IN THE HIGH COURT OF SOUTH AFRICA (WITWATERSRAND LOCAL DIVISION) MTN SERVICE PROVIDER (PTY) LIMITED

Transcription

1 IN THE HIGH COURT OF SOUTH AFRICA (WITWATERSRAND LOCAL DIVISION) Case No. 2004/20602 In the matter between MTN SERVICE PROVIDER (PTY) LIMITED Plaintiff And L A CONSORTIUM & VENDING CC t/a L A ENTERPRISES LANCE HENRY FRONEMAN CONDOPROPS 1021 CC First Defendant Second Defendant Third Defendant JUDGMENT C.J. CLAASSEN J The plaintiff is a service provider conducting business as an exclusive MTN cellular telephony Service Provider in South Africa. The first defendant conducts business as a distributor of cellular telephony products. The first defendant is a close corporation owned by the second defendant ( Froneman ). The third defendant is also a close corporation and, together with Froneman, bound themselves as sureties and co-principal debtors with the first defendant

2 2 in favour of the plaintiff for the due fulfilment and payment of all amounts due by the first defendant to the plaintiff. Plaintiff and the first defendant concluded three written sale contracts 1. On 2 April 2001 and at Sandton, a PRE PAID DISTRIBUTION AGREEMENT 1 ; 2. on 28 January 2002 and at Sandton, an ELECTRONIC DISTRIBUTION AGREEMENT 2 ; and 3. on 2 July 2002 and at Sandton, a CELLULAR TELEPHONY DISTRIBUTION AGREEMENT 3 ; were concluded. It should be noted immediately that the third agreement of 2 July 2002 superceded 4 the first agreement of 2 April The parties further concluded written amendment agreements in order to rectify the names of the plaintiff and the first defendant. This was necessary because subsequent to the conclusion of the agreements, plaintiff changed its name and the first defendant s name had been incorrectly recorded in the agreements. However, nothing turns on these amendments. In effect, the parties contractual relationship was at all times governed by two contracts i.e. the Pre Paid Distribution Agreement as later substituted by the Cellular Telephony Distribution Agreement on one hand, and the Electronic Distribution Agreement. The difference between these two agreements, in simple terms, is to be found in the fact that in the Pre Paid Distribution 1 See Annexure A to the plaintiff s particulars of claim, pages of the pleadings file, and pages 1-36 of Exhibit A handed in by consent between the parties. 2 See Annexure B pages of the pleadings file and pages of Exhibit A. 3 See Annexure X attached to the defendant s plea and counterclaim at pages of the pleadings file and pages of Exhibit A. 4 See clause 1.3 of the Cellular Telephony Distribution Agreement page 119 of the pleadings file.

3 3 Agreement plaintiff sold to the first defendant physical telephony products whereas in the Electronic Distribution Agreement plaintiff sold to the first defendant non-physical electronic signal facilities ( Network Services 5 ) which were necessary to make the physical telephony products function as they were designed to do. In the first case physical delivery of the products sold was possible but not so in regard to the delivery of the Network Services in the second case. In the second case delivery of the signal necessary to make the telephony products function, was occasioned by electronic activation, the notification whereof occurred via messages. It follows that proof of delivery of the sales in terms of the Electronic Distribution Agreement would be peculiarly problematic in legal terms. I will return to this aspect later. The parties conducted their commercial relationship for approximately two years and six months whereafter plaintiff terminated both contracts in terms of their respective termination provisions 6 providing for 90 days (or three months) notice in writing. The plaintiff terminated the agreements by reason of first defendant s alleged failure to meet the minimum targets set in the contracts. 7 Despite a written warning 8 to comply with the set targets, first defendant failed to deliver the required minimum performance as a result whereof plaintiff terminated, seemingly ex abundante cautelia, all three contracts in a letter dated 17 October After receipt of the letter of termination, no further orders were placed by the first defendant for products nor did plaintiff deliver any further products to the first defendant. 5 6 See clause 2.10 of the Electronic Distribution Agreement at p 65 of the pleadings file. See clause of the Electronic Distribution Agreement at page 73 of the pleadings file and clause of the Cellular Telephony Distribution Agreement at page 140 of the pleadings file. 7 See clause 14 of the Pre Paid Distribution Agreement at page 37 of the pleadings file and clause 16 of the Cellular Telephony Distribution Agreement at page 136 of the pleadings file as read with the plaintiff s letter dated 17 October 2003 addressed to the first and second defendants page 170 of Exhibit A, which letter was duly received and signed for on 17 October See the letter dated 8 July 2003 at page 166, Exhibit A duly received and signed for by Froneman on the same date. 9 See Exhibit A page 170.

