Brief Summary

Interim Interdict — Requirements for interim relief — Applicants sought interim interdict to prevent appointment of new contractors for sewer project — Applicants claimed prior appointment by municipality and substantial payments made — Respondents denied existence of contract and proper procurement process — Court considered prerequisites for interim interdict: prima facie right, irreparable harm, balance of convenience, and absence of alternative remedy — Applicants failed to establish a clear right or prima facie case due to lack of evidence of a binding contract — Application for interim interdict dismissed.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings took the form of an urgent application for interim relief, in which the applicants sought an interim interdict pending a review of a municipal decision. The review was directed at a decision by the Dihlabeng Local Municipality (cited as the first respondent) or alternatively its Municipal Manager (the third respondent), to appoint other parties to proceed with a municipal infrastructure project.

The applicants were MVD Xariep-Mol Procon Joint Venture, MVD Xariep Consulting Engineers CC, and Mol Pro Consulting (Pty) Ltd. The respondents were Dihlabeng Local Municipality, Dikgato Consulting Engineers, the Municipal Manager, Mashimini Enterprise, and Mapitsi Civil Works. The essential complaint was that the municipality had appointed the second, fourth and fifth respondents to continue with works on a project which, according to the applicants, had previously been awarded to them.

In procedural terms, the matter was initially brought on an urgent basis on 28 May 2013 and enrolled for hearing on 31 May 2013. The respondents filed a notice of opposition and, by agreement between the parties, the matter was postponed to 13 June 2013 for the filing of further affidavits and heads of argument, and was then argued. Judgment was delivered on 20 June 2013.

The dispute concerned the applicants’ attempt to establish a basis for interim interdictory relief by asserting an existing contractual appointment in relation to the “Construction of sewer reticulation in Fateng Tse Ntsho” project (with the background of sewer works in Paul Roux) and challenging the municipality’s appointment of other contractors/consultants to proceed with the works.

Material Facts

The applicants alleged that, during or about 2007/2008, they were contracted by the first respondent in relation to sewerage works (described in the papers as “Construction of sewer plant and reticulation: Paul Roux”). They stated that they produced business plans and working drawings, and that more than R1 million had been paid to them for work done. On their version, the project was later put on hold due to a lack of bulk water, pending completion of a bulk water supply line from Bethlehem to Paul Roux.

The applicants further alleged that, in December 2012, they became aware that the bulk water supply line was near completion and they enquired about resumption of the project. Although the municipality acknowledged receipt of their letter dated 4 December 2012, the applicants said they received no substantive response.

On or about 23 April 2013, the applicants alleged that they discovered other contractors were busy with construction works on the project which they contended had been awarded to them, and they addressed an urgent letter raising concerns that the municipality had appointed another consulting engineer and that work was continuing without their administration. The matter was then held in abeyance while the municipality indicated that a petitions committee would consider the grievance, but the contemplated meeting was postponed.

On 17 May 2013, the applicants’ deponent said he came across a press advertisement calling for tenders, including for construction of waste water treatment works in Paul Roux, and the applicants contended that no decision had been taken on their grievance.

The material disputes, as identified by the court, centred on whether a binding contract existed at all and whether any such contract was validly concluded. In the opposing affidavit, the third respondent (also acting on behalf of the first respondent) denied the existence of any agreement between the applicants and the municipality. He stated that after a diligent search, no documentation could be found indicating that an agreement came into existence or that any tender process had been followed in appointing the applicants. The respondents also relied on the existence of a municipal supply chain management policy (and the statutory and constitutional procurement framework) as the governing regime for procurement of goods and services by a municipality.

The court treated as significant that the applicants’ founding papers did not attach a contract, did not set out the terms of any oral agreement, and did not provide key contractual details (such as commencement and completion dates, penalties, and payment terms). The court further regarded it as material that it was common cause that no tender process had been followed in the applicants’ appointment, and that the applicants did not provide proof when invited to do so.

In reply, the applicants attempted to locate their appointment within a deviation provision of the supply chain management policy, alleging that they were appointed in an emergency situation as contemplated by that policy. The court considered this allegation in light of the broader procurement requirements applied to municipal contracting.

Legal Issues

The central legal question was whether the applicants satisfied the requirements for an interim interdict pending review, with particular emphasis on whether they had established a clear right or at least a prima facie right (though open to some doubt).

This required determination of mixed issues of fact and law. Factually, the court had to assess whether the applicants’ affidavits established the existence of a contract concluded with the municipality. Legally, the court had to consider whether, even if some form of agreement existed, it could be regarded as valid and enforceable in light of constitutionally and statutorily mandated procurement requirements applicable to municipalities, and whether the absence of compliance-related averments undermined the claimed right.

A further issue concerned the availability of an alternative remedy, namely a damages claim, and the role that availability played in the interim interdict analysis. The court also referred to its discretion in interim interdict matters, while making clear that it had no discretion to grant such relief where the prerequisites had not been established.

Court’s Reasoning

The court began by setting out the settled requirements for interim interdictory relief, namely a prima facie right, a well-grounded apprehension of irreparable harm, a favourable balance of convenience, and the absence of an alternative satisfactory remedy, with reference to Setlogelo v Setlogelo 1914 AD 221 and the approach described in Harms, Civil Procedure in the Superior Court. It emphasised the accepted formulation that a prima facie right may exist even if open to doubt, but that a court must consider the applicant’s allegations together with those respondent facts that cannot be disputed, and must evaluate whether the respondent’s contradictory allegations throw serious doubt on the applicant’s case.

