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[2018] ZAFSHC 179
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Quickleap Investments 438 (Pty) Ltd v Department of Human Settlements of the Free State Province and Others (1481/2018) [2018] ZAFSHC 179 (22 November 2018)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number:
1481/2018
In
the matter between:
QUICKLEAP
INVESTMENTS 438 (Pty)
Ltd Plaintiff
and
THE
DEPARTMENT OF HUMAN SETTLEMENTS
OF
THE FREE STATE PROVINCE First
Respondent
THE
MATJHABENG LOCAL MUNICIPALITY Second
Respondent
THE
MEMBER OF THE EXECUTIVE COUNCIL
FOR
COOPERATIVE GOVERNANCE, TRADITIONAL
AFFAIRS
AND HUMAN SETTLEMENTS OF
THE
FREE STATE PROVINCE Third
Respondent
THE
MINISTER OF HUMAN SETTLEMENTS Fourth
Respondent
HEARD
ON:
23 AUGUST 2018
CORAM:
P
MOLITSOANE, J
JUDGMENT
BY:
P MOLITSOANE, J
DELIVERED
ON:
22 NOVEMBER 2018
[1]
This is an application for a declaratory order in the following
terms:
1.
It is declared that the First Respondent ‘s
purported cancellation of the agreement between the Applicant and the
First Respondent
pertaining to the development and construction of
social housing in Hani Park Informal Settlement as a registered CDM
Project is
unlawful;
2.
It is declared that the agreement between
the Applicant and the First Respondent pertaining to the development
and construction
of social housing in the Hani Park Informal
Settlement as a registered CDM Project is consequently still valid,
in full force and
effect and enforceable;
3.
It is declared that the Applicant has the
right to continue with the agreed upon works for the development and
construction of social
housing in the Hani Park Informal Human
Settlement as a registered CDM Project and the First Respondent is
obliged to pay to the
Applicant the agreed upon compensation for such
works;
4.
It
is declared that the Second Respondent’s failure to, at its own
costs, establish
[H1]
,
install and complete a fully functional sewerage system at the
relevant building site situated in the Hani Park Informal Settlement
has no effect;
5.
The Applicant’s right to continue
with the agreed upon works for the development and construction of
social housing in the
Hani Park Informal Human Settlement as a
registered CDM Project, and on
6.
The First Respondent’s obligation to
pay to the Applicant the agreed upon compensation for such works;
7.
It is declared that once the Second
Respondent has, at its own costs, established, installed and
completed a fully functional sewerage
system at the relevant building
site situated in the Hani Park Informal Settlement, which sewerage
system should be capable of
functioning within normal and acceptable
engineering standards of a sewer network, and which sewerage system
should in particular
be able to sufficiently convey waste water and
sewerage from each house on the aforesaid building site up to(and
connected to)
the main sewerage line of the Second Respondent, the
Applicant and the First Respondent are entitled to deal with the
applicable
carbon credits in terms of the aforesaid agreement between
them;
8.
The First Respondent is ordered to pay the
costs of the application.
[2]
The 1
st
Respondent opposes the application while the third
and fourth respondent indicated that they will abide the order of
this Court.
The 2
nd
respondent did not oppose the
application.
[3]
On the 4
th
April 2007 and at Welkom the Applicant and the
2
nd
Respondent entered into a written land availability
agreement (the LLA) relating to the development of a residential
township land
described as ‘Extension 19, Thabong and
Extension20, Thabong’. The purpose was to erect low cost
housing. The LLA was
subject to the following suspensive conditions
that the second respondent shall:
“
14.1.1 Proclaim
the Land, attend to the infrastructure pertaining to roads, water,
electricity and sewerage;
14.1.2 Arrange for
movement of occupants on the individual plots to allow the Developer
to erect the houses.
14.2 This agreement is
further subject to the suspensive that the developer shall:
14.2.2 obtain funding
from local or international; donors within 12(twelve) months of date
of signature of this agreement.
14.3 If at the end of the
period of 12(twelve) months the land remains underdeveloped, then
same in the absence of an extension
of this agreement, shall revert
back to COUNCIL to be dealt with as they may deem fit, with the
DEVELOPER having no right to claim
whatever costs incurred during the
duration of the agreement.”
[4]
Pursuant to the conclusion of the LLA the Applicant and 2
nd
respondent concluded further addenda extending the duration of the
LLA. The first addendum was concluded on the 6
th
October
2008 and was to endure for a period of 6 months beginning on the 1
st
November 2008 and ending on the 31 May 2009 while the second addendum
was concluded on the 15
th
April 2010 and endured until the
1
st
June 2014.
[5]
In order to provide for certain amendments of clauses 2 and 3 of the
LLA the Applicant and the First respondent concluded written
addendum
to the agreement and again on the 19
th
June 2012 entered
into a further written agreement. In view of my finding below it is
unnecessary to discuss the contents of the
agreements and the
subsequent extensions thereof.
