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[2015] ZAGPJHC 334
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SS&G Project Finance Solutions (Pty) Ltd v Gibb (Pty) Ltd and Others (9982/2015) [2015] ZAGPJHC 334 (25 September 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
CASE
NO: 9982/2015
In
the matter between
SS&G
PROJECT FINANCE SOLUTIONS [Pty]
Ltd
APPLICANT
And
GIBB
(Pty)
Ltd
1
ST
RESPONDENT
RAND
WATER
BOARD
2
ND
RESPONDENT
EMFULENI
LOCAL MUNICIPALITY
3
rd
RESPONDENT
MINISTER
OF WATER AND
SANITATION
4
TH
RESPONDENT
MINISTER
OF
FINANCE
5
TH
RESPONDENT
MINISTER
OF ECONOMIC
DEVELOPMENT
6
TH
RESPONDENT
JUDGMENT
VICTOR
J
:
Issues
[1]
The applicant seeks extensive relief by way of urgency. The applicant
seeks to interdict the first and second respondents, the
first
respondent being its “co-venture partner” Gibb and second
respondent, Rand Water Board, from proceeding with
the implementation
of a written consultancy services agreement which they concluded on
26 February 2015, hereinafter referred to
as the impugned consultancy
services agreement. The applicant and Gibb had been awarded a tender
which was amended thereby virtually
cutting the applicant out of the
project.
[2]
The applicant also seeks an order to interdict and prohibit Gibb and
Rand Water from proceeding to implement any form of the
execution
plan that may emanate from the impugned consultancy agreement.
Further declaring that Gibb had no authority to
enter into and sign
the impugned consultancy services agreement on behalf of the
consortium and an order declaring that the impugned
consultancy
services agreement is null and void and unenforceable.
[3]
The next tranche of relief sought, also on an urgent basis, is that
Rand Water be ordered to enter into a new consultancy services
agreement on the basis contained in a settlement agreement which must
be read together with the letter of the second respondent
dated 10
February 2014. In order to avoid any doubt the new consultancy
agreement must also deal specifically with stage 2 of the
relevant
scope of services.
[4]
The next tranche of relief is that the fourth respondent, the
Minister of Water and Sanitation, be directed to instruct Rand
Water
as the implementing agent to immediately conclude the new consultancy
services agreement based on the relief sought in prayer
6. The next
tranche is against the fifth respondent, the Minister of Finance, who
must prevent all funds to be expended on the
basis and under the
auspices of the intended impugned consultancy agreement, and an order
directing the sixth respondent, who is
the Minister of Economic
Development to manage all the requisite supervision and control over
the scheme so that there is timeous
and proper implementation and
execution of the scheme and to facilitate such execution and
implementation in terms of the intended
consultancy service agreement
envisaged in prayer 6 of the Notice of Motion.
[5]
An order was also sought directing the parties to enter into
negotiations to conclude a written consortium agreement for the
purposes of implementing and executing the new consultancy agreement.
Urgency
[6]
The relief sought by way of urgency is extensive. The
application is in excess of 1 000 pages and approximately 10
counsel appeared. Each one of the respondents raised the question of
urgency but before I deal with that I need to set out what
the
applicant itself deemed the grounds of urgency to be.
[7]
In paragraph 103 of the application the urgency is based on the
following: that the delivery of the project is long overdue,
that Rand Water and Gibb, have made it clear that they intend
proceeding with the project in terms of the new service level
agreement
to the exclusion of the legally contracted party to the
agreement that is SS&G, the applicant in this matter. Rand
Water
has stated that it is not prepared to meet with SS&G to
discuss their objections to the new Service Level Agreement (SLA)
citing
that those objections relate to an internal dispute between
the joint venture parties and they do not wish to become involved in
that internal dispute.
[8]
The applicant does not know what further steps are being taken by
Rand Water and Gibb to implement the new SLA and it is quite
clear
that certainly Rand Water and Gibb intend proceeding with the SLA
which was concluded on 26 March 2008. In other words, the
applicant
feels that the basis of urgency is really to protect its own
interests and that urgency is justified having regard to
the history
of this matter.
