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[2023] ZAFSHC 313
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Bokamoso Painting Firm (Pty) Ltd v Masilonyana Local Municipality (4396/2022) [2023] ZAFSHC 313 (10 August 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN THE HIGH COURT
OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Case no
4396/2022
REPORTABLE: NO
OF
INTEREST TO OTHER JUDGES: NO
CIRCULATE TO MAGISTRATES:
NO
In
the matter between:
BOKAMOSO
PAINTING FIRM (PTY) LTD
Applicant
(Registration
number: 2016[…])
and
MASILONYANA
LOCAL MUNICIPALITY
Respondent
CORUM:
JP DAFFUE J
HEARD
ON:
20 JULY 2023
DELIVERED
ON:
10 AUGUST
2023
This judgment was handed
down electronically by circulation to the parties’
representatives by email, and release to SAFLII.
The date and
time for hand-down is deemed to be 14h00 on 10 August 2023.
ORDER
1.
The application is dismissed.
2.
Each party shall pay their own costs of the
application.
JUDGMENT
Introduction
[1]
Pending litigation between the parties, the
one party has approach the court to make an alleged settlement
agreement an order of
court. Even if this could be done, it would not
signal the end of the litigation between the parties.
The Parties
[2]
The applicant is Bokamoso Painting Firm
(Pty) Ltd (Bokamoso) who issued action procedure as plaintiff against
the defendant under
the same case number, to wit 4396/2022. Adv OK
Chwaro appeared for the applicant in the application before me, he
being instructed
by Modiboa Attorneys Inc, c/o McIntyre and Van der
Post, Bloemfontein.
[3]
The respondent in the application and the
defendant in the action is Masilonyana Local Municipality (the
Municipality). Adv LA Roux
appeared for the Municipality before me on
instructions of Peyper Attorneys, Bloemfontein.
Relief claimed
[4]
The following relief is claimed in the
notice of motion:
‘
1.
That it be declared that both the Applicant and Respondent have
reached or concluded a valid,
binding, legal and enforceable
settlement agreement in terms of Rule 34 as per the letters dated
09
th
February 2023, 10
th
February 2023, and 07 March 2023;
3.
That the Respondent be ordered and or
directed to make payment of R1 000 000.00 (One Million Rand) within
10 days from date of the
order of this honourable court as per the
settlement agreement between the parties;
4.
That the Respondent be ordered and or
directed to make payment of R1 189 200.00 (One Million, One Hundred
Eighty Nine Thousand and
Two Hundred Rand) on or before the 31
st
July 2023 as per the settlement agreement between the parties;
5.
That the Respondent be ordered and or
directed to pay the costs of this application on attorney and client
scale;’
History of the
litigation
[5]
On 9 September 2022 Bokamoso issued summons
against the Municipality, claiming payment in the amount of R3 849
600.00 plus interest
and costs. The cause of action is services
rendered in accordance with a tender awarded by the Municipality to
Bokamoso. The summons
was duly served on the Municipality.
[6]
The Municipality failed to file a notice of
appearance to defend and consequently, Bokamoso set down the matter
for default judgment
on 17 November 2022. On that day the matter was
removed from the roll. It was again set down for default judgment on
1 December
2022. On this occasion it was again removed from the roll
as a result of the Municipality’s belated notice of intention
to
defend which was filed that same day. The Municipality was ordered
to pay the wasted costs.
[7]
Hereafter settlement negotiations were
conducted between the parties as will be shown later herein. In a
strange turn of events
the applicant embarked upon application
procedure under the same case number. A notice of motion using the
long form in accordance
with Form 2(a) of the First Schedule to the
Rules was issued on 23 April 2023 in terms whereof Bokamoso sought
relief as set out
above. The Municipality filed an answering
affidavit to which Bokamoso replied. It is this opposed application
that needs to be
adjudicated.
The disputes
[8]
The application is opposed on two bases,
first that insofar as Bokamoso seeks relief in accordance with rule
34 of the Uniform Rules
of Court, it has not complied with the
requirements of the rule and second, no settlement agreement was
entered into between the
parties.
The applicability of
rule 34
[9]
Bokamoso elected to rely on rule 34 and
consequently ss 34(1) and (6) need to be considered. Sub-rule 34(1)
reads as follows:
‘
In
any action in which a sum of money is claimed, either alone or with
any other relief, the defendant may at any time
unconditionally
or without prejudice
make a written offer to settle the plaintiff’s claim. Such
offer shall be signed either by the defendant himself or by his
attorney if the latter has been authorised thereto in writing.
