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[2015] ZAGPJHC 92
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Aloecap (Pty) Ltd v Mogale City Local Municipality (468/2015) [2015] ZAGPJHC 92 (22 May 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG LOCAL
DIVISION, JOHANNESBURG)
Case No: 468/2015
DATE: 22 MAY 2015
In the matter between:
ALOECAP (PTY)
LTD
..............................................................................................
Plaintiff/Applicant
And
MOGALE CITY LOCAL
MUNICIPALITY
...................................................
Defendant/Respondent
JUDGMENT
FRANCIS J
1. This is an application for summary
judgment by the plaintiff based on a Service Level Agreement (the
agreement). The defendant
has applied for condonation for the late
filing of its affidavit resisting summary judgement. It is not
necessary to repeat what
the grounds for condonation are. I am
satisfied that a proper case has been made out for condonation and
condonation is in the
circumstances granted.
2. The plaintiff instituted an action
for damages against the defendant. It pleads that the plaintiff on 17
April 2012 then represented
by Joe Mthimunye entered
into an agreement with the defendant
represented by Tsheleki Tebjane in his capacity as a project manager.
The material terms of
the agreement, whether express, alternatively
implied, further alternatively tacit, included the following terms:
2.1 the plaintiff was appointed by the
defendant to render services to the defendant under the terms and
conditions of the agreement
in terms of clause 3.1;
2.2 the plaintiff would provide the
following services which were split into three distinct phases in
terms of clause 5:
2.2.1 Phase 1: the Structuring Process;
2.2.2 Phase 2: the Implementation of
the Structure; and
2.2.3 Phase 3: the Administration of
the Structure.
2.3 the fee payable to the plaintiff by
the defendant for the aforementioned services, were exclusive of
value added tax (VAT) and
were payable in arrears, in terms of clause
10, as follows:
2.3.1 a structuring fee of R2 000
000-00, payable according to milestones outlined in the table below;
2.3.2 legal fees to a maximum budget of
R200 000-00;
2.3.3 a success fee of 2% of the gross
proceeds received by the defendant on the implementation of the
aforementioned structure
in terms of clause 10.3.1;
2.3.4 an administration fee of 1% of
the gross collections received by the defendant will be payable to
the plaintiff for the duration
of the collection agreement and this
will be borne by the
defendant in terms of clause 10.4.1
2.4 the agreement would terminate on
the conclusion of the transaction in terms of clause 14.
2.5 should the defendant cancel the
agreement prior to its conclusion for any reason whatsoever, other
than a material breach by
the plaintiff, a cancellation fee equal to
the structuring fee, shall be payable immediately by the defendant to
the plaintiff
in terms of clause 14;
2.6 should either party breach the
agreement and in the event of the defaulting party failing to remedy
such breach within a period
of 10 days after receipt of written
notice from the aggrieved party requiring it to do so, then the
aggrieved party shall be entitled
to terminate the agreement with
immediate effect by written notice to the defaulting party, provided
that if the defendant terminated
the agreement in terms of clause 15
other than for a material breach by the plaintiff, the cancellation
fee in terms of clause
14.1 shall remain payable to the plaintiff by
the defendant in terms of clause 15.7.2;
2.7 no relaxation or indulgence which
either party may show to the other, shall in any way prejudice its
rights hereunder in terms
of clause 18.1.
3. The plaintiff alleges that pursuant
to the aforegoing it duly performed all its obligations in terms of
the agreement and carried
out the stipulated milestones in accordance
with the agreement and the defendant paid the plaintiff R1 450 000-00
exclusive of
Vat in respect of Financial Advisory Services.
4. In terms of claim A, the plaintiff
states that on 24 February 2014, the plaintiff submitted to the
defendant a Tax Invoice in
respect of the milestones completed in the
sum of R570 000-00 as appears from Annexure POC2. Notwithstanding
demand the defendant
has refused, failed and or neglected to effect
payment to the plaintiff in the sum of R570 000-00 and which amount
is due, owing
and payable.
