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IN THE HIGH COURT OF SOUTH AFRICA

(EAST LONDON CIRCUIT LOCAL DIVISION)

CASE NO. EL878/2016

 REPORTABLE YES/NO

In the matter between:

IMPILO YABANTU SERVICES (PTY) LTD                                   Plaintiff

and

MADODA TSHOKOTSHI                                                               Defendant

JUDGMENT

NQUMSE AJ:

Introduction

[1]     The plaintiff claims damages against the defendant arising out of an affidavit embodying alleged defamatory statements of and concerning the plaintiff, which was deposed to by the defendant. The defendant admits having made the statements but denies that the impugned statements are defamatory.

The parties

[2] The plaintiff is Impilo Yabantu Services, a company with limited liability duly registered in accordance with the Company Laws of the Republic of South Africa. It is a subsidiary company of Amanz’Abantu Services, a Company with limited liability also registered in accordance with the Company Laws of the Republic of South Africa.

[3] The Mvula Trust is a juristic person incorporated in terms of the Company Laws of the Republic of South Africa. It entered into a contract with Amanz’Abantu to inter alia provide services in schools in the Eastern Cape through the use of small businesses.

[4]     The defendant is Madoda Tshokotshi. He is the Director of Kids Investments, a franchisee that entered into a contract with the plaintiff to perform work in the schools listed in the main contract between The Mvula Trust and Amanz’Abantu.

[5]     It is common cause that Amanz’Abantu was appointed by The Mvula Trust (hereinafter referred to as TMT) to implement the Eastern Cape Schools Water and Sanitation Operation and Maintenance Programme as a franchisor. Broadly, the contract[1] entered into between Amanz’Abantu and TMT provides that the franchisor will facilitate the creation of franchisee micro-businesses which will undertake the servicing of certain schools in the Eastern Cape and that the franchisor will nurture the franchisees, progressively increasing their capacity and expertise throughout the course of phase 1 of the programme, by the end of which the franchisees must be financially viable, sustainable and competent so as to be in a position to work post phase 1 for themselves, unassisted.

[6]     The scope of the contract covered all schools in the following areas; Butterworth, Cofimvaba, Dutywa and East London. The programme was to endure for 36 months, spanning 1 September 2013 to 31 March 2016.

[7]     In furtherance of the objectives of the contract Amanz’Abantu, through its subsidiary company (the plaintiff), entered into contracts with various locally based franchisees who were to perform the work as stipulated in the main contract entered into with TMT.

The pleadings

[8]     In its particulars of claim the plaintiff alleges that the defendant, who was one of the locally based franchisees, on 20 November 2015, deposed to an affidavit in his capacity as director of Kids Investment, paragraph 17 of which reads:

“Impilo Yabantu created invoices for my organisation and other franchisees, and submitted to the employer (TMT) for payment during the period which we never rendered our services to them as a contractor.  As they furnished us with these invoices, no payment was done to my account as they were aware that I have not rendered services during this period.  To me this means that Impilo Yabantu has been benefiting fraudulently from the employer . . .”

[9]     The plaintiff has further averred, in the particulars of claim, that the words in the aforementioned paragraph are wrongful, unlawful and defamatory; they were understood by the reader thereof and were intended to mean that the plaintiff:

9.1    is unethical in its business practices;

9.2    was prepared to falsify invoices for the defendant’s business and submit false invoices for payment in circumstances where no service had been rendered to the plaintiff;

9.3    acted fraudulently in falsely representing that work had been done and monies were due to the plaintiff (for onward transmission to the defendant) to the prejudice of the employer, namely TMT;

9.4    is an entity that is prepared to engage in fraudulent business practises; and

9.5    through its employees, is dishonest, deceitful and cannot be trusted in future business relationships.

[10]   The plaintiff further pleaded that, apart from the defamatory meaning of the aforesaid affidavit, the words and the context of the affidavit carry the additional sting that the plaintiff is—

10.1  dishonest and deviant in the conduct of its business;

10.2  prepared to disregard the rights of others to advance its own business interests;

10.3  devoid of ethical business practises, greedy and prepared to make a profit where no profit is due; and

10.4  a business that lacks integrity and cannot be trusted.

[11]   As a result of the defamatory statement, so it is alleged, the plaintiff’s good name and business reputation have been damaged and the defamatory statement has also contributed to the suspension of and the premature termination of its contract with TMT and the concomitant loss of work opportunities for franchisor service providers and other locally based franchisees.

[12]   The defendant has pleaded that the statement is not wrongful but reasonable.[2]  It is further pleaded that the statement is true and amounts to a fair comment, alternatively constitutes privilege and was made without malice or intention to defame.[3]

The Plaintiff’s case

[13]   Mr Ive, the Chief Executive Officer (CEO) of Impilo Yabantu Services, testified that Impilo Yabantu was established in 2009 as a subsidiary company of Amanz’Abantu with its objective having been to undertake services for its public service clients through the use of franchisees defined as small businesses.  The defendant with its company Kids Investment was one of 22 franchisees that were engaged by the plaintiff. The contractual relationship of the plaintiff with the defendant commenced in February 2015 and ended in February 2015.

[14]   The main contract between TMT and Amanz’Abantu stipulated that the programme was for 3 years, valued at 61 million rands.  Around the end of March 2015, a dispute arose between TMT and the plaintiff in which TMT alleged that the plaintiff is involved in impropriety or corruption activities.  The dispute resulted in the suspension of the services of the plaintiff by TMT.  In reaction to the suspension, the plaintiff referred the dispute to arbitration.

