IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

CASE NO:  06/9257

In the matter between:

JOHANNESBURG DEVELOPMENT AGENCY (PTY) LTD                    Plaintiff

and

IGNITION CREATIVE (PTY) LTD				             Defendant

J U D G M E N T

C.J. CLAASSEN, J:

BACKGROUND

[1] 	It is common cause that on 25 October 2004 the plaintiff and defendant concluded a written agreement in terms of which the defendant was appointed by the plaintiff to assist it in respect of event and media management and the procuring of sponsorships for a period of one year commencing on 1 October 2004 and terminating on 30 September 2005.  In terms of this agreement defendant was appointed the plaintiff’s sole representative in respect of the Newtown Precinct and the venues managed by the plaintiff.  The tasks which the defendant was to conduct for and on behalf of the plaintiff were listed in annexures “A” and “C” in respect of certain events listed in Annexure “B”.  

[2] 	The contract between the parties distinguishes between two general categories of duties:  

2.1	The first related to media and even management.  In respect thereof the defendant was to be paid a monthly amount of R60 000,00 plus VAT and disbursements commencing from 1 October 2004.  

2.2 	In respect of the raising of sponsorships the defendant was to be remunerated by receiving 20% commission plus VAT on the amount of any sponsorships raised.

[3] 	In regard to the duty to raise sponsorships clause 4.1 of the contract provides as follows:

“4.1 	It shall be the duty of IGNITION to use its best endeavours to procure sponsorships for JDA by the canvassing of potential sponsors in all practical ways to procure the necessary funds for and on behalf of JDA.”

[4] 	It is immediately noticeable that clause 4.1 does not stipulate any time or date upon which sponsorships were to be obtained.  Presumably the parties intended such sponsorships to be obtained by the best endeavours within the term of the contract.  However, no specific date is stipulated for any sponsorships to be obtained by the defendant for and on behalf of the plaintiff.  At best for plaintiff, the clause is to be interpreted as stipulating for delivery of sponsorships within a reasonable time.  If so, a reasonable time means a time reasonable in all the circumstances. It may be extended beyond its normal span by special circumstances and these may include circumstances which did not exist at the time of the contract but which supervene later, hampering performance. In Hartwells of Oxford, Ltd v British Motor Trade Association [1950] 2 All ER 705 (CA) the term of the contract read as follows:

“The seller will use his best endeavours to secure delivery of the goods on the date agreed, but he shall not be liable for any damages, or claim of any kind, which may arise in case of delay.”

No date have however in that case been agreed, Somervell, L.J. said that the clause was inoperative and the obligation was, therefore, one for delivery within a reasonable time.

[5] 	In the present instance the parties seemed to be agreed that clause 4.1 of the contract was to be interpreted that the reference to “using its best endeavours” meant that there was a duty on the defendant to do what it could reasonably do in the circumstances.  The standard of reasonableness would be that which was reasonable and prudent for an agent in the business of raising sponsorships.  

[6] 	In Annexure “B” to the contract, a list of events appear.  Some of them are underlined and such underlining is said to mean:

“Underlined events are to be owned and managed by IGNITION, the rest are owned and managed by third parties.”

In Annexure “B” scheduled for August is an event known as “Women in Arts Festival” (“WAF”).  This event is not underlined and was thus “owned and managed” not by the defendant but by third parties.  It was common cause that the words “owned and managed” meant to denote where the risk fell for any monetary loss in managing and arranging the event.  It is common cause that there was at no stage any change in this contractual provision rendering WAF an underlined event which would have caused the risk to fall upon the defendant.

[7] 	The dispute between the parties revolves around the defendant’s participation in the WAF which was hosted by the plaintiff in the Newtown area of Johannesburg during the period 6 to 9 August 2005.  The festival was linked to the celebration of National Women’s Day on 9 August 2005 and encompassed a variety of events, including theatre and dance performances, photography and craft exhibitions and musical performances in the various venues in the Newtown area.  It included a free outdoor concert to be held on 9 August 2005 as well as a womens’ luncheon at which the Deputy President was the guest of honour, scheduled for 6 August 2005.

