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[2019] ZAECBHC 3
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Red Alert TSS (PTY) LTD t/a EL Guarding v Member of the Executive Council for The Department of Health,Eastern Cape Province (58/2013) [2019] ZAECBHC 3 (31 January 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, BHISHO
CASE
NO: 58/2013
In
the matter between:
RED
ALERT TSS (PTY) LTD t/a EL GUARDING
Plaintiff
and
THE
MEMBER OF THE EXECUTIVE COUNCIL FOR
THE DEPARTMENT OF
HEALTH, EASTERN CAPE PROVINCE
Defendant
JUDGMENT
___________________________________________________________________
STRETCH
J:
1.
On 7 February 2013 the plaintiff instituted action against the
defendant (also referred to as “the Department”) for
payment of the sum of R6 698 180,67, by way of a simple
summons which was served on the defendant on 4 March 2013. The
plaintiff’s cause of action arose from the defendant’s
alleged failure to fully compensate it for services rendered, despite
having been issued with an itemised statement demanding payment
in
the aforesaid amount, and urging the defendant to contact the
plaintiff, as payment was overdue.
2.
The defendant failed to enter an appearance to defend in terms
of the
uniform rules of this court. On 19 April 2013 the plaintiff served an
application for default judgment on the defendant
which had been set
down for 9 May 2013. On 7 May 2013 the defendant delivered notice of
its intention to oppose the application.
On 9 May 2013 the
application was withdrawn and the issue of costs was reserved.
3.
On 15 October 2013 the defendant delivered a notice of intention
to
defend the action. On 27 January 2014 the plaintiff filed its
declaration followed by a notice of bar on 26 March 2014. The
defendant pleaded on 2 April 2014. The plea was accompanied by a
special plea in response to which the plaintiff delivered a notice
of
exception on 14 May 2014.
4.
On 7 July 2014 the plaintiff gave notice of its intention to
amend
its declaration and to increase the quantum of its claim to
R7 423 375,21. The amendments were duly effected on
26
August 2014 and on 2 October 2014 the plaintiff served a second
notice of bar on the defendant in consequence of the defendant’s
failure to plead to the amended declaration. On 8 October 2014 the
defendant filed a notice in terms of rule 23(1) excepting to
the
plaintiff’s amended declaration as being vague, embarrassing
and lacking in averments necessary to sustain a cause of
action, and
granting the plaintiff 15 days to remove the causes of complaint.
5.
On 30 October 2014 the plaintiff delivered a further notice
of
intention to amend which amended pages were filed on 19 November
2014. The plaintiff served further notices of bar on the defendant
on
2 December 2014 and on 18 March 2015.
6.
This prompted the defendant, on 23 March 2015, to issue a notice
in
terms of rule 30A(1) stating that the plaintiff’s most recent
amendment had failed to comply with the rules of this court,
in that
the plaintiff had introduced new allegations in its amended pages
which were not predicated by a rule 28 notice, and extending
a
counter-invitation to the plaintiff to remove the cause of complaint
within ten days, failing which the defendant would move
an
application for the plaintiff’s claim to be struck out. Having
received no response from the plaintiff, the defendant
set the
application down to be heard on 30 June 2015. This was met with a
notice of opposition from the plaintiff. On 30 June 2015
the
application was removed from the roll. Costs were once again
reserved.
7. The
plaintiff subsequently served a third notice of bar on the
defendant
on 19 January 2016 and set the defendant’s application down for
hearing on 28 January 2016. It also duly delivered
heads of argument
in support of its prayer for dismissal of the application together
with the requisite notice that the matter
would be proceeding. On 25
January 2016 the defendant withdrew the application with an
appropriate costs tender. On 28 January
2016 the withdrawal was
reflected in a court order.
8.
On 29 February 2016 the plaintiff served a fourth notice of
bar on
the defendant. On 8 March 2016 the defendant pleaded to the
plaintiff’s amended declaration, claiming from the Department
payment of the sum of R7 423 375,21 plus interest.
