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[2013] ZAECPEHC 24
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Sundays River Valley Municipality v Cinzaco 180 (Pty) Ltd (2864/12) [2013] ZAECPEHC 24 (14 March 2013)
NOT REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, PORT
ELIZABETH)
CASE NO: 2864/12
IN THE MATTER BETWEEN:
SUNDAYS RIVER VALLEY MUNICIPALITY
........................................
APPLICANT
AND
CINZACO 180 (PTY) LTD
..................................................................
RESPONDENT
Coram: Lowe J
Date Heard: 21 February 2013
Date Delivered: 14 March 2013
JUDGMENT
LOWE, J:
INTRODUCTION:
[1] Applicant in this matter on
application, sought that the agreement concluded between the parties
which is referred to as the
“Addo Land Availability Agreement”
in respect of Erf 943 Addo Township on 25 February 2008 be declared
void
ab initio.
Respondent brought an application to strike
out the entire founding affidavit of Mr Ngoqo, the supporting
affidavit of Mr Somngesi
and the entire replying affidavit of Ngoqo
[2] The application was opposed by
respondent which filed answering papers, both parties seeking costs
on the scale as between attorney
and own client. Counsel argued that
the striking out application should be dealt with as part of the main
application the basis
thereof being the allegation that the
affidavits were entirely inadmissible hearsay.
[3] Both counsel in the matter filed
quite extensive heads of argument, persisting in some but not all of
the issues raised on the
papers.
[4] Counsel for respondent Mr
Pretorius
quite correctly, did not persist in the
suggestion that was made in the answering affidavits that applicant
should be estopped
from seeking the relief sought.
THE APPROACH TO DISPUTES OF FACT
ON APPLICATION:
[5] Having regard to the nature of
this application, the allegations and counter allegations made it is
relevant to refer to the
principles applicable not only to answering
affidavits, but to the resolution (if appropriate) of factual
disputes that might arise
on the papers between the parties.
[6] In answering affidavits a
respondent is required to set out which of the applicant’s
allegations he admits and which he
denies and to set out his version
of the relevant facts. Of course the applicant’s allegations of
fact is not a pleading,
and a statement of lack of knowledge, coupled
with a challenge to the applicant to prove part of his case does not,
amount to a
denial of the averments of the applicant. See
Gemeenskapontwikkelingsraad v Williams (2)
1977 (3) SA
955
(W);
Traut v Fiorine
[2007] 4 All SA 1317
(C) at
para [35].
[7] It is normally not sufficient for
a respondent to rely on a bare or unsubstantiated denial but the
respondent may, of course,
attack the credibility of the applicant’s
allegations by examining their inherent validity or probity in all
the proved circumstances
and without advancing further evidence. See
Room Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at 1163 and 1165;
Engar v Omar Salem Essa
Trust
1970 (1) SA 77
(N);
Kelleher v Minister of
Defence
1983 (1) SA 71
(E).
[8] In this matter and on numerous
issues, respondent, whilst putting up a version in paragraph 12 of
its answering affidavit, nevertheless
states that it has no knowledge
of the contents of paragraphs 10 to 13 of the applicant’s
founding affidavit putting applicant
to the proof thereof. It takes
the same approach in respect of applicant’s paragraph 15, and
pleads no knowledge of the meetings
of applicant’s council that
took place or of the resolution LMRN1.
[9] As will be seen hereafter, this
has the effect that respondent may well not be held to have properly
put in issue the crucial
allegations in this regard, save that it is
still open for me to consider respondent’s counsel’s
argument that these
allegations constituted hearsay material by
applicant and should not be admitted or that no regard could be had
thereto.
[10] In order to adjudicate this issue
it is necessary to analyse the contents of the affidavits in the
light of the rules which
I refer to hereafter. Motion proceedings,
unless relevant to interim relief, are about the resolution of legal
issues based on
common cause facts. They are not appropriate
generally to the resolution of factual disputes as they are not
designed to determine
probabilities, unless the circumstances are
special.
