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[2012] ZAGPPHC 197
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Circle Seven Trading 26 CC v Minister of Justice and Constitutional Development (40325/2009) [2012] ZAGPPHC 197 (29 August 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
(REPUBLIC OF SOUTH AFRICA)
DATE:
29/08/2012
CASE
NO: 40325/2009
In
the matter between:
CIRCLE
SEVEN TRADING 26
CC
......................................................................
PLAINTIFF
And
THE
MINISTER OF JUSTICE
AND
CONSTITUTIONAL
DEVELOPMENT
........................................................
DEFENDANT
JUDGMENT
RANCHOD,
J
[1]
Plaintiff instituted action against the defendant for what plaintiff
alleges was defendant's unlawful termination of an oral
agreement
entered into between the parties alternatively, repudiation, further
alternatively breach of the agreement, as a consequence
of which the
plaintiff has suffered damages in the amount of R978 679.30.
[2]
The defendant is cited in his official capacity as the minister
responsible for overseeing the affairs and administration of
the
National Prosecuting Authority of South Africa (NPA).
[3]
Plaintiff alleges that "on or about" May 2006, the
defendant advertised tender number NPA17-05/06. The tender was
for
the provision of guarding and special services at all the NPA's
offices nationally. The tender was for three years. The plaintiff
was
appointed as the successful tenderer or preferred service provider
for the services in the Eastern Cape Province. Another company
the
NSA Security Company, was awarded the tender to provide these
services in Gauteng, Limpopo and Mpumalanga. Other companies
were
appointed for the remaining provinces but these are not relevant for
the purposes of these proceedings before me. In October
2007 and
prior to the expiry of the three year contract, the defendant
terminated NSA Security Company's Services in Gauteng, Limpopo
and
Mpumalanga provinces.
[4]
Plaintiff's cause of action is set out in paragraph 9 of its
particular of claim. It bears setting out in full:
"On
or about October 2007, the plaintiff and the defendant entered into
an oral agreement, wherein the plaintiff was required
to continue
providing the services in the Gauteng, Limpopo and Mpumalanga
provinces which was supposed to have been provided by
NSA Security
Company."
[5]
Plaintiff further alleges:
"10.
The material express, alternatively, implied, further alternatively,
tacit terms of the oral agreement were that:
10.1
The plaintiff was to provide the security and guarding services to
the defendant in the Gauteng, Limpopo and Mpumalanga provinces;
10.2
The contract was initially for a period from October 2007 to 31 March
2008 (the particulars of claim mentioned 2007 but it
is common cause
that this is a typographical error and should read 2008) and was
thereafter extended on a month to month basis;
10.3
The contract was to be terminated on a month's notice, alternatively,
on a reasonable notice;
10.4
The plaintiff was to provide the security and guarding services on a
continuous basis, 24 hours per day and seven days per
week;
10.5
The defendant was to pay the plaintiff monthly in arrears for the
security and guarding services rendered."
[6]
Plaintiff says he dully honoured his obligations in terms of the oral
agreement between the parties.
[7]
Plaintiff then goes on to say that the defendant breached the
agreement alternatively repudiated it on one or more of several
grounds. It says the defendant failed to give the plaintiff a months'
notice alternatively reasonable notice of termination of
the
plaintiff's services and instead gave it only three days notice which
constitutes an unreasonable period of notice of termination.
Accordingly, says plaintiff, the defendant unlawfully terminated the
agreement between the parties.
[8]
The damages that plaintiff claims is for an amount of R774 000.00
which the plaintiff says it had to pay to 146 security personnel
as
salary in lieu of notice, in the November 2008 month; expenses
incurred in respect of equipment costs amounting to R23 000.00,
and
overhead costs for one month amounting to R181 679.30. The total
amount is therefore R978 679.30. The plaintiff also claims
interest
at the prescribed rate a tempore morae and costs of suit.
[9]
The defendant entered an appearance and thereafter filed a "notice
to remove causes of complaint" dated 8 September
2009 in which
he informed the plaintiff that he intended to raise an exception
against the plaintiffs particulars of claim on the
grounds that it
did not disclose a cause of action and/or it is vague and
embarrassing. The defendant then withdrew the notice
to remove causes
of complaint in terms of a notice of withdrawal dated 22 September
2009 as he had served the earlier notice out
of time. The following
day, the defendant filed his plea.
