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[2018] ZAECBHC 5
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Office of the Premier: Eastern Cape v Reity Holdings CC and Others (248/2018) [2018] ZAECBHC 5 (6 April 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, BHISHO)
CASE
NO: 248/2018
NOT
REPORTABLE
In
the matter between
THE
OFFICE OF THE PREMIER: EASTERN CAPE
Applicant
and
REITY
HOLDINGS CC
First
Respondent
REITY
TRADING ENTERPRISE CC
Second
Respondent
HABITAT
MODULAR CONSTRUCTION (PTY) LTD
Third
Respondent
REASONS
FOR ORDER
HARTLE
J
[1]
On Friday, 6 April 2018, the parties argued separate urgent
applications before me.
I took the matter under consideration
and delivered an order on 10 April 2018 in the following terms:
“
[1]
The urgent application by the applicant for a declarator and
ejectment is dismissed
with costs, such costs to include the costs of
the employment of two counsel;
[2]
The application for spoliation by the second respondent succeeds;
[3]
The applicant is directed to restore the second respondent’s
possession
of the demarcated construction sites at the ten premises
listed in paragraphs 2.1-2.10 of the second respondent’s notice
of counter application;
[4]
The applicant is directed to pay the costs of the second respondent’s
counter application on the party and party scale, such costs to
include the costs of the employment of two counsel;
[5]
The third respondent’s application for the relief sought in
paragraphs
3-8 of its notice of motion is dismissed with costs, such
costs to include the costs of the employment of two counsel; and
[6]
There will be no order as to costs in respect of the proceedings of
29 March
2018.”
[2]
These are my reasons.
[3]
Prior to my order, the duty judge on 22 March 2018 issued an order
against the first and
second respondents, ostensibly by consent,
providing that:
“
1.
The Respondents will cease all operations at the various sites
pending the hearing of the
application on the 29
th
March
2018.
2.
None of the parties and/or any person may remove any of the material
at any of
the various sites pending the hearings of the application
on the 29
th
March 2018.
3.
The security personnel employed by the Respondents at the various
sites must
ensure that the above has been (complied) with.
4.
The application will be heard on the 29
th
March 2018 at a
time to be confirmed by the Registrar on the 26
th
March
2018.
5.
Costs are in the cause.”
[4]
When the matter came before court on 29 March 2018 the third
respondent had by then issued
out an application to intervene in the
ejectment application in which it sought certain interdictory and
interlocutory relief striking
out passages in the second respondent’s
papers, also on the basis of urgency. For reasons which escape
me, since neither
the applicant or the third respondent believed that
the latter had any interest in the
lis
in the main
application, the parties agreed to a consent order in the following
terms:
“
1.
The application is postponed to Friday the 06
th
April 2018
at 11h00.
2.
Habitat Modular Construction (Pty) Ltd is granted leave to intervene
as the Third
Respondent in this application;
3.
The question of whether the Third Respondent should be ordered to pay
the costs
occasioned by this postponement on an attorney and client
scale, such costs of Senior and Junior Counsel and including the
travelling
costs (airfare) are reserved solely to accommodate the
Presiding Office(r)’s indisposition;
4.
The Third Respondent is ordered to file its answering affidavit in
relation to
the averments and allegations contained in the Second
Respondent’s answering affidavit, if so advised by no later
than 16:00
on Monday the 02
nd
of April 2018;
5.
The Applicant and the Second Respondent will if so advised, file
their Replying
Affidavits, if any before 16:00 Wednesday the 04
th
April 2018, where after the Third Respondent will attend to the
indexing and pagination of the entire application and the Third
Respondent will provide the Applicant and the Second Respondent’s
attorneys of record with a comprehensive index by no later
than 12:00
on Thursday the 05
th
of April 2018.
6.
The Second Respondent is to file its answering affidavit to the
application by
the Third Respondent on Thursday the 29
th
of March 2018, if so advised by no later than 16:00 on Monday the
05
th
of April 2018.
7.