5. In terms of claim B the plaintiff
alleges that during or about June 2014, the defendant repudiated the
agreement through its
conduct in electing not to pursue the
agreement. The defendant further sent a letter dated 17 June 2014
notifying the defendant
that it has terminated the agreement with
immediate effect, and which repudiation has accepted. The plaintiff
subsequently issued
a cancellation fee invoice, namely Annexure POC
3, in the sum of R2 000,000-00 plus VAT, in terms of clause 14.1 and
15 of the
agreement and submitted same to the defendant on or about
24 June 2014. The defendant has failed, refused and or neglected to
effect payment of the R2 000 000-00 and formal notice was given on 8
July 2014 in terms of section 3(2)(a) read with sections 4
and 5 of
the Institution of Legal Proceedings against Certain Organs of State
Act 40 of 2002 as appears from Annexure POC4 and
30 days was afforded
to the defendant to pay the aforesaid amount failing which action
would be instituted after a lapse of 30
days. Notwithstanding demand
the defendant has refused, failed and or neglected to liquidate its
indebtedness to the plaintiff.
6. The defendant entered an appearance
to defend and filed an affidavit resisting summary judgement. The
affidavit was deposed
to by Dan Metlana Mashitisho who describes
himself as the township manager of the defendant. He said that he
has read the combined
summons and particulars of claim with annexures
and the summary judgement application and affidavit in support of the
application
for summary judgment. He states that the defendant has a
bona fide defence and that it did not enter an appearance to defend
merely
to delay the granting of the plaintiff’s relief. He
states that there are serious disputes and contentious issues in the
action and that by entering an appearance to defend is not balking or
a delaying tactic.
7. The relevant portion of the
affidavit resisting summary judgment reads as follows:
“5. The plaintiff’s summons
are misleading and suffer an irregularity which affects its validity
in that the Plaintiff
in Claim A, claims payment of R570 000.00 plus
VAT and on paragraph 2 of Claim A: “interest on the aforesaid
amount of R855
000-00 plus VAT”.
6. This discrepancy cast doubt on
whether Plaintiff knows what exactly the Defendant owes and whether
Defendant were truly and lawfully
indebted to the Plaintiff on the
grounds set out in the Summons in its application for Summary
Judgement. It is questionable if
the Plaintiff could indeed be said
also to have verified the amount claimed with the necessary
exactitude.
7. The Plaintiff’s Particulars of
Claim lacked the forthrightness, a candid disclosure, as well as the
particularity that
would allow the Honourable Court to get a proper
perspective of the dispute between the parties. The Plaintiff claims
the Defendant
cancelled and omits to state the dispute or its own
culpability in the action.
8. In essence the defence of the
Defendant to the Plaintiff’s Particulars of Claim is that the
Defendant justifiably cancelled
the agreement on the 17th June 2014
because the Plaintiff breached the agreement.
9. The Plaintiff has failed to comply
with the provisions of clause 10.2 of the Service Level Agreement
(the Agreement) as it was
supposed to be. There were several
meetings between the Plaintiff and Defendant’s representatives
wherein the latter asked
the Plaintiff to remedy the breach. The
Plaintiff ignored the request, failed and/or refused to comply. As a
result, the Defendant
invoked the provisions of clause 8 of the
Agreement and cancelled the Agreement.
10. The Plaintiff’s breach is
material in terms of clause 5, process and objectives of the
agreement as it encapsulated the
work the Plaintiff was to perform,
which formed the basis of the deliverables between the parties. The
Defendant invokes the exception
non adimpleti contractus. The
Plaintiff cannot claim performance from the Defendant when it owes
antecedent and correlative performance
and has not performed.
Therefore, the Plaintiff is not entitled to the cancellation fee or
any outstanding amount it alleges is
due and payable to it.
11. The Defendant is contemplating a
Counter Claim and reserves its right in its Plea to the Plaintiff’s
claim owing to the
latter’s breach, and to recover the
ratepayers’ money.
12. The Plaintiff was at all times
aware of the Defendant’s contention and the breach the
Defendant complained of and called
upon the Plaintiff to remedy.
