Rethuseng Live Line and Services CC v Zeal Engineering Consultants (Pty) Ltd and Others (40779/14) [2021] ZAGPPHC 441 (8 July 2021)

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[2021] ZAGPPHC 441
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Rethuseng Live Line and Services CC v Zeal Engineering Consultants (Pty) Ltd and Others (40779/14) [2021] ZAGPPHC 441 (8 July 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NUMBER
:
40779/14
In the matter
between:
RETHUSENG
LIVE LINE AND SERVICES CC
APPLICANT
and
ZEAL
ENGINEERING CONSULTANTS (PTY) LTD
FIRST
RESPONDENT
THE
MKHONDO LOCAL MUNICPALITY
SECOND RESPONDENT
AOS
CONSULTING ENGINEERS (PTY) LTD
THIRD
RESPONDENT
IN RE:
RETHUSENG LIVE LINE AND SERVICES
CC
APPLICANT
ZEAL ENGINEERING
CONSULTANTS (PTY) LTD
FIRST RESPONDENT
THE MKHONDO LOCAL
MUNICPALITY
SECOND
RESPONDENT
JUDGMENT
TSATSI
AJ
INTRODUCTION
1.
This application has been heard in a virtual hearing via
Microsoft Teams.
2.
This is an opposed application seeking an
order to set aside the appointment of the Third Respondent
(Consulting Electrical Engineering;
“CEE”) and or the setting
aside of its findings. The First Respondent delivered  a counter
claim seeking monetary order
as quantified by the Third
Respondent  against the  Applicant and Second Respondent
jointly and severally opposed
by the Applicant  and Second
Respondent.
3.
The First Respondent applied for
condonation for filing its  replying  affidavit out of
time. This condonation application
was not opposed by either the
Applicant or the Second Respondent.
4.
The Applicant and the Second Respondent
opposed the First Respondent’s counter application. The Second
Respondent did not oppose
the Applicant’s application.
FACTS
5.
Rethuseng (herein referred to as “the
First Respondent”) applied for the liquidation of Zeal Engineering
Consultant (herein referred
to as “the Applicant”) and withdrew
such proceedings.
Subsequent to that, in
2014  the First Respondent instituted an action against the
Applicant and the Second Respondent for payment
of an amount of
R4846,015.42 alternatively an amount of R3249,043.64.
6.
The said liquidation was based on an
alleged indebtedness of an amount of R 3 249 043.64. This
alleged indebtedness arose
from the allegation that the First
Respondent as the “sub-contractor” concluded a contract with the
Applicant as the “contractor”
to the Mkhondo Municipality
(herein after referred to as “the Third Respondent”).
7.
The First Respondent stated that it was
owed the said amount due to the fact that it rendered electrification
services in respect
of five villages in the Second Respondent’s
area.
8.
The First Respondent contended that the
said amount was owed by the Applicant since it had a contractual
relationship with the Applicant
not with the Second Respondent. The
Applicant denied that it owed the said amount to the First Respondent
and questioned the First
Respondent’s
locus
standi
to apply for liquidation.
9.
All work had to be approved by the
Applicant before the First Respondent could claim payment from the
Second Respondent. The Applicant
did not approve the issuing of the
last three invoices by the First Respondent which are the subject of
litigation.
10.
On 1 July 2016 at Circle Chambers,
Pretoria, the Applicant, First and Second Respondents conducted a
pre- trial conference. The First
Respondent  will request the
President of consulting Engineering South Africa (“the CESA”) to
appoint an independent Consulting
Electrical Engineer  (“the
CEE”) to finally determine what amount is payable to the First
Respondent in respect of the five
electrification sites, having
regard to quantity, quality and defects. For purposes of the said
appointment the parties will
discover all relevant documents by
15 July 2016.
11.
There is only one electrical engineer on
the panel of the CESA’s President’s panel of mediators,
adjudicators and arbitrators
in the normal course of events that
would be the president’s nomination.
12.
On 19 August  2016  Mr Wally
Mayne (“Mr Mayne”) from the CESA, sent an email correspondence
indicating  seven independent
Consulting Engineers as option for
the appointment of the CEE. On 25 August 2016 the First Respondent’s
attorney requested the
Applicant and the Second Respondent  to
indicate if they had an objection to the appointment of any of the
seven nominated independent
Consulting Engineers.
13.
On 29 August 2016, Mr Nicholas Muofhe on
behalf of the Applicant indicated their choice in order of preference
as AOS Consulting Engineers
(“the third Respondent”); DJJC
Consulting Engineers and CA Du Toit. The Applicant’s first
preference for the appointment
of the CEE was the Third Respondent.
14.
On 12 March 2018 the First Respondent’s
attorney furnished three quotations for the hourly tariffs and
travelling costs of the Consulting
Engineer nominated by the
Applicant; viz. the Third Respondent, DJJC Consulting Engineers and
CA Du Toit. The First Respondent’s
attorney requested the
Applicant and the Second Respondent to provide them with their choice
in preferred company. The Third Respondent
was the preferred choice.
15.