9.
The matter was set down for trial which trial proceeded to finality
before me after the parties had agreed at a pre-trial conference held
on 10 September 2018 that the only issue in dispute at the
trial
would be the quantum of the plaintiff’s claim for price
increases.
The
plaintiff’s claim
10.
During 2008 the plaintiff was awarded a contract to provide security
services
at the defendant’s Mthatha Hospital Complex commencing
on 1 February 2009. The parties entered into a service level
agreement,
setting out the terms and the conditions of the contract.
In terms of this agreement incorporating a subsequent first amendment
to the contract price, the plaintiff was entitled to payment of the
total sum of R15 282 744 over 24 months at R636 780
per month, with effect from February 2009. Payment in terms of
monthly invoices was due within 30 days of receipt of the invoices.
11.
The contract was extended from time to time by the bid adjudication
committee
(“BAC”) and the defendant’s authorised
representatives. It ultimately lapsed after 53 months on 30 June
2013.
During this period the plaintiff had rendered uninterrupted
services to the defendant in terms of the agreement. In turn, the
defendant
had paid the plaintiff R636 780,00 per month over the
extended period of 53 months.
12.
As with the first amendment to the contract price, the plaintiff was
constrained
to annually update the tender price to allow for and
absorb increased salaries for employees in the security sector, as
published
in the Government Gazette from time to time, and as
regulated by the Private Security Industry Regulatory Authority
(“PSIRA”).
Indeed, the service level agreement makes
specific provision for this, stating that the contractor shall ensure
compliance with
all applicable prescripts and shall align the
salaries of its personnel with PSIRA rates as may be prescribed from
time to time
by the Minister of the Department of Labour.
13.
The first update (which I have already alluded to) was conveyed by
the plaintiff
to the defendant by way of a motivation in writing
(addressed to the Department’s Mr Sean Frachet and one Advocate
Nzuzo)
dated 30 April 2009. It reads as follows:
‘
REQUEST
FOR ABNORMAL PRICE INCREASE
We
were awarded the bid for provision of security and related services
at the Department’s Mthatha Hospital Complex and commenced
in
February 2009.
We
are requesting an abnormal price increase on this bid as there has
been a legislated change in regions and also in the legislated
change
in monthly salary rates of Grade B, C and D Guards who are required
on this contract.
At
the time of submitting our tender our total direct costs, share of
overheads, rate submitted and share of overhead percentage
and
once-off costs were as follows: …..
Once-Off
Costs ….. R310 431.00
.
With
the legislated changes we now request an abnormal increase in line
with the legislated changes applicable as follows: …..
Price
for 24 Months to 31 Jan 2011 ….. R13 095 484.80
.
Please
note that we have not changed the amount of overheads.
In
summary our request for the abnormal increase is as follows:
Amount
for 24 Months to end January 2011
13 095 484.80
Once-Off
Costs
310 431.00
13 405 915.80
Add
VAT
1 876 828.21
TOTAL
R15 282 744.01
Please
note that the legislated monthly salary rates for guards are only
applicable to August 2009 and wage negotiations are currently
underway. New rates will be applicable from 1
st
September
2009 hence we must advise that we will be motivating an abnormal
increase to cover that change once it has been legislated
and will
make further submissions in that regard in due course.
We
attach a letter from our Auditors regarding the above.
Trusting
our request will receive your favourable consideration.
Yours
sincerely
(Sgd)
MARK
S BENKENSTEIN
CORPORATE
SERVICES DIRECTOR
’
14.
On 26 June 2009 the respondent replied to the motivation as follows:
‘
Be
pleased to take note that the Department (on 28 June 2009) considered
and approved your request for an abnormal price increase
to a total
bid amount of R15 282 744,01.
This
decision shall take effect from the effective date of the
afore-mentioned contract and shall be binding between the parties
for
the duration of the said contract, provided that there is no new rate
prescribed by PSIRA during the currency of this contract.