[15]   In the ensuing arbitration proceedings TMT relied on the defendant’s affidavit to prove the allegations of corruption it made against the plaintiff.  With the exception of the payment advice on page 163 of the trial bundle, there were no other documents that were produced by TMT to support their claim of corruption against the plaintiff.  As a result, the arbitrator dismissed the claims by TMT and the defendant as spurious and without merit.

[16]   Under cross-examination Mr Ive contended that the defendant deposed to the affidavit in his personal capacity even though he stated in the first paragraph thereof that he was acting in his capacity as the director of Kids Investments.  The basis for his contention was the reference in some of the paragraphs of the affidavit in which the defendant uses the first person such as “I” and “my” in describing himself.  He also testified that an internal investigation that was mounted pursuant the allegations of fraud cleared the plaintiff of any wrongdoing and this was further supported by an audit outcome that did not identify any fraudulent or corrupt practises in their business transactions.

[17]   It was the company practice to pay franchisees who had performed their work within 30 days of having submitted their invoices.  Mr Birkholtz, who was the Operations Manager would verify the work of the franchisee(s) and confirm with Mr Botha who was the contract manager who in turn was responsible for the compilation of the invoice(s) for payment.  He further stated that the payment advices on pages 163 and 165 of the trial bundle are internal documents of the company which do not form part of the “Master” invoice that is normally compiled for submission to TMT for monthly payments under the contract.  Mr Ive, however, conceded that the aforementioned documents were filled in incorrectly in a number of ways.  By way of example, the franchisee details were indicated as Madoda Tshokotshi, instead of Kids Investments.  The payment advice on page 163 shows the signature of the franchisee as being that of Mr Birkholtz, instead of the defendant; under the column provided for the full names of the franchisee, Mr Birkholtz printed his own name.  Similarly, in the payment advice on page 165, the position is the same except under the column “Accepted by Franchisee” where the payment advice is left blank with no names or signature.

[18]   Mr Ive further contended that the shortcomings that were apparent on these documents were of no consequence since the documents were intended only for internal arrangements to process and approval of payments expeditiously to the franchisees.  “R13 000” reflected on the payment advice on page 163 is not a payment for work done but it is for retention monies that were due to the defendant.  He further explained that the pre-dating of the payment advice(s) was done in anticipation of the last date of the month in order to effect payment on the due date to avoid delayed payments to the franchisees. According to Mr Ive, the internal document which was understood as a communicating tool by their financial department was never intended to mislead anyone.

[19]   In response to a question from the court, Mr Ive stated that TMT has never claimed monies from the plaintiff that may have been unduly paid to the plaintiff through fraudulent claims.  There has neither been any forensic investigation instituted against the plaintiff at the instance of TMT, nor has there ever been any investigation conducted by law enforcement agencies in pursuit of the fraudulent allegations against the plaintiff.

[20]   Russel Botha, the contract Manager of the plaintiff, is the one who dealt with the franchisees and is responsible for the compilation of their work in order to prepare payment advices such as the one on page 163 of the trial bundle.  He testified that the information reflected on the payment advice is information that is transported from the job cards that are usually prepared by the franchisees.

[21]   The payment advices are internal documents for the use by the company and are made accessible to the franchisees whenever a need arises.  From time to time, the franchisees would not be available to sign these payment advices, resulting in Mr Wayne signing them on their behalf for the sole purposes of verifying their correctness.

[22]   Due to the strict verification measures that were put in place by the company, it was not possible to submit fraudulent claims to TMT. Mr Botha corroborated Mr Ive that the allegations of fraud and corruption made by the defendant found no support in the audit outcome of the plaintiff’s company books.

[23]   Under cross-examination Mr Botha explained that the information reflected on the payment advice of the defendant on page 163 was accumulative information that was obtained from the previous job cards of the defendant before he terminated his services with the plaintiff.  The amount of R13 000 that was due to the defendant is not money for work done by the defendant, but a retention amount that is normally paid out at the end of the contract of the franchisee. 

[24]   At the end of the plaintiff’s case the defendant applied for absolution from the instance, which was dismissed.

The defendant’s case

[25]   The defendant thereupon testified that he was contracted as a franchisee by the plaintiff during February 2014. However, due to a work stoppage in April of the same year, he secured alternative work with Amathole District Municipality. Subsequent thereto, he was awarded a tender by TMT to do work in the schools that were not listed under the contract with Amanz’Abantu.

[26]   It was during this time when TMT requested from him the contract he had signed with the plaintiff, the purpose of which was to compare it with the main contract between TMT and the plaintiff.  Amongst the discrepancies that were discovered by TMT is the existence of invoices (payment advices) which were generated in March 2015 on which his name was reflected whereas he had already terminated his contract in October 2014.

[27]   As a result of the discoveries that were made he deposed to an affidavit in which he alleged corrupt and fraudulent activities against the plaintiff. On a subsequent occasion, his affidavit was used by TMT in the arbitration proceedings between Amanz’Abantu and TMT.  It has never been his intentions to defame the plaintiff through his affidavit.

