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[2016] ZAWCHC 127
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Steenkamp NO and Another v Mossel Bay Municipality (21583/2011) [2016] ZAWCHC 127 (22 August 2016)
IN THE HIGH COURT OF SOUTH AFRICA
(
WESTERN
CAPE DIVISION, CAPE TOWN
)
CASE
NUMBER
: 21583/2011
DATE
:
22 AUGUST 2016
In
the matter between:
JAN
KASPER GERHARD STEENKAMP
NO
...................................................................
1
st
Plaintiff
STEPHANUS
JOHANNES STEENKAMP
NO
.................................................................
2
nd
Plaintiff
And
MOSSEL
BAY
MUNICIPALITY
............................................................................................
Applicant
J
U D G M E N T
DAVIS,
J
:
In this
matter the plaintiffs have sought to apply for leave to amend their
particulars of claim as is set out in a notice of intention
to amend
31 March 2016. The application is opposed by the defendant.
Briefly, the background to this matter can be
set out thus: during
the period 2007 to 2008 defendant invited interested parties to
submit bids for certain development rights
in the municipal area of
Mossel Bay.
On 19
December 2008 it appears that plaintiff was awarded certain rights
subject to the conclusion of a land availability agreement
between
defendants and the plaintiffs to be signed in due cause. This
was confirmed in a letter of 5 February 2009 in which
Mr Du Plessis,
the acting municipal manager of defendant, wrote to the plaintiffs as
follows:
“
This
is to notify you that your bid for the development rights for
purposes of establishing affordable housing in terms of the above
mentioned tender has been accepted subject to the successful
negotiation in signing of a land availability agreement. No
objection received from other bidders within the 21... day objection
period. You will be contacted shortly by an official
from the
municipality regarding the negotiation signing of a land availability
agreement as well as a service agreement.”
It appears
that attached thereto was a land availability agreement in draft
form. Thereafter a competing tender, ASLA, took
the award of
the tender to plaintiffs on review which was opposed by plaintiffs.
The hearing of the review in August 2009
was converted into internal
appeal proceedings. ASLA, the defendant and plaintiffs were all
party to these internal appeal
proceedings. On 21 October 2009
at a pre-trial conference held in Mossel Bay regarding the impending
internal appeal proceedings,
the parties agreed that these
proceedings should be converted into arbitration proceedings.
The arbitration was ultimately
set down for hearing in Mossel Bay at
the end of January 2010. At the hearing of the arbitration the
internal appeal was
settled between all the parties (according to
plaintiffs’ version) on the basis that the development right
were to be awarded
to both ASLA and the plaintiff on a shared basis.
A
settlement agreement was entered into and to the extent relevant
reads thus:
“
Settlement
agreement between appellant (ASLA) and third and fourth respondents
on behalf of Stone Trade Trust (STTC) (the third
and fourth
respondents were the trustees of the trust).”
The agreement
continues:
“
Whereas
the Mossel Bay Municipality (the Municipality) accepted STTC’s
bid for the development rights in respect of land in
Heiderand,
D’Almeida and Kwanonqaba (the development rights) in accordance
with the letter dated 5 February 2009 ... STTC
abandons the
development rights granted to it in respect of land in Heiderand and
undertakes not to object to the award of rights
to land in Heiderand
to ASLA by the municipality. ASLA withdraws its appeal against
the award insofar as it relates to the
land in D’Almeida and
Kwanonqaba and undertakes not to object to the award of such rights
to STTC. This agreement is
subject to:
3.1 the
parties obtaining a legal opinion confirming that the aforementioned
agreement may be implemented by the municipality in
accordance with a
call for proposals in respect of the development; and the
municipality through its duly authorised agent concluding
land
availability agreements with both.
3.2.1 ASLA in respect of ASLA’s proposal submit
to the municipality in respect of the land in Heiderand and;
3.2.2 STTC in respect of the land in D’Almeida
and Kwanonqaba.”
Plaintiffs’
summons in the matter was issued during October 2011. During
January 2012 defendant filed a plea in the
matter in respect of which
essentially it contended that;
The
award of the tender was always “subject to the successful
negotiation and signing of land availability agreement”
and
that as such the agreement contended for by the plaintiffs was
inchoate and unenforceable.
