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[2015] ZAFSHC 4
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SSI/Tshepega Joint Venture v MEC: Free State Provincial Government: Department of Police, Roads and Transport (393/2012, 4352/2013) [2015] ZAFSHC 4 (29 January 2015)
IN THE HIGH
COURT OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Case
No: 393/2012 & 4352/2013
In
the matter between:-
SSI/TSHEPEGA
JOINT
VENTURE
...............................................................................
Plaintiff
and
MEC:
FREE STATE PROVINCIAL GOVERNMENT:
DEPARTMENT
OF POLICE, ROADS AND
TRANSPORT
…............................................................................................................
Defendant
JUDGEMENT:
MOENG AJ
HEARD
ON:
14 NOVEMBER 2014
DELIVERED
ON:
29 JANUARY 2015
[1]
This judgment deals with two exceptions that have been raised against
the particulars of claim delivered by the plaintiff.
The
exceptions state that the particulars of claim lack averments that
are necessary to sustain a claim of enrichment. I shall for
ease of
reference refer to the parties as they are referred to in the main
action.
[2]
On 31 January 2012 plaintiff issued summons under case 393/2012 (“the
first summons”) against the defendant claiming
payment of R 44
779 617,26. Plaintiff alleged in its particulars of claim
that on 19 April 2010, it entered into a written
agreement with the
defendant in which it (plaintiff) was appointed as Program Manager to
assist the defendant with the implementation
of repairs and
rehabilitation programs for the Free State province road networks.
Plaintiff alleges that it complied with
all its obligations in
terms of the agreement but defendant failed to effect payment as
agreed. Notwithstanding due demand, defendant
refuses to pay the
amount.
[3]
In response, defendant pleaded that the alleged agreement is illegal,
therefore null and void in that the agreement: (a) lacked
budgetary
allocations under the Public Finance Management Act (“PFMA”)
and the requisite funds to meet the financial
commitments purported
to have been made in appointing the plaintiff could not lawfully have
been withdrawn from the Provincial
Revenue Fund; (b) that the
agreement was in contravention of the Medium Term Expenditure
Framework since the payment schedule extended
over a period of four
years, contrary to the prescribed three year period; (c) that the
appointment of the relevant road contractors
were not made in
accordance with the applicable supply chain management and
procurement processes; and (d) that the plaintiff was
aware of the
existence of the illegality of the contracts in that inter alia,
during the course of October 2010 plaintiff’s
representatives
were informed of the absence of proper authorization in respect of
the contract.
[4]
Defendant further pleaded in the alternative that should it be found
that the agreement is not null and void, then the agreement
is
voidable and it is entitled to cancel same on the basis that
plaintiff had knowledge of the contractual irregularities when
the
contract was concluded.
[5]
On 29 October 2013, plaintiff issued a second summons against the
defendant under case 4352/2013 (“the second summons”)
claiming R74 257 315,36 alternatively R44 109 499,81. This
amount was claimed on the strength of the agreement entered
into on
19 April 2010 (the same agreement as in the first action). Plaintiff
now claimed payment for the services it rendered over
and above those
in the first summons. In the alternative plaintiff pleaded
that:
“
In
so far as the defendant establishes that the agreement was invalid or
had been duly repudiated and plaintiff is not entitled
ex contractu
to any payments claimed by it, the plaintiff:
14.1 Had done the
services reflected in the said documents “C” and “D”
(in conjunction with those in “B”)
to case 393/2012); and
14.2 The defendant
had accepted and continued to accept such services and benefitted
from these; and
14.3 The defendant
was enriched in the amount of such payments as are claimed under the
Agreement.
14.4 The defendant’s
enrichment amounted to R 74 257 315.36 (giving credit to the
defendant’s payment under the contract
as set out in “C”).”
[6]
Plaintiff further sought and resultantly amended its particulars of
claim in the first action and pleaded as follows:
“
12.2 Pursuant
to the defendant alleging that the contract relied upon by the
plaintiff is void and illegal, the plaintiff claims
the amounts due
and owing under the alleged illegal agreement on an enrichment basis.
12.3 The plaintiff
claims monies on this enrichment basis for the works set out in
annexure B to this
(sic)
particulars of claim under case
number 393/12, as well as those under case number 4352/12.
13. Should the
plaintiff obtain judgment against the defendant on the enrichment
basis set out above, and under case 4352/12, such
judgment would
serve to discharge the defendant’s liability towards the
plaintiff in this claim.”