The parties delivered submissions to the
Third Respondent and the Third Respondent requested further
documentation from the First
Respondent. After allegedly executing
his mandate, the Third Respondent delivered its
decision/determination on 18 April 2019. The
determination provided
among others that the Third Respondent had meetings, studied,
investigated, determined and concluded that
the amount owed to the
First Respondent  is R3,249, 043. 00(incl. 14% VAT) in respect
of the services rendered on the electrification
projects on
Khalambasz, Bhoweni, Emakhaya, Entombe and Bakenko Villages.
16.
On 14 November 2019, approximately 7 months
later the Applicant instituted the present proceedings.
17.
There was an agreement reached and
concluded with regard to the appointment of the CEE. The agreement
expressly set out the
terms upon which the parties wish to dispose of
the issue of quantum. The agreement stated that the CEE will make a
determination
which determination shall be reached by procedures
determined by the CEE and  shall bind the parties.
The
purpose of the agreement  in an effort to resolve issues, the
parties decided to refer the  issues of whether the
First
Respondent was entitled to payment, including the determination of
the amount owed ( if there was any) in respect of the
five
electrification sites, having regard to the quantity, quality and
any defects be referred to the Consulting Electrical Engineer
(herein referred to as the Third Respondent”) to determine.
ISSUES
19.
The issue is whether or not this Court can
set aside the appointment of the Consulting Electrical Engineer (“
the CEE”) and or
its findings.
20.
The other issue is whether or not there is
a contractual relationship between the Applicant and the First
Respondent and or between
the Applicant and the Second Respondent.
21.
The Court has to determine whether the
Applicant owes an amount of R3249 043.64 to the First Respondent or
whether such amount is
owed by the Second Respondent and not the
Applicant.
22.
The other issue is that can the Court grant
condonation of filing the First Respondent’s replying affidavit out
of time to the First
and Second Respondents’ answering
affidavit in the First Respondent’s  counter application.
23.
A further issue that the Court has to
determine is whether or not it can grant a monetary judgment in
favour of the First Respondent
in its counter  application with
regard to the main action, where the First Respondent is the
Plaintiff, the Applicant and the
Second Defendants in the main
action are the Applicant and the Second Respondent, respectively in
this application.
In
addition can this Court strike out paragraphs 21 to 55 of the Second
Respondent’s answering affidavit to the First Respondent’s
counter application.
SUBMISSIONS
25.
Adv. Kairinos SC, submitted on behalf of
the Applicant  that the Applicant was appointed by the Second
Respondent. There is dispute
as to in what capacity was the Applicant
appointed. It is to be determined whether the Applicant was appointed
as an agent or not.
26.
It was further submitted on behalf of the
Applicant that the First Respondent alleged that it was not paid. As
a result of non- payment
the First Respondent “downed tools”.
Subsequent to that the First Respondent then applied for liquidation
of the Applicant. This
was based on the fact that the Applicant
allegedly owed the First Respondent money. The Applicant refused to
pay the First Respondent
the money it demanded payment for.
27.
The submission made on behalf of the
Applicant  was that the Applicant did not appoint the First
Respondent, it is the Second
Respondent  who appointed the First
Respondent.
28.
There is no evidence that electrification
was installed by the First Respondent, so charged the Applicant. At
liquidation application
there was dispute of facts and as a result
the matter was referred to trial. The parties’ argument is  whether
the Third Respondent
was appointed as an expert, quasi- judicial or
arbitrator. The Applicant contends that the appointment of the Third
Respondent was
procedurally flawed and not in compliance with the
requirements of the parties’ agreement as set out in the pre- trial
minutes.
29.
The reason why the preceding submission was
made was because the President of the Consulting Engineer of South
Africa (“the CESA”)
did not make the appointment. The power of
the President was delegated to another person who in turn delegated
the appointment to
the parties.
30.
The CEE appointed was a Consulting
Engineering Firm and not Consulting Electrical Engineering. It was
further submitted that the appointment
of the Third Respondent be set
aside as the report is based on mistake.
31.
The submission on behalf of the Applicant
was that a  quantity and quality cannot be determined without
virtual inspection
of the work. As a result the report and findings
are erroneous. The Third Respondent misdirected itself as an expert
as there was
no physical inspection done.
32.
The Court can set aside the appointment of
the Third Respondent if the Applicant approached the Court to correct
the mistake. The
Applicant’s submission is that that the Third
Respondent’s appointment was that of an expert.
33.
A joint expert was appointed to curtail the
process instead of each party appointing its own expert. The parties
did not intend appointing
an arbitrator. Functions of an expert are
distinguished from that of an arbitrator. The expert will do their
own investigation unlike
the arbitrator.
34.
A submission was made on behalf of the
Applicant that there was a snag list drawn up because of defects.
There was evidence that the
expert merely took a desktop evaluation
of the amount owed to the First Respondent by considering the
documentation furnished to
him by all parties. It was submitted that
the expert did was is called “number crunching” exercise.
35.
