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[2021] ZAGPJHC 416
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PUTCO (Pty) Ltd v City of Johannesburg Metropolitan Municipality and Others (21/31098) [2021] ZAGPJHC 416 (26 August 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 21/31098
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: YES
REVISED:
YES
Date:
26 August 2021
In
the matter between:
PUTCO
(PTY)
LTD
Applicant
and
CITY
OF JOHANNESBURG METROPOLITAN
MUNICIPALITY
1
st
Respondent
THE
SOUTH AFRICAN NATIONAL TAXI COUNCIL
2
nd
Respondent
ALEXANDRA,
RANDBURG, MIDRAND, SANDTON
TAXI
ASSOCIATION
3
rd
Respondent
ALEXANDRA
TAXI ASSOCIATION
4
th
Respondent
IVORY
PARK TAXI
ASSOCIATION
5
th
Respondent
MIDRAND
TAXI
ASSOCIATION
6
th
Respondent
RABIE
RIDGE TAXI
ASSOCIATION
7
th
Respondent
RANDBURG
LOCAL AND LONG DISTANCE
TAXI
ASSOCIATION
8
th
Respondent
MEC
FOR ROADS AND TRANSPORT,
GAUTENG
9
th
Respondent
JUDGMENT
MUDAU,
J:
[1]
This application has been brought on an urgent basis in accordance
with
Rule 6(12) of the Uniform Rules of Court. Putco (Pty) Limited
(‘Putco’) launched this application against the first
respondent, the City of Johannesburg Metropolitan Municipality (‘the
City’); the South African National Taxi Council
(second
respondent); groupings of minibus taxi associations (third to eighth
respondents) and the MEC for Roads and Transport,
Gauteng (ninth
respondent) cited as a nominal respondent for the Department of Roads
and Transport, Gauteng Province (‘GDRT’).
[2]
The City is
a Metropolitan Municipality establish in terms of the Local
Government Municipal Structures Act.
[1]
The second to eighth respondents have not participated in these
proceedings. The ninth respondent filed a notice to abide the
decision of this court. The application is opposed by the City. Putco
seeks an interdict against the City incorporating the new
bus
operating company and concluding or implementing any agreement with
the taxi associations about their allocation of shares.
[3]
Paragraph 2 of Putco’s Notice of Motion is relevant as it
reads:
‘
2. Pending the
final outcome of the dispute resolution process between the Applicant
and the First Respondent under
section 46
(2) of the
National Land
Transport Act of 2009
, including, under Regulation 7 of the National
Land Transport Regulations on Contracting for Public Transport
Services, 2009 published
under GN R877 in GG 32535 of 31 August 2009
(“the Regulations”), mediation and, if mediation fails, a
referral to the
appropriate court for settlement of the dispute, the
first respondent is interdicted from:
2.1 incorporating a
bus operating company or other corporate entity for the purposes of
Phase 1C(a) of the first respondent’s
integrated public
transport operational plan (also known as “Rea Vaya”);
and
2.2 negotiating,
concluding and/or giving effect to or implementing any agreement with
any of the Second to Eighth respondents or
any of them in combination
regarding their participation in, or shareholding of, a bus operating
company or other corporate entity
Incorporated for the purposes of
Phase 1C(a) of the First Respondent’s Integrated Public
Transport Operational Plan (also
known as “Rea Vaya”)’
.
[4]
The facts are largely common cause. Putco has been operating
scheduled
subsidized bus services in the City and large parts of
Gauteng for many years. Putco provides these services in terms of an
interim
contract number 48 of 1997 entered into on 26 March 1997
(subsequently amended on 6 August 1997 and 7 December 1997
respectively)
between Putco and the GDRT. This application arises
against the background of on-going efforts on the part of the City to
establish
an integrated public transport network (‘IPTN’)
in its metropolitan area and the relevant negotiations aimed at
achieving
this goal.
[5]
The City
has developed the Integrated Public Transport Operational Plan
(IPTOP) with a singular aim of integrating all existing
methods of
public transport into one network, under the umbrella ‘Rea Vaya
Rapid
Bus System’, which is being
implemented
in phases and on certain identified routes within the Municipality of
Johannesburg.
This is sanctioned by the
National Land Transport Act
(‘the
NLTA’).
