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[2023] ZAFSHC 178
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Goldfields Logistics (Pty) Ltd v MEC: Free State Department of Police , Roads and Transport (A72/2022) [2023] ZAFSHC 178 (10 February 2023)
FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case No: A72/2022
In
the matter between: -
GOLDFIELDS
LOGISTICS (PTY) LTD
APPELLANT
and
MEC:
FREE STATE DEPARTMENT OF POLICE,
ROADS
AND
TRANSPORT RESPONDENT
CORAM:
MBHELE
DJP, VAN ZYL J
et
BOONZAAIER AJ
JUDGMENT
BY:
BOONZAAIER, AJ
HEARD
ON:
2
DECEMBER 2022
DELIVERED
ON:
10 FEBRUARY 2023
INTRODUCTION:
[1]
This is an appeal to the full bench of this division against a
judgment of a single judge of this division,
(“the
court
a quo
“) on
3
March 2022
where the Appellant`s claim for enrichment was
dismissed with costs and the Respondent’s
second Special Plea was upheld. The appeal is with the leave of
the
court a quo.
THE
FACTUAL BACKGROUND
[2]
The Appellant, instituted action against the Respondent based on its
alleged right
to be reimbursed for
necessary and useful expenses incurred in managing the affairs of the
Respondent. The affairs so managed included
repairs to a specific
provincial road R59 between Bothaville and Parys in the Free State.
This road being a public road.
[3]
It is common cause that the parties did not enter into any agreement
and that the Appellant gave no
notice in terms of the
Institution
of Legal Proceedings Against Certain Organs of State Act 40 of 2002
(“the ILPACOS Act’). The Respondent filed a special
plea of prescription under the
Prescription Act 68 of 1969
and
non – compliance with the ILPACOS Act. The Respondent however
abandoned the special plea of prescription after an amended
plea was
filed for expenses running from 14 June 2015 to 24 April 2017.
[4]
It is the Appellant`s contention that it seeks reimbursement for
expenses incurred
in having repaired
the potholes on the R 59 between Bothaville and Parys being a public
road. The claim is sought under the
negotiorum gestio
for the
necessary and useful expenses incurred by the Appellant and thus not
for “
damages”
as defined in the ILPACOS Act.
[5]
The Respondent on the other hand is of the view that the claim is a
“
debt”
as defined in the ILPACOS Act
hence the Appellant needed to give timeous notice in terms of section
3 of the ILPACOS
Act. It was for the court
a quo
to determine
whether the necessary expenses under
negotiorum gestio
amount
to damages and whether the Appellant has complied with the Section 3
Notice, including the term “
debt”
as defined in
the ILPACOS Act.
[6]
The Respondent conceded that the merits of the claim were not before
the
court
a quo
for adjudication
and the court
a quo
erred in considering such and dismissing
the main claim on the merits.
[7]
Adv. Wright on behalf of the Respondent pointed out that the court
could have dismissed the Appellant`s
claim due to the finding of non-
compliance with the prescript of the Act.Such success would render
the claim “permanently
unenforceable”.
[1]
[8]
The Appellant raised the following issues on appeal, namely:
(a)
There was no need for the Appellant to apply for condonation of the
failure to give a notice.
(b)
The claim for unjust enrichment was not a ‘
debt’
as defined in s (1) of the ILPACOS Act and/or at least because it was
not a claim for damages. The Act is not applicable to the
enrichment
claim, and the absence of a notice in terms of the ILPACOS Act did
not therefore bar the enrichment claim. Its action
for unjust
enrichment is not a debt as defined in the ILPACOS Act because it
does not arise from the damages suffered. This defence
therefore has
to fail because a claim for enrichment does not fall within the ambit
of “
damages”
as defined in the ILPACOS Act. It`s
claim for unjust enrichment is not a “
debt
“as
defined by the ILPACOS Act because it does not arise from damages
suffered.
