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[2023] ZAFSHC 51
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Nexor 312 (Pty) Ltd T/A VNA Consulting v The Member Of The Executive Council Of The Free State Department Of Public Works & Infrastructure (5226/2021) [2023] ZAFSHC 51 (22 February 2023)
FLYNOTES:
RULE
41A AND MEDIATION NOTICE
CIVIL
PROCEDURE – Mediation – Notice – Application not
accompanied by required notice – Notice to
oppose and
answering affidavit similarly not accompanied by notice –
Respondent not setting out grounds why rule ought
to have been
complied with, nor alleging matter capable of being mediated –
Non-compliance with rule not an impediment
to determination of the
matter – Uniform Rule 41A.
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5226/2021
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
NEXOR
312 (PTY)
LTD
t/a
VNA
CONSULTING
Applicant
and
THE
MEMBER OF THE EXECUTIVE COUNCIL
Respondent
OF
THE FREE STATE DEPARTMENT OF PUBLIC
WORKS
& INFRASTRUCTURE
HEARD
ON:
13
OCTOBER 2022
JUDGMENT
BY:
DANISO, J
DELIVERED
ON:
This
judgment was handed down electronically by circulation to the
parties' representatives by email and by release to SAFLII. The
date
and time for hand-down is deemed to be 09h00 on 22 February 2023.
[1]
In this opposed application the applicant seeks payment for two
claims in the respective amounts of
R17 613 073.40 and
R10 333.440.00 together with costs and interest at the rate of
12% per annum calculated from
1 November 2020 to date of payment.
[2]
The applicant is a construction project management firm with
specialization in Infrastructure Delivery
Management Services (IDM
services), Capacitation, Management and Empowerment Programs
Implementation including Engineering, Program
and Portfolio
Management Services.
[3]
On the papers, it is common cause that on 3 August 2018 the parties
concluded a contract based on IDM
services to be rendered by the
applicant for a period of three years with effect 1 April 2018 to 31
March 2021.
[1]
It is also not in
dispute that pursuant to rendering the said services, the applicant
submitted invoices to the respondent for
the sums of R17 613 073.40
and R10 333.440.00.
[4]
The relief sought by the applicant is premised on the respondent’s
failure to the pay the said
invoices.
[5]
It is the applicant’s case that:
5.1. On 9
July 2021 letters of demand
[2]
were transmitted to the respondent’s Supply Chain Director of
Management of the Public Works Department, Mr. Khaya Radebe
and the
head of its Project Management Unit Mr. Freddy Tokwe respectively.
5.2. Messrs
Radebe and Tokwe responded by providing written undertakings to pay
the invoices. Annexures “VN4”
dated 13 July 2021 and
“VN7” dated 15 July 2021 are the written undertakings
stating the following:
“
re: Outstanding
IDMS fee claims
Dear Mr Raghubir
The Free State
Department of Public Works and Infrastructure herewith acknowledge
receipt of your letter dated 09 July 2021.
Due to the COVID-19
pandemic, all government allocated funds of the Department were, and
are still, being reprioritised in fighting
and curbing the pandemic.
This together with the reduced budget has impacted negatively on the
day to day business of the Department.
The Department of
Public Works and Infrastructure are committed in honouring its
commitment to VNA Consulting once the Department’s
budget
allocation for the 2021/22 financial year has been confirmed and
finalised.
Further to the above,
please be so kind as to provide more clarity on the description of
work under invoice FS1048.
I trust that you find
this in order.”
5.3. The
respondent was furnished with the requested details pertaining to
invoice FS1048 on 14 July 202.
[6]
The applicant submits that the respondent’s inability to pay
its debts due to budgetary constraints
is of no concern to it. The
applicant is severely prejudiced by the respondent’s failure to
make the payments as the invoices
have been outstanding for a
considerable time and the interest set by the respondent at 2% per
annum for unpaid invoices is quite
meagre considering the prevailing
current interest rates.
[7]
Before I turn to the basis of the respondent’s opposition, the
respondent seeks condonation for
the late filing if its answering
affidavit.