[2]
”The NLTA repealed and replaced the National Land Transport
Transition Act
[3]
,
with the aim of furthering the process of transforming and
restructuring the national land transport system. The City is rolling
out Rea Vaya bus routes in phases as part of its IPTOP. The first two
phases, Phase 1A and Phase 1B are done. Rea Vaya buses snake
through
Soweto and the Johannesburg CBD, their stops dotted along a London
Underground-like map. By way of example, Putco became
a 26%
shareholder in the bus operating company that was incorporated for,
and that currently operates the Phase 1B Rea Vaya bus
service.
[6]
Phase 1C, which is central to the current dispute is up next for
implementation.
It will run from the CBD to Sandton along Louis Botha
Avenue in an area called North East Quadrant. The City plans to
incorporate
the bus operating company in October this year. To this
end, the City has been negotiating with affected parties such as taxi
operators
and the applicant to remove or reduce their operational
services in exchange for shares in the Rea Vaya bus operating company
since
2017. A dispute has arisen between the applicant on the one
hand, and the City in the course of their negotiations, which has
reached
a stalemate.
[7]
Negotiations between the City and Putco broke down because they could
not agree on criteria for determining how the new Rea Vaya routes
will affect Putco’s existing route from Soweto to Sandton,
the
so-called “affectedness criteria”. Putco is unhappy that
its level of “affectedness” has been determined
by the
City to be 0.27%, which accordingly constitutes its shareholding
percentage based on the outcomes of certain surveys conducted.
The
City has already agreed with the taxi associations about how many
shares they will get in the new company.
[8]
Putco, as indicated, asks for an interdict against the City
incorporating
the new bus operating company and concluding or
implementing any agreement with the taxi associations about their
allocation of
shares. Putco contends that if the City incorporates
the new bus operating system and allocates shares to the taxi
associations,
there will be no shares left for Putco even if Putco
ultimately succeeds in its dispute with the City. It argues further
that it
will also be left out of important management decisions.
Putco contends further that the balance of convenience favours
interim
relief and that it has no alternative remedy. It maintains
that it has a clear statutory right to invoke the dispute resolution
process in section 46 of the NLTA, read with Regulation 7 of its
regulations. Putco submits that section 46 and its tailored dispute
resolution mechanism applies to its dispute with the City.
Legislative
background
[9]
The NLTA
contains elaborate provisions allocating
various responsibilities to the three spheres of government.
Consistent with the constitutional imperative of the division
of power between the national, provincial and local governments, the
NLTA defines a “
contracting authority”
to mean the National Department of Transport, a province or a
municipality
.
[10]
In terms of s 11(1)(c)(xxvi) for example,
the municipal sphere is responsible, inter alia, for
‘
concluding…negotiated
contracts contemplated in s 41(1) with operators for services within
their areas
’. Section 41 provides
as follows:
“
(1) Contracting
authorities may enter into negotiated contracts with operators in
their areas, once only, with a view to—
(a) integrating
services forming part of integrated public transport networks in
terms of their integrated transport plans;
(b) promoting the
economic empowerment of small business or of persons previously
disadvantaged by unfair discrimination; or
(c) facilitating the
restructuring of a parastatal or municipal transport operator to
discourage monopolies.
(2) The negotiations
envisaged by subsections (1) and (2) must where appropriate include
operators in the area subject to interim
contracts, subsidised
service contracts, commercial service contracts, existing negotiated
contracts and operators of unscheduled
services and non-contracted
services.
(3) A negotiated
contract contemplated in subsection (1) or (2) shall be for a period
of not longer than 12 years.
(4) The contracts
contemplated in subsection (1) shall not preclude a contracting
authority from inviting tenders for services forming
part of the
relevant network.
(5) Contracting
authorities must take appropriate steps on a timeous basis before
expiry of such negotiated contract to ensure that
the services are
put out to tender in terms of section 42 in such a way as to ensure
unbroken service delivery to passengers.”
[11]
In contrast, on existing contracting arrangements
section 46 of the NLTA provides, in relevant parts as follows:
“
(1) Where there
is an existing interim contract, current tendered contract or
negotiated contract as defined in the Transition Act
in the area of
the relevant contracting authority, that authority may—
(a) allow the contract
to run its course; or
(b) negotiate with the
operator to amend the contract to provide for inclusion of the
operator in an integrated public transport
network; or (c) make a
reasonable offer to the operator of alternative services, or of a
monetary settlement, which offer must
bear relation to the value of
the unexpired portion of the contract, if any.
