyers considered as necessary and as a result of the position which had been adopted by Nitida in denying that it had entered into the contract with the plaintiff. Mr. Webster argued that the claims by both the plaintiff and Nitida that LA Developments was the contracting party was therefore no more than a belated and opportunistic attempt by them at shifting the proverbial "goal posts" in the litigation.



[79.] In considering the evidence I have attached little weight to the demeanor of the respective witnesses. However, it was apparent that at times both Mandelstam and Veller appeared distinctly uncomfortable when confronted with certain aspects of their versions. Coetzee however, to his credit, when confronted by the contradictions in his version and particularly that evidenced in the letters of his lawyers and in the affidavit that he had deposed to, readily conceded the discrepancies and did not attempt to rationalize it save to disavow responsibility for the tactical decisions taken by his legal team. Moreover, he maintained that the initial letter of demand sent by his lawyers on 23 November

2007 arose directly out of what Mandelstam had said to him at their meeting on 22nd November 2007, that the plaintiff should seek payment from Nitida. That appears to have been the position that Coetzee had conveyed to the plaintiffs attorneys at the initial stage of the litigation between the parties.



[80.] In considering the contradictions in the pleadings with that of the evidence, the belated amendments, the discrepancies in the affidavit of Coetzee in particular, and the various letters I am mindful that a fair amount of confusion had been generated by the conduct of all of the parties which clouded their actual contractual relationships and responsibilities. For example, there was much debate about the nature of the contractual arrangement between LA Developments in respect of the entire project and whether Veller, on Mandelstam's view, assumed responsibility for the appointment of all the contractors that performed work on the project. Quite clearly that was not so as LA Developments had appointed and directly contracted with a number of sub­contractors and had clearly not sought any approval from Veller to settle any of their accounts. Mandelstam's claim that he had not appointed any sub­contractors in respect of the Nitida project was simply untenable and was not borne out by the documentation and in particular the accounting records and the invoices of LA Developments which contradicted Mandelstam's assertions. Moreover, Kriel, who was directly responsible for compiling the claims of the various contractors, demonstrated in his testimony through the use of the accounting records that LA Developments had in fact appointed and paid sub­contractors on site and on the project. Of significant too was the evidence by

Kriel that the 12% "mark-up" applied also to the contract with the plaintiff (as opposed to a 5% "mark-up" in respect charged on the Concept Creations contract). Mandelstam in evidence also confirmed Kriel's version that all the claims which had been sent out each month were approved by him, Mandelstam before being sent on to Nitida for their payment to LA Developments. Kriel explained that it was Mandelstam who was thereafter responsible for making the payments directly to the contractors. Mr. Webster submitted however that the contract in respect of the stucco agreement was sui generis and had to be considered on its own facts and circumstances. However, except for the initial sourcing of the quotation from the plaintiff by Conradie and the approval of the colour and product type by Veller and his wife Peta and the fact that serious problems arose with regard to the implementation of the contract, there appeared no real difference in respect of the flooring contract with that of any of the other sub-contractors and more significantly in the accounting processes and methodology employed by LA Developments with the plaintiff.



[81.] Kriel was also emphatic that he regarded LA Developments as the contracting party with the plaintiff although he appropriately acknowledged that he had not been privy to the initial dealings with the plaintiff in respect of the quotations. Although he had been retrenched by LA Developments he did not appear to be hostile to Mandelstam and claimed that he had visited them at times.

[82.] It was also apparent that the intervention by Veller in the carrying out of the work by the plaintiff and the problems that arose through the conduct of other parties contributed in no small measure to the obfuscation of the relationships between the parties. Mandelstam on his own version deliberately chose not to make payment to the plaintiff despite LA Developments arrangement of a 30 day payment period with the plaintiff and claimed that he awaited approval for the payment from Veller. Of significance, though is that at no stage prior to the mediation attempt had Mandelstam ever sought directly or indirectly the approval (or disapproval) of Veller with regard to the payment of the account. Veller had only at a very late stage claimed that payment was not to be made to the plaintiff and that it was to be delayed for a period of 60 days after completion of the work. I however, do not regard that intervention by Veller as support for Mandelstam's contention that the contract was between Nitida and the plaintiff. Veller's intervention, at best was no more than a desperate outburst and the expression of anger and frustration of the disgruntled owner.