4 4 On 4 November 2003 plaintiff demanded payment from the first defendant of an outstanding amount of R as set out in an annexure attached to the aforesaid letter from which it would appear that the amount is derived from 5 invoices issued in respect of account No It is common cause that such account was opened for the first defendant in the books of the plaintiff. 10 The only response from the first defendant was a letter written by a Mr. Ben Vorster dated 29 November 2003 wherein copies of the three contracts and the five invoices were requested. 11 Prior to the written cancellation contained in the letter dated 17 October 2003, the first and second defendants were verbally informed of plaintiff s intention to cancel the contracts. In response to such verbal information, a letter was written by Mr. Ben Vorster on behalf of the first defendant dated 16 October 2003 wherein plaintiff s right to cancel the contracts was not disputed but only the return of the suretyships requested. 12 In this regard it must be noted that counsel for the plaintiff, at the close of plaintiff s case, indicated that he was not persisting with the claims against the second and third defendants based upon the suretyship document. As a result second and third defendants are entitled to be absolved from the instance with costs. ISSUES ON THE PLEADINGS It is trite law that plaintiff bears the onus of proving on a balance of probabilities that the first defendant owes it the amount it claims. The pleadings indicate that the terms and provisions of the contracts are not in dispute. 13 The plaintiff divided its claim on the pleadings into two parts: Claim A is for an amount of R comprising physical stock sold and 10 See Exhibit A pages 171 and Exhibit A page See the Index to Notices and Interlocutory Applications file at page See paragraph 5 of plaintiff s particulars of claim at pages 6 11 as read with paragraphs 8 and 9 of the defendants plea at pages 102 and 103 and paragraph 8 of the plaintiffs particulars of claim at pages of the plaintiffs particulars of claim as read with paragraphs 14 and 15 of the defendants plea at pages 104 and 105 of the pleadings file.

5 5 delivered by the plaintiff to the first defendant at the latter s special instance and request. 14 This allegation is denied by the defendants as if specifically traversed and plaintiff is put to the proof thereof. 15 Claim B is for an amount of R comprising stock sold and delivered by the plaintiff to the first defendant in terms of the Electronic Distribution Agreement. 16 This allegation is also denied by the defendants as if specifically traversed and the plaintiff is put to the proof thereof. 17 As indicated previously the Cellular Telephony Distribution Agreement concluded in July 2002 superceded the Pre Paid Distribution Agreement. As such, the contractual relationship between the parties, as at the date of termination in October 2003, would be governed by the terms of the Electronic Distribution Agreement and the Cellular Telephony Distribution Agreement. The issues on the pleadings and the tendered evidence must therefore be viewed in the light of their provisions. THE EVIDENCE The plaintiff called four witnesses i.e. Mr. LJ. Lodge, Mr. K. Vandayar, Mr. Shepherd Mpofu and Mr. Maxwell Chongo. Thereafter plaintiff closed its case and the defendant similarly closed its case without calling any witnesses. Lodge confirmed the conclusion of the three agreements referred to above. He testified to the addendum agreements amending the names of the entities to the contracts. 18 He was in regular discussions with representatives of the first defendant regarding the termination of the contracts. He said that because first defendant did not reach its set targets the contracts were terminated in terms of the notice provision, giving them 90 days notice. The plaintiff s case was not based on any breach of contract on the part of the first defendant. The last See paragraph 7 of the plaintiff s particulars of claim at page 12 of the pleadings file. See paragraph 13 of the defendants plea page 104 of the pleadings file. See paragraph 10 of plaintiff s particulars of claim at page 18 of the pleadings file. See paragraph 17 of the defendants plea at page 105 of the pleadings file. In regard to the change of plaintiffs name see Exhibit B.

