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[2016] ZAFSHC 136
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Matjhabeng Local Municipality v Phakama Security Services CC; In re: Phakama Security Services CC v Matjhabeng Local Municipality (3116/2015) [2016] ZAFSHC 136 (5 August 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Application
No. 3116/2015
DATE:
5 AUGUST 2016
In
the matter between:
MATJHABENG
LOCAL
MUNICIPALITY
..........................................................................
Applicant
And
PHAKAMA
SECURITY SERVICES
CC
...........................................................................
Respondent
[Registration
number: 2005/183456/23]
In
re:
PHAKAMA
SECURITY SERVICES
CC
...............................................................................
Applicant
[Registration
number: 2005/183456/23]
And
MATJHABENG
LOCAL
MUNICIPALITY
.......................................................................
Respondent
JUDGMENT
BY:
VAN ZYL, J
DELIVERED
ON:
5 AUGUST 2016
[1] This is an
application wherein the applicant seeks the following relief:
“
1.
Rescission of the order granted by the above Honourable Court in
favour of Phakama Security Services CC on 6 August 2015;
2.
Declaring that the agreement set out in annexure “KM5” to
the applicant`s founding affidavit be declared illegal
and invalid;
3.
Costs of suit.”
[2]
The respondent previously launched an application (“the main
application”) against the applicant and in the absence
of
opposition, Daffue J granted the following order in favour of the
respondent, being the order which the applicant now seeks
to be
rescinded:
“
1.
It is hereby declared that the respondent is obliged to pay applicant
for security and guarding services provided by it, a monthly
fee
reckoned according to the monthly fee which was applicable at the
time of expiry of the fixed term contract which expired on
30
September 2012
, concomitantly and
proportionately increased in accordance with the annual increase in
minimum wages prescribed for security guards
by Private Security
Industries Regulatory Authority (“PSIRA”) from time to
time since
1 September 2014
.
2.
It is declared that respondent is indebted to applicant in the amount
of
R4 275 143.95
,
being the difference between the amounts for which applicant actually
debited respondent since 1 October 2012 and the amount of
the
increased monthly fees owing to applicant (reckoned as in prayer 1
above) from
1 September 2014
until
May 2015
.
3.
Respondent pay the amount of all the monthly invoices submitted to it
by applicant for the provision of guarding services, on
or before the
15
th
day of the month following the supply of the service in the said
invoice, but for any material dispute pertaining to the service
supplied or the amount of such invoice.
4.
Should respondent fail to effect payment of the full amount of any
such invoice, it shall report to the above Honourable Court
in
writing within 48 hours of the due date, by way of an affidavit sworn
to under oath by its municipal manager stating the full
reasons for
the non-payment, the steps it intends to take to rectify non-payment
and when compliance is anticipated;
5.
Respondent pay the costs of this application on the scale as between
attorney and client.
”
I
will refer to the parties as in the current application.
Background:
[3]
The relevant background facts and the allegations set out in the
founding affidavit of the main application are mostly common
cause
between the parties. During 2009 and following a formal procurement
process, which included the submission, allocation and
awarding of a
tender, the respondent was appointed by the applicant to provide
security- and guarding services, which included
the guarding of
personnel and buildings as well as other assets of the applicant in
relation to various service points. A copy
of the draft written
contract concluded between the parties was attached to the said
founding affidavit as annexure “RM2”
(“the
contract”). The erstwhile municipal manager of the applicant,
the late Mr T.H.E. Pietersen, signed the contract
on behalf of the
applicant. The deponent to the respondent`s affidavits, Mr R.J.
Molifi, who is the sole member of the respondent
Close Corporation,
signed the contract on behalf of the respondent. The respondent
rendered the services set out in the contract,
whilst the applicant
remunerated the applicant for the services in accordance with the
agreed contract price. The contract price
was a fixed amount for the
entire three years. The contract regulated the provision of security-
and guarding services by the respondent
to the applicant for the
period 1 October 2009 until 30 September 2012.
[4]
The Private Security Industry Regulatory Authority (“PSIRA”)
is the regulatory authority in the private security
industry. The
mandate of PSIRA is derived from the Private Security Industry
Regulatory Authority Act, 56 of 2001. The minimum
wages of private
security guards and their conditions of employment is specifically
regulated in law by the Sectoral Determination
for the Private
Security Sector (“the Sectoral Determination”), which
came into effect on 10 December 2001. Minimum
wages increase annually
in accordance with the Sectoral Determination. Every worker in the
private security sector who guards or
protects fixed property,
premises, goods, people or workers, is protected by the Sectoral
Determination and every employer who
employs private security guards
for rendering such services, is covered by and bound by the Sectoral
Determination. This protection
extends to so-called secondary
employers who outsource their security requirements to security
businesses such as the respondent.