[9]
The Respondent argued that the question is whether compensation for
unjust enrichment is damages within
the definition of “
debt
”
in s 1 of the ILPACOS Act. In this section “debt” is
defined as
any debt
arising from delictual, contractual or
other act or omission under any law, for which an organ of the state
is liable to pay damages,
whether the debt became due before or after
the fixed date. (Own emphasis).
THE
APPLICABLE LEGAL FRAMEWORK:
[10]
It is trite that in appeals, the appeal lies against the order and
not the reasons therefor.
[11]
I find
it necessary to refer to the background of Section 3 of the Act:
i)
In an attempt to alleviate the
harshness of the previous legislative regime, Parliament later opted
to enact uniform legislation
dealing with legal proceedings against
organs of State in general that sought to balance the fundamental
rights of the people and
the legitimate interests of organs of State.
The result was the Legal Proceedings Act.
ii)
The long title of the ILPACOS Act provides that its purpose is to
regulate the prescription and
to harmonize the periods of
prescription of debts for which certain organs of state are liable;
to make provision for notice requirements
in connection with the
institution of legal proceedings against certain organs of state in
respect of the recovery of debt; to
repeal or amend certain laws; and
to provide for matters connected therewith.
iii)
Section 3 is the heart of the ILPACOS Act. It provides, in s 3(1) for
the giving of notice in respect
of the institution of legal
proceedings against organs of state,
unless an organ of state
waives its rights
. It states:
“‘
No legal
proceedings for the recovery of a debt may be instituted against an
organ of state unless-
(a)
the creditor has given the organ of state in question in writing of
his or her or its intention
to institute the legal proceedings in
question; or
(b)
the organ of state in question has consented in writing to the
institution of that legal proceedings-
(i)
without such notice; or
(ii)
upon receipt of a notice which does not comply with all the
requirements set out in subsection
(2).”
[12]
Sections 3(2) and (3) deal with the giving of notice. They state:
‘
(2)
A notice must –
(a)
within six months from the date on which the debt became due, be
served on the organ of state
in accordance with section 4(1); and
(b)
briefly set out –
(i)
the facts giving rise to the debt; and
(ii)
such particulars of such debt as are within the knowledge of the
creditor.
(3)
For purposes of subsection (2)(
a
) –
(a)
a debt may not be regarded as being due until the creditor has
knowledge of the identity of the
organ of state and of the facts
giving rise to the debt, but a creditor must be regarded as having
acquired such knowledge as soon
as he or
she or it could have acquired it by exercising reasonable care,
unless the organ of
state wilfully prevented him or her or it from
acquiring such knowledge; and
(b)
a debt referred to in section 2(2)(
a
), must be regarded as
having become due on the fixed date.’
[13]
A “
debt”
is defined in the Act as any debt arising
from any cause of action:
“
(a)
which arises from delictual, contractual or any other liability,
including a cause of action which relates
to or arises from any-
i)
act performed under or in terms of any law; or
ii)
omission to do anything which should have been done under or in terms
of any law: and
(b)
for which an organ of state is liable for payment of damages.”
[14]
Subsections 3(1) and (2) require that a notice of intended legal
proceedings be given to the concerned organ
of state by the
creditor within six months from the date on which the debt became
due. This is a peremptory step before legal proceedings
can be
instituted.
[15]
Before compliance with the requirement of s 3(1) is needed, it must
be ascertained whether the claim at hand
constitutes a debt in
terms of s 1(1). This presupposes that there are claims against
organs of state which are not debts as envisaged
in s 1(1) of the
Act.
[16]
In
Thabani
Zulu & Co (Pty) Ltd v Minister of Water Affairs and Another
[2]
,
the court held that:
“
Paragraph
(
a
) of the definition [of the Act] is widely worded and makes
it clear that a debt is any liability whatsoever. It is, however,
followed
by para (
b
) and the question which arises is how the
two paragraphs relate to each other. They can be read either
disjunctively or conjunctively.
The paragraphs are linked by “and”
and not “or”. Ordinarily, paragraphs or phrases linked by
“and”
are read conjunctively and those by “or”
disjunctively. Accordingly, although the courts have read “and”
to mean “or” and
vice versa
in
appropriate circumstances, there must be compelling reasons to change
the words used by legislature”.
