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[2018] ZAECELLC 8
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Ntema Investments CC v Lukhozi Consulting Engineers (Pty) Ltd and Another (EL939/2018) [2018] ZAECELLC 8 (24 August 2018)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
EAST
LONDON CIRCUIT LOCAL DIVISION
CASE
NO: EL 939/2018
In
the matter between
NTEMA
INVESTMENTS
CC
Applicant
and
LUKHOZI
CONSULTING ENGINEERS (PTY) LTD
First
Respondent
HEAD
OF DEPARTMENT: EASTERN CAPE
DEPARTMENT
OF HUMAN SETTLEMENTS
Second
Respondent
JUDGMENT
HARTLE
J
[1]
The applicant launched an application for
final relief interdicting the first respondent from “forcefully
closing” a
construction site in the Frankfort Housing Project;
preventing it from carrying on its operations there, and from
interfering with
and terminating “the contract” between
the applicant and the second respondent.
[2]
In the founding affidavit, where the
applicant must make out its case, it describes itself as a close
corporation. The party
deposing to the principal affidavit, Ms.
Paulina Ramusi, is its sole member and she asserts pertinently that
it is this entity
on behalf of whom the proceedings are launched and
who has given her the necessary authorization to litigate.
[3]
The first respondent is simply described in
the founding affidavit as a company, carrying on business as
consulting engineers but
is not given any context in the founding
affidavit in relation to the applicant, the second respondent or “the
contract”.
[4]
The applicant explains that on 17 April
2017 “it” entered into a contract with the second
respondent in terms of which
it was contracted to construct 300 top
structures situated in the Amahlathi Local Municipality (“the
project”).
The applicant purported to attach a copy of
the contract at the heart of this application but the annexure
instead comprises a
“Funding Agreement” entered into
between the second respondent and “Ntema Investments CC JV
Sedtrade (Pty) Ltd”
(“the joint venture”) as
the “contractor” in respect of which the deponent is
ostensibly authorized as
“managing member”. Another
different contract features, a few pages of which were
co-incidentally put up by the
applicant to prove the manner in which,
and who, can terminate the contract. The latter extract however
put up by the applicant
ostensibly forms part of a standard JBCC
agreement which followed the signing of the funding agreement.
Evidently, although
it was not so expressly declared, this is the
contract is contention in the matter.
[5]
The applicant asserted, in support of its
contention that the conduct on the part of the first respondent which
it sought to restrain
was unlawful, that the first respondent was not
a party to “this contract” (ambiguously suggesting the
funding agreement),
and that it therefore had no right to terminate
and remove the applicant from the site and prevent it from
constructing the houses.
[6]
The supposed act of termination complained
of was given expression in a letter addressed by the first
respondent, not to the applicant
but to the joint venture referred to
above, dated 1 August 2018, in which it gave notice “in terms
of clause 36 of the JBCC
Principal Building Agreement Edition 5.0
(July 2007)”, in relation to the project, that the contract was
terminated by virtue
of the failure of the joint venture to have
rectified certain issues under the contract (“the notice”).
It appears
clearly from the very first sentence in the notice that it
was pre-empted “on an instruction received from the employer
dated
31 July 2018”. The specific grounds of termination
are listed and the joint venture is enjoined, in terms of clause
36.5.7 of the principal contract, to de-establish and remove all of
its temporary site structures, plants and surplus material
from the
site within fourteen days of the notice.
[7]
Ironically,
although the professed termination of the principal agreement, and
the first respondent’s entitlement to give
the notice at the
second respondent’s behest is the real gripe of the applicant,
the second respondent is cited in the application
only for its
interest in the matter and no relief is sought against it.
[1]
[8]
The applicant claims that it sought to make
enquiries from the second respondent about the “termination of
the contract”
and the intention of the first respondent to
close the site on 14 August 2018 heralded by the notice, but was not
favoured with
any reply. Undaunted by this lack of response,
the applicant instead focused its attention of the first respondent’s
supposed inference with its contractual relationship with the second
respondent, asserting that the first respondent is not empowered
by
the contract to terminate the agreement or to prevent it from
continuing to perform in terms thereof. In this respect
the
applicant is alluding to the JBCC agreement which it did not brother
to attach, notwithstanding the assertion that the contract
precludes
the allegedly unlawful conduct on the part of the first respondent
and would probably have entailed some sort of scrutiny
or
interpretation to get to the bottom of.
[9]
Although it is implied from the notice
authored by the first respondent and addressed to the joint venture
that it’s authority
to act in those circumstances arises from
its part as implementing agent in respect of the project, it was not
until the first
respondent opposed the matter and filed its answering
affidavit that its role in this respect was clearly revealed for the
first
time.
