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[2016] ZAGPPHC 118
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Tsogile Foundation Security Services v National Commissioner, South African Police Services and Another (59500/2010) [2016] ZAGPPHC 118 (4 March 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE NO.:
59500/2010
DATE: 4/3/2016
Not reportable
Of interest to other
judges
Revised
In the matter
between:
TSOGILE
FOUNDATION SECURITY
SERVICES
Plaintiff
and
THE NATIONAL
COMMISSIONER
SOUTH AFRICAN
POLICE
SERVICES
First
Defendant
PROVINCIAL
COMMISSIONER
SOUTH AFRICAN
POLICE
SERVICES
Second
Defendant
JUDGMENT IN RESPECT OF
THE SPECIAL PLEA RAISED BY THE DEFENDANTS
JANSEN J
1.
In
this trial, the defendants plead that the plaintiff’s claim
relates to a debt as envisaged in terms of the provisions of
the
Institution of Legal Proceedings against certain Organs of State Act
40 of 2002 (“
the Act
”
).
2.
It
was pleaded as a special plea that in terms of section 3(1) of the
Act, no legal proceedings for the recovery of a debt may be
instituted against an organ of state unless the creditor has given
the organ of state in question notice in writing of his or her
intention to institute the legal proceedings in question.
3.
It
was further pleaded that in terms of section 3(2)(a) a notice must be
served on the organ of state within six months from the
date upon
which the debt became due.
4.
It
was pleaded that the incident took place in 2009, no letter of demand
was sent to the first defendant within six months as required
by the
Act, and that the time for service of such a letter of demand had
lapsed.
5.
It
was further pleaded that the plaintiff did not request consent from
the first defendant nor sought condonation from a court for
non-compliance with this provision of the Act.
6.
Hence
it was pleaded that the plaintiff was barred from instituting legal
proceedings.
The history of
the matter
7.
It
is emphasised that this matter, or peripheral matters such as an
application to compel discovery, served before this court on
five
previous occasions.
8.
The
matter commenced by way of an urgent application. The founding
affidavit was served on 19 October 2010. The answering affidavit
was
deposed to on 2 November 2010. As long ago as 2 November 2010 Makgoba
J referred the matter to evidence.
9.
On
30 April 2013 Kubushi J dismissed a point
in
limine
which was argued relating to
non-joinder of the Minister of Police.
10.
On
13 August 2013 Tuchten J rescinded the order made by Makgoba J and
referred the matter to trial.
11.
The
declaration was served on 13 September 2014 and the defendants’
amended plea was served on or about 25 April 2014.
12.
What is evident from what is set out above is that since
receipt of the application on 19 October 2010 and the filing of its
answering
affidavit on 2 November 2010, the defendants knew exactly
what the plaintiff’s cause of action was and never argued
in
limine
that the requisite notice period
prescribed by the Ac had not been served.
13.
Even when the point
in limine
regarding non-joinder was argued before Kubushi J, (and
dismissed) the point
in limine
regarding non-compliance with the Act was never raised.
14.
Given the rationale for the Act, namely to give the
State, an entity with a plethora of divisions and arms, the time to
investigate
a claim for a debt (which is interpreted to mean
“damages”) the respondent can hardly be heard to say that
it does
not know which case it has to meet. By its conduct, it waived
any reliance on section 3(1) and (2) of the Act.
15.
It
had full knowledge of its right to rely on the provisions of the Act,
but refrained from doing so for close on three and a half
years, when
the urgent application instituted. Instead, it filed its
answering affidavit and plea to the declaration.
16.
In
the premises, the defendants can no longer rely on this point, which
has become academic at this point in time. They could
have
raised the point at any stage on the previous occasions when the
matter was before court. It failed to do so. In any event
preparations for the trial proceeded, discovery was made and
pre-trials were held, which demonstrates that the defendants knew
full well which case it had to meet.
17.
For
this reason alone, the special plea should be dismissed.
18.
Lest I err in my analysis above, I turn to the merits of
the special plea as argued.
The
plaintiff’s plea to the special plea of the defendants
19.
