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[2016] ZAGPPHC 1135
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Mapcivil and Landscaping and Others v Giyani Engineering and Consulting (CC) and Others (6915/2016) [2016] ZAGPPHC 1135 (14 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 6915/2016
Reportable:
NO
Of
interest to other judges: NO
Revised.
In
the matter between:
MAPCIVIL
AND LANDSCAPING
First
Applicant
BRIDGET
THANDEKA
DUMA
Second
Applicant
MOSES
MAPOLISA
Third
Applicant
and
GIYANI
ENGINEERING AND CONSULTING (CC)
First
Respondent
GIYANI
GLORIA MHLANGA
Second
Respondent
CALVIN
MUTIZE
Third
Respondent
FIRST NATIONAL
BANK
Fourth
Respondent
JUDGMENT
Carrim AJ
[1]
The applicants in this matter seek relief in the form of specific
performance from the 1st respondent flowing from an alleged
joint
venture between the parties in relation to vegetation clearing
tenders in the Msunduzi Municipality.
[2]
The applicants require first respondent, and to the extent second and
third respondents are agents of the first, to render to
the
applicants a true and proper statement of account together with all
supporting documents reflecting the correct income, assets,
expenditure and liabilities of the joint venture. They rely on
a signed Memorandum of Understanding (MoU) and various correspondence
and interactions between the second and third applicant with the
second respondent.
[3]
The respondents have opposed the application. The grounds of
opposition are many but the fundamental challenge raised
by the
respondents is that the MoU is not valid.
[4]
The respondents have also have raised two points
in limine.
[5]
The central plank of the point
in limine
raised by the
respondents in this matter is that the applicant ought to have
foreseen the likelihood of a material dispute of fact
arising on the
papers and yet they persisted with application proceedings in full
knowledge of this fact. On this basis alone the
application ought to
be dismissed. The other point
in limine
is that the referral
to court of the dispute between the parties is premature because the
joint venture agreement itself provides
for a resolution of disputes
between the parties and that the applicants ought to have exhausted
this remedy first.
[6]
The respondents had raised these points
in limine
in the
papers but had pleaded over in answer to the applicants founding
affidavit. However at the hearing of the matter counsel
for the
respondent limited himself to arguing only the points
in limine
and sought to adduce additional evidence by way of his heads of
argument, without any direction being given by the court as to
the
separation of issues or for leave to adduce further evidence.
The proper way for counsel would have been to seek the
leave of the
court in advance. Fortunately for his client’s sake the
answering affidavit is not limited to the points
in limine
.
Points
in limine
[7]
It seems that prior to the filing of this application the applicants
had brought urgent proceedings against the respondents
in this
court. The outcome of those proceedings was an agreement
between the parties which was made an order of court.
The order
states –
“
AFTER
PERUSAL
of
the papers filed of record, and hearing argument on behalf of the
parties, the following order is made:
1.
Pending
the final determination of an action, alternatively an application
further alternatively, arbitration as the case may be,
to be issued
by the first applicantand against the respondents inter alia, which
action/application/arbitration will be launched
no later than the 30
January 2016, the parties agree as follows:
1.1
The
first, second, third respondents will:
1.1.1
Pay
all monies already recieved by them, alternatively still to be
received by them, and pursuant to the Vegetation Management Contract
with the Msunduzi Municipality, under contract number 50/55 E9 of
2014, and into the first respondent’s call account held
with
First National Bank, Account Number 62573199538, less the relevant
monthly expenses incurred in the contract only;
1.1.2
The
respondents will not be entitled to access any balance held in the
call account without prior written approval from the applicant
which
approval shall not be unreasonably withheld.
1.2
Within
10 days of receipt of this order, to account for all monies received
by them up until the date of this order, and pursuant
to the
Vegetation Management Contract with the Msunduzi Municipality, under
contract number 50/55 E9 of 2014, and on a monthly
basis thereafter
and by not later than the 7
th
of each month, account fully for all proceeds and expenses relating
to the contract.
2.
The
applicant will:
2.1
Pay
an amount of R413 000.00 into a call account held in the name of
the first applicant pending finalisation of the dispute
in paragraph
1 supra.
2.2
Shall
account to the respondents for all and any monies received by them
from the Giyani Vegetation Management account with Standard
Bank.
3.
The
costs of this application, to be determined in the main
application/action/arbitration.