[11] A real dispute of fact may arise
of course where the respondent denies one or more of the material
allegations made by the
applicant and produces evidence to the
contrary or applies for the leading of oral evidence (no such
application for the leading
of oral evidence having been made by
either party in this matter).
[12] Of course a real dispute of fact
does not usually arise where the respondent:
[12.1] States that he can lead no
evidence himself or by others to dispute the truth of the applicant’s
statements but puts
applicant to the proof; or
[12.2] Relies on a bare denial of
allegations contained in the applicant’s affidavits. See
Saflec
Security Systems (Pty) Ltd v Group Five Building (East Cape)(Pty)
Ltd
1990 (4) SA 626
(E);
Ripoll-Dausa v Middelton
NO
[2005] 2 All SA 83
(C).
[13] The
Plascon-Evans
rule
(Plascon-Evans Paints Limited v Van Riebeeck Paints (Pty)
Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634), relevant to disputes of fact
provides that if disputes of fact arise on the affidavits and neither
party asks that
the matter be referred for evidence or trial, the
court will not do so, and is entitled to deal with the application on
the undisputed
facts. If notwithstanding that there are facts in
dispute on the papers the court is satisfied that the applicant is
entitled to
relief, in view of the facts stated by the respondent
together with the facts in the applicant’s affidavits which are
admitted
or have not been denied by respondent, it will make an order
giving effect to such finding. See
National Director of Public
Prosecutions v Zuma (Mbeki and Another Intervening)
[2009] ZASCA 1
;
2009 (2)
SA 277
(SCA) at para
[26]
. It may be different if the respondent’s
version consists of bald or uncreditworthy denials, raises fictitious
disputes of
fact or is so farfetched that a court may simply reject
same on the papers. In motion proceedings the question of onus does
not
arise. The more serious the allegations or its consequence the
stronger must be the evidence before the allegation will be found
to
have been established. (Zuma supra: [26] and following.)
[14] I should explain clearly in
adding to what I have set out above, that there may be instances
where a bare denial meets the
requirements of placing an applicant’s
allegation seriously in dispute in circumstances where there is no
other way open
to the disputing party and nothing more can therefore
be expected of him. Even in this situation, however, this may not be
sufficient
even if the facts alleged lie within the knowledge of the
averring party where no basis is laid for disputing the veracity of
the
averment or its accuracy. It must be remembered that:
“
This
rule of evidence, namely that if the facts are peculiarly within the
knowledge of a defendant the plaintiff needs less evidence
to
establish a prima facie case, applies to trials. In motion
proceedings the question of onus does not arise and the approach
set
out in the preceding paragraph governs irrespective of where legal or
evidential onus lies.”
(Zuma : supra Para (26)
and following.)
[15] In arriving at this decision, the
court must and I will have regard to the broader matrix of
circumstances all of which need
to be borne in mind when arriving at
a decision.
