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[2012] ZAECPEHC 89
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Westside Trading 78 (Pty) Ltd v MEC for the Province of Eastern Cape Responsible for Human Settlement (2814/2011) [2012] ZAECPEHC 89 (6 December 2012)
NOT REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, PORT
ELIZABETH)
In the matter between:
Case No: 2814/2011
WESTSIDE TRADING 78
(PTY) LTD
..................................................................
Plaintiff
And
THE MEMBER OF THE
EXECUTIVE COUNCIL
OF THE PROVINCE OF THE
EASTERN CAPE
RESPONSIBLE FOR HUMAN
SETTLEMENT
...............................................
Defendant
Coram:
Chetty,
J
Heard:
20
November 2012
Delivered:
6
December 2012
Summary:
Contract
- Multimillion rand housing project – Oral agreements -
Whether concluded – Written contract concluded in respect of
first phase of development – No written contract in respect of
second phase – No such agreement concluded – Absolution
granted.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Chetty, J
[1] It is apposite to
commence this judgment by iterating the correct approach to an
application for absolution as propounded by
Harms J.A, with reference
to various authorities, in
Gordon
Lloyd Page and Associates v Rivera and Another
1
where the learned judge
of appeal said the following: -
“
[2]
The test for absolution to be applied by a trial court at the end of
a plaintiff's case was formulated in
Claude
Neon Lights (SA) Ltd v Daniel
1976
(4) SA 403
(A)
at
409G - H in these terms:
'.
. . (W)hen absolution from the instance is sought at the close of
plaintiff's case, the test to be applied is not whether the
evidence led by plaintiff establishes what would finally be required
to be established, but whether there is evidence upon which
a Court,
applying its mind reasonably to such evidence, could or might (not
should, nor ought to) find for the plaintiff. (
Gascoyne
v Paul and Hunter
1917
TPD 170
at 173;
Ruto
Flour Mills (Pty) Ltd v Adelson (2)
1958
(4) SA 307 (T)
.)'
This
implies that a plaintiff has to make out a
prima
facie
case
- in the sense that there is evidence relating to all the elements of
the claim - to survive absolution because without such
evidence no
court could find for the plaintiff (
Marine
& Trade Insurance Co Ltd v Van der Schyff
1972
(1) SA 26 (A)
at
37G - 38A; Schmidt
Bewysreg
4th
ed at 91 - 2). As far as inferences from the evidence are
concerned, the inference relied upon by the plaintiff must be
a
reasonable one, not the only reasonable one (
Schmidt
at
93). The test has from time to time been formulated in different
terms, especially it has been said that the court must consider
whether there is 'evidence upon which a reasonable man might find for
the plaintiff' (
Gascoyne
(loc cit
))
- a test which had its origin in jury trials when the
'reasonable man' was a reasonable member of the jury (
Ruto
Flour Mills
).
Such a formulation tends to cloud the issue. The court ought not to
be concerned with what someone else might think; it should
rather be
concerned with its own judgment and not that of another 'reasonable'
person or court. Having said this, absolution at
the end of a
plaintiff's case, in the ordinary course of events, will nevertheless
be granted sparingly but when the occasion
arises, a court should
order it in the interests of justice.”
[2] This is precisely the
type of case where, despite counsel for the plaintiff’s
protestations to the contrary, not only
the paucity of the evidence
adduced on behalf of the plaintiff but the interests of justice
itself invite a judgment of absolution
from the instance given the
anomalies between the plaintiff’s pleaded case and the evidence
adduced on its behalf by its
managing director and sole witness, Mr
Keith Thomas
(
Thomas
).
The Pleadings
[3] In its particulars of
claim, the plaintiff alleged that during November 2004, the parties
concluded an oral agreement, the material
terms of which were
articulated as follows: -
“
3.1
The Defendant approved subsidies for the construction of 850
dwellings and services (internal reticulation) on erven in Ocean
View, Jeffreys Bay, in the area of jurisdiction of the Kouga
Municipality (“project”).
3.2 The Plaintiff was
appointed as the Support Organisation (the developer) for the project
and would be responsible for the construction
of the dwellings and
services (internal reticulation), which, subsequent to construction,
would be transferred to selected beneficiaries.
3.3 The Plaintiff would
be remunerated for the construction of the dwellings and services
(internal reticulation) in accordance
with the Defendant’s
subsidy quantum effective at the time of the commencement of the
project.