[83.] It was pointed out by both Mr. Van Rooyen and Ms Dicker that Mandelstam was a poor witness in several respects. Of significance also was the fact that Mandelstam had only conceded that LA Developments was responsible to the plaintiff for the amount of R11 640.00 on the penultimate day of the trial. Mandelstam's legal representative had also initially put to Coetzee that during the first telephone discussion with him there was no mention at all of the price of the flooring. Mandelstam however, in his testimony conceded that the very reason for the telephone call was in fact to discuss a discounted rate.

Further when confronted as to why the deposit of 50% had not been paid by LA Developments, Mandelstam initially claimed that LA Developments had not received a "valid" invoice for the 50% payment. He subsequently claimed that it was not paid because LA Developments had a pre-existing arrangement with the plaintiff in respect of payment of accounts on a 30 day period. The latter explanation however accorded with that of Coetzee that LA Developments enjoyed a 30 day payment period because of their pre-existing relationship. If anything, the payment of the account on a 30 day period supported the proposition that the contract was between LA Developments and the plaintiff as opposed to Nitida. Moreover, Mandelstam had not informed Veller at all about LA Developments' arrangement with the plaintiff of the 30 day period for the payment of the accounts which on Mandelstam's own testimony would have amounted to a substantial change of the contractual terms proposed by the plaintiff in the quotation for the flooring. Mandelstam also claimed that the deposit had not been paid to the plaintiff because Veller had on numerous occasions said to him that they would not pay for the work done by the plaintiff. He was however unable to recall exactly when such instructions were given to him by Veller and at best he appeared to be extremely vague and unclear about this apparent instruction.



[84.] As with Mandelstam, Veller did not impress as a witness. This is particularly so with respect to his repeated refrain about the choice of the stucco product which, despite the caution expressed by Groenewald, Veller repeatedly claimed that he had not been properly advised by Mandelstam of the alternate application of the "polish and grind" option that Coetzee had recommended. This appeared to be an almost ex post facto explanation of his choice of the stucco product. Veller very emphatically eschewed any responsibility for the decision and was quite content to blame everybody else such as Mandelstam and even Groenewald for the choice of the stucco product. Moreover, Veller's role and the confusion that his intervention caused with regard to the contractual relationships between the parties was compounded by what appeared to have been his acrimonious relationship with Gous. He readily conceded though in testimony and apologetically stated that it had unfortunately occurred as a result of his personality.



[85.] In regard to the question raised by Mr. Webster as to whether there was in fact an offer made it is clear that the revised quotation made by the plaintiff which had been sent to Conradie and which was thereafter considered at the site meetings at which LA Developments was also present constituted the offer. As to who accepted the quotation it is clear from the evidence that there is neither any written or any verbal acceptance of the quotation. However, the conduct on the part of LA Developments through that of Mandelstam and his staff, considered in the overall context, demonstrates that LA Developments had in fact tacitly accepted the offer and played the role of main contractor with the plaintiff as its sub-contractor. In this regard, the following is relevant; inter alia, the negotiation by Mandelstam of the discount with Coetzee; LA Developments acceptance of the invoices for both the stucco floor and that of the kitchen from the plaintiff and Solid Industrial Flooring, the conduct of the staff of LA Developments such as the correspondence between Stauch and Kleuver, and both Mandelstam and Kriel's role in the execution of the contract and their direct interventions with the plaintiff. Moreover, the accounting records and entries of LA Developments and the charges reflected therein support such a finding.



[86.] Furthermore I am of the view that the role played by Mandelstam in the mediation does not detract from the contractual relationship between LA Developments and the plaintiff. The mediation arose in the context of Mandelstam's desperate yet very sensible attempt to find a solution to a problem and dispute that had already begun to affect LA Developments' own relationship with the plaintiff. I am also of the view that the confusion which was generated by the initial letters of the attorneys for the various parties arose in part from Mandelstam's statement to Coetzee on 22 November 2007 that the plaintiff's recourse was against Nitida. The initial litigation under case number 17603/2007 also appeared to have been based on that misunderstanding and despite the lapse of a number of years such misunderstanding was not properly corrected with the issuing out of the further summonses in the dispute. If anything the subsequent litigation compounded the mushrooming confusion which resulted in the legal representatives of both plaintiff and Nitida (and for that matter LA Developments to) adopting fall back positions to protect their client's interests.



