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[2021] ZAWCHC 150
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Hammond and Hammond Transactional Law Clinic v Bitou Municipality and Others (8526/21) [2021] ZAWCHC 150 (11 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 8526/21
In
the matter between:
HAMMOND
AND HAMMOND TRANSACTIONAL
Applicant
LAW
CLINIC
and
BITOU
MUNICIPALITY
First Respondent
CHAUKE
QUANTITY SURVEYORS AND
Second Respondent
PROJECT
MANAGERS
PROVINCIAL
DEPARTMENT OF HUMAN
Third Respondent
SETTLEMENTS
Date
of hearing: 5 August 2021
Date
of judgment: 11 August 2021
Judgment
delivered electronically via email to the parties on 11 August 2021.
JUDGMENT
SAVAGE
J:
[1]
In this matter the
applicant, the Hammond and Hammond Transactional Law Clinic, sought
urgent relief against the respondents, Bitou
Municipality (‘Bitou’),
Chauke Quantity Surveyors and Project Managers (‘Chauke’)
and the Provincial Department
of Human Settlements (‘the
Department’). Chauke did not oppose the application.
[2]
The application was
launched on 20 May 2021 but was removed from the roll by the
applicant on 27 May 2021. On 4 June 2021 an amended
notice of motion
was filed by the applicant together with a supplementary affidavit.
The relief sought by the applicant in its
amended notice of motion
was an order of specific performance to compel Bitou to perform its
obligations in accordance with a contract
for the construction of 169
top structures in Qolweni, Phase 3A, Plettenberg Bay (‘the
contract’) and “
reimburse
all costs incurred by the Contractor as a direct result of unlawful
termination
”.
The applicant also sought an order that Bitou and the Department be
interdicted from appointing a new contractor to execute
the contract
“
pending
the resolution of the current dispute
”,
with Bitou and Chauke to pay the costs of the application on an
attorney and client scale.
[3]
On 9 June 2021 Bitou
filed a notice to oppose the application and the applicant enrolled
the application for hearing on 15 June
2021. The matter was rolled
over for hearing on 18 June 2021, the same date on which Bitou filed
its answering affidavit. The application
was by agreement postponed
for hearing to 15 July 2021, with the applicant directed to file any
replying affidavit by 30 June 2021
and costs to stand over for later
determination. The parties attempted to settle the matter without
success. On 30 June 2021 the
applicant filed its replying affidavit
to Bitou’s answering affidavit. On 12 July 2021 the Department
filed an “explanatory”
answering affidavit opposing the
relief sought against it. On the same date, Bitou filed an
application for condonation together
with a supplementary affidavit
concerning
inter
alia
the
liquidation of Ukhana Projects CC (“Ukhana”), the entity
to which Bitou had awarded the contact following a tender
process. On
14 July 2021 the parties agreed that the application be postponed to
22 July 2021 with the applicant granted until
16 July 2021 to file a
replying affidavit. It was ordered that costs stand over for later
determination.
[4]
On 19 July 2021 the
applicant filed its affidavit replying to the Department’s
opposing (“explanatory”) affidavit.
When the matter came
before the urgent court on 22 July 2021 it was crowded out of the
roll given the number of matters to be heard
and it was agreed that
the application be postponed for hearing on an urgent basis to 5
August 2021, with costs to stand over.
At the hearing of the matter
on 5 August 2021 the applicant withdrew the application but made no
tender of costs and sought that
the court exercise its discretion to
order that each party bear its own costs. Bitou and the Department
opposed such an order.
[5]
From the papers it is
apparent that Both Bitou and the Department took issue with the locus
standi of the applicant to launch the
application. Dr Anele Hammond,
the applicant’s founder and director, deposed to its founding
affidavit in which it was stated
that the applicant is a public
benefit organisation “
duly
authorised by the Legal Practice Council and the South African
Revenue Services
”
and a transactional law clinic which offers legal aid and financial
management services to small, medium and micro enterprises
at no
cost. In reply it was stated that the applicant is registered with
the National Home Builders Registration Council (“NHBRC”),
although no certificate of such registration was advanced. Bitou
awarded the contract to Ukhana following a tender process. Ukhana
was
not joined as a party to the proceedings and the respondents in their
opposing papers put up evidence that it had been liquidated
in April
2021. The applicant took the view that the joinder of Ukhana was
unnecessary given that it the contract had been ceded
to it by
Ukhana.