The
plaintiffs as prospective tenderers were under a legal duty to fully
disclose to the defendant all facts relevant to their
financial
ability to complete the tender.
Certain
facts pertaining to the plaintiffs financial position were not
disclosed to the defendant at the time of the submission
of the
plaintiffs bid and;
The
defendant was therefore entitled to cancel whatever contractual
relationship had come into existence between the parties upon
the
discovery of these facts.
During
May 2015 the defendant amended its plea. It has filed further
notice of intention to amend its plea on an extensive
basis and as a
result of this proposed amendment, the trial which had been set down
for hearing during August 2015 could not proceed.
As part of
the defendant’s amended plea, numerous additional defences were
introduced to which I shall not pay particular
attention at this
stage. The parties subsequently agreed to separate certain
legal issues arising from this amended plea
and the plaintiffs’
replication followed in October 2015.
Plaintiffs,
according to Mr Huisamen, who appeared on behalf of the plaintiffs,
were advised to amend their particulars of claim
extensively to
introduce a more comprehensive factual matrix within which the
alleged repudiation on the part of the defendant
took place.
This notice of intention to amend, as I have indicated, took place on
31 March 2016. Plaintiffs’
attempt to amend its
particulars of claim was then met with a comprehensive objection by
the defendant as of 11 April 2016.
In essence the objections
were based on the following grounds:
The
plaintiffs were seeking to introduce a new cause of action which
already had prescribed.
The
amendment would render the particulars of claim excipiable for a
series of reasons set out in this objection including that
the
defendant was not a contractual party to the settlement agreement
referred to in the papers as annexure “POC4”.
The
participation of ASLA was necessary for the continued validity of
POC4.
POC4 had
lapsed due to the failure by the parties to conclude a land
availability agreement prior to May 1, 2010 which was a suspensive
condition of the settlement.
POC4
was legally invalid due to an alleged non-compliance of relevant
legislation.
The
inconsistencies between POC4 and other documentation annexed in the
pleadings and relief sought namely that the annexure POC2
which was
the draft land availability agreement to which I have made reference
earlier and which was part of the original particulars
of claim, was
inconsistent with a further annexure POC5 to the notice of amendment
which annexure were signed by or on behalf
of the plaintiffs.
POC4
was inconsistent with the relief sought in terms of the particulars
of claim which relief was in respect of all the land
in question as
opposed to a portion thereof to which I have already made reference.
Mr
Huisamen submitted that plaintiffs case before and after the
amendment had been and always was that the defendant had repudiated
the development contract concluded between the parties (in terms of
the letter of 5 February 2009), that the plaintiffs had declined
to
accept the defendant’s repudiation and were entitled to an
order of specific performance, alternatively damages.
In the
alternative, plaintiffs accepted the repudiation and claimed damages
arising from the defendant’s repudiation of the
contract.
The
critical question which was raised in the debate about whether the
amendment should be permitted was whether there was now a
new cause
of action.
A NEW
CAUSE OF ACTION:
Before
dealing with the facts of this matter, it is important to examine
the law which underpins the arguments placed before
this Court
is of great relevance to the present dispute and therefore to
defendant’s arguments as to whether there is a new
cause of
action.
THE
QUESTION OF PRESCRIPTION.
Section
10(1) of the Prescription Act 68 of 1969 (“the Act”)
provides, subject to the provisions of this Chapter and
of Chapter 4,
that a debt shall be extinguished by prescription after the lapse of
the period which in terms of the relevant law
applies in respect of
the prescription of such debt.
Section
15(1) of the Act provides that the running of prescription, subject
to the provisions of subsection (2) is interrupted by
the service on
the debtor of any process whereby the creditor claims payment of the
debt.
Mr
Huisamen contended that, when the Act refers to a debt, it, in
effect, refers more generally to a claim and not to a cause of
action. There is, in his view, a material difference between
the concept of a cause of action and a right of action, the
latter
being equivalent to a claim or a debt.
