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[2019] ZAFSHC 242
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MIIB Business Technologies (Pty) Ltd v Mangaung Metropolitan Municipality (317/2018) [2019] ZAFSHC 242 (19 December 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number
: 317/2018
In
the matter between:
MIIB
BUSINESS TECHNOLOGIES (PTY)
LTD
Plaintiff
and
MANGAUNG METROPOLITAN
MUNICIPALITY
Defendant
HEARD
ON
:
5 and 6 NOVEMBER 2019
JUDGMENT
BY
: LOUBSER, J
DELIVERED
ON
: 19 DECEMBER
2019
[1]
The Plaintiff in this action is claiming an amount of R 6 959
814 damages from the Defendant for breach of contract. In
its Plea,
the Defendant denied any breach of contract, and included a Special
Plea of prescription. The Special Plea was not dealt
with at the
inception of the proceedings, since the Defendant elected to hear the
evidence of the Plaintiff first before it would
decide whether to
persist with the plea of prescription or not.
[2]
The Plaintiff called only one witness to testify, namely its managing
director, Mr. Jos Badimo. Thereafter the Plaintiff closed
its case,
whereupon Mr. Rautenbach, appearing for the Defendant, applied for
absolution from the instance in terms of the provisions
of Uniform
Court Rule 39(6). He advanced two grounds for his application, namely
that the claim of the Plaintiff had already prescribed,
and that the
Plaintiff had failed to show that it suffered any damages resulting
from the alleged breach of contract. In view of
the apparent
contentiousness of the grounds for the application, I requested the
parties to file heads of argument. The Defendant
filed its heads on
14 November 2019 and the Plaintiff filed its heads on the 20 November
2019. This Judgment therefore only concerns
the application for
absolution.
[3]
In applications for absolution the Court has a discretion to grant or
refuse absolution from the instance
[1]
.
The test to be applied by the court at this stage of the trial is
whether there is evidence upon which a court might reasonably
find
for the Plaintiff. Another approach is to enquire whether the
Plaintiff has made out a
prima
facie
case
[2]
.
[4]
As mentioned already, the claim is for breach of contract. Mr. Badimo
handed in the contract concerned, which is a contract
between the
Naledi Local Municipality and the Plaintiff for the installation and
maintenance of an integrated financial management
system. In 2016 the
Naledi Local Municipality was taken over by the Mangaung Metropolitan
Municipality with all its liabilities,
which explains why the latter
is the Defendant in the action and not Naledi, which is no more in
existence. The contract is a bulky
document and it would not serve
any purpose to repeat the contents thereof in this Judgment. I
propose to refer only to those clauses
which are relevant to the
present enquiry.
[5]
The contract was signed by the parties on 16 April 2010, and in
clause 5 thereof it is stipulated that the contract was commencing
on
1 April 2010 and that the duration of the contract would be for a
period of five years. In terms of clause 24 thereof, the fees
to be
charged by the Plaintiff (service provider) will be based on a fixed
monthly fee of R 95 000-00, starting on 30 April
2010. Upon
every month end, the service provider shall issue an invoice in an
amount equal to R 95 000-00, and payment of
the invoice will be
effected by the Defendant within five days from the receipt of a
correct and original invoice.
[6]
Mr. Badimo testified that the Plaintiff has complied with all
its obligations in terms of the contract, but that it was
only paid
the first invoice of R 95 000-00, which was issued by the
Plaintiff at the end of April 2010. Although the Plaintiff
went on to
issue invoices at the end of each of the following months, no further
payments were made by the Defendant. Then, all
of a sudden, the
Plaintiff received a letter dated 1 November 2010 from Naledi
informing that it came to the attention that there
were two companies
appointed to conduct similar tasks for the same period, namely Samras
and the Plaintiff. Since Naledi wanted
to investigate the issue, The
Defendant was requested to immediately vacate the premises.
Apparently nothing happened in respect
of the allegation of two
companies for some time, and a period of correspondence between the
parties and unsuccessful meetings
with government role players
followed. During this period, Mr. Badimo was assured by Naledi that
they wanted to resolve the issue.
[7]
When the matter did not become resolved, the Plaintiff could not wait
any longer, and on 13 June 2011 it requested that its
claim be
resolved by arbitration to be administered by AFSA. The request was
granted by AFSA, and Plaintiff paid the administration
fee
subsequently. Soon thereafter, however, the attorneys of Naledi
requested the Plaintiff to hold the arbitration process in
abeyance,
because Naledi wanted to amicably resolve the dispute. Another period
of correspondence and waiting on the part of the
Plaintiff ensued.
[8]
Then, on 15 September 2011, the Plaintiff received a letter from
Naledi’s attorneys, claiming that the contract in question
was
unlawful and that it should be set aside and be declared
null
and
void
. This letter ended with the request that an
alternative date for the pre-arbitration meeting be agreed upon in
the light thereof.
According to Mr. Badimo, this letter came as a big
shock to him. The next thing of importance that happened was the
filing of a
Notice of Motion by the Naledi Municipality on 5 December
2011 in the Free State High Court seeking an order that the contract
in question be declared invalid, unlawful and unenforceable. This
application was duly opposed by the Plaintiff, but it was never
set
down for hearing by Naledi.
[9]
In cross-examination and then in re-examination, Mr. Badimo testified
that the single payment that was made by Naledi for the
month of
April 2010, was only received by the Plaintiff around August 2010.
That payment, though, was an unequivocal acknowledgment
of debt for
the whole period of five years, he testified. When the arbitration in
the High Court was filed on 5 December 2011,
he finally realized that
the contract with Naledi was then terminated, and he then also
realized that the arbitration proceedings
were then also something of
the past. He thereafter never insisted that the application should
proceed. Mr. Badimo further conceded
that there never was any
unequivocal undertaking by Naledi or by the present Defendant to pay
him. But he testified that he understood
prescription to mean that if
you engage with the debtor, the running of prescription becomes
interrupted.