[6]
On 9 October 2020
Ukhana received written notice from Bitou that that it was the
preferred bidder in respect of the contract and,
according to Dr
Hammond, Ukhana ceded the contract on the same day to the applicant,
with it recorded that Bitou would only acknowledge
the cession once
the contract had been awarded. The letter of award of the contract by
Bitou to Ukhana was dated 1 December 2020.
On 7 December 2020 in a
letter addressed to the Bitou Municipal Manager, Mr Lonwabo Ngoqo,
Ukhana indicated that it “
hereby
cedes
”
the contract to the applicant, with all payments in respect of the
contract to be paid to an entity described as Hammond
and Hammond
Inc. Mr Ngoqo signed in acknowledgement of the purported cession on
the same date.
[7]
In her affidavit Dr
Hammond indicated that subsequent to the purported cession of the
tender she received a demand from a Mr Sompani
to pay Bitou’s
top six officials an upfront bribe in the amount of R700 000,00,
with the remainder of the money to be
paid as a monthly percentage on
each certificate due until the end of the contract. After Dr Hammond
refused payment, Bitou’s
Mayor visited her at her home
apparently “
sent
by the comrades to collect what had been promised to them
”
by Ukhana. Mr Enquin Le Roux of Ukhana told Dr Hammond that “
this
happens on every transaction
”
and that he was coerced and under duress had agreed to pay the
R700 000,00, which had been arranged with the Deputy
Mayor, Mr
Sandiso Gcabayi. Dr Hammond was contacted again by Mr Sompani and
told that the payment was non-negotiable. Thereafter
Dr Hammond’s
house was broken into three times during the course of which she and
her daughter were threatened and hurt.
Mr Ngoqo visited her and
reiterated the demand for payment on 16 December 2020 and indicated
that given that a variation order
extending the contract sum had been
agreed, an extra R 500 000,00 had to be paid before Christmas day
which would be shared amongst
Bitou’s top six officials.
Following Dr Hammond’s refusal to make the payments, she stated
that the contract was taken
away from the applicant and given to new
contractors. And, after legal action was threatened the contract was
reinstated, subject
to conditions including the identity of
individuals who were to be offered positions and suppliers who were
to be employed.
[8]
On 2 February 2021
when Dr Hammond’s house was broken into for the ninth time she
became “
incapacitated
for a few months
”
following which on 17 February 2021 the contract was apparently
awarded to other companies and the applicant’s site
office and
storeroom were occupied. At a community meeting the applicant’s
employees were purportedly fired and the works
were taken over. After
legal intervention the contract was reinstated by Bitou but this was,
according to Dr Hammond, under duress
and the working relationship
became intolerable. As a result a notice of default was sent to Bitou
and Chauke by the applicant
on 24 February 2021 and, after no
response was received, works were suspended by the applicant on 19
March 2021. On 7 April 2021
the applicant gave notice of termination
of the contract, following which it was denied access to the site and
its assets seized
by a group of people, apparently in the presence of
Mr Ngoqo and Mr Sompani. On 12 April 2021 Mr Sompani sent the
applicant a letter
purporting to terminate the contract. The
applicant responded that the unlawful termination of the contract
amounted to a repudiation
which was not accepted, with it demanded
that Bitou perform in terms of the contract. After it did not, on 28
April 2021 the applicant
sent a letter of demand to Bitou and Chauke
demanding payment. Full payment was not received and the applicant’s
vehicles
and machinery worth R2 200 000,00 remain on the
site. Efforts at mediation failed on 13 May 2021.
[9]
Mr Ngoqo deposed to
Bitou’s answering affidavit, taking issue with the applicant’s
locus standi and stating that the
application was “
misplaced,
misdirected and vexatious
”.
