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[2019] ZANCHC 21
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Unitrans Passenger (Pty) Ltd t/a Mega Bus & Coach v ZJ Business Enterprises CC (67/2014) [2019] ZANCHC 21 (3 May 2019)
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IN THE HIGH COURT OF SOUTH AFRICA
(NORTHERN CAPE DIVISION, KIMBERLEY)
Case no:
67/2014
Date heard:
18-02-2019
Date delivered:
03-05-2019
In
the matter between:
UNITRANS
PASSENGER (PTY) LTD t/a MEGA BUS & COACH
Appellant
and
ZJ
BUSINESS ENTERPRISES
CC
Respondent
Coram:
Tlaletsi JP; Phatshoane ADJP et O'Brien AJ
JUDGMENT
O'BRIEN
AJ
[1] This
is an appeal with leave of the court
a quo (per
Matlapeng AJ)
against the whole of its judgment and order dated 10 March 2017
declaring null and void the cancellation of the subcontracting
agreement dated 03 March 2010 entered into between Unitrans Passenger
(Pty) Ltd t/a Mega Bus & Coach, the appellant, and ZJ
Business
Enterprises CC, the respondent. Further ancillary relief,
inter
alia,
the return of a bus or its prototype to the respondent;
that the respondent be allowed to lease the bus in issue on the same
terms
and conditions as set out in the subcontracting agreement
"subject to the necessary variations taking into account the
changed
circumstances"; and that it be allowed to render
transport services as set out in a sub-contracting agreement, was
also granted.
[2]
With
that prelude I turn more fully to the facts. The appellant was
awarded a contract by the Department of Transport and Public
Works,
Northern Cape ("the department"). The initial contractual
period expired and this necessitated the renewal of
the contract
which would operate on a month to month basis. The appellant's
obligation in terms of this contract was to provide
vehicles for
transport. Due to the department's empowerment initiatives, the
appellant was allowed to sub-contract some of its
transport routes to
empowerment partners. The rationale behind this initiative was to
transfer experience and skill which would
enable these partners to
act independently as the main contractors of the department.
[3]
During
March 2010, the respondent, represented by Mr Z Khumalo, as a
potential empowerment partr1er, submitted a tender to sub-contract
the route between Loopeng and Kuruman. It was a tender requirement
that a sub contractor provide its own 65-seater bus to
service
the relevant route. The tender was awarded to the respondent but it
was indicated to the adjudication panel that it did
not have a bus.
According to the appellant it was agreed to lease a bus to the
respondent as an interim measure as it was always
the latter's
intention to buy its own vehicle. The end result was a sub-contract
incorporating the lease of a bus by the appellant
to the respondent.
[4]
On
3 March 2010, the appellant and the respondent entered into a written
sub contract ("the agreement") the salient
terms of
which read as follows:
"Clause 1: Introduction:
MBC [the appellant] operates public
passenger services between Kuruman and surrounding areas in terms of
contract NVC/0033 with
the Department of Transport, Roads and Public
Works, Northern Cape Province. Tender rules, general conditions as
well as the specifications
of the contract are set out in Book 1 and
2 of the contract attached for ease of reference and are an integral
part of this agreement.
Clause 2: Contract Period:
This agreement is valid for the duration
of
the current contract which operates
on a month to month basis.
Clause 3: Route:
The sub-contractor [the respondent] will
operate the trips between Loopeng and Kuruman or
a
part thereof in terms of the attached
timetable approved by the Department. In the event that this route is
not economically viable,
MBC will allocate an alternative route.
Clause 4: Vehicle
The bus to be utilised must comply with the
requirements as set out in Book 1 and 2 of the contract...
Clause 16: Cancellation of Contract:
This agreement is subject to cancellation by
either party in the following circumstances:
(i)
If
the sub-contractor fails to comply with the condition set out in Book
1 and Book 2 of the contract MVIC/003.
(ii)
If MBC fails to reimburse
the sub-contractor for services rendered.
(iii)
If any actions by the
sub-contractor threaten the cancellation of the contract.
(iv)
If the sub-contractor
fails to operate the trips
as
set
out in the timetable.
(v)
If the sub-contractor
submit false claims to MBC.
(vi)
If the sub-contractor
interferes or competes with the services rendered by MBC in the
Kuruman and Surrounding Areas.
(vii)
Notice of such
cancellation must be in writing [and must be given] at least 14
(fourteen) days in advance.
[5]
Subsequent
to the lease in respect of the bus being concluded the relationship
between the parties turned acrimonious. The appellant
alleged that
the respondent did not abide by the terms of the lease because Mr
Khumalo had failed to attend to the daily route
and had made no
attempts to get involved in the operation of the transport business.