The Parties are entitled to file further heads of argument, if so
advised by
no later than 12:00 on Thursday the 05
th
of
April 2018.
8.
The status quo pertaining to the order that was made by this Court on
the 22
nd
of March 2018 is maintained on condition that all
parties reserve their rights in relation to the disputes on the
papers.”
[5]
Paragraph 3 of the order requires some elucidation. The duty
judge had that morning
been involved in a motor vehicle accident and
was unable to hear the matter, resulting in the inevitable
postponement, albeit the
third respondent had complicated the matter
by bringing its application to intervene at the doors of the court so
to speak.
[6]
The “status quo” referred to in paragraph 8 of the order
was reserved even further
pending the consideration of the matter
between my hearing the application and issuing the order which I did.
[7]
The applicant is the Office of the Premier of the Eastern Cape, the
protagonist of the first
perceived emergency. It launched an
application on 12 March 2018 seeking an order ejecting the
respondents from certain construction
sites at school premises in the
province at which it was alleged they were unlawfully holding over
after cancellation or the expiry
of a construction contract. It
also sought related declarators confirming that the underlying
agreements were cancelled or
had terminated naturally by effluxion of
time and that the respondents had no right to occupy, possess or hold
over at the relevant
construction sites.
[8]
The relief sought was directed against both the first and second
respondents for “want
of avoiding confusion and doubt regarding
relief and/or orders sought”. It transpired that although
the construction
contract, conceded to have been “part of the
tender documents” and thus “binding on the second
defendant”,
the first respondent had been reflected in the
service level agreement as the contractor. For what it is
worth, there is
apparently no registered close corporation bearing
the name cited by the applicant as the first respondent. The
second respondent
says that “Reity Holdings” is however a
trade name used by it. The matter was initially opposed on
behalf of
both respondents but when its representatives were served
with a notice in terms of rule 7(1) requiring them to produce a power
of attorney from the “entity” cited as the first
respondent and on whose behalf they had purported to “act”,
they promptly withdrew from acting for this party.
[9]
In my view nothing turns on this although the applicant made capital
of it and in effect
changed its cause of action based on this
particular development. I will shortly explain the context.
I accepted the
second respondent’s legal representative’s
explanation however, there being no reason not to, that it had been a
mistake
to go on record for the first respondent and that no
mala
fides
were intended.
[10]
It is common cause that a joint venture entity (“JVE”),
known as Habitat Modular
Designs (“Habitat”)/Reity
Trading Enterprises, had been awarded a tender for a project
described as the “Emergency
Construction of Classrooms and
Ablution Facilities Using Alternative Construction Methods”,
with reference number SCMU –
16/17-0008 and that the second and
third respondents were members of this JVE.
[11]
Although they were supposed to be joined at the hip as it were in
respect of clusters A
and B of the project when the tender was
awarded, the applicant alleged that a disagreement ensued between the
members after the
award of the tender,
inter alia
regarding
the third respondent’s concerns that the second respondent was
operationally and financially incapable of carrying
out the works in
terms of the contract. The applicant had in consequence sought
to interpose itself in this debacle, but
to no avail. The
upshot of this impasse is that it had resolved to split the work
between the parties, giving individual
responsibilities to each in
respect of designated shares, which it advised the parties of by
letter dated 31 May 2017. It
was envisaged thereby that each
party would deliver separately in terms of their respective contracts
without placing reliance
on the other.
[12]
Although
the second respondent felt it has been forced into this position as a
standalone contractor against its will, as I understood
its sole
member to mean, this led to the signing of a separate service level
agreement with the applicant in respect of the apportioned
works.
Whereas the tender had been awarded in March already, a fact which
the second respondent says it learnt of only after
seeing a published
notice, the relevant service level agreement was only signed on 4
July 2017.
[1]
[13]
The
applicant claims however that although the service level agreement
arising from the award of the tender was supposed to have
been
entered into with the second respondent, it was instead concluded
with the first respondent which is not only an unregistered
close
corporation, but was not accredited for construction work with the
Construction Industry Development Board (“CIBD”)
an
agency of the department of Public Works.