Adv. De Beer submitted on behalf of the
First Respondent that the First Respondent installed electrical
services to the five villages
as indicated above. Due to lack
of payment the First Respondent abandoned the sites. Another entity
had to finalize the project
called Alpheu Electrical. Subsequent to
that the First Respondent instituted claim for three outstanding
invoices that the
Applicant refused to approve. It was submitted on
behalf of the First Respondent that the amount claimed still stand
and is owing.
36.
A further submission on behalf of the First
Respondent was that the First Respondent wants to be paid for the
work done. The determination
made by the Third Respondent is not only
binding on the parties but it is final. The Applicant agreed to the
appointment of the Third
Respondent and supported such appointment.
The Applicant cannot say that it  is aggrieved by the
appointment simply because
the Third Respondent did not deliver the
results that the Applicant wanted.
37.
An agreement was reached on who to appoint
by the parties. It was submitted on behalf of the First Respondent
that the Third Respondent
should not be viewed as an expert but
rather as a semi- arbitrator.
38.
There was a snag list prepared. Eskom
indicated that there were defects. However Eskom does not know who
caused the defects. The submission
on behalf of the First Respondent
was that the Applicant’s attempt to set aside the appointment of
the Third Respondent and its
determination is a clear attempt to
resile from the agreement. The Applicant’s application is devoid of
any allegation setting
out special circumstances justifying
detraction from the agreement.
39.
It was submitted on behalf of the First
Respondent that it is trite that any criticism in respect of the
appointment of an independent
party subsequent to an alternative
dispute resolution mechanism must be stated at the commencement of
such appointment.
40.
The Applicant and the Second Respondent
supported the appointment of the Third Respondent. The determination
was handed down
18 April 2019 a year later. The Applicant never
criticized or disputed the appointment of the Third Respondent. The
only reasonable
conclusion is that the Applicant is voicing its
dissatisfaction of the outcome of the determination.
41.
The Applicant should have instituted review
application to set aside the appointment of the Third Respondent.
Since the parties agreed
that the quantum be determined by the Third
Respondent and that the contracting parties shall be bound by the
determination. If it
is found that the decision is reviewable then
the Applicant  failed to make a case  for the determination
to be reviewed.
Therefore the provisions of the agreement stands and
remain uncontested.
42.
Adv. De Beer submitted that the Third
Respondent operated as a tribunal created by a contract. Neither the
Applicant  nor the
Second Respondent challenged any of the
provisions of the agreement on the ground of being against public
policy. There is no room
for a tacit importation of any rule of
natural justice into the agreement between the parties. The Applicant
had to show that the
express contractual provisions  had been
breached.
43.
There is no procedure in the agreement that
stated that the Third Respondent should do a physical inspection of
the work rendered
in respect of an invoice. Neither was there a
requirement that the Third Respondent should not do the assessment
through a desktop
exercise, auditing and scrutinizing all documents
available to it on claims. Paragraph 2.8 of the agreement
provides that:
“The CEE shall at all times be entitled to determine
the applicable procedures for his/her applicable determination of the
referred
issues”.
44.
The First Respondent instituted a counter
application for the confirmation of the Third Respondent’s
determination dated 18 April
2018 which was made in accordance with
the agreement. The First Respondent also submitted that it wanted to
struck out paragraphs
21 to 55  of the Second Respondent’s
answering affidavit to the First Respondent’s counter application.
45.
It was submitted that the counter
application is based upon the agreement reached between the parties
as couched in the relevant pre-
minutes. The sole purpose of the
agreement  was to curtail the issues between the parties in
respect of quantum of what is owing
to the First Respondent in the
main action.
46.
According to the submission made on behalf
of the First Respondent, it was contended that the Second Respondent
decided not to oppose
the main application, it only filed the
answering affidavit to the First Respondent’s counter application.
The majority  of
the allegations made by the Second Respondent
in its answering affidavit are irrelevant. The contents which stand
to be struck for
irrelevance are paragraphs 21 to 55 of the answering
affidavit of the Second Respondent.
47.
Adv. Malowa  submitted on behalf of
the Second Respondent that the Second Respondent did not oppose the
main application because
there was no relief sought against the
Second Respondent by the Applicant.  The Second Respondent is
involved because of the
counter application. The Second Respondent
should not be held liable by either the Applicant or the First
Respondent.
48.
The Applicant  and the Second
Respondent are the only parties who were involved in liquidation
application against each other.
If the Second Respondent was a party
to the construction contract or agreement with the Applicant and the
First Respondent it would
have been cited as a party in the relief
sought in the liquidation proceedings.
49.
In addition the Applicant did not involve
the Second Respondent in the liability for  payment of money by
the First Respondent
in its founding papers. It is only in the
Applicant’s heads of argument in the second or fourth paragraph
that the Applicant insinuate
that there was a contract between itself
and the Second Respondent acting as its agent.
50.
It was submitted on behalf of the Second
Respondent that there were no rights ceded to the First Respondent.
The submission on behalf
of the Second Respondent was that the
Applicant  failed to state exactly which rights were ceded. The
Applicant is not an agent
of the Second Respondent. There is a
contractual relationship between the Applicant  and the First
Respondent which is distinguishable
and independent from the Second
Respondent.