[3]
The affidavit was
filed on 25 August 2022 approximately 7 months out of the time
indicated in the notice of motion including the
8 days after the date
on which the answering affidavit was due as per the court order of 21
July 2022. Despite the extreme lateness,
the respondent has provided
no tangible explanation for its ineptitude except to fleetingly aver
in para 2.7 of the answering affidavit
that:
“
It was expected
of me to submit the answering affidavit as per the court order and
explain that the Respondent did not receive the
requested documents
to enable it to put up a proper defence and not just to ignore to
file, I apologise profusely to this court
for such a conduct. Having
complied with the court order, I know turn to deal with the averments
in the main application.”
[8]
Furthermore, the respondent merely refers to its application for a
postponement of the proceedings of
21 July 2022 without elaborating
and explaining what documents were needed in order to respond to the
applicant’s claim,
who was supposed to provide them to the
respondent, when were they requested and when were they ultimately
received.
[9]
It is a well-established principle that condonation cannot be had for
the mere asking. It is an indulgence
which a court has a discretion
on whether to grant it or not. The respondent must show sufficient
cause entitling it to the court’s
indulgence by giving a full
explanation for the non-compliance with the court rules so that the
court can
understand
how the delay came about.
[4]
Having regard to
what
is averred in the answering affidavit, the respondent appears to have
abrogated itself from the responsibility of providing
this court with
a full and sufficient explanation of its failure to comply with the
rules of this court. Nonetheless, despite the
sparse explanation, I
am inclined to condone the late answering affidavit as no prejudice
has been indicated by the applicant.
I am also of the view that it
would be in the interests of justice including that of the applicant
that this matter is progressed
and duly determined on the merits.
[10]
The respondent has raised a cocktail of dilatory defences.
In
limine,
the
claim is resisted on the grounds that: the application is irregular
for want of compliance with Rule 41A of the Uniform Rules
of Court
and section 3 of the Institution of Legal Proceedings Against Certain
Organs of State Act
[5]
(“The
Act”); the dispute between the parties cannot be properly
determined by way of application proceedings the matter
must
accordingly be referred for oral evidence and; the applicant’s
founding affidavit is defective in that, the resolution
authorizing
the deponent to depose to the said affidavit was not attached on the
founding affidavit.
[11]
Rule 41A states:
“
(2)(a)
in every new action or application proceeding, the plaintiff or
applicant shall, together with the summons
or combined summons or
notice of motion, serve on each defendant or respondent a notice
indicating whether such plaintiff or applicant
agrees to or opposes
referral of the dispute to mediation.
(b)
A defendant or respondent shall when delivering a notice to defend or
a notice to oppose, or at any tie thereafter,
but not later than the
delivery of a plea or answering affidavit, serve on each plaintiff or
applicant or the plaintiff’s
or applicant’s attorneys, a
notice indicating whether such defendant or respondent agrees to or
opposes referral of the dispute
to mediation.”
[12]
It is common cause that when
the application was
served on the respondent it was not accompanied by the notice as
contemplated in R
ule 41A
(2) (a).
Similarly, the respondent’s notice to oppose the application
and the subsequent answering affidavit was served without
the Rule
41A (2) (b) notice.
[13]
The object of Rule 41A is to afford litigants with an opportunity to
resolve their disputes through mediation as
an alternative to
litigation. It requires both parties to comply with the Rule and
while the applicant has explained that the failure
to serve the
notice simultaneously with the application was an oversight while the
respondent has not offered any explanation for
its non- compliance
with the Rule. The respondent’s compliance is not dependent on
the applicant’s compliance, if the
respondent was of the view
that the matter was capable of being mediated the respondent should
have filed the required Rule 41A
(2) (b) notice. In those
circumstances, the respondent would have been entitled to invoke the
provisions of Rule 49A
(9)
(b)
[6]
which provide a remedy
against
a
party who
unreasonably
avoids mediating a matter. It is for the respondent to set out
grounds why it was of paramount importance that Rule
41A ought to
have been complied with in the context of this matter. Nowhere in the
answering affidavit is it alleged that this
matter is cable of being
mediated. For these reasons, I am not persuaded that the applicant’s
non-compliance with Rule 41A
constitutes an impediment to the
determination of this matter.
