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2011
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[2011] ZANCHC 10
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Babereki Consulting Engineering (Pty) Ltd v M & F Contractors CC and Another (580/11) [2011] ZANCHC 10 (17 June 2011)
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE HIGH COURT, KIMBERLEY
Case No: 580/11
Date of Hearing: 27.05.2011
Date Delivered: 17.06.2011
In the matter between:
BABEREKI CONSULTING ENGINEERS (PTY) LIMITED
APPLICANT
And
M & F CONTRACTORS CC
FIRST RESPONDENT
THE PHOKWANE MUNICIPALITY
SECOND RESPONDENT
JUDGMENT
HENRIQUES AJ
INTRODUCTION
This an application for a final interdict in which the applicant
seeks the following orders:
"...
2. The first respondent be
interdicted and restrained from further executing upon the ostensible
contract concluded with the second
respondent for the provision of
works relating to project
PHOKTCP05:
The Construction of Internal Sewer Reticulation Network for 1 450
stands in Pampierstad, Northern Cape Province
;
3. The second respondent be
likewise interdicted and restrained from acting upon its reciprocal
obligations in terms of the unlawful
and illegal agreement so
concluded.
4. The first and second
respondents be ordered to pay the costs of the application jointly
and severally, payment by one the other
to be absolved."
It is trite that to succeed in obtaining such relief the applicant
has to show a clear right, an injury actually committed or
reasonably apprehended and the absence of any other satisfactory
remedy.
1
THE ALLEGATIONS RELIED ON BY THE APPLICANT
Pursuant to a tender process, the applicant was awarded a contract
which entailed the rendering of professional consulting engineering
services and conducting the physical construction work on Project
PHOKTCP05 (hereinafter referred to as “the project”).
2
This is evident having regard to annexure TM1
3
and TM2
4
annexed to the papers
5
and the founding affidavit.
The first respondent had been appointed to perform certain of the
construction work on the project as a contractor by means of
a
written contract concluded with the applicant acting on behalf of
the second respondent. Parts of the written portion of the
contract
concluded between the applicant and the first respondent are annexed
to the papers
6
and reference is made thereto in the founding affidavit.
The applicant alleges that after it had given notice to the second
respondent suspending its work, being the consulting engineering
services as well as the construction work, the first and second
respondents concluded an agreement in terms of which the first
respondent continued with the construction work.
7
If one considers the annexures to the founding affidavit, the
applicant had rendered the consulting engineering services and
carried out construction work, for a period of time until it became
involved in a dispute relating to non-payment with the second
respondent.
8
This dispute over non-payment appears to have remained unresolved
for a considerable period of time when matters came to a head
in
March 2011.
This is when the applicant notified the second respondent that it
was intending to “terminate” the works until such
time
as issues regarding non-payment had been resolved.
9
A letter notifying the second respondent of the suspension of the
works with immediate effect, which was sent to second respondent,
is
dated 10 February 2011.
10
On the same date, the applicant also issued a notice to the first
respondent to cease all work under the sub-contract agreement
concluded and also annexed a copy of the notice sent to the second
respondent.
11
The second respondent, on receipt of annexure TM 14 responded by way
of a letter, which is annexure TM15.
12
In essence the second respondent acknowledged the applicant's
decision to suspend the works but indicated that it would request
the sub-contractors, one of whom was the first respondent, to
continue with the work until issues surrounding payments were
resolved.
The letter further reads as follows:
“
However, I must also
mention that we have exhausted our MIG allocation and therefore we
will not be able to do payments on the bulk
sewer line which are
legally due to you until we got funds from MIG.
The Municipality will also want
to request the contractors i.e. MF Contractors and Lubbe Construction
to continue with the works
while issues around professional fees are
resolved. The Municipality commits to pay Lubbe Construction and MF
Contractors for
any work that will be done during this period of
professional fees dispute. This letter will also be copied to the
two contractors.”
This letter appears to suggest that there was not a dispute in
respect of amounts due but rather that the second respondent did
not
have sufficent funds to effect payment to the applicant. This is
confirmed to some extent if one has regard to Annexure TM16
13
.
It would further appear that a response was provided to the request
set out in Annexure TM 16 on 1 March 2011 by applicant
having
regard to Annexure TM17
14
.
Despite the letter of suspension issued by the applicant to the
first respondent, the first respondent continued with work on
the
project. The applicant alleges that this is a clear violation of the
agreement concluded between itself and the first respondent.