”
[8]
Following the agreed order of court the applicants’ elected to
launch this application.
[9]
The respondents allege that in that urgent application they had
already disputed the validity of the MoU and whether the alleged
joint venture between the parties extended to the existing contract
with the Msunduzi Municipality. The applicants were therefore
aware
that there was likely to be a material dispute of fact between the
parties and yet they elected to proceed via application
proceedings
and not via an action. On this basis alone, it was argued, the
application should be dismissed because the applicant
was abusing the
court’s process. However the papers of the urgent proceedings
were not included in the record by either party
and I am therefore
unable to assess whether the same dispute of fact had arisen in that
case. Hence I am unable to decide the first
point
in limine
.
[10]
The second point
in limine
, namely premature referral to the
court, assumes the existence of a valid MoU or that the provisions
dealing with dispute resolution
in the MoU were severable. Given that
the respondents allege inter alia and seemingly in the alternative
that the MoU was signed
under duress or that the second respondent
whose signature is reflected on the signature page of the document
did not know what
she was signing, the point
in limine
cannot
succeed until the validity of the MoU has been placed beyond doubt.
Furthermore clause 13 of the MoU, which deals
with dispute resolution
between the parties, does not contain any provisions that suggest
severability or survival of the clause
beyond cancellation or
termination. Hence this clause would only apply if the MoU was valid
and binding on the parties. I am therefore
unable to decide this
point without deciding whether there was a valid contract or not.
[11]
I now turn to consider the merits of the application.
Validity
of the Joint Venture
[12]
The applicants’ version is that the husband of the second
applicant, Lameck Cindove (“Lameck”) and the second
respondent had a prior work relationship. The second respondent had
experience in vegetation clearing projects. On 26 June 2014,
the
Msunduzi Municipality tender was advertised. The second applicant
(“Thandeka”) and Lameck approached second respondent
(“Gloria”) about working together on the tender. The
parties had come to an agreement that they would form a joint
venture
and utilize the first respondent as a vehicle through which they
would tender for the contract. They specifically
decided to use
the first respondent as a vehicle for the tender. The third applicant
assisted Gloria with the collation of information
for the tender and
ultimately assisted her with the submission of the documents before
the due date of 30 July 2014. The MoU had
not been signed yet there
were discussions between the parties as to the terms thereof.
In support of this they rely on an
email sent by third applicant on 1
August 2015 to Gloria, in which the MoU is attached for her comments
and consideration. The
MoU was signed by Gloria on 4 August (on
behalf of first respondent) and by third applicant (on behalf of
first applicant) on 5
August 2014. The tender was subsequently
awarded to the first respondent on 11 March 2015 (“
the
contract
”). The contract for the clearing of vegetation
would endure until 11 March 2017.
[13]
The MoU is intermittently referred to as the Joint Venture Agreement
or “Joint Venture Agreement”.
[14]
The applicants allege that until this point things were proceeding
smoothly until Gloria, who was the sole member of the first
respondent, sold her interest to the third respondent who eventually
acquired sole control of the third respondent seemingly with
effect
from 2 December 2015. Third respondent is now reneging on the
agreement between the parties. There is a prior history and
tension
between the third respondent and Lameck because third respondent had
been dismissed by Lameck at TNJ Project Solutions
(which appears to
be a subcontractor in the contract).
[15]
The applicants have put up additional papers relating to the period
after the tender was awarded which supports the inference
that there
was a joint venture between the parties. The first is an email
from Gloria to Lameck dated 12 March 2015 in which
she puts up a
budget proposal for the “Msunduzi project”.
The important passages in this proposal are that
they target to
invoice R600 000 every month, they open a joint venture account
(Gloria and Thandeka) into which the income from
Msunduzi will be
deposited and that they will share 50/50 on the net income after
expenses. The other document is an email
from Gloria to Zanele
at Msundizi Municipality, copied to Thandeka, on 5 October 2015 in
which she provides the bank account details
for the joint venture and
a letter confirming that Gloria and Thandeka have entered into a
“joint venture partnership to
execute and run our Msunduzi
Contract No E9 of 2014”.
[16]
The respondents’ core version is that there is no joint venture
in relation to the Msunduzi tender. They dispute
the events
that occurred prior to the signing of the MoU and allege that Gloria
submitted the tender documents on her own.