[7]
On 29 May 2014, an order was obtained wherein the actions brought by
the plaintiff against the defendant under the two actions
were
consolidated in one action to be further prosecuted under case number
4352/2013.
[8]
Defendant had however on 23 January 2014 under case 4352/2013, prior
to the consolidation and amendment of the first summons,
excepted to
the plaintiff’s particulars of claim. The root of the exception
being that the alternative cause of action based
on enrichment,
firstly lacked averments necessary to sustain an action in that the
plaintiff failed to allege the essential elements
of any applicable
or valid
condictio
, and secondly that the plaintiff pleaded an
enrichment claim in respect of services which were the subject of a
different action
under the first summons. This second ground of
exception was addressed in the amendment as set out above and was not
persisted
with.
[9]
On 4 June 2014, defendant filed another exception to the amended
particulars of claim in the first summons. The complaint being
that
the particulars lack averments necessary to sustain a claim of
enrichment as the plaintiff failed to allege the essential
elements
of any of the
condictiones
.
[10]
Mr. Kemack argued that the plaintiff has not identified the
condictio
upon which it relies and its enrichment claim must relate to the
alternative of the defendant establishing that the agreement was
invalid
as pleaded under paragraph 14 of the second summons.
He contended that the enrichment cause of action cannot be premised
on the
condictio ob turpem vel iniustam causam
since the
plaintiff refers to invalidity rather than illegality, which is
required to recover performance under an illegal contract.
He further
argued that the plaintiff failed to allege the central requirement
under this
condictio
which is that the amount is claimed under
an agreement which is void and unenforceable because it is illegal,
therefore prohibited
by law.
[11]
He contended that the plaintiff can neither rely on the
condictio
indebiti
because there is a cause, albeit a defective one. The
plaintiff, so the argument proceeded, has not pleaded the essential
requirement
that there was no legal obligation for it to perform and
that the performance was effected in the mistaken belief that it was
due.
He argued that the plaintiff’s cause of action can also
not fall under the
condictio sine causa generalis
or the
condictio
sine
causa
specialis
which applies to
specific situations not including performance under an invalid
agreement.
[12]
Mr. Kemp conversely argued that the general enrichment elements are
clearly to be gleaned from the particulars of claim and
that it is
not incumbent to restrict the particulars to any specific
condictio
.
He contended that the enrichment claim is an alternative claim should
any of the defendant’s defences invalidate the contract
that
has been pleaded in the main. The enrichment claim is to be read in
its context and it covers the eventuality that the defendant
demonstrates invalidity in whatever form.
[13]
Before dealing with the exception, I find it appropriate to first
deal with the substantive law relating to enrichment in determining
whether the essential elements to sustain a cause of action have been
pleaded. Liability for enrichment is in a nutshell liability
for the
restitution of an unfounded patrimonial transfer resulting from an
obligation created by the increase of one party’s
estate at the
expense of the estate of another without such cause as the law may
regard as conclusive for the transfer to the estate
of the first
party. (See JC Sonnekus
Unjustified Enrichment in South
African Law
)
[14]
It is generally accepted by our Courts that the identification of the
cause of action or the specific
condictio
is not of
importance. I find it apposite to refer to what was stated by Schutz
JA in
First National Bank of Southern Africa Ltd v Perry
NO and Others
2001 (3) SA 960
(SCA) at para [23]:
“
This
difference of approach as to the appropriate condictio again
underlines the point which I made in McCarthy Retail Ltd v
Shortdistance
Carriers CC (SCA) 16.03.2001 unreported, that we spend
too much of our time identifying the correct condictio or actio.
Counsel
frequently err. The academics say that the Courts, including
this Court, frequently err. And to judge by the difference of opinion
as to the condictio sine causa revealed in McCarthy's case, some
of the academics sometimes err too. My suggestion, in that
case,
accepted by two of my Brethren, was that the adoption of a general
action might help remedy this situation, by fixing attention
on the
requirements of enrichment rather than on the definition and
application of the old actions.”
[15]
Although there is no general action based on enrichment in South
African law, there are nonetheless certain generic requirements
for
any claim based on enrichment, which are that: (a) the defendant must
be enriched; (b) the plaintiff must be impoverished;
(c) the
defendant’s enrichment must occur at the expense of the
plaintiff’s impoverishment; and (d) the enrichment
must be
unfounded or unjustified (see 9 LAWSA 209).