THE PLEADINGS

[8] 	The plaintiff instituted three claims.  In Claim A it alleged that the defendant breached the written agreement by failing to raise a sponsorship in the amount of R403 000,00, instead raising only R240 000,00.  It alleges that it suffered damages in the amount of R254 500,00 made up as follows:

8.1	The additional cost of booking a venue and 
booking the performing artists 		– 	R200 000,00

8.2 	Advertising and promoting the concert 	– 	R  24 500,00

				Total			–	R254 500,00

[9] 	In Claim B the plaintiff claimed damages for the defendant’s alleged breach of the contract in that defendant failed to sell three tables at R10 000,00 per table.  As a result plaintiff suffered damages in the amount of R30 000,00.

[10] 	Claim C was an alternative to Claim A based upon delictual damages allegedly suffered by the plaintiff.  It was alleged that defendant misrepresented to the plaintiff that it had secured a sponsorship in the amount of R300 000,00 for the concert from Pick ‘n Pay Foundation. In reliance upon the representations plaintiff booked a venue at which the concert was performed, booked the artists who performed there and incurred costs related to advertising and promoting the concert.  It was alleged that the defendant owed a duty of care to the plaintiff not to make false representations in this regard.  It was further alleged that the representation was false as Pick ‘n Pay Foundation had not agreed to sponsor the concert. In the result plaintiff suffered damages in the amount of R254 500,00.

[11] 	Defendant instituted a counterclaim for an amount of R136 800,00 in respect of the monthly amounts due by the plaintiff for August and September 2005.  It was common cause that plaintiff failed to make payment of these two monthly amounts.  It was also common cause that plaintiff owed that amount to the defendant and sought to set it off against the damages allegedly owed to it by the defendant arising out of the defendant’s alleged breach of contract alternatively its wrongful misrepresentation.  

THE WITNESSES

[12] 	The plaintiff called three witnesses. Ms Xoliswa Ngema (“Ngema”) testified that the parties concluded a memorandum of agreement and that such agreement provided for the relationship between the parties. Ngema was the plaintiff’s development manager for Newtown at the time that the dispute arose and was currently a member of Bassline Jazz Club CC owned by a Mr Brad Holmes.  Mr Holmes also testified as well as Ms Cathy Coyle an account executive at Yong and Rubican, an advertising agency who is responsible for Pick ‘n Pay’s marketing and advertising.  On behalf of the defendant Ms Penny Mohlale a director of the defendant testified.

[13] 	Let me say immediately that Ngema and Holmes did not impress me as witnesses at all. Ngema gave confused and contradictory evidence regarding the alleged instruction to the defendant to raise sponsorships;  in regard to the alleged initial budget and the final budget from which defendant was supposed to glean the amount required in the form of sponsorships;  in regard to how the budget of R403 000,00 came about;  and whether or not defendant had in fact used their best endeavours to obtain sponsorships;  and why R30 000,00 was spent by plaintiff when defendant undertook all liability for making sufficient tables and chairs available for the luncheon. All of these were crucial matters in regard to Claim A and B.  As to Claim C it was evident from her evidence that the alleged representation did not amount to a confirmation that a sponsorship had in fact been secured.  At best on her evidence a positive statement was made that Pick ‘n Pay might sign for such sponsorship.

[14] 	As far as Mr Holmes is concerned I can only mention that his evidence was plague by retractions, inaccuracies and vagueness. He gave his evidence in a typically artistic fashion with flair and entertainment.  However, he was high on emotion but low on accuracy and fact.  Ms Coyle’s evidence was merely factual to the extent that Pick ‘n Pay did not in fact grant the sponsorship for the concert.

[15] 	On the other hand Ms Hohlala for the defendant impressed me as a highly intelligent woman who gave her evidence with factual accuracy which was supported by the documentary evidence. At no stage did she contradict herself. She gave her evidence in a calm and collected way which inspired confidence in the truthfulness of her assertions. 

