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2021
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[2021] ZAGPPHC 387
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Basadi Baitsosa Consultants and Projects CC v South African Forestry Company SOC Ltd (29193/2021) [2021] ZAGPPHC 387 (18 June 2021)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 29193/2021
REPORTABLE:
NO.
OF
INTEREST TO OTHER JUDGES: NO.
REVISED.
DATE
:
18 JUNE 2021
In
the matter between:
BASADI
BAITSOSA CONSULTANTS AND PROJECTS CC
Applicant
and
SOUTH
AFRICAN FORESTRY COMPANY SOC LTD
Respondent
J
U D G M E N T
This
matter has been heard in open court and otherwise disposed of in
terms of the Directives of the Judge President of this Division.
The
judgment and order are accordingly published and distributed
electronically.
DAVIS,
J
[1]
Introduction
In this urgent application, an
erstwhile service provider of the South African Forestry Company Soc
Ltd (SAFCOL), seeks to interdict
SAFCOL from proceeding with the
appointment of new service providers pending the resolution of
disputes between the applicant and
SAFCOL by way of arbitration.
[2]
Relevant
Chronology
The relevant chronology of the
parties’ engagement with each other will contextualize the
current disputes:
2.1
On 1
July 2019 the applicant was appointed as a service provider to
SAFCOL, pursuant to which, on 5 September 2019 the parties concluded
a written agreement with each other. In terms of the agreement
the applicant would render certain silviculture services for
SAFCOL
for a period of three years. These services would include
annual burning of firebreaks, chemical weeding, mechanical
weeding,
pruning, pitting, fertilizing, planting of seedlings and ancillary
services, using labour sourced from local communities.
2.2
The
written agreement provided that the applicant may not cede or assign
its rights or obligations in terms of the agreement without
the
written consent of SAFCOL, which consent will not unreasonably be
withheld. All disputes in terms of the agreement would
be
referred to the Arbitration Foundation of South Africa (AFSA) to be
resolved by way of arbitration in terms of the AFSA rules.
2.3
During
the existence of the contract, numerous issues arose from time to
time concerning the applicant’s workforce.
The
allegations that these resulted in protests at different intervals at
different sites as a result of non-payment of salaries
and wages,
stand uncontested. These, so SAFCOL says, has already resulted
in losses of some R700 000. All these
issues constituted
breaches of the agreement.
2.4
In
the beginning of April 2021, the workforce issues escalated to the
extent that the industrial strike action reached a point beyond
the
applicant’s control. Employees of SAFCOL were held
hostage and other service providers were barred from entering
SAFCOL
sites.
2.5
At
that time, invoices of the applicant for March 2021, April 2021 and
May 2021 were not yet payable by SAFCOL, but, in order to
assist the
applicant and to defuse the situation, SAFCOL, after informing the
applicant and relying on the applicant’s historical
data,
reconciled the outstanding invoices and paid the applicant’s
workers their salaries and wages directly on 24 April
2021 when it
became clear that the applicant was otherwise unable to do so.
2.6
This
followed on a written demand to the applicant on 19 April 2021 to
remedy all breaches to the agreement between the parties,
particularly pertaining to labour issues and labour disputes within 7
days.
2.7
The
seven calendar days (calculated in terms of the contract) expired on
26 April 2021).
2.8
The
applicant’s erstwhile member, Ms Madalane alleges in the
founding affidavit, that the applicant had resolved all its financial
difficulties by ceding and assigning all its rights and obligations
in terms of the agreement to another close corporation, Hankhesa
Consulting CC on 3 May 2021. The cession agreement is, despite
an allegations to that effect, not annexed to the founding
affidavit. It is contended that it was sent to SAFCOL. As
no response or consent had been received, counsel for the
applicant
submitted that it had “fallen by the wayside”, but that
the envisaged financial support still remained.
2.9
I
interpose to state that there are no supporting affidavits from the
current members of the applicant nor any on behalf of Hankhesa
Consulting CC confirming or corroborating any of the above aspects.
2.10
Be
that as it may, on 12 May 2021, SAFCOL cancelled the agreement due to
non-fulfillment of its prior demand.
2.11
On
the same day, the applicant, represented by an acting CEO who states
that he had taken over from Ms Madalane “as she is
taking
indefinite leave”, again reported that, according to the
applicant, all labour issues had been resolved. The
acting CEO
pleaded that a meeting be arranged to discuss matters amicably rather
than resorting to litigation. The letter,
however, also records
the position to be as follows: “
Although
I am fully aware that our relationships with Safcol is a legal one,
governed by a contract, I am of the view though that
the best and
cost-effective solutions are achieved by frank discussions before
considering legal options
”.
2.12
When
no further meetings resulted, the applicant resorted to its attorneys
who, on 24 May 2021, wrote to SAFCOL. In the letter,
the
attorneys place the applicant’s breach in dispute and labels
SAFCOL’s cancellation of 12 May 2021 a repudiation
of the
agreement, which was not accepted by the applicant. The letter
also served as a demand to SAFCOL to refrain from obtaining
quotations from other service providers whilst the dispute between
the parties remained unresolved, failing which, an application
for an
interdict would follow.
2.13
In
view of its history with the applicant, SAFCOL concluded that the
time had arrived to resort to alternative service providers
and
consequently issued a request for quotations on 1 June 2021 in terms
of the procurement provisions of the Public Finance Management
Act, 1
of 1999 (the PFMA) and the Preferential Procurement Regulations,
2017. The validity period for bids is 60 days and
the bid
evaluation process has commenced and is underway.