[2]
[14]
Although
the applicant sought a declarator that both the service level
agreement and the JBCC be regarded as cancelled
vis
a vis
both the first and second respondents, it was clarified that the
circumstances under which the “novated” or separate
agreement had come to be concluded with an unregistered close
corporation and an unaccredited construction entity was “not
an
issue” to be determined before me. The applicant should
have disclosed this in my view because, as it turned out,
the second
respondent explained in its papers that this was clearly a mistake
and that the service level agreement fell to be rectified
in due
course to reflect the second respondent as the true contractor.
[3]
In any event, seemingly accepting that the second respondent was the
real macoy performing the works in terms of the service
level
agreement, despite what the contract in the applicant’s views
indicates, it noted an issue with it because it (clearly
after the
fact) purportedly had a level 1 contractor grading only which meant
that it could not perform contract works above the
value of
R200 000.00 in the public sector.
[15]
On 5
February 2018 the applicant sent a default notice to “Reity
Trading Enterprise” (which it is common cause was received
by
the sole member of the second respondent) which was premised on a
breach of clause 36.2 of the “JBCC Contract” (portions
of
which were only disclosed and relied upon in the application) and
clause 8 of the service level agreement (sic).
[4]
The notice was all over the place but its primary concern appeared to
be not that the second respondent had not delivered
but that it might
not be able to timeously and properly deliver on its obligations in
terms of the service level agreement.
As an aside the applicant
alleged that it had extended the time period for completion for the
works to 28 February 2018 as if to
point to an indulgence it had
shown the second respondent, but if one has regard to the applicant’s
letter informing it thereof,
the reason for the extension
self-evidently relates to the applicant’s inclusion of two
other schools and eleven more classrooms
with a financial implication
of an additional contract price of just under R6 million.
[5]
[16]
Despite the second respondent (as a legitimate partner in the JVE)
obviously having made
the grade for the award of the tender under the
relevant conditions which had applied when it was awarded, the
applicant in the
default notice now also sought to impose upon it an
obligation to provide proof of its CIDB grading. It was also
called upon
to satisfy the applicant as to the “availability of
funding”, a concern which the third respondent had notably
brought
to its attention.
[17]
The notice
evoked a response from the second respondent’s legal
representatives at the time, Messrs Thomas & Swanepoel
Inc., who
rejected the letter as an attempted repudiation of the agreement,
which the second respondent was not prepared to accept.
They
pointed out a number of issues arising, most notably that the
applicant had failed to make payment of certificate number 5
since
2017, an allegation not placed in dispute by the applicant.
[6]
[18]
The applicant simply steam rolled ahead and on 26 February 2018 wrote
a further letter
advising the second respondent that the contract was
cancelled for its failure to rectify the default to its satisfaction
and purporting
to deny it any further access to the construction
sites or from removing any materials. The involvement of the
South African
Police Service was threatened if it attempted to
persist in occupying the sites. The principals of the various
schools were
also instructed by the applicant to inform the second
respondent to stay off the construction sites and by all accounts
acted upon
such directions.
[19]
It was on the basis of this purported cancellation alternatively the
fact that the agreement
had supposedly expired on 28 February 2018,
since no further extension had been entertained (it is inexplicable
why not when the
works had been substantially increased without any
formal amendment to the agreement), that the applicant sought to
eject the “respondents”
(sic) or anyone claiming the
right to do so under their name, from occupying, possessing or
holding over at the construction sites.
[20]
On its own
showing, in the founding affidavit and from the annexures which the
applicant attached, it was abundantly plain that
its entitlement to
cancel the agreement was in serious contention, if not highly
questionable from a simple reading of its default
notice to the
second respondent, and that the second respondent had asked for the
issues which had arisen between them to be arbitrated
in terms of the
JBCC. This was reinforced by the second respondent’s
opposing papers put up to resist the relief sought
by the applicant,
a version I was obliged to accept on the basis of the
well-established Plascon-Evans Rule.