[14]
There is also no explanation why the respondent is of the view that
this dispute cannot be judged on papers.
A
real, genuine and bona fide dispute of fact can exist only where
the court is satisfied that the party who purports to raise
the
dispute has in its affidavit seriously and unambiguously addressed
the fact said to be disputed. See
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[7]
para
13. In this matter, it is indisputable that
the
applicant rendered the IDM services and that the invoices submitted
in that regard were not disputed by the respondent instead,
an
undertaking to pay was made. The issue of whether the undertaking to
pay is enforceable against the respondent or not does not,
in my view
constitutes a
real,
genuine and
bona
fide
dispute
of fact warranting the dismissal of the application or a referral to
oral evidence.
[15]
The respondent has merely scantily alleged that that the applicant’s
letters of demand do not comply with
section 3 of the Act without
disclosing the grounds for this objection and the material
facts upon which the defence is based. That aside, on
the
facts germane to this matter, the applicant’s various letters
of demand, Annexures “RA2”, “VNA2”
and “VNA6”
were issued and served on the respondent respectively on 13 August
2019, 21 May 2020 and 9 July 2021 well
within the six months’
period specified in section 3 of the Act. In the said letters the
basis of the debt and the amounts
due are duly set out and the
application was instituted on
10 November 2021
approximately
three months after the letters of demand were served in that regard,
I am satisfied that that the letters of demand
comply with the
provisions of section 3 of the Act.
[16]
The respondent’s objection against the authority of the
applicant’s deponent simply on the basis that
there was no
authorisation attached to the founding affidavit is unsound. It is
not required for a deponent to an affidavit in
motion proceedings to
be authorised by the party concerned, it is the institution of the
proceedings and the prosecution thereof
that must be authorised.
[8]
[17]
Based on the reasons above, I am inclined to determine the objections
in favour of the applicant. The points
in limine
are
accordingly dismissed.
[18]
Turning to the reasons for non-payment. According to the respondent
the applicant is not entitled to payment because
of its failure to
comply with the pre-conditions of the contract clauses 3 and 6 in
that, the applicant failed to attach on the
founding affidavit the
allocation letter signed by the respondent as proof of the scope and
allocation of the services to be rendered
by the applicant including
a programme submitted to the respondent for the performance of the
said services and the detailed timesheets
relating to the amounts
claimed therefore, having not complied with these pre-conditions the
respondent’s obligation to pay
the invoices has not risen.
[19]
As regards, the written undertakings to pay given by Messrs Radebe
and Tokwe on behalf of the respondent, it is
the respondent’s
case that these officials are not the respondent’s accounting
officers. They acted without the authority
of the accounting officer
and without such authorization their decisions are invalid and
accordingly not binding on the respondent.
[20]
There is no merit to the respondent’s defences. As correctly
pointed out by the applicant in reply, the respondent
should have the
allocation letter in its records as it was the responsibility of the
respondent to issue the said letter to the
applicant in fact, the
allocation letter was duly issued on 31 January 2019.
[9]
Similarly, the contention that the applicant is not entitled to the
order sought as the amount claimed has not been established
is also
unsound. I have already alluded to the fact that at no stage were the
invoices disputed by the respondent. In terms of
the contract, the
respondent is not entitled to refuse to make payment without
providing the applicant with a notice and the reasons
in that regard.
See clause 4.4 of the contract:
“
If any item or
part of an item in an invoice submitted by the Service Provider is
disputed by the Employer, the latter shall, before
the due date of
payment, give notice thereof with reasons to the Service Provider,
but shall not delay payment of the balance of
the invoice.”
[21]
As regards, the enforceability of the undertaking to pay “the
acknowledgment of debt,” I am of the
view that the Supreme
Court of Appeal in
Meadow
Glen Homeowners Association v City of Tshwane Metropolitan
Municipality
[10]
at para 23 summed up this issue aptly and confirmed that:
“
...
