A Cape Town-based consulting firm has burnt its fingers in a “deal” with the University of KwaZulu-Natal, losing half a million rand and notching up big legal fees because it signed the contract with “the guy in the corner office” who, it later emerged, was not authorised to do so.
Durban High Court judge Jerome Mnguni this week dismissed, with costs, an application brought by Oppex Consultants CC, which was claiming an amount of R525 000 from the university, being its share of a million-rand refund from the eThekwini municipality in respect of overcharged electricity.
Oppex runs an “own risk” business of analysing electricity consumption and advising on savings. It does not charge upfront, but earns its fees by participating in the saving or refund achieved by its clients.
In November 2006, salesman Anton Maine visited Rajesh Dhuni at the university, who signed a deal authorising Oppex to do an analysis.
Its investigations resulted in a refund of just more than a million rand from the municipality. In terms of the agreement, Oppex was entitled to half of this.
But the university denied liability and said Dhuni – as head of expenditure – was not authorised to conclude the agreement.
During the trial, the university did not call Dhuni, because of his ill-health, but relied on the evidence of his boss, finance manager Yagambran Pillay, who said the authority to conclude the agreement was vested only in the university’s registrar.
Documents were handed in showing who among the university’s officials were entitled to enter into such agreements, and for what value.
Dhuni’s name did not appear anywhere.
The judge said it was clear he lacked the authority, but the inquiry did not end there. He also had to determine if the university induced Maine, by word, representation or conduct, to believe Dhuni was so authorised. Central to this was the evidence of Maine, the judge said.
The judge concluded, after hearing Maine’s evidence, that the university had not in any way induced Maine reasonably to believe that Dhuni was authorised to enter into the agreement.
Accordingly, the judge dismissed the application and ordered Oppex to pay the university’s legal fees, including the costs of two counsel.