[7]
[21]
It was
further clear that the allegations in the applicant’s founding
affidavit setting out its cause of action were all over
the place,
and that it was ambivalent concerning the basis for its entitlement
to eject the second respondent from the construction
sites. It
equivocated between an expired agreement or one cancelled on proper
terms on the one hand, and on the other, hinted
at an “invalid
agreement” by virtue of Reity Holdings having concluded the
service level agreement with it instead
of the real macoy.
Despite this, it yet invoked the provisions of clause 36.5 of the
JBCC alleging that the respondents were
not entitled to remain in
possession because the JBCC specifically directs the “respondents”
to vacate and cease work
immediately upon cancellation.
[8]
[22]
It further also complained after the fact that the second respondent
was non-compliant
with the tender conditions and also accused it of
fraud, ostensibly to extricate itself from the agreement, if not on
one basis
then on another, and in my view to cast the second
respondent in a poor light. The applicant also made capital of
the fact
that the second respondent had not completed the building of
even one classroom or toilet in the emergency project without placing
the delay in its proper context.
[23]
It added the spin, to justify urgency, that the respondents’
presence at the construction
sites post cancellation/expiry was
causing “unrest” because of issues between the contractor
and its labourers which
compromised the safety of learners. The
applicant did not stop at creating an atmosphere of explosive
proportions to make
its case for urgency. It alleged that the:
“
untenable delay
were very likely to cause unrest to the various schools and
communities. This destructive consequence has
to be avoided.
Violence may result in destruction of property and loss of life.
I am informed by the various stakeholders
that tension is brewing,
more especially at the sites where the respondents had vanished and
abandoned the site only to re-emerge
in the face of cancellation of
the contract. This alone renders the matter to be urgent.”
[24]
Ms. Ntshingula, a chartered accountant and programme manager of
Emergency Construction
of Classrooms and Ablution Facilities using
Alternative Construction methods, in the Office of the Premier, who
deposed to the
founding affidavit on the applicant’s behalf,
also pointed to negative media reports arising from the respondents’
poor performance which she suggested tarnished the reputation of the
applicant in the eyes of the public, whereas these reports
self-evidently related to construction sites in Port Elizabeth and
had no bearing on the application.
[25]
She also unashamedly used emotional sway, alleging that the
respondents’ unlawful
conduct is a”
“
violation of
learners’ rights to education and dignity which also damages
the applicant’s reputation. Consequently,
there is
growing anxiety at various schools and communities in the areas the
schools are situated which has an imminent danger
to public
infrastructure thus rendering this matter to be urgent.”
[26]
After the attorneys representing the second respondent filed a notice
of withdrawal of
acting for the first respondent and only in its
replying affidavit, the applicant went full tilt at this development
as sealing
the fate of the second respondent as a fraud, and accusing
its attorneys along with it of being up to no good, justifying a
costs
award against them on a punitive scale. The applicant
purported to pass off this so-called concession by the second
respondent’s
attorneys as damning evidence that the service
level agreement had stealthily been concluded with a non-existing
entity, thus rendering
the contract (which it had asserted in its
founding affidavit had been
lawfully
cancelled by it) now
instead voidable because it had been entered into with the first
respondent and that no rights could accordingly
vest for the benefit
of the latter “on the facts of (the) case”. Because
it suited its purpose, it abdicated
the reliance by any party on “the
cancellation clause of an otherwise invalid and
void ab initio
contract” whereas a lawful cancellation had been the premise of
its application when it was first launched.
[27]
Needless to
say, I found that not only had the applicant failed to make out a
case for the relief sought but that it had also abused
the process of
court by putting up a heightened emotional plea of urgency. It
is most unfortunate that whereas the parties
had agreed to arbitrate
any dispute arising, the applicant had motivated its entitlement to
urgent judicial intervention on the
basis that by holding over the
respondents had purportedly undermined its constitutional imperative
to provide infrastructure at
the relevant schools in the form of
inter
alia
decent toilets and to protect and respect children’s
rights.