[10]
The defendant raised two special pleas. Firstly, it was pleaded that
the plaintiff failed to comply with the provisions of
the Institution
of Legal Proceedings Against Certain Organs of State Act 40 of 2002
(the Act). Secondly, that plaintiff failed
to comply with the
provisions of rule 18(6) of the Uniform Rules of Court in its
reliance on the existence of an oral agreement.
The defendant says
plaintiff failed to plead the precise date when and the place where
the oral agreement was entered into and
also failed to state who
represented the parties to the oral agreement. Hence, plaintiffs
reliance on the oral agreement does not
disclose a cause of action
and is not in compliance with the Uniform Rules and accordingly the
defendant is unable to plead thereto.
The defendant then pleads over.
[11]
The plaintiff thereafter replicated to the defendant's special pleas.
[12]
Plaintiff pleaded that it had served a notice in terms of section
3(2){a) of the Act on the defendant on 20 March 2009 in compliance
with the provisions of the Act. It attached a copy of the said
notice. Plaintiff further pleaded that the notice was served within
a
period of six months from the date on which the plaintiffs cause of
action arose. The plaintiff did not deal with the second
special plea
in the replication.
[13]
At the commencement of the trial plaintiff's counsel, Mr Mokwena,
said that the defendant's ttempt to raise the cause of complaint
by
way of a special plea was unacceptable as it had deprived the
plaintiff of dealing with the complaint which it would have been
able
to do had the defendant properly complied with rule 23. The rule
provides for circumstances where a plea may be, inter alia,
vague and
embarrassing. A party may then serve notice in terms of the rule that
it intends to raise an exception if the cause of
complaint is not
removed. Raising it as a special plea was in the circumstances
impermissible. I agree. In any event although the
defendant in the
special plea said he is unable to plead, he pleaded comprehensively
to plaintiff's claim.
[14]
The defendant says that the cause of action as set out in plaintiff's
particulars of claim differs materially from what is
set out in the
notice in terms of the Act. Whereas plaintiff's notice refers to an
unreasonable and procedurally unfair administrative
action on the
part of the NPA, in the summons the plaintiff pleads the existence of
an oral agreement. Hence, says defendant, plaintiff
failed to
disclose a cause of action against the defendant. Furthermore, says
defendant, the plaintiff failed to plead compliance
with the
provisions of section 3 of the Act in its particulars of claim.
[15]
These issues raised in the special plea are identical to those raised
in the withdrawn notice of exception.
[16]
From the plaintiff's replication it is clear that the relevant notice
in terms of the Act was served on the defendant within
a period of
six months from the date on which plaintiff's cause of action arose
and the special plea in this regard falls to be
dismissed with costs.
[17]
I turn then to the second special plea.
[18]
In essence, defendant's contention is that the plaintiff did not
allege an oral agreement in the notice in terms of the Act
but
referred to an administrative action on the part of the defendant. It
is so that the plaintiff did not persist with its claim
on the basis
of an administrative action as such. For then it would have had to
proceed with a review in terms of the Promotion
of Administrative
Justice Act (PAJA).
[19]
Section 3(2) of the Act provides: "A notice must-
(a)
within six months from the date on which the debt became due, be
served on the organ of state in accordance with section 4(1);
and
(b)
briefly set out -
(i)
the facts giving rise to the debt; and
(ii)
such particulars of such debt as are withinthe knowledge of the
creditor."
[20]
The notice in terms of the Act was sent by plaintiff's attorneys to
the National Prosecuting Authority of South Africa. The
notice is
dated 19 March 2009 and comprises of four pages. After setting out
the background as to how the plaintiff came to be
appointed to render
guarding and security services to the NPA it further sets out the
facts relating to the termination of NSA's
services and the
plaintiff's appointment in place of NSA. The notice then goes on to
state:
"7.
