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[2018] ZALMPPHC 34
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Merifon (Pty) Ltd v Greater Letaba Municipality and Another (01/2014) [2018] ZALMPPHC 34 (14 June 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
CASE
NO:01/2014
In
the matter between:
MERIFON
(PTY)
LTD
PLAINTIFF
And
GREATER
LETABA
MUNICIPALITY
1
ST
DEFENDANT
HOUSING
DEVELOPMENT
AGENCY
2
ND
DEFENDANT
JUDGEMENT
SEMENYA
J:
1.
Plaintiff launched an application for leave to amend paragraph 5 of
the particulars of claim and replication in terms of Rule
28 (4) of
the Uniform Rules of Court. The defendant has, in terms of Rule
28(3), delivered a notice of objection to the plaintiff’s
notice to amend. The parties shall, for convenience, be referred to
as in the main action.
2.
The contents of paragraph 5 of the particulars of claim, which are
relevant for the purposes of this judgement, and which the
applicant
seek to amend are as follows:
5
“
On or
about 7 March 2013 and at or near Polokwane, alternatively
Modjadjiskloof, the plaintiff as represented by Mr Mangena and
the
first defendant as represented by its municipal manager, Ms T G
Mashaba (Mashaba), properly authorized as pleaded hereinafter,
entered into a written agreement (“the agreement). The express
terms of the agreement, are, inter alia the following:
3.
It is not necessary
to state the terms and conditions of the agreement in that part
of the envisaged amendment is that they
be delete. It would however
appear from the nature of the proposed amendment that the need to
amend the plaintiff’s particulars
of claim and replication was
necessitated by the allegations made in the first defendant’s
plea, in which the validity of
the alleged contract between the
plaintiff and Mashaba is denied. It is alleged that Mashaba
lacked authority to enter into
the contract with the plaintiff in
that she failed to observe the provisions of the Local Government:
Municipal Finance Management
Act, 56 of 2003 (MFMA).
4.
The
plaintiff seeks to amend the particulars of claim by inserting the
following highlighted phrases to paragraph 5 of the particulars
of
claim:
“
On
or about 7 March 2013 and at or near Polokwane,
alternatively
,
Modjadjiskloof, the plaintiff as represented by Mr Mangena and First
Defendant as represented by its Municipal Manager, Ms T G
Mashaba,
properly authorized,
alternatively
acting with ostensible authority ,
further
alternatively
,
acting with the usual authority of a Municipal Manager,
entered into a written Agreement (the agreement). The express terms
of the Agreement, that are relevant hereof, are inter alia,
the
following:”
6.
The proposed amendment to the plaintiff’s replication is to be
effected as follows:
“
By
inserting the following paragraphs after paragraph 3
3.A
At all relevant times Ms T G
Mashaba (Mashaba) in her capacity as the first Defendant’s
Municipal Manager:
3.A1 Was the accounting officer of
the first Defendant, as provided for in section 60 of the MFMA:
3.A2. Was part of the top
management of the First Defendant, as provided for in section 77 of
the MFMA.
3.B
As accounting officer of the First
Defendant, Ms Mashaba was, further, responsible for the
implementation of the First Defendant’s
approved budget, as
provided for in Section 69 of the MFMA.
3.C
In the premises, and insofar as it
may be found that Ms Mashaba did not have actual authority to
represent the First Defendant in
concluding the agreement with the
Plaintiff, the position of Ms Mashaba, as Municipal Manager of the
First Defendant, lead to an
appearance that she was authorized to act
on behalf of the First Defendant and, as a result Ms Mashaba had
ostensible authority
to present the first Defendant in concluding the
agreement with the plaintiff.
3.D
In
the alternative and the event of the Honourable Court finding that Ms
Mashaba did not have any authority to represent the First
Defendant,
being it actual or ostensible, the plaintiff pleads as follows:
D
.1 At all relevant times the First Respondent represented through
its conduct, in appointing Ma Mashaba as Municipal Manager,
that Ms Mashaba was duly authorized, inter alia, to conclude
contracts on behalf of the First Defendant. The First Defendant,
further:
3. D. 1. 1 Allowed Mashaba to sign
Annexure
“
POC1
” to the amended
particulars of claim, under circumstances where she was not “properly
authorized” to do
so;
3. D. 1. 2 Gave Mashaba defective
and / or ineffective authority to sign
Annexure
“
POC1
”
to particulars of claim;
3.