[9]
It just so
happened at the time that society was terribly outraged by the death
of a young learner in a pit latrine at a
school.
[28]
I must say that I was appauled at the egregiously high-handed
behavior of the applicant’s
staff involved in the handling of
the entire matter and their failure to respect the contractual rights
of a party which they purported
to ride rough shod over.
[29]
In the result the applicant’s urgent application was dismissed.
[30]
Concerning the spoliation application by the second respondent, I was
satisfied that it
had established the requisites for the grant of the
relief, namely that it had been in peaceful undisturbed possession of
the construction
sites (even if only by maintaining a presence at the
sites to preserve their lien) and that it had been deprived of its
possession
by the unequivocal instruction of the applicant to the
various schools to disallow them access. The applicant’s
defence
to the relief sought on this basis was a bare denial, but it
could hardly have been gainsaid even on its own showing that it had
gone out of its way to dispossess the second respondent from the
construction sites. The status
quo
had in fact already
been restored by this court’s order dated 22 March 2018, albeit
on the basis of the parties’ consent
and my order that the
spoliation application, urgent by its very nature, and necessary to
protect the second respondent’s
lien, was tantamount to
confirmation of this interim relief.
[31]
As for the third respondent’s application, it was obvious that
the parties were not
happy partners in the joint venture and that
separate service level agreements were concluded a result of their
inability to present
a unified front. The second respondent
made no bones about its true feelings toward the third respondent and
rather than
retract the allegations which the third respondent
contended were defamatory, instead repeated them in reply to the
application.
I made no pronouncement on the so-called
defamatory nature of the allegations. Indeed I was not required
to, the third respondent’s
application at the hearing being
confined on the basis that the allegations made in the impugned parts
were “scandalous”,
“vexatious” and irrelevant
to the
lis
between the applicant and the respondents in the
main application within the meaning envisaged by rule 6 (15).
[32]
Rule 6 (15) provides that the court may on application order to be
struck out from any
affidavit any matter which is scandalous,
vexatious and irrelevant, with an appropriate order as to costs,
including costs as between
attorney and client. But the court
may not grant the application unless it is satisfied that the
applicant will be prejudiced
if the application is not granted.
[33]
The irony of the third respondent being joined in the application is
that it did not wish
to concern itself at all with the
lis
between the applicant and the second respondent neither did it oppose
the relief sought in this respect. (The applicant held
a
similar view that the third respondent should not be joined in the
main application because it had no substantial interest in
the relief
that had been sought.)
[34]
Personally I would not have entertained the intervention application
but I was presented
with the third respondent’s joinder as a
fait accompli
. I was abundantly evident however that all
the third respondent sought to do by the joinder was to come on board
strictly
to protect its interests by clearing its name and having the
offending statements expunged as it were.
[35]
In my view even if those allegations may notionally have been
scandalous, vexatious or
irrelevant as between the applicant and the
second respondent, I was not satisfied that the prejudice envisaged
by the sub-rule
extends to the “prejudice” of a party
coming into the litigation for the express purpose of protecting its
good name
and reputation. In other words the prejudice
envisaged by the sub-rule must relate to prejudice naturally arising
in the
litigation and which would impact on the court’s
determination of that
lis
.
[36]
Ironically the third respondent motivated that the relief sought by
it was urgent and that
its application (which is in reality was an
interlocutory application) had to be heard as a preliminary
application at the hearing
of the main application. Whilst it
may well be that this is a requirement in the ordinary course, I did
not believe that
the right extended to a party standing outside of
the litigation to enter the fray on an urgent basis to meet that
requirement,
only there to profess that it actually had no interest
in the
lis
between the principal parties. In such a
situation the so-called urgency appeared to me to be contrived and
artificial.
In any event I believed that the prejudice
contended for by the third respondent if I failed to exercise my
discretion in favour
of granting its application could be ameliorated
by it suing the second respondent for defamation to assuage its good
name in due
course. I considered it unnecessary to entertain
its very parochial complaints of prejudice
vis a vis
itself
and the second respondent that had no bearing on the principal
lis
.