15
The applicant draws an inference that the first respondent performs
the work under an “agreement” concluded with
the second
respondent, as it is of the view that the first respondent would not
perform the work without payment and further
as the second
respondent continues to make payment to the first respondent
directly.
16
No where do the respondents deny that an “agreement”
has been concluded nor is it denied that the first respondent
is
continuing to render services on the project.
17
The applicant avers that this subsequent "agreement"
between the first and second respondents is illegal as same has
not
been concluded in accordance with section 217 of the Constitution
and national legislation, namely the Preferential Procurement
Policy
Framework Act, which governs the awarding of service contracts by
organs of state.
The applicant submits that this application is urgent in light of
the fact that the schedule of work will be completed within
the next
three to four months should it be allowed to continue, there is no
oversight of the work being conducted nor any oversight
in so far as
the safety of the construction site is concerned.
18
The first respondent, opposes the application, on the following
grounds, namely:-
that there has been non-compliance with rule 18(6) of the uniform
rules of court in that the founding affidavit contains no
details
as to “
whether the alleged contracts were written or oral
and when or where they were concluded and, if written to annex
copies thereof
to his founding affidavit”
;
19
consequently the application is an irregular step
20
that
"there is a dispute of fact on the papers"
having regard to paragraphs 8.7 to 9.1, particularly paragraph 8.9
and the correspondence annexed to the papers. The applicant
ought
to have proceeded by way of summons and not by way of application;
consequently, the first respondent requests the court
to dismiss
the application, alternatively, to refer the matter to trial or for
the hearing of oral evidence.
The affidavit of the first respondent is deposed to by Modisaemang
Frans Modisa, in his capacity as managing director who avers
that
"he has not entered into any oral or written agreement with
me"
21
,
referring to the applicant.
The second respondent, in its affidavit deposed to by its Municipal
Manager, Moeketsi Dichaba, merely confirms issues raised
by the
first respondent in its affidavit, and aligns itself with the
grounds of opposition set out by the first respondent in
its
opposing affidavit and requests that same be read as if specifically
incorporated.
22
It also seeks an opportunity to respond to the allegations should
the points
in limine
not be upheld.
23
Dichaba avers that the second respondent is unable to properly
respond to the allegations in the founding affidavit until such
time
as it has been furnished with a true copy of the written agreement
upon which the applicant relies.
24
THE RESPONDENTS OPPOSITION
I propose to deal with the respondents’ opposition. Rule 18(6)
of the Uniform Rules of Court reads as follows:
"A party who in his
pleading relies upon a contract shall state whether the contract is
written or oral and when, where and
by whom it was concluded, and if
the contract is written a true copy thereof of or of the part relied
on in the pleading shall
be annexed to the pleading."
Rule 18 relates to pleadings generally. Advocate Grobler, who
appeared for the applicant, submitted that an affidavit is not
a
pleading and relied on the commentary in Erasmus for this
submission
25
.
The
point in limine
in my view is without merit. The
applicant alleges in its founding affidavit that a contract existed
between the itself and the
first respondent. A copy of the relevant
portion of the written contract on which it relies is annexed to the
papers. When
I raised this during the course of argument with Adv.
Schreuder, who appeared for the respondents, he indicated that the
first
respondent had not signed such document and no reliance could
therefore be placed on it.
This is not correct in light of the fact that the deponent to the
first respondent’s affidavit Modisa’s signature
appears
in his capacity as CEO of the first respondent
26
and his intials appear on the document as well. I also find it
disingeneous of Modisa to state under oath as he has done, that
he
has not concluded any agreement either oral or written with the
applicant in light of this and when it is also apparent from
the
correspondence exchanged that first respondent has in fact been
performing such construction work, which has been acknowledged
by
the second respondent.
I am further of the view that the reference to the failure to annex
a copy of the contract as constituting an irregular step,
is also
without merit. This is compounded in that the respondents have not
complied with the provisions of Rule 30 in this regard
either.
It is trite that a respondent should file an affidavit on the merits
at the same time that it takes a preliminary objection on
a point of
law.
A respondent must admit or deny, confess and/or avoid the
allegations in the applicant's affidavit failing which the court
must for the purposes of the application accept the allegations as
correct.
27
This is what I am faced with – the respondents content
themselves with a point
in limine
and proffer no response to
any of the allegations made by the applicant in its founding
affidavit. Neither are any attempts made
to deal with the contents
of the annexures to the papers. I must, in the absence of any
challenge to the applicant’s allegations,
accept them.