It may therefore be accepted, as stated in
Kudu
Granite Operations (Pty) Ltd v Caterna Ltd
2003
(5) SA 193
(SCA)
that the development,
subsequent to the recognition of the generic requirements, for any
claim in enrichment has progressed to such
an extent that the common
law
condictiones
need no longer be used as the only point of departure.
[16]
As indicated above, the South African law still does not, mainly for
fear of an unlimited and unrestricted liability in enrichment,
formally recognise a general action in enrichment.
The
current situation therefore entails that ad-hoc extensions are
utilised in a careful broadening of the actions of the common
law,
unless the facts of the matter are on all fours with the requirements
of a classic action. (See JC Sonnekus
Unjustified
Enrichment in South African Law
).
Harms advice to pleaders is to formulate any enrichment claim in
terms of the different
condictiones
.
Pleadings can therefore be framed mindful of the generic requirements
for any claim based on enrichment and the prospect of the
ad-hoc
extensions broadening the actions of the common law.
[17]
It is trite that a party who has performed whether in whole or in
part in terms of an illegal contract may reclaim performance
with the
condictio ob turpem vel iniustam causam
.
Such a party
must allege and show:
(a) a transfer of property or payment of money
to the defendant from the plaintiff;
(b)
that the transaction or its performance was illegal;
(c)
that the defendant was unjustly enriched.
The
central requirement of this
condictio
is therefore that the amount claimed must have been transferred
pursuant to an agreement that is void and unenforceable because
it is
illegal, i.e. because it is prohibited by law.
[18]
If the contract is invalid but not illegal, the cause of action is
the
condictio indebiti
.
(See
Legator McKenna Inc v Shea
2010 (1) SA 35 (SCA). The essential
allegations for the
condictio
indebiti
are that: (a) The transfer or payment must have been made in the bona
fide and reasonable but mistaken belief that it was owing;
(b) The
transfer must have been made
sine causa
or
indebite
,
there must therefore have been no legal or natural obligation to have
made it. (c) The error must have been reasonable, meaning
that the
mistake must be excusable in the circumstances of the case; (d) the
property being reclaimed must in legal terms have
been transferred to
the defendant. If the claim arises from performance in terms of an
invalid contract, the performance is not
indebite
because there is a cause, albeit an illegal one. The claim then lies
under the
condictio ob turpem vel
iniustam causam
(see Harms at 101 (f)
and compare
Afrisure CC and Another v
Watson N.O. and Another
[2008] ZASCA 89
;
2009 (2) SA
127
(SCA) at para
[51]
a well as
First
National Bank of Southern Africa Ltd v Perry N.O. and Others
supra at para [22].
[19]
Returning to the germane issue at hand, it is important to have
regard to the test that is employed in deciding exceptions:
In order
to succeed
,
it must be borne in mind that the defendant has the duty as excipient
to persuade the Court that upon every interpretation which
the
particulars of claim can reasonably bear, no cause of action is
disclosed. Compare
Theunissen
en Andere v Transvaalse Lewendehawe Koöp Bpk
1988
(2) SA 493 (A)
at
500E
.
A
charitable test is used on exception, especially in deciding whether
a cause of action is established, and the pleader is entitled
to a
generous interpretation.
(
First
National Bank Southern Africa v Perry NO and Others
supra
)
The court should not look at a pleading “with a magnifying
glass of too high power”. (
Kahn
v Stuart and Others
1942 CPD 386
at 391). The pleadings must be read as a whole and no
paragraph can be read in isolation. (
Southernport
Developments (Pty) Ltd v Transnet Ltd
2003 (5) SA 665
(W) at 669)
[20]
The pleadings in
casu
admittedly followed an unusual course in that plaintiff initially
instituted the first action in contract only, without pleading
an
enrichment claim. The defendant in response pleaded that the
agreement on which plaintiff relied is illegal and null and void
or
in the alternative voidable. It is in reaction to these averments of
illegality that the alternative claim under the second
summons and
the amendment to the first summons was delivered. Quoted verbatim,
the plaintiff pleaded in the amended particulars
that
“
pursuant to the defendant alleging that the
contract relied upon by the plaintiff is void and illegal, the
plaintiff claims the
amounts due and owing under the alleged illegal
agreement on an enrichment basis”. The plaintiff therefore
clearly refers
to the illegality as opposed to the invalidity of the
contract.
[21]
The enrichment claim under the alternative to the second summons was
clearly also in reaction to the plea in the first summons.
