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[2023] ZAECQBHC 2
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Ascon Trading CC t/a Ascon Civil Engineering v Wilson and Another (3387/2022) [2023] ZAECQBHC 2 (17 January 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
Case No. 3387/2022
In
the matter between:-
ASCON
TRADING CC t/a ASCON CIVIL ENGINEERING
Applicant
and
CLIVE
WILSON
First Respondent
NELSON
MANDELA BAY MUNICIPALITY
Second Respondent
JUDGMENT
BANDS
AJ:
[1]
This matter, having been brought on extremely truncated time periods,
served before me as an urgent application on the ordinary motion
court roll, and finds its origin in adjudication proceedings between
the applicant and the second respondent. This application is
the third in a succession of proceedings between the said parties.
[2]
Pursuant to the adjudication proceedings, and on 27 May 2022, the
second
respondent was ordered to make payment to the applicant in the
cumulative sum of R11,722,975.59 (including VAT) for services
rendered,
which payment the second respondent declined to make.
Instead, the second respondent disputed the adjudicator’s
decision
and referred the issue to arbitration. Whilst the
validity of the second respondent’s referral is disputed by the
applicant,
such issue does not fall to be determined by me. The
applicant, in turn, referred the second respondent’s failure to
make payment in accordance with the adjudication decision to
arbitration.
[3]
The applicant, frustrated by the second respondent’s conduct,
sought
interim enforcement of the adjudication decision in the
arbitration proceedings in accordance with Article 26 of the Rules
for
the Conduct of Arbitrations: 2018 Edition, read together with the
relevant clauses of the General Conditions of Contract for
Construction
Works, which governed the parties’ contractual
relationship (“
the interlocutory arbitral proceedings
”).
[4]
The decision in the interlocutory arbitral proceedings, which was
issued
on 24 September 2022 reads for itself. The last two
paragraphs thereof bear repetition herein:
“
22.
I must therefore find that Respondent is
indeed obliged to comply with the Adjudication Decision and
accordingly order that it do
so forthwith.
23.
Enforcement of such parties’ rights and obligations, including
any determined by me
as arbitrator, must, if necessary, be sought by
application to the competent court having jurisdiction in the place
either of the
adjudication and/or of this arbitration, supported by
submission thereof of the Adjudication Decision and this, my
Interlocutory
Arbitral Decision.”
[5]
At the time
of argument, the interlocutory arbitral decision was subject to a
remittal application at the instance of the second
respondent,
seeking an order that such decision be remitted
[1]
to the first respondent for reconsideration of the question as to
whether payment by the second respondent of the amount of
R11,722,975.59
(including VAT), pending the outcome of the
arbitration proceedings, should be made subject to the provision by
the applicant of
security.
[6]
In essence, the applicant, by way of the present application, seeks
an
order that the interlocutory arbitral decision, issued on 24
September 2022 by the first respondent arbitrator, be made an order
of court as envisaged in paragraph 23 thereof; and payment in the sum
of R11,722,975.59 (including VAT) for services rendered,
together
with interest and costs.
[7]
The second respondent has declined to enter into the merits of the
present
dispute and instead opposes the relief sought by way of two
points
in limine
.
[8]
In the first instance, and in light of the remittal application
referred
to above, the second respondent contends that the issues
raised (and the relief sought) herein pertain to the same cause of
action
as that which is currently pending between the same parties,
before the first respondent. Put simply, the second respondent
has raised a defence of
lis alibi pendens
. Secondly,
having regard to the history of the matter, the second respondent
placed urgency in issue. When the matter
was argued, I heard
submissions on both urgency and on the merits to enable me to give
judgment on the latter, in the event of
a finding that the matter was
properly enrolled.
[9]
It is trite that where urgency is placed in issue, it is proper to
determine
that matter as a preliminary point prior to entering into
the merits of the dispute. I accordingly proceed on this basis.
The
proceedings, as elected by the applicant
[10]
Notwithstanding that the matter was set down by way of the
applicant’s notice of
motion for hearing on a Tuesday, the
applicant, prior thereto, sought and obtained a directive from this
court on 16 November 2022,
which reads as follows:
“
1.
