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[2021] ZALMPPHC 3
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Bravospan 252 CC v Greater Tzaneen Municipality (393/2018) [2021] ZALMPPHC 3 (2 February 2021)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(LIMPOPO DIVISION,
POLOKWANE)
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO THE JUDGES: YES/
NO
(3)
REVISED.
Date…02/02/2021
CASE
NO: 393/2018
In
the matter between:
BRAVOSPAN
252 CC
PLAINTIFF
and
GREATER
TZANEEN MUNICIPALITY
DEFENDANT
JUDGMENT
MAKGOBA
JP
[1]
The Plaintiff instituted a claim against the Defendant based on
various causes of action for payment
of money, arising out of
rendering security services by the Plaintiff.
The
dispute arises from a Service Level Agreement (SLA) entered into
between the parties on the 28 August 2014.
[2]
The said SLA was declared null and void by this Court in a judgment
handed down on 19 August 2016.
The SLA was declared null and void on
the grounds that the parties did not comply with the provisions of
section 217(1) of the
Constitution Republic of South Africa, 1996, as
well as the Defendant’s Supply Chain Management Policy, in that
the Defendant
failed to invite the Plaintiff and other entities in an
open bid process, to submit bids and be involved in a fair,
equitable,
transparent, competitive and costs effective process.
[3]
The Plaintiff’s claims are based on four different causes of
action, namely a delictual
claim, alternatively fraudulent
misrepresentation, further alternatively enrichment, further
alternatively constitutional damages.
The Plaintiff’s
standpoint is that it needs to succeed on any one of the four causes
of action. Therefore, in the event that
the Court finds that any one
of the causes of action was proved, it will not be necessary to
decide the others.
[4]
The Defendant raised special pleas on the following legal issues:
4.1.
Res judicata
;
4.2.
Non-compliance with the provisions of
section 3(2)
of the
Institution
of Legal Proceedings Against Certain Organs of State Act No. 40 of
2002
;
4.3.
Plaintiff’s fourth cause of action (i.e constitutional damages)
not appropriate remedy;
4.4.
Prescription.
[5]
In the pre-trial minutes dated the 21 September 2020 the parties
agreed to separation of the merits
and quantum. Only in the event
that the merits become decided / settled in favour of the Plaintiff,
the parties agreed to refer
the issue of quantum to mediation.
Accordingly,
the trial proceeded before me on the issue of merits or liability.
[6]
The Plaintiff called only one witness to testify on its behalf,
namely Mr Matimba MacKay (Matimba)
the sole member of the Plaintiff
close corporation.
At the
end of the Plaintiff’s case, Defendant closed its case without
presenting any evidence. The Court is then left with
only the
Plaintiff’s version.
The
Plaintiff’s version
[7]
What actually happened between the parties, as testified by Matimba,
for the Plaintiff, is as
follows.
The
Plaintiff, represented by Matimba, successfully applied for a tender
with the Defendant for the supply of the security services.
The
Tender, SCMU 20/2013 was awarded legally after a competitive bid
process.
[8]
The advertisement calling for the Tender did not set out the term of
the contract. For perfectly
sound commercial reasons, this was a
problem for Plaintiff. The services required by the Defendant needed
a service provider to
invest substantial funds in the form of
equipment and other input costs. According to Matimba, a term of less
than three years
would not be economically viable and the contract
had to be valid for at least 3 years. Matimba, in responding to the
advertisement,
attended a compulsory briefing session with the
Defendant. At this briefing Matimba, as well as other contractors,
expressed concern
over the lack of clarity over the term of the
contract. The concern was that a contract of less than 3 years was
not viable. The
Defendant informed all the parties that the initial
term will be for 12 months but an extension will be negotiated,
depending on
price. All the potential bidders were left with the
impression that the contract will be extended by the Defendant
Municipality
at the end of the first 12 months. Matimba’s
uncontested evidence is that if anything less than 3 years was on
offer; he
would have walked away and not entered into the SLA.
Therefore, the SLA contained a term that at the end of the first 12
months
the contract will be extended, subject to pricing.
