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[2016] ZAFSHC 44
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Nyumba Mobile Homes & Offices (Pty) Ltd v Mec: Department of Health Free State Province and Another (5280/2014) [2016] ZAFSHC 44 (17 March 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No.: 5280/2014
In
the matter between:
NYUMBA MOBILE
HOMES &
OFFICES
(PTY)
LTD
...............................................................................................................
Applicant
And
MEC:
DEPARTMENT OF HEALTH
FREE
STATE
PROVINCE
............................................................................................
1
ST
Respondent
FEZILE
DABI DISTRICT
MUNICIPALITY
.............................................................
2
ND
Respondent
HEARD
ON:
10 MARCH 2016
JUDGMENT
BY:
C. REINDERS, J
DELIVERED
ON:
17 MARCH 2016
[1]
This is an application for condonation in terms of section 3(4)(a) of
the Institution of Legal Proceedings against Certain Organs
of State
Act 40 of 2002 (the Act). The application is opposed only by the
second respondent, Fezile Dabi District Municipality
(the
municipality).
[2]
During December 2011 the first respondent awarded a “joint
tender” to Ramalephatso Industries CC and Sizampilo Projects
CC
(the contractors). The applicant was appointed as a sub-contractor
for the contractors to erect structures to be used as general
wards
and a temporary mortuary at the Metsimahole Hospital in Sasolburg.
The municipality was appointed by the first respondent
to implement,
facilitate and monitor construction of the hospital and to effect
payments in terms of the tender.
[3]
Construction commenced during January 2012. As the contractors still
owed the applicants a substantial amount by April 2013,
the applicant
and contractors entered into a written cession agreement on 26 June
2013 in terms whereof the indebtness was acknowledged
and the
contractors ceded, transferred and made over their right, title and
interest against the municipality, to the applicant.
The cession
agreement was made an order of court on 4 July 2013.
[4]
The applicant completed the project in January 2014 and payment was
demanded from the municipality’s principle agent,
Mazibuko
Wessels Architects on 30 January 2014. No response was forthcoming
and the applicant gave notice in terms of the provisions
of the Act
on 2 September 2014 via e-mail (letter of demand dated 15 August
2014) to the first respondent and the municipal manager
of the
municipality. The said letters, as well as proof of e-mailing
thereof, are annexed as respectively annexures “PL6”
and
“PL7” to the applicant’s founding affidavit. On 11
September 2014 the first respondent acknowledged receipt
of the said
notice but noted as follow:
“
Please
be informed that your notice does not comply with Act 40 of 2000.”
The
municipality however in its opposing affidavit perseveres that it
never received any notice in terms of the Act.
[5]
In adjudicating upon condonation for the late filing of the
prescribed statutory notice of an intention to institute legal
proceedings against an organ of State, the applicable provisions of
section 3 of the Act read as follows:
“
(4)(a)
If an organ of State relies on a creditor’s failure to serve a
notice in terms subsection (2)(a), the creditor may
apply to a court
having jurisdiction for condonation of such failure.
(b)
The court may grant an application referred to in paragraph (a) if it
is satisfied that-
(i)
the debt had not been extinguished by prescription;
(ii)
good cause exists for the failure by the creditor; and
(iii)
the organ of State was not unreasonably prejudiced by the failure.”
[6]
It is trite that a court’s power to grant condonation is
circumscribed by section 3(4)(b) in requiring that it be satisfied
that all the requirements as set out, are met. These requirements are
conjunctive and must be established by the applicant.
See:
Minister of Agriculture and Land Affairs v CJ Rance (Pty) Ltd
2010 (4) SA 109
(SCA)
at par [11].
[7]
The applicant relies on an extant cause of action and the issue was
neither contested by the municipality in its heads of argument
nor by
Mr Roux on behalf of the municipality in oral submissions. I am
satisfied that the first requirement in considering condonation,
namely that the debt has not been extinguished by prescription, has
been met.