[10]
Apart from raising
in
limine
objections, the most important
of which is that the principal JBCC agreement in respect of the
project is one between the joint
venture and the second respondent
and not the applicant standing alone, who therefore lacks
locus
standi
to bring the application, the
first respondent put into context that the relationship which came
about between the joint venture
and the respondents (as opposed to
the applicant and the respondents) arose as a result of formal tender
proceedings in accordance
with the relevant public procurement
legislation. It further clarified that it was the duly
appointed principal agent on
behalf of the second respondent (the
employer) in respect of the project, a fact of which the applicant is
well aware but which
it manifestly played down in my view in the
founding affidavit.
[11]
A copy of its letter of appointment
subsequent to its formal bid in this respect was put up in
substantiation of this allegation.
[12]
Additionally it pleaded that the second
respondent instructed it in this role to terminate the contract with
the joint venture after
it had failed to perform in accordance with
its contractual obligations or to comply with a contract instruction
given by it.
The grounds upon which it did so are not material
for present purposes, but suffice it to say that they appear to be
compelling
reasons for the second respondent’s decision to
terminate effectuated by the first respondent. It transpired
that the
relevant notice had been addressed to the joint venture on
the instructions of the second respondent on the basis of
recommendations
which had first been made by the first respondent to
it in its capacity as principal agent.
[13]
The written instruction of the employer’s
official, Ms. Nosicelo, given in this instance was also put up in
support of the
first respondent’s assurance that it was not
acting randomly or off its own bat, but within the parameters of its
role as
principal agent and with the necessary knowledge and the
employer’s support. Moreover, so it pointed out, the
intimation
given in the notice was not that termination was imminent,
but rather that the second respondent had in fact terminated the
contract.
It had merely conveyed the employer’s decision
in this respect. The first respondent further denied
threatening closure
of the construction site or the removal of the
joint venture. Instead it had merely purported to spell out the
necessary
processes that would ensue as provided for in the relevant
provisions of the JBCC agreement, a regular trajectory which the
joint
venture must have expected in all the circumstances.
[14]
All of this it did by virtue of its
appointment as principal agent, which it was fully entitled and also
obliged to do in the aforestated
capacity.
[15]
I should mention that the second
in
limine
objection taken by the first
respondent is that the joint venture, if it wishes to challenge the
termination of the contract, ought
to do so not in this court but as
provided for in the JBCC agreement, by availing itself of the dispute
resolution procedures therein
catered for. There appears to me
to be merit in this procedure having been adopted viz a viz the joint
venture and the employer,
but it is unnecessary for me to determine
this objection given the view I take herein.
[16]
How the applicant could have failed in the
founding affidavit to disclose the first respondent’s peculiar
formal role in overseeing
the implementation of the project entirely
escapes me. Without the relevant context the impression was
sought to be created,
by design in my view that some random entity,
without any relationship to the project, had purported to involve
itself unlawfully
by interfering in the contractual relationship.
The non-disclosure of the true position is further demonstrated by
the applicant’s
assertion of a “forceful” closure
of the construction site and prevention of the contractor from
carrying on its work.
No doubt the applicant hoped to conjure
up an image of being spoliated rather than resorting to a true
context.
[17]
Good faith is a
sine
qua non
in
ex
parte
applications. This must
also be the case in any application launched on an urgent basis.
But for the fact that the
first respondent managed to file an
answering affidavit in the short time frame available to it after
being served, a court hearing
the matter in the absence of the
parties would have been forgiven for thinking that this was a
spoliation scenario and the actions
of the first respondent entirely
unwarranted or high-handed. I am left with the unfortunate
impression that the material
facts of the first respondent’s
peculiar role was purposely suppressed or opportunistically omitted.
On either basis,
this is reason enough to dismiss the application.
[18]
It is further a trite principle that an
applicant must make out its case in its launching affidavits and not
in its replying affidavit.
[19]
The applicant failed to make any reference
in its founding affidavit to the existence even of a joint venture in
relation to the
project. Clearly on the face of it the
application was being made on behalf of a close corporation of which
the deponent
is the sole member. If this was a mistake, in its
replying affidavit the applicant merely purported to suggest that the
application
on behalf of the joint venture was authorized, and put up
a resolution, but this resolution is self-evidently one that
authorizes
her to sign the documents in connection with the tender
for the awarded contract, or any other contract arising thereform,
and
not to institute litigation on behalf of the joint venture.
[20]
The applicant also purported to put up a
“confirmatory affidavit” of the sole owner of Sedtrade
(Pty) Ltd (the other
entity forming part of the joint venture), Ms.
Faatima Haffejee, who claims that she authorized the applicant to
bring the proceedings
on behalf of the joint venture, premised on her
having “read the founding affidavit and the answering affidavit
of Mrs PAULINA
RASMUSI and the accompanying annexures”. I
was assured from the bar by applicant’s counsel, Mr. Seima,
that Ms.
Haffejee had had sight of all the pleadings, including the
answering affidavit of the first respondent although her confirmatory
affidavit does not say as much, but even assuming a ratification by
her of what has gone before, the applicant’s founding
affidavit
remains premised on an application by the applicant with no
disclosure whatsoever of the joint venture’s involvement
in the
project.
