Mayihlome Electrical (Pty) Ltd v Matjabeng Municipality and Another (2590/2006) [2006] ZAFSHC 36 (5 October 2006)

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[2006] ZAFSHC 36
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Mayihlome Electrical (Pty) Ltd v Matjabeng Municipality and Another (2590/2006) [2006] ZAFSHC 36 (5 October 2006)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case
No.: 2590/2006
In the case between:
MAYIHLOME
ELECTRICAL (PTY) LTD
Applicant
and
MATJABENG
MUNICIPALITY
1
ST
Respondent
DR
BENJAMIN MALAKOANE
2
nd
Respondent
(In his capacity as the
Municipal Manager
of
the First Respondent)
M E MATHABO MOKAPO
3
rd
Respondent
(In her capacity as the
Executive Mayor
of
the First Respondent)
_____________________________________________________
JUDGMENT:
RAMPAI, J
_____________________________________________________
HEARD ON:
24 AUGUST 2006
_____________________________________________________
DELIVERED ON:
5 OCTOBER 2006
_____________________________________________________
[1] The matter came to
this court by way of a semi urgent application. It was first
launched on Thursday the 27 July 2006 before
Van der Merwe J who then
postponed it to Thursday the 8
th
August 2006. On that day
Wright J postponed it to Thursday the 24 August 2006 on which day it
was argued before me. Having heard
argument I reserved judgment.
[2] The relief sought by
the applicant is threefold. If you will you may say in these
proceedings there are three cases in one.
The first prayer is that
certain specific resolution taken by the 1
st
respondent in
Welkom on the 12 May 2006 be reviewed and set aside. The second
prayer is that the respondents be directed to furnish
the applicant
with a copy of the forensic report compiled by Price Water Cooper and
handed to the respondents in Welkom on the 12
May 2006. The third
prayer is that the respondents be directed to pay to the applicant
all the money the respondents owe to the
applicant in terms of a
contract which money the respondents have been withholding since the
12 May 2006 on account of the said resolutions.
[3] The
relief claimed in this application is based on the following overall
grounds:
3.1 That resolution
SA10/2006 of the 1
st
respondent’s council was
ultra
vires
because it was illegally taken in contravention of rule
29(1)(a) of the Standard Rules and Oders.
3.2 That
resolution SA10/2006 was
ultra vires
because it was illegally
taken in contravention of rule 94, rule 95 and rule 98 of the
Standard Rules and Orders as well as section
20(1) of the Municipal
Systems Act No. 32/2000.
3.3 That
resolution SA10/2006, the prior forensic report which gave rise to it
and the subsequent contract termination which flowed
from it were all
unlawful because the respondents did not observe the
audi alteram
partem
rule before taking the resolution.
3.4 That resolution
SA10/2006 was unlawfully used by the respondents to wrongfully
withhold payment to the applicant for the services
duly rendered to
the respondents.
[4] The applicant and the
1
st
respondent concluded an agreement in Welkom on the 20
May 2005 whereby the applicant undertook to do high mask lights
maintenance
in the streets of Matjhabeng family of communities and
the 1
st
respondent undertook to pay the applicant for
providing the required services. The contractual relationship
endured for approximately
a year. During that period a forensic
audit of the 1
st
respondent was done. A special mandate
to the outside auditors led to the investigation of certain employees
and service providers
of the first respondent. The auditors
completed their special investigation, compiled an audit report and
finally presented their
report to the 1
st
respondent.
[5] The 1
st
respondent held a special council meeting in Welkom on the 12 May
2006. Present at the meeting was, among others, a representative
of
the auditors. He presented the written audit report to the
councillors. The forensic audit report implicated the applicant and
certain employees of the 1
st
respondent in connection with
certain irregular dealings associated with the service contract
between the applicant and the 1
st
respondent. The report
was debated by the councillors at that meeting in the presence of the
outside investigator.
[6] On account of the
forensic assessment report the municipal council of the 1
st
respondent resolved
ex tempore
, among others:
to hand the forensic
assessment report to the South African Police Service.
to terminate, with
immediate effect, the agreement between the applicant and the 1
st
respondent.
to withhold payment of
money due and payable to the applicant in respect of services
provided prior to the termination of the agreement.
These
then are the main features of resolution SA10/2006 which triggered
this litigation off.