THE FACTS AND ISSUES:
[16] The following facts are, on a
proper reading of the affidavits filed by the various parties, common
cause:
[16.1] That the deponent Ngoqo is the
municipal manager of the applicant municipality having been appointed
as such on 6 April 2012
long after the events relevant hereto
unfolded;
[16.2] The appellant and the
respondent concluded an agreement for the sale and transfer of Erf
943 in Addo Township (“the
Erf”) falling within
applicant’s jurisdiction signed and dated on 25 February 2008
(LMRN4 to the papers);
[16.3] This agreement was signed for
and on behalf of applicant by the then municipal manager N K Singanto
(“Singanto”)
and by Fanie de Lange for respondent;
[16.4] The agreement post-dated an
advertisement placed by applicant in the EP Herald on the 28 January
2008 calling for proposals
for the development of a piece of land in
“Addo town” (failing to identify which piece of land) but
with reference
SCH/adt-2-2008 (signed by Singanto) by no later than
14 February 2008;
[16.5] On 18 February 2008 (a mere
four days after the tenders closure date) Singanto addressed a letter
to respondent informing
respondent that the tender (which the letter
indicates had being submitted) had being considered by the Bid
Adjudication Committee
which had resolved that the tender
SCN–adt-2-2008 had being awarded to respondent, subject to the
submission of a detailed
business plan and the signing of a
memorandum of undertaking and the signing of a land availability
agreement (calling for acceptance
within seven working days);
[16.6] Respondent accepted this on 19
February 2008;
[16.7] The municipality appointed
attorneys Canter and Company to attend to the transfer of the
property (Erf 943) in terms of the
agreement;
[16.8] Those attorneys addressed a
number of letters to the municipality, the first on the 27 May 2008
inter alia
asking for confirmation that in terms of paragraph
15.2 of the written agreement a deposit of 10 % of the purchase price
had been
paid by respondent to applicant (to which it seems there was
no response); and a further letter on 27 November 2008 referring to
other matters relevant to the transfer;
[16.9] Finally on the 14 November 2011
there is a further letter from Cantor and Co to applicant referring
to the instruction from
applicant to effect transfer to respondent
and calling
inter alia
for confirmation of the payment of the
R60 000-00 deposit referred to in the first letter;
[16.10] Analysis of the agreement
establishes this was indeed in respect of the Erf alleged (although
incorrectly described as 934
whereas it should have being 943), the
purchase price therefore being R600 000-00 of which R60 000-00
was payable within
seven days of signature;
[16.11] A further letter was addressed
by Canter and Co to applicant on 1 February 2012 stating that
respondent maintained that
it had paid the deposit of R60 000-00
on 3 March 2008;
[16.12] The current municipal manager
then, when transfer was demanded, (after he came into office) made
enquiries relevant to the
background of the matter and says that he
sought relevant documents making enquiries with the officials of the
applicant particularly
relevant to:
[16.12.1] a resolution of the
applicant’s counsel referred to in the letter awarding the
tender (LMRN2);
[16.12.2] a copy of the proceedings of
the Bid Evaluation Committee of the applicant dealing with the
tender;
[16.12.3] a copy of the valuation
which would have being required in respect of Erf 943 (para 10).
[17] In this regard respondent claims
no knowledge hereof in its answer, but in argument contended that
this was essentially a precursor
to mere hearsay evidence of what was
discovered and not that personally known to the deponent.
[18] Ngoqo then states that he did not
“get these documents” following this with the statement
that he was “...
advised that they did not exist” (para
11).
[19] He says that “I also did
not find any resolution relating to the Erf in the resolutions of the
Applicant’s council”
(para11). In answer to all the above
respondent says that it has no knowledge hereof puts applicant to the
proof but is not able
to contest the allegations made.
[20] Ngoqo continues to say that he
sought a copy of the applicant’s procurement policy procedures
as well as its supply chain
management policy. He was told that both
these documents were non-existent (para12). Again respondent says
that it has no knowledge
hereof.
[21] Suspecting now that there had not
been proper process, as would have being required, Ngoqo refers to
the Municipal Finance
Management Act and states that Erf 943 was a
non-exempt capital asset, in which respect in terms of the
Regulations and section
14 (2), Applicant would have first to
determine in a public meeting whether the asset was required for the
provision of minimum
level of basic municipal services with its fair
market value being disclosed. He states that “I could not find,
nor could
anyone produce a copy of a record of the council of the
applicant in which prescripts of s 14, s 111 and the Regulations of
the
MFMA where considered (sic para 13.4).” Again respondent
states that it has no knowledge hereof.
[22] The deponent continues to say “I
also did not find any record of public participation that has to be
undertaken in respect
of a considered lease or a disposal of a
municipal asset as prescribed in regulation 528 of the Regulations
MFMA” (sic) (para
13.5). Again respondent states that it has
knowledge hereof putting Applicant to the proof.