[87.] The amount which LA Developments accepted responsibility to the plaintiff in respect of the repair to the bathrooms was also reflected in LA Developments' accounts as part of the overall account of the plaintiff. This lent further support to the claim that LA Developments as opposed to Nitida was in fact responsible to the plaintiff for the entire amount claimed by the plaintiff. At no stage had LA Developments indicated to Nitida that it was not responsible for the amounts claimed in respect of the repairs to the bathrooms beyond its belated and in the failed attempt at mediation.



[88.] On the consideration of all of the evidence and documents I am of the view that the contract was entered into between the plaintiff and LA Developments as the main contractor.



Was LA Developments acting as agent?

[89.] There is no evidence to suggest that at any stage Veller appointed Mandelstam or LA Developments as his agent in the overall Nitida project. Veller was adamant that he had simply contracted with LA Developments to provide him with what he referred to as "a finished product" and despite his involvement in the aesthetics and costs of the project, which was of particular concern to him, he did not assume any responsibility for entering into contracts with any sub­contractors other than Concept Creations. Ms Dicker submitted that there was clearly no basis on which LA Developments could be construed as having acted as an agent on behalf of Nitida. She also referred to the evidence of Mandelstam that, had LA Developments been able to negotiate with any of the contractors the terms of payment that were beneficial to LA Developments, such as early payment, such benefit would have been retained by LA Developments and would not have been passed on to Nitida. The retention by LA Developments of any such profit was contrary to the principles of agency which do not permit a retention except by agreement or waiver of any such profit by the principal. Moreover Nitida would have had to be informed of any such benefit, which on Mandelstam's own testimony was never done in respect of any of the sub-contracts in which LA Developments may have retained a benefit and neither was there any evidence of any waiver sought or obtained from Nitida. There was also no evidence that LA Developments had separately accounted to Nitida in respect of the payments which it had made to other contractors for the benefit of Nitida and neither did it appear from the accounting records of LA Developments that it kept separate accounts and records of any such transactions on behalf of "its principal" and nor had it rendered regular accounts to Nitida. Had LA Developments in fact acted as agent Ms. Dicker correctly argued it would have been required to have kept separate accounts in respect of each of the contracts it had acted as agent for its principal with appropriate recordals of payments made and received. It also appeared that the payments received by LA Developments from Nitida were simply paid into a single banking account and that the amounts formed part of one general credit balance in LA Developments bank accounts, and in which it received any accrued interest.



[90.] As already indicated the onus rested on LA Developments to prove that it acted as the agent for Nitida, which on the evidence it had not done.

[91.] In respect of the second question on the separated issues I am of the view that LA Developments is the party liable to the plaintiff for the payment of the sum that is owed for the application of the stucco flooring.



The third question, the sum that is owed to the plaintiff.

[92.] The plaintiff claimed that because the discounted amount had not been paid upon completion of the contract the party liable for payment was not entitled to the 7,5% discount and had to pay the full the amount originally quoted for. In this regard it was pointed out by Ms Dicker, and correctly so, that insofar as a dispute had arisen with regard to whether the work had been completed as contracted for the court is at this stage of the proceedings not in a position to determine the question as to the amount owing. Such determination can only be made once there is a proper consideration as to whether the work contracted for, had in fact been completed. That question is yet to be determined and stands over for later determination.



The question of costs.

[93.] Mr. Van Rooyen submitted that if the court found that LA Developments was liable to the plaintiff as the contracting party the plaintiff should not be held liable for Nitida's costs, but that Nitida should be held responsible for the plaintiffs costs jointly and severally with LA Developments, the one paying the other to be absolved; in view of the following considerations.

(i) Veller's unreasonable conduct that led to Nitida being credited by LA Developments in the sum which was payable to the plaintiff and with the result that LA Developments had not paid the plaintiff.

(ii) Nitida had the use of the restaurant floor for longer than four years (since the 13 November 2007 when the restaurant opened) without paying a cent for it and without any repair work or maintenance.

(iii) Nitida could have avoided the litigation by ensuring payment to the plaintiff
and by accepting the plaintiffs offer to attend to the further repair work.



[94.] I am of the view that Mr. Van Rooyen's submissions in this regard are not entirely without merit. I am strengthened in my view in the light of the conduct of Veller in response to the execution of the work by the plaintiff and also his contribution to the confusion as it unfolded as to who the contracting parties in fact were.