In this
connection he referred to the decision in
Rustenberg Platinum
Mines v Industrial Maintenance Painting Services
2009 (1) ALLSA
275
(SCA) where this issue was fully canvassed. In this case,
in terms of an agreement between the parties, the respondent had
undertaken certain work for the appellant and supplied certain
materials in relation to such work. Appellant had paid for
the
work based on invoices supplied by the respondent. However, it
averred that subsequently it discovered that some of the
claims paid
were not valid and, based on unjust enrichment demanded repayment
from the respondent. Only part of the amount
was repaid leading
to the action between the parties. When the trial commenced
appellant sought to amend its particulars
of claim.
In
short, after three witnesses testified on its behalf, plaintiff
sought to amend its particulars of claim by adding two alternatives
to its cause of action as pleaded, allegedly so as to accord with the
evidence already tendered.
Defendants
objected to the proposed amendment and this dispute proceeded all the
way to the Supreme Court of Appeal. Of relevance
are the following
passages from the judgment of Mpati P at para 13:
“
An
amendment is no doubt permissible provided that the debt which is
claimed by way of the amendment is the same or substantially
the same
debt as originally claimed. In order to decide the defendants’
objection based on prescription in this matter,
that is whether the
debt claimed in proposed amendment has become prescribed, it is
necessary to identify the debt or as Harms,
JA put it in
Drennan
.. one must ascertain ‘what the claim was in the broad sense of
the meaning of that word’. As has been mentioned
above it
is common cause between the parties that when the excess amount was
paid to defendant, there was no
causa
for the payment – no work had as yet been done and no materials
supplied. It is that excess amount (“the debt”)
as
embraced in the original cause of action which plaintiff seeks to
recover. It is true that the proposed amendment sets
out a
cause of action which is different from that contained in the
particulars of claim. The proposed amendment seeks to
introduce
as alternative causes of action, contractual obligations arising from
agreements between the parties in terms of which
the defendant
tacitly agreed to repay the excess amount to plaintiff. The question
however is whether the proposed amendment introduces
a new claim or
debt.”
Mpati P
then referred to the decision in
Evins v
Shield Insurance
where Corbett, JA (as
he then was) said the following:
“
Where
the plaintiff seeks by way of amendment to argument his claim for
damages, he will be precluded from doing so by prescription
if the
new claim is based upon a new cause of action and the relevant
prescriptive period has run but not if it was part and parcel
of the
original cause of action and merely represents a fresh quantification
of the original claim or an addition of a further
item of damages.”
Cited at para 14.
Mpatip,
JP then continues:
“
According
to Corbett, JA if an amendment introduces a new ‘claim’
or ‘debt’ which is based on a new cause
of action, such
amendment will be susceptible to a special plea of prescription if
the prescriptive period has run. Put differently,
if the new
cause of action i.e. the material facts which must be proved for a
plaintiff to succeed, sought to be introduced by
the amendment gives
rise to a different ‘right of action’ or ‘ debt’
to the one originally claimed, that
plaintiff will be precluded from
effecting the amendment if the relevant prescriptive period has run.
But as I understand
the extract from the judgment of Trollip, JA it
does not follow that a new cause of action sought to be introduced by
an amendment
will necessarily give rise to a ‘claim’ or
‘debt’.”
At para
19 the learned President continues:
“
At
the risk of repetition ... Jones, AJA said in deciding whether
a summons interrupts prescription, it is necessary to compare
the
allegations and relief claimed in the summons with the allegations of
the relief claimed in the amendment to see if the debt
is
subsequently the same .. When this test is applied to the facts of
the present matter, the result seems to me to be that the
plaintiff
seeks throughout to recover the same debt .. It is so as I have
mentioned above, that the allegations of ‘cause
of action’
upon which the relief claimed is based in the amendment differs from
the allegations of ‘cause of action’
set out in the
particulars of claim but the relief claimed i.e. the ‘debt’
is, in my view, the same.”
In the
matter to which Mpati, P referred, that is
CJU
Insurance Limited v Rumdell Construction (Pty) Ltd
2004 (2) SA 622
(SCA) at para 5, the Court held:
“
The
defendants’ argument is by introducing a new contract the
plaintiff has introduced a new cause of action, but it does
not
follow that by curing a defective cause of action by introducing the
contract upon which it really relies the plaintiffs, summons
necessarily claims a different debt. Indeed it is settled law,
that a summons which sets out an excipiable cause of action
can
interrupt the running of prescription provided that the debt is
cognisable in the summons and is identifiable as substantially
the
same debt as the debt in the subsequent amendment.”
