Katushya Security Services (Pty) Ltd v Dihlabeng Local Municipality (4837/2007) [2009] ZAFSHC 120 (19 November 2009)

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[2009] ZAFSHC 120
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Katushya Security Services (Pty) Ltd v Dihlabeng Local Municipality (4837/2007) [2009] ZAFSHC 120 (19 November 2009)

FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 4837/2007
In
the
matter
between:-
KATUSHYA
SECURITY SERVICES (PTY) LTD
Applicant
and
DIHLABENG
LOCAL MUNICIPALITY
Respondent
_____________________________________________________
CORAM:
H.M.
MUSI, JP
_____________________________________________________
HEARD
ON:
5
NOVEMBER 2009
_____________________________________________________
DELIVERED
ON:
19
NOVEMBER 2009
_____________________________________________________
JUDGMENT
_____________________________________________________
H.M.
MUSI, JP
[1] This is an
application brought in terms of section 3(4) of the Institution of
Legal Proceedings Against Certain Organs of State
Act 40 of 2002 (the
Act) for condonation of the failure by the applicant to serve a
notice on the respondent of its intention to
institute legal
proceedings against the respondent in terms of section 3(2) of the
Act. The notice must be served within six months
of date on which
the cause of action (debts) became due. The applicant served such
notice out of time.
[2] It
will be helpful to sketch the background to the application. The
applicant was awarded a tender by the respondent municipality
to
provide security services to the respondent. The tender was awarded
on 18 June 2003 and was to run for a period of five years.
However,
by letter dated 22 December 2005 the respondent informed the
applicant that its council had resolved to resile from the
contract
with effect from 23 January 2006. Despite protestations from the
applicant, the respondent persisted with the cancellation
of the
contract and ultimately the applicant stopped work on the contract on
24 January 2006.
[3] Prior
to cancellation of the contract, the applicant had instituted action
against the respondent claiming arrear payments for
services rendered
under the same contract. This action was, however, withdrawn on 25
January 2007 for reasons not disclosed in
the papers (the applicant
indicated only that it was on advice of counsel). Thereafter and on
23 August 2007 the applicant’s
attorneys served a notice in terms
of section 3(1) of the Act informing the respondent of the
applicant’s intention to institute
action for damages arising from
the repudiation of the contract. A copy of the particulars of claim
of the intended action was
annexed to the letter.
[4] Summons
was subsequently issued on 11 October 2007 and duly served. The
respondent opposed the action. A full exchange of
pleadings took
place and the matter was enrolled for trial on 18, 19 and 21 August
2009. In its plea filed on 14 December 2007,
the respondent had
raised the objection that there had not been compliance with the
provisions of section 3(2) of the Act but the
applicant did nothing
about this until 15 July 2009 when its attorneys addressed a lengthy
letter to the respondent’s attorneys
in which the respondent was
requested to consent to the out of time notice in terms of section
3(1). It appears that the respondent
did not respond to such letter
but it can be accepted that it declined to accede to the request.
Quite clearly the applicant could
not proceed with the trial under
those circumstances and it was duly postponed to enable it to launch
the instant application,
which it did on 8 July 2009.
[5] The requirements for
the grant of condonation under section 3(4) of the Act are set out as
follows in subsection 4(b):
“
The court may
grant an application referred to in paragraph (a) if it is satisfied
that-
(i) the debt has not been
extinguished by prescription;
(ii) good cause exists for the
failure by the creditor; and
the organ of state
was not unreasonably prejudiced by the failure.”
[6]
In
MADINDA
v MINISTER OF SAFETY AND SECURITY
[2008] ZASCA 34
;
2008 (4) SA 312
(SCA), which is a leading case on section 3(4)(b),
the SCA highlighted two issues that should be taken into account when
considering
an application of this nature. The first is that it is
not required of an applicant to prove these requirements on a balance
of
probability. It is only required of the court to be satisfied
that the requirements have been met. The matter was put as follows

in
MADINDA
at 316 C – D:
“
[8] The phrase
'if [the court] is satisfied' in s 3(4)(b) has long been recognised
as setting a standard which is not proof on
a balance of probability.
Rather it is the overall impression made on a court which brings a
fair mind to the facts set up by the
parties.”
[7] Another
aspect is that a distinction must be drawn between two periods. The
period within which the notice in terms of section
3(2) must be given
is critical. The applicant must explain his/her failure to act
within this period. Any delay after this period
is irrelevant to the
requirement of good cause. But is does not mean that an applicant is
ex
empt
from giving an explanation for the subsequent delay, for instance, in
applying for condonation; for this is a factor that may
influence the
court’s exercise of its discretion to grant condonation.
[8] With that prelude, I
now turn to consider whether the applicant had satisfied the
requirements of section 3(4)(b). It is not
in dispute that the
applicant’s claim has not prescribed. The critical question is
whether good cause has been shown for the
failure to give timeous
notice.
[9] The
deponent
to the founding affidavit, who is the financial and operational
director of the applicant, says that he had not been aware that