[28]   Under cross-examination he confirmed his understanding of the contents of his affidavit and what it conveyed regarding the fraudulent conduct by the plaintiff.  However, he denied that any reader of the affidavit would conclude that the plaintiff is unethical in its business practises.  Whilst he claimed to have seen other invoices at the offices of TMT which indicated that the plaintiff still reported having 22 franchisees, he never saw his name mentioned on those invoices except to assume that he must have been part of the 22 franchisees.  However, he could not describe the form of those invoices. He was neither able to state if they were in the same format as the one on page 163 nor was he able to mention the amounts indicated therein.

[29]   According to the defendant, the document on page 163 is not a payment advice as alleged by the plaintiff but an invoice that contains information that is collated from the job cards of franchisees.  He confirmed signing other similar invoices, but not all the invoices.

[30]  He was challenged regarding why he was adamant that there was fraud when there were no monies which were paid out to somebody who was not entitled thereto. He said the allegations of fraud against the plaintiff were primarily because (a) Mr Birkholtz was not a franchisee but signed as franchisee on the payment invoice on page 163, and; (b) his discovery that the number of franchisees in the “master” invoice submitted to TMT was still indicating that there were 22 franchisees whereas he had left the plaintiff’s company. He conceded that had Mr Birkholtz signed at any other place on the invoice more specifically below the one provided for the franchisee, he would not have taken issue with that.

[31]   The defendant did, however, not dispute the evidence of Russel Botha and Ive regarding the manner in which the payment advice/invoice was generated. He also could not confirm whether or not a deposit of R13000 was made into his bank account since, according to him, he had not been able to obtain his bank statements for the past 3 years since he left the plaintiff.  Instead, he was not owed any monies by the plaintiff and therefore did not expect any payment.  It also never dawned on him to enquire from the plaintiff more particularly Mr Ive with whom he had good relations as to the reason for Mr Birkholtz to have signed the invoice on page 163  as franchisee.

[32]   The defendant earlier denied the publication of the document to third parties, but later conceded that the statement was read by the officials of TMT and their typist and later placed before the arbitrator thereby publishing it.

[33]   Under cross-examination the defendant further explained that whilst the “master” invoice that was sent to TMT was from Amanz’Abantu, the supporting and accompanying invoices were from the plaintiff that is how the invoice on page 163 got its way to TMT.

[34]   In re-examination the defendant stated that the incorrect dates that were reflected in the payment advice/invoice on page 163 is a further reason that caused him to allege that the plaintiff was involved in fraudulent activity.

[35]   Fezeka Mazomba, a former Regional Director of TMT, testified that she knows both the plaintiff and the defendant.  As the then accounting officer of TMT she was responsible for reporting on the progress and the extent of the implementation of the programme to their client, the Department of Education, and to assess whether the programme should continue in the next financial year. According to her, the continuation of the programme was dependent ostensibly on whether TMT had met its objectives agreed upon by the parties.  However, having joined TMT at the end of the financial year, the reporting to the Education Department which appears not to have satisfied the department had already been done by her predecessor.

[36]   When the franchisees got to know about her appointment as the new regional director they set up an appointment to meet up with her.  In their meeting, she had the opportunity to peruse their contracts and discovered that the contract between TMT and the franchisor and the contract between TMT and the department differed when compared to the contract signed between the franchisor and the franchisees.  In support of her contention she highlighted, inter alia, that the contract between Amanz’Abantu and Kid Investments had a clause which stipulated as follows:

“[a] 15% management fee of the turnover of the subcontractors business per month will be paid to Impilo Yabantu Services.”

[37]   However, according to the priced schedule of quantities between TMT and Amanz’Abantu, there was an allowance of 15.39% already effected which amounts to R5,9 million and which was allocated to Amanz’Abantu as a management fee for the programme. Since the franchisor had already been allocated this money, the franchisor benefitted twice when it charged the fee from the franchisees.  She also found, as it was the case on the document on page 163, that the franchisees were charged a fee for material, equipment, and consumables that were already included in the budget that was allocated to Amanz’Abantu. Similarly, the franchisor was not supposed to charge franchisees the insurance cover.  The plaintiff was queried about these deductions by way of a letter in which Amanz’Abantu was advised that it acted in breach of the contract.

[38]   According to her, the invoice on page 163 is used by the plaintiff as a supporting document to the main invoice that was submitted to TMT for payments.  When she showed the defendant the invoice on page 163, he informed her that at the time the invoice was created he was no longer contracted with the plaintiff.  Even though the information on invoices such as on 164 and 166 of the trial bundle appears to be accumulative information from job cards, she does not agree with the totals that have been arrived at.

[39]   Under cross-examination Ms Mazomba conceded that there was nothing preventing Amanz’Abantu the freedom to contract with its franchisees.  However, according to her view, had Amanz’Abantu been transparent with the benefits the franchisees were entitled to, they would not have agreed to some of the terms in their contracts.  When she was asked if she had approved any payments as regional director during February or March 2015 given the discrepancies she highlighted in the invoices, she said she did not make any payment approvals even though she discovered problems in the invoices since she was not yet a Regional Director but a Quantity Surveyor of TMT at the time.

[40]   She further testified that she was unable to produce proof or state how much money had been misappropriated or any loss suffered by TMT as a result of the inappropriate claims made by Amanz’Abantu.  Neither did she lay any criminal charges of fraud or corruption against Amanz’Abantu or the plaintiff.  She was not able to dispute that a meeting of franchisees and the franchisor took place in Butterworth where an agreement was allegedly reached for the franchisor to retain money from the franchisees as retention and only payable at the end of the contract.  She also found that the R13 000 which is claimed by the plaintiff as retention payment is not specifically provided for in the contractual agreement between the franchisor and franchisees.  It is also not mentioned as such on the invoice on page 163.