[6]
The main grounds of the opposition by the 1
st
Respondent
of this Application are the following:
1.
That the applicant seeks relief by way of
application while a dispute of fact exist;
2.
That the Applicant seeks declaratory relief
and cannot do so by means of motion proceedings;
3.
That the LLA has an arbitration clause
which the parties to that agreement may not withdraw from.
4.
That the LLA has a non-variation clause and
can only be amended in writing, which amendment needs be signed by
the duly authorized
representatives of the parties to the LLA.
5.
That the suspensive conditions in the LLA
were not fulfilled, which state of affairs means that the LLA never
became
perfecta;
6.
That the contract depends on the existence
of the LLA and as the LLA never came into existence, no contractual
relationship between
the Applicant and the First Respondent exist;
7.
In the alternative, the First
Respondent lawfully cancelled the contract as a result of the
Applicant’s breach thereof and
failure to remedy such breach.
In this regard the 1
st
Respondent apparently relies on the Applicant’s alleged duty to
sell ‘
carbon credits.’
[7]
At the onset this court was referred to the previous court
applications involving the parties. In particular the Applicant
caused an application to be issued in this court under case number
5963/16(the first application).This application was withdrawn
after
the respondents filed their opposing affidavits. Mr Johannes Petrus
Oosthuizen, the deponent in the founding affidavit in
this case
before me (the second application) was also the deponent in the
founding affidavit in case number 5963/16.The parties
in the first
application were cited as in the 2
nd
application. In both
these cases Mr Oosthuizen testified that the facts contained in the
founding affidavits of both applications
were, unless indicated
within his personal knowledge and were to the best of his knowledge
true and correct.
[8]
Mr Oosthuizen deposed in the first application that the Applicant and
the 2
nd
Respondent entered into a
verbal land
availability agreement
relating to the development of a
residential township on the land described as ‘Extension
19,Thabong’and ‘Extension20,Thabong’by
erecting low
income housing. In the 2
nd
application he makes the same
allegations under oath save to now change and indicate
that the
LLA was in writing
. He avers in the 2
nd
application
that at the time of launching the first application he had forgotten
about the existence of some of the written agreements
between the
Applicant and the 2
nd
Respondent. He further indicates
that he realised that he had unintentionally failed to disclose all
of the relevant facts in the
first application as a result of which
he withdrew the same. He subsequently brought an application in this
court under case number
5377/2077 compelling the 2
nd
Respondent to provide it with the LLA and copies of any or all
written approved extensions of the LLA. The 2
nd
Respondent, through its attorneys forwarded the LLA as well as an
addendum to the LLA signed on the 6
th
October 2008.The
attorneys to the 2
nd
Respondent also alluded to the fact
that their client only had the LLA and the addendum dated 6
th
October 2008 in their possession and that ‘
a diligent search
was conducted in respect of other agreements [the applicant]
requested but same could not be found despite such
a search’
(my emphasis).
[9]
Mr Oosthuizen in the first application emphatically states that:
“
5.6.2.1 Even
though clause 3 of annexure ‘QL4’ [in
casu
it is
annexure ‘QL7’] hereto may create…an impression,
the Applicant and the First Respondent never concluded
a written
agreement prior to annexure ‘QL4’hereto.” It is
pertinently clear that the Applicant denied vehemently
that LLA was
ever concluded between the Applicant and the 2
nd
Respondent.
Its existence was therefore denied. The explanation Mr Oosthuizen
gives that he had forgotten about the existence of
other agreements
is simply too easy and unacceptable. The reason I say so is that the
LLA is actually the agreement upon which
this application or any
action whatsoever the Applicant may have against the respondents and
all the subsequent agreements are
based on. It is actually the
foundation upon which the whole cause of action is based or founded
upon. It stands to reason that
without the LLA he had no action. How
could he then forget about this document which is a basis for a claim
of millions of rands?
It is difficult to fathom. Quiet apart
from this, one is left wondering what else Mr Oosthuizen has
forgotten or as he said in
his own words that he ‘unintentionally
failed to disclose’ certain facts.
[10]
Over and above the 2
nd
Respondent indicated that it had
only the LLA and the addendum signed on the 4
th
April 2007
in its possession. Curiously the 2
nd
Respondent says a
diligent search was conducted in respect of other agreements the
Applicant requested but same could not be found.
This leaves one with
a question mark of whether there are other agreements. The 2
nd
Respondent does not say that these were the only two agreements
between the parties, but what it actually says is that they were
the
only ones in its possession. In these circumstances the
Respondents have the right to cross examine the witnesses of
the
Applicant.
[11]
In view of the fact that I intend to deal with this matter on the
basis of whether the Applicant ought to have brought
an action
or an application I will not deal with all other reasons for opposing
the application as I am of the view that this fact
may dispose of
this matter.
[12]
The Applicant avers that the suspensive conditions in the LLA and the
1
st
and 2
nd
Respondent and 2
nd
addendum have been fulfilled. On the other hand, it is contended on
behalf of the 1
st
Respondent that the suspensive
conditions have not been fulfilled and as such no contract came into
being. The 1
st
Respondent further contends that the
conclusions of the addenda could not extend an agreement which did
not exist or which had
lapsed.