notice had to be given. This may be so, but the fact is that his
company had entrusted the matter to an attorney, who could not
claim
ignorance of the notice requirement. Indeed the attorney, Mr. M.H.
Henning, confirms that the notice in terms of section
3(2) had been
served on the respondent when the withdrawn action was instituted.
It seems to me that the real reason for the default
is the
misconception on the part of the applicant’s attorneys that it had
not been necessary to serve the notice, since they
had already served
one when they instituted the earlier action. Mr. De Bruin, for the
respondent, criticised the manner in which
this lapse is explained in
the founding affidavit and I think that the criticism has merit. One
would have expected Mr. Henning
to have put some muscles in the bones
contained in the founding affidavit. On the contrary, his
confirmatory affidavit merely
confirms the bare averments contained
in the founding affidavit.
[10] Be
that as it may, the circumstances of the case seem to support the
averment that the attorneys acted under a
bona
fide
misapprehension of the law. In this regard, it should be noted that
the earlier action involved the same parties and was based
on the
same contract, the cancellation of which gave rise to the subsequent
action. It is not a coincidence that the notice was
only sent on the
eve of the issue of the summons. It can be accepted that at this
point the attorneys had briefed counsel who
then pointed out that
this was a separate cause of action requiring service of a fresh
notice. Paragraph 10.3 of the founding
affidavit confirms that it is
counsel who alerted the attorneys to the default and by that time the
six months period within which
the notice should have been sent, had
elapsed. A strong factor that has to be taken into account is that
the applicant had made
it clear all along that it would sue for
damages by virtue of the repudiation of the contract. The letter of
10 January 2006 makes
this clear.
[11] Prospects
of success of the action are also a consideration. It is noteworthy
that the applicant does not pertinently deal
with this aspect in its
founding affidavit. I broached this issue in argument and Mr. De
Bruin indicated that he would accept
that this issue has been
sufficiently covered in the founding affidavit based on the contents
of paragraph 8 thereof.
[1
2] In
my view, the applicant has made out a
prima
facie
case for purposes of this application. The fact is that there was a
contract and it has been repudiated by the respondent. Whether
the
repudiation was warranted would be for the respondent to show at the
trial. Taking all the above factors together, I agree
with the
submission made by Mr. Daffue, for the applicant, that good cause has
been shown to exist in this matter.
[13] The
requirement that the organ of state must not be unreasonably
prejudiced by the non-compliance with section 3(2) can readily
be
disposed of. It was pointed out in
MADINDA
at 320 H – J paragraph [21] that although an applicant bears the
onus of bringing its case within the terms of the statute, it
has to
be borne in mind that the question whether the respondent will be
unreasonably prejudiced is a matter essentially within
its knowledge.
I have perused the respondent’s averments in this regard and they
do not disclose prejudice. What the respondent
complains about are
problems normally encountered in trials: the fact that witnesses may
disappear, that memories fade with time
etc, etc. At any rate,
whatever prejudice may be there the respondent will not be
unreasonably prejudiced thereby.
[1
4] Finally,
I have noted that the applicant was alerted to the need to bring a
condonation application as early as 14 December 2007.
Yet one year
and eight months elapsed before such application was launched. Even
when the out of time notice in terms of section
3(1) was sent to the
respondent on 23 August 2007, no request for consent in terms of
section 3(1)(b) was made. It is only when
the trial date was
approaching that a belated request was addressed to the respondent to
waive objection to the default. The result
is that the trial had to
be postponed. Now this is an issue that implicates the discretion
whether to grant condonation and there
is no explanation for it.
Nonetheless, I think that it will be unfair to deny the applicant its
day in court. However, the applicant
deserves disapprobation for
this. The applicant or its attorneys have been dragging their heels,
with the result that the matter
has become protracted to the
respondent’s detriment and I think that the respondent was entitled
to oppose the unreasonably delayed
application. In this regard, I
agree with Mr. De Bruin that the applicant should be mulcted with
costs.
[15] In
the result, the following order is made:
1. Condonation is granted
for the applicant’s failure to give timeous notice in writing to
the respondent of its intention to
institute legal proceedings as is
required by
section 3
of the
Institution of Legal Proceedings Against
Certain Organs of State Act 40 of 2002
.
2. The applicant is to
pay the costs of the application, including opposition thereto.
___________
_
H.M.
MUSI, J
P
On behalf of the
applicant: Adv. J.P. Daffue SC
Instructed by:
McIntyre & Van
der Post
BLOEMFONTEIN
On behalf of the
respondent: Adv. J.P. de Bruin SC
Instructed by:
Naudes
BLOEMFONTEIN
/sp