[16] 	To the extent that a credibility finding is necessary in this regard I have no hesitation in accepting the version put forward by Ms Mohlala in preference to that testified to by Ngema and Holmes.

[17] 	In support of the aforesaid conclusions, let me give the following examples:

17.1	Ngema was adamant that the budget of R360 319,20 was the final budget as at 20 June 2005 and that this was “shared” with the defendant at every meeting.  In light of Mr Holmes’s evidence that the document was only produced on 3 August 2005, this cannot be.  It is clear that that which Ngema presented as fact, was in truth a reconstruction based on the document bearing the date of 20 June 2005.  Their insistence that a further budget must have been produced (in order to explain the discrepancy between the amount of this budget and the R403 000,00 ultimately paid to Bassline is exposed as a reconstruction by Mr Holmes’s evidence that there was no further budget and that the additional amount was to result of extras requested by the plaintiff.  

17.2	Similarly it is difficult to ascertain from Mr Holmes’s evidence what was fact as opposed to what was conjecture in speculation.  He initially testified that Mohlala’s representation regarding the Pick ‘n Pay sponsorship was made on the Friday preceding the concert i.e. on 5 August 2005 and that he was told one or two days before the concert that the sponsorship had not come through and that he had to change the budget.  He embellished this version with detail that Gearhouse, the stage builders, were already setting up the stage equipment and that he had to instruct them to remove the equipment from the venue originally intended for the concert, i.e. Mary Fitzgerald Square to a smaller venue, only 100 meters apart.  Once he was confronted with the documentation he moved his days one week earlier.

CLAIM A

[18] 	The main problem with plaintiff’s Claim A is that it neither pleaded nor proved that the defendant failed to use its best endeavours to procure the alleged sponsorship amounting to R403 000,00. There was absolutely a dearth of evidence indicating that the defendant should have done more than it in fact did alternatively that it sought sponsorships in an incorrect or unprofessional way.

[19] 	Mohlala’s uncontested evidence was that it identified various companies which had an interest in women’s issues.  It telephonically contacted some 38 such companies and managed to persuade about 10% to accept the presentation of a proposal.  It prepared proposals setting out the details of the festival and the particular leveraging opportunities for the particular proposed sponsor.  A number of these proposals are contained in the bundle of documents Exhibit “A between the pages 256 to 401.  After presentation of these proposals one company i.e. Peugeot motors agreed to provide a sponsorship in the amount of R300 000,00. That much is common cause.  There was no suggestion that Mohlala and/or the defendant could have or ought reasonably to have done anything further to procure another sponsorship.

[20] 	It would seem as if the plaintiff’s argument is to the effect that because defendant had been set a target in respect of the amount of the sponsorship that it should raise (a contention which is in dispute) the fact that it failed to do so meant that it did not use its best endeavours.  This argument is bad in law.

[21] 	There is another reason why Claim A cannot succeed. The plaintiff claims in contract and not in delict and the measure or damages for the two should always be kept in mind.  In Trotman v Edwick 1951 (1) SA 443 (AD) at 449 the following was said:

“A litigant who sues on contract sues to have his bargain or its equivalent in money or in money and kind.  The litigant who sues on delict sues to recover the loss which he has sustained because of the wrongful conduct of another, in other words that the amount by which his patrimony has been diminished by such conduct should be restored to him.”

[22] 	In the present instance plaintiff ought therefore to have claimed the difference between the amount of the sponsorship in fact raised by the defendant and the amount of the sponsorship which it ought to have raised.  This plaintiff did not do and instead claimed the cost of certain additional expenses incurred i.e. the booking of the venue and performing artists and advertising and promotion material.  The problem is that whether or not the contract was breached these costs would have had to be incurred in any event for the festival and concert to proceed.  Thus, even if the sponsorship had been raised, these costs would have been incurred in any event.

[23] 	There is a third reason for dismissing Claim A arising out of the disputes of fact concerning the alleged instruction upon which plaintiff’s claim is based.  It is not however necessary for me to entertain further this ground as I am of the view that the first two grounds are more than adequate to dismiss Claim A.