[8]
I next turn to the requirement that the organ of State was not
unreasonably prejudiced by the failure to serve the statutory
notice
within the prescribed six month period. The municipality avers that
they would suffer prejudice as they had no knowledge
of the cession
agreement between the applicant and the contractors. Mr Roux
submitted that it is clear from the cession agreement
that no
officials from the municipality were signatories to the contract.
However, from the court order dated 4 July 2014,
it is evident that
the municipality was one of the parties who was interdicted from
making any payments to the contractors. In
the same court order the
cession agreement was made an order of court. Furthermore, in the
answering papers of the municipality
the deponent, me Lindi Molibeli,
in reply to knowledge of the session, states that the municipality
was “not served with
the documents as required and it came to
our attention when papers were served.” This to my mind is
indicative of the fact
that the municipality at least by 4 July 2013
had knowledge of the intended action against them.
[9]
On 10 February 2015 when the opposing affidavit was deposed to, it
was alleged in regard to possible prejudice to the municipality
that
“some witnesses to the matter are no longer in the employ of
the second respondent, e.g. (sic) Dr Mongake who was the
municipal
manager.” To my mind this averment does not hold water in view
of the municipality’s knowledge of ongoing
disputes regarding
payment as early as July 2013 after the applicant commenced
construction only a year before. The defendant on
the papers have
thus not been prejudiced due to the late filing of the statutory
notice in as far as the preparation for trial
and/or the obtaining of
witnesses or evidence are concerned.
[10]
The main purpose of the statutory notice, to wit to inform the
defendant of a potential claim to enable it to investigate same
timeously, to gather evidence and to consider its position on this
specific cause of action,
(See:
Mohlomi v Minister of Defence
[1996] ZACC 20
;
1997
(1) SA 124
CC par [9]) could already have been dealt with when the
municipality obtained knowledge through the court order dated 4 July
2013.
I am at ease therefore to find that that the defendant was not
unreasonably prejudiced by the late filing of the statutory notice
by
the applicant.
[11]
The remaining requirement is whether good cause for failing to
deliver the statutory notice as prescribed by section 2 of the
Act,
was established by the applicant. In
Madinda
v Minister of Safety and Security
[2008] ZASCA 34
;
2008 (4) SA 312
(SCA) at para
[8]
it
was held that an applicant’s burden of establishing good cause
has to be discharged not on a balance of probabilities,
but rather on
the overall impression made on the court which brings a fair mind to
the facts set up by the parties.
[12]
Although good cause within the meaning of section 3(4)(ii) has not
been defined, it may include a number of factors which will
vary from
case to case. These include prospects of success, the reasons for
delay, sufficiency of the explanation offered and the
bona fides of
an applicant.
See:
Madinda
supra
par [10].
All
the relevant circumstances must be assessed in a balanced fashion.
The fact that the applicant is strong in certain respects
and weak in
others will be borne in mind in the evaluation of whether the
standard of good cause has been achieved.
See:
Madinda
supra
par [13].
[13]
Absence of unreasonable prejudice falls to be decided separately as a
specific requirement to be met by an applicant. Whereas
good cause
primarily concerns the applicant’s conduct and its motives, the
absence of unreasonable prejudice shifts the focus
onto the State
organ and the protection of its interests by receiving timeous
notice.
See:
Minister of Agriculture and Land Affairs v CJ Rance (Pty) Ltd
supra
at par [38].
[14]
In attempting to show good cause for the delay the applicant dealt
with this aspect only in two paragraphs under the heading
“Good
cause for the failure by the creditor”. It is averred that the
applicant did give notice to the first respondent
and further
“unfortunately the notice that was prepared for the attention
of the second respondent was not sent, due to an
oversight.”
This explanation tendered by the applicant is indeed skimpy and
vague. However, this should be weighed up against
the background to
the application as was indeed fully dealt with by the applicant, to
wit the history of the matter, including
the involvement of the
municipality and the lengths that the applicant had to go to in
securing payment for services rendered.
[15]
Although the applicant was late in filing its replying affidavit (for
which condonation was granted) and took some time in
issuing summons,
it is clear from the history of this matter and the papers before me
that the applicant indeed had the intention
of instituting a claim
against the municipality for recovering the debt owing to them. I
cannot reasonably conclude that
the applicant is not seriously
interested in pursuing litigation or that the bona fides of the
applicant is under suspicion.