51.
The Applicant would still has his invoice
for service rendered even  in approving the First Respondent
invoice. The Applicant
was working independently to put it’s
signature to the invoice which signature is a “condition sine qua
non” to the payment
of money towards the First Respondent.
52.
The Second Respondent  was not
responsible for approval or inspection of construction work done.
There is  no invoice approved
by the Applicant  which is
left unpaid by the Second Respondent. The Second Respondent  has
already paid other contractors
to finalize same work that was
supposed to be completed by the Applicant and the First Respondent.
53.
Regarding the CEE appointment and findings
the process is
void ab initio
and it is proven to be wrongful by lack of substance within it. The
findings by the Third Respondent was done outside the mandate
given
to the CEE. It was thought that the Third Respondent is an Electrical
Professional Engineer which seem not to be the case.
The Third
Respondent was not appointed upon procedure agreed to by the parties.
54.
The Third Respondent was executing assigned
duty with mistake common to the parties. There are grounds to do away
with his appointment
and findings. The Third Respondent should have
known that assessment of quality, quantity and defect was critical
with physical assessment.
The Third Respondent should have withdrawn
from instruction or mandate if it realized that it can’t perform in
terms of the mandate
due to the factors beyond its control.
55.
The submission on behalf of the Second
Respondent was that Courts usually hold parties to be bound by
pre-trial minutes, the need
to set  aside the Third Respondent’s
appointment and findings  is different. The First Respondent
stated that there are
special circumstances that exist, the pre-trial
minutes may not be binding. The issue is not the binding of the
pre-trial minutes
but the finding emanating from the pre- trial
minutes.
56.
It was submitted on behalf of the Second
Respondent that the First Respondent’s intention to struck out
certain portions of the
Second Respondent’s answering affidavit is
not in line with the law and it will be prejudicial to the Second
Respondent not the
First Respondent. The Second Respondent opposed
the striking out of paragraphs 21 to 55 of its answering affidavit.
The
striking out of certain portions of the Second Respondent’s
answering affidavit may happen if the allegations are vague and
embarrassing irrelevant or to the prejudice of the First Respondent.
The First Respondent did not comply with Rule 23 (2). The
Second
Respondent was entitled to respond to the Applicant’s founding
affidavit and the First Respondent answering affidavit
wherein its
counter claim make allegations against it.
THE
LAW
Challenging
the findings of an expert or setting aside the appointment of an
expert
58.
Section 38
of the
Superior Courts Act 10of
2013
provides that the Constitutional Court and or in any civil
proceedings, any Division may with the consent of the parties refer
any
matter which requires extensive examination of records or a
scientific, technical or local investigation which in the opinion of
the Court cannot be conveniently conducted by it or any matter which
relates wholly or in part to accounts or any matter arising
in such
proceedings, for enquiry or report to a referee appointed by the
parties and the Court may adopt the report if such referee
either
wholly or in part or either with or without modification or may remit
such report for further enquiry or report or consideration
by such
referee or make such other order in regard thereto as may be
necessary or desirable.
59.
According to the
Arbitration Act 42 of 1965
, the arbitration process refers to
proceedings
conducted by an arbitration tribunal for the settlement by
arbitration of a dispute which has been referred to arbitration
in
terms of an arbitration agreement.
60.
Arbitration
agreement refers to
a
written agreement providing for the reference to arbitration of any
existing dispute or any future dispute relating to a matter
specified
in the agreement, whether an arbitrator is named or designated
therein or not.
61.
In casu the referee/expert was appointed by
the parties not by the Court. The principle is the same regarding the
parties’ view
of the referee/expert’s determination.
62.
The
position of a referee under
s 19bis
is, as the High Court correctly
found, similar to that of an expert valuator who only makes factual
findings but dissimilar to that
of an arbitrator who fulfils a
quasi-judicial function within the parameters of the
Arbitration
Act
42 of 1965
.
In
this regard, the dictum of Boruchowitz J in
Perdikis
v Jamieson
2002
(6) SA 356
(
W);
para 7,
is
apposite:
‘
It
was held in
Bekker
v RSA Factors
1983
(4) SA 568
(T)
that a valuation can be rectified on equitable grounds where the
valuer does not exercise the judgment of a reasonable man, that
is,
his judgment is exercised unreasonably, irregularly or wrongly so as
to lead to a patently inequitable result.’
I
was referred to the case of
Perdikis
v Jamieson
(supra) by Counsel for the Applicant.
63.
Counsel
for  the Applicant also referred me to
Estate
Milne v Donohoe Investments (Pty) Ltd
,
1967
(2) SA 359
(A)
at 373H – 374C, where
Ogilvie
-Thompson JA stated that:
‘
This
argument assumes something in the nature of an appeal to the
arbitrator against the decision of the auditor. That is, however,
not
the position. In making his valuation, the auditor hears neither
party. His is not a
quasi-
judicial
function. He reaches his decision independently on his knowledge of
the company’s affairs. His function is essentially
that of a valuer
(
arbitrator
,
aestimator
),
as distinct from that of an arbitrator (
arbiter
),
properly so called, who acts in a
quasi-
judicial
capacity. The distinction between
arbitrators
was
well known to our writers .... The
arbitrator
or
aestimator
need
not necessarily be an entirely impartial person. In discharging his
function he is of course required to exercise an honest
judgment,
the
arbtirium
boni viri
;
but a measure of personal interest in not necessarily incompatible
with the exercise of such a judgment.’