Issues for determination             

[41]   It being common cause that the impugned statement was made and published by the defendant to the management of TMT and its support staff and further served before the adjudicator in the arbitration proceedings, the issues to be determined by this court can be crystallized as follows:

41.1   whether the statement published against the plaintiff is defamatory;

41.2   whether the statement is truthful and amounts to a fair comment in the public interest and protected under the defence of privileged disclosure; and

41.3    for the appropriate award for damages.

The law

[42]   In Khumalo and Others v Holomisa[4]  the Court stated the elements of defamation as being the wrongful and intentional publication of a defamatory statement of and concerning the plaintiff.[5]

[43]   A defamatory statement is one which tends to diminish the esteem in which the person to whom it refers is held by others.[6]  A plaintiff must, therefore, prove the words actually used whilst the effect and meaning of the words used are a matter for the court to decide.[7]

[44]   Once a defamatory statement has been found to have been published, the presumption that of the publication of the defamatory material was made animus iniuriandi is triggered. The defendant bears the onus of alleging and proving the absence thereof.[8] 

Application of the law to the facts                

[45]   The impugned statement of the affidavit reads:

“furthermore, Impilo Yabantu created invoices for my organisation and other franchisees organisation and submitted to the employer for payment during the period which we never rendered our services to them as a contractor. As they furnished us with these invoices, no payment was done to my account as they are aware that I have not rendered services during this period. To me, this means that Impilo Yabantu has been benefitting fraudulently from the employer by claiming monies using my organisation credentials without my permission. Proofs of these invoices are available. It is important to note that Kids Investment last rendered services for Impilo Yabantu in August 2014.”

[46]   The import of this paragraph is that the plaintiff created invoices fraudulently for the defendant’s organisation and other franchisees and those invoices were submitted to TMT for purposes of claiming payments for services the defendant as well other franchisees did not render.  Through its conduct, the plaintiff benefited fraudulently from TMT. What is also significant is the assertion that the necessary proof to support these allegations is available.

[47]   Notwithstanding the allegation by the defendant that there were other invoices that were created for other franchisees, as well as the assertion that he has proof of other invoices to back up his claim, no such invoices were made available in these proceedings. Nor was there any evidence proffered by other franchisees as support to this assertion by the defendant. In the absence of that evidence, I am not able to place any reliance that there were other invoices for other franchisees.  Accordingly, this ought to be rejected as false. A proper reading of paragraph 17 suggests that the only issue that the defendant considers as fraud are the invoices that were generated by the plaintiff on his behalf whilst he was no longer rendering services for the plaintiff. It is also worthy to note that nowhere else in the body of the affidavit is the allegation made that the conduct of the plaintiff constitutes fraud. In oral evidence the defendant amplified his claim of fraud by saying: “I observed that the invoice was not signed by me, hence I said this was a fraud or this is a fraud.”[9] I find it necessary to analyse the nature of the invoice referred to by the defendant which was attached on page 163 of the trial bundle.

[48]   Both Mr Ive and Mr Botha testified that the document on page 163 of the bundle is a payment advice that is prepared by the plaintiff to be used internally for effecting the payment of the franchisees. Their evidence is to the effect that the document was created by the plaintiff and had not been submitted to them by the defendant as a tax invoice. It is therefore common cause that the document was from the plaintiff and addressed to the same plaintiff. The only reference that was made about the defendant is where he is indicated as a franchisee. The document has two significant columns which in my view are relevant in determining its nature. The first column reflects “approved for payment”. Under this column there are three blocks, for the name of the approving official, the date on which the payment is approved as well as the signature of the approving official. The name that is indicated as the approving official in the document on page 163 is R Botha, dated 27 March 2015 and bearing his signature.  I hasten to mention that this part of the document did not attract much controversy except the date. The next column is the section referred to as “Accepted by franchisee” which also has blocks for the name of the franchisee, the date and the signature. The name of the franchisee is indicated as W Birkholtz.  This name is written legibly in capital letters. The signature is also that of the same name as Birkholtz and the date is indicated as 25 March 2015.

[49]   It is important to bear in mind that it is not in dispute that the document did not originate from the defendant albeit containing information that is harvested from the job cards of franchisees. What the evidence shows is that this is not an invoice which the plaintiff issues to TMT for payment. The least that can be said about it even though it is disputed by the plaintiff is that it is attached to the main invoice that is submitted to TMT for payment.  If this document was intended to be an invoice for the purposes of TMT, I cannot find a reason why TMT would not have picked up that the document is not addressed to it but to the very plaintiff.  It further flies in the face of any reasoning that if this document was an invoice directed to TMT, why Mr Birkholtz would openly place his name and signature legibly in the place of a franchisee a clear misrepresentation to TMT. I agree with Mr Cole, counsel for the plaintiff, that the actions of Mr Birkholtz are not consistent with those of a person who was involved in nefarious activities of fraud.

[50]   The defendant referred to Birkholtz as a fraudster of note who angered him the most upon discovering that the payment advice/invoice was signed by him, a known fraudster. However, as alluded to above, the overt endorsement of the names of Mr Birkholtz as well as his signature lacks the feature of misrepresentation or fraud. It is not logical for a person who intends to mislead or misrepresent the facts would place his names in the most legible manner as Birkholtz did thereby making himself easily identifiable. This leads me to conclude that the objective facts point to the direction that the document on page 163 was meant for internal purposes within the company and was not an invoice as it is made out to be by the defendant.