[9]
The applicant has set out a very helpful timeline in this matter
which shows that the joint venture tendered for a project which
was
initially envisaged to be run by the Emfuleni Local Municipality.
They tendered and were successful. The closing date
for the bid was
29 June 2012 and the tender was awarded to the joint venture group
being the applicant and Gibb. It became clear
at some stage that the
project was then inter-governmentally re-directed and that Rand Water
was to run the project. Rand Water
set out a new set of tenders which
precipitated an urgent application brought by consensus between the
joint venture parties to
interdict the proceedings in that the tender
had already been awarded. That application was launched on 10 October
2013 and the
person who deposed to that affidavit was a Mr De Vries.
[10]
On 29 October 2013 the Rand Water tender was interdicted and then the
parties met over a period in order to settle the litigation.
On 30
January 2014 the first letter of offer was made by Rand Water.
On 1 February 2014 there was a meeting. On 4 February
2014
there was another letter of offer from Rand Water and in that letter
various deletions were made and in particular the representative
of
Gibb deletes the words “as per original appointment”.
Various correspondence was exchanged between the parties and
it would
appear that the matter eventually became settled on 9 February 2014.
[11]
In terms of the settlement agreement it was envisaged that there
would be a new contract concluded and the scope of the services
were
adjusted and the impugned contract was concluded. This dispute has
its genesis in what was envisaged in that settlement agreement.
In fact, in terms of clause 2.8 of the settlement agreement it was
envisaged that the settlement agreement would not come into
effect
until the contract was concluded between the parties and this is the
SLA contract.
[12]
On 10 February 2014 Rand Water made a letter of offer and the offer
in paragraph 2 reads as follows: that Rand Water further
hereby
confirms your appointment to carry out a portion of the work in
respect of the above bid the initial tender awarded by the
Emfuleni
Local Municipality. In this letter of offer it is recorded that Rand
Water would assume the role of Emfuleni Municipality.
In paragraph 4
of the letter of offer the point of departure between the parties is
the interpretation of the words that the new
infrastructure will be
as per the original appointment set out in
table 4.1 of the Gibb
March 2010 draft.
[13]
Now for the purpose of urgency it is not necessary for me to resolve
that debate between the parties. What is of importance
is on
the same day, 10 February, both Mr De Vries of Gibb and Mr Gooley of
the applicant signed a letter of acceptance. Both
parties
signed. However, it soon must have become evident to Mr Gooley
that what he had signed could have created some ambiguity
and it
certainly did have some dissonance in terms of what had been agreed
to.
[14]
In the email of 10 February 2014 sent at 9:15 pm to all the parties
Mr Gooley makes the point that he is challenged by the
manner in
which phase 2 of the project is to be carried out. He states
that there are the ECSA guidelines for consulting
engineers and their
clients. The guidelines do not apply to commercial contracts
comprised of finance, legal, project management,
PR and
communications. I think it was agreed between the parties that the
ECSA is really for the engineering works. The parties
were awarded
the contract on the basis of the PPP contract. He contended that this
would prejudice the applicant in the following
way: it would
prejudice its income stream and it would also have a reputational
effect.
[15]
There was continuous contact between the applicant, Gibb and Rand
Water. Quite clearly the battle lines were drawn on the evening
of 10
February 2014. All the respondents attack the basis of urgency
and state that the applicant should have brought its
application much
earlier since it knew that the dispute was extensive and certainly by
May 2014 it was clear that there would be
no consensus. The applicant
is criticised for not doing anything further in terms of bringing
finality to the SLA agreement and
the applicant criticises Gibb and
Rand Water for doing nothing for a year and then suddenly in March,
2014 there was a signing
event where the SLA was signed and to which
the applicant claims it was not party to and did not agree and would
never have agreed
since it was only prepared to proceed along the PPP
basis.
[16]
By May of 2014 the then attorneys for the consortium terminated their
mandate because of the internal differences in the consortium
and a
new attorney came on record. By 6 March 2015 it was quite clear
that the applicant contended that the settlement agreement
which was
signed was not in accordance with their understanding of the
settlement agreement and that the change from the PPP to
ECSA
contract was not in accordance with the settlement agreement.