[16]
It is trite that the prospects of success of the intended claim play
a significant role. Strong merits may mitigate fault,
no merits may
render mitigation pointless. In its answering papers the municipality
alleged that the fact that no summons had been
served by the
applicant, is fatal to the granting of condonation. It has been held
that the issuing of summons is not a prerequisite
for an application
for condonation in terms of the Act (
See: Minister of
Safety and Security v De Witt
[2008] ZASCA 103
;
2009 (1) SA 457
(SCA) at 457).
Summons has in any event since already been issued more than a year
ago. In its heads of argument the municipality
submitted that
the applicant does not have any chances of success in the main
action. From the papers before me it does not appear
that the
municipality has pleaded to the summons, nor is any averment made in
this regard in the heads of argument filed on 2 March
2016. Although
knowledge of the cession agreement is denied by the municipality, it
is common cause that such an agreement
was concluded and in fact made
an order of court. In terms hereof the applicant indeed has good
prospects of success in the main
action as is evident from the
summons that was issued. Based on the aforementioned I am not of the
view that it can I concluded
that the applicant does not have good
prospects of success in the main action.
[17]
In general terms the interest of justice play an important role in
condonation applications.
See:
Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre
as Amicus Curiae)
[2007] ZACC 24
;
2008
(4) BCLR 442
para [20].
It
cannot be disputed that the applicant delivered a very important
service to the community by erecting structures to be used as
general
wards and a temporary mortuary at the Metsimahole Hospital in
Sasolburg. The dispute regarding the money still due to them
stands
to be adjudicated. In the circumstances, having taken all the
relevant factors into consideration, I am of the view that
the
interest of justice requires that condonation be granted instead of
dismissing the application, having the effect that the
applicant may
not fully ventilate the dispute against all of the defendants,
including the municipality.
[18]
It is trite that the very purpose of the provision allowing
condonation is to give a court a discretion to determine whether
the
organ of State can rely on con-compliance.
See:
Minister of Safety and Security v de Witt
supra at para [12].
The
overall impression that I have come to taking all the above mentioned
factors into account is that the attempt by the applicant
to show
good cause was indeed not flawless, but I am exercising my discretion
in favour of the applicant and granting it the opportunity
to have
its claim tested according to the dictates of law and justice.
[19]
The applicant prays for an indulgence of this court in requesting the
granting of condonation, and I am not of the view that
the
municipality was acting in bad faith in opposing this application. In
as far as the cost of 18 February 2016 is concerned,
Mr Bruwer
tendered an explanation that the court file “went missing”
and therefore the application had to be removed
from the roll.
However, as was correctly pointed out in the heads of argument filed
by Mr Ponane on behalf of the municipality,
the applicant did not
file its heads of argument and practice note timeously in terms of
the practise of this Division on 10 February
2016, but only alerted
the offices of the municipality’s attorneys of record on 12
February 2016 that the court file could
not be found and that the
matter thus had to be removed from the roll. I would have expected
the applicant to have been aware of
the file gone missing long before
12 February 2016 had preparation for filing of the heads of argument
commenced timeously. I am
of the view that the applicant should bear
the costs in both instances.
[20]
I consequently make the following orders:
1.
Condonation is
granted to the applicant for failure to serve the notice contemplated
in
section 3(1)(a)
of the
Institution of Legal Proceedings Against
Certain Organs of State Act 40 of 2002
within the period laid down in
section 3(2)(a) of the Act.
2.
The applicant
is ordered to pay the costs of this application, including the wasted
costs of 18 February 2016.
C.
REINDERS, J
On
behalf of Applicant: Mr M Bruwer
Instructed
by:
S
Roux Incorporated
Pretoria
c/o
Hugo & Bruwer Attorneys
BLOEMFONTEIN
On
behalf of Respondent: Adv A Roux
Instructed
by:
Ponoane
Attorneys
BLOEMFONTEIN