[9]
Plaintiff was awarded the contract and signed a service level
agreement (SLA) with the Defendant
on the 20 November 2013. Plaintiff
set up a fully equipped control room in the Civic Centre and
installed monitoring equipment
in various sites on the instructions
of the Defendant. Plaintiff provided the required services for an
initial period of 12 months.
An invoice for such services was
delivered to the Defendant on a monthly basis and they were paid in
full.
[10] At
the end of the 12 month period and at least two months before the
period ended, Plaintiff and Defendant
entered into negotiations to
extend the SLA, as was initially agreed.
On the
18 August 2014 Defendant obtained Municipal Council authorization to
extend that SLA by two more years and also to extend
the service to
further sites within the Municipality.
In
order to satisfy themselves that they could legally extend the SLA,
Defendant obtained a legal opinion, dated 29 August 2014,
which
advised that in the circumstances and bearing in mind the terms of
the SLA, the Defendant can legally extend the SLA.
[11]
Defendant drafted an addendum to the SLA which the parties signed on
the 28 August 2014. Defendant extended
the term by a further 24
months and extended the number of sites to be monitored by Plaintiff.
Plaintiff continued to provide services
in all the sites and
Defendant continued to accept and benefit from Plaintiff’s
services. Matimba gave a complete description
of all the equipment
and human resources deployed by Plaintiff.
Plaintiff
continued to deliver monthly invoices for payment, but, for
unexplained reasons the Defendant failed to make payment.
Promises of
payment were made by Defendant and at the same time Plaintiff was
requested to continue providing services as agreed
in the SLA
addendum.
[12] On
the 9 February 2015 Defendant unexpectedly launched an application to
set aside the addendum (the application).
Even after launching the
application, Defendant continued to accept and enjoy the services
rendered by Plaintiff. However, no payment
for such services was
forthcoming.
The
Court granted an order declaring the addendum null and void on 19
August 2016. The Court refused an application for leave to
appeal on
9 November 2016 and the Supreme Court of Appeal dismissed the
application for leave to appeal the order of the High Court
on 27
February 2017.
Significantly
and on the 10 July 2015, Defendant wrote to Plaintiff, through their
attorneys, requesting Plaintiff to continue to
provide services
“
until a new service provider is
secured”.
Plaintiff continued to
provide the services, but inexplicably, defendant refused to pay.
[13]
The Defendant obtained a second legal opinion which advised that
Defendant was being enriched at the expense
of Plaintiff. The opinion
is dated
4 June 2015
. The opinion advised Defendant to make
payment to Plaintiff. Defendant ignored the opinion without tendering
any explanation. It
is undisputed that for a period of 24 months,
Plaintiff provided the services and Defendant enjoyed the benefit
thereof. It is
also not disputed that throughout the 24-month period,
Defendant did not engage another service provider.
Plaintiff
continued to provide services in terms of the contract, at the
request of the Defendant who continued to accept and benefit
from
such services. Plaintiff stopped providing services on the 31 October
2016, by which time no other service provider had been
appointed and
no payments were made to Plaintiff.
Common
Cause Facts
[14] At
the risk of repeating myself, I find it appropriate to set out the
following facts which are common cause
or not in dispute:
14.1.
The parties concluded an SLA and at the expiry
thereof after 12 (twelve) months, concluded an addendum to the SLA
which effectively
extended the contract by a further period of 24
Months.
14.2.
After concluding the SLA and thereafter the
addendum, Plaintiff performed its obligations in terms of the
addendum and did so for
the entire period of 24 (twenty-four) months.
14.3.
On 9 February 2015 the Defendant launched an
application before this Court in order to set aside the addendum as
illegal due to
its own failure to comply with its own supply chain
procedures. The application was successful and the addendum was
declared null
and void on 19 August 2016. The SCA dismissed an
application for leave to appeal on 27 February 2017.
14.4.
Even after the Defendant launched the
application to declare the addendum null and void, Plaintiff
continued to perform in
terms of the addendum and continued to do so
upon the written request of the Defendant . (as per letter dated 10
July 2015).
14.5.
The Plaintiff continued to provide services until
the 31 October 2016 and which services were accepted by Defendant who
enjoyed
the benefit thereof but refused to pay.
14.6.