’
(my emphasis)
[10]
In
Naylor
and Another v Jansen
[1]
the Supreme Court of Appeal dealt with the purpose of rule 34 and the
fact that it was designed to enable a defendant to avoid
further
litigation and failing that, to avoid liability for the costs of such
litigation. Obviously, having referred to the general
rule, the trial
court still remains with an unfettered discretion in awarding costs.
[11]
As
Erasmus
[2]
states, an
unconditional offer is designed for the case where the defendant
admits liability on the plaintiff’s claim, in
whole or in part,
entitling the plaintiff to accept the offer and to sue for the
balance of his claim at his peril. The procedure
is created to either
terminate or curtail litigation. A defendant making use of the
procedure may avoid liability for the costs
of the litigation. After
judgment has been given and the offer or tender has been brought to
the notice of the court, the question
of costs may be considered
afresh.
[3]
The usual practice is
to order the defendant to pay the plaintiff’s costs incurred up
to the date of the offer or tender
if the offer or tender exceeds the
amount of the judgment and to order the plaintiff to pay the
defendant’s costs incurred
thereafter.
[12]
We have not come to the end of the
litigation, ie the action instituted by Bokamoso. The Municipality
has not even filed a plea
and the pleadings have not been closed.
Evidence is still to be led at the trial where after the trial judge
will be required to
deliver a judgment. Once that is done, he may be
required to consider the costs award afresh. Bearing this in mind,
rule 34 is
inapplicable
in
casu
. The
whole purpose of Bokamoso’s application is to make an end to
the entire dispute between the parties and for the court
to declare
that a settlement agreement as alleged has been entered into in order
to obtain finality. Therefore, Bokamoso apparently
does not intend to
await a judgment by the trial court after the leading of evidence.
Rule 34 caters for a totally different scenario
as mentioned and Mr
Chwaro conceded this in the following words in his written heads of
argument:
‘
The
settlement agreement which was concluded between the parties does not
have the hallmarks of a rule 34(1) settlement as there
was no
compliance with the requirements thereof, especially the written
offer which was to be accepted within 15 days from the
date of the
offer, as envisaged in rule 34(6) of the Uniform Rules of Court.’
It is correct that
Bokamoso did not accept the offer within 15 days as provided for in
rule 34(6), but this is irrelevant for the
reasons stated.
[13]
Although not dealt with by the parties
during argument, I also considered the possibility of adjudicating
the application based
on rule 41(4) of the Uniform Rules of Court
which reads as follows:
‘
(4)
Unless such proceedings have been withdrawn, any party to a
settlement which has been reduced to writing
and signed by the
parties or their legal representatives but which has not been carried
out, may apply for judgment in terms thereof
on at least five days’
notice to all interested parties.’
Although
the sub-rule in its present form supersedes the judgment of Erasmus J
in
Siebert
and Honey v Van Tonder
[4]
insofar as signature of the parties are now required, the judgment
still remains relevant insofar as the court held that the settlement
must be intended to bring an end to the suit as a whole. Applications
for judgment in terms of rule 41(4) are not incidental or
pending
proceedings in the sense contemplated in rule 6(11). Such
applications are brought in terms of rule 6(1) as Bokamoso tried
to
do, although the application was filed under the same case number and
not a different number.
[5]
Consequently, this rule, although not relied upon by Bokamoso, does
not find application in this case.
The alleged settlement
agreement
[14]
The
second basis relied upon by the Municipality in its opposition of the
application is the non-existence of a settlement agreement.
Before I
deal with the evidence pertaining to the alleged settlement
agreement, it is apposite to refer to the following judgment
of the
Constitutional Court.
Eke
v Parsons
[6]
confirmed with approval the following principle:
‘
A
compromise once lawfully struck is very powerfully supported by the
law, since nothing is more salutary than the settlement of
lawsuits.’
[7]
It
went on to state:
‘
[31] The
effect of a settlement order is to change the status of the rights
and obligations between the parties. Save
for litigation that
may be consequent upon the nature of the particular order, the order
brings finality to the
lis
between
the parties; the
lis
becomes
res
judicata
(literally,
“a matter judged”).’
[8]
Bearing
in mind that there may be certainty about some aspects of the offer
and possible acceptance thereof, it is clear that the
parties did not
intend to and therefore did not settle the dispute in order to bring
‘finality to the
lis
between the parties’. Having
said this, it is also apposite to consider the legal principles
pertaining to agreements in
general hereunder.