He denied that Bitou was a party to the cession agreement and stated
that the municipality is governed by the principles
of accountability
and transparency, as well as the statutory conditions governing the
implementation of building contracts and
supply chain management. If
the contract was ceded in its entirety, he stated that this would
have required various checks and
balances to have been followed,
which were not, and for the applicant to be recognised by the
building industry in the manner required
by statute, which it was
not. Furthermore, it was disputed that the application was urgent and
denied that a contractual relationship
existed between the applicant
and Bitou. It was stated further that the applicant’s
affidavits “
vexatiously
contain unsubstantiated, irrelevant allegations of corruption and
incompetence on the part of members of
[Bitou]”.
[10]
In her replying
affidavit Dr Hammond persisted that a cession had been agreed and
approved in October 2020, that the applicant therefore
held the
requisite locus standi in the matter and that there was no
requirement that Ukhana be a party to the application. It was
stated
that it was Mr Ngoqo who had proposed the cession, that he was aware
of it and had acknowledged and approved of the cession.
Dr Hammond
stated that a further addendum to the previous cession agreement was
concluded between the applicant and Ukhana on 22
January 2021, a copy
of which was attached to the replying affidavit. In addition, the
“Cession and Subcontract Agreement”
concluded on 25
January 2021 between Ukhana and the applicant, in terms of which
inter alia
Ukhana was to be appointed as “
the
Contractor responsible for the Technical execution of the project for
a monthly remuneration
”,
was put up for the first time in reply. It was also in reply that Dr
Hammond stated that the applicant was registered by
the National Home
Builders Registration Council (“the NHBRC”) at the
request of Bitou.
[11]
The Department sought
that the late filing of its “explanatory” opposing
affidavit on 13 July 2021 be condoned on the
basis that although the
application was initially served on it the matter was removed from
the roll and that the Department became
aware of the re-enrolment of
the matter on 30 June 2021 after attempts at settlement failed. On
this date a letter of demand was
received by the Department from the
applicant in terms of which the applicant sought that the Department
halt the appointment of
a new contractor, Ruwacon, to execute the
contract pending the judicial review of that appointment. On 1 July
2021 the Department
undertook “
pending
the resolution of the current dispute in the High Court
”
not to permit Ruwacon to go on site or incur costs in respect of the
project. This, it was stated, was understood by the
Department to
mean that the undertaking applied pending the resolution of the
interdict application brought by the applicant against
the
Department. Following a dispute between the parties as to what it was
that the undertaking contemplated, the Department filed
a notice of
opposition in the matter.
Submissions
on costs
[12]
The applicant sought,
following its withdrawal of the matter, that it be ordered that each
party bear its own costs given that this
would be just and equitable
given the facts and circumstances relevant to the launch of the
application and its withdrawal. The
applicant stated that it acted in
an attempt to benefit the community and that it was the Department
which had sought the postponement
of the matter on 15 June 2021 to
explore settlement, with other delays not caused by the applicant.
[13]
It was contended for
Bitou that the application had been instituted in bad faith, in a
reckless and vexatious manner and that the
applicant’s locus
standi had not been established, with the application premature and
that Ukhana had not been joined as
a party to it. It was also
indicated that the allegations of criminal misconduct raised by the
applicant had been referred to the
prosecuting authorities for
further investigation. However, despite this, Bitou sought that it be
granted its costs on an attorney
and client scale.
[14]
The
Department argued that costs be awarded in its favour against the
applicant on a party and party scale, including the costs
of two
counsel. In this regard it was stated that at the heart of the matter
was the status of the contract to which the Department
was not a
party. It was the termination of this contract which impacted on
service delivery in the area and which triggered the
Department’s
obligation in terms of section 156 of the Constitution to intervene.
Importantly, it was stated that the relief
sought by the applicant
was conceptually flawed and not competent, with the applicant lacking
locus standi to institute the proceedings.
It
was contended that no case had been made out for such relief sought
as the applicant had not tendered performance under the contract
or
stated that it was capable of performance and therefore could not
claim an order of specific performance.