The
plaintiff’s reply to the special plea was that it received a
letter of termination of services and instructions from the
defendants on 12 May 2009. This letter read as follows: —
·
Following conversation between Directors Ngobeni
and Marais about the security guards on 2009-05-12 bears reference.
·
You
are hereby informed to remove all the guards from all police stations
gates under Phalaborwa cluster with immediate effect.
·
This
office has realised that the deployment of the guards at various
police stations did not receive a prior blessing from the
provincial
management and therefore the removal of such staff becomes imminent.
20.
On
5 August 2009, the plaintiff addressed a letter of demand to the
Legal Services at the Head Office of the South African Police.
Receipt of the letter of demand was confirmed on 5 August 2009 by way
of a letter.
21.
The
plaintiff’s letter of demand, dated 5 August 2009, reads as
follows: —
·
My
client successfully tendered for the rendering of Security Services
for the SAPS for a period of 3 years in respect of the Roodepoort
and
Phalaborwa areas. This was confirmed on 31 March 2009 by your
Director F. Mashika under your reference number 19/1/9/1/143TP(07).
·
As
requested, Mr J. Modiba (representing my client) approached all the
station commissioners within the said areas and agreed on
their
specific requirements in terms of the accepted tender.
·
Thereafter, specified quotations were handed to
the station commissioners for their final acceptance and that was
done by each of
them, in terms whereof, my client had to commence
with the rendering of the agreed services on 1 May 2009 and do so for
a period
of 3 years.
·
My
client duly complied with its obligations as contractually agreed
upon and is still doing so in respect of the Roodepoort area.
·
However, my client was informed by the station
commissioners of Phalaborwa Snr Supt MD Selepe, to terminate the
rendering of services
at the end of May 2009, the reason being that
no funds are available.
·
This
lead to the situation where my client was compelled to cease the
rendering of services in the Phalaborwa area on 31 May 2009.
·
In
view of the aforesaid, the following is put on record:
·
My
client has a valid and legally binding contract with the SAPS to
render security services on an agreed basis in the Phalaborwa
area.
·
In
fact, it did that for the month of May 2009 and is entitled to
compensation as is reflected in the invoices forwarded to the
station
commissioners in question.
·
Furthermore, my client is entitled to have the
contract enforced for the remainder of the 3 years period as agreed
upon.
·
Therefore, should my client not immediately be
compensated for the services rendered during May 2009 and its
position be restored
based upon the existing contract referred to
above, the High Court will be approached on an urgent basis for the
necessary relief
to protect my client’s rights and interests in
this regard. This will obviously lead to substantial legal costs
which will
also be recovered from you.
·
Should my Client’s demands not be complied
with by 16:00 on 6 August 2009, I will have no alternative than to
approach the
court on the basis referred to. I trust, however, that
litigation can be avoided and look forward to your URGENT response.
22.
From the letter of demand it is clear that the
plaintiff insisted on specific performance of the agreement.
23.
Two
further special pleas relating to the alleged prescription of the
plaintiff’s action and non-joinder of the Minister of
Police
were also included in the defendants’ plea.
24.
The
second special plea was met by the plaintiff stating that the current
proceedings were initiated through an urgent application
during
December 2010, where both defendants were represented by counsel. The
claim had therefore clearly not prescribed. Regarding
the third
special plea (non-joinder), the plaintiff replicated that on 29 April
2013 the defendants raised the self-same plea as
a point
in
limine
which was dismissed by the court on 30
April 2013, and that this point had thus been finally adjudicated
upon.
25.
During the hearing before me, the first special plea
relating to non-compliance with the Act was argued at length.
26.
It
is correct to state that the plaintiff’s declaration, as
currently formulated, indicates that the plaintiff was paid for
the
security services rendered to the defendant(s) for the month of May
2009 only (in the amount of R221 285.99) which amount
was paid
in November 2009.
27.
The
declaration reads as follows: —
“
Due to
the wrongful cancellation and termination of the security services
agreement the Plaintiff suffered damages for wages not
paid due to
breach of an employment contract with the security personnel employed
by the Plaintiff to perform the services at the
various police
stations in Phalaborwa for a period of one year.”
28.
