About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2013
>>
[2013] ZASCA 138
|
|
MEC for Finance and Economic Development, KwaZulu-Natal v Masifundisane Training and Development College CC (606/2012) [2013] ZASCA 138 (27 September 2013)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 606/2012
Not Reportable
In the matter between:
THE MEMBER OF THE
EXECUTIVE
COUNCIL FOR FINANCE
AND ECONOMIC
DEVELOPMENT,
KWAZULU-NATAL
....................................................
APPELLANT
and
MASIFUNDISANE TRAINING
AND
DEVELOPMENT
COLLEGE CC
..........................................................
RESPONDENT
Neutral
citation
:
MEC
for Finance and Economic Development, KwaZulu-Natal v Masifundisane
Training
(606/2012)
[2013] ZASCA 138
(27 September 2013)
Coram
: Lewis,
Ponnan, Tshiqi and Wallis JJA and Swain AJA
Heard
: 5 September
2013
Delivered:
27
September 2013
Summary
:
Public
private partnership (PPP) – regulation 16 of the Treasury
Regulations in respect of Government Departments, promulgated
in
terms of the
Public Finance Management Act 1 of 1999
– alleged
that PPP not concluded in accordance with
regulation 16
and PPP
agreement not binding on the MEC – dispute of fact incapable of
resolution on the papers – not necessary or
desirable to
resolve legal issue – appeal upheld.
Order
On appeal from:
KwaZulu-Natal High Court, Pietermaritzburg (Norman AJ sitting as
court of first instance):
1. The appeal succeeds
with costs, such costs to include those occasioned by the employment
of two counsel.
2. The order of the court
below is set aside and is replaced with the following order:
‘
The
application is dismissed with costs including those occasioned by the
employment of two counsel.’
JUDGMENT
_______________________________________________________________
Swain
AJA
(
Lewis, Ponnan, Tshiqi and Wallis JJA
concurring):
The
respondent, Masifundisane Training and Development College
(Masifundisane), successfully instituted application proceedings
before the KwaZulu-Natal High Court, Pietermaritzburg (Norman AJ)
against the appellant, the Member of the Executive Council
for
Finance and Economic Development KwaZulu-Natal (the MEC), for
payment of the sum of R3 877 119.16 together with
interest
on this and certain other capital sums.
The
claim of Masifundisane arose from an agreement concluded between the
Department of Economic Development, KwaZulu-Natal (the
Department)
and Masifundisane on 12 May 2006. Masifundisane was to assist the
Department in developing primary, secondary and
tertiary
co-operatives registered in terms of
s 7
of the
Co-Operatives Act 14
of 2005
, over a period of three years for a total consideration of
R99,30 million.
The
establishment of these co-operatives was aimed at encouraging and
supporting a variety of economic enterprises, where individuals
could work together to advance the business of each co-operative.
The
breakdown in the relationship between Masifundisane and the
Department occurred when the Department formed the view that the
claims of Masifundisane in terms of the agreement were unjustified.
As a result payments by the Department were delayed and then
withheld, leading ultimately to the cancellation of the agreement by
the Department.
In answer to the claim
of Masifundisane, the MEC opposed the application on two grounds,
these being the only issues on appeal:
(a)
In
limine the MEC contended that the agreement was correctly classified
as a Public Private Partnership (PPP) agreement as defined
in
regulation 16.1 of the Treasury Regulations for departments, trading
entities, constitutional institutions and public entities
1
(the regulations) issued
in terms of the
Public Finance Management Act 1 of 1999
. Because the
requisite approvals of the Treasury were not obtained in terms of
regulation 16
prior to the conclusion of the agreement, the agreement
was not binding on the department in terms of
regulation 16.9.1.
(b)
Masifundisane should have anticipated that a material dispute of fact
would arise on the papers and proceeded by way of action
and not
application.
The
court below rejected these defences, finding that the parties never
intended to conclude a PPP agreement. In addition, any
disputes of
fact were not material and did not have to be referred for the
hearing of oral evidence. The present appeal is with
the leave of
the court below.
The
issue whether the agreement was correctly classified as a PPP
agreement, as defined in
regulation 16
,
was
raised for the first time as a point in limine in the answering
affidavit deposed to by Ms Coetzee on behalf of the MEC. It
was
dealt with in a perfunctory manner with no reference to the detailed
requirements of the regulations in this regard. The
deponent simply
referred to the general characteristics of a PPP and made the bald
statement that the agreement met these criteria.
The need for a
detailed examination of this issue was not met in the heads of
argument filed by the parties, or in the arguments
advanced before
this court.
The
issue is one of considerable importance to private parties
concluding contracts with government institutions and to those
institutions. It required for its proper determination a more
careful consideration than that which has been provided in the
present case. In addition, we have not been provided with the views
of the National Treasury, whose interests would be affected
by a
decision on this issue. Accordingly, in the light of the conclusion
I have reached on the alternative ground of appeal,
I find it
unnecessary and undesirable to decide this issue.
I
turn to the remaining issue of whether the court below erred in
finding that the disputes of fact on the papers were not material
and did not have to be referred for the hearing of oral evidence.
At
the heart of the dispute as to whether Masifundisane was entitled to
payment lies the issue of whether Masifundisane had achieved
specified ‘deliverables’ in terms of the agreement which
entitled it to payment. There was a dispute of fact incapable
of
resolution on the papers in this regard. In addition, clause 13.7 of
the agreement provided that the payments were only to
be made to
Masifundisane if the Department was satisfied with Masifundisane’s
performance. The Department’s dissatisfaction
with
Masifundisane’s performance was made clear in the
correspondence between the parties and the meetings held prior to
the institution of proceedings. Whether the Department’s
dissatisfaction was reasonable was an issue which could not be
decided on the papers. The court below accordingly erred in deciding
the matter when there was a dispute of fact incapable of
resolution
on the papers. Masifundisane should have realised this before
proceeding by way of application and should have done
so by way of
action. See
Adbro Investment Co Ltd v Minister of the Interior
1956 (3) SA 345
(A) at 350A.
In the result the
following order is made:
1. The appeal succeeds
with costs, such costs to include those occasioned by the employment
of two counsel.
2. The order of the court
below is set aside and is replaced with the following order:
‘
The
application is dismissed with costs including those occasioned by the
employment of two counsel.’
K G B SWAIN
ACTING JUDGE OF APPEAL
appearances:
FOR APPELLANT: C J
PAMMENTER SC (with him s jikela)
NGIDI & COMPANY INC,
DURBAN
SYMINGTON & DE KOK,
BLOEMFONTEIN
FOR respondeNT: v i gajoo
sc (with him w s kuboni)
GARLICKE & BOUSFIELD,
LA LUCIA
WEBBERS, BLOEMFONTEIN
1
Treasury
Regulations, GN R225,
GG
27388, 15 March 2005.