The application must be served upon the
respondents on or before 17 November 2022.
2.
The respondents must deliver their notice to oppose and answering
affidavit,
if any, on or before 16h00 on Tuesday, 22 November 2022.
3.
The applicant must deliver its replying affidavit, if any, on or
before 16h00
on Friday, 25 November 2022.
4.
The matter will be heard at 09h30 on Tuesday, 29 November 2022.”
[11]
I pause to make two observations.
[12]
Firstly,
the matter, having been set down for hearing on a Tuesday, being a
day on which motion court ordinarily sits, did not require
a
directive from this court.
[2]
Secondly, the times frames contained in the court’s directive,
but for the date on which service was to be effected,
[3]
mirrored those constructed by the applicant in the certificate of
urgency filed of record. I deal with the relevance of the
latter observation in due course.
[13]
The
application, having been issued on 16 November 2022, was served on
the second respondent at 09h54 on Thursday, 17 November 2022,
giving
the second respondent 3 court days to: (i) provide its legal
representatives with instructions in respect of the allegations
contained in the founding papers; (ii) allow for the preparation of
answering papers and the approval thereof by the second respondent’s
relevant official, being the Chief Financial Officer and Acting City
Manager; and (iii) the attestation thereof. The second
respondent, in addition to taking issue with the alleged urgency of
the application, as a whole, takes issue with the extent to
which the
times frames were abridged and the date unilaterally selected by the
applicant for hearing, both in the context of the
factual matrix of
the matter and in the context of the administrative challenges which
go hand in hand with an organisation such
as the municipality and the
considerable demands on the relevant functionary’s time.
Having said that, the second respondent
was obliged to provisionally
accept the procedure adopted by the applicant,
[4]
and thereafter raise whatever objection it may have.
[5]
[14]
The second respondent, anticipating its inability to comply with the
time frames set out
in the directive for the filing of papers,
directed correspondence through its attorney of record to the
applicant’s attorney
of record on Monday, 21 November 2022.
In essence, the correspondence served to foreshadow the views of the
second respondent
in line with the points
in limine
raised
herein and contained an undertaking in terms of which the second
respondent endeavoured to let the applicant have the second
respondent’s answering papers by close of business on
Wednesday, 23 November 2022. The aforesaid correspondence was
met with a response on behalf of the applicant, advising the second
respondent that the present application was to take precedence
over
other matters and required the second respondent to comply with the
directive issued. The second respondent thereafter
provided an
unsigned copy of its answering affidavit to the applicant, via email,
on 23 November 2022, whereafter a signed copy
was delivered on 24
November 2022 at 15h34, being one and two days later than the period
selected by the applicant and directed
by this court.
[15]
The
applicant contends that in the absence of an application for
condonation for the late filing of the second respondent’s
answering affidavit, such affidavit should be disregarded by this
court, and the matter determined on the applicant’s version
alone. Without wishing to belabour the point, I am of the view
that the stance adopted by the applicant is highly technical
and
overly formalistic in the circumstances of the present dispute.
This is particularly so where the applicant has failed
to indicate
what prejudice, if any, it has suffered by the late filing of the
second respondent’s answering affidavit.
[6]
[16]
In
considering the approach to be adopted in the circumstances, I have
had regard to the legal principles enunciated in the following
decisions;
Ferreiras
(Pty) Ltd v Naidoo and Another;
[7]
Pangbourne
Properties Ltd v Pulse Moving CC and Another;
[8]
and
Trans-Africa
Insurance Co Ltd v Maluleka.
[9]
I too have had regard to the decision of
Phasha
v Mourundi N.O. and Others
,
[10]
to which I was referred by the applicant, and which decision I am in
respectful disagreement with for the reasons stated.
Taking
into account the aforesaid, I am of the view that no application for
condonation in the present circumstances is necessary.
In the
event that I am incorrect in this regard, and in the exercise of my
discretion, the late filing of the second respondent’s
answering affidavit is condoned and accordingly the matter, in the
interests of justice, falls to be determined on all the papers
before
the court.