[10]
This witness further conceded that clause 32.1 of the contract
provided the Naledi Municipality with the right to terminate
the
contract whenever they wish to do so, but he insisted that clause
32.2, which makes provision for a claim for damages in such
an event,
entitled the Plaintiff to sue for the outstanding balance over the
contract period of 60 months. This is precisely what
the plaintiff
was now doing, he told the Court. He confirmed that the Plaintiff
eventually issued summons against the Defendant
on 24 January 2018.
[11]
I now turn to the ground of prescription. The
Prescription Act 68 of
1969
provides that a debt like the present one prescribes after three
years
[3]
. In terms of
section
13
the completion of prescription is delayed where, inter alia, the
debt is the object of a dispute subjected to arbitration. In such
a
circumstance the period of prescription will not be completed before
a year has elapsed after the day on which the impediment
ceased to
exist
[4]
. The Act further
provides in section 14 that the running of prescription shall be
interrupted by an express or tacit acknowledgment
of liability by the
debtor.
[12]
In the present case, the contract would have elapsed after a period
of 5 years, that is at the end of March 2015. The duration
of the
contract, however, never got that far, because on 5 December 2011 the
Defendant filed the High Court application referred
to above. Mr.
Badimo testified that he regarded the filing of that application is a
clear sign that Naledi had terminated the contract.
The damages
claimed, therefore became due on that date. An official stamp of the
Sheriff on the summons bears the date of 29 January
2018, which leads
to the assumption that the summons was served on Naledi around the
end of January 2018, which is a little more
than six years after the
debt became due. At a first glance, therefore, the Plaintiff’s
claim appears to have become hopelessly
prescribed.
[13]
Mr. Daniels, appearing for the Plaintiff, submitted in his heads of
argument that the contract value of R 6 959 814-00
must be
seen and viewed as one unitary and indivisible amount, although it is
made up of the equal instalments of R 95 000-00
per month over a
period of 5 years. This is so, he submitted, because the issue of the
payment of a debt consisting of outstanding
payments in instalments
is a question of fact and not a question of law. The evidence before
this Court is that the indivisible
amount of the claim became due and
payable on 5 December 2011, on which date it became clear to the
Plaintiff that Naledi had terminated
the contract. The result thereof
is that prescription of the claim began to run on 5 December 2011.
[14]
Whenever prescription is pleaded by a Defendant, the creditor bears
the onus of proving that the completion of prescription
was either
delayed (in this instance, by the arbitration proceedings) or by the
interruption of the prescription (for instance
by an express or tacit
acknowledgment of liability by the debtor or the debtor’s
agent)
[5]
. In the present case,
Mr. Badimo testified that there never was any unequivocal
acknowledgment of liability to pay the Plaintiff,
apart from the
single payment of R 95 000-00 that was made in 2010. That
payment, he testified, signalled an acknowledgment
of the liability
to pay the whole debt. I do not agree, because Naledi already made it
clear in September 2011 that it regarded
the contract as unlawful,
null
and
void
.
The clear implication thereof was that it was Naledi’s view
that it had made the payment erroneously. In any event, if Mr.
Badimo
is correct in this regard, the running of prescription shall commence
to run afresh from the day on which the interruption
takes place
[6]
, with the effect that the claim for the whole debt had still become
prescribed. By his own evidence, however, he regarded the
whole
contract as terminated on 5 December 2011, which makes the payment in
August 2010 mostly irrelevant. The result is that the
Plaintiff has
failed to prove that the running of prescription became interrupted.
[15]
The only question remaining is whether the completion of prescription
was actually delayed under the circumstances set out
in Section 13 of
the Act, and to such an extent that it can be said that the
Plaintiff’s claim had not become prescribed.
According to the
evidence, the arbitration proceedings instituted by the Plaintiff
commenced on 13 June 2011. According to Mr.
Badimo, he decided not to
proceed with such arbitration on 5 December 2011. If another year is
added to the period 13 June
2011 to 5 December 2011 (in terms
of Section 13), a period of delay amounting to 18 months is
applicable. Even under such circumstances,
the claim had clearly
become prescribed by January 2018.
[16]
Lastly, I should mention that I do not envisage any possibility that
the Plaintiff’s case may be strengthened by evidence
that might
emerge during the Defendant’s case. I therefore have to come to
the conclusion, unfortunately, that there is no
evidence upon which
the Court might reasonably find for the Plaintiff. In the premises,
it is not necessary to decide the question
whether the Plaintiff has
shown that it suffered any damages resulting from the alleged breach
of contract.
[17]
The following order is made:
1.
Absolution from the instance is granted
with costs.
_________________
P.J.
LOUBSER, J
For
the Plaintiff: Adv. A.N Daniels
Instructed
by: B.L Nkuna Inc, Pretoria
C/O
Matsepe Inc.
Bloemfontein
For
the Defendant: Adv. J.S. Rautenbach
Instructed
by: Webber Cooper Lockman Inc.
Bloemfontein
[1]
Goliath v MEC for Health, Eastern Cape
2015 (2) SA 97
(SCA) at par 19
[2]
Government of the Republic of Zimbabwe v Fick and Others
2013 (5) SA
325
(CC)
[3]
Section 11(d)
[4]
Section 13 (1)(i)
[5]
Regering van die RSA v SA Eagle Versekeringsmaatskappy
1985 (2) SA
42
(O) and KLD Residential CC v Empire Earth Investments 2017 (6) SA
55 (SCA)
[6]
Section 14(2) of the Act