Defendant even obtained a legal opinion from its
own attorneys which stated that it had been enriched at the expense
of Plaintiff
and that Defendant should pay.
Claim based on Unjust
Enrichment
[15]
When dealing with the Plaintiff’s claim based on unjust
enrichment it is important to note as stated
above that the Defendant
did obtain a legal opinion from its attorneys that the Defendant had
been enriched at the expenses of
the Plaintiff and that the Defendant
should pay. Despite the legal advice, the Defendant failed to pay.
[16]
In its particulars of claim, paragraphs 33 to 38, the Plaintiff
pleaded the material facts relied upon to
establish that the
Defendant has been enriched at the expense of the Plaintiff
[1]
.
The
entire cause of action was proved on the undisputed evidence of
Matimba. Matimba was unaware that the addendum was illegal.
He was
persuaded by the Defendant that the addendum was legal, moreso that
the Defendant obtained a legal opinion and drafted the
addendum for
signature.
After
signing the addendum, Plaintiff continued to provide services to
Defendant in respect of additional sites for a period of
24
(twenty-four) months.
[17]
Even after launching an application to set aside the addendum,
Defendant continued to persuade Plaintiff
to continue to provide
services. Defendant even requested Plaintiff, in writing, to continue
to provide services until a replacement
service provider was
appointed. On the 10 July 2015, after the application to set aside
was launched, Defendant through its attorneys,
wrote to Plaintiff as
follows:
“
The
service level agreement will continue until such time that a new
service provided is secured”
It is also not in dispute
that during the 24-month extension of the SLA Defendant did not
engage any other service providers.
It is not disputed that
the Defendant benefited from Plaintiff’s services to the full
value of the addendum.
The
Plaintiff had a contract and was obliged to perform in terms of it
and accepted Defendant’s word that he will be paid.
At some
stage Defendant even sent Plaintiff a copy of the cheque requisition
to pay Plaintiff. The letter is dated 8 July 2015
wherein Defendant
even undertook to pay the amount into Court
[2]
.
[18]
In my view the Defendant was unjustifiably enriched to the full value
of the addendum. There was no plea
of non-enrichment or loss of
enrichment and above all no evidence on the part of the Defendant.
The Plaintiff performed, on Defendants
instructions and the Defendant
accepted performance. In the circumstances the Plaintiff is entitled
to get paid
[3]
.
[19]
The present case is not distinguishable from the case of
MEC
for Health Gauteng v 3P Consulting (Pty) Ltd
[4]
.
In the
latter case a service agreement between the parties was assailed on
the grounds that the purported renewal of the three years
(one year
longer than previously agreed and at increased contract value)
occurred without following a public bidding process and
in a manner
which could not be said to be fair, equitable, transparent,
competitive and cost-effective as contemplated in section
217(1) of
the Constitution read with
section 38(1)(a)(iii)
of the
Public
Finance Management Act 1 of 1999
. The Supreme Court of Appeal held
that the renewal of the service agreement did not give rise to a new
service agreement: it simply
extended the duration of the services
agreement for a period of three years. That as there was no new
service agreement, there
was no new procurement of goods or services
and it was therefore not necessary to have followed a competitive
public bidding process
in this regard.
[20] In
the present case the Plaintiff is entitled to payment for services
rendered irrespective of the Court
ruling that the SLA addendum is
null and void. In the case of
Albertyn v Khumalo and Others 1946
Vol 2 WLD
it was said:
“
The
Court will come to the relief of one of the parties to an illegal
contract where such a course is necessary to prevent injustice
or to
satisfy the requirements of public policy”.
[21] It
is common cause that in the application to set aside the addendum the
Court found against the Plaintiff
and decided that the addendum was
null and void. However, in the circumstance of this case Plaintiff
should nevertheless have received
payment for services rendered.
The
case of
Department
of Transport and Others v Tasima (Pty) Ltd
[5]
is
applicable where it was said:
“
For
these reasons I would have declared that the extension with effect
from 1 May 2010 to April 2015 was inconsistent with section
217 of
the Constitution and
section 38
of the
Public Finance Management Act
and
as a result the extension was void ab initio. However in the
exercise of remedial power on justice and equity, I would have
preserved
what had already been done in terms of the invalid
extention and order Tasima to transfer the eNaTis systems to the
Corporation
within 30 calendar days”
See also
State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
2018 SA 23(CC)
Defendant’s
defence on the Merits
[22]
The Defendant’s plea to paragraphs 33 to 38 of Plaintiff’s
particulars of claim which constitute
the cause of action on unjust
enrichment is a bare denial and without stating its specific defence.