[17]
The applicant thereafter provided the second respondent’s
attorney of record with
its replying papers via email on 25 November
2022 at 18h58, in which the applicant seeks condonation for the late
filing thereof,
whereafter they were served and filed on Monday, 28
November 2022, one day prior to the hearing of the matter. On
the same
day, the court file, which after the filing of all sets of
affidavits comprised of some 235 pages, was duly updated.
[18]
Counsel thereafter approached me in chambers on the morning of
Tuesday, 29 November 2022,
at which juncture I stood the matter down
until 14h15 to allow the parties time to finalise their respective
heads of argument
and to afford me with an opportunity to consider
them. Whilst I was provided with a copy of the second
respondent’s
heads of argument prior to 14h15, the applicant’s
heads of argument were handed to me from the bar at the commencement
of
the matter. The aforesaid flurry of exchange is indicative
of the time constraints placed on both parties, consequent to the
time frames selected by the applicant.
[19]
In
argument, the applicant persisted with its view that the matter was
adequately urgent and that the truncated time frames, as
selected by
the applicant, were appropriate. Whilst it was suggested on
behalf of the applicant that the court, in issuing
the directive, had
determined the matter as sufficiently urgent so as to warrant the
time frames in question, it was correctly
conceded by Ms Olowookorun
that such directive does not in any way bind the court hearing the
matter insofar as the issue of urgency
is concerned, which can only
properly be determined on all the relevant facts of the case,
[11]
including the circumstances put forward by the second respondent
herein.
Urgency
[20]
At this
juncture it is apposite to reiterate the cautionary words of Kroon J
in
Caledon
Street Restaurants CC v Monica D’Aviera,
[12]
which judgment has over time, developed into a paradigmatic authority
on urgency in this division:
“
It
is incumbent on the applicant to persuade the court that the
non-compliance with the rules and the extent thereof were justified
on the grounds of urgency. The intent of the rules is that a
modification thereof by the applicant is permissible only in
the
respects and to the extent that is necessary in the circumstances.
The applicant will have to demonstrate sufficient
real loss or damage
were he to be compelled to solely or substantially on the normal
procedure. The court is enjoined by
rule 6(12) to dispose of an
urgent matter by procedures “which shall as far as practicable
be in terms of these rules”.
That obligation must of
necessity be discharged by way of the exercise of a judicial
discretion as to the attitude of the court
concerning which
deviations it will tolerate in a specific case. Practitioners
must accordingly again be reminded that the
phrase “which shall
as far as practicable be in terms of these rules” must not be
treated as pro non scriptio…
The applicant, or more
accurately, his legal advisors, must carefully analyse the facts of
each case to determine whether a greater
or lesser degree of
relaxation of the rules and the ordinary practice of the court is
merited and must in all respects strike a
balance between the duty to
obey rule 6(5)(a) and the entitlement to deviate therefrom, bearing
in mind that that entitlement and
the extent thereof, are dependant
upon, and are thus limited by, the urgency which prevails. The
degree of relaxation of
the rules should not be greater than the
exigencies of the case demonstrate (and it need hardly be added these
exigencies must
appear from the papers).
[21]
Whilst the applicant in the present instance did not depart from Form
2(a) of the first
schedule to the rules, Kroon J’s words find
application not only in the context of such departure, but also in
respect of
the extent to which Form 2(a) is adapted to meet the
specific demands of each case, for example, by the truncation of the
time
periods set out in rules 6(5)(b), 6(5)(d), 6(5)(e) and 6(5)(f)
and/or the nomination of an advanced date for the hearing of the
matter.
[22]
In other words, and as succinctly put by Lowe J at paragraph [32] of
Tekoa Engineers (Pty) Ltd v Alfred Nzo Municipality and Others
(supra)
:
“
There
are degrees of urgency of course. An Applicant must set out
explicitly the circumstances which render the matter urgent
such as
to justify the curtailment of the Rules, procedures and time periods
adopted. That there will be a loss of substantial
redress, if
not heard on the basis chosen, must be shown
.”
