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[2018] ZAGPJHC 708
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Vodacom (Pty) Limited v Mobile Telecommunications Network (Pty) Limited Transnet (SOC) Ltd (25771/2018) [2018] ZAGPJHC 708 (26 November 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 25771/2018
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between
:
Vodacom
(Pty) Limited
Applicant
and
Mobile
Telecommunications Network (Pty) Limited
First Respondent
Transnet
(SOC) Ltd
Second
Respondent
JUDGMENT
ON SECTION 18(1) APPLICATION
Van
der Linde, J
:
Introduction
and background
[1]
In the last week of July 2018, in the urgent
court, Transnet SOC Limited (“
Transnet”
)
brought an application against Mobile Telecommunications Network
(Pty) Limited (“
MTN
”),
in which Vodacom (Pty) Limited (“
Vodacom
”)
successfully applied for leave to intervene. I gave a judgment
on 24 August 2018 in favour of Transnet. The effect
of the order,
which was in terms of prayer 2 of the Notice of Motion, was to direct
MTN to comply with an order by the Independent
Communications
Authority of South Africa’s Council (“
ICASA
”),
that MTN must comply with the award by Transnet of the tender to
Vodacom, and must port all Transnet’s cell phone
numbers on its
network to Vodacom’s network.
[2]
As will appear from that judgment, there was a
materially relevant earlier judgment delivered on the 18
th
June 2018 between MTN, Transnet and Vodacom under Case Number
33335/2017, by Sutherland, J. In that judgment, my colleague
dismissed
an application by MTN to review and to set aside Transnet’s
disqualification of MTN in a tender process that led ultimately
to
Transnet awarding a contract to Vodacom for the provision of mobile
telecommunication services to Transnet employees.
My colleague
has subsequently in an
ex tempore
judgment dismissed an application by MTN for leave to appeal his
judgment.
[3]
Subsequently, on 9 October 2018 I dismissed an
application by MTN for leave to appeal the judgment that I gave on 24
August 2018.
There are therefore three judgments which set out
the background and the pertinent facts that give rise to the current
dispute
between MTN and Vodacom; and Transnet. But in a nutshell,
what had happened was the following.
[4]
In September 2014 Transnet and MTN concluded a
written agreement whereby MTN would provide voice and data services
to Transnet until
9 October 2015. Transnet had an option to
extend the agreement for 12 months, to 9 October 2016. It exercised
that option
and thereafter extended the contract for another three
times, ultimately until 9 March 2018.
[5]
As is set out in my judgment on the merits of
this matter, Transnet had in the meantime set about inviting
proposals to enable it
to award a fresh tender for the provision of
those services upon the expiration of the MTN contract.
Tenderers were MTN,
Cell C and Vodacom. The tenders by MTN and
Cell C were unsuccessful (MTN was disqualified) and they were so
advised on 22
August 2017. Vodacom was chosen to be the
preferred bidder.
[6]
MTN was not satisfied with this outcome and
complained to Transnet’s Procurement Ombudsman on 29 August
2017 and also applied
urgently on 4 September 2017 for urgent
interdictory relief. On 11 October 2017 the Ombudsman reported that
MTN had been correctly
disqualified and recommended that Transnet
proceed with the tender process, and award the tender to Vodacom.
This happened
and consequently on 2 February 2018 Transnet and
Vodacom concluded a written agreement, called a Master Services
Agreement (“
MSA
”),
for the provision by Vodacom to Transnet of voice and data services.
[7]
Shortly after the conclusion of this agreement,
MTN on 8 February 2018 reinstated its urgent application.
Transnet in turn
referred a complaint against MTN to ICASA’s
Complaints and Compliance Commission (“
CCC
”)
and on 19 March 2018 a hearing before that body took place.
Both parties were heard but its conclusion and recommendation
were
reserved.
[8]
When on 22 March 2018 MTN’s application
came before the Gauteng Division, Johannesburg, it was struck from
the roll for lack
of urgency. Later that very day, the CCC
issued an interim ruling (which was dated 21 March 2018) in which it
said that it
would hold over its decision on the merits until the
High Court had dealt with MTN’s urgent application. MTN
thereupon
set down its urgent application for an interdict on the
ordinary opposed roll for 14 May 2018. It was removed from that
roll
by Wepener, J on 24 April 2018 for lack of compliance with the
Practice Manual.