64.
In
Van
Heerden v Basson
1998
(1) SA 751
Hartzenberg
J referred to
Hurwitz
Hurwitz & Others NNO v Table Bay Engineering and Another!994 (3)
SA 449 (C)
at
457 A-C wherein the Court said: â€œ
do
not conceive it to be the law that, where a third party nominated by
the parties fixes a rent which is shown to be manifestly unjust,
the
contract ipso facto fails to the ground. Whether in any particular
case that will be the consequence will depend, so it seems
to me,
the subsequent actions of the parties. If a party signifies that he
will accept the determination of a court in lieu
of the third party's
determination, there is no good reason why he should not be bound to
do so thereafter He has agreed thereby
to a variation of the rent
fixing method originally agreed upon. But, if he declines to accept
such a determination by a court, I
do not think that he can or should
be compelled to do so. Why should he not be entitled to say, for
example, that he concedes that
the third party's determination is
indeed manifestly unjust and therefore not binding, but that he is
not prepared to become involved
in a litigious proceeding to
determine what the rent should be, and prefers to allow the lease to
lapse for want of the contractually
agreed determination."
65.
In
Wright v
Wright
2013 (3) SA 360
(GSJ), The Court
stated that: “It is significant, in this regard, that an
arbitrator, as contemplated in the
Arbitration Act, fulfils
a
quasi-judicial function whereas a valuator is required only to make a
finding. Similarly, a referee, appointed in terms s19bis
of the Act,
is required only to make a factual finding. A referee, unlike an
arbitrator, does not exercise a judicial or quasi-judicial
function.
Accordingly, the grounds upon which the award of an arbitrator and
the report of a referee may be challenged differ significantly.
In
this regard, a report of a referee as contemplated in s19bis may be
set aside if his or her judgment is exercised unreasonably,
irregularly or wrongly, whilst the award of an arbitrator, appointed
in terms of the
Arbitration Act, may
only be set aside on the limited
basis as provided for in
s 33
of the
Arbitration Act, which
includes
that an arbitrator has misconducted himself in relation to his duties
as an arbitrator; or has committed a gross irregularity
in the
conduct of the proceedings; or has exceeded his powers; or that the
award was improperly attained.
66.
The test applied for rectification of
an expert valuator's report, which is akin to that of a referee's
report, accords with the test
applied in
Estate
Young and Chaffer 1917NDP 244,
albeit
that the jury system has been discontinued in South Africa. A
referee's report, as contemplated in s19bis of the Act, is a
finding
of an expert appointed by the court, to investigate and provide a
report of his or her findings to the court on questions
of fact. A
court should, therefore, be 'extremely slow' to interfere with these
findings, unless it can be shown that the findings
are so
unreasonable, irregular or wrong, so as to lead to a patently
inequitable result.
67.
In
LTA
Construction Ltd v Minister of Public Works and Land Affairs
1992
(1) SA 837
(C)
at 847 D-I, 854 G-H). The court is not obliged to ratify a referee’s
report. It may take any of the following steps:(a) adopt
the report
wholly or in part with or without modifications; or (b) remit the
report for further enquiry or report or consideration
by the referee;
or (c) make such other order as may be necessary or
desirable.
Breach
of contract
68.
Rule 18 (6) of the Uniform Rules of
Court provides that: “
A party who in
his pleading relies upon a contract shall state whether the contract
is written or oral and
when, where and
by whom it was concluded, and if the contract is written a true copy
thereof or of the part relied on in the pleading
shall be annexed to
the pleading”.
69.
When
a breach of a contract occurs, the innocent contracting party has an
election: he or she may either abide by the contract and
enforce it
or cancel the contract
[1]
.
70.
In
Christie’s
Law
of Contract in South Africa
7
ed
[2]
, at 616 states:
‘
The
remedies available for a breach or, in some cases, a threatened
breach of contract are five in number. Specific performance,
interdict,
declaration of rights, cancellation, damages. The first
three may be regarded as methods of enforcement and the last two as
recompenses
for non-performance. The choice among these remedies
rests primarily with the injured party, the plaintiff, who may choose
more than
one of them, either in the alternative or together, subject
to the overriding principles that the plaintiff must not claim
inconsistent
remedies and must not be overcompensated.’
71.
There
are many cases in which it was held that if one party to the
agreement repudiates the agreement, the other party at his election,
may claim specific performance of the agreement or damages in lieu of
specific performance and that his claim will in general be
granted,
subject to the Court’s discretion
[3]
.
72.
Prima
facie
every
party to a binding agreement who is ready to carry out his own
obligation under it has a right to demand from the other party,
so
far as it is possible, a performance of his undertaking in terms of
the contract
[4]
.