This is so if one considers the second ground upon which the
respondents challenge the application namely that there exists a
serious dispute of fact on the papers.
What is meant by a dispute of fact? This is set out in
Room Hire
Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
:
28
"1. When the respondent
denies all the material allegations made by the various deponents on
the applicant's behalf, and produces
or will produce, positive
evidence by deponents or witnesses to the contrary. He or she may
have witnesses who are not presently
available or who, though adverse
to making an affidavit, would give evidence
viva voce
if
subpoenaed.
2. When the respondent admits
the applicant's affidavit evidence but alleges other facts which the
applicant disputes.
3. When the respondent concedes
that he or she has no knowledge of the main facts stated by the
applicant, but denies them, putting
the applicant to the proof and
himself or herself gives or proposes to give evidence to show that
the applicant and his or her
deponents are biased and untruthful or
otherwise unreliable, and that certain facts upon which the applicant
relies to prove the
main facts are untrue. The absence of any
positive evidence possessed by a respondent directly contradicting
the applicant's main
allegations does not render the matter free of a
real dispute of fact.”
It is trite that a court faced with an allegation of a dispute of
fact must determine whether there is a real dispute of fact
failing
which a respondent would be able to raise fictitious issues of fact
and thus delay the hearing of the matter. Vague
and insubstantial
allegations are insufficient to raise the kind of dispute of fact
that should be rendered for oral evidence.
29
If I consider the opposing affidavits filed by the respondents,
nowhere do they attempt to deal with the factual basis of the
application. I must thus accept the applicant’s allegations
pertaining to the contractual relationship between itself and
the
first respondent. In fact, the respondents do not in any way deny
that they have concluded an agreement or some sort of
arrangement
with the first respondent for the rendering of services. These
allegations remain unchallenged. In addition if one
has regard to
the papers filed it is clear that there can be no dispute that a
contract does exist.
The correspondence refers to a dispute that exists between the
parties insofar as payment is concerned, not that payment is not
due. In fact, the correspondence put up by the second respondent
specifically annexure TM15
30
indicates that the second respondent will continue to make payment
to the first respondent while it resolves issues relating
to
non-payment of the applicant's fees. The respondents attempt to rely
on the correspondence to found a dispute of fact is misguided.
I have considered the paragraphs referred to, relied on by the
respondents for alleging that a dispute of fact exists and find
no
merit in this submission specifically if one has regard to the Room
Hire case and the manner in which disputes of fact arise.
HAS THE APPLICANT SATISFIED THE REQUIREMENTS FOR AN INTERDICT AND
IS THE APPLICANT ENTITLED TO THE RELIEF THAT IT SEEKS?
Does the Applicant have a clear right?
The first page of annexure TM2 is titled “
Construction Work
Contract in connection with Project PHOKTCPO5 ..... between Babereki
Consulting Engineers CC and MF Contractors
CC.”
31
As already pointed out the signature of Modisa on behalf of the
first respondent appears on page 26.
32
At paragraph 1.1.14 the employer is defined as Babereki Consulting
Engineers on behalf of the second respondent.
33
Clause (b) under part C1.1.1 on page 25 of TM2 reads as follows:
“
This document formalises
the legal process of offer and acceptance. It contains:…..
(b) confirmation from the
employer that he accepts the tender offer following his tender
evaluation, and that a contract therefore
exists; and …..
Page 35 of annexure TM2 clause C1.2 thereof deals with the special
conditions of contract. It reads as follows:
“
The following
amendments of the general conditions of contract 2004 apply to this
contract.
Annexure TM2 thus provides that the general conditions of contract
for construction work 2004 applies. Clause C1.3 which is
an
appendix to the form of the tender provides that the general
conditions of contract for construction work (2004) is applicable
to
this contract and requires the contractor to secure his own copy.
34
Clause 4 of the contract provides that a contractor shall in
carrying out his aforesaid obligations comply with the engineer's
instructions on any matter relating to the works.
35
Clause 4.4 specifically provides that a contractor shall only take
instructions from the engineer.
Clause 39 of the general conditions deals with the suspension of the
works. It provides that a contractor shall on the written
order of
the engineer suspend the progress of the works.
36
Insofar as the first respondent is concerned, it is clear that there
is a contract between the applicant and the first respondent
in
terms of which the first respondent was appointed as
"sub-contractor"
to carry out the construction
works. The contract is clear. The applicant, in its capacity as
engineer, can instruct the first
respondent to cease and/or suspend
the works.