[1]
In addition, the requirements for interdictory relief had not been
met and t
he
applicant had failed to join Ukhana or its liquidators, when they had
a direct and substantial interest in the outcome of the
application.
Evaluation
[15]
Liability
for costs in a civil matter is a separate issue which is governed by
its own criteria.
[2]
The general rule is that costs follow the result, with this rule
departed from only for good reason having regard to the facts
and
circumstances of the matter and fairness to both sides. Rule 41(1)(a)
provides that a person instituting any proceedings may
at any time
after the matter has been set down with, the consent of the parties
or the leave of the court, withdraw such proceedings
and “must”
file a notice of withdrawal which may set out a consent to pay costs.
Where there is no consent to pay costs,
the other party may apply to
court for an order of costs.
[3]
The rule does not constrain the court’s discretion in relation
to the determination of costs and where an applicant indicates
at the
hearing of a matter that it has elected to withdraw the matter before
the court, the court may at its discretion proceed
to determine the
issue of costs.
[16]
Ordinarily,
the withdrawal of a matter is viewed as a concession on the merits, a
recognition that the merits have become academic
or that the relief
sought is for whatever reason futile. Whatever the reason for the
withdrawal of a matter, the court retains
a discretion to award
costs,
[4]
with the general rule being that the respondent is entitled to all
costs caused by the institution of the proceedings, a rule which
is
not to be departed from without good grounds.
[5]
The court exercises a wide but not unlimited discretion in
determining costs, with it required to consider the facts and
circumstances of the matter. Importantly, the exercise of this
discretion must lead to a result which is one to which a reasonable
person could have come.
[17]
In
considering whether this court should exercise its discretion to
award costs against the applicant in favour of Bitou, the conduct
of
Bitou and its officials in the dispute which resulted in this
application being launched is relevant. The purported cession
of the
contract was discussed with senior officials of Bitou, with
Mr
Ngoqo signing in acknowledgement of the purported cession on 7
December 2020. The relevant officials of Bitou conducted themselves
in a manner which indicated that they recognised the purported
cession and allowed the applicant to commence work and receive
payment under the contract. It follows that the claim in these
proceedings that the purported cession was invalid, regardless of
whether this may indeed be so, contradicts the conduct and
representations of Bitou’s officials which caused the dispute
to arise. This coupled with the serious allegations of corruption and
other criminal misconduct made against senior Bitou officials
by Dr
Hammond, indicate that the application was not one launched in bad
faith, recklessly or vexatiously as is suggested by Bitou’s
counsel. To the contrary, it is unlikely that the need for the
application would have arisen at all had Bitou’s officials
performed their duties with due regard to the law and in the manner
required of them. The serious allegations raised by the applicant
against the top six officials of Bitou and the circumstances
surrounding the award of the tender to Ukhana by Bitou clearly
require
urgent investigation by the relevant authorities in the
public interest and particularly the interests of the community of
Plettenberg
Bay. For all of these reasons, there appears to me to be
no basis on which to award costs against the applicant in favour of
Bitou,
let alone costs on an attorney and client scale.
[18]
Turning
to whether the applicant should be ordered to pay the Department’s
costs on a party and party scale, it is relevant
that the applicant
did not have careful regard, more so as a law clinic, to the issue of
its locus standi in this matter. On the
applicant’s own version
it was the purported cession of the contract entered into between it
and Ukhana which founded its
locus standi in the matter, yet the
agreement was only put up for the first time in reply. It is equally
relevant that the applicant
did not join either Ukhana or, after its
liquidation had become apparent, the liquidators of Ukhana to the
proceedings despite
the fact that it was Ukhana that had been awarded
the public tender by Bitou and when, on the applicant’s own
version, was,
by virtue of the purported cession, “
responsible
for the Technical execution of the project
”.
In such circumstances Ukhana or its liquidators clearly had a direct
and substantial interest in the matter.
[6]
[19]
It is
also noteworthy that the applicant accepted that the purported
cession of the contract to it did not follow any public procurement
process despite the public funds involved and the fact that the
contract had been awarded following a public procurement process.