[9]
On 26 April 2018 the CCC recommenced to ICASA’s
council that MTN be ordered to port all Transnet’s cell phone
numbers
onto Vodacom’s network. ICASA’s council
approved that recommendation and on 3 May 2018 issued an order to
that
effect.
[10]
In the meantime MTN’s application to
challenge the award of the tender and the subsequent contract to
Vodacom came before
Sutherland, J and it is that application which
his Lordship dismissed on 18 June 2018. He dismissed MTN’s
application, declared
the award of the tender to Vodacom free of any
irregularities, and declared that the contract between Transnet and
Vodacom pursuant
to the award of the tender was validly concluded.
[11]
In my judgment on the merits I pointed out that
the reasoning of the CCC, which was accepted by the ICASA council,
was that the
porting regulations published in Government Gazette No
28091 of 30 September 2005 compelled MTN to port, irrespective of the
validity
of the underlying agreement, since the regulations list in
regulation 4(9) the exhaustive grounds upon which MTN might reject a
porting request. These exhaustive grounds do not include the
existence of a valid and binding agreement between Transnet
and MTN.
[12]
This reference to the existence of a valid and
binding agreement between Transnet and MTN formed a major part of the
debate on the
merits in the matter before me. MTN resisted an
order directing it to port, because – so it argued - Transnet
had not
succeeded in validly terminating the prior agreement that had
been in existence between MTN and Transnet. On this argument,
Transnet
therefore had no power to enter into a valid agreement with
Vodacom; and this court could not enforce against MTN the Transnet
decision to award the contract to Vodacom, because MTN itself still
had a binding contract with Transnet.
[13]
The simple point that MTN took in support of its
proposition that its contract with Transnet was still extant, was
that when Transnet
purported to terminate the contract, its notice of
termination was defective, because the contract required of Transnet
to give
a written notice of cancellation of “…
not
less than 1 (one) calendar month
”.
MTN argued that that reference meant not simply one calendar month,
but actually one
named
calendar month. On the facts, Transnet had given a notice on 8
March 2018, purporting to terminate the contract with effect
from 9
April 2018. MTN argued that the notice ought to have terminated
the contract with effect from 30 April 2018 and not
9 April 2018.
[14]
In my judgment I concluded that MTN’s
submission was incorrect and, relying on LAWSA Volume 27, “
Time
”,
by E Cameron (Revised by M Dendy), the correct legal position was
that unless there were contrary indications, a reference
to “
calendar
month
”, even in a civil contract, meant
a period which commences on a specific date in one month and
terminates on the same date
in the next month.
[15]
MTN also took a second point before me, which was
that it was entitled to challenge collaterally the validity of the
administrative
action upon which Transnet relied in its application
before me to compel MTN to port, the administrative action being the
order
of the ICASA council.
[16]
In my judgment I acknowledged that a defensive
challenge to the legal validity of the action relied upon by the
administration for
the coercive action was, in principle, available
to MTN. But I held also that the substantive underpinning of
MTN’s
collateral challenge to the validity of the ICASA council
order was destroyed by the combined effect of my finding that the
Transnet/MTN
agreement had been validly terminated, and by the
dismissal by Sutherland, J of MTN’s challenge to the validity
of the tender
award to Vodacom, coupled with his declaration that the
contract between Transnet and Vodacom had been validly concluded.
[17]
In my judgment on the application for leave to
appeal I held that no reasonable prospect of success had been shown
and on that basis
I dismissed that application. MTN has
subsequently applied to the Supreme Court of Appeal for leave to
appeal against the
order I made against it in favour of Transnet in
the main application, and that application is currently pending.
[18]
In consequence of that step,
section 18
of the
Superior Courts Act 10 of 2013
applies.
S.18(1)
to s.
18
(3) provide as
follows:
“
18.Suspension
of decision pending appeal
(1)
Subject to subsections (2) and (3), and unless
the court under exceptional circumstances orders otherwise, the
operation and execution
of a decision which is the subject of an
application for leave to appeal or of an appeal, is suspended pending
the decision of
the application or appeal.
(2)
Subject to subsection (3), unless the court
under exceptional circumstances orders otherwise, the operation and
execution of a decision
that is an interlocutory order not having the
effect of a final judgment, which is the subject of an application
for leave to appeal
or of an appeal, is not suspended pending the
decision of the application or appeal.
(3)
A court may only order otherwise as
contemplated in subsection (1) or (2), if the party who applied to
the court to order otherwise,
in addition proves on a balance of
probabilities that he or she will suffer irreparable harm if the
court does not so order and
that the other party will not suffer
irreparable harm if the court so orders.