(2) If the parties
cannot agree on amendment of the contract or on inclusion of the
operator in such a network, or the operator
fails or refuses to
accept such an offer, the matter must be referred to mediation or
arbitration in the prescribed manner to resolve
the issue.
(3) The Minister may
make regulations providing for the transition of existing contracting
arrangements and the transfer of the
contracting function in terms of
this section or section 41, including the transfer or amendment of
existing permits or
operating licences to give effect to its
provisions in the case of an assignment under section 11(2) …”.
[12]
In turn,
Regulation 7 prescribes the “mediation” process mentioned
in section 46(2). It is an expedited process that
must end if there
is no mediated settlement within 60 days. Then, either party may
“institute proceedings in the appropriate
court for settlement
of the dispute”.
[4]
[13]
According to Putco, it does not matter that its contract is with the
Provincial government.
What matters is that Putco’s contract is
an “existing interim contract” and that Putco’s
routes under its
contract take place “in the area of the
relevant contracting authority”, being the City of
Johannesburg. It contends
that the better interpretation is that
“negotiations” under section 41 are the same
“negotiations” referred
to in section 46(1)(b). It
contends that the City’s offer to Putco of a paltry number of
shares in the new bus operating
company, though inadequate, amounts
to an “offer…of a monetary settlement”, as
envisaged in section 46(1)(c).
Putco contends further that to use the
words in section 46(2), the City and Putco “
cannot agree on
amendment of the contract or on inclusion of the operator in such a
network
” and Putco has “
refuse[d] to accept”
the City’s offer of a “
monetary settlement
”
in the form of shares in the bus operating company.
[14]
According to the City however, the contract negotiations between the
parties are not governed
by the provisions of section 46 of the NLTA
but are subject to section 41 thereof. Section 41, the City argues,
was intended to
facilitate the conclusion of new contracts and
transformation of the transport industry to include persons or
entities that were
previously excluded. If any party is not satisfied
with the terms of the new contract it may refuse to participate in
the proposed
contract for a fixed period of 12 years. Section 41, as
the parties agree, has no dispute resolution process.
[15]
The City contends that section 46 (2) relied upon by Putco finds no
application as the
City has no existing contract with it. Apart from
the considerations relating to the balance of convenience, the
application was
opposed on the basis of lack of urgency, the absence
of any prima facie right, no well-grounded fear of
irreparable harm,
and the presence of alternative remedies in due
course. Counsel for the City submitted that Putco failed to prove
that it has a
right that was violated. In addition, that the balance
of convenience does not favour the granting of an interim interdict.
Discussion
[16]
In order to
succeed Putco has to satisfy the authoritative requirements that must
present before an interim interdict can be granted.
What needs to be
established for the application to succeed is a prima facie right
even if it is open to some doubt, a reasonable
apprehension of
irreparable and imminent harm to the right if an interdict is not
granted, the balance of convenience must favour
the granting of the
interdict, and Putco as the applicant, must have no other reasonable
remedy.
[5]
[17]
This
application boils to down to a singular issue, whether section 41 or
46 of the NLTA finds application in the stalemate between
the
parties. lt is not disputed that the City does not have an existing
contract with Putco, but with the Provincial department.
This
question was settled in
Golden
Arrow Bus Services (Pty) Ltd v City of Cape Town and Others
[6]
,
a
matter with facts strikingly similar to those in
casu
.
The SCA held, as pointed out earlier, the determination of the appeal
depends on the construction of ss 41 and 46 of the NLTA
and of the
NLTA Regulations. As the SCA stated:
“
These
sections deal with entirely different situations. Section 46
regulates the position where there are ‘Existing contracting
arrangements’. So the addendum to which GABS and the City are
party is subject to its provisions. Section 41 deals with ‘Negotiated
contracts’, and therefore governs contracts to be entered into
after the commencement of the NLTA between the City and vehicle
operator companies such as GABS. That section itself provides that
the City may negotiate a contract with an operator only once,
and
that for a maximum period of 12 years. It thus allows a deviation
from the government norm in respect of private services,
which is
that procurement is put out to tender. In effect, it facilitates the
quick implementation of a transport system within
a municipality”.