[37]
In the result I issued the orders which I did.
[38]
Because of the unfortunate circumstances in which the matter could
not proceed on 29 March
2018 due to my colleague’s
“indisposition”, I made no costs order arising from those
proceedings.
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE
OF HEARING: 6 April 2018
DATE
OF ORDER: 10 April 2018
DATE
OF REASONS: 5 June 2018
APPEARANCES
:
For
the applicant :
Messrs
Zilwa SC and Metu
Instructed
by
Mbana
Incorporated Attorneys
c/o
Mase & Mukoyi Attorneys,
King
William’s Town,
ref.
Mr. Mukoyi.
For
the second respondent :
Messrs
Botes SC and Van Gass
Instructed
by
Van
Der Merwe & Van Der Merwe Attorneys
c/o
Squire Smith & Laurie Inc.,
King
William’s Town,
ref.
Mrs. Frederichs.
For
the third respondent :
Messrs
Ntsaluba SC & Matanda
Instructed
by
JK
Malatji Attorneys
c/o
Mandla Falinthenjwa Inc.,
King
William’s Town,
ref.
Mr. Falinthenjwa.
[1]
A
copy of the JBCC was never provided although the applicant sought to
rely on its provisions
inter
alia
to indicate that the “respondents” were not entitled to
hold over after cancellation. Indeed the applicant
sought to
have the JBCC declared cancelled without even attaching a copy of
the contract to its papers.
[2]
In
terms of the
Construction Industry Development Board Act, No 38 of
2000
, the Board leads and sets standards for construction industry
stakeholders. It also maintains a national register of
contractors
which categorizes contractors in a manner that
facilitates public sector procurement as envisaged in
section 2
(d)
of the Act. Contractors are restricted by their grading
concerning the value of contract works they can tender for
in the
public sector.
[3]
It
is entirely probable that it was a mistake. The converse of
this proposition is that the applicant was hoodwinked into
entering
into a service level agreement, co-incidentally signed by the sole
member of the second respondent, as an imposter in
a situation where
the applicant had failed spectacularly to carry out any kind of due
diligence. Another obvious mistake
is that the member is
described as a “company director”, whereas the entity it
was engaging with was a close corporation.
[4]
Clause
8 has many sub-clauses extending over three pages. It is not
clear what clause the notice was specifically based
upon.
[5]
The
applicant’s failure to amend the agreement formally to include
this extra work was among the complaints of the second
respondent
that the applicant was not giving it a fair ride. The second
respondent claims it was only informed about the
extension
supposedly advised on 8 August 2018 according to the applicant, some
three weeks before receipt of the default notice.
On the
probabilities the extension letter is hardly consistent with the
second respondent supposedly being a defaulter.
To the
contrary, its responsibilities were added to rather than curtailed
[6]
Failure
to pay on the certificate is consistent with an earlier breach by
the applicant even if the second respondent was slow
in getting
around to making an issue of it.
[7]
Plascon-Evans
Paints (TVL) Ltd. v Van Riebeeck Paints (Pty) Ltd.
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) at 634E – 635C
[8]
The
applicant alluded to clause 36.5 of the standard JBCC which
apparently provides that:
“
36.5
Where this agreement is cancelled in terms of 36.0 the following
shall apply:
36.5.1
The employment of the contractor shall be cancelled and the
execution of the works shall cease.
The contractor shall
vacate the site subject to provisions of 36.5.6. The
contractor shall remain responsible for the works
in terms of 8.1
until possession is relinquished to the employer.”
The
second respondent denied that the provisions of clause 36 were
applicable in the scenario because of the applicant’s
own
default.
[9]
The
applicant alleged that the respondents continued occupation and
unlawful possession of the sites undermined the rule of law
and “a
legitimate government constitutional obligation to provide learners
with education, in a safe and dignified environment”.