Despite awareness of the dispute, it issued Summons and is now
applying for Summary Judgement knowing
the application to be without
merit. The Plaintiff is also aware of the basis and the contention
which entitles the Defendant
to defend.
13. Plaintiff is trying to shut the
door of the court to the Defendant without an opportunity to
ventilate the issue in dispute.
The Honourable Court
should not allow such opportunistic
conduct.
CONCLUSION
14. I humbly and respectfully submit
that the Application for Summary judgement is an abuse of the process
of the Rules of the Honourable
Court by Applicant. I request and
implore the Honourable Court to deprecate such abuse and dismiss this
Application.
15 I ask the Honourable Court to grant
the Defendant leave to defend the action and order that the Plaintiff
to pay the costs of
this Application particularly on the reasons set
out in paragraph 11 above”.
8. The defendant’s affidavit
under rule 32(3) must disclose fully the nature and grounds of the
defence and the material facts
relied upon therefore. The court
has a discretion in terms of rule 32(5)
whether to grant summary judgment or not. See Gruhn v M Pupkewitz &
Sons (Pty) Ltd
1973 (3) SA 49
(A) at 58. Where the defence is based
on upon facts, in the sense that the material alleged by the
plaintiff in his summons or
combined summons, are disputed or new
facts are alleged constituted a defence, the court does not attempt
to decide these issues
or to determine whether or not there is a
balance of probabilities in favour of the one party or the other.
All that the court
enquires into is: (a) whether the defendant has
‘fully’ disclosed the nature and grounds of his defence
and the material
facts upon which it is founded, and (b) whether on
the facts so disclosed the defendant appears to have, as to either
the whole
or part of the claim, a defence which is both bona fide and
good in law. If one of the requirements is satisfied the Court must
refuse summary judgment, either wholly or in part, as the case may
be. The word ‘fully’ connotes that while the defendant
need not deal exhaustively with the facts and the evidence relied
upon to substantiate them, he must at least disclose his defence
and
the material facts upon which it is based with sufficient
particularity and completeness to enable the Court to decide whether
the affidavit discloses a bona fide defence. In this regard see
Maharaj v Barclays National Bank Ltd
1976 (1) SA 418
(A) at
425G-426E. At the same time the defendant is not expected to
formulate his opposition to the claim with the precision that
would
be required of a plea; nor does the Court examine it by the standards
of pleading. See Estate Potgieter v Elliott 1948 (1)
SA1084 (C) at
page 1087.
9. The plaintiff’s claim is that
it has performed in terms of the agreement and that the agreement was
cancelled by the defendant
and that as a result of such cancellation
the defendant has repudiated the agreement and is therefore entitled
to the damages that
it has claimed.
10. The defendant denies that it
repudiated the agreement and states that the plaintiff has breached
the agreement. It was called
to remedy the breach which it failed to
do as a result of which the defendant cancelled the agreement. It
has indicated that it
may institute a counterclaim.
11. The question that arises is whether
the defendant has fully set out its defence. The crux of the dispute
is who has breached
the agreement. This is a matter that will have
to be decided at the trial. I have set out the defendant’s
affidavit resisting
summary judgement and am of the view that the
defendant has disclosed its defence and the material facts upon which
it is based
with sufficient particularity and completeness. I am
satisfied that based on the explanation that the defendant has a bona
fide
defence.
12. It follows that the application for
summary judgment stands to be dismissed. This is not a matter where
costs should follow
the result and cost should be costs in the
action.
13. In the circumstances I make the
following order:
13.1 The defendant’s late
affidavit resisting summary judgement is condoned.
13.2 The application for summary
judgement is dismissed.
13.3 The defendant is granted leave to
defend the action.
13.4 Costs are costs in the action.
FRANCIS J
JUDGE OF THE HIGH COURT
FOR DEFENDANT : M NOWITZ INSTRUCTED
BY NOWITZ ATTORNEYS
FOR DEFENDANT : R S MOTHIBE
INSTRUCTED BY BHIKA INC
DATE OF HEARING : 11 MAY 2015
DATE OF JUDGMENT : 22 MAY 2015