There
was no plea of non-enrichment or loss of enrichment and as stated
earlier in this judgment the Defendant did not present any
evidence
but closed its case at the end of Plaintiff’s case.
[23]
The greater part of Defendant’s heads of argument as well as
the oral submission by Counsel dealt with
the application, as a
defence, of two legal principles:
Firstly,
the principle of
ex turpi causa non
oritur actio
; and
Secondly,
the relaxation of the principle of
in
pari delicto potior est condicio defendentis.
-
(When the parties are equally at fault, the
defendant’s position is more compelling).
The Defendant argued that
the Plaintiff has no enforceable claim against it in that the
extended SLA is invalid, null and void,
unenforceable and
unconstitutional, and was found as such by this Court in a review
application. That this extended SLA was tainted
with illegality and
is thus unenforceable.
[24]
Plaintiff’s Counsel argued that Defendant may not rely on these
defences and that the Court must dismiss
them out of hand for not
being pleaded.
For the reasons that
follow hereunder, I agree with Counsel for the Plaintiff.
[25]
The Defendant’s plea does not comply with
Rule 22(2).
The Rule
provides that
“
(2) The
defendant shall in his plea either admit or deny or confess and avoid
all the material facts alleged in the combined summons
or declaration
or state which of the said facts are not admitted and to what extent,
and shall clearly and concisely state all
material facts upon which
he relies.”
There
is absolutely no mention of these defences in Defendant’s plea.
If it was intended that these principles provide a defence
in answer
to Plaintiff’s claims, the uniform rules compel Defendant to
plead it is so that Plaintiff knows the case it has
to meet.
The
defendant is duty bound to set forth his defence with sufficient
precision to enable the plaintiff to ascertain what the defence
is
[6]
.
A
pleader cannot be allowed to direct the attention of the other party
to one issue, and then at the trial attempt to canvass another
[7]
.
[26]
I am of the view that the two defences raised by Defendant in their
heads of argument and oral submissions,
for the first time, do not
form part of the issues before me as they were not pleaded as issues
in their plea.
In the result the two
defences raised by the Defendant are rejected.
[27]
In any event on the peculiar facts of this case the
ex turpi causa
defence cannot assist Defendant. The illegality of the addendum to
the SLA came only when the Court pronounced on the validity
of the
addendum. At all material times Plaintiff provided services in the
belief that the agreement was valid. Plaintiff also provided
services
on the written instructions of Defendant. It therefore cannot be said
that Plaintiff knowingly acted illegally.
It
is common cause that Plaintiff performed its obligations in terms of
the contract and Defendant benefited from the performance.
On the
facts of this case, this Court is inclined to relax the application
of the
pari delicto
in favour of Plaintiff.
It
is trite that the Court will not enforce rigidly the general rule in
in pari
delicto potior est conditio defendentis
,
but will come to the relief of one of the parties where such a course
is necessary in order to prevent injustice or to satisfy
the
requirements of public policy
[8]
.
Defendant’s
Special Pleas
[28]
The Defendant raised special pleas on the
following legal issues: res judicata, non-compliance with
section
3(2)
of the Institution of Legal Proceedings against Certain Organs
of State Act No. 40 of 2002 and prescription.
Res
judicata
[29]
The requirements of
res judicata
are that the cause of action,
relief and parties be the same in the earlier proceedings. When the
Defendant in the present proceedings
brought an application to set
aside the addendum on 9 February 2015 under case number 238/2015, the
present Plaintiff instituted
a counter application claiming damages
and payment of debt in the sum of R 2 005 000.00 for services
rendered from November 2014
to March 2015 and Plaintiff’s
counter claim was dismissed with costs. In the present proceedings
Plaintiff issued its summons
for payment of the amount of R 9 624
000.00 under various causes of action referred to in paragraph [3]
above. It is against this
backdrop that the Defendant raised a
special plea of
res judicata
.