[23] Importantly, at paragraph 14 of
the founding affidavit Ngoqo states that the only document that
relates to a public invitation
relevant to the sale of Erf 943 in
question is the tender advertisement referred to above (LMRM9).
[24] Respondent admits this
fundamental allegation which then becomes common cause. Put
otherwise, the respondent in the application
admits that there was no
other document relating to public invitation dealing with the sale of
Erf 943 other than the tender advertisement.
It is immediately
apparent that if this advertisement fell short of the statutory
requirements applicable to the sale of immovable
property by a
municipality, this would afford applicant with the necessary
foundation for declaring those proceedings a nullity
having regard to
what follows.
[25] Ngoqo continues to say the
following at paragraph 15 of the affidavit: “I also satisfied
myself that there had not been
any Tender Committee or Bid
Adjudication Committee that sat and considered the tender in respect
of which the agreement leading
to the sale of Erf 943 was entered
into.” Although conceding the letter from Singanto accepting
the tender, he states that
there is in fact still no record of any
such tender in the municipal offices. Again in this regard, the
respondent states that
it has no knowledge hereof placing reliance on
the principles of estoppel
.
[26] In support hereof applicant
refers to the affidavit of Somngesi who was in the employ of
applicant at the time of the transaction
in question holding the
portfolio of Director Corporate Services and acting thereafter from 1
April 2008 to 30 June 2008 as acting
municipal manager of applicant.
[27] He confirms that Ngoqo requested
“... the necessary documents and resolutions from me and I
assisted in investigating
the matter” (para 3.3) and further “I
confirm further that there are no documents showing that the
statutory procedure
prescribed for a transaction of this nature was
followed” (para 3.4). As I have said the Somngesi affidavit is
referred to
in applicant’s paragraph 15 to which respondent
states that it has no knowledge putting applicant to the proof
thereof. Respondent
further does not deal specifically with the
Somngesi affidavit or join issue therewith directly at all other than
to the extent
that I have referred above.
[28] In essence the approach taken by
respondent is the following:
[28.1] It admits the general
background to the conclusion of the agreement referred to above and
evidenced by the letters attached
in support thereof and claims that
it paid the deposit of R60 000-00 to applicant on 3 March 2008
attaching as “proof
of payment” a cheque in the sum of
R60 000-00 drawn by “O de Lange” which is made out
in favour of applicant
but which bears no bank stamp. It further
attaches a Standard Bank statement of O de Lange showing that this
particular cheque
number 1047 was debited to the account in the sum
of R60 000-00 in 5 March 2008 there being funds in the account
against which
this cheque could be met.
[28.2] The respondent continues to
state, as I have said, that it has no knowledge whatsoever of the
documentation in the applicant’s
possession, or rather the lack
thereof, the fact that there appeared to be no resolution of
applicant’s council relevant,
no proceedings of the bid
evaluation committee or valuation of Erf 943, let alone any record
showing compliance with the requirements
of the MFMA and its
regulations or anything relating to public participation, (and
admitting that there was no document relating
to a public invitation
applicable to the sale of the property other than the tender
advertisement). This enables it (so it is argued)
to rely on
estoppel. It states that it obtained the necessary documentation from
the municipal offices completed and submitted
the tender, accepted
the conditions, filed its business plan, paid valuers an amount of
R20 000-00 to provide a valuation
of the property (when this was
done is not clear), signed the written agreement and paid the
purchase price deposit timeously.
It says that it acted
bona fide
and paid the transfer fees to applicant’s attorneys but that
applicant acting negligently or intentionally caused respondent
to
act to its prejudice and misrepresented to respondent that the
applicant had complied with all the legislative requirements
to sell
the property, causing respondent prejudice when concluding the
agreement. Finally at paragraph 12.16 of its affidavit it
says
applicant is accordingly estopped from relying on its own failure.