The appellant explained that this was not
in the spirit of the
agreement as it related to the transfer of experience and skills.
[6]
In
an attempt to find a resolution the appellant set about assisting the
respondent to obtain its own bus. A meeting was arranged
between the
respondent and a third party to discuss the purchase options which
the respondent had failed to honour. The meeting
was to be attended
by the appellant, the respondent and one Hans Collins of Busmark, the
latter being a supplier of buses which
provides a number of purchase
options concerning buses available to buyers. The respondent failed
to take up this opportunity.
[7]
The
department, through its monitoring of the main contract and lease,
expressed concern, first, at the respondent's reluctance
to gain the
requisite experience and skill as was envisaged in the agreement and
second, that it had not purchased its own bus.
[8]
At
a meeting held on 3 October 2012 attended by all relevant parties the
respondent was reminded to be more involved in the running
of the
business and same was alerted to the fact that it was a requirement
that it should possess its own bus.
[9]
On
13 November 2013 the appellant cancelled the lease of the bus on the
basis that the respondent did not obtain its own bus to
service the
route and took no part in the operation of the business. However, in
its notice of cancellation, reference was made
to the main agreement
and not necessarily to the lease itself. In correspondence the
appellant sought the return of its bus from
the respondent.
[10] On 25 February
2014 the respondent approached this court on an urgent basis for an
order declaring
the cancellation of the lease wrongful; placing the
respondent in immediate possession of the bus, alternatively, that it
be placed
in possession of a similar bus; that the respondent be
allowed to lease the bus on the same terms and conditions as set out
in
the lease applicable as at 31 January 2014; that the respondent be
allowed to render transport services as set out in the lease
on the
same terms and conditions as was applied for on 31 January 2014; and
further ancillary relief.
[11]
On
10 July 2015 the court granted leave to the appellant to file a
further affidavit. In this supplementary affidavit the appellant
avers that during April 2014 the parties had entered into discussions
regarding the further operation of the bus service by the
respondent.
The respondent wished to renegotiate the terms upon which it wanted
to continue to provide the bus services to the
appellant.
Furthermore, the respondent wanted to secure a future contract which
would extend beyond the current contractual term
between the
respondent and the department. The negotiations came to naught and no
new contract was concluded between the parties.
[12]
On
19 March 2015, the respondent served summons on the appellant
containing various claims. The relevant claim is couched as follows:
"Claim 3
…
19.
On or about April/May 2014
and at Mothibi Stad, Northern Cape Province, the parties entered into
an oral agreement (hereinafter
''the Oral Agreement').
20.
During the conclusion of
the oral agreement, the plaintiff was duly represented by
Z
J Kumalo, whilst the defendant was
duly represented by Mr Pieter Gouws.
21.
The material express,
alternatively tacit, alternatively implied terms of the oral
agreement were as follows:
21.1
The plaintiff will obtain
its own bus in order to continue to render transport services
as
a
sub-contractor to the defendant;
21.2
The parties will, in due
course enter into
a
formal
written contract, which will set out the details of the terms of the
agreement between the parties in. terms whereof the
plaintiff will
render transport services as
a
sub-contractor to the defendant;
21.3
The plaintiff will secure
the services of its own driver for the purposes of rendering the
above transport services;
21.4
The plaintiff will, in
addition to obtaining its own bus as well as securing the services of
its own driver and in order to be able
to render the transport
services as sub-contractor to the defendant in terms of the agreement
mentioned in paragraph 21.2 hereinabove,
submit to the defendant the
following documentation:
22.
The plaintiff adhered to
the terms of the oral agreement by purchasing its own bus during
April 2014 and by submitting all the above
documentation to the
defendant by May 2014.
23.
The defendant fails to
adhere to the terms of the oral agreement by failing to conclude
a
written contract with the plaintiff
as is mentioned in paragraph 21.2 hereinabove.
24.
On the above premise the
defendant breach the terms of the oral agreement.
25.
The above-mentioned breach
of the oral agreement by the defendant pertain to
a
material term of the oral agreement
and the plaintiff consequently cancel the oral agreement,
alternatively cancel it herewith.
26.
As
a
result of the breach of the oral
agreement by the defendant the plaintiff had to return the bus during
September 2014.
27.
As a
result
of the breach of the oral agreement by the defendant and the
resulting return of the bus by the plaintiff, the plaintiff
suffered
damages in the amount of R42 857-00."