[3]
Relief
claimed
3.1
In
the circumstances as set out in the above chronology, the applicant
launched the present urgent application on 11 June 2021 claiming
that
SAFCOL “
be
interdicted and ordered to desist from proceeding with the
appointment of other service providers to do civiculture (sic) work
which was previously performed by the applicant, pending resolution
of the dispute … through arbitration
”.
3.2
Costs
are also claimed.
3.3
No
timeframe or other procedural prescripts pertaining to the
arbitration were contained in the notice of motion and Adv Malatji,
who appeared for the applicant, from the bar argued that the disputes
are manifold and appear to be beyond the simple issue of
cancellation
of the agreement.
[4]
The
law pertaining to interim relief
It is trite that, in applications for
interim relief, the requirements are the following:
-
that the
right which is the subject matter of the main proceedings (in this
case, the intended arbitration proceedings) which the
applicant seeks
to protect, is clear or, if not clear, is prima facie established,
though open to some doubt,
-
that, if the
right is only prima facie established, there is a well-grounded
apprehension of irreparable harm to the applicant if
the interim
relief is not granted and it ultimately succeeds in establishing the
right,
-
that the
balance of convenience favours the granting of the interim relief and
-
that the
applicant has no other remedy.
See
Setlogelo v Setlogelo
1914
AD 221
at 227 and
L. F. Boshoff Investments (Pty) Ltd v Cape Town
Municipality
1969 (2) SA 256
(C) at 267A – F.
[5]
Evaluation
5.1
That
the applicant has the right to have disputes in respect of its
agreement with SAFCOL determined by way of arbitration, is beyond
doubt – the agreement itself provides for this. What
exactly the dispute is and whether it has any prospect of success,
are less clear. There has not been any referral to arbitration
yet and neither have the disputes which the applicant suggests
exist
been formulated, either in the papers or in terms of the AFSA rules.
Insofar as the validity of the termination of
the agreement is the
primary of those disputes, counsel for SAFCOL referred to the
decision in
Malan
v City of Cape Town
2014 (6) SA 315
(CC) at [25] to point out that, once the applicant
had failed to comply with the demand to remedy its breach by the due
date, SAFCOL
had been fully entitled to cancel the agreement.
There is therefore serious doubt whether the right which the
applicant seeks
to enforce will bear any consequential relief in its
favour.
5.2
Regarding
the issues of irreparable harm, the applicant averred that the
termination of its agreement with SAFCOL, will render a
number of
workers and their families destitute. The facts indicate that
the non-payment from time to time by the applicant,
had already in
the past impacted negatively on those workers. There is
insufficient evidence to conclude that the applicants’
financial woes are at an end. Moreover, SAFCOL’s
requirement in its request for quotations, is that any new service
provider, must make us of local labour at the various SAFCOL sites.
This would mitigate (or even remove) the fear of prejudice
to the
workforce. The sole remaining harm which the applicant itself
may suffer, is the loss of profit, should it be successful
in
establishing that the agreement has been unlawfully terminated by
SAFCOL. Such loss can be adequately compensated by a
damages
claim.
5.3
The
above discussion also indicates where the balance of convenience
lies: should an order as prayed for be granted, that would
leave
SACOL without anyone rendering silviculture services and tending to
its forests and plantations. Such an untenable
situation would,
if the interim order is granted, endure for an indeterminate time.
Even though Adv Malatji made reference
to an expedited arbitration
possibility (which has not been canvassed on the papers), no
immediate time-frames can be established
in circumstances where the
referral to arbitration has not yet even commenced. On the
other hand, should new service providers
be appointed (which, in
terms of the bid validity period, must take place, at the very
latest, within the next 47 days) they would
simply step into the
shoes left by the applicant and, employ the workforce already on site
and proceed with the rendering of silviculture
services, preventing a
re-occurrence of losses such as that which had happened in the during
under the applicant’s tenure.
The balance of convenience
therefore does not favour the granting of the relief.
5.4
In
respect of both the issues of irreparable harm and the balance of
convenience, it is apposite to note that the applicant had
not,
neither in its notice of motion nor in its founding affidavit, made
any provision for the
lacuna
which will exist pending finalization of the proposed arbitration.
It has not asked for suspension of the termination of
the agreement
which took place on 12 May 2021 (more than a month ago) nor tendered
any interim solution. Moreover, no affidavit
has been delivered
gainsaying any of the averments made in SAFCOL’s answering
affidavit.
5.5
It
must follow that the applicant has failed to make out a case for the
relief it seeks.
[6]
Costs
Although costs customarily follows the
event, having regard to the applicant’s position and the pleas
delivered
ad misericordiam
by Mr Malatji, I am, in the
exercise of the court’s discretion, inclined to have the
liability for costs stand over until
the determination of the
validity of the cancellation and to treat this application as an
interlocutory application in that process.
[7]
Order
1.
The
application is dismissed.
2.
Costs
of the application shall be costs in the intended arbitration between
the parties.
3.
Should
the arbitration not be proceeded with, either party shall be entitled
to approach this court in terms of Rule 41, on notice
and, by way of
supplemented papers, for determination of the issue of costs.
N
DAVIS
Judge
of the High Court
Gauteng
Division, Pretoria
Date of Hearing: 14
June 2021
Judgment delivered: 18
June 2021
APPEARANCES:
For
the Applicant:
Adv. K R Malatji
Attorney for
Applicant:
Lancaster Kungoane Attorneys, Centurion
For
the Respondents:
Adv. C Thompson
Attorney
for Respondents:
Richen Attorneys’ Inc, Randburg
c/o Savage Jooste Adams
Attorneys,
Pretoria