6 6 order placed by the first defendant for stocks and services was invoiced on 15 October Lodge testified that the plaintiff used an Oracle accounting system to manage its stocks and debtors. This is a software package designed for larger businesses similar to SAP and ACPAC. He stated that monthly statements indicating transactions from the 1 st to the last calendar day of each month were generated and stored on the plaintiff s computer system. The statements were printed out in duplicate, the first copy going to the distributor and the second copy retained by the plaintiff. Lodge issued a certificate in terms of section 15 of the Electronic Communications and Transactions Act No. 25 of 2002 ( ECT Act ) 20 Lodge confirmed the correctness of paragraphs 1, 2 and 3 thereof which state as follows: 1. The running account statements from January 2003 to February 2004 and the summary of the running account statements annexed hereto and marked LA 1 and LA 2 respectively and initialized by me are copies and/or printouts of the data stored on the plaintiff s computer system. 2. The data recorded on the account statements was made in the ordinary course of the plaintiff s business. 3. The data recorded on the account statements was: generated and stored by the plaintiff under my supervision and control on the plaintiff s computer system; maintained by the plaintiff under my supervision and control on the plaintiff s computer system; and printed by the plaintiff under my supervision and control from the plaintiff s computer system. The documents attached to Lodge s certificate are copies of the documents found at pages in Exhibit A. He confirmed that these copies and See LA2 Exhibit A, page 321. See Exhibit C.

7 7 printouts are correct copies of the data contained on the Oracle computer system. 21 Lodge testified that he was responsible for the statements and the day to day accounting of debtors. He was in charge of a staff of approximately 20 people. The first defendant was granted 30 days for payment of stocks and services purchased from and delivered to it by the plaintiff. The first defendant never paid the exact amounts reflected in the invoices but instead paid lump sums which were then allocated by the plaintiff s staff to the various invoices, starting with the oldest orders. He stated that the staff created the transactions from orders received and each staff member dealt only with his particular function in regard to each order. Once the transaction is captured the value thereof is automatically calculated by the computer system as it contains all the prices of the various products. The outstanding balance on the distributor s account is a function of all the transactions as calculated by the computer system. The statements attached to Exhibit C were downloaded from the computer system and printed. A summary of the transactions concluded between plaintiff and first defendant between the period 1 July 2003 to 19 March 2004 were downloaded from the computer indicating the respective invoice numbers, purchase orders, descriptions of each item, the values of the transactions and payments made by first defendant as well as credits granted to the first defendant. 22 Payments were made by cheque. Lodge explained the process of concluding transactions between it and the first defendant as follows: The distributor was entitled to place orders for stock or services in writing or by telefax or electronically by . These orders would then be captured on plaintiff s Oracle system by his staff. The order is See paragraph 4 of Lodge s certificate in Exhibit C. See Exhibit A pages , a copy of which is also attached to the end of Exhibit C.

8 8 then sent electronically for approval to the Credit Manager who is also under Lodge s control. The Credit Manager checks to see if the distributor s account is overdue and whether the order is within his credit limits. The amount of the order is automatically calculated by the accounting system. If approved, the distributor s account is debited and the order is sent through electronically to plaintiff s warehouse where an invoice is generated. The physical stock or order is then delivered to the distributor who will sign an acknowledgement of receipt which is returned to the plaintiff as proof of delivery. Delivery of the required network services is done by an electronic activation process in another department of the plaintiff headed up by Mpofu. Lodge stated that the accounting system would not allow duplication of orders as it wouldn t accommodate a purchase order twice. He stated that mistakes are possible but highly unlikely due to the checks and balances incorporated within the system which identifies mistakes and rectifies them. He stated that in any event first defendant never queried the statements reflecting the orders placed and delivered and the payments made in regard thereto. The outstanding amount was based on the last five orders placed by the first defendant. These are as follows: FIGURE 1 Date Invoice No. Purchase Description Invoice Order including VAT 18 Sept PO R180 Call-a-lot 30, Logical Number R30 Call-a-lot 1,890, Logical Number R60 Call-a-lot 75, Logical Number