[13]
The
appellant claims that, by issuing summons and alleging a new
agreement, the respondent had repudiated the agreement between
the
parties. The appellant, therefore, accepted the repudiation and
cancelled the agreement.
The
court
a quo's
judgment
[14]
The
court a
quo
determined
the issues to be, firstly, whether the parties had entered into two
distinct agreements, namely a sub-contracting agreement
and a
sub-contracting agreement incorporating the lease of a bus and
secondly, whether the respondent had lawfully cancelled the
lease.
[15]
The
court a
quo
found
that the lease of the bus had been incorporated in the main
agreement. It reasoned that the respondent needed a bus in order
to
fulfil its contractual obligations. It held that the duration of the
lease of the bus was linked to that of the main agreement
and would,
therefore, be on a month to month basis as set out in the main
contract between the appellant and the department.
[16]
The
court a
quo
found
the cancellation of the agreement to be wrongful and bad in law. It
reasoned that the requirement that the respondent must
have a bus of
its own was not part of the agreement.
[17]
With
regard to the subsequent oral agreement, the court found that it did
not substitute the agreement. The mere fact that an allegation
is
made in the particulars of claim, which is disputed, does not make
the existence of such an allegation a fact.
[18]
The
court determined that the cancellation of the agreement was null and
void. It granted the respondent ancillary relief as set
out in the
first paragraph of this judgment.
The
grounds of appeal
[19]
Before
us the appellant contends that the court
a
quo
erred in not finding that the
reliance by the respondent on a subsequent oral agreement did not
constitute a repudiation or replacement
of the initial written
sub-contract. Expanding on this ground, the appellant argues that the
court
a quo
erred
in not finding that there was a direct interconnection between the
written sub-contract and the later oral agreement in that
both causes
of action arose out of an identical subject matter.
[20]
The
appellant further argued that the Court had erred in making an order
for specific performance since the cancellation of the
original
agreement three years prior. It was contended that the reference to
"the necessary variations taking into account
changed
circumstances", in the order for specific performance, is vague
and unenforceable regard being had to the period that
had lapsed. In
addition, having made an order for specific performance the court
a
quo
had erred in not finding that
the Northern Cape Provincial Department of Transport, Safety and
Liaison had a direct and substantial
interest in the outcome of the
application and should have been joined in the proceedings, the
argument continued.
The
analysis
[21]
Both
counsel candidly accepted the cancellation of the agreement as
wrongful. However, the appellant contends that the court
a
quo
misdirected itself in not
finding that the subsequent oral agreement superseded the written
agreement. By issuing summons, so contended
by the appellant, the
respondent evinced an intention not to be bound by the written
agreement. In effect, the appellant accepted
the issuing of the
summons as a repudiation of the agreement and had therefore cancelled
the written agreement.
[22]
As
was explained in
Datacolor
International (Pty) Ltd v lntamarket (Pty) Ltd:
[1]
"Repudiation
has
sometimes
been said to consist of two
parts: the act of repudiation by the guilty party, evincing a
deliberate and unequivocal intension no
longer to be bound by the
agreement, and the act of his adversary, 'accepting' and thus
completing the breach."
And at para [16] of the judgment the following
dictum of Corbett JA in
Nash v Golden Dumps (Pty) Ltd
1985 (3) SA
1
(A)
appears:
"Where one party to
a
contract, without lawful grounds,
indicates to the other party in words or by conduct
a
deliberate and unequivocal intention
no longer to be bound by the contract, he is set to 'repudiate' the
contract
. ..
Where
that happens, the other party to the contract may elect to accept the
repudiation and rescind the contract. If he does
so,
the contract comes to an end upon
communication of his acceptance of repudiation and rescission to the
party who has repudiated
... "
[23]
It
is trite that the test for repudiation is objective. See
Poni
Sammy
&
Another
v Versailles Estates (Pty) Ltd
[2]
;
Tuckers Land
&
Development
Corporation (Pty) Ltd v Hovis.
[3]
[24]
What
arises for consideration is whether the issuing of the summons was an
act of repudiation. It is to be remembered that after
the appellant's
purported cancellation of the agreement, the respondent returned the
bus. Following this, the parties engaged in
negotiations for the
reformulation of the terms of their prior written agreement. These
negotiations became an exercise in futility.
As already mentioned,
the respondent launched an urgent application on 28 February 2014
resulting in the relief granted by the
court a
quo.