Our instructions are further that:
7.1
Circle 7, at your request, continued to provide the services to you
beyond 31 March 2008;
7.2
You embarked on a bid process in July 2008, however, the bid was
cancelled and circle 7 continued to render its services to
you at
your request;
7.3
On 28 October 2008, Circle 7 received a letter from you dated 27
October 2008 wherein you state that:
7.3.1
You intended to issue a new bid for the services to be finalised on
30 September 2009, and the services in terms thereof to
commence on 1
October 2009;
7.3.2
You had decided in the interim to participate in the guarding
services bid issued by the Department of Justice and Constitutional
Development ("DOJ") in respect of the services until the
finalisation of your bid on 30 September 2009;
7.3.3
You were accordingly giving Circle 7 a three days notice of
termination of its services.
8.
Our instructions are further that:
8.1
Having received your notice of termination, Circle 7 advised you of
the labour relations implications of your decision and requested
a
month's notice to enable it to make proper arrangements with the
security personnel in its employ, including those of the NSA;
8.2
You refused to accede to Circle 7's request on the basis that you had
no obligation to give Circle 7 a month's notice and on
the basis that
you had no relationship with the security personnel;
8.3
As a consequence of your refusal, Circle 7 had to pay 196 security
personnel's salaries in lieu of notice, amounting to R777
700.00
(seven hundred and seventy seven thousand seven hundred rands),
incurred equipment costs amounting to R23 000.00 (twenty
three
thousand rands) and overheads amounting to R181 679.30 (one hundred
and eighty one thousand six hundred and seventy nine
rands and thirty
cents)."
The
letter then goes on to state that the NPA's decision to no longer
utilise the services of Circle 7 amounted to an administrative
action
and its decision was unreasonable and procedurally unfair. Further,
that unless the NPA rectified its actions within 30
days of the date
of the letter or notice Circle 7 will proceed to have the decision
reviewed. The notice ends with a demand for
payment of an amount of
R1 119 912.40.
[21]
Counsel for the defendant argued that the plaintiff ought to have
indicated in its notice that it was relying on a cause of
action
premised on an oral agreement. It was argued that the notice reveals
a cause of action pertaining to an administrative action
and not an
oral agreement. These submissions are untenable.
[22]
The relevant section of the Act only requires the plaintiff to
briefly set out the facts giving rise to the debt and such
particulars of such debt as are within the knowledge of the creditor.
In my view the Act does not require the plaintiff to set out
the full
terms of the agreement or to plead those terms which would normally
be pleaded in the particulars of claim. Nor, in my
view, is the
plaintiff required to state its cause of action in the notice. On a
proper construction of the notice sent by the
plaintiff to the
defendant, the plaintiff has set out the facts giving rise to the
debt and such particulars of the debt as were
within its knowledge in
more detail than it was required to do in terms of section 3(2) of
the Act. In paragraph 6 of the notice
it is stated:
"6.
Our instructions are further that:
6.3
In October 2007, Circle 7 was appointed to provide the services in
the provinces which were awarded to NSA, in (sic) the period
October
to 30 November 2007;
6.6
On or about 21 November 2007, you approved the appointment of Circle
7 for the period up to 31 March 2008 to, inter alia, give
yourselves
time to advertise and follow the tender process in respect of the
services."
[23]
It is common cause or not in dispute that the plaintiff rendered
certain services over the various periods of time. It is also
not in
dispute that the defendant gave three days' notice terminating
plaintiff's services. The essence of plaintiff's complaint
in the
notice was that the notice period of three days was unreasonable and
that a reasonable period would have been one month.
These facts are
alleged in the particulars of claim as well. In the circumstances, I
am of the view that there is no substance
in this special plea and it
falls to be dismissed with costs. I turn then to the next special
plea.
[24]
This plea has been raised in terms of rule 18(6) of the Uniform Rules
of Court. The essence of the defendant's complain, in
this regard, is
that the plaintiff has failed to plead the date when and the place
where the oral agreement was entered into and
the individuals who
represented the defendant and the plaintiff when it was concluded.
[25]
Rule 18(12) provides that:
"If
a party fails to comply with any of the provisions of this rule, such
pleading shall be deemed to be an irregular step
and the opposite
party shall be entitled to act in accordance with rule 30."