It
remains your responsibility to advise the Department when the new
rates have been prescribed.
Kindly
find attached hereto an addendum making the necessary amendments to
the principal agreement. Please do sign same and revert
it back to
our offices within 48 hours on receipt of this correspondence.
Yours
in Health
(sgd)
ACTING
GENERAL MANAGER
SUPPLY
CHAIN MANAGEMENT
’
15.
On 2 September 2009 (in a letter addressed to the Department’s
Mr Sean
Frachet) the plaintiff motivated its predicted second price
increase as follows:
‘
REQUEST
FOR ABNORMAL PRICE INCREASE
We
were awarded the bid for provision of security and related services
at the Department’s Mthatha Hospital Complex and commenced
in
February 2009.
We
are requesting an abnormal price increase on this bid as there has
been a legislated increase in monthly salary rates of Grade
B, C and
D Guards who are required on this contract. The relevant Government
Gazette is dated 25
th
August 2009 (No. 32524) and is
effective from 1
st
September 2009.
In
our previous “Request for Abnormal Price Increase” which
was sent to yourself on 30
th
April 2009 (refer annexure
I), the applicable costs and contract price requested was as follows:
…..
TOTAL R15 282 744.01
.
We
are attaching the “Illustrative Contract Pricing Structure”
for the period ended 31
st
August 2009 (Annexure 2) and for
the period commencing 1 September 2009 (Annexure 3).
The
percentage increase in overheads and the new requested amount for
overheads is calculated by multiplying the previous amount
for
overheads by the percentage increase in overheads as follows: …..
The
total direct costs have increased as follows: …..
Therefore
we request that the total contract price be increased as follows:
For
the period from 1
st
February 2009 to 31
st
August 2009 the monthly amount is unchanged as per the previous
request for abnormal price increase (Annexure I) as follows: …..
Price for 7 Months ….. 3 819 516.40.
For
the period from 1
st
September 2009 to 31
st
January 2011 the amounts change in line with the gazetted increases
(calculated above) as follows: ….. Price for 17 Months
…..
10 322 552.15
.
Contract
Price for 24 months (7 Months and 17 Months) above
14 142 068.55
Once
off cost (unchanged)
310 431.00
14 452 499.55
Add
VAT
2 023 349.94
Total
revised contract price
Requested
for 24 months to 31
st
January 2011
16 475 849.49
Trusting
our request will receive your favourable consideration.
Yours
sincerely
(sgd)
MARK
S. BENKENSTEIN
CORPORATE
SERVICES DIRECTOR
’
16.
I digress to point out that these illustrative contract pricing
structures upon
which the plaintiff relied from time to time have the
following in common:
a.
They were all issued and regulated by PSIRA.
b.
They applied to an average period of 12 months at a time.
c.
They were based on an average month of nightly 12 hour shifts
on
site.
d.
They provided for a total direct cost and a share in the overheads
for each graded security officer.
e.
The pricing
structures, illustrating the total cost per month for employers with
respect to security officers employed by them in
the private security
industry did not make allowance for profit or VAT.
[1]
17.
On 28 September 2012 the plaintiff’s branch manager forwarded
the customary
motivation to the Department. It reads as follows:
‘
REQUEST
FOR THE STATUTORY INCREASE (2012 TO 2013)
Due
to the fact that the security industry has an annual increase
effective 1
st
September 2012, and with the Department of
Labour trying to bridge the financial gap between the different
grades and areas, this
is the result of us requesting an increase of
8.5%.
See
herewith price changes as stipulated on the table below:
For
the period 01 September 2010 to 31 August 2011 the prices were as
follows: …..
Total
Price Per Month ….. Grand Total ….. R639 780.99
For
the period 01 September 2011 to 31 August 2012 the prices were as
follows: …..