[17]
All those difficulties had been recorded over the period of the year
but in particular by the beginning of March 2015 there
was an
incremental effort by the applicant to have the matter resolved and
by 26 March Rand Water and Gibb signed the new SLA,
which certainly
made it clear that the ECSA guidelines would be applied to any
further contract. This meant prejudice to
the applicant in that
the fee that they would earn would be much reduced.
[18]
The grounds of urgency by the first, second, fourth and fifth
respondents are really an attack on the time lapse between 10
February 2014 up to and until 26 March 2015. Neither of the
respondents seems to attack the second stage, which I shall call the
second stage of the urgency argument. However, it seems to me that
the attack on the urgency between 10 February 2014 and 26 February
2015 requires greater analysis.
[19]
The point is made by the respondents that there had even been a
suggestion of mediation and I think that was by June 2014 in
order to
try and resolve the difficulties between the parties in the joint
venture and this did not yield any resolution.
There was even
talk of an exit agreement by the applicant but nothing came of that.
[20]
In my view, the issues raised by the applicant are extensive.
There is not a part A or part B to the relief which it
sought.
The applicant pressed the Court to take into account that the signing
of the SLA on 26 March was signed under suspicious
circumstances. The
applicant had been involved in the matter right up until then. The
email sent to Mr Gooley to attend did not
reach him because it was
sent to the incorrect email address.
[21]
The submission by the applicant is that if the Court were to condone
that aspect, the Court would really be condoning suspicious
behaviour.
[22]
It was put to Mr Malindi SC, counsel on behalf of the second
respondent, that the signing of the agreement seemed to be suspect.
In fact, if the email did not reach Mr Gooley of the applicant Mr De
Vries of the first respondent, could have phoned Mr Gooley
to tell
him to come down to Vereeniging to be part of the signing ceremony.
[22]
Now that may be an unsatisfactory feature but there is not sufficient
evidence before me to make a finding on that. I have
to look at the
application as a whole. It is clear that the relief sought from the
various ministerial departments, for example
the fourth and fifth
respondent that is relief which cannot be granted on an urgent basis.
It clearly is a direction in the form
of a
mandamus
to direct that the Minister of
Water and Sanitation give instructions to the second respondent.
Similarly, the relief sought against
the fifth respondent is also of
a mandatory nature and so too with the sixth respondent.
[23]
Upon a proper analysis of the relief sought it is far reaching, it is
not something which government departments can resolve
at such short
notice. As I understood the argument on behalf of the applicant
there was greater emphasis on the relief sought
in prayers 2, 3, 4
and 5. The import of granting relief in terms of prayers 2, 3,
4 and 5 in really forcing the parties to
negotiate and conclude a
different consultancy services agreement and each one of the
respondents had difficulty and to do so under
urgency would also make
it a far more complex exercise. Clearly the fourth and fifth
respondents cannot carry out what the applicant
wishes on an urgent
basis.
[24]
I, therefore, do have to assess whether prayers 2, 3, 4 and 5 can be
carried out on an urgent basis and whether this Court
can prevent the
implementation of a consultancy services agreement based on the
disputes of fact which have arisen. The applicant
urged upon the
Court the principle that the disputes of fact are not that
extensive. It seems to me, however, that the applicant
can well
in due course obtain its relief by way of a claim for damages that it
may have against the first respondent.
[25]
Having regard to the entire matrix of facts before me, the relief
sought in prayers 2, 3, 4, 5 and 6 cannot be justified on
an urgent
basis. The applicant, therefore, fails on the basis of urgency,
and that was the only aspect that was argued before
me. As regards
costs at this stage the appearance by two counsel only on the
question of urgency was not justified.
The
order I would make is
The
application is struck from the roll for lack of urgency.
The
applicant is ordered to pay the wasted costs of one set of counsel
and that is the senior counsel for each party.
______________________
M.
Victor
Judge
of the High Court
Gauteng
Local Division