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[2024] ZAECMKHC 42
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Maziya General Services CC v Minister of Public Works N.O and Another (Appeal) (CA 240/2022) [2024] ZAECMKHC 42 (6 February 2024)
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE DIVISION
- MAKHANDA
Case
No: CA 240/2022
In the matter between:
MAZIYA
GENERAL SERVICES CC
Appellant
(Registration
Number: 1999/014056/23)
and
THE
MINISTER OF PUBLIC WORKS N.O.
First Respondent
TSHIYA
INFRASTRUCTURE DEVELOPMENT (PTY) LTD
Second Respondent
(Registration
Number: 2013/060335/07)
APPEAL JUDGMENT
Makaula J:
A.
Introduction
:
[1]
This is an appeal against an exception granted in favour of the first
respondent (the
first defendant) in the court
a quo
.
B.
Background facts
:
[2]
The appellant (the plaintiff) and the second respondent (the second
defendant), as
a joint venture, entered into a written contract with
the first defendant for the repair, renovation, and building of new
accommodation
at the Queenstown Police Station. The contract
was to endure for a period of 36 months. The contract amount was
R96 389 663.85
(Ninety-six million, three hundred and
eighty-nine thousand six hundred and sixty-three rand and eighty-five
cents). The joint
venture commenced with the work on 19 February
2019.
[3]
On 6 March 2020, the first defendant repudiated the contract based on
non-performance
by the joint venture. The repudiation of the contract
was accepted by the plaintiff which owned 60% of the stake in the
joint venture.
The second defendant which obviously owned 40%
remained supine. Having accepted repudiation, the plaintiff
terminated the contract
and elected to sue for damages in the amount
of R11 958 171.72 (Eleven-million, nine hundred and
fifty-eight thousand,
one hundred and seventy-one rand and
seventy-two cents) being 60% of the damages owed to it in terms of
the joint venture.
[4]
The claim was directed against the first defendant in terms of the
contract. The plaintiff
joined the second defendant as a party to the
extent that it may have an interest and may be bound by any relief
that could be
granted against the first defendant. No relief
was sought against the second defendant. The first defendant
excepted
to the summons on the grounds that it is vague and
embarrassing alternatively, it failed to disclose a cause of action.
[5]
The crux of the exceptions is firstly, that the first defendant
argued that the plaintiff
failed to plead any premise in fact or law
upon which it, acting unilaterally (i.e. without the second
defendant) could legitimately
dispute the notice of cancellation
issued by the first defendant and also elect to accept such
repudiation. Secondly, the
first defendant alleged that the
plaintiff’s failure to allege a basis in fact or law upon which
it could unilaterally enforce
rights accruing to the plaintiff and
the second defendant under the contract to which they were
contracting parties as a joint
venture rendered the particulars of
claim to be contradictory, vague and embarrassing. Thirdly, the
first defendant averred
that absent any basis in fact and law upon
which the plaintiff could unilaterally act on behalf of the second
defendant as a party
to the joint venture, and bind it and/or
exercise and/or usurp its contractual rights of the joint venture for
its own benefit,
or absent any allegations upon which the plaintiff
could pursue damages for its own account against the first defendant
arising
out of a contract to which the second defendant was a party
with the plaintiff, the particulars of claim fail to disclose a cause
of action. Based on these grounds, the first defendant argued
before the court
a quo
that the particulars of claim are
excipiable.
[6]
The court
a quo,
having dealt with the submissions by the
parties, held that “by failing to plead the basis upon which
the plaintiff can enforce
rights stemming from a contract entered
into between it, and the second defendant, on the one hand, being a
joint venture, and
the first defendant on the other, renders the
plaintiff’s particulars of claim vague and embarrassing”.
C.
Grounds of Appeal
:
[7]
The contention by the appellant is that the court
a quo
erred
in its findings that the plaintiff failed to plead sufficient facts
on the basis upon which the joint venture was formed
and carried out
its function. The contention by the plaintiff was that it
pleaded the facts that gave rise to the joint venture;
the 60% - 40%
distribution ratio of the revenue; the conclusion of the contract
between the joint venture and the first defendant;
the facts leading
to the cancellation of the contract and the acceptance of the
repudiation by the plaintiff; and the split of
the damages in terms
of the joint venture agreement with the plaintiff claiming 60% of his
pro tanto
share in the joint venture agreement.
[8]
The further contention by the plaintiff was that the court
a quo
should have found that the plaintiff’s particulars of claim
sufficiently set out the allegations to which the first defendant
was
required to plead, setting out all the facts pertaining to the
plaintiff’s
locus standi
to accept the repudiation and
to institute legal action for the recovery of damages owed to it
flowing from such repudiation.