[51] I do not find any credence in the allegations of fraud based on the document on page 163. I hold this view notwithstanding the evidence of Mrs Mazomba who at no stage mentioned with any level of certainty that the plaintiff was fraudulent except making other allegations against the plaintiff and which were dismissed as baseless by the arbitrator. Her letter is conspicuously silent that the plaintiff conducted itself in a fraudulent manner.

[52]   For sake of completeness I reproduce her letter dated 03 September 2015, which reads:

“Paragraph 3: We are of the view that Amanz’Abantu Services, has failed to achieve the objectives of the programme in the following respect:

3.1.           In terms of the franchisee agreements concluded between Impilo Yabantu Services and the franchisees, amongst others Kid Investment and Amanjuza Projects (Pty) Ltd:

3.1.1.            The franchisee is required to have standard equipment to complete the work;

3.1.2.            The plant and equipment that is required in addition to the standard equipment would be rented to the franchisee at the agreed higher charges by Impilo Yabantu Services;

3.1.3             A 15% management fee on the turnover of the franchisees’ business per month will be paid to Impilo Yabantu Services;

3.1.4             Consumables and materials supplied to the franchisee are deducted from the franchisee before payment is made to the franchisee;

3.1.5             The franchisee will be required to hold public liability insurance to the maximum value of R2 000 000.00 per claim in respect of Kid Investment, and R1 000 000.00 in respect of Amanjuza Projects (Pty) Ltd;        

3.1.6             Kid Investment is only allocated 21 schools of more than 1000 schools to be services.

3.2.           Impilo Yabantu Services hires out and charges the franchisees for plant and material which it receives for free. In terms of our agreement with Amanz’Abantu Services, the franchisor receives a 15% fee on the purchase of tools, machinery, material, OHS clothing and materials and sundry disposables;

3.3.           Impilo Yabantu Services requires the franchisees to hold public liability insurance.  Whereas clause 82.1 of the franchisor agreement provides that a minimum amount of cover for insurance in respect of death of or bodily injury to employees of a contractor arising out of and in the course of their employment in connection with the contract is as prescribed by the Compensation for Occupational Injuries and Diseases Act 130 of 1993;

3.4.           Impilo Yabantu Services charges the franchisees 15% management fee while the franchisor agreement provides a fixed fee of R11 865 000.00 for fixed costs related to standard service including management, facility appraisal, reporting and health and hygiene awareness;

3.5.           Impilo Yabantu Services deducts payment from the franchisees for consumables which it receives for free from the government;

3.6.           In terms of clause 7.2 of the franchisee agreement, all the work executed by each party during the contract shall rest will Impilo Yabantu Services. This clause defeats the purpose of the programme which requires that by the end of Phase 1, the franchisees must be financially viable, sustainable, competent and already actively finding post Phase 1 work for themselves;

3.7.           On the face of it, not all schools identified in terms of the agreement are being serviced.

Paragraph 4:  In terms of clause Z3.1 any offer payment, consideration, or benefit of any kind by the contractor, which constitutes or could be construed either directly or indirectly as an illegal or corrupt practise, as an inducement or reward for the award or in execution of this contract constitutes grounds for terminating the contractor’s obligation to provide the service or taking any other action as appropriate against the contractor.

Paragraph 5: On the face of the contents of paragraph 3 above, Amanz’Abantu service’s conduct contributes or could be construed either directly or indirectly as an illegal or corrupt practice or an inducement for the reward, which defeats the objectives or purpose of the programme, which is to develop, nurture and support the franchisees, and amounts to a material breach of the agreement.

Paragraph 6: It is in view accordingly that Amanz’Abantu is in material breach of clause Z3.1 of the agreement and we request that you remedy the breach within 10 days of receipt of this letter.

Paragraph 7:  In the event you do not do so, the agreement will be terminated with immediate effect.

Paragraph 8:  In respect of the payments due to Amanz’Abantu Service for the services already rendered, we confirm that we are still reconciling the payments made under the programme in order to determine the amounts due to Amanz’Abantu Services.  We will revert to you in due course regarding such payment.”

[53]   Whilst paragraph 3 of the letter lists the failures of the plaintiff in achieving the objectives of the programme, no mention is made of fraudulent invoices that were generated by the plaintiff. Nor is there any reference made that they have discovered invoices in which Mr Birkholtz   misrepresented himself as a franchisee when he was not.  The inference drawn is that TMT was equally aware that the payment advices were not intended to be invoices and they were indeed not such.

[54]   Most notably, nowhere in the letter does TMT allege that the plaintiff has benefited fraudulently and for which they demand payment of monies so benefited, alternatively demanding payment of such monies that were due to the franchisees. Further, Mrs Mazomba, having  seen the contracts of the franchisees and the payment advices that specifically relate to the defendant, she nevertheless, steered clear from indicating the manner in which the franchisees had been short-changed and what was owed to them by the plaintiff.  If that had been the case, I am unable to understand why it was not raised in the letter. Not only that, in light of the seriousness of fraud and corruption committed against TMT, it escapes any reasoning why it would fail to involve the law enforcement agencies to investigate a possible criminal charge against the plaintiff.

