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[2021] ZASCA 3
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Municipality of Mhlontlo v TDH Tsolo Junction (1086/2019) [2021] ZASCA 3 (7 January 2021)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
no: 1086/2019
In
the matter between:
MUNICIPALITY
OF MHLONTLO
APPELLANT
and
TDH
TSOLO JUNCTION (PTY) LTD
RESPONDENT
Neutral
citation:
Municipality
of Mhlontlo v TDH Tsolo Junction
(1086/2019)
[2021] ZASCA 3
(7 January 2021)
Coram:
VAN DER MERWE, MOCUMIE
and PLASKET JJA and LEDWABA and MATOJANE AJJA
Heard:
09 November 2020
Delivered:
This judgment was
handed down electronically by circulation to the parties'
representatives via email, publication on the Supreme
Court of Appeal
website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 7 January 2021.
Summary:
Contract–conditions
in preliminary letter of appointment not incorporated in main
contract for development–main contract
sole memorial of
agreement between parties and not subject to suspensive condition
based on letter of appointment.
ORDER
On
appeal from
: Eastern
Cape Division of the High Court, Mthatha (Nhlangulela DJP, sitting as
court of first instance):
The
appeal is dismissed with costs, including those of two counsel.
JUDGMENT
Ledwaba
AJA (Van der Merwe, Mocumie and Plasket JJA and Matojane AJA
concurring)
[1]
This is an appeal against an order of the Eastern Cape Division of
the High Court, Mthatha (Nhlangulela
DJP), dismissing the special
pleas raised by the appellant, the Municipality of Mhlontlo, in
respect of the claim for damages for
breach of contract that the
respondent, TDH Tsolo Junction (Pty) Ltd, had instituted against it.
The only issue for determination
in the appeal is whether the
contract relied upon by the respondent had been rendered
unenforceable by the nonfulfillment of a
suspensive condition
emanating from the letter of appointment referred to below. The
factual matrix within which the issue arises
is set out hereunder.
[2]
In July 2008 the appellant invited proposals for the development of
property of the appellant referred
to as Tsolo Junction (the
property) in Tsolo, a town within the jurisdiction of the appellant.
The respondent was one of the bidders.
In December 2008, the
appellant issued a letter of appointment, signed by the municipal
manager, to the respondent with respect
to the development of the
property. The letter read as follows:
‘
APPOINTMENT
OF A SUPPLIER FOR THE TSOLO JUNCTION DEVELOPMENT.
It gives us
great pleasure to inform you that the Council of Mhlontlo
Municipality hereby appoints you for the Tsolo Junction Development
as per your proposal. A meeting between you and the Mhlonto Local
Municipality is arranged for Thursday, the 4th of December 2008.
The
terms of reference will be discussed in that meeting with regard to
standards, which should be maintained to keep up with the
housing
standards and NHBRC regulations. In addition, you will be required to
table a detailed project plan with specific timeframes
as well as
signing of a Contract, which will outline the conditions of the
contract.
Kindly note that
your appointment shall only be effective when you have satisfied all
the requirements, submitted all the documents
outlined below and, you
have signed the contract outlining the Conditions of Contract.
•
Proof of Insurance
•
Surety letter from
the guarantor
•
Letter of acceptance
•
Program of work
•
Occupational Health
and Safety Plan [and names of personnel to implement it]
Kindly respond in
writing to confirm acceptance of this appointment within seven (7)
working days of receiving this letter.
We look forward to
working with you.
Yours faithfully’
[3]
The respondent accepted the appointment in writing. After
negotiations between the parties, they signed
a Supply and
Development Agreement (the agreement) on 18 March 2009. The agreement
stipulated the terms and conditions applicable
to the development of
the property by the respondent.
[4]
On 25 February 2011, as I have said, the respondent issued summons
against the appellant based on the
appellant’s breach of the
agreement. In its particulars of claim, the respondent claimed
damages in an amount of R48 340 059.00.
The appellant filed
numerous special pleas, to which the respondent replicated. By
agreement between the parties, the court a quo
determined the special
pleas in a separate hearing. It dismissed all of them and granted
leave to the appellant to appeal to this
court only with regard to
the special plea based on alleged nonfulfillment of the suspensive
condition in the letter of appointment.
[5]
It is common cause that the respondent did not submit any of the
documents that had been listed in the
letter of appointment. This
formed the foundation of the appellant’s argument before us.
The appellant contended that the
agreement was subject to the
suspensive condition that the respondent had to submit the said
documents. The appellant argued that
the agreement did not come into
existence and that, therefore, the claim for damages was not
sustainable. For the reasons that
follow, this argument is devoid of
any merit.
[6]
In its terms, the letter of appointment was a preliminary document.
It expressly provided that the development
of the property would be
governed by a written contract which would “outline the
conditions of the contract”. The undisputed
evidence was that
during the negotiations between the parties that preceded the
conclusion of the agreement, the representatives
of the respondent
had explained why the documents in question were not applicable to
the project and that this was accepted by
the appellant’s
representatives.
[7]
Thus, the parties in fact agreed to exclude the requirement that
these documents be submitted, from
the agreement. The agreement
contained no reference to the letter of appointment and, importantly,
clause 15 thereof provided that
it constituted the sole memorial of
their agreement:
‘
WHOLE
AGREEMENT
The terms and
conditions set out herein constitute the entire agreement between the
parties. No amendment or variation of whatsoever
nature of the terms
hereof and no consensual cancellation of this agreement shall be
binding unless reduced to writing and signed
by both parties.’
Accordingly, the
agreement was clearly not subject to the alleged suspensive condition
in the letter of appointment as submitted
by the appellant.
[8]
It follows that the appeal must fail. The appellant accepted that the
employment of two counsel was
justified, in the light of the amount
involved and the importance of the matter to the respondent.
[9]
The following order is issued:
The
appeal is dismissed with costs, including those of two counsel.
____________________
A
P Ledwaba
Acting
Judge of Appeal
APPEARANCES
For
Appellant:
V S Notshe SC (with him P Mnqandi)
Instructed
by:
Potelwa & Co
Attorneys, Mthatha
Ponoane Attorneys,
Bloemfontein
For
Respondent:
A Beyleveld SC (with him I Bands)
Instructed by:
Friedman Scheckter,
Port Elizabeth
Symington De Kok,
Bloemfontein