[26] In dealing with this difficult
matter respondent’s counsel quiet correctly did not pursue the
estoppel argument. This
is so in as much as it is trite that a court
will not allow a respondent to succeed on the basis of estoppel in
respect of a matter
in which to do so would sanction an illegality,
in circumstances where there was non-compliance with the necessary
statutory formalities
without which the conclusion of the agreement
would have being illegal. Indeed he conceded in effect that if I find
against his
argument on hearsay and restitution the respondent may
well be in difficulty.
[27] It was rather applicant’s
counsel’s argument that although the affidavits purported to
set out that applicant had
no knowledge of compliance and could not
find the documents (and concluded therefore they did not exist), and
although respondent
could not contest this (directly) it was
significant that no records were annexed of the minutes of the
meetings adverted to and
particularly in any event that, so it was
contended, Ngoqo’s allegations were entirely hearsay. This was
especially so, so
it was argued, having regard to the fact that the
minutes of the Bid Adjudication Committee meeting and the Council
meetings were
not annexed which would have enabled a analysis by
respondent itself of whether or not these matters have been dealt
with or not.
Of course I should immediately point out that Applicant
could in all probability have secured these documents to peruse and
comment
on had it sought on application that the discovery process be
made applicable to this application in terms of Rule 35 (13). It did
not do so.
[28] He argued further that there was
more than adequate evidence of payment to the municipality and that
the applicant’s
response hereto, that it could not trace the
payment, was wholly inadequate.
[29] The conclusion he submitted to be
drawn from this was that there was thus no tender of repayment this
being, so it was argued,
a matter of restitution and that applicant
was therefore not entitled to an order declaring the written contract
void in the absence
of same, referring to
Hall-Thermotank in
Natal (Pty) Ltd v Hardman
1968 (4) SA 818
(T) at 832.
THE HEARSAY ARGUMENT:
[30] Dealing firstly with the
allegations that the main facts upon which applicant relies amounted
to hearsay the following appears.
[31] It would already be apparent from
what I have summarised above, that the main deponent Ngoqo, in my
view, sufficiently qualifies
his affidavit to establish that in the
main this is not hearsay there is certainly no basis laid for
striking out of the entire
affidavit nor could this be the case in
respect of the Somngesi affidavit.
[32] Ngoqo says (paragraph 10) that he
made enquiries with the officials of the applicant and sought the
relevant documents referred
to in that paragraph. He says that “I
did not get these documents” having being advised that they did
not exist. Whilst
this would seem to indicate in this regard that it
was his officials that sought and did not find the documents, he
continues to
say “I also did not find any resolution relating
to the Erf in the resolutions of the applicant’s council”.
This
is a statement of direct knowledge although he does not depose
to or give the details of his search in this regard.
[33] He says in paragraph 12 that he
sought
a copy of the applicant’s Procurement Policy in
Supply Chain Management Policy, following this with a statement that
he was
told that both these documents did not exist. Again this would
seem to indicate that he is relying in this instance upon what he
was
told.
[34] However, and of considerable
importance is that having then set out what he considered were the
relevant statutory requirements
arising from various statutes and
regulations, he says that he could not find any record of the Council
showing compliance therewith
(paragraph 13.4 and paragraph 13.5) he
says “I also did not find any record of public participation
that has to be undertaken
...”.
[35] The Somngesi supporting affidavit
is in any event first hand support herefor from a senior official who
says he assisted in
investigating the matter – which averment
is not properly contested in answer.
[36] Even if I am incorrect in the
above regard it is in fact unnecessary to decide whether there is
sufficient assertion of personal
knowledge to establish the necessary
in this regard, even in the light of respondent’s inability to
deny same.
[37] I say this, as at much as
paragraph 14 Ngoqo states clearly that the only document that relates
to public invitation relevant
of the sale of the property in question
is the tender advertisement – this admitted unequivocally by
respondent.