[17]
The court in para 12 held that:
“
Using
the ordinary meaning of the words in the definition, therefore, the
two paragraphs must be read conjunctively. When that is
done, para
(
b
) qualifies or limits the generality of para (
a
) in
two ways. First, it restricts debts to those which constitute a
liability to pay damages and, secondly, it restricts debts
to those
where an organ of state is the debtor. On an ordinary reading of the
definition, it boils down to this. A debt is the
liability of an
organ of state to pay damages, arising from any cause of action”.
[18]
In the
Zulu
matter supra, what was claimed against
the organ of state was arrear rental in
terms of a lease agreement.
The court held that s 3(1) of the Act was
not applicable as arrear rental was non-damages debt, but the claim
for arrear rental
was one for specific performance.
[19]
The Supreme Court of Appeal quoted paras 11 and 12 in the
Zulu
matter
with approval in
Vhembe
District Municipality v Stewarts & Lloyds Trading (Booysens)(Pty)
Ltd (SCA)
(Van Zyl AJA).
[3]
“
This
means that all the claims arising out of a contract with an organ of
state, as long as they are for specific performance and
not damages,
are not covered by the word ‘debt’ under s 1(1) of the
Act. Consequently, this means that the Act would
not be applicable
and creditors need not comply with its provisions. I submit that, as
soon as a claim for specific performance
or non-damages is due, the
creditor may immediately proceed with an application to enforce
payment or issue summons, without wasting
time and costs by complying
with the Act, as such compliance would be legally unnecessary.”
[4]
[20]
The
Supreme Court of Appeal was recently asked in the matter between
Greater
Tzaneen Municipality v Bravospan 252
[5]
to consider whether an enrichment claim is considered a 'debt' in
terms of the ILPACOS Act.
[21]
The
Municipality had concluded a Service Level Agreement (SLA) with
Bravospan. The latter relied on four alternative causes
of
action, namely, delict, fraud, constitutional damages and unjust
enrichment. On 2 February 2021, the High Court ruled that
Bravospan had made out a case against the municipality based on
unjust enrichment. The Municipality appealed the decision and raised
only two issues on appeal, namely:
a)
Bravospan failed to comply with the provisions of s 3(2) of the
ILPACOS Act; and
b)
Alternatively, a portion of Bravospan's enrichment claim had been
prescribed.
[22]
The Supreme Court of Appeal therefore had to consider the aspect of
failure to comply with section (3)2 of the
ILPACOS Act.
[23]
However, during the presentation of the case in the SCA the
Municipality conceded that the claim for unjust enrichment
was not a
“
debt”
as defined in s1(1) of the Act. Therefore,
the municipality conceded that the Act was not applicable to the
enrichment claim.
[24]
Adv. Wright correctly pointed out that the SCA at the end had no need
to further consider the issue. She further
pointed out that the cases
relied on by Appellants in Kovacs supra and Zulu
supra
all considered the definition of “
debt”
within the context of the facts of those specific cases and with
reference to the pleaded causes of action.
[6]
Those courts did not investigate the definition of the word
“
damages
”.
[25]
She further argued that the claim
in casu
does not stem from a
contract and is not based on unjustified enrichment. It was
argued in the court
a quo
that the claim cannot be for
enrichment because the Plaintiff was not
impoverished.
[26]
She also further submitted that Subparagraph (b) of the definition of
“
debt’’
seemingly provides for a narrower ambit than other generally accepted
definitions of the word.
[7]
[27]
Negotiorum
gestio
is
the
Latin
for
"management of business") and is a form
of spontaneous voluntary
agency
in
which an intervenor or
intermeddler, the
gestor
,
acts on behalf and for the benefit of a principal (
dominus
negotii
),
but without the latter's prior consent. The gestor is only
entitled to reimbursement
for expenses and not for remuneration, the underlying principle being
that
negotiorum
gestio
is
intended as an act of generosity and friendship and not to allow the
gestor to profit from his intermeddling. This form
of intervention is
classified as a
quasi-contract
and
found in
civil-law
in
South Africa.