73.
In
Govan
v Skidmore
[5]
, the
following principle was enunciated:
‘
In
finding facts or making inferences in a civil case, it seems to me
that one may, as Wigmore conveys in his work on evidence …
by
balancing probabilities select a conclusion which seems to be the
more natural or plausible conclusion from amongst several conceivable
ones, even though that conclusion may not be the only reasonable
one.’
The
Applicant ought to stand or fall by its founding affidavit
74.
In
Betlane
v Shelly Court CC
[6]
the
Court said: ‘It is trite that one ought to stand or fall by one's
notice of motion and the averments made in one's founding
affidavit.
A case cannot be made out in the replying affidavit for the first
time. In
De
Beer v Minister of Safety and Security and Another
[7]
,
where it was held that ‘It is trite law that an applicant must
stand or fall by his or her founding affidavit. The Applicant is
therefore not permitted to introduce new matter in the replying
affidavit. The Courts strike out such new matter. The above being
the
relevant principle, I am thus entitled to exclude any new material in
the replying affidavit insofar as it seeks to make out
a new case and
not simply replying to what is set out in the answering affidavit”.
75.
In
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) at para 47
the Supreme
Court of Appeal  held that,
it
is not proper for a Court in motion proceedings to base its judgment
on passages in documents which have been annexed to the papers
when
the conclusions sought to be drawn from such passages have not been
canvassed in the affidavits. A party cannot be expected
to trawl
through annexures to the opponent’s affidavit and to speculate on
the possible relevance of facts therein contained.
The
Court cannot deal with a matter that is not before it: Lis pendis
76.
It is trite law that the
principle of
lis
alibi pendens
has
four requirements namely: Pending litigations; between the same
parties or their privies; based on the same cause of action; in
respect of the same subject matter (
Eravin
Construction CC v Twin Oaks Estate Development (Pty) Ltd
(1573/10)
[2012]
ZANWHC 27
(29 June 2012).
77.
In
Nestlé
(South Africa) (Pty) Ltd v Mars Inc
[8]
,
the SCA describe the features of the plea
lis
alibi pendens
as follows: ’
The
defence of
lis
alibi pendens
shares
features in common with the defence of
res
judicata
because
they have a common underlying principle, which is that there should
be finality in litigation.  Once a suit has been
commenced
before a tribunal that is competent to adjudicate upon it, the suit
must generally be brought to its conclusion before
that tribunal and
should not be replicated (
lis
alibi pendens
).
By the same token the suit will not be permitted to be revived once
it has been brought to its proper conclusion (
res
judicata
).
The same suit, between the same parties, should be brought only once
and finally.’
Application
to strike  out paragraphs 21 to 55 of the Second Respondent’s
answering affidavit
78.
Rule 6 (15) provides that the Court may on
application order to be struck out from any affidavit any matter
which is scandalous, vexatious
or irrelevant, with an appropriate
order as to costs, including costs as between attorney and client.
The Court shall not grant the
application unless it is satisfied that
the applicant will be prejudiced in his case if it be not granted.
79.
In
Helen
Suzman Foundation v President of the RSA and others
[9]
,
the Court held that: ‘Is the additional evidence scandalous,
vexatious or irrelevant? Two requirements must be met before a
striking
out application can succeed: (i) the matter sought to be
struck out must be scandalous, vexatious or irrelevant; and (ii) the
court
must be satisfied that if such a matter is not struck out the
party seeking such relief would be prejudiced.
“
Scandalous”
allegations are those which may or may not be relevant but which are
so worded as to be abusive or defamatory; a “vexatious”
matter
refers to allegations which may or may not be relevant but are so
worded as to convey an intention to harass or annoy; and
“irrelevant”
allegations do not apply to the matter in hand and do not contribute
one way or the other to a decision of that
matter. The test for
determining relevance is whether the evidence objected to is relevant
to an issue in the litigation’.
80.
If
it were not for the requirement the offending material should be
prejudicial most applications to strike out scandalous, vexatious
or
irrelevant materials could have been on notice only.  However
prejudice need to be alleged and proved, which in turn means
that
evidence is required and that the other party has to be given an
opportunity to answer the factual allegations made with regard
to
the. question of prejudice
[10]
.
Dispute
of facts
81.
In
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[11]
Heher
JA
stated;
“
recognising
the truth almost always lies beyond mere linguistic
determination the courts have said that an applicant who seeks
final
relief on motion must, in the event of conflict, accept the version
set up  by his opponent unless the latter’s allegations
are,
in the opinion of the court, not such as to raise a real, genuine or
bona fide dispute of fact or are so far-fetched clearly
untenable
that the court is justified in rejecting them merely on the papers;
Plascon-
Evans Paints Ltd v Van Riebeeck Paints (Pty)Ltd
[1984] ZASCA 51
;
1984
(3)
SA 623
(A) at 634 that E – 635 C…”.
82.