[38] That being so, applicant
contended that having regard to the requirements of section 14(2) of
the MFMA read with its regulations,
(regulation 3) there must be a
public meeting to determine issues relevant to the sale of such a
municipal asset with disclosure
of its fair market value, and further
having regard to section 124(2) of the Municipal Ordinance 20 of 1974
it is necessary to
advertise the intention to sell property and to
consider objections if any lodged, it has to be accepted as common
cause that this
simply did not occur. The advertisement such as it
was is certainly not compliance herewith if in fact this is required.
THE STATUTORY FRAMEWORK:
[39] Before the new Local Government
dispensation when local authorities were creatures of statute the
power to dispose of property,
particularly immovable property, was
specifically granted to such authorities in terms of the various
Municipal Ordinances. In
the late 1980’s permission was usually
no longer required by the municipalities from the Province as they
held delegated
power to dispose of immovable property subject to a
process of public participation and calling for tenders.
[40] With the establishment of Local
Government as a sphere of government in terms of the Constitution the
important thing became
the functional areas in terms of which
municipalities could exercise their constitutionally –protected
original powers.
[41] Just as Provincial Governments
may do so, a municipality is able to take the necessary measures in
its functional areas to
achieve its objects. (Constitution 2156 (5)).
This precludes the right to dispose of immovable property.
[42] The MFMA which commenced on 1
July 2004 deals inter alia with the disposal by a municipality of
capital assets.
[43] On the coming into operation of
the MFMA, there seem to be a widely held view that municipalities
continued to be bound to
the original Provincial Ordinances.
[44] This suggestion was put to rest
in
CDA Boedery (Edms) Bpk and Others v The Nelson Mandela
Metropolitan Municipality and Others
[2007] ZASCA 1
;
2007 (4) SA 276
(SCA)
,
where the court made it clear that all legislation was implicitly
repealed if it conflicted with local governments new constitutional
status.
[45] In respect of capital assets the
MFMA simply provides that a municipality may not alienate an asset if
it is needed “to
provide the minimum level of basic municipal
services”. (S 14 (1)). Although the power to transfer property
is subject to
a specific regulatory framework the basis of MFMA and
that framework is that the power to dispose of an asset is an aspect
of state
power exercised by Municipality.
[46] Importantly the power to alienate
a municipal asset is subject to the MFMA and its regulations.
[47] The first principle introduced by
the MFMA is that assets necessary for the provision of minimum level
of basic municipal services
may not be transferred by municipality.
(Section 14 (1)).
[48] The second principle is that a
municipality should get market value when it disposes of an asset.
(Section 14 (2)).
[49] Section 14 (5) of the MFMA
provides that “(a)ny transfer of ownership of a capital asset”
must be “fair,
equitable, transparent, competitive and
consistent with the [municipalities] supply chain management policy”.
[50] The alienation of an asset must
thus be in terms of the municipalities supply chain management policy
which must statutorily
contain a section on disposal management.
[51] This being so, it was held that
Lephondo v Dilhlabang Local Municipality (unreported case no
7493/2008 FSHC at para 19)
that the transfer of ownership of
a capital asset that takes place without compliance with the
provision of section 14 isn’t
valid. See also
Biong
Africa Free State (Ems) Bpk v Freedom Front Plus
[2011]
JOL 27944
(FSB) at para 8
.
[52] It must follow that failure to
comply with any subsidiary legislation relevant to procedural
requirements, would also render
the transaction invalid.
[53] The detailed framework in which
the MFMA disposal of asset provision operate include the Asset
Transfer Regulations and the
Supply Chain Management Regulations (GN
R 868 of 30 May 2005).
[54] These regulations entrench the
valuation principle to ensure that the interests of the municipality
are not prejudice by its
disposal. (Regulation 3(a) Asset Transfer
Regulations).
[55] The regulatory framework guides
the disposal and transfer of Assets including immovable property.
[56] There is no doubt in my view that
Erf 943 is an “Asset” as defined in the regulations which
makes it clear that
this includes immovable property.