One of the obligations of the
respondent which was stipulated in the contract is the following:
“
The
Service Provider shall, at all material times be a member of the
Private Security Industry Regulation Authority in good standing
and
shall retain such membership for the duration of this contract. It is
the Service Provider’s obligation in terms of this
agreement to
comply with all other obligations including the payment of
subscription membership fees, imposed by the relevant legislation
and
prescripts applicable to the Security Industry.”
The
applicant contended that the aforesaid provision recorded the
applicant`s recognition of its own obligation to comply with not
only
labour laws in general, but also the specific obligations from the
Sectoral Determination.
[5]
The respondent is indeed registered with PSIRA, as it is obliged to
be, as a provider of private security- and guarding services.
The
guards who are employed by the respondent similarly have to be and
are registered as such by PSIRA.
[6]
PSIRA is the competent authority for the determination of the
contract pricing structure when procuring security- and guarding
services, which is done in accordance with the Illustrative Contract
Pricing Structure (“ICPS”) of PSIRA. The price
stipulated
in the contract was indeed calculated using the ICPS of PSIRA.
[7]
The respondent is not the sole service provider of security services
to the applicant. The applicant also uses other security
companies.
The applicant has allocated different assets to each service
provider, to guard on its behalf.
[8]
When the three-year period of the contract expired, and at or about
the end of September 2012, the respondent was appointed
on a
month-to-month basis to continue rendering the same services to the
applicant as are stipulated in the contract, with effect
from 1
October 2012 (“the month-to- month appointment”). The
month-to-month appointment was done verbally by the same
Mr Pietersen
who previously signed the contract. He was empowered to do so in
accordance with the delegated powers vested in him.
Mr Molifi again
represented the respondent. The respondent continued rendering the
agreed services ever since the month-to-month
appointment and the
applicant has continued to pay the respondent for such services,
although not in accordance with the ICPS.
[9]
Since the month-to-month appointment until September 2014 the monthly
invoices submitted to the applicant by the respondent
did not make
provision for any concomitant increase brought about by annual
increases in minimum wages for security guards and
prescribed by the
Sectoral Determination. At the time of the month-to-month appointment
there was no specific agreement concluded
regarding the monthly fee
payable for the agreed services. The respondent, however, have since
the month-to-month appointment repeatedly
requested various officials
of the applicant that the respondent be paid an increased monthly
amount for the services rendered,
reckoned and calculated on the
basis of the ICPS of PSIRA; in other words, by increasing the monthly
amount proportionately with
the increase in minimum wages prescribed
by PSIRA. According to the respondent it is at least a tacitly
implied term of the
month-to-month appointment that the respondent is
and has been entitled to invoice the applicant on the aforesaid
basis.
[10]
Eventually a meeting was held on 3 September 2014 between the
applicant’s present municipal manager, Mr M Lepheana, Mr
Molifi
on behalf of the respondent and the representatives of the other
security companies. The issues of increased remuneration
and a prompt
date of payment were discussed. An extract of the ICPS of PSIRA from
1 September 2014 to 31 August 2015, a copy of
which is attached to
the founding affidavit in the main application as annexure “RM4”,
was handed to Mr Lepheana. During
the meeting Mr Lepheana agreed that
the respondent (as well as the other service providers rendering
security and guarding services)
were entitled to be paid an increased
amount for services rendered in accordance with the month-to-month
appointment, reckoned
according to the ICPS, with effect from 1
September 2014.
[11]
Subsequent to the said meeting, the operational manager of one of the
other security companies, Mr C Malan, prepared a minute
of the
meeting and handed it to Mr Lepheana. A copy of the minutes is
attached to the founding affidavit in the main application
as
annexure “RM5”. A confirmatory affidavit by Malan was
also attached. Mr Molifi also confirmed the correctness of
the
essential issues recorded in the said minutes and that it accords
with the discussions and agreement that was concluded during
the
meeting. The following are the relevant extracts from the minutes:
“
1.
The MM instructed Mr Suping that he must start the process to give
the current security service providers a three year contract,
or to
put out new tenders for security service providers. The MM said that
it was unfair towards the companies to give a month
to month
contract, as we cannot plan according to that.
2.
The MM instructed Mr Suping that the necessary documents regarding
payments to security companies must reach him by no later
than on the
8
th
of
every month, and that all security companies must be paid by no later
than the 15
th
of every month. …
3.
The MM told Mr Suping that it is unacceptable for them to take such a
long time to pay service providers.
4.
…
5.
The MM instructed Mr Suping to adjust our rates according to PSIRA
pricing structure with immediate effect. The MM instructed
Mr Suping
that the companies must be paid as from today 3 September 2014.”
Mr
Suping is the Executive Director of the respondent`s department of
Community Services & Law Enforcement.
[12]