Amounts are then sent out which are awards which were
made by the CCMA.
29.
It
is also pleaded that the plaintiff suffered a loss of income or
profit due to the cancellation of the security services agreement
in
the amount of R 4 320 983.55.
30.
It
is clear that the latter amounts are damages, calculated in a certain
way.
31.
The
rationale for the provision of the Act is, as stated, to provide for
the State to be forewarned of actions or applications to
be brought
against it timeously in order to assess its position because the
State consists of so many entities, and has so many
arms. This was
pertinently held in the Constitutional Court case of
Mohlami
v Minister of Defence
[1996] ZACC 20
;
1997 (1) SA 124
(CC)
.
32.
The
definition of “
debt”
in the Act, which came into operation on 28 November
2002, reads as follows: —
‘
debt’
means
any debt arising from any cause of action –
(a)
Which arises from delictual, contractual or any
other liability, including a cause of action which relates to or
arises from any
–
(i)
act performed under or in terms of any law; or
(ii)
omission to do anything which should have been
done under or in terms of any law; and
(b)
for which an organ of state is liable for payment
of damages, whether such debt became due before or after the fixed
date;
‘
fixed
date’
means
the date of commencement of this Act;
33.
Thus “a debt” is simply the liability on the
part of an organ of state to pay damages, as was held on
Thabani
Zulu and Co (Pty) Ltd v Minister of Water Affairs and Another
2012 (4) SA 91
KED at 94 H – 97 A
.
34.
This rationale can readily be understood. It is easy for
the State to ascertain the facts where, for example, the amount
claimed
is a specific amount payable in terms of a contract, as was
held in
Nicor IT Consulting (Pty) Ltd v
North West Housing Corporation
2010
(3) SA 90
(NWM)
.
35.
However, when damages are claimed arising from any cause
whatsoever, the State must rely on the evidence of witnesses,
documents
and the like and has to be pre-warned in order to garner
and preserve evidence and identify witnesses.
36.
It
was emphasised in written submissions to the court that the
plaintiff’s counsel had, from the inception of the case and
during his opening address, submitted that the special plea relating
to the Act could not be adjudicated upon in
vacuo
without vital evidence being advanced.
37.
On
the merits, the plaintiff pleaded that the tender contract, which was
not in issue, required an official order to be placed on
the
plaintiff for the condition of specific security services before it
could perform such services. This fact was denied
by the
defendants. It was argued by the plaintiff that, in any event, the
special plea meant that the defendants bore the onus
in respect
thereof. This submission is clearly accurate.
38.
In
argument, the defendants’ counsel did not respond to these
submissions but simply argued that there had been no compliance
with
the Act.
39.
The
plaintiff’s counsel took the court through the correspondence
which was exchanged between the parties from May to November
2009.
It was submitted that the court would be in a position to
ascertain whether the letter of 4 August 2009 constituted
the
requisite notice required by the Act (and not a letter of demand as
contended by the defendants’ counsel) by way of oral
evidence.
40.
The
defendants’ argument that “the letter of demand”
cannot constitute a notice of indented legal proceedings
as envisaged
in section 3(1)(a) is without merit. The letter of 4 August
2009 complies with the provisions of section 3(2)(b)
in that it sets
out the facts giving rise to the debt and such particulars of the
debt as were within the plaintiff’s knowledge.
The
plaintiff also states that it will institute legal proceedings if its
demands are not met.
41.
The
point was taken by the defendants’ counsel that in its reply,
the plaintiff did not specifically plead that the Act is
not
applicable, and merely referred to its letter dated 4 August 2009.
It is trite that where issues are denied it is not
necessary to
file a reply because joinder of issue operates as a denial of every
material allegation of fact in the pleading upon
which issues are
joined as contemplated by Rule 25 of the Uniform Rules.
42.
One
must also keep in mind the provisions of section 34 of the
Constitution, namely the need to protect the right of access to the
court.
43.