Rule
30 deals with irregular proceedings. Where a pleading both fails to
comply with rule 18 and is vague and embarrassing, the
defendant has
a choice of remedies. He may either bring an application in terms of
rule 30 or raise an exception in terms of rule
23(1). In casu, the
defendant failed to invoke either of these rules.
[26]
Rule 23(1) provides that:
"Where
any pleading is vague and embarrassing or lacks averments which are
necessary to sustain an action or defence, as the
case may be, the
opposing party may, within the period allowed for filing any
subsequent pleading, deliver an exception thereto
and may set it down
for hearing in terms of paragraph (f) of sub rule (5) of rule (6):
provided that where a party intends to take
an exception that a
pleading is vague and embarrassing he shall within the period allowed
as aforesaid by notice afford his opponent
an opportunity of removing
the cause of complain within fifteen days: provided further that the
party excepting shall within ten
days from the date on which a reply
to such notice is received or from the date on which such reply is
due deliver his exception."
[27]
As 1 said earlier, the defendant served a notice of intention to
except but then withdrew it when it realised that it was out
of time
in doing so. It then raised the grounds for exception by way of the
special plea. In my view, it is impermissible for the
defendant to
have proceeded in the way that it did and it has deprived the
plaintiff of the opportunity to cure any alleged defect
in its
particulars of claim. In any event, any alleged defect relating to
the alleged oral agreement was cured by the plaintiff
through the
evidence that it has adduced during the course of the trial. Had a
proper exception been raised this court would nevertheless
still have
had the power to defer consideration of the exception to the trial.
In Erasmus: Superior Court Practise; service issue
35, 2010 at B1-160
it is stated:
"A
court has the power to defer consideration of an exception to the
trial, and will do so where the question raised by the
exception
seems to be interwoven with the evidence which will be led at the
trial. Thus, for example, where the whole of a contract
is not before
the court, it will not assign any meaning to particular words or
clauses thereof at the exception stage if there
is room for a
contention, ex facie the pleadings, that the omitted terms, whether
considered with or without additional evidence
of surrounding
circumstances, might have a significant bearing on the issues before
the court."
In
the circumstances that special plea also falls to be dismissed with
costs.
[28]
I turn then to the merits of the case.
[29]
I will deal firstly with the second claim that was introduced by the
plaintiff pursuant to it having been granted leave to
amend its
particulars of claim at the end of the trial.
[30]
The second claim reads as follows:
"On
or about 23 August 2007, the defendant, prior to the plaintiff been
approached to render the services which was supposed
to be rendered
by NSA, recommended and approved that the plaintiff should render
those services for the remaining period of 22
(twenty two) months.
This
information was concealed from the plaintiff and only discovered
during the discovery process, a few days before the trial
and
subsequent to the plaintiff having delivered its particulars of
claim.
The
abovementioned facts give rise to a further cause of action and claim
by the plaintiff.
Despite
the recommendation and approval, the defendant fails to appoint the
plaintiff for the remaining period of 22 (twenty two)
months.
The
plaintiff has suffered loss of earnings as a result of the direct
conduct of the defendant.
The
plaintiff claims for loss of profit over a period of 22 (twenty two)
months minus one month already computed in the current
cause of
action as apparent from the combined summons.
Wherefore
the plaintiff claims for: -
1.
Payment of the amount of R1 635 113.50;
2.
Interest thereon at the prescribed rate a tempore morae;
3.
Costs of suit;
4.
Further and/or alternative relief."
[31]
This claim is based on an internal memorandum dated 23 August 2007,
of the NPA. The memorandum is from Mr Tebogo Setabela,
Senior
Manager, Supply Chain Management Unit to Mr Brian Graham, Chief
Financial Officer. Its purpose is stated to be "to
appoint
Circle 7 CC as a preferred service provide (sic) for guarding and
special service to NPA officers in Gauteng and Free State".
It
is further stated in the memorandum that:
"The
NSA has breached the contract and approval has been granted to
terminate the contract and appoint the new service provider
through
Treasury Regulation 16A 6.4. ... It should be noted that from all
service providers awarded the contracts Circle 7 and
NSA were the
only companies that demonstrated capacity to manage the contract by
scoring high points on functionality during the
valuation (sic)
process. Circle 7 has representation in more than two provinces. ...