On the
strength of this authority, Mr Huisamen contended that the
plaintiff’s cause of action was that they were entitled
to
certain development rights awarded to them as part of a tender
process. The defendant had unlawfully repudiated its
contractual
obligations which flowed therefrom and accordingly
plaintiffs were entitled to certain specified relief. In his
view, the
debt which was claimed by the plaintiffs had remained
exactly the same. Plaintiffs were either entitled to specific
performance,
alternatively to damages. All that the plaintiffs
were now seeking to introduce by way of the amendment was, in effect,
to
consolidate the range of pleadings which had grown from the
initial summons; that is, to ensure that the comprehensive factual
matrix, including the effect of the agreement of settlement in the
internal appeal proceedings, within which the defendant’s
repudiation is contractual obligation took place, was incorporated
into the pleadings.
The
settlement reached between the parties following the internal appeal
process was purely incidental to the entire matter. While
plaintiffs’
cause of action might have been varied and / or expanded by the
agreement of settlement or indeed limited thereby,
the claim was in
essence the same claim as initially had been instituted.
DEFENDANTS
ARGUMENTS:
Mr Van
Riet, on behalf of the defendant, contended that plaintiffs’
cause of action as formulated in the particulars of claim
of 30
September 2011 was based entirely on the following set of averments:
The
alleged acceptance by defendant during February 2009 of the
plaintiffs bid for the award of the development rights (low income
housing).
As a
consequence of the acceptance ‘a contract (the development
contract)’ was duly concluded between the parties
as at
February 2009.
Defendant
unlawfully repudiated the said development contract on the basis set
out in the particulars of claim.
Plaintiff
had declined to accept the alleged repudiation and its main claim
was for specific performance by defendant of its obligations
which
flowed in terms of the “development contract”.
Turning
to the nature and effect of the proposed amendment to which defendant
had objected so strenuously, Mr Van Riet contended
that the
intention was clearly to delete the existing particulars of claim in
its entirety and to substitute therefore a new set
of allegations
which were contained in the notice of intention to amend. In
his view, plaintiffs had now omitted all reference
to the development
contract and relied on the alleged settlement agreement concluded
between plaintiffs and a co-bidder, being
ASLA on 29 January 2010.
The
proposed particulars of claim record that a legal dispute arose
between the parties and ASLA, a competitive bidder, which took
defendants award of the bid on review to Court. This dispute
was subsequently converted to defendant’s internal dispute
resolution procedure and later to arbitration before Melunsky, J.
On the first day of the arbitration “ASLA and the
Trust
resolved to settle the internal appeal (now arbitration)”.
The agreement reached between the parties (contained
in POC4) at the
arbitration proceedings furthermore finally disposed of all prior
issues that may have existed in relation to the
award of the tender
to the Trust, the review proceedings brought by ASLA and the internal
appeal proceedings with all the parties
including the defendant, in
other words the legal disputes were novated by agreement.
Although,
according to Mr Van Riet, defendant was not a signatory to this
agreement (POC4), the plaintiffs now sought to make defendant
a party
thereto on the basis of the series of ungrounded allegations:
ASLA
and the Trust resolved to settle the arbitration ‘with the
express participation approval and consent of the defendants”
(para 27 of the notice of intention to amend).
Prior
to the conclusion of the settlement agreement, defendant “indicated
that it would be agreeable to award the development
rights to both
ASLA and the Trust on a shared basis subject to inter alia the
condition that a legal opinion be obtained from
counsel confirming
that it would be lawful to do so”.
The
said settlement agreement (POC4) was negotiated together with and
expressly approved by the defendant.
Although
POC4 was not signed by the defendant, the latter was a party thereto
and bound by the provisions thereof.
Defendant
at all material times represented and the parties at all material
times accepted that the conclusion of a land availability
agreement
or development agreement between defendant and plaintiff would not
constitute the basis for the defendant to frustrate
the
implementation of the development question.