As regards the second respondent, the applicant was appointed as its
turnkey agent. Insofar as the second respondent is concerned,
Advocate Grobler submitted that the basis for seeking the interdict
is two-fold. One, that there is no privity of contract between
the
second respondent and the first respondent and secondly that insofar
as the second respondent is concerned, it is engaged
in illegal
activity specifically in contravention of Section 217 of the
Constitution and in breach of national legislation.
Section 217(1) of the Constitution provides that an organ of State
such as a municipality which contracts for goods and services
must
do so in accordance with the system which is fair, equitable,
competitive and cost effective. This constitutional imperative
is
echoed in the
Local Government: Municipal Systems Act, 32 of 2000
and the
Local Government: Municipal Finance Management Act, 56 of
2003
. A municipality is obliged by such statutory prescripts when
concluding a service delivery agreement to act openly in accordance
with a fair, equitable, competitive and cost effective system and in
terms of a supply chain management policy designed to have
that
effect.
Our courts have in a number of decisions held that contracts
concluded without compliance with such constitutional and statutory
prescripts are invalid.
37
In fact our courts have gone so far as to enjoin our courts not to
condone such conduct. In
Standard Bank of South Africa Ltd v
Swartland Municipality and Others
38
the court held as follows:
The unauthorised and illegal
conduct of the third respondent is contra boni mores and contrary to
public policy, and cannot be condoned
by the court. It militates
against the doctrine of legality, which forms an important part of
our legal system, and more especially
since the Constitution became
the supreme law of the country. Chaskalson CJ ( as he then was) said
in Pharmaceutical Manufacturers
of SA and Another: In re Ex parte
President of the Republic of South Africa and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC)(2000(3) BCLR 241) in para 20 that:
The exercise of all public power must comply with the
Constitution, which is the supreme law, and the doctrine of
legaliity, which
is part of that law.
This statement was quoted
with approval in Oudekraal Estates(Pty) Ltd v City of Cape Town and
Others 2002(6) SA 573 ( C ) ([2002])
3 All SA 450
at 593B-D
In light of the authorities mentioned, and on the facts before me,
it appears that the first respondent continues to perform
the
construction work at the request of the second respondent in the
absence of compliance with procurement policy and national
legislation governing the awarding of such contract and or /tenders.
As such the applicant is entitled to approach the court to request
this court not to condone this conduct.
Has there been any harm committed?
Insofar as the second requirement for an interdict is concerned,
namely whether or not there is any harm, it is clear from the
papers
and annexures, that this requirement has been satisfied.
Alternative Remedy
I now turn to consider the aspect of whether or not the applicant
has an alternative remedy.
Insofar as the first respondent is concerned, it has no alternative
remedy but to obtain the interdict in light of the fact that
a
letter to suspend the works has not been heeded.
Insofar as the second respondent is concerned, Advocate Grobler
submitted that strictly speaking the applicant could sue for
damages
in terms of the contract. However, his argument went further in
this regard. The first respondent continues to perform
construction
work for the second respondent in violation of national legislation
relating to the procurement of services. This
court ought not to
sanction such conduct. In light of this, the applicant has no
alternative remedy but to approach the court
to interdict such
conduct, and accordingly is entitled to the interdict.
During the course of argument and in his heads of argument, Adv
Schreuder, submitted that the applicant had no legal right to
compel
the first and second respondent to breach “contractual
obligations.” In the alternative, he submitted that
the
respondents are free to do business as envisaged in terms of section
22 of the Constitution. What this argument fails to
take into
account is the following.
On the papers before me, there is an allegation that the first
respondent performs construction work by virtue of an agreement
concluded in the absence of compliance with national legislation.
The respondents have not denied this and have indicated by
conduct
that such work will continue. There is no oversight of the actual
construction work nor in so far as the safety of the
site is
concerned.
Accordingly, I am of the view that the third requirement has also
been met and the applicant is on the facts of this matter entitled
to the relief it seeks.
I thus grant an order as follows:
The applicant’s non
adherence to the to the rules of court pertaining to time periods
and service be condoned;
The first respondent is
interdicted and restrained from further executing upon the
ostensible contract concluded with the second
respondent for the
provision of works relating to project PHOKTCP05: The Construction
of Internal Sewer Reticulation Network
for 1 450 stands in
Pampierstad, Northern Cape Province;
The second respondent is
interdicted and restrained from acting upon its reciprocal
obligations in terms of the unlawful and illegal
agreement so
concluded.