[25]
What
is remarkable is that the respondent issued summons against the
appellant alleging that there was an oral agreement, the terms
of
which were that: it would obtain its own bus to render transport
services that had been initially contemplated in the written
agreement; the parties would in due course formalise the oral
agreement by reducing it to writing and the respondent would secure
its own driver. The respondent further alleges that it had complied
with the terms of the oral agreement and had bought its own
bus. It
contended that the appellant had failed to comply with the terms of
the oral agreement; had accordingly breached same resulting
in the
respondent cancelling the oral agreement and claiming damages.
[26]
The
court
a quo
took
the view that the oral agreement was merely an allegation in the
summons which was disputed by the appellant and therefore,
no
reliance could be placed on it.
[27]
In
my view, the court
a quo
was
incorrect in holding as it did. By issuing summons based on the
alleged breach of the oral agreement and claiming damages, the
respondent evinced an unequivocal intention not to be bound by the
written agreement. It elected to rely on the oral agreement,
the
terms of which are different from those contained in the written
agreement, and to claim damages. The respondent did not transfer
the
terms of the written agreement into the oral agreement. What it did
was to create new terms by providing,
inter
alia,
its own bus to render
transport services which had not been contemplated in the cancelled
written agreement.
[28]
In
the written agreement the transport route was described as trips
between Loopeng and Kuruman or a part thereof in terms of an
attached
timetable approved by the department. Should this route not be
economically viable, the appellant will allocate an alternative
route. However, in the subsequent oral agreement it was allegedly
agreed that the respondent will render transport services with
its
own bus and own driver together with certain documentation. It was
also allegedly agreed that the oral agreement will be formalized
by a
written contract. It must be noted that in the written agreement a
specific route is stipulated whereas in the alleged oral
agreement as
per claim three, no route whatsoever is mentioned. This is an
indication beyond doubt that the parties had intended
a new
agreement.
[29]
Objectively
considered, the manifestation of an outward act (conduct) shows
unequivocal intention not to be bound by an agreement.
In this
instance the respondent has shown its intention not to be bound by
the original agreement which would explain its claim
for damages
under the new oral agreement. By issuing summons and claiming damages
the written agreement, was extinguished. The
appellant was within its
rights to accept the repudiation and to cancel the agreement. In the
premise, the court
a quo
incorrectly
disregarded the issuing of the summons and claims for damages as not
constituting an act of repudiation.
[30]
On
the view we take of this matter, it is not necessary to deal with the
question of non-joinder of the department. The point of
non-joinder
was not enthusiastically pursued. The appellant's contention was that
the order of the court
a quo
was
vague insofar as: the respondent being allowed to lease the bus in
issue on the same terms and conditions as set out in the
subcontracting agreement
"subject
to the necessary variations taking into account the changed
circumstances".
In my view,
words such as "necessary variations" and "changed
circumstances" are quite vague and may potentially
lead to
further litigation between the parties. Apart from being vague, the
order of the court
a quo
is
not competent when regard is had to the lapse of time between the
unlawful cancellation of the agreement and the date of the
launching
of the application.
[31]
The
upshot of the above analysis is that the appeal ought to be upheld.
With regard to costs in the proceedings before the court
a
quo,
the respondent was entitled to
approach the court on an urgent basis to enforce its rights in terms
of the purported cancelled written
agreement. This was conceded by
the appellant's counsel. Therefore, the respondent is entitled to its
costs up until the filing
of the replying affidavit. The following
order is made.
Order
1.
THE APPEAL SUCCEEDS WITH
COSTS, SUCH COSTS TO INCLUDE THE APPLICATION FOR LEAVE TO APPEAL;
2.
THE ORDER OF THE COURT
A
QUO
IS SET ASIDE AND, IN ITS
STEAD, THE FOLLOWING ORDER IS ISSUED:
"1. THE APPLICATION
IS DISMISSED WITH COSTS. THE RESPONDENT IS ENTITLED TO ITS COSTS UP
UNTIL THE FILING
OF THE REPLYING AFFIDAVIT."
O'BRIEN
AJ
Northern
Cape High Court, Kimberley
I
concur
TLALETSI,
JP
Northern
Cape High Court, Kimberley
I
concur
PHATSHOANE,
ADJP
Northern
Cape High Court, Kimberley
For
the Appellant:
Adv WB Pye
Instructed
by:
Fletcher's Attorneys
For
the Respondent:
Adv D Olivier
Instructed
by:
Hugo, Mathewson &
Oosthuizen
[1]
[2000] ZASCA 82
;
2001 (2) SA 284
(SCA) para 1
[2]
1973 (1) 372 (A) at 387 A - C
[3]
1980 (1) SA 645
(A) at 653 B - G).