[7]
And
importantly:
“
that the
parties to the contracts envisaged by s 46 already have rights:
the
section does not deal with contracts that have yet to be concluded
(although it does make provision for the inclusion of an
operator in
an existing contract).
So
the resort to mediation or arbitration is not to find a way of
creating or imposing contracts on the parties: it is for the purpose
of resolving disputes that may arise when changes to vested rights
are proposed. Nonetheless GABS argued that because it was a
party to
an existing contract with the City (the addendum) it was entitled to
rely on s 46(2) in requiring the City to embark upon
a mediation, and
(at least before the hearing of the appeal) if that failed, to
arbitration so that an arbitrator would determine
the terms of the
negotiated contract”.
[8]
(My underlining).
[18]
Regulation 7 relied upon by Putco governs the mediation process
following disagreements
between the parties as intended in section
46(1). Reliance by Putco on a remedy as envisaged in section 46(2) is
totally misplaced.
It deals with existing contracting arrangements,
in this instance between the Province and Putco. To permit its
invocation to the
current impasse between the parties would be to
impose terms on the intended contract via the back door which is not
only inimical
to the scheme of section 41 as Griesel J (sitting as
the court of first instance) found, but section 46 as well. As
Griesel J found
in relation to the City of Cape Town, the approach
which I equally adopt, the City of Johannesburg as a contracting
authority in
terms of the NLTA is not precluded from concluding a
section 41 contract “in the same area or same route”
where Putco
has an existing contract (Regulation 2 (1) (a)).
[19]
The applicant has failed to prove that it has any rights that have
been violated and worthy
of protection by this court. The application
is not urgent inasmuch as Putco has failed to show that the prima
facie right
relied upon is of such a nature that, if not
protected by an interim order now, irreparable harm would result to
them, which harm
cannot be reasonably addressed in the future on the
basis of an existing contract with the Province.
[20]
Granting
the relief sought by Putco will offend against the trite principle of
the doctrine of privity of contracts by parties.
[9]
I find that there is no privity of contract between the City and
Putco flowing from the latter’s contractual relationship
with
the Province. Equally, section 46 finds no application against the
ninth respondent as the current dispute regarding a new
contract has
nothing to do with it.
[21]
There is no
suggestion made that the Province ceded its rights and obligations
regarding the existing contract with Putco, to the
City. The legal
consequences of a cession are trite: a non-party to a contract
becomes a party to the rights thereto by way of
cession.
[10]
Putco and the Province have the benefit of their respected rights in
relation to Putco’s existing routes as per their contract.
The
balance of convenience overwhelmingly favours the refusal of interim
relief in order that the City concludes its section 41
agreements
timeously for it to fulfil its statutory mandate as envisaged in
section 40 of the NLTA to integrate transport services
for the
benefit of the general public.
[22]
It follows, accordingly, that this application lacks merit. Under all
the above-mentioned circumstances,
the following order is made:
Order
[1]
The application is dismissed with costs, including those of two
counsel.
T
P MUDAU
JUDGE
OF THE HIGH COURT
Appearances:
For
the Applicant: Adv. A E Franklin SC with Adv J
Mitchell
Instructed
by:
Bowman Gilfillan Inc.
For
the City:
Adv. S. V Notshe SC with Adv. M Kutta
Instructed
by:
Poswa Inc.
Date
of hearing: 13 August 2021
Date
of judgment: 26 August 2021
[1]
117 of 1998.
[2]
5 of 2009. Section 40 of the NLTA requires a municipality, among
other things, to ‘
take
steps as soon as possible…to integrate services subject to
contracts in their areas, as well as appropriate uncontracted
services, into the larger public transport system in terms of
relevant integrated transport plans
’.
[3]
Act 22 of 2000.
[4]
Regulation 7 (15)
[5]
Setlogelo
v Setlogelo
1914 AD 221
at 227; see also Webster v Mitchell
1948
(1) SA 1186
W.
[6]
[2014] 1 All SA 627 (SCA).
[7]
At para 11.
[8]
At para 14.
[9]
Cosira
Developments
(Pty) Ltd v Sam Lubbe Investments CC t/a Lubbe Construction and
Others
2011 (6) SA 331
(GSJ) at 336B.
[10]
See generally Lief NO v Dettmann
1964 (2) SA 252
(A)