Hence, where an organ of state in fact knows precisely
what the cause of action is, the State’s right to be warned of
contemplated
legal proceedings, has to be weighed carefully
vis-à-vis
a plaintiff’s right to access to courts. In the
case of
Zulu
referred
to above, the court held that notice in terms of section 3 was not
called for where the cause of action related to agreed
fees payable
to the plaintiff by the erstwhile Department of Water Affairs. A
claim for arrear rental and other charges was similarly
held not to
be a “debt” as defined in the Act in the case
of
Director-General, Department of Public Works v Kovacs Investments 289
(Pty) Ltd
2010 (6) SA 646
(GNP) at
[10] to [12]
.
44.
It
was argued by the plaintiff that it would be clear from oral evidence
that the damages now claimed by the plaintiff are in lieu
of specific
performance, which fact could not be proved without evidence relating
to both the special plea and the merits of the
case. It was argued
that the letter of 4 August 2009 complies with the provisions of
section 3 of the Act.
45.
The
plaintiff’s reasoning is in line with the case law of the
Supreme Court of Appeal such as
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014 (2) SA 494
(SCA)
which
requires a written document to be read within context. It would also
address the thorny issue of whether the damages claimed
are actually
in lieu of specific performance in the case of a breach of contract.
46.
In
Victoria Falls and Transvaal Power Co Ltd v
Consolidated Langlaagte Mines Ltd
1915
AD 1
22
, it was stated:
The agreement
was not one for the sale of goods or for a commodity procurable
elsewhere.
So that we must apply
the general principles which govern the investigation of that most
difficult question of fact – the
assessment of compensation for
breach of contract.
The
sufferer by such a breach should be placed in the position he would
have occupied had the contract been performed, so far as
that can be
done by the payment of money, and without undue hardship to the
defaulting party.
(emphasis added.)
47.
It
was also held in the case of
Nkata v First
Rand Bank Limited and Others
2014 (2)
SA 412
(WCC)
at paragraph [39] that: —
“
In the
case of the loan of money, there may not be a material difference
between the monetary amount claimable by the lender upon
cancellation
on the one hand, and by way of specific performance of the
accelerated debt on the other, but conceptually there is
a
distinction between the two cases.”
48.
Thus,
it was argued that the damages now claimed by the Plaintiff was his
“expectation interest” in terms of the law
of contract.
In
Trotman v Edwick
1951 (1) SA 443
(J) at
449 B – C
it was held that: —
“
A
litigant who sues on contract sues to have his bargain or its
equivalent in money or in kind.”
49.
The
plaintiff argued that it was not claiming reliance interest (to be
placed in a position in which it would have been if it need
never
entered into a contract) nor restitution interest (which may overlap
with reliance interest). It was claiming damages in
lieu of specific
performance.
50.
These
contractual issues are difficult to resolve without oral evidence.
51.
The
following was stated in the defendants’ heads of argument:
“
The
plaintiff’s claims are not for payment of certain sums of money
in respect of which the defendants undertook to pay in
terms of a
contract. If this was the case, which is not, it would not have been
unnecessary for the plaintiff to have served the
defendants with a
notice in terms of the Act. It is apparent and unambiguous from the
reading of the plaintiff’s particulars
of claim that the
plaintiff did not plead specific performance for payment pursuant to
a written contract in respect of which the
defendants undertook to
make such payments. Clearly, the plaintiff’s claims are for
damages within the meaning of debt as
defined in section 1 of the
Act.”
52.
This submission by the defendants disregards the
tortuous history of the matter and that an urgent application was
brought in 2010
after the letter of 4 August 2010 had been sent to
the defendants. It also disregards the Supreme Court of
Appeal’s
dictate to the effect that a written document must be
construed purposively and must be contextualised.
53.
The
defendants pleaded that in terms of the contract it owed the
plaintiff nothing as it had not placed official orders on the
plaintiff. The plaintiff avers in its pleadings that the final
quotation prepared by the plaintiff and signed by the defendants
served as an official order, for a three-year period from May 2009.
The plaintiff further pleaded that in order to perform the
services
required from it, it had to employ personnel, purchase equipment and
obtain obligatory personal liability insurance.
54.
According to the plaintiff, the parties entered into the
agreement on the basis of the following facts: —
·
“
The
Plaintiff would deliver the security services for a period of 3 years
to the Phalaborwa Police clusters.