Total
Price Per Month ….. Grand Total ….. R744 516.45
For
the period 01 September 2012 to 31 August 2013 the prices were as
follows: …..
Total
Price Per Month ….. Grand Total ….. R807 800.35
For
your perusal, we herewith attach the new government gazetted PSIRA
rates effective from 01 September 2012 to 31 August 2013.
We
have however strived to keep this to the minimum.
We
value your business and would be happy to discuss your increase
should you have any queries.’
18.
On 5 October 2012 Mthatha Hospital acknowledged receipt of this
correspondence.
19.
On 4 June 2013, the Department’s senior manager for contract
management
wrote the following letter to the plaintiff:
‘
SCMU3-06/07-0212:
PROVISION OF SECURITY SERVICES AT MTHATHA HOSPITAL COMPLEX –
PRICE INCREASE
1.
The above matter bears reference.
2.
Please be advised that the Department has approved a price increase
of 8% for 2011/12, which increases the monthly amount due to
R744 516.46 and 8.5% for 2012/13, which increases the monthly
amount due to R807 800.35 respectively.
3.
Please be further advised that the increase for 2011/12 is valid
from
1
st
September 2011 to 31
st
August 2012, and the
2012/13 increase is valid from 1
st
September 2012 to 30
th
June 2013.’
20.
On 12 December 2012 the plaintiff’s attorneys formally served
on the Department
an itemised statement claiming the sum of
R6 698 180,67 urging the Department to contact the
plaintiff as payment was
overdue. The covering letter reads as
follows:
‘
We
act on the instructions of Red Alert TSS (Pty) Ltd t/a EL Guarding of
East London.
We
have been instructed to demand from you, as we hereby do, payment of
the sum of R6 698 180,67 being the sum/balance
due to our
client for security and related services together with interest at
15.5% per annum a tempore morae from date of service
of this letter
of demand to date of payment.
A
copy of the original Service Level Agreement, marked “MM1”,
is attached hereto together with related contract documentation
for
your reference in order to enable you to investigate this matter.
We
also enclose herewith, marked “MM2”, a statement showing
all the outstanding invoices together with copies thereof
as well as
a detailed statement, marked “MM3”, showing all payments
made.
We
await your response within one month from date hereof.
Kindly
note that this letter is written in compliance with the Provisions of
Section 3 of the Institution of Legal Proceedings against
certain
Organs of State Act, No 40 of 2002.’
21.
In the absence of a response, the plaintiff instituted the claim
which I have
already referred to, the quantum of which was
subsequently amended to R7 423 375,21 to allow for certain
price increases
which were not taken into account when the November
2012 statement was served on the defendant in December 2012.
The
defendant’s plea
22.
In its plea, the Department admitted that the parties had entered
into a service
level agreement, entitling the plaintiff to payment of
R15 282 744,01, which incorporated the first request for a
price
hike which I have already referred to. The terms and conditions
of the service level agreement are not in dispute.
23.
What has been disputed on the pleadings, is that the defendant is
liable for
VAT, despite the fact that the illustrative contract
pricing structures which the plaintiff had been using as a benchmark,
specifically
and categorically exclude VAT.
24.
The Department, in its plea, has also alleged that some invoices had
been paid,
that there was a price discrepancy with respect to certain
invoices, and that some of them had been duplicated. It was
furthermore
alleged that R971 540,31 of the claim had already
been paid.
25.
As I have said, pursuant to the close of pleadings, the parties
agreed that
the only issue in dispute was the quantum of the
plaintiff’s claim for price increases. As it turns out, this
agreement has
been of no assistance whatsoever in narrowing the
lis
between the parties.
The
evidence
26.
The plaintiff and the defendant each called one witness. The
plaintiff relied
on the evidence of Mr Mark Benkenstein, who is its
corporate services director, and who has been with the company since
1999. The
defendant presented the evidence of Mr Sean Frachet, who is
the Department’s chief director in its finance component.
27.