Section 82
of the
Local Government: Municipal Structures Act 117 of
1998
determines that the municipality must appoint a municipal
manager as the person responsible for the administration of the
municipality
and such person will also be the accounting officer of
the municipality.
In
terms of
s 56(3)
of the same Act, the executive mayor, in performing
his duties must monitor the management of the municipality’s
administration
in accordance with the direction of the municipal
council
(s 56(3)(d))
and oversee the provision of services to
communities in the municipality in a sustainable manner
(s 56(3)(e)).
Section 54A
of the
Local Government: Municipal Systems Act 32 of 2000
also provides that the municipal council must appoint a municipal
manager as the head of administration of the municipal council.
Furthermore,
s 55
sets out the responsibilities of the municipal
manager as head of the administration, subject to the policy
directions of the municipal
council.
Section 55(1)(b)
determines that
the municipal manager is responsible and accountable for the
management of the municipality’s administration.
Section 60 of
the Local Government: Municipal Finance Act 56 of 2003 provides that
the municipal manager is the accounting officer
of the municipality.
”
[22]
The respondent’s assertion that the respondent’s
accounting officer cannot be seen to be perpetuating
a wrong
committed by its officials when acts of irregularity have been
discovered does not take the respondent’s case any
further. It
was pointed out in
Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
[11]
at para 26 that:
“
The proper
functioning of a modern State would be considerably compromised if
all administrative acts could be given effect to or
ignored depending
upon the view the subject takes of the validity of the act in
question. No doubt it is for this reason that our
law has always
recognised that even an unlawful administrative act is capable of
producing legally valid consequences for so long
as the unlawful act
is not set aside.”
[23]
In the circumstances, I am satisfied that the applicant has made a
case for the relief it seeks. The applicant’s
claims prevail.
[24]
Resultantly, the following order is made:
1.
Judgment is granted in favour of the applicant in respect of:
1.1.
Claim 1, payment in the amount of R17 613 073.40 together
with interest at the rate of 12% per
annum calculated from 1 November
2020 to date of payment.
1.2.
Claim 2, payment in the amount of R10 333.440.00 together with
costs and interest at the rate of 12%
per annum calculated from 1
November 2020 to date of payment.
2.
The respondent shall pay the costs.
NS
DANISO, J
APPEARANCES:
Counsel
on behalf of Applicant: Adv.
A.K. Kissoon Singh
SC
Instructed
by: Lovius
Block Attorneys
BLOEMFONTEIN
Counsel
on behalf of Respondent: Adv.
L.R. Bomela
Instructed
by: State
Attorney
BLOEMFONTEIN
[1]
Annexure
“VNA1” of the applicant’s Founding Affidavit.
[2]
Annexures “VNA2” and “VNA6” of the
applicant’s founding affidavit.
[3]
Paras 2.7 to 2.8.
[4]
Uitenhage
Transitional Local Council v SA Revenue Services
[2004]
(1) SA 292
(SCA)
at 297 I-J.
[5]
Act No, 40 of 2002.
[6]
A
party who
unreasonably
avoided mediating a matter which was capable of being mediated may
be mulcted with a cost order at the end of the
proceedings when the
court considers the issue for costs of the application.
[7]
[2008]
ZASCA 6
;
2008
(3) SA 371
(SCA).
[8]
Ganes
and Another v Telecom Namibia
Ltd
2004
(3) SA 615
SCA para 19.
[9]
Annexure “RA3” of the applicant’s replying
affidavit.
[10]
(
2015
(2) SA 413
(SCA);
City of
Johannesburg Metropolitan Municipality and Others v Hlophe
and
Others
2015
All SA 251
(SCA)
at [19] and;
Pheko
& Others v Ekurhuleni Metropolitan Municipality (No. 2)
2015
(5) SA 600
(CC)
at [58] and [59].
[11]
2004
(6) SA 222
(SCA).