[55]   In sharp contrast, the upshot of the defendant’s evidence is that he was not owed any monies by the plaintiff.  Hence he never bothered to verify or check the amount for retention that was allegedly paid into his account.  Both in his affidavit as well as in oral evidence he does not point to any loss or potential loss suffered by either himself or TMT as a result of the corrupt and fraudulent activities of the plaintiff.

[56]   I also find that the defendant has not established that the impugned statement was reasonable and true.  Even if I were to hold otherwise, the defendant has not pleaded that the statement was in the public interest neither was it relied upon during his testimony.[10]  The publication of truth alone is a defence in an action in tort under the English Law.  Under the South African Civil and Criminal law, the publication of truth must also be for the public benefit.[11] It was further stated in Modiri v Minister Safety & Security & others[12] as follows:

“Under the rubric of truth and public benefit, the balancing act turns mainly on the element of public interest or benefit. If a defamatory statement is found to be substantially untrue, the law does not regard its publication as justified. Publication of defamatory matter which is untrue or only partly true can never be in the public interest, end of story.”

[57]   The defence of fair comment that was pleaded flies in the face of the allegation of truthfulness since the defendant was not expressing an opinion. Nor could the statement have been understood as an opinion by a reasonable hearer. This is borne out in the reasons advanced by the defendant for alleging fraud, namely the creation of the invoice on page 163 and the signature of Mr Birkholtz which was in the wrong place. The defendant was unequivocal that his allegation of fraud and corruption was not based on an opinion but on fact.  In Heroldt v Willis[13] it was stated: 

“In our law it is not good enough, as a defence to or a ground of justification for a defamation, that the published words may be true: it must also be for the public benefit or in the public interest that they be published.  A distinction must always be kept between what ‘is interesting to the public’, as opposed to ‘what is in the public interest to make known’.  The courts do not pander to prurience.  I am satisfied that it is neither for the public benefit nor in the public interest that the words in respect of which the applicant complains be published, even if it is accepted that they are true . . .” 

In light of what is stated above I have to agree with Mr Cole that the defendant has failed to discharge the onus that the publication was in the public interest.

[58] I also find it necessary to consider the allegations made by the defendant against the definition of fraud. The authors Gardiner and Lansdowne [14] define fraud as the following:

“To constitute the crime of fraud, there must be a wilful perversion of the truth made with the intent to defraud and to the actual or potential prejudice of another. The perversion of the truth must be such as to amount to a false representation as to an existing fact, and must be made wilfully that is with knowledge of falsity.”

[59]   I find no shred of evidence that supports the allegation of fraud against the plaintiff as defined above. More so, the defendant did not bother to take any reasonable steps to verify the accuracy of his information, such as to enquire the reason for Birkholtz to have signed the invoice on page 163 and the purpose for which the invoice was created months after he had left the plaintiff’s company. Most notably is his failure to verify from TMT with whom he held meetings, as to whether the actions of plaintiff constituted fraudulent activity and has thereby benefitted unlawfully before making the serious allegations of fraud against the plaintiff. I, therefore, find that the allegation is unsustainable and it is false.

[60]   I now turn to deal with the defence of privileged disclosure.  Privilege exists where someone has a right or duty to make, or an interest in making specific defamatory assertions, and the person or people to whom the assertions are published have a corresponding right or duty to learn or an interest in learning of such assertions.[15]  A defendant does not, however, escape liability merely because the statements are made in judicial or quasi-judicial proceedings.  She/he must show that the statements were relevant and germane to the matter at issue.[16]  A plaintiff in a defamation suit must show that the defendant exceeded the bounds of privilege; he acted with malice.  Any motive that does not originate from a sense of “duty or the desire to protect an interest” gives rise to improper motive or malice.[17]

[61]   In Naylor and Another v Jansen[18] a statement was found to be one of qualified privilege and the following was said by Scott JA –

“In the event of it being shown that the statement was made with knowledge of its untruthfulness, the inference that would arise in the absence of any indication to the contrary would be that the statement was actuated by malice.”

[62]   In the present matter the purpose for the statement is somewhat curious.  According to the defendant, he was called by the management of TMT who had already compiled and prepared the affidavit to cause him to sign thereon.  This gives an impression that the contents of the affidavit did not originate from the defendant.  On the other hand, according to Mrs Mazomba, after they had discussed issues relating to the conduct of the plaintiff, the defendant on his own deposed to the affidavit and whatever appears thereon was written by him.

[63]   The question that arises is whether the offending statement was published by the defendant in the discharge of a duty or the protection of a legitimate interest to another person who has an interest in receiving it.  It is common cause that the defendant did not have any contractual relationship with TMT and therefore had no duty to make a statement for TMT and neither was such a duty pleaded or any evidence tendered to show that duty.  Furthermore, all, if not most issues, contained in the affidavit were already in the domain of TMT.  This is borne out in the letter addressed to the plaintiff referred to above.  The only and most distinct aspect in the affidavit which differs from the letter of TMT is the allegation of fraud which as contained in paragraph 17 of the affidavit.