In a nutshell, Benkenstein’s evidence was that during the
duration of
the contract the plaintiff paid the PSIRA rate increases
to its employees out of its own pocket and then claimed what it had
absorbed
towards the end of the contract.
28.
In support of his evidence Bekenstein referred to spreadsheets which
had been
prepared by the plaintiff in order to compare the
plaintiff’s contract price increases with the recommended PSIRA
direct
cost or rate increases.
29.
These tables illustrate:
a.
That for the duration of the mutually extended contract period,
the
plaintiff increased its prices by 11,02 per cent, 5,98 per cent,
13,28 per cent and 8,5 per cent annually.
b.
That these price increases were either below or on a par with
the
illustrative PSIRA rate increases.
30.
According to Benkenstein the defendant had indeed paid a
portion of the
amount claimed, reducing the total amount outstanding
to R6 910 317,14. During cross examination it was put to
him that
in terms of the defendant’s calculations, the
defendant only owed the plaintiff R2 489 961,16 with
respect to price
increases of which R513 580,08 had already been
paid, reducing the amount due by the defendant to the plaintiff to
R2 391 142,00
plus interest. It seems that this contention
was to some extent founded on a different construction of the
Department’s letter
of approval signed on 4 June 2013, to be
read to have included VAT in its computation of the monthly amounts
due for the 2011/12
and 2012/13 years respectively, whereas the
plaintiff’s calculations excluded VAT.
31.
I do not
understand this contention. As I have said, the documented PSIRA
illustrative monthly contract pricing structures made
it clear that
VAT and profit were excluded.
[2]
The plaintiff had also consistently in the past reflected VAT as a
separate add-on in its accounts and invoices to the Department.
Despite the fact that Benkenstein was rarely if ever cross-examined
on this aspect, he nevertheless went to inordinate lengths
to explain
this when he testified in chief. I have given careful consideration
to his explanation in conjunction with the pleadings
and the
spread-sheets which the plaintiff has relied on to present its
evidence. I find the evidence to be both logical and consistent
with
the agreement with the Department, considered in conjunction with the
PSIRA illustrative VAT exclusive pricing structures.
If I am correct
in this regard, the foundation of the defendant’s pleaded
lis
with
the plaintiff falls away. This is so because it is the extent of the
Department’s liability to the plaintiff which is
in issue; not
the fact thereof. It has not been contended that the plaintiff was
not entitled to apply the PSIRA’s illustrative
contract pricing
structures as published from time to time when it rendered accounts
to the Department for services rendered. Indeed,
the plaintiff’s
written requests for statutory increases seem to me to have been
compliant with the Department’s missive
dated 26 June 2009
(which I have already referred to) in two material respects:
a.
They served to advise the Department of the new prescribed rates
(as
called upon to do) annexing the relevant contract pricing structures
(which
ex facie
the structures themselves excluded profit and
VAT);
b.
They served as requests for statutory increases which were either
consistent with or below the relevant contract pricing structures.
32.
To my mind these requests were not, and were never intended to be VAT
inclusive
bids, or tenders or repetitions of awards.
33.
It has been conceded on the Department’s behalf that as at the
date of
trial the Department owed the plaintiff R2 391 142,00
plus interest in respect of PSIRA linked price increases.
34.
It was apparently to explain this concession and to dispute that it
was liable
for anything in excess thereof, that the Department called
Mr Frachet as its witness. Frachet had prepared his own supporting
documentation
in response to Benkenstein’s evidence and the
spread sheets which he had referred to. Frachet contended that
because
the original award of R15 282 744,01 was VAT
inclusive, any increases in relation to the contract would also have
been
VAT inclusive. I do not agree. As I have said, it is clear that
the PSIRA illustrative contract pricing structures exclude both
profit and VAT. Whilst it is so that the final figure of the original
award included VAT, the plaintiffs communications with the
Department
from time to time thereafter were clearly designed to be informative
and to comply with the Department’s letter
of 26 June 2009. The
plaintiff has in any event adequately, in my view, illustrated that
these requests were not bills or invoices
or statements for that
matter. If they were, I would imagine that they would also have been
formatted in the same fashion as the
addendum to the service level
agreement which initially reflected the total increased contract
value without making any reference
to PSIRA illustrative contract
pricing structures and/or proposed percentage increases.