[9]
The plaintiff further premises its appeal on the fact that Rule 18(4)
of the Uniform
Rules of Court requires only a statement of material
facts and not law, contrary to the finding of the court
a quo
.
[10]
The plaintiff submitted that it was entitled to (a) accept the
repudiation; (b) cancel the contract;
and (c) sue for its equivalent
share of damages.
D.
First respondent’s argument
:
[11]
The argument by the first respondent, both orally and on paper before
us, is somehow convoluted.
It skirts around the argument that
the plaintiff did not plead facts or law upon which it could act
unilaterally in respect of:
(a)
accepting repudiation of the contract.
(b)
cancellation of the contract.
(c)
it’s notice to the first defendant of the intention to
institute legal proceedings,
despite the fact that the contract was
between the joint venture and the first defendant.
[12]
Furthermore, the first defendant relies on clauses 7.1 and 2 of the
joint venture agreement in
arguing that neither the plaintiff nor the
“Project Leader” of the joint venture had the authority
to act unilaterally
to cancel the contract.
E.
Analysis
:
[13]
Clause 7.1 reads in part:
“
.
. . no party shall have the authority to bind or to make any
commitment on behalf of the Joint Venture or any other party unless
such authority is expressed in writing by the parties jointly with
regard to the Joint Venture or by a party individually with
regard to
that party”.
[14]
Clause 7.1 talks to a party purportedly acting on behalf of the joint
venture. This clause is
specific and needs no further elucidation in
that it precludes any party from binding or making a commitment “on
behalf of
the Joint Venture”. The plaintiff did not act
on behalf of the joint venture but on itself as a member hence the
joint
venture is not a party to the action. The particulars of
claim do not refer to the joint venture but to the two members of
the
joint venture. Therefore Clause 7.1 is not applicable.
[15]
The relevant portion of Clause 7.2 relied upon by the first defendant
is Clause 7.2.2 which requires
the unanimous consent of the parties
to the joint venture when dealing with the “process and terms
and conditions of payment
as applicable to the venture generally and
to the parties individually”; unless the joint venture
agreement had been terminated.
[16]
The first defendant had repudiated the contract, the effect of which
was that the contract had
been cancelled. The joint venture agreement
clearly stipulates in clause 3 that it was entered into for the
duration of the project.
This clause provides that the joint venture
agreement shall be terminated upon, amongst others, any of the
following: If the client
makes material modification or alteration to
the Project and the parties agree in writing to withdraw from the
Project. By
implication repudiation equates termination of the
contract. Therefore, nothing precludes the plaintiff from pursuing
its rights
to sue for its
pro rata
share of the damages (if
any).
[17]
Rule 18(4) of the Uniform Rules of Court provides that every pleading
shall contain a clear and
concise statement of
material
facts
upon which a pleader relies for his claim with sufficient
particularity to enable his opponent to reply thereto. In order
to succeed, the plaintiff had to plead facts or details of the relief
it sought so that the first defendant knew what order the
court
a
quo
was asked to make against it. It is a fundamental judicial process
that the plaintiff establishes the facts relied upon and the
court
a
quo
had, on those facts, to apply the rules of law and draw conclusions
as regards the rights and obligations of the parties
[1]
.
In essence, the plaintiff, in terms of Rule 18(4) was not required to
plead any basis in law other than facts upon which the court
a
quo
could
apply the rules of law.
[18]
It is a basic principle that a pleading should be phrased such that
the other party may reasonably
and fairly be required to plead
thereto. Pleadings must be lucid and logical and in an intelligible
form; the cause of action must
appear clearly from the factual
allegations made
[2]
.
[19]
The first complaint, as expounded above by the first defendant is
that the plaintiff failed to
plead a basis in fact or law upon which
it could act unilaterally in accepting repudiating, cancelling the
contract, or suing for
damages. Following Rule 18(4), I am not
in agreement with the complaint raised by the first defendant. The
plaintiff in paragraphs
5 and 6 pleaded the terms of the joint
venture agreement. The joint venture was formed for purposes of
tendering for the contract.
The joint venture was to cease at the end
of the contract. The relevant revenue to be realised from the
contract was to be split
at 60% - 40%, as stated above.
[20]
In paragraphs 7 to 10 of the particulars of claim, the plaintiff
pleads the terms of the agreement
between the joint venture and the
first defendant, and nothing turns on those paragraphs.
However, in paragraphs 10 to 15A,
the plaintiff pleads the facts
which deal with the performance of the contract, repudiation by the
first defendant on various grounds
(culminating in the non-completion
of the work by the plaintiff); the acceptance of such repudiation by
the plaintiff; the unilateral
cancellation of the agreement by the
plaintiff; and the ultimate issue of the summons wherein the
plaintiff quantified the damages
and deducted 40% which is due to the
second defendant. The above facts, as pleaded by the plaintiff, are
clear and concise. They
spell out the basis upon which the plaintiff
claims only 60% of the proven damages and not 100% on behalf of the
joint venture.