”
Vodacom’s
submissions
(20)
Vodacom thus applies for an order that my order
not be suspended. In moving its application, Vodacom submitted that
MTN was conducting
the appeal process in bad faith. It
submitted that under section 173 of the Constitution, this court has
the inherent power
to protect and to regulate its own process and,
also within that power, to prevent any possible abuse of process.
It relied
in this regard on
South African
Broadcasting Corp Ltd v National Director of Public Prosecutions and
Others
[2006] ZACC 15
;
2007 (1) SA 523
(CC) at para
[90]
.
Based on that proposition, it submitted that its application for an
order that my decision not be suspended pending MTN’s
application to the SCA for leave to appeal, should be granted.
(21)
Mr Chaskalson, SC who appeared for Vodacom,
submitted too that Vodacom will suffer irreparable harm if this court
does not order
that its decision is not suspended, and that MTN will
not suffer irreparable harm if this court issues such an order.
Fundamentally,
the submission was that whereas MTN would always be
able to sue Transnet for contractual damages should it transpire that
MTN’s
contract remained valid and Transnet acted in breach of
it, Vodacom did not have a similarly enforceable cause of action
against
MTN should it turn out that all along Vodacom was correct and
MTN not.
(22)
He pointed out that the contract between Vodacom
and MTN is a three years fixed term contract that has commenced
running, and that
accordingly for so long as Vodacom is being kept
out of the contract, its potential damages are escalating
exponentially and commensurately.
Mr Chaskalson submitted that
Vodacom did not have an effective alternative cause of action against
MTN for two reasons.
(23)
First, the cause of action would be for pure
economic loss and our courts are slow to recognise such a cause of
action. But
second, he submitted that it would be difficult to
prove negligence if MTN responds by asserting it was acting upon
legal advice
in adopting the stance that it did. Accordingly,
so submitted Mr Chaskalson, if the order sought is not granted, the
balance
of irreparable harm favours MTN and not Vodacom, and thus
Vodacom clears the threshold referred to in section 18(3) of the Act.
(24)
So far as concerns “
exceptional
circumstances
”, Mr Chaskalson submitted
that these are established by the following facts. First,
contrary to the usual scenario,
in this matter there was an earlier
decision by the ICASA council in favour of the position supported by
Vodacom before this court
in the matter before me. This
cements, in a way, the correctness of this court’s judgment.
(25)
Second, Mr Chaskalson submitted that the conduct
of MTN is inconsistent with procurement legislation and he referred
in this regard
to Annexure “TS23” page 123 of the main
application. He submitted that MNT has by now extorted more
than R100
million in conflict with procurement legislation.
Third, he submitted that this application was brought by way of
urgency;
and fourth, he submitted that the merits were strongly in
favour of Vodacom.
MTN’s
submissions
(26)
In response Mr Kutumela on behalf of MTN,
submitted that what Vodacom seeks is an extraordinary deviation from
the usual common
law position as well as from what is now the section
18(1) position, namely an “
exceptional
”
remedy. He submitted that exceptionality is not constituted by
mere loss of revenue, nor by a simple difference of
opinion between
parties as to who is right and who is wrong in law.
(27)
Further, Mr Kutumela submitted that despite the
contention by Mr Chaskalson, his own client had on affidavit asserted
that it has
a damages claim in delict against MTN, and Vodacom should
be kept by that assertion. The relevant passage quoted by Mr
Kutumela
from the affidavit of Vodacom in the main application reads:
“
Vodacom
maintains that it is entitled to delictual and restitutionary damages
from MTN for the losses that it is suffering at the
expense of MTN as
a result of MTN’s refusal to port the remaining Transnet
members to it …
”.
This
comes from the founding affidavit of Vodacom in its intervention
application, paragraph 17.4.5. Mr Kutumela submitted
that it is
not a requirement that MTN should show that Vodacom has a clear cut
alternative case; all that MTN need show is that
Vodacom has an
alternative cause of action.
(28)
Mr Kutumela submitted that fundamental to the
hierarchy of the courts and the judicial process is that finality in
litigation must
await the decision of the last and final court. That
would be the Constitutional Court, and not the Gauteng Division,
Johannesburg.
He submitted that MTN has a right to apply for
leave to appeal and if Vodacom’s application were granted, that
right would
be stultified.