35.
It is significant that Frachet agreed that the plaintiff was entitled
to apply
annual increases of 11,29 per cent, 5,98 per cent, 13,87 per
cent and 8,98 per cent in terms of the PSIRA rates. Indeed, he
testified
that the Department’s letter dated 26 June 2009 made
it clear that the Department would respect the regulatory authority
adjustments “for as long as PSIRA is alive.”
36.
It is clear then that on the pleadings as supported by the evidence,
the issue
is not the application of the PSIRA rates. What the
Department’s contention does seem to be is that these PSIRA
percentages
were “misapplied” or “incorrectly
calculated”, based on starting values at the commencement of
each spectral
calendar which were way in excess of what they ought to
have been, resulting in exhorbitant over-billing on the Department’s
part.
37.
Frachet accordingly re-did the maths in a fashion which he was
comfortable with,
and as I can make out, concluded that the
Department was liable to the plaintiff for payment of the sum of
R3 362 682,04
based on PSIRA rate increases of 11,29 per
cent in September 2009, 5,98 per cent in September 2010, 13,87 per
cent in September
2011 and 8,98 per cent in September 2012.
38.
Frachet
testified (as supported by the Department’s disbursement
reports) that the Department had in the interim made two
further
payments of R458 482,23 and R513 058,08, resulting in a balance
due of R2 391 142,04
[3]
,
plus interest in the sum of R3 278 404,16
[4]
.
39.
During cross-examination Frachet unequivocally and repeatedly
conceded that
he realised for the first time after the trial had
commenced, that there was no correlation between the rand values
claimed by
the plaintiff, and the PSIRA percentage increases. Simply
put, this realisation appears not to have been within the
Department’s
contemplation when it delivered its plea.
40.
Despite attempts by the Department’s counsel thereafter to
suggest via
Frachet that it was catered for in the plea, it is
apparent from a reading of the Department’s plea that the
issues addressed
therein have no bearing whatsoever on the question
of a misapplication of the PSIRA rates as suggested by Frachet. Nor
did the
evidence ultimately presented on the Department’s
behalf attempt to adequately (or at all) address the issues
purportedly
traversed on the pleadings.
41.
As I have said, I have carefully considered the plaintiff’s
presentation
of the basis upon which it has calculated the
Department’s liability to it. It is common cause that the
Department did not
pay the plaintiff in excess of that which had been
agreed upon in the addendum to the original service agreement,
despite the recommended
PSIRA rate increases. Even in this respect,
the Department fell in arrears and has, subsequent to the exchange of
pleadings, made
further payments amounting to R971 540,31.
42.
Having said that, it appears that the plaintiff itself has been
somewhat dilatory
in its accounting to the Department and in claiming
that which it was entitled to in terms of the PSIRA rates as an when
such entitlement
became due. Indeed, it appears to me that the
plaintiff’s claim against the Department only really
crystallised in its finally
amended declaration which was delivered
on 19 November 2014. The nature and extent of the plaintiff’s
claim was, in my view,
properly and fully set forth in this document.
If the Department did not think so, or was of the view that the
plaintiff had over-claimed
based on miscalculations or incorrect
applications of the percentage increases, it ought to have raised
this at the very latest
when it pleaded. Instead, it raised a special
plea which it purportedly abandoned, followed by claims which it
barely touched on
when it presented its evidence.
43.