3.4 A written agreement
would be signed by the parties, which document would confirm the
terms of the agreement (as set out above)
and would include ancillary
terms relating to the implementation of the project.”
[4] It then alleged that
the oral agreement metamorphed into a
“
binding
agreement”
not
only by a resolution dated 26 November 2004 annexed to the summons as
“A” and signed by the defendant’s then
incumbent,
Mr
G.E
Nkwinti
,
but was moreover
confirmed in a letter addressed to the Kouga Municipality by the
Deputy Director: Housing Secretariat of the Department
of Local
Government and Housing of the Province of the Eastern Cape. The
latter document,
annexure
“B” to the summons, merely repeats the recommendations
encapsulated in “A”, an extract from the
minutes of a
meeting where various entities, including the plaintiff, made
presentations to the Eastern Cape Human Settlements
department
concerning the proposed housing settlement at Ocean View, Jeffreys
Bay.
[5] The aforementioned
recommendations, suitably amended, read as follows: -
“
(a)
850 subsidies be approved in terms of Peoples Housing Process, for
the Support Organisation, Westside Trading 78 (Pty) Ltd,
as
calculated below: -
(b)
850 subsidies @
R25 800.00 = R 21 930 000.00 SCCCA variance @ R3900 x
850 =
R 3 315 000.00
TOTAL
R
25 245 000.00
(c) An Establishment
Grant be approved as calculated below: -
850 subsidies @ R
570.00 = R484 500.00
(d) An amount of
R500.00 for town planning and survey (P2) be deducted as historical
cost.
(e) The top structure
conforms to the minimum Provincial norms and standards
(f) Westside Trading 78
(Pty) Ltd be approved as Support Organisation.
(g) Kouga Municipality
be approved as Accounts Administrator
(h) Kouga Municipality
with a representative of the MMP be approved as Certifier
(i) The costs of the
land be clarified
(j) The Support
Organisation submit a project implementation plan within seven (7),
after the signing of the agreement after signing
of the agreement.
(k) The beneficiary
application forms be submitted to the department within 30 days after
project approval.
(l) The Support
Organisation enters into an agreement with the MEC”
The question which arises
is whether these recommendations in fact constitute a record of the
oral agreement which the plaintiff
contends was concluded at the
presentation referred to hereinbefore. I shall in due course state my
reasons for finding against
the plaintiff but am constrained to
return to the pleaded case.
[6] The plaintiff then
alleged that during March 2005 the defendant sought its consent to a
variation of the agreement by reducing
the number of houses to be
built and thereafter, during July 2005, concluded a further oral
agreement, varying the terms of the
previous oral agreement as
follows: -
“
6.1
The project would be implemented in two phases.
6.2 In the first phase
360 dwellings would be constructed.
6.3 In the second
phase, which would be undertaken when subsidy funds were available,
490 dwellings would be constructed.
6.4 The Plaintiff would
be remunerated for the first phase of construction in terms of the
Defendant’s subsidy quantum effective
at the time of the
commencement of the first phase of the project.
6.5 The Plaintiff would
be remunerated for the second phase of construction in terms of the
Defendant’s subsidy quantum effective
at the time of the
commencement of the second phase of the project.
6.6 The parties would
sign a written agreement in respect of the first phase of the
project, which document would confirm the terms
of the agreement (as
set out above and varied as set out above) relevant to the first
phase and would include ancillary terms relating
to the
implementation of the first phase of the project.
6.7 The parties would
sign a written agreement in respect of the second phase of the
project, which document would confirm the terms
of the agreement (as
set out above and varied as set out above) relevant to the second
phase and would include ancillary terms
relating to the
implementation of the second phase of the project.”
[7] In amplification of
this further oral agreement it annexed a letter addressed to the
Kouga Municipality by the Department of
Local Government and Housing,
Eastern Cape, incorporating a resolution by the defendant to the
effect that: -
“
(a)
the project approval i.r.o. Jeffreys Bay 100 hectares, with Westside
Trading 78 (Pty) Ltd as the Support Organisation, be reduced
from 850
subsidies to 360 as a first phase with the following financial value:
360 subsidies @
R31 929.00 = R11 494 440.00
360 subsidies @ R
3 900.00 = R1 404 000.00 (SCCCA variance)
360 subsidies @ R
4 790.00 =
R1 724 440.00
TOTAL
R14 622 840.00
the agreement between
the MEC and the respective Support Organisation be amended
accordingly.”