D. 1. 3 Allowed Mashaba to sign Annexure “POC1” to the
particulars of claim under circumstances where, according
to the
First Respodent, the agreement is illegal and null and void due to
non-compliance with the First Respondent’s internal
procedures,
to which the Plaintiff was not privy.
D
.2 The First Defendant’s acts and/or omissions, as aforesaid,
were negligent, as the First Defendant should have reasonably
foreseen that third parties would accept that Mashaba was duly
authorized to represent the First Defendant, in concluding
agreements,
specifically
Annexure
“
POC1
”
to the particulars of claim on behalf of the First Defendant.
3.
D. 3 Acting on the belief that Mashaba was duly authorized to
represent the First Defendant the Plaintiff was induced, to its
detriment, to enter in to the agreement.
D.
4 In the premises, the first Defendant is estopped from denying that
Mashaba was not authorized to represent the concluding
the
agreement
,
attached to the particulars of claim as
Annexure
“
POC1
”.
7.
In
its objection, the first defendant state that the municipal manager
requires proper authority as opposed to ostensible or actual
authority to conclude a legally enforceable contract on behalf of the
municipality. It is further stated that in the absence of
this proper
authority, the proposed amended particulars fail to disclose the
cause of action and are therefore excipiable.
8.
With regard to the proposed amendment to the replication, the
objection raised by the first defendant is that the plaintiff intends
to rely on estoppel. The first defendant alleges that estoppel cannot
assist the plaintiff in that the municipal manager’s
failure to
act in conformity with the prescribed Act and Regulations rendered
the contract illegal. It is stated in the objection
that estoppel
cannot legalize a contract entered into illegally.
9.
Rule 28 (1) provides as follows:
“
Amendments
to pleadings and documents
(1)
Any
party desiring to amend any pleading or document other than a sworn
statement, filed in connection with any pleadings, shall
notify all
other parties of his intention to amend and shall furnish particulars
of the amendment.
(2).
An objection to the proposed amendment shall clearly and concisely
state the grounds upon which the objection is founded.
(3).
If an objection which complies with subrule (3) is delivered within
the period referred to in subrule (2), the party wishing
to amend
may, within 10 days, lodge an application for leave to amend.”
7.
As a starting point, I am satisfied that the plaintiff and the first
defendant have both complied with the requirement of Rule
28 as
quoted above. It remains to be determined whether the proposed
amendment of the particulars of claim and replication would,
if
allowed, be excipiable on the ground that they fail to disclose a
cause of action as submitted by counsel for the first defendant.
10.
In
First
National Bank of Southern Africa Ltd v Perry NO and Others
2001 (3)
SA 960
at 965 C-D
it was stated that for an exception to succeed, the excipient has to
show that the pleading is excipiable on every interpretation
that can
reasonably be attached to it.
11.
Counsel for the first defendant argued that the plaintiff intends to
rely on the impression allegedly created by the Municipal
Manager. He
submitted that a municipality, as an organ of State, creates an
impression to every person it deals with in the following
three
manners:
a).
By words which are in a Statute;
b).
By knowledge that is common to the public;
c).
That whoever deals with an organ of State is expected to know the
Acts and Regulations applicable that organ, in this case the
municipality.
12.
Counsel for the first defendant argued that it is the municipality
that must create an impression and not the Municipal Manager.
It was
submitted that the court can take judicial cognizance that everyone
knows the law, inclusive of the plaintiff. Counsel argued
that it was
incumbent of the plaintiff in this case to satisfy itself that the
Municipal Manager has complied with the statutory
requirements as
laid down in the MFMA and that she has the so-called
proper
authority
before it entered into the relevant contract.- (my own
emphasis).
13.
On the issue of proper authority, counsel for the plaintiff
argued that the notion of actual and ostensible/apparent authority
has recently been recognized and applied by the Constitutional Court
in
Makate
v Vodacom Ltd
2016 (4) SA 121
(CC) (Makate
)
,
in
which the case of
Hely-Hutchinson
CA v Brayhead Ltd and Another
[1968 1 QB 549
(CA) (Hely-Hutchinson CA
at 583 A)G
was
referred to with approval
.
14
.