I am not inclined however, to rule in the plaintiff’s favour
simply because
the defence which the defendant ultimately raised in
evidence had no foundation in the pleadings. It is really not
difficult to
traverse this defence. Mr Frachet’s contention is
that the plaintiff has raised exhorbitant price increases ranging
from
15 to 27 per cent annually, which are not at all in line with
the PSIRA rates. In placing a rand value on these percentages,
Frachet
did not take into account that the Department had not
escalated its payments to the plaintiff in terms of either the PSIRA
rates
or those ultimately raised by the plaintiff.
44.
On the other hand, the plaintiff’s table (which Mr
Benkenstein adequately
explained) speaks to the factual position when
attaching a compounded rand value on the percentage increases. In a
nutshell, the
Department’s argument with respect to the quantum
of its liability to the plaintiff assumes that the Department had
kept
up with the increases in its payments to the plaintiff. It is
common cause that it has not. The defendant’s argument is
accordingly
flawed. It is flawed because it is based on calculations
which repeatedly depart from a factually incorrect base-line
liability
rand value. There is really no other way of putting it. To
quote the plaintiff’s counsel, the claim “is what it is”.
45.
As for the issue of VAT, I have already dealt with the fact
that the plaintiff
was entitled to, and indeed constrained to add VAT
onto the price increases illustrated by PSIRA from time to time.
Interest
46.
Based on the evidence before me, the water is somewhat murky with
respect to
issues such as whether the plaintiff regularly accounted
to the defendant, and whether it regularly communicated with the
Department
with respect to the application and the effect of PSIRA
linked contract price increases. In this regard the Department has
conceded
that:
a.
It owes the plaintiff R2 391 142,00;
b.
It has
calculated that the interest due on this amount exceeds the aforesaid
capital amount.
[5]
c.
It was presented for the first time with a detailed globular
claim
when the plaintiff issued its declaration, the final amendment of
which was delivered on 19 November 2014.
47.
In the premises I am inclined to make an order incorporating the
admitted interest
equal to the capital amount on the first
R2 391 142,00 of the plaintiff’s claim, followed by
an award for
mora
interest on the balance (taking into account
the two further payments of which the Department has furnished proof)
calculated from
19 November 2014 to date of payment.
The
reserved costs
48.
The respective legal representatives have not been in a position to
persuasively
press for awards in their clients’ favour with
respect to the reserved costs which depart from the norm. In the
premises
the parties are of the view that these costs should be in
the cause. I agree.
Order
a.
The defendant is ordered to make payment to the plaintiff in
the sum
of R6 451 834,90.
b.
The defendant is ordered to pay interest on this amount calculated
as
follows:
i.
R2 391 141,73 on the portion of R2 391 141,73.
ii.
Applicable
mora
interest on the balance of R4 060 693,17
calculated from 19 November 2014 to date of payment.
c.
The defendant is ordered to pay the costs of the action including
the
costs which were reserved on 9 May 2013 and 30 June 2015.
_____________________
I.T.
STRETCH
31 January 2019
Judge
of the High Court
Dates
heard: 11 & 12 September 2018
Date
handed down: 31 January 2019
For
the plaintiff:
Mr
Cole
Instructed
by Matyeshana & Moodley Attorneys
Care
of Gravett Schoeman Van Rensburg & Moodley
King
Williams Town
For
the defendant:
Mr
Sishuba
Instructed
by The State Attorney
[1]
It is not in dispute that the plaintiff is a registered VAT vendor
and is accordingly obliged by law to charge VAT.
[2]
This is for obvious reasons. As pointed out by the Department’s
counsel, not all employers are VAT vendors.
[3]
According to my calculations R3 362 682,04 –
(R458 482,23 + R513 058,08) = R2 391 115,04
[4]
Frachet said that this interest (which exceeds the capital amount)
was calculated by applying loan amortisation schedules based
on
individual amounts becoming due and payable within 30 days of the
PSIRA increases in terms of the Public Finance Management
Act.
[5]
Regard must be had to the in duplum rule which states that the
creditor is not entitled to claim interest which exceeds the capital
amount.