Based on these facts, it is open to any legal eye that
the claim is based on either joint or joint and several liability of
the
first defendant to the plaintiff and the second defendant. The
joining of the second defendant as a party to the proceedings
pre-supposes
that the plaintiff was, even though no order was sought
against it, aware that the law distinguishes between the liability of
parties/creditors,
jointly on the one hand and jointly and severally
on the other. The distinction is telling when it comes to
co-creditors
deciding either to sue together or each to go alone, so
to speak. It is common cause that, in terms of the
lis,
the plaintiff and the second defendant must be classified as
co-creditors. The claim against the first defendant is for damages
pursuant to the repudiation of the contract and the subsequent
cancellation thereof.
[21]
Christie
[3]
quotes with approval
the following passage by Marais J in
BHT
Water Treatment (Pty) Ltd v Leslie
[4]
:
“
It
seems to me that the intention of the parties is all important when
one decides who may exercise the rights, and in what manner,
and
whether they can be exercised wholly or in part by one of the
creditors, or whether they must be exercised by all the creditors
acting together.”
[22]
Clearly, this confirms the view that, in classifying the rights of
co-creditors it is essential
to first ascertain what the parties
intended. The intention of the plaintiff and the second defendant in
forming the joint venture
is clear in the agreement. It was to tender
for this contract only, and thereafter, it stood to be dissolved. The
revenue
ratio
was made specific at 60% - 40%.
[23]
The difference between joint liability and joint and several
liability of the co-debtor and creditors
has been amply dealt with by
the learned author in Christie
[5]
as follows:
“
Shortly,
co-debtors are said to be jointly liable when each is liable for its
share of the one debt; jointly and severally liable
when each is
liable for the full amount of the same debt, and severally liable
when each is liable for a separate debt. Co-creditors
are said
to be jointly entitled when each can claim its share of the one debt;
jointly and severally entitled when anyone but not
all can claim full
payment of the same debt, and severally entitled when each has a
claim for a separate debt. Liability
in
solidum
or solidary liability means
liability for the full amount of the debt, as in joint and several or
(a rare usage) several but not
joint liability”.
[24]
The issue of joint and several entitlements of co-creditors also
cropped up but was not decided,
by Corbett J, as he then was, in
Kotsopoulos
v Bilardi
[6]
,
Corbett J dealt with but did not decide whether suing by one of the
co-creditors amounted to a splitting of the debt he dealt with
this
in the context of whether a cession of a debt to two or more persons
jointly and severally may validly be effected without
the consent of
the debtor. He observed as follows:
“
Where
a debt is owed to a number of creditors jointly and severally (or
in
solidum
) it is regarded as a single
obligation owed to a multiplicity of obligees. The debtor is
entitled to choose to which of the
co-creditors he wishes to pay the
debt and payment to the creditor of his choice discharges the whole
obligation as regards all
of the creditors (
Voet,
45.2.4).
On the other hand, any
one of the co-creditors may demand and receive payment of the whole
debt
. Moreover, according to
Voet,
45.2.4, where a particular co-creditor has instituted action against
the debtor to recover the debt and issue in the suit has been
joined,
the debtor loses his right of choice and
is obliged to make payment to the creditor who has sued him
(see also Wessels on
Contract
,
2
nd
ed., paras. 1565-7) (other references omitted). This being, in
general, the essential character of a debt owed to co-creditors
jointly and severally, there is much to be said for the view that the
cession of a debt to two or more persons jointly and severally
does
not amount to a splitting of the debt and does not impose additional
burdens or duties upon the debtor; and that, therefore,
it may be
validly effected without the consent of the debtor. The
only
point which arises is whether each co-creditor would be entitled to
claim and sue for a
pro
rata
share of the debt only
,
thus
creating a multiplicity of claims and actions
.
It may well be that in such a case the Court would take the view
that, inasmuch as each co-creditor was entitled to claim
the whole
debt, action to recover a mere
pro rata
share would amount to an improper
splitting of a single claim and would disallow this procedure under
its general power to prevent
an abuse of the process of the Court.
I do not propose, however, to express any final opinion upon these
points because this
ground of invalidity was not advanced by the
excipient’s counsel and consequently no argument thereon was
addressed to the
Court”. (Emphasis added).