[15]
Before I return to the law, the facts must
be considered. The alleged agreement is not contained in one
document, but in a series
of letters. The first letter, initiating
the settlement negotiations, was written by the Acting Municipal
Manager of the Municipality
on 9 February 2023. This letter followed
upon a meeting held between Modiboa Attorneys on behalf of Bokamoso
and a delegation led
by the Acting Municipal Manager. The following
extracts from this letter, quoted
verbatim,
need reflection:
‘
2.
The Discussions.
In December 2021 Bokamoso
Painting Firm was paid an amount of R 1 000 000 from the invoice they
had submitted amounting R 2,854,080.00
for the
completed phase 1
and 2 and 3
, thus R 1,854,080.00 is an outstanding balance for
the work completed.
The Municipality
acknowledged its indebtedness to Bokamoso Painting Firm (Pty) Ltd
with the amount of R 1,854,080.00 in respect
of Phases 1, 2, and 3 of
the project for which Bokamoso Painting was appointed.
The Municipality
acknowledges the debt of R 1 189 200,00 in respect phase [the phase
number was not inserted, but it is clear from
all the evidence that
the reference should have been to phase 4], subject to
correction
of the signatory
on the documents accompanying the invoice.
The Municipality disputed
the claim amounting to R 475 680,00 and R237 840.00 in respect of
Phases 5 and 6 on the following grounds:
a)
…
b)
…
3.
Resolution.
It was resolved that:
a)
The Municipality is to make a Settlement
proposal on the amount of R 1,854,080.00 and R 1 189 200,00
b)
Bokamoso Painting Firm will attend to the
queries raised by the Municipality in respect of phases 5-6 of the
project then invoice
the Municipality;
c)
When the settlement agreement is reached
all legal processes will be withdrawn by Bokamoso Painting Firm (Pty)
Ltd;
d)
Each party is to carry its own legal
costs.’. (my emphasis.)
A payment proposal was
annexed to the letter in terms whereof the Municipality proposed to
pay R 1 854 080,00 on 31 March 2023 and
R 1 189 200,00 on 31 July
2023.
[16]
On 10 February 2023 Modiboa Attorneys
responded on behalf of Bokamoso to the letter of the Municipality. I
quote from paragraphs
3 and 4 of the letter:
‘
3.
We must for the record, confirm that our client is in agreement with
the move for the settlement
of the matter herein to avoid unnecessary
legal costs,
but would like to counter
propose the following subject to your approval or for your
consideration and or response thereto
;-
3.1
that the first payment of R1 854 080.00 should be made on or before
the 28
th
February 2023 instead of the 31
st
March 2023, the reason being, ….;
3.2
that the second payment
should also cover the fees for phase 5 and
6
…, meaning the amount payable on the 31
st
July 2023
should be R1 995 520.00
(as per second tax invoice)
and that should form part of the settlement herein,
instead of R1
189 200.00
.
4.
We would much appreciate it if you can revert back to us not later
than Wednesday the 15
th
February 2023 with your response
or reaction towards our
counter proposal herein
…’
(my emphasis.)
[17]
On 27 February 2023 Modiboa Attorneys wrote
another letter to the Municipality. I quote from the letter:
‘
3.
We also place it on record that we since had a meeting with you on
the 26
th
January 2023 and fairly enough by now the settlement discussions
should have been concluded whether positively or negatively, but
because of your delayed response we are
unable
to finalise the settlement discussions
and it now a month since we had a meeting with you which is not fair
for our client because even one of the dates suggested in
our
counter
proposal
is tomorrow and you have
failed to respond thereto.
4.
We therefore based on the above give you until Wednesday 01 March
2023 to finally respond
to our letters and the settlement discussions
should be finalised by Friday 03
rd
March 2023, failing
which we are proceeding with litigation processes and you will have
to file your plea.’ (my emphasis)
Two letters were written
by Modiboa Attorneys to Peyper Attorneys (now on record on behalf of
the Municipality during the settlement
negotiations) the one on the
7
th
of March 2023 and the second on the 13
th
of
March 2023. The following is quoted from the first letter:
‘
3.
….., please be advised or advise your client that our client
is acceding to your client
settlement proposal as contained in the
letter dated 09
th
February 2023, meaning your client should or will pay our client the
amount of R1 854 080.00 on or before 31
st
March 2023 and R1 189 200.00 on or before 31
st
July 2023.
4.