Plaintiff
raised the enrichment claim in so far as the defendant establishes
that the agreement was invalid. Plaintiff indisputably
refers to the
invalidity rather than the illegality of the contract. This averment
should however be read in the context of what
is contained in the
amended particulars under the first summons that the plaintiff claims
monies on enrichment based on the illegality
of the contract for the
works under both actions. The evidence to be led at the trial can
clearly be gleaned from the main action
in contract and the
alternative will be persisted with should the illegality be proven by
the defendant. If evidence can be led
in this regard then the
pleadings cannot be excipiable.
[22]
The main complaint against the alternative claim is that the
plaintiff failed to allege the central requirement under the
condictio
ob turpem vel iniustam causam
since it refers to invalidity rather than illegality. This complaint
fails to have regard to the pleadings in their context. It
is in the
main important to note that it is the defendant that raised the
illegality of the contract and the alternative claim
is aimed at
ensuring success for the plaintiff should defendant show that there
were irregularities that tarnished the conclusion
of the contract.
The amended and alternative claims are phrased in such a way
that they cover both illegality and invalidity
which may be claimed
under the
condictio
ob turpem
or the
condictio
indebiti
.
Both are however pleaded in case the defendant is successful in
showing the illegality or invalidity of the contract. It is not
necessary at this stage to determine whether plaintiff will be
successful in proving either of these claims as this will be dealt
with at the trial. It is therefore inconceivable that the defendant
can argue that it cannot plead to the alternative or amended
claim
more so that defendant raised the illegality of the contract.
[23]
It is however not necessary that the specific
condictio
be identified. What is of importance is that the basic requirements
of an enrichment claim are present. When viewed as a whole,
the
salient facts as gleaned from the pleadings are briefly that the
plaintiff was contractually appointed as Program Manager to
assist
the defendant with the implementation of road repairs and
rehabilitation programs. Plaintiff complied with all its obligations
in terms of the agreement by performing the services. The defendant
had accepted and continued to accept such services and benefitted
from same. The defendant, by having accepted the services of the
plaintiff, was enriched in the amount of the payments
that
it failed to effect as agreed. The defendant alleges that this
agreement is either void or voidable as per the plea to the
first
summons.
[24]
These facts fall squarely within the generic requirements for any
claim based on enrichment. Plaintiff’s claim is based
on the
locatio condictio operis
as the defendant allegedly derived benefit from the plaintiff’s
labour and expertise. It is well established that no man
may enrich
himself at the expense or to the detriment of another. The fact that
plaintiff pleads that defendant accepted and continued
to accept its
services and benefitted from same satisfies the requirement that the
defendant must be enriched whereas the statement
that plaintiff
complied with all its obligations in terms of the agreement by
performing the service qualifies the requirement
of impoverishment.
As plaintiff has admittedly not been reimbursed for the services, the
requirement that the defendant’s
enrichment occurred at the
expense of the plaintiff and that the enrichment was unjustified, has
by implication been satisfied.
[25]
The general operation of the law of enrichment lies outside the realm
of contract, and its most frequent application relates
to cases where
improvements have been made by a possessor of land. It was however
used in
Rubin
v Botha
1911 AD 568
to prevent enrichment which had its origin not in
possession but in an agreement which the parties believed to be
binding, but
which turned out to be invalid. The plaintiff in the
main pleaded that it was under the impression that it acted under a
valid
contract and relies on the enrichment claim in the alternative
and in case defendant successfully raises the illegality or
invalidity
of the contract.
[26]
Both the amended plea and the alternative claim clearly define the
issues upon which the plaintiff relies to sustain its cause
of
action. When viewed in context, the
facta
probanda
as appears
ex
facie
the pleadings also point to the
evidence that will be led to disclose a cause of action during the
trial.
I am satisfied that every
fact which would be necessary for the plaintiff to prove, if
traversed, in order to support its
right to judgment of the Court has
been alleged.
[27]
In the result I make
the following order:
i.
The exception
is dismissed.
ii.
The defendant
is ordered to pay the plaintiff’s costs which shall include the
costs occasioned by the employment of two Counsel.
________________
L.B.J.
MOENG, AJ
On
behalf of Excipient/Defendant: Adv. A. Kemack and V September
Instructed
by:
State
Attorney
BLOEMFONTEIN
On
behalf of Respondent /Plaintiff: Adv. KJ Kemp SC and S Grobler
Instructed
by:
Peyper
Attorneys
BLOEMFONTEIN