Applying these principles, the court treated the existence of a valid contract as pivotal to the claimed prima facie right. It reasoned that if a valid contract existed, the applicants might have established at least a prima facie right in substantive law. However, the court concluded that the applicants had not produced sufficient evidence in their affidavits to prove that a binding contract, validly concluded with the municipality, existed.

In reaching that conclusion, the court relied on the principle that in motion proceedings the affidavits serve as both pleadings and evidence, and therefore must contain the material necessary to establish the contractual right relied upon. It referred to Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA) and Absa Bank Ltd v Kernsig 17 (Pty) Ltd 2011 (4) SA 492 (SCA) for the proposition that the affidavits must be evaluated on whether they establish the contract alleged. The court found the applicants’ founding affidavit deficient because it did not set out the terms of any oral agreement, did not attach any written contract, and provided limited documentation beyond appointment-related letters. It also considered it material that, while payment for some work appeared to have occurred, it was not common cause who made payment and the applicants provided no confirmatory details supporting their assertion that the municipality paid them.

The court also assessed the asserted appointment against the procurement framework binding on municipalities. It referred to Municipal Manager: Qaukeni Local Municipality and Another v FV General Trading CC 2010 (1) SA 356 (SCA) and the constitutional requirement in section 217(1) that organs of state must contract for goods and services in accordance with a system that is fair, equitable, competitive and cost-effective. The court treated these requirements, echoed in the Local Government: Municipal Systems Act 32 of 2000 and the Local Government: Municipal Finance Management Act 56 of 2003, as applicable regardless of whether a supply chain management policy existed at the time, and held that the absence of a compliant procurement process could render a contract unlawful.

Against that framework, the court found there were no factual averments by the applicants that their alleged appointment in 2007/2008 complied with the constitutional and statutory procurement requirements, or that it was transparently and properly concluded as an emergency deviation. The court reasoned that, even if an agreement had been concluded (which it did not accept was sufficiently established), it would in any event be invalid if it did not comply with the mandatory procurement prerequisites. On that basis the court concluded that the applicants had not established the required prima facie right.

The court further held that the applicants had an alternative remedy. It stated that if the applicants could prove a valid contract, they would have a claim for damages, and it considered that such damages would not be impossible to prove. This supported the conclusion that interim interdictory relief was not justified on the papers before it.

On discretion, the court reiterated that it had no discretion to grant an interim interdict where the requirements were not met. It added that even if the requisites were assumed to be present, it would not have exercised its discretion to grant the interim interdict in the circumstances. The court expressly noted that refusing interim relief did not preclude the applicants from attempting to establish a valid agreement in subsequent proceedings, including the contemplated review.

Finally, because the application failed on the interim interdict requirements, the court considered it unnecessary to address urgency and made no finding on urgency.

Outcome and Relief

The court dismissed the application insofar as it related to Part A of the notice of motion, being the application for interim interdictory relief, and ordered that it be dismissed with costs.

No relief was granted restraining the municipality or the appointed respondents from proceeding with the project pending the contemplated review.

Cases Cited

Setlogelo v Setlogelo 1914 AD 221.

Edrei Investments 9 Ltd (In Liquidation) v Dis-Chem Pharmacies (Pty) Ltd 2012 (2) SA 553 (ECP).

Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA).

Absa Bank Ltd v Kernsig 17 (Pty) Ltd 2011 (4) SA 492 (SCA).

Municipal Manager: Qaukeni Local Municipality and Another v FV General Trading CC 2010 (1) SA 356 (SCA).

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 217(1).

Local Government: Municipal Systems Act 32 of 2000.

Local Government: Municipal Finance Management Act 56 of 2003.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the applicants failed to establish the requirements for an interim interdict because they did not demonstrate, on the affidavits, the existence of a validly concluded and enforceable contract with the municipality that could found a prima facie right. The applicants’ papers lacked material averments and documentation to prove the contractual terms and validity, and did not allege facts showing compliance with mandatory municipal procurement requirements derived from section 217(1) of the Constitution and the relevant local government statutes.

The court further held that the applicants had an alternative remedy in the form of a damages claim if they could later prove a valid contract, and it therefore declined to grant interim relief. The application for interim relief was dismissed with costs, and the court made no determination on urgency.

LEGAL PRINCIPLES

The judgment applied the established requirements for an interim interdict, namely a prima facie right (even if open to some doubt), a reasonable apprehension of irreparable harm, a balance of convenience in favour of the applicant, and the absence of another satisfactory remedy. The court treated these requirements as cumulative, and reiterated that where they are not established, a court has no discretion to grant interim interdictory relief.

In evaluating whether a prima facie right had been established in motion proceedings, the judgment applied the principle that affidavits constitute both pleadings and evidence, and therefore must contain sufficient averments and supporting material to establish the substantive right relied upon. A party relying on contract must, on the papers, set out the basis for the contract’s existence and enforceability in a manner enabling the court to determine whether final relief could ultimately be obtained.

The judgment further applied the principle that a municipality’s contracting for goods and services is constrained by constitutional and statutory procurement imperatives, particularly the requirement that procurement be conducted under a system that is fair, equitable, competitive and cost-effective. Where an alleged municipal contract is not shown (on the papers) to have been concluded in compliance with those imperatives, its validity is placed in serious doubt, undermining any asserted contractual right for purposes of interim interdictory relief.

Finally, the judgment treated the availability of a damages claim as an important consideration in assessing whether interim relief is appropriate, supporting a conclusion that an interim interdict should not be granted where an adequate alternative remedy exists on the facts presented.

MVD Xariep-Mol Procon Joint Venture and Others v Dihlabeng Local Municipality and Others (2059/2013) [2013] ZAFSHC 105 (20 June 2013)