[23]
Pertinently,
the question is whether the applicant has set out objective grounds,
why the matter is urgent and whether it has explained
why it cannot
obtain substantial redress at a hearing in due course. The fact
that an applicant wishes to have a dispute
adjudicated upon
urgently;
[13]
alternatively,
is subjectively of the view that a matter is urgent, does not render
it as such.
[24]
Moreover,
an applicant cannot content itself to merely sit back and delay the
assertion of his or her rights, and by doing so, create
his or her
own urgency. Such conduct does not amount to urgency justifying
the determination of the matter in accordance
with Rule 6(12).
[14]
[25]
Having said that, I now turn to the grounds relied upon by the
applicant underpinning the
procedure adopted by it. In
determining the adequacy of such procedure, it is also necessary for
the court to consider the
facts placed before it by the second
respondent. Insofar as any factual disputes exist on the
papers, I am obliged to apply
the
Plascon-Evans
rule,
given that the relief sought by the applicant is final in nature,
[26]
As indicated above, the adjudication proceedings culminated in the
delivery of the adjudicator’s
decision on 27 May 2022.
Subsequent thereto, the applicant demanded compliance therewith, to
no avail. On 25 June 2022, the
second respondent delivered it’s
notice of disagreement with the said determination and referred the
issue to arbitration.
The applicant, thereafter, referred the
second respondent’s failure to make payment in accordance with
the adjudication decision
to arbitration. The first respondent
was subsequently appointed as arbitrator, and the applicant, given
the second respondent’s
failure to comply with the adjudication
decision, sought interim enforcement of the adjudication decision in
the arbitration proceedings
on 17 August 2022, which decision was
issued on 24 September 2022.
[27]
Immediately apparent from the aforesaid is that no effort is made by
the applicant to explain
what took place during the four-week period
between 27 May 2022 and 25 June 2022, other than to state that it
demanded payment
from the second respondent. It is also not
clear from the papers on what date the applicant referred the second
respondent’s
conduct to arbitration and whether any steps were
taken to pursue the referral by the applicant prior to the second
respondent
having done so. Given that the applicant is silent
on the date on which the arbitrator was appointed, I am also unable
to
ascertain the passage of time between the appointment of the
arbitrator and the launch of the applicant’s enforcement
proceedings
on 17 August 2022, the latter being a date some two
months following the delivery of the second respondent’s notice
of disagreement.
Accordingly, there exists a three-month period
between the delivery of the adjudicator’s decision on 27 May
2022 and the
launch of the applicant’s enforcement proceedings
on 17 August 2022, which is largely unexplained on the papers.
[28]
The decision in the interlocutory arbitral proceedings, was issued on
24 September 2022,
whereafter the applicant demanded compliance
therewith on 25 September 2022. The applicant’s narration
of events as
from 24 September 2022, as set out in the founding
papers, reads as follows:
“
[18]
Following publication of the Arbitration
Award on 24 September 2022, the Applicant demanded payment of
R11 722 975.95,
as per the adjudication decision, however
despite the demand for payment and the obligation to pay within 30
days, no payment has
been received from the Second Respondent.
A copy of the Applicant's demand for payment is annexed as annexure
“
GM4”
.
[19]
During the arbitral preliminary meeting, the attorney for the Second
Respondent advised that
it takes the Second Respondent between four
to six weeks to process and effect payment. The Applicant, in a
show of good
faith, duly waited for a period of six weeks to expire
(which expired on 5 November 2022) believing that the Second
Respondent
would honor its obligation to make the necessary payment
to it, however, to the Applicant's dismay, the said payment was not
made
by the Second Respondent.”
[29]
The applicant thereafter goes on to state that it received
correspondence from two of its
sub-contractors on 9 and 11 November
2022, respectively, in which the one sub-contractor threatened
liquidation proceedings should
payment of the sum of R144,256.22 not
be received within 20 days from date of demand, and the other
threatened to “
proceed further
” given that no
payments had been received by the applicant in reduction of its
debts. The application was thereafter
launched on 16 November
2022 and served on the second respondent on 17 November 2022.
