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2013
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[2013] ZAFSHC 81
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MEC: Department of Police, Roads and Transport, Free State Provincial Government v Terra Graphics (Pty) Ltd t/a Terra Works and Another, In re: Terra Graphics (Pty) Ltd t/a Terra Works and Another v MEC: Department of Police, Roads and Transport, Free State Provincial Government and Another (3489/2012) [2013] ZAFSHC 81 (23 May 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No : 3489/2012
In
the matter between:-
THE MEC: DEPARTMENT
OF POLICE, ROADS
AND TRANSPORT, FREE
STATE PROVINCIAL
GOVERNMENT
.........................................................................
Applicant
and
TERRA GRAPHICS
(PTY) LTD t/a TERRA
WORKS
..........................................................................
1
st
Respondent
SSI/TSHEPEGA JOINT
VENTURE
...............................
2
nd
Respondent
IN RE:
TERRA GRAPHICS
(PTY) LTD t/a
TERRA WORKS
.......................................................................
Applicant
and
THE MEC: DEPARTMENT
OF POLICE, ROADS
AND TRANSPORT, FREE
STATE PROVINCIAL
GOVERNMENT
..............................................................
1
st
Respondent
SSI/TSHEPEGA JOINT
VENTURE
...............................
2
nd
Respondent
_____________________________________________________
JUDGMENT:
DAFFUE, J
DELIVERED ON:
23 MAY 2013
_____________________________________________________
[1] This is an
application for leave to appeal against the judgment of Matlapeng AJ
delivered on 7 February 2013. The matter was
referred to me by the
Acting Judge President as Matlapeng AJ’s acting stint came to
an end.
[2] Applicant in the main
application is Terra Graphics (Pty) Ltd t/a Terra Works. The MEC:
Department of Police, Works and Transport,
Free State Province was
cited as first respondent and SSI/Tshepega Joint Venture as second
respondent in that application.
[3] In order to avoid
confusion I shall refer to the parties as Terra Works, the Department
and second respondent as the case may
be.
[4] The relief claimed by
Terra Works was granted essentially as prayed for in its Notice of
Motion, the effect being that the Department
was ordered to pay
R1 540 123,54 to Terra Works for work done and services
rendered, alternatively the Department was
ordered to pay the
aforesaid amount to second respondent which was ordered to pay the
amount over to Terra Works. Interest and
costs orders were made as
well.
[5] The Department
applies for leave to appeal to the Supreme Court of Appeal,
alternatively the Full Bench of this Division, against
the whole of
the judgment and the orders granted.
[6] The grounds of appeal
can be summarised as follows:
6.1. The learned Judge
erred in finding that Terra Works proved that there was privity of
contract between it and the Department.
6.2. The learned Judge
erred in finding dat Terra Works’ appointment was intended to
be on behalf of the Department and not
the second respondent.
6.3. The learned Judge’s
conclusion that second respondent was conveniently used as a conduit,
is unfounded.
6.4. The learned Judge
erred in finding that the judgment in
Minister of Public Works
and Land Affairs v Group Five Building Ltd
[1999] 3 ALL SA
467
(SCA) was inapplicable
in casu
.
6.5. The learned Judge
failed to have regard to the application of the
Public Finance
Management Act of 1999
and other statutory regulatory framework.
6.6. The learned Judge
erred in finding that the obligation of second respondent to comply
with statutory requirements pertaining
to Terra Works was sufficient
evidence that Terra Works was appointed by the Department.
6.7. The learned Judge
erred in granting judgment for the amount claimed together with
interest and costs.
[7] In further heads of
argument filed by the Department’s counsel on my invitation
they made it clear that they stood by
the grounds of appeal, but
identified three key arguments which they alleged form the basis of
the application to wit:
7.1. the learned Judge
erred by not holding that the sub-consultancy agreement which formed
the subject matter of Terra Works’
cause of action was invalid
and unenforceable;
7.2. although the
sub-consultancy agreement may appear to be an independent contract
between Terra Works and second respondent,
viewed holistically it is
an agreement that is inextricably linked to the main agreement
between the Department and second respondent;
7.3. by upholding Terra
Works’ claim, the court by implication declared the
sub-consultancy agreement to be a valid contract
notwithstanding that
it offended against the provisions of the statutory framework that
regulated procurement by Government.