9 9 10 Oct PO PP MotorolaT190DB 59, Burgandy 10 Oct PO PP LG B1200 Blue 7, PP Motorola C350 Silver 54, PP Motorola T , DB Burgandy PP Nokia 2100 Green 1, PP Nokia , PP Samsung SGH-C100 67, Silver PP Sim Kit R , Personalized Pre Paid 4, k swap-out sim card 13 Oct PO R30 Call-a-lot Logical 1,260, Number R60 Call-a-lot Logical 5, Number 15 Oct PO R30 Cal-a-lot Logical 630, Number 23 In regard to the two purchase orders dated 10 October 2003 in figure 1 above, plaintiff was able to provide two signed Proof of Delivery ( POD ) copy tax invoices. 24 It would appear from these two documents that they were signed by one Fiona on behalf of the first defendant. This would appear to be Me Fiona Campbell who was concerned with orders at the Head Office in Midrand of the first defendant. 25 The totals inclusive of Vat as indicated on the two POD copy tax invoices, tie up with the figures in respect of these two transactions as reflected in the summary of transactions in Exhibit A page 324. In terms of the contracts the parties agreed that a signed invoice or delivery note will serve as absolute and incontrovertible proof of delivery, whereafter no claims for shortages will be considered or accepted by the See Exhibit A page 324 See Exhibit A pages 340 and 341. See Annexure A to the Cellular Telephony Distribution Agreement at page 151 in the pleadings file.

10 10 plaintiff. 26 Lodge conceded that these are the only proof of delivery documents in regard to the delivery of physical stock available to the plaintiff. The remaining three transactions dated 18 September, 13 October and 15 October 2003 in Figure 1 above, relate to the supply and delivery of Network Services pursuant to the provisions of the Electronic Distribution agreement. Network Services is defined as meaning those GSM telecommunications services made available from time to time, by the Service Provider (the plaintiff) to its Customers via the Network pursuant to the purchase of a Pre Paid Network Package. 27 The word Network is defined as meaning: the public cellular telephone network operated by the Operator and through which the network services are made available by the service provided to its customers. 28 Lodge agreed that the ordering and delivery of these Pre Paid Network Packages are regulated by clause 6 of the Electronic Distribution Agreement. A very helpful schematic illustration of the operation of the process contemplated by clause 6, is found in Annexure C attached to the Electronic Distribution Agreement. 29 The distributor normally places an order via electronic mail ( ) containing the required information as set out in Annexure F 30 attached to the Electronic Distribution Agreement. The s are sent to a designated e- 26 See clause 7.8 of the Pre Paid Distribution Agreement at page 33 of the pleading file and clause 7.8 of the Cellular Telephony Distribution Agreement at page 129 and 130 of the pleadings file. 27 See clause 2.10 of the Electronic Distribution Agreement being Annexure B to the plaintiff s particulars of claim at page 65 and clause 2 of the Cellular Telephony Distribution Agreement at p121 of the pleadings file which refers to the conclusion of an End User Agreement or the purchase of a Pre Paid Kit or Pre Paid Debit Card instead of Pre Paid Network Package. The difference is of no significance to this case. 28 See clause 2.9 of the Electronic Distribution Agreement being Annexure B to the plaintiff s particulars of claim at page 65 and clause 2 of the Cellular Telephony Distribution Agreement at page 121 of the pleadings file. 29 See page 85 of the pleadings file. 30 See page 91 of the pleadings file.