[30]
Not only can the applicant’s version as to the events which
transpired between 24
September 2022 and 5 November 2022 not be
accepted, given the facts put up by the second respondent, but they
are patently false
if regard is had to the applicant’s own
version. More particularly, the applicant’s attempt to
explain its inaction
during the said period by contending that it
duly awaited the lapse of a period of six weeks in “good faith”
to receive
payment, is nothing short of fallacious.
[31]
The four to six-week period referred to by the applicant in paragraph
[19] of its founding
papers, as set out herein above, pertained to
the payment of the arbitrator’s fees and not the monies claimed
by the applicant.
To suggest otherwise, is not only
inconsistent with the second respondent’s version, but it is
not borne out from the documents
before me.
[32]
Firstly, if regard is had to paragraph [18] of the applicant’s
founding papers, reference
is made to an obligation on the second
respondent to pay within 30 days of demand. This is in direct
conflict with the suggestion
contained in paragraph [19] of the
founding papers that the applicant waited out the six-week period in
“good faith”.
[33]
In any event,
ex facie
the written demand referred to in
paragraph [18] of the founding papers, dated 25 September 2022, which
emanated from one Sipho
Gcora (“
Gcora
”) on behalf
of the applicant, the applicant demands payment by the end of the
following week, failing which “
judgment will be taken
against NMBM with a view to attach the Municipality’s
account…
” It is accordingly clear that as
early as 25 September 2022, the applicant intended to pursue the
present proceedings
should payment not be forthcoming by the end of
the month. Notwithstanding the aforesaid, the applicant has
elected not to
disclose what transpired from the end of September
2022 until the launch of the present proceedings on 16 November 2022.
[34]
Moreover, on 29 September 2022, Gcora, again on behalf of the
applicant, directed correspondence
to the second respondent’s
attorney of record in which it was
inter alia
recorded that:
“
With
reference to the above subject matter, you have not informed me
whether you have an indication of whether NMBM will pay Ascon
by
tomorrow or not…
As
you have not responded to my question on when will payment be made, I
am forced to place you on terms to respond by close of
business
today, failing, which Nolan and Cindy will escalate this matter to
the Executive Mayor so that there is oversight over
this violation of
section 65(2)(e) of the MFMA under your watch…
Kindly
therefore get back to me before close of business on whether NMBM
will make payment tomorrow or sometime next week.
”
[35]
The aforesaid passages speak for themselves and are telling in the
extreme.
[36]
Thereafter, on 4 October 2022, principals of the applicant, together
with Gcora, attended
the offices of the Municipality’s
Executive Major and demanded a meeting. A meeting was
thereafter set up for 5 October
2022, which yielded no progress.
[37]
On 13 October 2022, a representative of the applicant, advised one of
its sub-contractors,
via email, that “
[w]e are currently in
communication with the Executive Mayor for his urgent intervention”
.
[38]
It is also inexplicable why the recent threats of legal proceedings
made by the applicant’s
respective sub-contractors renders the
matter urgent, when one of the said sub-contractors had already, on 3
August 2022, informed
the applicant that the matter could not be held
in abeyance any longer.
[39]
In a further attempt to bolster its allegations of urgency, the
applicant contends that
it has found itself with no other option but
to dispose of its remaining construction equipment in order to cover
its business
expenses, including payment of salaries to employees and
to finance its legal costs. The applicant, being decidedly coy as to
when
the disposal of the said assets took place, seeks to create the
impression that same is current and ongoing. It is apparent from
the
papers before me that the applicant had already in February 2022 lost
its fleet of construction equipment due to repossession
and that the
small holding used by it as a storage facility and builder’s
yard had been auctioned. Furthermore, it was at
risk of losing its
office property to a creditor that same month.
[40]
It is apposite to mention that from the research conducted by the
second respondent’s
attorney of record, in an application
brought by the second respondent in the arbitration proceedings
seeking an award for security
for costs, it is patently clear that
the applicant’s financial troubles have long since preceded the
present proceedings,
with there being seven judgments against the
applicant as at 10 February 2022. In response thereto, the
applicant takes issue
with the second respondent’s disclosure
of such information, contending same to be a smear campaign. I
disagree. Whilst
the applicant admits that its financial
difficulties dated back to 2019, it contends that same does not
detract from the current
urgency of the matter.