[13]
Perusal of both applications reveals that there is a dispute whether
the suspensive conditions have been fulfilled or not.
Mr Mokhesi
testifying on behalf of the First respondent makes a bald statement
that same have not been fulfilled. He does not explain
in what way
the suspensive conditions were fulfilled. On the other, the Applicant
says if Mr Mokhesi alleges in respect of
non- fulfilment of
suspensive conditions that the second respondent has failed to
“….attend to the infrastructure
pertaining to roads,
water, electricity and sewerage as clause 14.1,1 of the LLA provides
then in that case, the Applicant submits,
inter alia
, that the
sewerage system that was installed by the 2
nd
Respondent
in the Hani Park Informal Settlement will have to be rectified so
that it becomes capable of functioning within the
normal and
acceptable engineering standards of sewer network.
[14]
The importance of the suspensive condition in the paragraph above
arises when one has regard to the following: Following the
conclusion
of the LLA the Applicant and the 1
st
respondent entered
into a Memorandum of Understanding meant to foster a co-operative
working relationship between the two parties
in order for the 1
st
Respondent to be a programme champion aimed at providing funding and
housing solutions for the poor in Hani Park Informal Settlement.
The
understanding envisaged that the First Respondent would provide
funding for building of 2000 households.
[15]
The applicant was to sell carbon credits to overseas markets
whereupon 70% of the proceeds were to be reinvested to the 2
nd
Respondent to build a further 4000 households. According to the 2
nd
respondent the first 2000 houses were erected and the obligation to
sell the carbon credits arose. The First respondent contends
that the
Applicant failed to sell the carbon credits and were thus in breach
of the agreement.
[16]
The applicant contends that both the Applicant and 2
nd
Respondent had certain crucial roles to play for the successful
implementation of the LLA. The 2
nd
Respondent’s role
included the establishment, inter alia, of a fully function sewerage
system. According to the Applicant
in order to qualify for carbon
credits that could be sold in the open market, carbon credits had to
be monitored, assessed and
validated as being reduced and avoided.
This could only be done when a fully functional service, including
sewerage system had
been installed, connected and commissioned.
[17]
Applicant contends that the 2
nd
Respondent failed to
install a fully functional sewerage system. This conclusion is based
on a purported report of an engineer
of the Applicant. Applicant
appended to the founding affidavit a letter from Umfundo Professional
Services CC. This letter appears
to have been written by one Andre
Van Rooyen, an engineer. This letter purports to give expert
testimony. That letter and
its purported testimony cannot be
admissible for the following reasons. The Applicant has failed to
qualify Van Rooyen as an expert.
No evidence was led as to his
qualifications. No evidence was led regarding which field of
engineering he is qualified in and specifically
whether he can be
qualified in making opinions on sewerage connections. No evidence has
been led as to area of his speciality.
No evidence was led as to his
practical experience. From the papers filed it is indeed difficult to
conclude that he is an expert
in the field relating to sewerage
systems. His evidence was also not presented as required. The motion
procedure does not relieve
a party of the Rules applicable to the
calling and presentation of expert testimony. In the absence of
proper expert evidence it
is difficult to conclude whether the
sewerage system did function properly or not and if not, and what the
cause therefore was.
This in turn centres on a dispute of whether the
suspensive condition in the LLA has been fulfilled or not. The
Applicant bears
the onus of proving the fulfilment of suspensive
conditions and in the absence of credible evidence I am unable to
find that the
applicant has complied with all its obligations. This
is clearly a dispute of fact the Applicant should have foreseen.
[18]
From the afore going it is clear that there is a serious dispute of
facts which the Applicant should have foreseen in view
of the fact
that the issues raised herein were also the subject of contention in
the first application. I find that the Applicant
should have
proceeded by way of action. Although the 2
nd
respondent
did not oppose the application I am unable to find in favour or
against it as the issues raised are equally applicable
to it.
[19]
In view of the importance of the matter to the parties as well as the
constitutional impact of the matter to provide adequate
housing to
the poorest of the poor, I am of the view that the following order
will be appropriate:
ORDER
1.
The application is referred to trial;
2.
The Notice of Motion and the founding
affidavit shall stand as summons and the answering affidavit as entry
of appearance to defend;
3.
The applicant shall file its declaration
within twenty (20) days of this order;
4.
Thereafter the applicable provisions of the
Uniform Rules of this Court are to apply;
5.
The costs shall be costs in the cause.
__________________
P.E.
MOLITSOANE, J
On
behalf of Applicant: Adv. JF KRUGER
Instructed
by: Graham Attorneys
Bloemfontein
On
behalf of defendants: Adv. N SNELLENBURG SC
With
him Adv. L.R BOMELA
Instructed
by: STATE ATTORNEY
BLOEMFONTEIN
[H1]