In
this regard, the applicant took the view that there was no
transparent, fair or equitable process required in relation to the
cession, which was purely a matter of contract. In taking this view
the applicant failed to have regard to the public nature of
the
contract, the public funds allocated to the contract, the system of
public finance management applicable to the award of public
contracts
or the provisions of s 217 of the Constitution, the
Local Government:
Municipal Finance Management Act 56 of 2003
, the Supply Chain
Management Regulations and Bitou’s own supply chain management
policy.
[20]
Following
the launch of the application, the Department provided the applicant
with a limited undertaking in relation to Ruwacon
and supported
efforts to settle the matter. When these efforts proved unsuccessful
the matter was set down for hearing. Having
regard to the relevant
facts and circumstances in the matter, the relief sought against the
Department, the public funds involved,
the public interest and
interests of the community, the difficulties inherent in the
applicant’s case more so in relation
to the applicant’s
locus standi and the failure to join Ukhana or its liquidators, the
Department was obliged to oppose the
matter. This is all the more so
given the applicant’s expressed view as to the extended scope
to be given to the Ruwacon
undertaking, the Province’s
constitutional obligations and the serious issues raised with regards
to the procurement process
undertaken by Bitou in relation to the
contract.
[21]
In
considering an award of costs against the applicant it is relevant
that while the applicant indicates that it is a public benefit
organisation and a registered law clinic, it states that it is also
registered with the NHBRC. As such it is clearly operating
within the
commercial sphere. The consequences of having launched and withdrawn
this application would therefore have been known
to it. Having regard
to considerations of fairness the applicant cannot be exempted in
toto from the payment of the Department’s
costs. However, given
the relevant facts and circumstances the view I take is that the
applicant should not be saddled with the
costs incurred before the
Department opposed the matter, when the matter was crowded out of the
urgent roll or the costs associated
with the Department’s
application to have the late filing of its opposing affidavit
condoned.
[22]
Costs
on a party and party scale are therefore to be paid by the applicant
to the Department from the date on which it opposed the
application,
save for costs in respect of the Department’s application for
condonation and those occasioned by the postponement
of the matter on
22 July 2021, when the matter could not be heard given the number of
urgent matters on the roll. I am, in addition,
not persuaded that the
matter warranted the employment of two counsel by the Department and,
as a result, the costs awarded against
the applicant in favour of the
Department are to be limited to costs in respect of only one counsel.
Order
[23]
In the
result, the following order is made:
1.
Subsequent
to its withdrawal of this application on 5 August 2021, the
applicant, the Hammond and Hammond Transactional Law Clinic,
is
ordered to pay the costs of the third respondent, the Provincial
Department of Human Settlements (“the Department”)
on a
party and party scale from the date on which the Department opposed
the application. Such costs are to include the costs of
only one
counsel but exclude –
1.1
costs
in respect of the Department’s application to condone the late
filing of its “explanatory” opposing affidavit;
and
1.2
costs
occasioned by the postponement of the matter on 22 July 2021.
2.
The
first respondent, the Bitou Municipality, is to bear its own costs.
SAVAGE
J
Appearances
:
Applicant:
M Ipser
Instructed by
Hammond and Hammond Transactional Law Clinic
First
respondent: J Jantjies
Instructed by
Sokutu Attorneys
Third
respondent: I Jamie SC and L Stansfield
Instructed by
the State Attorney
[1]
Farmers’
Cooperative Society v Berry
1912
AAD 343 at 315.
[2]
Graphic
Laminates CC v Albar Distributors CC
2005
(5) SA 409
(C) at 412.
[3]
Rule
41(1)(c).
[4]
See
Wildlife
and Environmental Society of South Africa v MEC for Economic
Affairs, Environment and Tourism, Eastern Cape and Others
2005 (6) SA 123
(E) st 129-30.
[5]
AC
Cilliers Law of Costs at 2-8 and 2-10.
[6]
Kethel
v Kethel’s Estate
1949
(3) SA 598
(A).