They further dispute
the validity of the MoU on the basis that Gloria did not know what
she was signing alternatively that she
signed under duress because
she had been found to be moonlighting at TNJ Project Solutions. In
the alternative they submit that
the MoU was only concluded after the
tender was submitted and therefore cannot apply to the contract.
[17]
Additional grounds advanced by the respondents are that the alleged
joint venture was not in compliance with the tender requirements
and
that there was serious non-compliance with the applicants with the
Standard Conditions of Tender (Standard Conditions). Clause
7 of this
document offers a remedy to tenderers who would have wanted to vary
the conditions of tender as the MoU attempts to do.
The
applicants had the opportunity to do so in the contact award letter
but never utilized it. Furthermore the joint venture could
not be
valid because Clause 13 of the Standard Conditions restricted the
assignment of the contract or any part thereof by either
the Council
or the contractor (Supplier) without the written consent of the
other. Much argument was put up and many cases
relied upon in
support of the contention that the joint venture was not valid
vis-à-vis the requirements of the Council
or the tender
process. Debates about whether written consent had been given
expressly or tacitly by Council or whether a joint
venture was in
existence at the time the tender was awarded are to my mind
irrelevant to the enquiry at hand.
[18]
The central fact in the applicants’ version is that they had a
joint venture agreement with the first respondent in relation
to the
Msunduzi Municipality tender and that they had specifically agreed to
utilize the first respondent as a vehicle for the
execution thereof.
The agreement was reduced to writing in the MoU. The respondents
dispute the validity of the MoU and its application
to the Msunduzi
tender. This issue would be determinative of the matter and it
is the issue I have been asked to decide.
And it is in
this area that I find some discomfort in deciding the matter solely
on the papers before me and without the hearing
of viva voce
evidence.
[19]
The first matter that gives rise to this concern is that on the
applicants’ own version there were discussions between
the
parties and they had assisted Gloria with the submission of the
tender. This all occurred prior to the signing of the MoU.
The
discussions during the period leading up to the signing of the MoU
could help to shed light on the interpretation of some of
the wording
used in the MoU.
[20]
For example clause 1(c) which contains Definitions the Bill of
Quantities is defined as Annexure A for this Contract. But Annexure
A
is not attached and Contract is not defined. Then in 1(d) the
client is defined as the Municipality of, the Employer of
the
project. Yet neither the word “
Employer
” nor
“
project
” is defined. In a paragraph headed
“
RECITALS
” the word Project is used, with an upper
case P. It is unclear whether this refers back to the project
in 1(d).
[21]
Critically in clause 2.1 which states that the “
parties
associate themselves as independent firms forming a business alliance
to execute the Municipality of Msundizi contract namely
eradication
of vegetation
”. It is unclear whether the contract referred
to in this clause is the Contract referred to in 1(c)
[22]
A second matter that gives rise to this discomfort is the
interconnected relationships between the parties and in particular
the allegation that Gloria had signed the contract under duress.
This goes to the question of intention. While
her
proposal of 12 March 2015 does not contain words suggesting
reluctance it would be difficult to make an evaluation about duress
without the benefit of viva voce evidence.
[23]
Further clause 18 of the MoU provides that “
the MoU
constitutes the entire agreement between the parties and supersedes
any previous understanding, commitments or agreements,
oral or
written with respect to the subject matter hereof
”. The
fact that the parties seemingly engaged in discussions and had
already submitted the tender prior to the signing of
the MoU makes it
vital for this court, when asked to interpret the terms of the MoU,
which in themselves are not consistently used,
to have the benefit of
extraneous viva voce evidence as to the meaning of various words and
phrases used by the parties.
[24]
Another factor that is also somewhat concerning is the parties
understanding of the nature of the joint venture. In para 8.25
of the
founding affidavit the applicants alleges that the joint venture was
in the nature of a partnership and as such the parties
owed each
other inter alia a duty to account. The same term, partnership,
is used in the letter of 5 October referred to
above. The respondents
pounce upon the latter to suggest that the partnership or joint
venture was between Thandeka and Gloria,
thus implying that the first
respondent, being a close corporation, could not be bound to it. A
court would not be able to arrive
at an understanding about the
nature of the joint venture and the parties’ intentions without
the hearing of viva voce evidence.