CLAIM B

[24] 	The parties agreed that plaintiff would not bear any costs for the luncheon and that all the costs related thereto were to be paid from the sale of tables.  It is common cause that defendant was obliged to provide free seating for 90 guests, i.e. being three tables for the sponsor Peugeot and its guests, three tables for the sponsor Transnet and its guests and three tables for the plaintiff and its guests.  Each table consisted of ten chairs and each chair cost R1 000,00. Defendant was under a duty to sell additional tables and chairs to finance the cost to it of providing three seating for 90 guests.

[25] 	The uncontested evidence of Mohlala was that the defendant subcontracted Thebe Events to arrange the lunch and sell the tickets.  In terms of clause 5.2 of the aforesaid subcontract defendant was obliged to pay Thebe Events the cost price of a chair set at R315,00 plus VAT.  Defendant in fact provided the 93 seats and paid Thebe an amount of R32 319,00 in respect thereof.  There was no need for plaintiff to pay any further amount in respect of its 33 seats.  Why did the plaintiff then pay R30 000,00 direct to Thebe Events?  Ngema testified that had they not done so, the event would not have proceeded.  This is clearly incorrect.  Mohlala testified that there were approximately 300 guests at the luncheon.  The luncheon was therefore never threatened by a lack of patronage.  It is not even clear whether Ngema on the evidence attendant the luncheon.  And her evidence as to the amount of people which attended it is therefore under serious doubt whereas Mohlala’s evidence is far more acceptable.

[26] 	In any event it is common cause that the luncheon was held, that plaintiff did not carry any risk in regard to the financial implications of organising and managing the event, and that defendant secured 93 seats as required by clause 4.1 of the contract with Thebe events. Any paying guests attending the luncheon beyond the 93 guests, was for the profit or loss of defendant and not the plaintiff.  There is therefore no breach of contract established by the plaintiff in regard to 30 chairs or three tables as alleged by it in its pleadings.  Claim B cannot therefore succeed either.

ALTERNATIVE CLAIM C

[27] 	Plaintiff’s alternative Claim C was based upon negligent misstatement causing purely economic loss.  The loss claimed as damages was exactly the same as that claimed under the contractual claim for damages in Claim A.  It has authoritatively been laid down that misstatements or misrepresentations do not differ in principle from other forms of allegedly wrongful conduct.  In computing the damages for the negligent misstatement in exactly the same manner as the alleged damages suffered from breach of contract, plaintiff has in fact in Claim C sought to claim its bargain.  That of course is the contractual measure of damages and not the delictual measure of damages. That in itself is sufficient ground for dismissing Claim C as an alternative to Claim A.  

[28] 	In the present instance the parties concluded a contract.  It is common cause that the alleged misrepresentation did not induce the conclusion of such contract but flowed from its execution. Council for the plaintiff relied on Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (AD) for the submission that a claim in delict for negligent misstatement was entertainable in the present circumstances.  His reliance on the Bayer case is however misconceived.  That case decided that the delictual action for damages based on the making of a misstatement which induced the conclusion of the contract is tenable in our law.  Contrary to counsel’s submission it would seem to me that the decision in Lillicrap’s case is against plaintiff.  At 500 Grosskopf AJA stated at H-I as follows:

“However, in general, contracting parties contemplate that their contract should lay down the ambit of their reciprocal rights and obligations. To that end they would define, expressly or tacitly, the nature and quality of the performance required from each party.  If the Aquilian action were generally available for defective performance of contractual obligations, a party’s performance would presumably have to be tested not only against the definition of his duties in the contract but also by applying the standard of the bonus paterfamilias.  How is the latter standard to be determined? Could it conceivably be higher or lower than the contractual one?  If the standard imposed by law differed in theory from the contractual one, the result must surely be that the parties agreed to be bound by a particular standard of care and thereby excluded any standard other than the contractual one.  If, on the other hand, it were to be argued that the bonus paterfamilias would always comply with the standards laid down by a contract to which he is a party, one would in effect be saying that the law of delict can be invoked to reinforce the law of contract.  I can think of no policy consideration to justify such a conclusion.”