(29)
In response to the submission that MTN was not
prepared to give an undertaking to pay damages should it turn out
that Vodacom was
right all along, Mr Kutumela submitted that there
was no obligation to give such an undertaking. He stressed the
submission
that MTN has a right to raise a collateral challenge, and
to raise it on appeal. As to prospects of success, he submitted
that the review record in the main review application was not
available when I gave my judgment and therefore it was not my
province
to pronounce on the prospects of success of that review.
On his submission, the prospects of success on appeal favoured MTN.
(30)
In reply, Mr Chaskalson submitted that Vodacom
accepted that it was difficult to find
mala
fides
on the part of MTN on these application
papers. That being so, if MTN acted in good faith, then there is no
alternative cause of
action available to Vodacom against MTN.
Discussion
(31)
There are principally three issues that weigh
with this court in arriving at a conclusion on the submissions of the
parties.
The
first issue
is
that the approach of a court to an application under
section 18
of
the
Superior Courts Act is
novel in the context of motion
proceedings. Although it is accepted that relief under
section
18
would at least ordinarily be granted upon application, still the
court is required to reach a decision “
on
a balance of probabilities
” so far as
concerns the respective irreparable harm that the parties will
suffer. This is an unusual measure to be
applying in motion
proceedings.
(32)
Usually motion proceedings are not designed for
the determination of factual disputes on a balance of probabilities:
National Director of Public Prosecutions v
Zuma (573/08)
[2009] ZASCA 1
(12 Jan 2009) at [26]
:
“
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special they cannot be used to resolve factual
issues because they are not designed to determine probabilities.
It
is well established under the Plascon-Evans rule that where in motion
proceedings disputes of fact arise on the affidavits,
a final order
can be granted only if the facts averred in the applicant's (Mr
Zuma’s) affidavits, which have been admitted
by the respondent
(the NDPP), together with the facts alleged by the latter, justify
such order. It may be different if the respondent’s
version
consists of bald
or uncreditworthy denials, raises fictitious disputes of fact, is
palpably implausible, far-fetched or so clearly
untenable that the
court is justified in rejecting them merely on the papers. The court
below did not have regard to these propositions
and instead decided
the case on probabilities without rejecting the NDPP’s
version.”
(33)
It is for
this very reason that judgments such as
Plascon-Evans
Paints (Tvl) Ltd v Van Riebeeck Paints (Pty) Ltd. (53/84)
[1984]
ZASCA 51
;
[1984] 2 All SA 366
(A);
1984 (3) SA 623
;
1984 (3) SA 620
(21 May 1984)
and the many judgments that are annotated on it, came to see the
light. There are firm rules that apply when final relief
is
sought on affidavit, and equally when interim relief only is sought
in motion proceedings. But the legislature has now
swept aside
those rules of practice by exacting of a court, as I have said, to
determine the issue of irreparable harm on a balance
of
probabilities. That is the approach that I proceed to adopt.
(34)
The
second overarching
issue
flows from the one just mentioned.
That is to determine who between MTN and Vodacom, on a balance of
probabilities and not
constrained by
Plascon-Evans
,
stands to suffer irreparable harm more than the other if the Vodacom
application before me were granted or conversely refused.
In
this context the parties compared their respective positions (as I
have indicated above) relative to the availability of damages
claims
to make good any loss that each may suffer if the suspension judgment
went against them.
(35)
In other words, Vodacom argued that if my order
was suspended, so that MTN could carry on providing the mobile
telephony services
pending its appeal, Vodacom’s ultimate
residual damages claim against MTN would be far less effective than
MTN’s damages
claim against Transnet if my order was not
suspended, and MTN was thus directed to port. MTN argued the mirror
position. The irreparable
harm debate was therefore decked on this
table, and that is what I am required to call.
(36)
Now litigation in the High Court to recover pure
financial loss, be it delictual or contractual, is always a drawn out
process.
It is also very costly. However in this matter
the two protagonists are mega-corporations and the damages are, at
least potentially,
very sizeable. They are not put off by the
prospect of High Court litigation, as the proceedings before me have
illustrated.
And so it seems to me that the mere fact that MTN could
sue Transnet for contractual damages in due course, or conversely
that
Vodacom could sue MTN for delictual damages in due course, is
evenly balanced.
(37)
But what is not evenly balanced is that, in my
view, a cause of action by MTN against Transnet for breach of
contract is a much
easier row to hoe, than is a delictual cause of
action by Vodacom against MTN. I say that for the following
reasons.