[30]
The cause of action in Plaintiff’s claim for the amount of R 2
005 000.00 in case number 238/2015 was
for the enforcement of the
contract (addendum) which was declared null and void by the Court in
its judgment of the 19 August 2016.
In the present case (case number
393/2018) the Plaintiff claims the amount of R 9 624 000.00 based on
unjust enrichment. The question
is whether the causes of action are
the same in both cases.
[31]
The requirements of same cause of action and same relief can be
dispensed with where the same issue has been
finally decided in the
previous proceedings. This is the form of
res judicata
known
as issue estoppel. A plea of issue estoppel can only be permitted if
it would not cause unfairness in the later proceedings.
I am
of the view that to uphold the special plea in the circumstances of
this case will lead to unfairness in this case. This is
so because
this Court was in a better position to hear the undisputed evidence
of Plaintiff which evidence clearly establishes
a case of unjust
enrichment.
In
Prinsloo
NO and Another v Goldex 15 (Pty) Ltd and Another
[9]
it was held that the gist of the plea is that the matter or question
raised by the other side had been finally adjudicated upon
in
proceedings between the parties and that it therefore cannot be
raised again. However, the Court held that in time the
requirements were, relaxed in situations which gave rise to what
became known as issue estoppel.
[32]
The relaxation of the common law requirement of the plea of
res
judicata
was
explained as follows by Scott JA in
Smith
v Porrit and Others
[10]
.
“
Following
the decision in Boshoff v Union Government
1932 TPD 345
the ambit of
the exceptio rei judicata has over the years been extended by the
relaxation in appropriate cases of the common law
requirements that
the relief claimed and the cause of action be the same (eadem res and
eadem petendi causa) in both the case in
question and the earlier
judgment. Where the circumstances justify the relaxation of these
requirements those that remain are that
the parties must be the same
(idem actor) and that the same issue (eadem quaestio) must arise.
Broadly stated, the latter involves
an inquiry whether an issue of
fact or law was an essential element of the judgment on which
reliance is placed. Where the plea
of res judicata is raised in the
absence of a commonality of cause of action and relief claimed it has
become commonplace to adopt
the terminology of English law and to
speak of issue estoppel. But, as was stressed by Botha JA in
Kommissaris van Binnelandse
Inkomste v Absa Bank BPK
1995 (1) SA 653
(A) at 669D, 670J-671B, this is not to be construed as implying an
abandonment of the principles of the common law in favour of
those of
English law; the defence remains one of res judicata. The recognition
of the defence in such cases will however require
careful scrutiny.
Each case will depend on its own facts and any extension of the
defence will be on a case by case basis. (KBI
v Absa Bank supra at
670E-F.)
”
.
[33] I
come to the conclusion that the causes of action are not the same in
the two proceedings between the parties.
There is a claim for
enforcement of the illegal contract as against the claim for unjust
enrichment. In any event the circumstances
of the present case are
such that the requirement for the special plea of
res judicata
should be relaxed.
The
Defendant’s special plea of
res
judicata
is accordingly dismissed.
Non-Compliance
with Section 3(2) of Act No. 40 of 2002
[34]
The Defendant alleges that the Plaintiff notice in terms of section
3(2) of Act 40 of 2002 does not comply
with all the requirements set
out in section 3(2) of the Act in that the said notice was not served
on the Defendant within a period
of six (6) months from the date on
which the debt became due in accordance with section 4(1) of the Act.
That the Plaintiff has
failed to apply for condonation for
non-compliance with the provisions of this Act.
[35]
There is no merit in the special plea raised by the Defendant.
On the
facts of this case it is clear that Plaintiff did comply with section
3(2)(a) of the Act. Plaintiff continued to render service
until end
October 2016. This Court gave judgment setting aside the addendum on
19 August 2016 and refused leave to appeal on 9
November 2016. The
SCA refused leave to appeal on the 27 February 2017. The requisite
notice in terms of section 3(2) of the Act
was served on 8 September
2017.
Clearly,
Plaintiff was unable to institute this action including the issue of
the notice in terms of the Act until the SCA pronounced
on the
application for leave to appeal. The debt became due after the SCA
had pronounced on the application for leave to appeal.