The first and second
respondents are ordered to pay the costs of the application jointly
and severally, the one paying the other
to be absolved.
________________________
J I
HENRIQUES
ACTING
JUDGE
Appearance
for Applicant:
Advocate S Grobler instructed by Du Toit
Attorneys, Kimberley
Appearance
for Respondent:
Advocate J Schreuder instructed by BG Bojosinyane
and Associates, Hartswater
1
Setlogelo v Setlogelo
1914 AD 221
, Erasmus Superior Court Practice
Supplementary Volume E8-6C footnote 13 and the authorities referred
to therein.
2
Paragraph 7.2.founding affidavit, page 8 indexed
papers.
3
Page 21 of the indexed papers.
4
Pages 22 to 63 of the indexed papers.
5
Paragraph 7.2, page 8 of the indexed papers; Paragraph 7.4,page 9
of the indexed papers page 25 of the indexed papers
6
Annexure TM2, pages 22 to 63 of the indexed
papers, paragraph 7.4, founding affidavit, page 8 indexed papers
7
Paragraph 7.3, page 8 of the indexed papers
8
According to the paragraph 8.7, page 10 indexed
papers such dispute is alleged to have arisen in May 2010. This is
also confirmed
by the contents of the correspondence exchanged.
9
Annexure TM12, page 83 indexed papers
10
Annexure "TM14", page 86 of the papers
Paragraph 8.18
of the founding affidavit, page 13
11
Annexure TM13, page 85 of the indexed papers
12
Page 87 of the indexed papers
13
Page 90, Indexed papers
14
Page 91, Indexed papers
15
Paragraph 9.8, page 16 indexed papers
16
The applicant had also objected to the second
respondent not complying with the terms of the agreement and making
payment directly
to the first respondent.
17
Having regard to the heads of argument filed on
behalf of the respondents and considering the submissions made by
Counsel for
the respondents, the respondents acknowledge that the
first respondent continues to carry out construction work on the
project
and alleges it is entitled to do so either as it has to
honour its obligations to the second respondent and or because it is
free to business as of right in terms of section 22 of the
Constitution.
18
Paragraph 10.2 page 17 indexed papers and paragraph 10.9. pages 18
and 19 indexed papers.
19
Paragraph 6.3 page 98 of the indexed papers
20
Paragraph 6.4 page 98 of the indexed papers
21
Paragraph 7.1, page 99 of the indexed papers
22
Paragraph 7, page 103 of the indexed papers
23
At the hearing of the matter, the respondents
counsel did not seek leave to have the matter adjourned for the
filing of further
affidavits.
24
Paragraph 6, page 103 of the indexed papers
25
Erasmus Superior Court Practice page B1-44
26
Page 26, Indexed papers
27
See:
Erasmus, Superior Court Practice
, B1 to 44
Moosa v
Knox
1949 (3) SA 327
(N) at 331
United Methodist Church of
South Africa v Sokufundumala
1989 (4) SA 1055
(O) at 1059A
28
1949 (3) SA 1155
(T) at 1163
29
Erasmus
, B1-48D
and B1-49
King Williams Town
Transitional Local Council v Border Alliance Taxi Association
2002 (4) SA 152
(E) at 156 I-J
30
Page 87 of the indexed papers
31
Page 22, indexed papers.
32
During the course of argument Advocate Schreuder, correctly in my
view did not pursue the submission that because the contract
was not
signed it had not come into existence.
33
Page 35 indexed papers
34
Page 45 indexed papers. In light of the fact that
only portions of the general conditions of contract (2004) were
annexed to the
papers, so as not to render then to bulky, I had
requested that a full copy thereof be filed. The parties
representatives had
agreed to do so.
35
Clause 4.3 general conditions of contract 2004
36
39.1 The Contractor shall, on the written order of the Engineer,
suspend the progress of the Works or any part thereof for such
time
or times and in such manner as the Engineer shall order and shall,
during such suspension, properly protect the works insofar
as is
necessary.
37
See in this regard:
Premier, Free State and Others v Firechem
Free State (Pty) Ltd
2000 (4) SA 413
(SCA)
Municipal Manager: Qaukeni Local Municipality and
Another v FV General Trading CC
2010 (1) SA 356 (SCA)
38
2010 (5) SA 479(WCC)
at paragraph 22