(38)
A contractual damages claim does not require
proof of a state of mind as does a delictual claim; nor does it
require assessing the
conduct of the guilty party against a notional
standard. All that MTN would have to show, was that the
termination by Transnet
of the contract with MTN was –
objectively - bad in law. The quantification of the damages would
then follow as a matter
of arithmetic. It may be that there is
a case to be made that the damages, being in the nature of special
damages (loss of
profit), would have to be shown to fall within the
contemplation of the parties when the contract was entered into. But
I suggest
that, given the nature of the contract, this would not be
insurmountable at all.
(39)
Against that Vodacom, to succeed ultimately in
its delictual action against MTN, would have to show that public
policy demanded
the existence of a duty in law on the part of MTN
owed to Vodacom – in effect - to concede that Vodacom’s
position
regarding the termination of the contract between Transnet
and MTN, was correct all along; and Vodacom would additionally have
to show that MTN negligently breached that duty by adopting a
contrary position. In doing so Vodacom would find itself in
the
invidious position of having to argue that the opposing position held
by MTN was so bad in law that no reasonable person would
have adopted
that position.
(40)
I have grave reservations as to whether this
could ever be shown. It seems to me that Mr Chaskalson is
correct when he submits
that the delictual cause of action by Vodacom
against MTN for delictual loss represented by pure economic loss is
an alternative
which is far more esoteric and difficult to show than
is the contractual alternative available to MTN against Transnet. I
agree
therefore that, on a balance of probabilities, Vodacom has
shown that the requirements of
section 18(3)
have been met.
(41)
It follows that I disagree with Mr Kutumela’s
submission that it is not for this court to analyse whether the
alternative
case that avails is good or bad in law. All that is
necessary, according to his submission, is to identify whether such a
case
(available to Vodacom) exists; if it does, then that weighs
against directing that the order not be suspended pending the appeal.
That is to my mind taking far too impractical a view of the matter.
If an alternative damages cause of action is one in form only
but not
in substance, then the party in whose favour the judgment was given
will be denied the vindication of its rights if the
order is
permitted to remain suspended.
(42)
That brings me to the
third
issue
, being the existence of “
exceptional
circumstances”
. As occurred in
Incubeta
Holdings (Pty) Ltd v Ellis, 2014(3) SA 189 (GJ)
,
the right which was vindicated in favour of Vodacom is one which has
a use-by date. If the process of appeals, perhaps not
stopping
at the Supreme Court of Appeal but even going on to the
Constitutional Court (given MTN’s financial muscle), has
the
effect of wiping out any practical effect which a favourable judgment
in favour of Vodacom will have, then it seems to me that
that would
be destructive of the rule of law. It implies that the very process
of appeals would be permitted, of itself, to destroy
the advantage of
the vindication of rights.
(43)
No doubt different considerations might apply if
the prospects of success on appeal are held to be good. But in
this matter
the prospects of success on appeal have been held to be
poor. Therefore this court, if MTN were to be correct in the
present
application, is being asked to ignore the fact that it has
decided that MTN do not have good prospects of success on appeal; and
yet the same court is being asked to allow the process of two
potentially weak appeals to destroy through the effluxion of time
the
vindication by Vodacom of its rights. That seems to me to be a
legal perversity which qualifies as exceptional circumstances
for the
purposes of
section 18(1)
of the
Superior Courts Act.
(44
)
In these circumstances I am persuaded that
Vodacom’s application must be granted and I make an order in
terms of prayers 1
and 2 of the Notice of Motion dated 19 September
2018, except that the costs of the application are on the party and
party scale.
WHG van der Linde
Judge,
High Court
Johannesburg
For
the applicant:
Adv M Chaskalson, SC
Instructed
by:
Edward Nathan Sonnenbergs Inc
Applicant’s
Attorneys
The Marc
128 Rivonia Street
Sandton 2196
Tel: (011) 269 7600
Email:
mrossouw@ensafrica.com
smbatha@ensafrica.com
Ref:
SMbatha/MRossouw/0426427
For
the 1
st
respondent:
Adv L Kutumela
Instructed
by:
Werksmans
Attorneys
1
st
Respondent’s Attorneys
155 – 5
th
Street
Sandton
Johannesburg
Tel: (011) 535 8145
Email:
cmanaka@werksmans.com
Ref:
CManaka/MOB18149.57
Argued:
21 Nov 2018
Judgment:
26 Nov 2018