Erasmus confirms that the purpose of Rule
37 is to promote the effective disposal of litigation: “The main
object of the rule is
investigating ways to avoiding costs at a stage
where it can still be avoided. It is intended to expedite the trial
and to limit
the issues before the Court. The rule is intended
primarily to curtail the duration of a trial, narrow down issues, cut
costs and
facilitate settlements.” ( 7 Erasmus Superior Court
Practice Vol 2 at D1 – 496).
83.
The Supreme Court of Appeal confirmed in
Filta – Matrix (Pty) Ltd v Freudenberg & Others:
[1997] ZASCA 110
;
[1998]
1 All SA 239
(A)
; that, “(t)o
allow a party, without special circumstances, to resile from an
agreement deliberately reached at a pre- trial conference
would be to
negate the object of Rule 37, which is to limit issues and to curtail
the scope of the litigation.”   ([1998]
1 All SA 239
(SCA) at 247 e-f; MEC for Economic Affairs, Environment and Tourism :
Eastern Cape v K Kruizenga & Henque 2189 CC t/a Wimrie
Boerdery
(169/2009)
[2010] ZASCA 58
(1 April 2010).
APPLICATION
OF THE LAW TO THE FACTS
84.
In light of the definition of the arbitration
process and agreement, the process of appointing a third party
in
casu
, to resolve issues does not fall
within the definition of arbitration process.
85.
There was no submission made that any agreement
between the parties had an arbitration clause where the parties were
obliged to refer
the dispute to an arbitrator.
86.
It is therefore not correct to submit that the
Third Respondent was appointed as an arbitrator or semi- arbitrator.
Based on the law
quoted above, the Third Respondent was appointed as
an expert.
87.
The submission that the appointment of the CEE should be set aside,
poses challenges. The reason being that the Applicant and
the Second
Respondent were  involved in the appointment of the CEE. They
were given an opportunity to choose between
seven
independent Consulting Engineers as option for the appointment of the
CEE. The Applicant and the Second Respondent opted for
the Third
Respondent as their choice.
88.
If the Third Respondent  was chosen without the knowledge and
consent of the Applicant and the Second Respondent, the
issue of the
flawed appointment would have come into the picture.
89.
The fact that the President did not  appoint the CEE as expected
cannot be challenged  after the fact. Both the Applicant
and the
Second Respondent participated in the appointment of the CEE. The two
parties should have challenged the procedure at the
beginning and not
agree to the appointment only to challenge such appointment later.
90.
I agree with the submission made on behalf of the First Respondent
that the Applicant and the Second Respondent supported the
appointment of the Third Respondent. Both the Applicant and the
Second Respondent were kept updated about the developments regarding
the appointment of the Third Respondent and they both participated.
91.
The report of an expert may be set aside if his or
her judgment is exercised unreasonably, irregularly or wrongly.
For an expert determination  to be underpinned by proper
reasoning, it must be based on correct facts. The proper facts can
be
deduced once proper inspection of the facts including physical
inspection of the sites have been acquired.
92.
Incorrect
facts militates against proper reasoning and the correct analysis of
the facts is paramount for proper reasoning, failing
which the Court
will not be able to properly assess the cogency of the
determination. Proper facts can be attained when a holistic
approach has been adopted by using both desktop,  physical
inspection of the sites and any other factor that the expert deem
fit
to take into consideration.
93.
The Applicant and the Second Respondent could not
have challenged the Third Respondent’s findings until a
determination was made.
It would be only after a determination was
made that the Applicant and the Second Respondent had grounds to
challenge  the Third
Respondent’s determination.
94.
Both the Applicant and the Second Respondent have
issue  with the findings of the Third Respondent and want same
to be set aside.
I am of the considered view that the Third
Respondent should have conducted physical inspection for it to arrive
at an informed conclusion
in order to compile an informed rand
holistic report/ determination.
95.
The Applicant failed to attach the alleged
agreement between the Second Respondent and it as the Second
Respondent’s agent.
This is in conflict with Rule 18 (6) of
the Uniform Rules of Court. If the Applicant in deed had an agreement
where with the Second
Respondent, where the Applicant is considered
an agent, the Applicant should have sued the Second Respondent for
breach of agreement.
96.
Even though the
Second Respondent did not oppose
the main application, it is a fact that  the first time the
Applicant mentioned that there is
an agreement between it and the
Second Respondent was in its heads of argument.
97.
As mentioned above, a party must stand or
fall by its founding papers.
The
Applicant failed to make out a proper case on the founding affidavit
and notice of motion, with regard to the fact that the Applicant
has
a cession agreement with the Second Respondent  and then seeking
to make out a proper case in the heads of argument.
98.
The First Respondent failed to attach an agreement
it allegedly has with the Applicant. Instead the First Respondent
attached an appointment
letter dated 24 April 2012 marked annexure
“A”. It is trite that a letter of appointment is not a contract
or an agreement.
There  has to be proof that there was in
fact consensus
ad idem
among the parties.
99.
In the appointment  letter it is stated
that the conditions applicable to the contract between the Applicant
and the First Respondent
are set out in the NEC Engineering
Construction short contract and Mkhondo Municipality Supply Chain
Management (“SCM”) policies.