Accordingly,
the requisite notice was given within six months and therefore a
proper notice was given in terms of section 3(2)(a)
of the Act. The
special plea raised by the Defendant in this regard must fail.
Prescription
[36]
The Defendant alleges that Plaintiff acquired the knowledge of facts
from which the debt arose when the invoices
became due for payment
and also when the Defendant disputed the legality of the extension of
the SLA in terms of the addendum.
That the Plaintiff instituted this
action after a period of three (3) years after the debt became due
and therefore the Plaintiff
should be nonsuited on the ground of
section 11(d)
of the
Prescription Act No. 58 of 1969
.
This
is based on the assertion that the Plaintiff’s cause of action
arose on 9 February 2015 when Defendant launched the application
to
set aside the addendum against the Plaintiff.
[37]
The facts in this case show that Plaintiff opposed the said
application and prescription was interrupted
until the 27 February
2017 when the SCA refused leave to appeal.
Only
after the SCA decision, did Matimba became aware or had knowledge
that the Defendant’s conduct giving rise to the debt
was
actionable. The Plaintiff could not have been aware of this cause of
action herein until the litigation in the application
to set aside
the addendum and the appeal process were completed.
[38]
Prescription begins to run when the debt in question is due, that is,
when it is owing and payable.
Section
12(3)
of the
Prescription Act 68 of 1969
provides:
“
A debt shall
not be deemed to be due until the creditor has knowledge of the
identity of the debtor and of the facts from which
the debt arises:
Provided that a creditor shall be deemed to have such knowledge if he
could have acquired it by exercising reasonable
care
”.
See:
MEC for
Health, Western Cape v MC (1087/2019)
[2020] ZASCA 165
(10 December
2020)
and
Bester and Others NNO v Gouws and Others (851/2019)
[2020] ZASCA 174
(17 December 2020).
[39]
The Plaintiff’s claim against the Defendant has therefore not
prescribed in terms of
section 11(d)
of the
Prescription Act 68 of
1969
.
Conclusion
[40]
Having upheld the Plaintiff’s claim against the Defendant based
on unjust enrichment as a cause of
action it is not necessary to
consider the other causes of action as stated in paragraph [3] of
this judgment.
[41]
The following order is granted:
41.1 The
Plaintiff has made out a case against the Defendant based on unjust
enrichment.
41.2. The Defendant
is ordered to pay Plaintiff an amount determined under the disputed
quantum.
41.3. The Defendant
to pay the costs of this action on party and party scale.
E
M MAKGOBA
JUDGE PRESIDENT OF THE
HIGH COURT,
LIMPOPO DIVISION,
POLOKWANE
APPEARANCES
Heard
on
26
& 27 November 2020 , 11 December 2020
Judgment
delivered on
02
February 2021
For
Plaintiff
Adv.
I Hussain SC
Instructed
by
MED
Attorneys
c/o
CJ Ntsoane Attorneys
For
Defendant
Adv.
Adv. A T Ncongwane SC
Adv.
L Mboweni
Instructed
by
Talane
& Associates Attorneys
c/o
Reneilwe Mathekga Attorneys
[1]
See pages 100 to 101 of pleadings bundle
[2]
See page 168 of Bundle B of application to set aside the addendum
[3]
See STV CT 2018 (5) SCA at paragraphs 115 to 116; Encon Construction
(Pty) ltd and Another v Palm Sixteen (Pty) Ltd
1972 (4) SA 511
(T);
Wolmarans and Another v Tuckers Land & Development Corporation
(Pty) Ltd 1979 (1) SA 663 (T)
[4]
2012 (2) SA 542 (SCA)
[5]
2017 (2) SA 622 (CC)
[6]
See FPS Ltd v Trident Construction (Pty) Ltd
1989 (3) SA 537
(SCA)
at pages 541H to 542D
[7]
See Kali v Incorporated General Insurance Ltd
1976 (2) SA 179
(D) at
182A
[8]
Jaybhay v Cassim
1939 AD 537
[9]
2014 (50)SA 297 (SCA)
[10]
2008 (6) SA 303
(SCA) para 10