[25]
The only issue that was left open by Corbett J, in the
Kotsopoulos
matter
is whether a creditor can claim for his
pro
rata
share against a debtor as in the instant matter. The
reservation expressed by Corbett J, of whether an action to recover
a
pro
rata
share
would not in the exercise of a discretion by any court ceased with
the matter, not amount to splitting of a single claim has
been
correctly dealt with by the learned author Christie
[7]
with reference to case law, as follows:
“
The
suggestion is an interesting one, but its validity is respectfully
doubted. The court’s power to prevent an abuse of its
process
by splitting claims is unquestioned when the splitting goes to absurd
lengths, but the power to prevent an abuse has certainly
not become a
rule that claims may in no circumstances be split, and, if there were
such a rule,
it would seem to conflict
with Voet
,
who appears to contemplate one joint and
several creditors suing for its own
proportionate share
.
A joint and several creditor who has a
good reason for suing individually
for
its proportionate share
,
such
as the reluctance of co-creditors to press their claims or their
departure from the country and apparent loss of interest in their
claims, is not abusing the process of the court and there is
no
reason why its action should not be allowed to proceed. This
conclusion is in accordance with
Anglo-African
Shipping Co (Rhod) (Pvt) Ltd v Baddeley,
where
Goldin J, after considering the second passage from Corbett J’s
judgment in
Kotsopoulos
quoted
above,
nevertheless accepted that a
joint and several creditor could sue for its
pro
rata
share
.
In the case of a joint and several creditor who has acquired its
rights by cession from a single creditor, however, the
debtor will be
able to challenge any enforcement of the claim by the joint and
several creditor that has the effect of splitting
the claim to the
debtor’s prejudice, just as it could have challenged the
cession if it had had the same effect. In
the result, the law
appears to be that a joint and several creditor can sue individually
for its proportionate share unless it
acquired its rights by cession
and would, by so suing, be imposing a burden on the creditor that
could not have been imposed but
for the cession”.
In
Bezuidenhout
v Goldberg
[8]
,
Innes CJ dealing with the argument on exception based on the ground
that a co-owner of the property was not joined as a party to
the
action reasoned thus:
“
(W)here
two persons jointly contract and one of them asks that the whole
contract should be declared null and void, I think all
parties to the
contract should, as a general rule, be parties to the action.
If
PL
Bezuidenhout
did not desire to
join as a co-plaintiff, he could very easily have been made a
co-defendant
”. (Emphasis
added).
[26]
Similarly, in this instance, the second defendant remained supine
pursuant to the repudiation
of the contract by the first defendant.
It was within the rights of the plaintiff to join the second
defendant. As a party to the
proceedings, the second defendant had an
opportunity to defend the action if it felt that the plaintiff
trampled its rights. However,
despite being joined as a party, the
second defendant did not contest or defend the action taken by the
plaintiff. It is unfortunate
that this court is not privy to the
reasons why the second defendant showed no interest in participating
in the action. Be that
as it may, the particulars of claim as they
stand cannot be said to be excipiable for being vague and
embarrassing.
[27]
To me, whether the first defendant is liable to the plaintiff jointly
and or jointly and severally,
the pleading remains good and thus not
excipiable for the reason that the second defendant is before court
as a co-creditor, and
it was incumbent upon it to defend the action
if it would prejudice its rights going forward. The second defendant
as an interested
party was joined as a party and afforded a suit.
[28]
In the circumstances, there is merit in the appeal, and it should be
upheld. As a result, the
following order shall issue.
1
The appeal is upheld with costs.
2.
The order of the court
a
quo
is set aside and replaced with the
following:
“
The
exception is dismissed with costs”.
M MAKAULA
Judge of the High
Court
Norman J:
I agree.
TV NORMAN
Judge of the High
Court
Ellis AJ:
I agree.
L ELLIS
Acting Judge of the
High Court
Appearance:
Counsel for the
Appellant:
Adv J Möller
Circle
Chambers
Pretoria
Instructed
by:
Van Der Bilt Attorneys
c/o Wheeldon Rushmere &
Cole
Makhanda
Counsel for the First
Respondent:
Adv JJ Nepgen
Chambers
Gqeberha
Instructed
by:
State Attorneys
c/o
Whiteside Attorneys
Makhanda
Date
Heard:
24 July 2023
Date
Delivered:
06 February 2024
[1]
Erasmus: Superior Court Practice, Volume 2 D1-232A, Service 8, 2019.
[2]
Trope v
South African Reserve Bank
1992 (3) SA 208
(T) at 210G-H as cited in Erasmus
supra
at D1 – 234.
[3]
Christie’s Law of Contract, 7
th
Edition at page 299.
[4]
[1993]
3 All SA 126
at 128 ; 1993 (1) SA 47 (W) 51B
[5]
ibid
at
293.
[6]
1970 (2) SA 391
(C) at 397 D-H.
[7]
ibid
at
page 301.
[8]
1905
TS 127
at 28.