[8] In his heads of
argument counsel for Terra Works indicated that the Department’s
discontent was confined to the following:
8.1. the court’s
finding that there was a direct
nexus
between Terra Works and
the Department entitling Terra Works to sue the employer for its
bargain;
8.2. the court’s
unwillingness to deal with the question of illegality of the main
contract concluded between the Department
and second respondent.
[9] In their further
heads of argument counsel for the parties were in agreement that the
matter is of considerable importance,
not only for the parties
in
casu
, but for others that are in the same position as Terra
Works. Mr Grobler on behalf of Terra Works indicated that the main
application
herein was to serve as a “test case” and that
there are seven other sub-contractors that are in the process of
seeking
similar relief by means of court proceedings. Counsel are
also
ad idem
that if leave is to be granted, it should
preferably be to the Supreme Court of Appeal.
[10] Mr Grobler argued
that the application for leave to appeal should be dismissed, but if
leave is granted, it should be on the
limited ground of alleged
voidness and invalidity of the main contract between the Department
and second respondent only. Mr Sibeko
on behalf of the Department
argued that leave should be granted on the grounds set out in the
application for leave to appeal and
therefore against the whole of
the judgment and orders.
[11] The Department put
forward several defences in the main application, three of which it
relied upon throughout the proceedings
to wit:
11.1. lack of privity of
contract between Terra Works and the Department;
11.2. the contract
between Terra Works and the Department did not comply with peremptory
statutory obligations;
11.3. the main contract
between the Department and second respondent is invalid and
enforceable and therefore all agreements flowing
therefrom are also
invalid.
[12] Matlapeng AJ elected
not to adjudicate the dispute pertaining to the alleged invalidity of
the contract between the Department
and second respondent. He found
that it was the subject matter of a pending case instituted by second
respondent against the Department
and that he did not have to
pre-empt the decision of another court. In the process the learned
Acting Judge did also not consider
the alleged invalidity of the
sub-consultancy agreement.
[13] Having studied the
judgment of Matlapeng AJ, the main application including the heads of
argument filed prior to the adjudication
of that application, as well
as the further heads of argument filed on behalf of the parties, I am
satisfied that there is a reasonable
possibility that another court
may arrive at a different conclusion and therefore I find that there
is a reasonable prospect of
success on appeal for the following
reasons:
13.1. the Supreme Court
of Appeal may well find that second respondent did not act for and on
behalf of the Department when the
sub-consultancy agreement was
concluded, but that this contract is indeed a nominated sub-contract
as the qualities thereof are
akin to those tabulated by Schutz JA in
Minister of Public Works and Land Affairs v Group Five Building
Ltd
1999 (4) SA 12
(SCA) at 17C – 18A;
13.2. another court may
well find that Mr Grobler’s argument that even in the event of
a finding that the main contract between
the Department and second
respondent is invalid, this does not mean, in the light of the
Oudekraal
principle, that the further contract entered
into as a consequence of the main and invalid contract is also
invalid, is not justified
insofar as neither he, nor the learned
Acting Judge appreciated that the Department relies not only on the
invalidity and unenforceability
of the main contract, but also the
sub-consultancy contract for the very same reasons;
13.3. the issues raised,
in particular the defences based on
sections 66
and
68
of the
Public
Finance Management Act of 1999
, is to a certain extent
res nova
and in the light of the importance of the matter it is necessary that
these defences are considered by the Supreme Court of Appeal,
particularly as Matlapeng AJ did not deal therewith at all.
[14] Consequently I am
not prepared to adhere to Mr Grobler’s request that if leave is
granted it should be on a limited issue
only as indicated. Leave
should be granted in respect of all those issues raised by the
Department in its application for leave
to appeal.
[15] Therefore the
following orders do issue:
15.1. Leave is granted to
appeal to the Supreme Court of Appeal.
15.2. Costs of the
application to be costs in the appeal.
______________
J.P. DAFFUE, J
On behalf of applicant:
Advv L.T. Sibeko SC & V
September
Instructed by:
C/o State Attorney
BLOEMFONTEIN
On behalf of respondents:
Adv S. Grobler
Instructed by:
Peyper Sesele Attorneys
BLOEMFONTEIN
/spieterse