[64]   In an attempt to answer the question framed in Borgin[19]  in relation to this matter, whether in the eyes of a reasonable man its circumstances create a duty or interest which entitled the defendant to articulate the words as stated in his affidavit the way he did, in my view the answer has to be in the negative. Since it was also not pleaded nor any evidence proffered that the publication was in the public interest. I am therefore not persuaded that public policy could justify the publication as lawful.[20]

[65]   In Clover SA (Pty) Ltd and Another v Sintwa[21] Mbenenge J (as he then was) was required to consider qualified privilege in the context of defamatory statements made during quasi-judicial proceedings. The learned Judge highlighted the distinction to be drawn between two categories of qualified privilege and stated thus:

“(1)      discharge of or furtherance of an interest; and

(2)     judicial and quasi-judicial proceedings.”

Mr Jikwana for the defendant argued that the privilege enjoyed by the defendant in this matter falls in the category of quasi-judicial proceedings held before an arbitrator.  Whilst I am in full agreement that the proceedings before the arbitrator qualify as quasi-judicial, I am however, of the view that the statements made by the defendant do not enjoy the protection of any of the two categories of qualified privilege as propounded in Sintwa above.

[66]   My view is further bolstered by the reason given by Mrs Mazomba for the drafting of the affidavit by the defendant.  She said they needed the information in order to know what was happening between the contract of the franchisor and the franchisees and to report to the Department of Education.  Nowhere does she say they needed the affidavit in order to use it in the arbitration proceedings.

[67]   Based on the entirety of the evidence adduced in this matter the question is whether the defendant has proved on a balance of probabilities all the defences he pleaded. I come to the conclusion that he has failed to prove the defences relied on to excuse the unlawfulness of the impugned statement.

[68]   Once the court has found that defamation has been established, it is presumed that the publication was both unlawful and intentional and the defendant bears the onus to prove the absence of animus injuriandi.[22]  The mere statement by the defendant that he did not have the intention to defame the plaintiff is not sufficient to discharge that onus of proving the absence of wrongfulness and prove the presence of the grounds of justification.

[69]   I now turn to deal with the effect and meaning of the words used by the defendant.  A defamatory statement is one which tends to diminish the esteem in which the person to whom it refers is held by others.[23]  This takes me to the point that the plaintiff in this matter is not an individual but a company registered in accordance with the company laws of the Republic.  The question whether a company is entitled to sue for defamation was settled in Dhlomo NO v Natal Newspapers (Pty) Ltd and Another[24], where, with reference to G A Fichardt Ltd v The Friend Newspapers Ltd,[25] it was held:

“It has been settled by a series of decisions, both in England and in South Africa that an action will be at the suit of a trading company for statements defaming it in its business character or reputation . . .”[26]

[70]   In Dhlomo[27] the learned judge remarked thus: 

“In my opinion we should hold, and I so hold, that a non-trading corporation can sue for defamation if a defamatory statement concerning the way it conducts its affairs is calculated to cause it financial prejudice.” This position was again restated in Media 24 Ltd v SA Taxi Securitisation (Pty) Ltd wherein Brand JA remarked as follows:

“After Dhlomo (supra) and Caxton Ltd and Others v Reeves Forman (Pty) Ltd and Another[28]  it has consistently been accepted by our courts, including this Court, that corporations, both trading and non-trading, have a right to their good name and reputation which is protected by the usual remedies afforded under our law of defamation, including a claim for damages.”

[71] I come to an inescapable conclusion that the allegation as contained in paragraph 17 of the affidavit is defamatory.  I therefore turn to agree with the averments made in the plea of the plaintiff that the meaning of the words are that the plaintiff is untruthful, dishonest, and dishonourable and conducts its business in an unethical manner.  I further find that this is the meaning they convey to a reasonable third person who reads the statement, the effect whereof tends to diminish the esteem and reputation of the plaintiff.

Quantum

[72]   I now turn to consider an award that will ameliorate the harm caused to the plaintiff. In Muller v South African Associated Newspapers Ltd and Others[29]  Watermeyer J stated as follows:

 “In estimating the amount of damages to be awarded the court must have regard to all the circumstances of the case.  It must, inter alia, have regard to the character and the status of the plaintiff, the nature of the words used, the effect that they are calculated to have upon him, extent of the publication, the subsequent conduct of the defendant, and in particular his attempts, and the effectiveness thereof, to rectify the harm done.”

[73] The approach to be followed in the determination of what is fair and an adequate compensation for the injured party for the sequelae for his or injuries has been explained by  Bosielo AJA (as he then was) in Minister of Safety and Security v Tyulu[30] as follows:

“the primary purpose is not to enrich the aggrieved party but to offer him or her some much needed solatium for his or her injured feelings”. In Minister of Safety and Security v Seymour [31] Nugent JA stated that:

“the assessment of awards of general damages with reference to awards made in previous cases is fraught with difficulty. The facts of the case need to be looked at as a whole and few cases are directly comparable. They are a useful guide to what other courts have considered to be appropriate but they have no higher value than that”

[74] FDJ Brand Defamation LAWSA 7 second edition sets out the factors which may be taken into account in determining a suitable award of damages. They are:

(a) the nature of the defamatory statement;

(b) the nature and extent of the publication;

(c)  the reputation character and conduct of the plaintiff and

(d) the motives and conduct of the defendant. (See also Mogale & Others v Seima 2008(5) SA 637 (SCA) paras [2] - [17])

The nature of the defamatory statement

[75] I consider the statement of the defendant as defamatory and lacking the substance to support the allegations therein. It follows that the statement and allegations played a role in the eventual suspension of the plaintiff’s contract with TMT. As already alluded to above, the effect of the statement is that the plaintiff is unethical and unprofessional in its business activity.