[95] Much of the confusion with regard to the contract emanated from the terms of the overall agreement between Nitida and LA Developments and their failure to have reduced their relationship to a written agreement. That responsibility was assigned to Mandelstam. He failed to do so and neither Veller nor Conradie ever ensured that he attended to it. Moreover the perils of a hands-on approach adopted by Veller required that the roles and responsibilities of the parties be clearly set out in writing not so much for when the contract runs smoothly but for when problems occur as indeed was the case. Veller had also directly intervened with the plaintiff when problems arose with regard to the application of the stucco flooring instead of directing his concerns to Mandelstam or addressing such concerns at the weekly site meetings. He simply chose to aggravate an increasingly difficult and pressurized situation in which the plaintiff had to meet its obligations. His gratuitous utterances against Gous (for which he has already been held accountable in other civil proceedings) appeared to have compounded the situation, but more so his reference to a penalty of R25 000.00 per day and the threat of withholding payment for a period of 60 days until he was satisfied with the work. If anything, his interventions at the meetings referred to by Gous appeared not to have been constructive and he appeared to have been unnecessarily impatient with the explanations tendered by Gous as to the cause of the problems.



[96] Veller in his testimony had also disclaimed any knowledge of the proposed payment requirements of the plaintiff. However, the scheduled payments of 50%, 40%o and 10% were clearly indicated on the quotation provided to Conradie which quotation was tabled and brought to Veller's attention at a site meeting. It would have been inconceivable that Veller, who paid close attention to the cost of the flooring, would not have had regard to the payment terms as he was also directly involved in the monthly remittances to LA Developments.



[97.] In fact it is Veller's own words that "the plaintiff could sue until the cows came home" that contributed to this protracted litigation. Moreover, he had simply made accusations that the work of the plaintiff "was shoddy right from the start" without being able to substantiate them. In his testimony, however, he did explain that he had increasingly become desperate about the completion of the floor as the restaurant had to be opened and functional in order to generate funds to defray the costs of the construction.



[98.] However, it is not only Veller's contribution to the confusion that resulted in the protracted litigation but also the extent to which Mandelstam simply used the situation in an attempt to extricate LA Developments from any responsibility towards the plaintiff. In this regard I am of the view that LA Developments should be solely responsible for the costs occasioned with regard to the amount of the oral agreement of R11 640 (excluding VAT).



[99.] I have also considered whether the plaintiff through its own conduct contributed to the necessity of it having to resort to litigation to determine the contractual parties and obtain payment for the services that it had rendered. It would appear though that the staff of the plaintiff, Gous and Coetzee in particular, had conducted themselves both fairly and reasonably towards both Nitida and LA Developments. The plaintiff had without hesitation provided revisions to quotations, commenced work on the application of the stucco floor without insisting on the payment of the deposit or any written agreement and appeared to have attempted to attend to defects as and when they arose and even at its own costs. As already indicated, despite the contradictions in the affidavit of Coetzee with that of his testimony I am of the view that he gave a satisfactory explanation of the position adopted by the plaintiff. These observations and findings with regard to Coetzee's testimony relate only to the contractual issue which is being determined at this stage. So too, are my observations and findings on the credibility of both Mandelstam and Veller confined to the issues presently determined.



[100.] In the circumstances I am of the view that Nitida should also be responsible with LA Developments for the costs of the plaintiff. Insofar as Nitida has successfully proved that it was not a party to the contract between the plaintiff and LA Developments I am of the view that Nitida should be entitled to recover part of its legal costs on the separated issues from LA Developments.




The following order is made:


In respect of the questions on the issues to be determined at this stage



(1.) The identity of the party who entered into the agreement with plaintiff? It is my finding that LA Developments is the party to the contract.



(2.) The identity of the party liable to plaintiff for the payment of the sum that would be owing to plaintiff for the application of the stucco on the floors of Nitida during 2007?

It is my finding that LA Developments is the responsible party.


(3.) The sum that would be owing to plaintiff for such services in terms of the agreement subject to any other defence raised in the pleadings?


  1. LA Developments is responsible for the payment of R11 640 (excluding VAT) to the plaintiff in terms of the oral agreement.

  2. (ii) The remaining amount of the contract stands over for later determination.


Costs

(1.) LA Developments is responsible for the full amount of the costs occasioned by both the plaintiff and Nitida in respect of the amount of R11 640 (excluding VAT).

(2.) LA Developments and Nitida are responsible in equal shares for the payment of the plaintiffs costs (pro rata to the above costs order) on the separated issues thus far determined.

(3.) LA Developments is responsible for 50% of Nitida's costs (pro-rata to the above costs order) on the separated issues thus far determined.



SALDANHA, J