Neither the said short contract nor
the  SCM policies were attached.
100.
This Court was not in a position to determine the
exact contractual relationships between the Applicant, First and
Second Respondents
without access to the relevant contracts.
101.
The First Respondent asked this Court to grant it
an order in the amount of R3249 043.64. Both the Applicant and the
Second Respondent
dispute the submission that the First Respondent is
owed the said amount. There is dispute with regard to  whether
or not the
Applicant or the Second Respondent or both are liable to
the First Respondent. The conflict as it stands
in
casu
, cannot be decided on papers.
102.
The
Plascon Evans Rule holds that when factual disputes arise in
circumstances where the Applicant seeks final relief, the relief
should be granted in favour of the Applicant only if the facts
alleged by the Respondent in its answering affidavit, read with the
facts it has admitted to, justify the order prayed for
.
A
Court must be convinced that the allegations of the Respondent/s ( in
casu being the Applicant and the Second Respondent)
are so
far-fetched or clearly untenable that it is justified in rejecting
them merely on the papers and without requiring oral evidence
to be
led.
103.
It
is my view that the Court cannot grant the monetary order prayed for
by the First Respondent in its counter application as it stands.
104.
The
counter  application cannot be decided without hearing of oral
evidence. The Plascon-Evans Rule will not resolve the dispute
because
of the degree of conflict  between the parties’ versions of
events. This Court would have ordered that Rule 6(5)(g)
of the
Uniform Rules of Court be  followed, which includes the referral
of the disputed portion of the matter to oral evidence.
There is an
action pending with regard to the same issue.
105.
The First Respondent in its application
to strike out paragraphs 21 to 55 of the Second Respondent’s
answering affidavit failed
to comply with Rule 6(15).
This
Court cannot   grant the application unless it is satisfied
that the First Respondent  will be prejudiced in its
case
if paragraphs 21 to 55  of the Second Respondent’s answering
affidavit are not struck out.
106.
The First Respondent  failed to allege
and prove prejudice in its application to struck out. I disagree with
the Second Respondent’s
submission  that the application
should have been in terms of Rule 23(2). An application in terms of
Rule 23 (2) does not have
to be on affidavit, it can be on notice
only. The First Respondent had a choice to use Rule 23 (2) or Rule
6(15). The only problem
is that the First Respondent did not plead
prejudice on affidavit.
107.
I have considered all the submissions made
by the Applicant, First and Second Respondents including the
authorities they relied on.
108.
In the premises I therefore make the
following order:
108.1
The decision of the CEE/ Third Respondent  is set aside and the
existing CEE/ Third Respondent must value the unpaid work
(if any)
with the benefit of the physical inspection  assessment in order
to determine their quantity, quality and whether they
were free of
defects in order to make a proper decision as to the amount owed to
the First Respondent (if any).
108.2
The Applicant’s application to set aside the appointment of the
CEE/ Third Respondent as the independent Consulting Civil
Engineer as
envisaged in the pre-trial minutes signed by the Applicant, First and
Second Respondents on 1 July 2016 in the action
between them in this
Court under case number 40779/2014  is dismissed with costs.
108.3
Condonation for filing the replying affidavit out of time by the
First Respondent is granted.
108.4
The First Respondent’s application to struck out paragraphs 21 to
55 of the Second Respondent’s answering affidavit to the
First
Respondent’s counter claim is dismissed with no order as to costs.
108.5
The First Respondent’s counter – application is dismissed with
costs.
E.K.
Tsatsi
Acting
Judge of the High Court
For
the Applicant: Adv. G. Kairinos SC
Instructed by: W.P. Steyn
Attorneys
For the First Respondent: Adv. J. De Beer
Instructed
by: Du Plessis Mundt Attorneys
For the Second Respondent: Adv. M.
Malowa
Instructed
by: TMN Kgomo and Associates Inc.
Date
of hearing: 31 May 2021
Date
of judgment: 8 July 2021
This
judgment was handed down electronically by circulation to the
parties’ representatives via email and by uploading on case lines.
1.
Culverwell & another v Brown
1990 (1) SA
7
(A) at 16J-17A.
2.
G B Bradfield
Christie’s
Law of Contract in South Africa
7
ed (2016) at 616.
3.
Haynes
v Kingwilliamstown Municipality
1951
(2) SA 371
(A); Rens
v Coltman
[1995] ZASCA 118
;
1996 (1) SA 452
(A).
4.
Farmers’
Co-operative Society(Reg)  v Berry
1912
AD 343
.
5.
1952
(1)SA732 (N).
6.
2011
(1) SA 388
(CC) para 29.
7.
(2011) 32 ILJ 2506 (LC).
8.
(333/99)
[2001] ZASCA 76
; [ 2001] 4 All
SA
315
(A) (31 May 2001).
9.
Helen Suzman Foundation v President of the
RSA and others
2015 (2) SA 1
(CC).
10.
CG Marnewick: “Litigation Skills for South African lawyers; Second
Edition: 2007: P151.
11.
[
[2008] ZASCA 6
;
2008] 2 All SA 512
(SCA).