[57] Once a municipal council has
given its approval in principle to the sale of an Asset, it steps out
of the picture and the municipal
manager must act in terms of the
municipalities disposal management system. (Regulation 12(4) Asset
Transfer Regulation.) That
policy must comply with
regulation 40
of
the
Municipal Supply Chain Management Regulations. This
is
irrespective of the value of the asset to ensure that the asset is
sold at market related prices, unless the public interest
or the
plight of the poor demands otherwise.
(Regulation 40(2)(b)(i).)
In
applying the disposal management system the municipality must
consider the gain or loss that will result from the transfer and
record this in the accounting records of the municipality.
(Regulation 12(5)
Asset Transfer Regulations.)
[58] It is disturbing to say the least
that it appears from the founding affidavit in this matter that at
the time of this transaction
in 2008, there was in all probability no
Supply Chain Management Policy at applicant municipality.
[59] It was and remains every
municipality’s obligation to have and implement an SCM policy
that gives effect to the MFMA’s
requirements relating to Supply
Chain Management (section 111 MFMA).
[60] That policy must comply with the
prescribed regulatory framework (section 112(1) and the lengthy list
of matters specified
in section 112 of the MFMA. The SCM regulations
apply to municipalities and the policy is a public document to which
parties wishing
to participate in tendering process have a right to
access, this including respondent in this matter. (
Nelson
Mandela Bay Municipality v Afrisec Strategic Solutions Limited 2008
JDR 1014 (SC) para 29-30.)
THE RESULT:
[61] Whatever the position in this
regard, it appears that:
[61.1] There was a poor and inadequate
attempt at advertisement relevant to “proposals for the
development of a piece of land
in the Addo town”, without any
reference even to the Erf number or the fact that the property would
be sold, and no other
public advertisement;
[61.2] There were no municipal council
resolution relevant;
[61.3] There was no Bid Adjudication
Committee resolution relevant;
[61.4] Apparently there was no Supply
Chain Management Policy in place let alone a disposal policy;
[61.5] Effectively there was no public
notification or participation invited in the process which in any
satisfactory manner referred
to this Erf in question;
[61.6] Save for the valuation
apparently obtained by respondent, there was no municipal valuation
of the property concerned.
[62] It must follow from the above,
and even having regard to the limited information contained in the
founding and replying affidavit,
that there simply was a gross
failure to comply with the statutory and regulatory requirements for
the disposal of the immovable
property by a municipal entity.
[63] That being so, and having regard
to section172 (1) (a) of the Constitution, I “must” issue
a declaration of invalidity
the transaction being inconsistent not
only with the Constitution but also with the MFMA and the statutorily
regulatory framework
as set out above.
[64] I am persuaded on the appropriate
approach set out above to disputes of fact:
[64.1] That there is sufficient
personal knowledge of the lack of the required process, documentation
and resolutions applicable
to the sale of such an asset as set out by
Ngoqo (as supported by Somngesi);
[64.2] There is also on the common
cause facts non-compliance with the requirements of the MFMA (and its
regulations) and the remaining
statutory framework and regulations
relevant to the sale of this property.
[65] That being so, and in the absence
of the availability of an estoppel argument in the circumstances, it
is clear that the process
and procedure relevant to the sale of this
property did not comply with the statutory requirements.
[66] In the circumstances, and unless
there is merit in counsel for respondent’s argument that in the
absence of a tender
of return of the deposit contract cannot be set
aside, I would have no choice but to do so.
[67] This requires a consideration of
whether, in any event, it was necessary for applicant to tender
return of the R60 000-00
in as much as its attitude is that the
receipt of this sum has not yet been traced notwithstanding enquiry.
Ngoqo states that he
asked the chief financial officer of applicant
to trace payment of this amount and “... to date this money has
not been traceable”.
Applicant puts respondent to proof of the
payment, but fails in its main affidavit to even deal with whether or
not payment was
received, and only in reply stating that it could not
be traced but falls short of saying that this definitely was not
received.