[29] 	The diligence and duty of care upon which the plaintiff relies in the present instance can only result from the fact that the parties had in fact concluded a contract.  Had there been no contract there would also have existed no duty of care.  Plaintiff did not allege that the duty of care existed apart from the fact that the parties were tied together in a contractual relationship.  In these circumstances I am of the view that the plaintiff cannot rely in the alternative to its contractual remedies on an Aquilian claim for damages based on negligent misstatement.

[30] 	Counsel for the defendant raised various factual bases for rejecting the alternative Claim C.  On the facts of the case it seems highly improbable and unlikely that Mohlala would indeed have made such a representation when the falsity thereof would easily and very quickly thereafter have been established.  There was on the probability also no reason for Mohlala to have made such misstatement.  The defendant did not carry the risk of the event as the WAF was not an underlined event in terms of their contract. What benefit would Mohlala and/or the defendant have gained by making such a misstatement?  In any event I have already found that Ngema’s version of the events is subject to grave suspicion as her credibility was undermined by her own vagueness and contradictory evidence. As such the plaintiff can only succeed if the probabilities favour its version or if they are evenly balanced then the defendant’s version is to be rejected as false.  By no means can it be suggested that Mohlala’s version is to be rejected as being false.

[31] 	The probabilities also indicate that Ngema and Holmes took “a calculated risk” in deciding to proceed with the concert on 20 July 2005.  At that point in time the artists had already been booked although only one sponsorship obtained from Peugeot was confirmed.  It is evidently probable that Ngema and Holmes attempted to justify their actions by interpreting Mohlala’s positive statement that Pick ‘n Pay will come on board as a kind of warranty.  In view of the absence of any warranty in the written contract, it is all the more dangerous to extend delictual liability to a situation where the parties have contracted with one another.  In my view the probabilities indicate that Ngema and Holmes attempted to justify their actions after they took a calculated risk by seeking to strengthen their case and unjustifiably elevated Mohlala’s positive enthusiasm about the Pick ‘n Pay sponsorship to a statement equivalent to a warranty.

[32] 	Counsel for the defendant also raised the point that no damages flowed from the alleged misstatement of Mohlala.  I support these contentions but find it unnecessary to deal with them in the judgment.  In my view the reasons set out above are sufficient to reject Claim C as factually unsound and bad in law.

THE DEFENDANT’S COUNTERCLAIM

[33] 	As indicated above there seems to be no dispute that defendant is entitled to payment of its counterclaim. In the absence of any justifiable claim by the plaintiff against the defendant, there is nothing against which defendant’s counterclaim can be set off. As such, I am of the view that defendant should be entitled to judgment on its counterclaim.

CONCLUSION

[34] 	For the aforesaid reasons I have come to the conclusion that plaintiff’s claims should be dismissed and defendant’s counterclaim should be granted.  I make the following order:

1.	Plaintiff’s Claims A, B and C are dismissed with costs.

2.	Defendant’s counterclaim is granted in the following terms:

	Payment of the amount of R136 800,00.

	Interest on the aforesaid amount at the rate of 15,5% per annum as calculated as follows:

	On the amount of R68 400,00 from 1 August 2005 to date of payment.

2.2.2 	On the amount of R68 400,00 from 1 September 2005 to date of payment.

	Costs of suit.

DATED at JOHANNESBURG this  4th  day of OCTOBER 2007. 

					                  ______________________________
						                    C J CLAASSEN
					                     JUDGE OF THE HIGH COURT

COUNSEL FOR THE PLAINTIFF    	: 	ADV B L MAKOLA
ATTORNEYS FOR THE PLAINTIFF	:	AMOS KHUMALO ATTORNEYS
COUNSEL FOR THE DEFENDANT	: 	ADV A DE KOCK
ATTORNEYS FOR THE DEFENDANT:	CHRISTELIS AND ARTIMEDIS 
CASE WAS HEARD ON		:	14, 17, 18 AND 20 SEPTEMBER 2007  
DATE OF JUDGMENT		:	4 OCTOBER 2007