11 11 mail address stipulated by the plaintiff and constitute prima facie proof of the fact that such order had been submitted by the distributor. 31 Plaintiff can then accept or reject the order and once it has accepted the order, delivery of the packages shall be affected by way of electronic delivery in a format in accordance with the Business Specifications attached to the agreement. The business specifications provide that the delivery of such network services takes place by way of an containing an encrypted file in the denominations stipulated by the distributor. The network services are, however, initially inactive and will only be activated once the distributor has acknowledged receipt of the encrypted file by way of a return to the designated address. 32 Delivery of the network services will be deemed to have taken place either once the acknowledgement of receipt of the encrypted file has been ed back to the plaintiff by the distributor or once such network services have been activated by the plaintiff for use on the network, which ever is the sooner. 33 Lodge confirmed that the copy tax invoice duplicate downloaded from the Oracle debtor system in regard to the transaction of 18 September 2003 (Purchase Order ) 34 would have been ed to the first defendant. The same was true of the copy tax invoice duplicate in respect of Purchase Order with delivery date of 13 October 2003 and the copy tax invoice duplicate in respect of Purchase Order with delivery date 15 October The status of these three transactions in as far as the activation of those network packages are concerned is reflected in a status report indicating their status as 4 which is the code indicating activation of such network packages. There are only two examples of s sent by the first defendant requesting activation of orders neither of which relate to the three orders referred to above See clause 6.1 of the Electronic Distribution Agreement at page 68 of the pleadings file. See clause 6.3 of the Electronic Distribution Agreement at pages 68 and 69 of the pleadings file. See clause 6.4 of the Electronic Distribution Agreement at page 69 of the pleadings file. See Exhibit A pages 336 and 337. See Exhibit A pages 338, 339, 334 and 335. See Exhibit A pages 326 and 327.

12 12 Vandayar is the Commercial Operations Manager in charge of the Order Management Department. He stated that orders could be placed by fax or e- mail. Upon receipt thereof by his department, they satisfy themselves that it comes from a genuine customer who has an account with the plaintiff and whether the product ordered falls within the bouquet allowed by the agreement. They capture all details of the transaction on the Oracle system and it generates a Purchase Order number for each transaction. It is then sent through to the Commercial Credit Department who verifies the amount and the credit limit of the customer. A copy of the order approved and signed by the Commercial Credit Department is then delivered back to the Order Management Department. Thereafter the order is released to the warehouse where the stock is then matched with the order and shipped to the distributor. The computer system then generates an invoice. An invoice cannot be generated without an order placed. The system generates the invoice and it is not a manual function. This system is in respect of physical stock which has to be delivered to the distributor. As far as the electronic network services are concerned the distributor has to order it by . The designated address of the plaintiff to which the distributor sends an order, is referred to in the Business Specification attached to the Electronic Distribution Agreement as Annexure C. 37 The verification process is exactly the same as with orders for physical stock. He confirmed that the copy tax invoice duplicates downloaded from the Oracle computer in respect of Purchase Orders PO , PO and PO was the result of the orders having been captured in his department and then generated by the shipping department after they had sent it through to the warehouse. Vandayar was not cross-examined and his evidence was therefore not challenged. 37 See clause at page 86 of the pleadings file and page 62 of Exhibit A.

13 13 Mpofu was the Product Manager of plaintiff concerned with the electronic distribution of airtime. He confirmed that orders processed and captured on the Oracle system, come to his department and they deliver the network services by way of an containing encrypted information. This process does not entail delivering any physical stock. The encrypted information contains the pin numbers which would enable the physical stock to be activated. Upon receipt of an requesting activation, the pin numbers are electronically activated. Mpofu was also not cross-examined and his evidence was unchallenged. Mpofu also submitted a certificate in terms of section 15 of the ECT Act. 38 In his certificate he explains the status report 39 previously referred to in the following terms: 1. The LA Enterprises Order Activations ( Order Activation Record) annexed hereto and marked LA3 and initialized by me is a copy print-out of the data stored on the plaintiff s computer system. 2. The data recorded on the Order activation Record was made in the ordinary course of the plaintff s business. 3. The data recorded on the Order Activation Record was: 3.1 generated and stored by me on the plaintiff s computer system; 3.2 maintained by me on the plaintiff s computer system; and 3.3 printed by me from the plaintiff s computer system. 4. The Order Activation Record is to be found in the plaintiff s trial bundle. He confirmed that LA3 relates to the activation of orders placed by the first defendant as customer of the plaintiff. The first three entries on the document relate to the purchase orders , and which tie up See Exhibit D. See Exhibit A page 333.