The nature and extent of the publication

[76] It is common cause that the statement was published to the management of TMT and the administrative staff that were involved in the preparation thereof. This includes the arbitrator and the personnel that were involved in the tribunal of the arbitration. It appears that besides those mentioned above the statement did not enjoy a wide publication.

The reputation, character and conduct of the plaintiff

 [77]  According to Mr Ive, Amanz’Abantu is a 75% Black owned business which was founded in 1997 with Impilo Yabantu, its subsidiary, founded in 2009. They do business with the entire Eastern Cape, predominantly in the rural parts of the Eastern Cape. They are involved in programmes that run into billions of rands. Their company has prominence as leaders in the sector of providing sanitation to rural communities. From the R61 million that was allocated for the project they still had R30 million rand to spend which was held back due to the suspension of their contract with TMT.

The motives and conduct of the defendant

[78] The publishing of the statement by the defendant without any attempt to verify the truthfulness of his allegations in my view amounts to an ill motive. It is so that the sour relations that developed between the defendant and the plaintiff actuated malice on the part of the defendant to get back at the plaintiff in publishing a statement that was unfounded.

[79] Whilst the matters below show awards that were awarded to individuals I nevertheless find them as a helpful guide to assist me to arrive at an appropriate award.

[80] In Lady Agasim-Pereira v Johnic Publishing Eastern Cape (Pty) Ltd and Others[32] the plaintiff sued the defendants for defamation based on an article which was published in The Herald, (a daily newspaper owned by the first defendant). The court awarded her R50 000.

[81] In the matter of Independent Newspapers Holdings Ltd & Others v Suliman[33] the plaintiff claimed R1000 000 from Independent News Holdings, in respect to damages arising out of a defaming article which appeared in Cape Times. The article had a picture of the plaintiff and it stated that the plaintiff was a suspect in a Cape Town bombing. The learned Selikowitz J held that a reasonable reader would have concluded that the plaintiff was arrested as a suspect in the Planet Hollywood bombing and awarded the plaintiff R90 000 in damages for defamation. On appeal, the Supreme Court set this award aside and awarded the plaintiff R50 000.

[82] In Naylor and Another v Jansen; Jansen v Naylor and Others[34] the court awarded the plaintiff R30 000 in damages. It was alleged that he had stolen money from his employer. The facts showed he had not stolen money but had made guilty of misconduct involving dishonesty. On appeal the award was reduced to R15 000.

[83] In the matter of Dikoko v Mokhatla[35] the plaintiff who was an executive mayor of the Southern District Municipality was awarded R110 000 for defamation as the defendant had deliberately acted to falsely implicate the plaintiff in greater debt than was in fact the case.

[84] In Tsedu and another v Lekota [36] the plaintiffs who were prominent office bearers of the African National Congress brought an action against the City Press newspaper after they carried an article under the heading ‘ ANC top brass spied on one another-apartheid agent’. The plaintiffs were awarded R150 000 and R112 500 respectively. On appeal both awards were reduced to R100 000.

[85] In Buthelezi v Poorter and Others.[37] It was held that a court “is entitled to take into account the conduct of the defamer from the time the label was published until judgment to the extent that such conduct is directly connected with the wrong sued on.”

[86]   In the present matter whilst the defendant stated that he never had the intention to defame the plaintiff but actuated by Mr Birkholtz who signed a document he was supposed to have signed, he was on the same breath adamant and stuck to his guns that the plaintiff committed fraud and was corrupt.  Consequently he never apologised to the plaintiff nor did he demonstrate any contrition for his wrong doing.

[87]   Most relevant to this matter is what was said In Media 24[38] by Brand JA where the following is stated:

“There is no formula for the determination of general damages.  It flows from the infinite number of varying factors that may come into play.  So, i.e., the court will have regard to the character of the corporation business, the significance of its reputation, the seriousness of the allegations, the likely impact of those allegations on the corporation’s reputation, and so forth.  But as was pointed out by Corbett CJ in Caxton, the court will also have regard to the fact that the company has no feelings that can be consoled.  At the other end, the court will consider that part of the loss that could have been recovered as special damages.  Finally, the court will have to perform the balancing act between the different interests invoked, including the chilling effect of excessive awards on freedom of expression”

[88]   In the light of the comparable awards referred to above and what was said in Media 24[39], my view is that an amount of R90 000 would be appropriate in the circumstances.  I also do not find any reason why costs should not follow the successful party.

Order 

[89]   In the premises the following order is made.

         (1)     The defendant is liable to pay the plaintiff the amount of ninety thousand rand (R90 000) as and for damages.

         (2)    Interest thereon at the prescribed legal rate from a date fourteen days after the date of judgment to date of payment.

         (3)     The defendant shall pay the plaintiff’s costs of this action, such costs to bear interest from a date fourteen days of the Taxing Master’s allocator to date of payment.

_______________________

V NQUMSE

ACTING JUDGE OF THE HIGH COURT

BHISHO

Counsel for the plaintiff          :         S H Cole

Instructed by                          :         Russel Linde Attorneys

                                                          CAPE TOWN

                                                          C/o Osborne Attorneys

                                                          EAST LONDON

For the defendant                  :         T M Jikwana

Instructed by                          :         Majali Incorporated Attorneys

                                                         EAST LONDON

Dates heard                            :   24 & 26 April 2019; and 15 & 16 July 2019

Date judgment delivered       :     14 January 2020

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