I note that at paragraph 45 of
Makate
, the court
stated the following:
“
[45]
Actual authority and ostensible or apparent authority are the
opposite side of the same coin. If an agent wishes to perform
a
juristic act on behalf of the principal, the agent requires authority
to do so, for the act to bind its principal. If the principal
had
conferred the necessary authority either expressly or impliedly, the
agent is taken to have actual authority. But if the principal
were to
deny that she had conferred authority, the third party who concluded
the juristic act with the agent may plead estoppel
in replication. In
this context, estoppel is not a form of authority but a rule to the
effect that if the principal had conducted
herself in a manner that
misled the third party into believing that the agent has authority,
the principal is precluded from denying
that the agent had
authority.”
15.
I am further aware that at paragraph [68], the Constitutional Court
held that the applicant (Makate) established that Mr Geissler
(the
agent), had ostensible authority to bind Vodacom.
16.
On counsel for the first defendant’s contention that it is the
municipality or the Municipal Manager who must create the
impression,
counsel for the plaintiff referred the court to the case of
Manana
v King Sabata Dalindyebi Municipality 2010 JDR 1423 SCA
. At
paragraph [13] of this judgment the court stated that:
“
The
constitutional structure of government is separated into three
spheres: the national sphere, the provincial sphere and the local
sphere. The local sphere of the government consists of
‘municipalities’, which must be established for the whole
of the territory of the Republic. The executive authority of the
municipality does not vest in its municipal manager (or any other
of
its employees). Its executive authority is constitutionally vested in
its municipal council.”
At
[16] the court held that:
“
A
municipal council is not capable in practice of exercising its
executive authority by running the day-to-day affairs of the
municipality
and it employs staff to do that on its behalf. In the
past it was common for municipal councils to confer the appropriate
authority
upon their staff by delegation of all or some of its
executive powers. Such a delegation of power does not ordinarily
divest the
delegator of the power to perform the particular function
itself.”
17.
I am in agreement with counsel for the plaintiff that the issue would
be whether the world would conclude that a person holding
a position
of a Municipal Manager, such as Mashaba in the present case, who
comes into the meeting and during negotiations signs
certain
documents, has the required authority to do so. The submission made
by counsel for the first defendant with regard to what
should create
the municipality’s impression to the public is found to be
without merits. Counsel for the plaintiff submitted
that the
plaintiff’s application for an amendment should be allowed to
give it an opportunity to present evidence to prove
that Mashaba
created the impression that she has the required authority to act on
behalf of the municipality.
18.
With regard to the issue of estoppel, I agree with the plaintiff’s
counsel that the court should allow the amendment and
leave it to the
trial court to decide whether the plaintiff should succeed on this
ground or not. I am of the view that the same
applies with regard to
the plaintiff’s of reliance on ostensible/apparent authority.
In any event, it is not for this court
in the instant application to
rule on the merits of the particulars of claim and the replication or
the defences raised by the
parties.
19.
In accordance with
Makate
above at paragraph [49], the trial court would have to determine
whether the plaintiff proved the following requirement of estoppel:
a). a representation made in words or
by conduct, including silence or inaction;
b). That the representation must have
been made by the principal to the person who raises estoppel (the
representee);
c). the principal must reasonably have
expected that her conduct may mislead the representee; and
d). the representee must reasonably
have acted on the representation to his own prejudice.
21.
I therefore find that the fact that the plaintiff wishes to amend its
particulars of claim so as to rely on actual or ostensible
authority
cannot render the particulars of claim excipiable on the ground that
they fail to disclose a cause of action.
22.
Counsel for the plaintiff contended that the first defendant’s
proposition is incorrect and that the court should award
the
plaintiff costs which must include cost of two counsels. I have
decided to allow the amendment of the plaintiff’s particulars
of claim which will have the effect that the matter may go on trial.
I will therefore make no cost order.
23.
In the premise I make the following order:
i). The plaintiff is authorized to
amend its particulars of claim and replication as prayed for;
ii).
Costs to be costs in the cause.
_____________________________________
M.V SEMENYA
JUGDE OFTHE HIGH COURT; LIMPOPO
DIVISION
APPEARANCES
FOR THE PLAINTIFF
: ADV: DA SILVA SC
INSTRUCTED BY
: PW BECKER INC
FOR THE DEFENDANT :
ADV: ROSSOUW SC
INSTRUCTED BY
: MOHALE INC
DATE OF HEARING
: 16 MAY 2018
DATE OF JUDGEMENT
: 14 JUNE 2018