[25]
While these are matters that give rise to some discomfort about
deciding the matter only on the papers before me, I disagree
with
counsel for the respondent that the application ought to be dismissed
because the applicants were aware of the material dispute
of fact
regarding the validity of the MoU and that they are abusing the
court’s process and the application of rule 6 by
coming via
application proceedings.
[26]
In this case there is documentary evidence in the form of a MoU
signed by both parties which
ex facie
suggests that there was
an agreement between the parties. The respondents have not
denied signing the MoU but have put up
a version challenging the
validity thereof and the application of its ambit. In my view
this is a sufficiently narrow albeit
critical issue that can be
referred to oral evidence.
[27]
The applicants have already suggested that if this court is not
willing to adopt a robust approach the matter should be referred
to
oral evidence. The respondents when asking for the matter to be
dismissed also agree that I cannot decide it only on the
papers
before me.
[28]
Accordingly I make the following order –
1.
The
application is referred for the hearing of oral evidence at a time to
be arranged with the Registrar on the following issues:
1.1
Whether
the Memorandum of Understanding, (hereafter “
MOU
”)
dated 5 August 2014 is a valid agreement between and binding on the
parties.
1.2
That
the first respondent (and so to the second respondent and third
respondents insofar as they are the agents of the first respondent),
be ordered to render the applicants, within a period of twenty (20)
days from the date of the granting of this order, a true and
proper
statement of account together with all supporting documents
reflecting the correct income, assests, expenditure and liabilities
of the joint venture in terms of the MOU signed on 5 August 2015.
1.3
That
the first respondent is ordered to comply with, and perform in terms
of the MOU dated 5 August 2014, including but not limited
to:
1.3.1
the
continuation of the contract with Msunduzi Municipality;
1.3.2
to
continue to use the assest and services of the applicants as set out
in the MOU;
1.3.3
to
make payment of all payments received from the client into the joint
venture bank account;
1.3.4
granting
the first applicant in particular Bridget Thandeka Duma, joint
signing powers to the joint venture bank account; and
1.3.5
the
sharing of the profits made from the contract with the first
applicant in the ratio 1:1 with the first applicant.
1.4
The
parties are to debate the account received in paragraph 1.2 supra,
within sixty (60) days after the account has been received,
amongst
themselves, failing which they may set the matter down, on a date to
be arranged with the Registrar, for a debatement of
the said account.
2.
Prayers
2, 3 and 5 of the Otice of Motion dated 28 January 2016 is postponed
sine die.
3.
The
evidence shall be that of any witness whom the parties or either of
them may elect to call, subject, however, to what is provided
in
paragraph 3 thereof;
4.
Neither
party shall be entitled to call witnesses unless:
4.1
It
has served on the other party at least fifteen (15) days before the
date appointed for hearing (in case of a witnessto be called
by the
respondent) and at least ten (10) days before such date (in case of a
witness to be called by the applicant), a statement
wherein the
evidence to be given in chief by such person as set out; or
4.2
The
court, at the hearing, permits such person to be called despite the
fact that no such statement has been served in respect of
his or her
evidence;
5.
Either
party may subpoena any person, to give evidence at the hearing,
whether such person has consented to furnish a statement
or not;
6.
The
fact that the party has served a statement in terms of paragraph 3
hereof, or has ssubpoenaed a witness, shall not oblige such
arty to
call the witness concerned;
7.
In
so far as Expert Witnesses are to be called, Rule 36 of the Uniform
Rules of Court shall apply.
8.
Within
twenty (20) day of the making of this order, each of the party shall
make discovery on oath, of all documents relating to
the issues
referred to in paragraph 1 thereof which are or have at any time been
in possession or under the control of such party;
9.
Such
discovery shall be made in accordance with Rule 35 of the Uniform
Rules of Court and the provisions of the rule with regard
to the
inspection and production of documents discovered shall be operative;
10.
The
incidence of costs incurred by the parties in the current and
pending proceedings, shall be determined by the court after
the
hearing of oral evidence.
___________________________
Y.
CARRIM
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Heard
on
:
06 September 2016
Delivered
on:
14 September 2016
For
the Applicants:
Advocate H. Jacoobs
Advocate J. Hershenshon
Instructed
by:
Gwanangura Singini
Attorneys
For
the First & Third Respondents:
Advocate N. S. Petla
Instructed
by:
Masewatla Attorneys