It is therefore recommended that Circle 7
be appointed for the
remaining period of the contract (22 months) to provide guarding and
special service for ail offices previously
guarded by NSA."
[32]
The Treasury Regulation referred to is:
"16A
6.4 If in a specific case it is impractical to invite competitive
bids, the accounting officer or accounting authority
may procure the
required goods or services by other means, provided that the reasons
for deviating from inviting competitive bids
must be recorded and
approved by the accounting officer or accounting authority."
[33]
Although the recommendation by Mr Setabela was approved by Mr Brian
Graham the Chief Financial Officer, it was not communicated
in the
form of an offer to the plaintiff and it can therefore not be said
that the plaintiff accepted it. The second claim therefore
falls to
be dismissed.
[34]
I turn then to the first claim.
[35]
Much evidence was led about whether there was an oral agreement or
not between the parties. In the absence of a written agreement
the
agreement must have been oral. This much seems evident from the
evidence of Mr Dikobe, for the plaintiff that as a result of
a phone
call from a Mr Sepati Sizana of the NPA a meeting took place with Ms
Charmain Marshal when it was agreed that plaintiff
render the
services previously rendered by NSA. The services had been rendered,
initially for just under six months and thereafter
for varying
periods of one or more months. This much is common cause. Hence the
defendant's submission that there was no oral agreement
cannot
prevail. Defendant says the services were provided on a "quotation"
basis hence there could be no question of
any "notice period"
arising. The submission, as I understand it, is that once plaintiff
submits a quotation for a specific
period and it is accepted by
defendant, the service is rendered for that period and paid for by
the defendant, hence there can
be no question of any notice period.
That would no doubt be the case generally. However, several
difficulties present themselves.
Initially, services were not
rendered on a quotation basis. Quotations were requested only later.
And I accept that quotations
were presented later. If a quotation
basis is used then it is trite that the service is rendered only
after the quotation is accepted.
The evidence, however, indicates
that in a number of instances the so-called quotations were presented
in arrears or after the
services were rendered. Ms Marshal testified
that the so-called quotations were merely a means to facilitate
payment by the defendant.
The price, the services to be rendered and
where they were to be rendered were already determined beforehand. Mr
Dikobe testified
that the services were to be rendered on a month to
month basis. What was not discussed was any notice period. This makes
sense.
If it was understood that the services were rendered on a
month to month basis then the question of a notice period cannot
arise.
That this was the case is borne out by Mr Dikobe's evidence
that when he received a letter dated 27 October 2008 informing him
that plaintiffs services would no longer be required after the end of
October 2008 his immediate response was to ask the NPA in
a letter
dated 28 October 2008 for a one month notice as plaintiff would have
to give its employees a month's notice to terminate
their services.
[36]
From the evidence it is clear that a notice period was never
discussed beforehand. The question to be determined then is whether
defendant was obliged to give - as plaintiff contends - reasonable
notice and if so, what would constitute a reasonable period
of
notice. In this regard it is important to note that Mr Dikobe
testified that plaintiff operated on its own timeframe with its
employees. Its timeframe (in other words, period of employment
arrangement with its employees) was not based on the timeframe or
period for rendering services to the NPA. Given this concession and
the other facts I have referred to it cannot be said that the
defendant was obliged to give any notice, let alone reasonable
notice, to plaintiff. That plaintiff was obliged to give its
employees
one month's notice in terms of labour law provisions is
beside the point. That is a matter between the plaintiff and its
employees.
[37]
For all these reasons I make the following order:
1.
Plaintiff's application to amend its particulars of claim is granted
with costs;
2.
Defendant's special pleas are dismissed with costs,
3.
Plaintiff's claim is dismissed with costs.
N
RANCHOD
Judge
of the High Court
40325/2009/sg
Heard
on:12 October 2010 and 7 November 2011
For
the Plaintiff: Adv Mokwena
Instructed
by: Messrs Werksmans, Johannesburg
For
the Defendant: Adv Bezuidenhout
Instructed
by: State Attorney, Pretoria