….. and our client is
still of the view that fees for phase
5 and 6 should form part of last payment
due in July 2023 whilst
our client addressing any other issue that might be outstanding
herein.’ (my emphasise)
The following is quoted
from Modiboa Attorneys’ letter of 13
March 2023:
‘
2.2
the counter proposals were made by our client or our office, but to
some extent those were never entertained
by your client, and or
rejected by your client;
2.3
the settlement proposal as contained in your client’s letter of
the 09
th
February 2023 remained open for acceptance by our
client and same was never withdrawn by your client;
2.4
the settlement proposal was then accepted by our client as per our
letter of the 07
th
March 2023, and as a result of the
acceptance hereof, a settlement agreement was concluded between the
parties as of the 07
th
March 2023.
[18]
Interestingly, Mr Du Plooy of Peyper
Attorneys addressed an email to Modiboa Attorneys on 27 March 2023. I
quote:
‘
2.
Our client was unable to make full payment of the R 1 854 080.00 due
to receiving a lower
equitable share than expected.
3.
Our instructions are therefore
inter alia
the following:
3.1
Our client is willing to settle the dispute between the parties on an
amicable basis, and has shown
its bona fides by making an initial
payment.
3.2
Our client will make payment towards settling the account with each
Equitable share.
3.3
Our client will make payment of R1 000 000.00 with the equitable
share received during July 2023.
3.4
Our client will make payment of R1 189 200.00 with the equitable
share received during December 2023.
3.5
Our client still disputes
the claims with regards to Phase 5
and 6.
4.
Kindly confirm whether your clients are willing to accept the
settlement proposals.’
(my emphasis)
[19]
Modiboa Attorneys responded to Peyper
Attorneys in a letter on the same day and I quote:
‘
3.
Our client attempted unsuccessfully to do the counter proposal and
your client choose to
ignore our letters and our client did not have
any option under the circumstances but to accede to your client’s
initial
settlement proposal and as a result hereof an agreement came
into place between the parties and it is therefore binding and
enforceable
on the parties.
4.
Our cannot agree to any further settlement proposal
, because
parties have reached an agreement already, and if on Friday 31
st
March 2023 our client does not receive payment of R1 000 000.00, our
instructions are to file an application in the High Court
in terms of
an order will be sought to confirm the settlement agreement (
and
the terms thereof
)…
5.
Your client’s settlement proposal was not subject (nor did the
parties agree thereto)
to your client receiving equitable share, and
even in the letter dated 07
th
February 2023 no reference
has been made thereto, …’ (my emphasis)
Legal principles
pertaining to agreements in general
[20]
Now
that the communication relied upon by Bokamoso has been dealt with,
it is necessary to consider the authorities. It is apparent
that
Bokamoso is not relying on a settlement agreement contained in one
document signed by the parties and/or their legal representatives
on
their behalf. A series of letters form the basis for the alleged
settlement agreement as indicated above. The general principle
is
trite. Upon receipt of an offer by the offeror, the offeree’s
counter-offer incorporates a rejection destroying the original
offer.
This has been the case in this country for more than a century. The
matter was first pronounced in
Watermeyer
v Murray
[9]
and more recently in
Legator
McKenna Inc and Another v Shea and Others
[10]
and
Robarts
v Antoni N.O and Others
[11]
.
[21]
Bradfield
suggests in Christie’s Law of Contract in South Africa
[12]
that it is conceivable that a counter-offer in a specific instance
would not incorporate a rejection, relying on a
dictum
of Watermeyer CJ in
Collen
v Rietfontein Engineering Works
[13]
to
the effect that this is a general rather than an absolute rule. The
dictum reads as follows:
‘
It
must also be remembered that a counter-offer is in general equivalent
to a refusal of an offer and that thereafter the original
offer is
dead and cannot be accepted unless revived.’
It is
also clear that an offeror may repeat an offer after it has been
destroyed as a result of a counter-offer or rejection and
in doing so
resuscitate the original offer
[14]
.
Greenberg JA stated in
Boeren
v Harris
[15]
that the acceptance of an offer ‘must leave no room for doubt.’
Bradfield criticises the aforesaid phrase,
[16]
saying that ‘it must be taken with a pinch of salt’.
However, an acceptance of an offer by the offeree must be clear
and
unequivocal or unambiguous. The acceptance must correspond with the
offer, either exactly or at least in all material respects.