[28]
It originated as a Roman
legal
principle
in which an individual acted on behalf of another, without his asking
and without
remuneration
.
It
was considered a part of
officium
(
duty
),
for
instance, to defend a friend's or
neighbour's
interests
while the friend or neighbour was away.
[29]
The principal, or
dominus
negotii
(or
rarely
dominus
negotiorum dominus rei gestae
),
is bound to indemnify the gestor for the expenses and liabilities
incurred. If the principal
fails
to do so, there is
unjust
enrichment
,
and
the gestor then has a claim to bring an action for
restitution
.
In
South Africa, multiple restitutionary actions lie for
negotiorum
gestio.
[8]
[30]
Adv. Benade on behalf of the Appellant referred to
Amler`s
Precedents of Pleadings,
[9]
where it is stated that the relief claimable by a gestor include the
right to be reimbursed for necessary and useful expenses.
[31]
The concept of
negotiorum gestio
is known in English legal
theory as ‘necessitous intervention’, which is exactly in
my mind what the Appellant alleges
what happened
in casu.
CONCLUSION:
[32]
It is accepted that prior notification and the need to alert
on an intention to sue organs of State is required when the claim is
for any debt. This is to prevent an avalanche of claims being
instituted without giving the government departments the timeous
opportunity to investigate claims. Still the SCA regards the
definition of a “
debt”
as in the ILPACOS Act to
exclude claims similar to the one in the current matter. ILPACOS Act
is therefore, not applicable herein.
[33]
I come to the conclusion that the court a quo erred procedurally when
it decided an issue that was not yet before
it.
[34]
The court
a quo`s
order rejecting the Appellant`s submission
with regards to its claim not being a” debt “is therefore
not sustainable
in law. The court
a quo
further erred in
finding that the Appellant`s claim constitutes a “
debt “
within the ambit of the ILPACOS Act.
[35]
The appeal ought to succeed.
[36]
When the court considers costs, the court has a discretion which must
be exercised
judicially. There is
no reason to deviate from the general rule hat costs follow the
event.
ORDER:
[36]
The following order is made:
1.
The appeal is upheld with costs.
2.
The order of the
court a quo
is set aside and replaced with
the following:
“
The
defendant`s second special plea is dismissed, with costs”
____________________
A.S. BOONZAAIER,
A J
I
agree and it so ordered.
_______________
N.M MBHELE, DJP
I
agree
______________
C.VAN ZYL, J
For
the Appellant:
Adv
H.J. Benade
Chambers
Bloemfontein
Instructed
by:
Symington
& de Kock Attorneys
169
Nelson Mandela Drive
BLOEMFONTEIN
For
the Respondent:
Adv.
G.J.M. Wright
Counsel
for the Respondent
Instructed
by:
Office
of the State Attorney
Fedsure
building 9
th
10
th
floors
Charlotte
Maxeke Street
BLOEMFONTEIN
[1]
Holeni
v land and Agricultural Development Bank 2009 (4)SA 437(SCA) at [44]
[2]
2012
(4) SA 91
(KZD)
at para 11
[3]
(Unreported
case no 397/2013, [26-6-2014])
[4]
De
Rebus Oct 2014:25[2014] DEREBUS190
[5]
(
Unreported
case no. 428/2021[2022] ZASCA155(7 November 22),
See
also Nicor IT Consulting
(Pty)
Ltd v North West Housing Corporation
2010
(3) SA 90
(NWM) and Director-General, Department of
Public Works v Kovacs Investment 289 (Pty) Ltd
2010
(6) SA 646
(GNP) for more.
[6]
This is evident from the usage
of phrases such as “plaintiff`s claim” (
Kovacs)
and “ this case” (
Zulu).
[7]
Electricity
Supply Commission v Stewards and Lloyds of SA 1981(3) SA 340 (AD) at
344 F
[8]
Wille`s
Principles of SA LAW 9
th
edition. Juta Cape Town at 1055
[9]
8
th
Edition, 2015 at 267