[68] This is significant, in as much
as the annexing of the cheque, albeit not drawn by one of the
directors of respondent, discloses
that the payment cheque was made
to the municipality within the seven day period during which it
should be made, was reported to
the attorneys as having been paid,
and it was certainly debited against the relevant cheque account
(although the cheque bears
no bank stamp on the face of it), proof of
which is annexed and cannot be disputed.
[69] I must conclude inevitably on the
appropriate test, referred to above, that the deposit of R60 000-00
was paid on 3 March
2008 to the applicant and debited against the
drawer’s account on 5 March 2008 within the period during which
this should
have been done.
[70] The attorney’s letter to
applicant at that time asking for confirmation of payment went
unanswered, and although it is
disturbing that applicant’s
chief financial officer could not in the time given presumably trace
same, this is insufficient
for me to conclude that the payment was
not made and received.
[71] The matter thus turns on whether
or not there is force in the respondent’s counsel argument that
absent a tender the
relief sought cannot be granted.
[72] In this regard, in my opinion,
counsel is wrong.
Hall-Thermotank
relates to an
entirely different concept, attaching to the circumstance in which
where rescission of a judgment is sought, restitution
must follow and
to preserve the entitlement to restitution there must be a tender to
restore the benefits received pursuant to
the contract as well as
whatever was received by virtue of the contract whether or not it has
value.
[73] The basis of the applicant’s
contention in this regard is not that there was any breach of
agreement or any action of
either party warranting cancellation for
any reason that would otherwise be valid in the law of contract, but
rather that the conclusion
of the agreement constituted an illegality
as a matter of public law there having been a failure to comply with
the statutory requirements
therefore, and that therefore on the
authority of numerous cases it was the duty of the applicant to come
to court to have the
agreement declared an illegality.
[74] In the result, and having
concluded that the contract on the evidence before me constituted an
illegality, it must be set aside
regardless of applicant’s
failure to tender return of the R60 000-00. To do otherwise
would be to sanction a clear illegality.
[75] I consider, however, that I am
able, having regard to the conclusion that I have reached relevant to
the payment of this money,
to order nevertheless, that applicant must
pay R60 000-00 to respondent within seven days of the date of
this order. Whilst
respondent did not bring a conditional
counterclaim in this regard it would seem to me that it need not have
done so and that as
part of the relief sought by applicant it is
implicit that any money paid by respondent must be returned to it.
COSTS:
[76] It will be noticed that the order
that follow does not incorporate an order as to costs in applicants
favour, as I intend to
make to no order as to costs. In this regard,
and although applicant has been successful in having the contract set
aside, I have
nevertheless been obliged to visit it with an order for
repayment of the deposit which it failed to tender. Further, and even
though
applicant was substantially successful in this regard, on the
papers before me, I cannot conclude that it was in any way
respondent’s
fault that the statutory requirements were not
complied with, and accordingly, in the broad discretion I have in
respect of costs,
I consider it just and equitable that each party
bear its own costs in this matter.
ORDER:
[77] It is ordered accordingly that:
[77.1] The application to strike out
is dismissed.
[77.2] The Addo Land Availability
Agreement, LMRN4 to the founding papers dated 25 February 2008 is
declared null and void
ab initio.
[77.3] Applicant pay respondent the
sum of R60 000-00, being the deposit received in respect of the
sale, within seven days
of the date of this order.
[77.4] There is no order as to costs.
_________________________
M.J. LOWE
JUDGE OF THE HIGH COURT
Obo the Applicant/Plaintiff: Adv Msizi
Instructed by: Doreen Mgoduka
Attorneys
10 Buckingham Road
Mount Croix
Port Elizabeth
(041 – 3732031/2901)
Obo the Respondent/Defendant: Adv
Pretorius
Instructed by: De Villiers &
Partners
62 Erasmus Drive
Summerstrand
Port Elizabeth
(041 – 5835534)