[21]
A confirmatory affidavit does not
ameliorate the shortcoming by the non-joinder of the joint venture,
which entity would be a vital
party to the application by obvious
implication assuming the applicant wished to assert its
locus
standi
and not the applicant’s.
The rule is that any person is a necessary party and should be joined
if such person has a
direct and substantial interest in any order
that a court might make, or if such an order cannot be sustained or
carried into effect
without prejudicing that party, unless the court
is satisfied that he or she has waived his or her right to be
joined. It
is not for Ms. Haffejee to waive the right of the
joint venture which is a separate legal entity.
[22]
A
formal resolution from the joint venture would have been a necessity
in my view, but in this anomalous situation, the applicant
has not
purported to convey that contrary to what is asserted in the founding
affidavit the real party is the joint venture.
[2]
Instead the applicant has simply averred that the applicant “has
not failed to join the joint venture in this application”.
This the court is supposed to glean from the separate averment of the
applicant’s sole member (who unequivocally brought
the
application on behalf of the applicant itself and not as an
authorized entity on behalf of the joint venture), and the glib
assertion of Ms. Haffejee that she is content with the applicant
dealing with “this matter in this manner” and litigating
on behalf of the joint venture.
[23]
Given these odd circumstances, the joinder
must either be effected properly, or not failing which the first
respondent’s first
in limine
objection is well taken.
[24]
As I have said, it is perhaps a mistake on
the deponent’s part that the close corporation was cited as the
applicant, but
it is not for this court to condone the
misapprehension or to read in essential averments at the expense of
the respondents especially
where the joint venture’s lack of
legal standing has been pertinently raised.
[25]
It is the applicant who must make out its
locus standi
in the founding affidavit, which it has woefully failed to do.
[26]
Even on the assumption that the party whose
interests are before me is the joint venture, the applicant has
failed in my view to
establish the requirements for the grant of a
final interdict.
[27]
Ms. Rasmusi relies for the first
respondent’s supposed unlawfulness on the provisions of clause
29 of the JBCC contract, but
the extract provided which spells out
the circumstances under which the employer can terminate in fact
supports the first respondent’s
assertion that it was within
its rights to give the required notice to the joint venture of its
default on behalf of the employer
(Clause 29.2). Although
sub-clause 3 provides that where the contract has not remedied a
specified default, “the employer
may give notice to the
contractor of the termination of this agreement forthwith”, the
first respondent has explained that
it was the conduit through which
this election on the part of the employer was conveyed to the joint
venture. It also put
up a copy of that authorization or
instruction to act on its behalf which supports the first
respondent’s recommendation
that a termination is apposite in
all the circumstances. No violence or threat of force is
apparent in the notice and the
request to the joint venture to vacate
the site is in accordance with the contract and follows as a
consequence to termination.
[28]
On
the basis of “dooming principle” of the Plascon-Evan
Rule
[3]
as Mr. Kotze for the
first respondent put it, there can be no unlawful conduct on the part
of the first respondent warranting the
restraining order sought as
the latter was instructed (as the employer’s agent) to give the
requisite notice of termination.
If the joint venture does not
accept this as constituting formal notice of termination it is not
for it to take on the first respondent
in this respect, but rather
the second respondent concerning the basis for its decision.
[29]
Absent proof of a clear right, it is
unnecessary to go any further.
[30]
In the result the application falls to be
dismissed with costs. I am constrained to order such costs on
the punitive scale
given the applicant’s lack of disclosure
concerning the first respondent’s role in the matter as
principal agent and
the fact that the first respondent was obliged to
come to court to answer the unfounded claim on an urgent basis even
after the
first respondent’s attorneys had confirmed to the
applicant’s attorneys that the former had issued the
termination
notice on the instructions of the employer.
[31]
In the result I issue the following order:
1.
The application is dismissed, with costs on
the scale of attorney and client.
_________________
B HARTLE
JUDGE OF THE HIGH
COURT
DATE OF HEARING: 21
August 2018
DATE OF JUDGMENT: 24
August 2018
Appearances:
For
the applicant: Mr. Seima instructed by Ramusi Attorneys c/o
Nozuko Nxusani Inc, East London (ref. LOT/RAM/NTE/002).
For the first
respondent: Mr. D Kotze instructed by Clark Laing Attorneys, East
London (ref. Mr. Laing).)
[1]
In
my view this is tantamount to a non-joinder of the second
respondent. Service of the application was effected on the
employer,
but at an address referred to in the funding agreement
nominated by the employer for those purposes. The sheriff
served at
this address on a “machine operator registry”
rather than at the state attorney’s office where papers would
customarily
be served.
[2]
It
is notable that in the replying affidavit the applicant continues to
assert its privity of contract with the second respondent
and not
that of the joint venture. Indeed in articulating prejudice
the deponent referred to the personal effect on her
and did not
allude to the interests of the joint venture.
[3]
Plascon-Evans
Paints (Pty) Ltd. V Van Riebeck Paints (Pty) Ltd.
[1984] ZASCA 51
;
1984 (3) SA 623.