14 14 respectively with the copy tax invoice duplicates at pages 334, 338 and 336 of Exhibit A. He confirmed that the code 4 under the table headed Status signified that those purchase orders had in fact been activated in respect of pre paid cards between the sequential numbers reflected against each purchase order in columns 5 and 6 of the document. In fact, all the purchase orders reflected in the second column of the document were activated except the 5 th entry which indicates a status code 5. Mpofu explained that that purchase order was blacklisted. He confirmed that column 4 indicated the date and time upon which the respective orders were captured on the system. The information on the document was extracted from the computer system. Chongo was the Commercial Credit Manager and Credit Control Supervisor responsible for collecting outstanding amounts and resolving account queries. He approved or declined orders after credit checks, price checks and customer identification were made. CLAIM A In my view the uncontroverted oral evidence together with the documentation establish on a balance of probabilities that plaintiff delivered the physical stock reflected on the copy tax invoices in respect of Purchase Orders and , both dated 10 October I have come to this conclusion based on the evidence of Lodge. The two invoices were downloaded from the Oracle computer and copied. The documents contain the required acknowledgement of receipt signed by Me Fiona Campbell and it also bears the stamp of the first defendant. It indicates that the stock was delivered to the first defendant on the 14 th of October 2003, i.e. 4 days after the invoice was generated. The documents speak for themselves and in my view fall within the methodology for deliveries and proof of such deliveries set out in clause 7.7 of the Pre Paid Distribution Agreement as well as clause 7.7 of the Cellular 40 See pages 340 and 341 of Exhibit A.

15 15 Telephony Distribution Agreement. The POD copy tax invoices must have been returned by the driver of the plaintiff in order for the plaintiff to be in possession thereof and to capture it on the oracle computer. In my view the document constitutes absolute and incontrovertible proof of delivery of the stocks referred to therein. In my view plaintiff proved first defendant s liability to pay the balance owing on Purchase Order namely R plus R in respect of Purchase Order , totalling R323, CLAIM B In my view plaintiff also succeeded in proving this claim. The evidence of Lodge stands uncontradicted to the effect that first defendant never queried the outstanding amounts on the statements delivered to it. Furthermore in regard to the network packages, delivery takes place electronically. There is no evidence to contradict the evidence of Lodge as confirmed by Mpofu that the status of purchase orders , and in respect of network packages are to the effect that they were in fact activated. This is further confirmed by the fact that there is an example of the first defendant s requesting activation of order No. LA57 42 This order appears as the eighth entry on the activation status report, page 333 Exhibit A. It bears the code No. 4 indicating a status of activation. Similarly code 4 adjacent to the first three entries in respect of the unpaid purchase orders, must also have been activated. In terms of the contractual provision of the Electronic Distribution Agreement, activation constitutes delivery of network packages. 43 Thus plaintiff proved electronic delivery of the network services contained in the aforesaid three purchase orders. PAYMENT See Exhibit LA2 at page 321 of Exhibits A and C. See Exhibit A page 326. See clause 6.4 of the Electronic Distribution Agreement at page 69 of the pleadings file.