Mr Van
Riet further referred to paragraph 38 of the notice of intention to
amend where the following allegation appeared:
“
The
defendant accepted and reached agreement on the terms of the said
settlement agreement and / or acquiesced therein subject to
only one
proviso namely that a legal opinion be obtained confirming that the
defendant was duly authorised to implement the settlement.”
In
terms of paragraph 37 of the notice of intention to amend the
following appears:
“
In
all circumstances the terms of the agreement which forms the
plaintiffs cause of action in this matter, was therefore recorded
in
annexure POC1, read with the Trust bid document as amplified and / or
amended by the agreement of settlement of 29 January 2010
(POC4)”.
In Mr
Van Riet’s view therefore, it was clear that the conclusion and
enforceability of the settlement agreement (POC4) between
three
parties, being plaintiffs, ASLA and defendant was an essential link
in the new cause of action. It followed that the settlement
agreement
was therefore a novation of the development contract. In short,
the defendant adopts the view that the settlement
agreement was a
compromise and that it had extinguished any prior claim of the
plaintiff.
Mr Van
Riet sought to support defendant’s case on the basis of an
exposition of the law of compromise. Compromise unquestionably
extinguishes any legal relationship that may previously exist between
the parties. It brings legal proceedings already instituted
to
an end and prevents further legal proceedings in respect of the
original disputed cause of action. See for example
Western
Assurance Company v Caldwells Trustee
1918 AD 262
at 270-271.
Gollach
and Gompers (1967) (Pty) Ltd v Universal Mills and Produce Company
(Pty) Ltd
1978 (1) SA 914
(A) at 922.
On this basis and because a compromise does not depend on an original
cause of action, a party sued in a compromise
cannot then go behind
the agreement and raise defences to the original cause of action.
The
extent to which a disputed cause of action is affected by a
compromise depends on the intention of the parties. The
compromise
may be concluded, subject to either a suspensive or
resolutive condition. Much of Mr Van Riet’s argument was based
on the
decision in
Van Zyl v Niemann
1964 (4) SA 661
(A) where Botha, JA said at 668D-F:
“
Die
bespreking het uiteindelik uitgeloop op ʼn skikkingsooreenkoms
waarvolgens respondent die reeds betaalde bedrae behou en
appellant ʼn
verdere R72 aan respondent as ʼn toegewing van sy kant betaal
het. Dit was volgens appellant ooreengekom
dat respondent op
geen verdere betaling van die reeds gedane boorwerk geregtig sou wees
nie en dat indien respondent op enige verdere
betaling ten opsigte
van bedoelde boorwerk sou aandring, appellant geregtig sou wees om
sekere betalings wat hy reeds aan respondent
gedoen het met inbegrip
van die laaste bedrag van R72 van hom terug te vorder.
Respondent het hom egter by hierdie ooreenkoms
nie gehou nie want op
21 Desember 1962 het hy appellant laat aanskryf vir betaling van ʼn
verdere bedrag van R241 ten opsigte
van dieselfde boorwerk.”
At 669F
Botha, JA said the following:
“
Dat
hier met die
conditio sine causa
ageer is dus duidelik. Uit appellant se eie getuienis blyk dit
egter dat hy met die skikkingsooreenkoms van 3 November 1959
afstand
gedoen het van sy reg op terugbetaling van die bedrae deur hom
voorgeskiet op die kontrakprys op grond van respondent se
beweerde
repudiasie van die boorkontrak.”
EVALUATION:
The key
question is whether the proposed amendment provides plaintiff with an
entirely new cause of action in the place of one which
was set out in
the initial claim; in particular that not only is an attempt being
made to join defendant as a contracting party
to the new contract
between plaintiffs and another party, but that the whole cause of
action is in essence now based on this agreement
(POC4). Furthermore,
the question arises as to whether the proposed amendment is not one
which merely introduces fresh and alternative
averments supporting
the original right of action as set out in the particulars of claim,
but replaces the old one and therefore
introduces a new cause of
action which is based entirely on POC4.
Stripped
to its essentials it appears to me that plaintiffs cause of action is
the following:
They
were awarded development rights for the project in question.