[41]
Regard being had to the aforesaid, I am of the considered view that
any urgency which may
have existed, if any at all, was self-created
by the substantial delay in the launch of these proceedings.
Further and in
any event, the procedures and time periods adopted by
the applicant, in the context of the present dispute, are unjustified
and
unsupported by the relevant facts as to urgency.
[42]
It was
intimated during argument on behalf of the applicant that the matter
had been fully ventilated and the issue for determination
in respect
of the merits was crisp and could easily be determined by this
court. I am mindful of the comments by Kroon J
in
Caledon
Street Restaurants CC
(
supra
)
[15]
in
which he recorded that whilst there is a temptation to brush the
wrong handling of a matter, and the applicant’s presentation
thereof as urgent beyond what was justified, under the rug, the
attractiveness of finally disposing of the litigation should not
be
allowed to govern.
[43]
I align myself with the aforesaid position.
[44]
It is trite
that in the event of a finding that the matter is not of sufficient
urgency to warrant being entertained in accordance
with Uniform Rule
6(12), the appropriate order is generally to strike the matter from
the roll without the court making a determination
on the merits.
[16]
I am of the view that the present application is the type of matter
which calls for such an order. Given my finding
in respect of
urgency, I need not deal with the second respondent’s remaining
point
in
limine
.
[45]
I accordingly issue the following order:
1.
The application is struck from the roll with costs.
I
BANDS
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For
the applicant:
Ms Olowookorun
Instructed
by:
Bukky Olowookorun Attorneys Inc.
7
Bird Street, Central, Gqeberha
For
the second respondent:
Mr Richards
Instructed
by:
Karsans Incorporated
Bird
Street, Central, Gqeberha
Coram:
Bands AJ
Date heard:
29 November 2022
Delivered:
17 January 2023
[1]
In terms of
section 32(2)
of the
Arbitration Act, 1965
[2]
Bobotyana
and two others v Dyantyi and others
2021 (1) SA 386
(ECG);
Tekoa
Engineers (Pty) Ltd v Alfred Nzo Municipality and Others
(1284/20)
[2022] ZAECMKHC 84 (25 October 2022) by Lowe J at para [3]; and
National
Ship Chandlers (Natal) 1989 (Pty) Ltd v Ellis and Another
(542/2018)
[2018] ZAECELLC 6 (6 April 2018) by Hartle J at para [13].
[3]
The certificate of urgency proposed service on the respondents on 16
November 2022.
[4]
To avoid the risk of judgment being taken against it by default.
[5]
Caledon
Street Restaurants CC v D’Aviera
[1998] JOL 1832
(SE) at page 7.
[6]
Other than the late filing of its replying affidavit, which I in any
event condone to the extent that same may be necessary.
[7]
2022 (1) SA 201
(GJ
).
[8]
2013
(3) SA 140
.
[9]
1956
(2) SA 273
.
[10]
(3046/2018) [2019] ZALMPPHC 22 (7 May 2019).
[11]
Voigt
NO and Another v EGH IP (Pty) Ltd and Others
(1076/2021) [2021] ZAECGHC 40 (4 May 2021).
[12]
[1998] JOL 1832
(SE) at page 8.
[13]
East
Rock Trading 7 (Pty) Ltd and Another v Eagle Valley Granite (Pty)
Ltd and Others
(11/33767) [2011] ZAGPJHC 196 (23 September 2011) at paragraph [9].
[14]
Lindeque
and Others v Hirsch and Others, In Re: Prepaid24 (Pty) Limited
(2019/8846) [2019] ZAGPJHC 122 (3 May 2019); and
Masipa
and Another v Masipa
(23224/2020) [2020] ZAGPPHC 214 (4 June 2020).
[15]
At pages 10, 11 and 21.
[16]
Commissioner
for South African Revenue Service v Hawker Air Services (Pty) Ltd;
Commissioner for South African Revenue Service
v Hawker Aviation
Services Partnership and Others
[2006] ZASCA 51
;
2006
(4) SA 292
(SCA).