[8] It is common cause
that the parties concluded a written agreement, annexure “D”
to the particulars of claim, during
December 2006 for the
construction of 360 homes at Ocean View and that both the plaintiff
and the defendant duly complied with
their obligations thereanent. In
essence the dispute relates to whether the parties initially
concluded an agreement involving
the construction of 850 homes which
was subsequently varied into a two phased project, the first, the
construction of 360 homes
and the second, the construction of 490
homes. The adjudication of that issue must perforce commence by
considering the parties’
other housing project agreements. It
is not in issue that during February 2005 the parties concluded three
written agreements viz,
Hankey 160, Hankey 150 and Hankey 40. Each of
those written agreements was signed by
Thomas
on behalf of the
plaintiff and Mr
Nkwinti
, and formed part of a
bundle of documents, (exhibit “A”), handed in from the
bar during the plaintiff’s case.
[9] During his testimony
in chief,
Thomas
, expounding upon the plaintiff’s
pleaded case, testified that the pleaded oral agreements had in fact
been concluded and
the project divided into two phases. The
documentation relied upon, referred to in the preceding paragraphs,
as constituting corroborative
evidence in support of the plaintiff’s
case is however wholly inconclusive. Annexure “A” to the
summons does
not lend itself to the interpretation contended for.
[10] It is apparent
therefrom that the recommendations recorded in the minutes of the
meeting constituted a mere identification
of the plaintiff as the
preferred contractor. It explicitly pronounced in recommendation (L)
that a binding contract was dependent
upon the conclusion of a
written agreement.
Thomas
could have had no illusions to the
contrary. He was the signatory on behalf of the plaintiff as regards
the Hankey projects and
it is inconceivable how he could have deduced
that a multimillion rand contract, could validly, be concluded,
orally. Neither does
annexure “C” to the summons justify
the interpretation contended for. It is common cause that budgetary
constraints
necessitated the staggering of the project into two
phases, hence the notification to the Kouga Municipality encompassed
in annexure
“C” to the plaintiff’s summons.
[11] It is evident from
the terms of
Thomas’
letter to the defendant
during May 2008 that whilst he bemoaned the staggering of the
project, he did not labour under the impression
that he had concluded
a binding agreement to construct the second phase of the project. The
letter pertinently states
“
and
we were advised that the second phase of 490 will be considered when
the financial challenges have improved”
.
If the agreement,
as
contended for,
had
in fact been concluded, the obvious thing would have been to record
this in the letter. Its absence therefrom and in the plethora
of
e-mails sent to officialdom within the office of the defendant
negates any suggestion that the oral agreements pleaded were
concluded. Neither the documents relied upon nor the evidence of
Thomas
himself provide any basis
for finding that any oral agreements were concluded.
[12]
Thomas
testified that following
the meeting with Mr
Andre
Muller
(
Muller
),
an acting director in the defendant’s Port Elizabeth Housing
offices, he had
“
no
doubt”
that
he would be constructing the remaining 490 homes. His conviction was
however, objectively viewed, not only extremely tenuous,
but based
entirely upon a speculative hypothesis. He was, as recounted above,
aware, having previously concluded three written
agreements in
respect of the Hankey housing projects that the authority to contract
vested in the MEC. Consequently, his evidence
that he believed that
Muller
had the requisite
authority to bind the defendant is improbable in the extreme. The
latter’s station within the hierarchy
of the human settlements
department viz, an acting director in the Port Elizabeth office,
clearly provided no
justification for
Thomas
to conclude that
Muller
had such authority. In my
judgment the evidence adduced on behalf of the plaintiff is wholly
insufficient to sustain its cause of
action.
[13] In the circumstances
the defendant is entitled to an order for absolution from the
instance, with costs.
________________________
D. CHETTY
JUDGE OF THE HIGH
COURT
On behalf of the
Plaintiff: Adv O.H Ronaasen instructed by Roelofse Meyer Inc, 29 Bird
Street, central, Port Elizabeth, Ref: Lunen
Meyer; Tel: (041) 585
3270
On behalf of the
Defendant: Adv G. Bloem SC instructed by State Attorney, 29 Western
Road, Central Port Elizabeth, Ref: Mr Mnyande;
Tel: (041) 585 7921
1
2001
(1) SA 88
@ p92 para [2]