The
award was not set aside on review and to an extent therefore
stands.
What
transpired after the award of the tender to the plaintiffs was that
a competing tender (ASLA) had attempted to set aside
the plaintiffs
appointment on review which attempt failed.
ASLA
thereafter sought to set aside the award of the tender by way of an
internal appeal.
This
attempt culminated in the conclusion of the agreement of settlement
referred to throughout this judgment as POC4.
ASLA
subsequently withdrew from the project, notwithstanding that a
settlement had been reached between the parties in the internal
appeal proceedings.
The
effect of the withdrawal was that the award of the tender to the
plaintiffs stands either completely or at best for the defendant
in
respect of the limited areas allocated to the plaintiff as part of
the agreement of settlement.
The
proper approach to this application must therefore be that which was
set out by Caney, J in
Trans Drakensberg
Bank Ltd (under JM) v Combined Engineering (Pty) Ltd
1967 (4) SA 632
(D) at 638:
“
The
primary principle appears to be that an amendment will be allowed in
order to obtain a proper ventilation of the dispute between
the
parties, to determine the real issues between them so that justice
may be done. Overall however is the vital consideration
that no
amendment will be relied in circumstances which will cause the other
party such prejudice as cannot be cured by an order
for costs and
where appropriate a postponement ... These observations make it
clear I consider that the aim should be to
do justice between the
parties by deciding the real issues between them. The mistake
or neglect of one of them in the process
of placing the issues on
record is not to stand in the way of this; his punishment is in his
being mulcted in the wasted costs.
The amendment will be
refused only if to allow it would cause prejudice to the other party
not remediable by an order for costs
and where appropriate a
postponement.”
Returning
to the amended plea, paras 36 and 37 are critical and read thus:
“
The
aforesaid agreement (settlement agreement) reached between the
parties at the arbitration proceedings furthermore finally disposed
of all possible prior issues that might have existed in relation to
the award of the tender to the Trust. The review proceedings
brought by ASLA and the internal appeal proceedings of all the
parties, including the defendant, agreeing that the development
rights which were the subject matter of the tender would be divided
between the Trust and ASLA as set out in annexure POC4.
In all
the circumstances the terms of the agreement which forms the
plaintiffs cause of action in this matter are therefore recorded
in
annexure POC1 read with the Trust bid document as amplified and / or
amended by the agreement of settlement on 29 January 2010
(POC4).”
The
core claim, when one reads these two key passages from the settlement
agreement, is that which was based on the letter of 5
February 2009,
read admittedly with the settlement agreement. This agreement
purported, at best for the defendant, to remove
one portion of the
land from the subject matter of the tender which was accepted by the
defendant. But at its core, the cause
of action was predicated
on the averment of an award of the tender as set out in the letter of
5 February 2009.
The
settlement agreement if it is abstracted from the letter, makes no
sense as a separate cause of action. The two must be read
together
and the primary basis upon which the cause of action is predicated
remains the factual matrix, as amended, admittedly
including that
which was contained in the initial particulars of claim. This is not
a case similar to a compromise. Ironically,
in this matter defendant
stoutly resists the idea that it was a party to the settlement
agreement. Therefore the law relating to
compromise can hardly be
invoked in the same fashion in this case as it was in the law on
compromise which I have cited earlier.
In
summary, this case is not on all fours with the cases which were
cited by defendant’s counsel in support of the argument
that a
compromise has trumped any initial cause of action.
For all
these reasons therefore, it is my view that the proposed amendments
do not serve to introduce a completely new cause of
action but rather
to stand to be classified in the fashion set out by Mpati, P in the
Rustenberg Platinum Mines
case
supra
.
ACCORDINGLY
THE DEFENDANT’S OBJECTIONS TO THE APPLICATION FOR AMENDMENT ARE
DISMISSED AND THE PLAINTIFF IS ALLOWED TO AMEND
ITS PARTICULARS OF
CLAIM IN ACCORDANCE WITH ITS NOTICE OF INTENTION TO AMEND OF 31 MARCH
2016. THE DEFENDANT IS ORDERED TO
PAY PLAINT’S COSTS.
DAVIS, J