·
The
Plaintiff had to enter into employment contracts with employees to
render the security service to the Defendants and these employees
would have a claim for dismissal in terms of a contract should the
employment contract end prior to the period of employment.
·
The
Plaintiff would earn a profit each year from the 3 year contract, and
the Plaintiff would suffer a loss of profit should the
contract be
terminated prior to the expiry of the 3 year contract period.
·
The
parties were aware that the security contract in Phalaborwa was
exactly the same and on the same measure as the security contract
entered into between the parties for the Roodepoort police clusters
in terms of the same bid and was in fact a back to back contract.”
55.
The
defendants, very importantly, stated the following in their heads of
argument: —
“
The
plaintiff’s claim, if any, would be for damages arising from
the alleged breach of contract. In any event, the defendants
deny
that there was such termination of the contract.
The
defendants’ case is that there was no official order issued to
the plaintiff which would have required it to render the
services.
The defendants are therefore not liable for any damages alleged to
have been suffered by the plaintiff.”
56.
From the defendants’ own heads of argument it is
clear that there is a dispute regarding the nature of the contract
entered
into and whether it had even been breached.
57.
If
this is the case, as is very clear from the defendants’ heads
of argument, the defendants cannot state whether there was
or had to
be compliance with section 3 of the Act, without traversing the terms
of the contract by way of oral evidence.
58.
This supports the plaintiff’s argument that the
special plea is inextricably intertwined with the merits of the case.
59.
It
was also argued on behalf of the defendants that there was no notice
to the second defendant and that the case against it should
be
withdrawn.
60.
It
is unclear from the declaration why the second defendant was joined.
61.
Although,
prima facie,
there
may be merit in the defendants’ argument that the plaintiff is
claiming damages, there may,
prima facie,
also
be merit in the plaintiff’s argument that, in effect, it is
claiming “expectation interest”. This depends
entirely on
the terms of the contract and the circumstances in which the 4 August
2009 letter was written.
62.
Most importantly, the court cannot lose sight of section
34 of the Constitution. The letter of 4 August 2009 indicates what
the
plaintiff’s cause of action is. As stated, section 3 of the
Act was clearly never relied upon by the defendants, otherwise
the
plaintiff would have pleaded that this issue has finally been
adjudicated upon as it did in relation to the point
in
limine
regarding the non-joinder. There can
no longer be any prejudice to the defendants whatsoever if there
were, indeed, no compliance
with the Act.
63.
It
is also significant that the court may condone non-compliance with
section 3 on application if it is satisfied in respect of
certain
issues. Section 3(4) provides as follows: —
“
(4)(a)
If an organ of state relies on a creditor’s failure to serve a
notice in terms of 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 has 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.
(c) If an
application is granted in terms of paragraph (b), the court may grant
leave to institute the legal proceedings in question,
on such
conditions regarding notice to the organ of state as the court may
deem appropriate.”
64.
It
also bears mention that it is clear from the pre-trial issues that
the defendants sought to have the matter referred to oral
evidence
and not the plaintiff.
65.
In
view of what has been set out above, it is held that the letter of 4
August 2009 constitutes compliance with section 3 of the
Act.
66.
Given the fact that the onus in respect of the special
plea rests on the defendants, and that the court invited the
defendants to
lead evidence regarding the circumstances surrounding
it, which invitation was summarily declined by counsel for the
defendants,
they have failed to prove their special plea.
67.
In
the premises, the following order is made: —
Order
The defendants’
first special plea regarding the non-compliance with the provisions
of the Institution of Legal Proceedings
against Certain Organs of the
State Act, No. 40 of 2002, is dismissed with costs.
MM JANSEN J
JUDGE OF THE HIGH
COURT
For the Plaintiff
Advocate JGW Basson
(083 272
7899)
Instructed by
Maluleke Msimang & Associates
(012 323
3832) (Ref. No. Mr Matlala/RJ/CIV.1584)
For the
Defendants
Advocate Hutamo
(
083
558 0823 / 011 282 3700)
Instructed by
The
State Attorney
(012 309 1579) (Ref No.
6519/2010/Z23)