[17]
[22]
The contents of the letters are not in
dispute. However, the Municipality tried to put a different
perspective thereon in the answering
affidavit. All of a sudden, and
in an about-turn, the allegation was made that Bokamoso had not fully
complied with its contractual
obligations pertaining to phase 4. I
find this disturbing, bearing in mind that the Municipality’s
attorney made it quite
clear in its email of 27 March 2023 that the
only reason why it could not make the full payment of R 1 854 080,00
agreed upon by
the 31
st
of March 2023 was due to receiving a lower equitable share than
expected. Therefore, an amount of only R 854,080,00 was paid, leaving
a balance which the Municipality’s attorneys undertook to pay
during July 2023. The same applies to the undertaking to pay
R 1 189
200,00 during December 2023, whilst all of a sudden it was alleged in
the answering affidavit that this amount was not
due and payable.
[23]
This being opposed motion proceedings, the
Plascon-Evans
principle should be applied. The question is therefore two-fold, to
be considered on the evidence tendered by the Municipality
which
version cannot be rejected as farfetched. First, it must be
considered whether an offer was made which was accepted. Second,
whether Bokamoso’s counter-offer amounted to a rejection of the
initial offer, which was no longer open for acceptance as
Bokamoso
tried to suggest. Bearing in mind the correspondence and the evidence
presented, I am satisfied that it is possible to
find that there was
an agreement pertaining to the amount payable in respect of phases 1,
2 and 3, the effect being that Bokamoso
is entitled to payment of R 1
million. There is uncertainty pertaining to the amount of R 1 189
200,00 in respect of phase 4. I
shall rather err on the side of
caution and refuse to make any order for payment at this stage of the
proceedings, allowing the
Municipality to defend the action and for
the parties to deal with the issues in dispute during a forthcoming
trial.
[24]
The action procedure should be allowed to
continue to finality. That will mean that the Municipality shall file
its plea immediately
whereupon Bokamoso may file a replication if so
advised. Summary judgment procedure may be utilised thereafter and
the court adjudicating
that application may grant summary judgment
for the amount due, owing and payable together with costs, ordering
the parties to
go on trial pertaining to the remainder of the
disputes.
[25]
I earnestly considered whether this court
should not come to the assistance of Bokamoso, bearing in mind the
unconditional offer
in respect of which an amount of R1 million is
clearly due and payable. I made it clear that neither rule 34, nor
rule 41(4) is
applicable. As pointed out in
Eke
v Parsons supra
the settlement order
must bring finality to the
lis
between the parties, save perhaps for litigation consequent upon the
nature of the order. Unless as provided for in summary judgment
applications, a court cannot deal with litigation on a piece-meal
basis.
Costs
[26]
Although I am not prepared to grant orders
as sought by Bokamoso, it is apparent that the Municipality has
unconditionally admitted
liability for payment of R1 million.
Although the Municipality has successfully opposed the application,
this is a suitable case
where I, in the exercise of my discretion,
shall deviate from the general rule and not award costs in favour of
the Municipality.
Therefore, I regard it only fair that each party
shall pay their own costs of the application.
Order
[27]
The following order is issued:
1.
The application is dismissed.
2.
Each party shall pay their own costs of the
application.
JP DAFFUE J
Counsel
for the applicant in this application:
Adv
OK Chwaro
Modiboa
Attorneys Inc
c/o
McIntyre &Van der Post
BLOEMFONTEIN
Counsel
for the respondent in this application:
Adv
LA Roux
Peyper
Attorneys
BLOEMFONTEIN
[1]
(508/05)
[2006] ZASCA 94
; [2006] SCA 92 (RSA);
2007 (1) SA 16
(SCA) (31
August 2006) at paras 13 & 14.
[2]
Superior
Court Practice D1 – 446.
[3]
See
sub-rule 34(12).
[4]
1981
(2) SA 146
(O) at 148 D.
[5]
Erasmus
Superior Court Practice D1-552A.
[6]
(CCT214/14)
[2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) (29
September 2015).
[7]
Ibid
para
22.
[8]
Ibid
para
31.
[9]
1911
AD 61
at 70.
[10]
(143/08)
[2008] ZASCA 144
;
2010
(1) SA 35
(SCA);
[2009] 2 All SA 45
(SCA) (27 November 2008) para
17.
[11]
[2014]
3 All SA 160 (SCA); [2014] JOL 31706 (SCA); [2014] ZASCA 64 (SCA).
[12]
GB
Bradfield, Christie’s Law of Contract in South Africa 8
th
ed p 67.
[13]
1948
(1) SA 413
(A) at 420.
[14]
Robarts
v Antoni N.O.
and
Others
para 21.
[15]
1949
(1) SA 793
(A) at 801.
[16]
Christie’s
Law of Contract in South Africa 8
th
ed p 86.
[17]
Ibid
at
pp 87 & 88.