16 16 The evidence is also uncontradicted that first defendant never disputed that delivery took place and that it failed to pay for the remaining five purchase orders which are in dispute. It is common cause that the first defendant did not pay per invoice but in round numbers at various intervals. The summary of transactions, pages of Exhibit A 44 have been certified by Lodge as being an extract generated by the Oracle computer system of the various transactions between January 2003 and February It records all the payments made by first defendant to the plaintiff in respect of the various purchases. There is no evidence to counter the correctness of the amounts paid by first defendant as reflected in the summary of transactions. In any event it was not first defendant s defence that it had paid for these purchase orders. The defence put in argument and in cross-examination was exclusively levelled at the plaintiff s alleged inability to prove delivery of the stock represented in the remaining 5 purchase orders. Once proof of delivery had been established, first defendant is without defence as regards its liability to pay for the stock reflected in the unpaid purchase orders. GENERAL Counsel for the first defendant launched a spirited attack on the plaintiff s case based upon the submission that it must fail as it relies on inadmissible hearsay evidence. Reliance was placed upon the cases Ndlovu v Minister of Correctional Services and Another [2006] 4 All SA 165 (W) at 172f 174b and S v Ndiki and Others [2007] 2 All SA 185 (Ck) at 192i 198e. He submitted that the computer generated documents relied upon by the plaintiff fall foul of the common law hearsay principles as encapsulated in the Civil Proceedings Evidence Act No. 25 of 1965 and the Law of Evidence Amendment Act No. 45 of See also the documents attached in Exhibit C.

17 17 In my view there is no substance in the aforesaid submission. In the present case we have the viva voce evidence of the Head of Department (Lodge) concerned with the capturing of orders received by the plaintiff onto a computer system. He is responsible for the correct capturing of such information. As it were, the buck stops with him. His evidence in regard to the transactions recorded in the statements and the summary of transactions, constitute direct evidence as regards the correctness thereof. Although the orders were captured upon receipt thereof by his staff, in law it must be regarded as if he himself has dealt with the incoming orders. If it were otherwise, evidence of each member of his staff, would have to have been called to testify as to each of the orders they dealt with when capturing the data thereof on the computer. If that were the law, I would say the law is an ass. It seems to me to be common sense to expect a party to call the head of the department to testify about the activities of such department. This is standard procedure where heads of department in government, business, mining, universities, etc. have to testify. The person in control is the person to testify about the activities of the staff under his or her control. This occurred in the present case. Lodge was head of the department dealing with the capturing of orders. Once the orders were captured the further perusal of the orders by other departments merely added information such as purchase order numbers, approval of the client s credit limit etc. In my view the contents of the purchase orders as constituting proof that the first defendant indeed placed such orders has been satisfied by the evidence of Lodge as head of department in his capacity as the person responsible for the correct capturing of the orders placed by first defendant. The next point is the question of proof of delivery. Proof of delivery in Claim A regarding the physical equipment delivered has been proved by the signature of Me Fiona Campbell on the two POD copy tax invoices referred to earlier. No hearsay problems will arise in regard to these two documents. They speak for themselves.

18 18 As to proof of delivery of the network packages, the point of departure is the e- mail sent by the first defendant on 7 November 2002 page 326 of Exhibit A. This deals with a request to activate a wholly unrelated order No. LA57. It was never disputed that this emanated from the first defendant. Such resulted in a status 4 of that particular shipment as documented on the status report at page 333 of Exhibit A. By parity of reason the status 4 next to the first three purchase orders in respect of network packages delivered to the first defendant would similarly indicate that they have been activated. This much was confirmed by Mpofu. In terms of the contractual provisions activation is equal to delivery. The only question is whether the computer incorrectly allocated a status code 4 to the three unpaid purchase orders. In this regard the uncontroverted evidence of Lodge and Mpofu bridges the gap on behalf of the plaintiff to the effect that the system is self correcting and therefore it is highly unlikely that the computer would have made a mistake. However, should I be incorrect in the conclusion reached in the previous paragraph there is the further evidence contained in the certifications of Lodge and Mpofu in terms of section 15 of the ECT Act. This section reads as follows: 15(1) In any legal proceedings, the rules of evidence must not be applied so as to deny the admissibility of a data message, in evidence (a) (b) on the mere grounds that it is constituted by a data message; or if it is the best evidence that the person adducing it could reasonably be expected to obtain, on the grounds that it is not in its original form. (2) Information in the form of a data message must be given due evidential weight. (3) In assessing the evidential weight of a data message, regard must be had to (a) the reliability of the manner in which the data message was generated, stored or communicated;

19 19 (b) (c) (d) the reliability of the manner in which the integrity of the data message was maintained; the manner in which its originator was identified; and any other relevant factors. (4) A data message made by a person in the ordinary course of business, or a copy or printout of or an extract from such data message certified to be correct by an officer in the service of such person, is on its mere production in any civil, criminal, administrative or disciplinary proceedings under any law,.. admissible in evidence against any person and rebuttable proof of the facts contained in such record, copy, printout or extract. To the extent that it may be held that the documents relied upon by the plaintiff constitute data messages, I am of the view that the certifications by Lodge, in his capacity of Senior Financial Manager, and Mpofu as Product Manager, of the plaintiff passes muster. Their evidence is uncontroverted that the capturing of the transactions was in the ordinary course of business of the plaintiff. To the extent that the documents are copies or printouts or extracts from the data messages, their certifications as officers in the employ of the plaintiff, make the documents on mere production admissible and therefore the documents constitute rebuttable proof of the facts contained therein. In the present case no rebuttal was presented by the first defendant which could undermine the correctness of these documents. In my view the documents constituted the best evidence which the plaintiff could obtain and should not be rejected merely on the ground that the documents were not in original form. In assessing the evidential weight of the data messages relied upon by the plaintiff, there is the uncontroverted evidence of Lodge as backed up by the evidence of Mpofu and Vandayar as to the efficiency and dependability of the Oracle computer and accounting system. The originator of these data messages are those persons in the employ of the plaintiff under the control of Lodge and Mpofu. They were responsible for their accuracy.

20 20 In view of the aforesaid circumstances it would, in my view, be a travesty of justice if the computer generated documentation evidencing a long standing contractual relationship between the plaintiff and the first defendant stretching over more than a year, where the value of these transactions ran into several millions of Rands per month, should be rejected merely because of the hearsay rule. In my view this type of case is per excellence the type of case intended by the Legislature to pass muster for purposes of facilitating proof of facts by way of data messages in terms of the ECT Act. FIRST DEFENDANT S COUNTERCLAIM In paragraph 4 of the conditional counterclaim, it is alleged that plaintiff has failed to make payments in regard to certain commissions allegedly earned by the first defendant in terms of Annexure C attached to the Pre Paid Distribution Agreement and Annexure D attached to the Cellular Telephony Distribution Agreement. It is alleged that plaintiff has failed to make full payment of these commissions and that an outstanding amount of R is due and payable by the plaintiff to the first defendant. As indicated earlier, first defendant did not produce any documentary or oral evidence to rebut the correctness of the entries in the summary of transactions. 45 The summary of transactions indicates various credits in favour of the first defendant in respect of incentives, commissions, bonuses and payments. The first defendant did not supply any evidence to indicate that these were incorrect or inadequate. No evidence was presented as to how the claimed amount of R in respect of commissions, is made up. 45 See Exhibit A pages , also attached to Exhibit C.

21 21 In these circumstances, there is no basis to find that the first defendant discharged the onus of proving its entitlement to the claimed amount and the counterclaim falls to be rejected. CONCLUSION I am therefore of the view that the plaintiff has succeeded in proving its case on a balance of probabilities and I make the following order: 1. The second and third defendants are absolved from the instance with costs. 2. The first defendant is ordered to pay the plaintiff: 2.1 The amount of R in respect of Claim A. 2.2 The amount of R in respect of Claim B. 3. Interest at the rate of 15.5% per annum as from 18 January 2004 to date of payment. 4. First defendant s counterclaim is dismissed. 5. Costs of suit. DATED AND SIGNED AT JOHANNESBURG ON THIS DAY OF DECEMBER 2007 C.J. CLAASSEN JUDGE OF THE HIGH COURT Counsel for the plaintiff: Attorneys for the plaintiff: Adv. Fischer Bowman Gilfillan Inc.

22 22 Counsel for the defendants: Attorneys for the defendant: Adv. Den Hartog Eugene Maritz Attorneys The case was heard on the 7 and 10 th of September 2007.