[7] The applicant’s
case was that it had, at least, a three year contract with the 1
st
respondent and that the respondent was not entitled, without good
reason, to terminate such contract as it did. The respondent put
up
a defence that the said contract was a month to month agreement and
not a three year agreement and that there were valid reasons
which
justify the council’s decision to terminate such agreement with
immediate effect. These in brief are the background facts
and the
broad parameters of the dispute.
[8] I shall revert to the
merits later in respect of each separate relief claimed. Before I do
that I have to deal with the point
raised
in limine
first.
The main point
in limine
taken by the applicant was that the
deponent to the opposing affidavit lacked authority to depose to such
an affidavit on behalf
of the respondents. Obviously this objection
cuts across the entire spectrum of the defences of respondents
relating to all the
three dimensions of the relief sought. The
joint opposing affidavit of the three respondents was made and signed
by Mr. Segalo,
the acting departmental head of the finance department
of the 1
st
respondent. He stated that the municipal
manager of the 1
st
respondent, Dr. Malakoane, was out of
the country at the time and that before Dr. Malakloane left the
country he had appointed him,
the deponent, Mr Segalo, as the acting
municipal manager of the 1
st
respondent.
[9] The
authority of Mr. Segalo was questioned by the applicant in the
replying affidavit. The applicant alleged that Dr. Malakoane
did not
have the necessary authority to delegate his powers to Mr. Segalo.
In the rejoinder, the respondent confirmed that the municipal
manager, Dr. Malakoane and not the municipal council had appointed
Mr. Segalo to act as a municipal manager but denied the applicant’s
contention that for that reason Mr. Segalo lacked authority to depose
to the opposing affidavit as he did on behalf of the respondents.
[10] Before me, Mr. Van
Rhyn, counsel for the applicant, contended that in the light of the
maxim
delegata potestas non potest delegare
, the municipal
manager did not have the power to delegate the powers already
delegated to him. He relied on the case of
W A MNGOQI v THE
CITY OF CAPE TOWN AND OTHERS
, case number 3619/06, Cape
Provincial Division and the case of
THE CITY OF CAPE TOWN v W A
MNGODI AND ANOTHER
,
case number 3944/06 also
unreported. He submitted that seeing that the respondents rejoinder
did not cure the defect in the opposing
affidavit there was
technically no opposition to the relief sought by the applicant. If
the submission is correct then it meant
that the respondents were not
properly before the court in these proceedings.
[11] But
counsel for the respondents, Mr. Danzfuss, disagreed. He contended
that Dr. Malakoane, as the municipal manager of the first
respondent,
acted within the framework of the law when he delegated his powers to
Mr. Segalo. Therefore he submitted that Mr. Segalo
as the deponent
of the opposing affidavit lacked no authority to depose to the
opposing affidavit on behalf of the respondents as
he did.
[12] Section
82(1), Municipal Structures Act No. 117/1998 provides that a
municipal council must appoint (a) a municipal manager who
is the
head of administration and b) an acting municipal manager when
necessary.
[13] Section
59, Municipal Systems, Act No. 32/2000 among others provides:
that a municipal council
must develop a system of delegation that will maximise
administrative and operational efficiency and provide
for adequate
checks and balances.
that a municipal council
may delegate appropriate powers to any of its
staff
members,
among others.
that a municipal council
cannot delegate its powers as specified in section 76(b) and its
supreme power as specified in section
160(2) of the 1996 RSA
Constitution. See subsection 1(a).
that a delegation must
be in writing.
That a delegation may be
restricted by means of limitations, conditions and directions
imposed by the municipal council.
That a municipal council
may authorise its functionary to whom it has delegated a certain
power to redelegate such a delegated power
farther. See subsection
2(d).
[14] Section
60, Municipal Systems Act No. 32/2000 among others provides:
that the power of the
municipal council itself to delegate certain powers is strictly
confirmed to specified municipal structures
only and nobody else and
it further provides that the power of a municipal to make a
determination or adjustment of the employment
benefits in respect of
a municipal manager may be delegated to an executive committee or
executive mayor only.
[15] Section 238 of the
1996 RSA Constitution provides that an organ of the state may
delegate
any power or function
. In terms of section 239 of
the same constitution a local government such as the 1
st
respondent is an organ of the state.
[16] Section 160(2) of
1996 RSA Constitution restricts the
carte blanche
powers of a
state organ, in the context of this case, a local government to
delegate powers or functions. This exclusionary provision
of the
constitution expressly prohibits a municipal council from delegating
certain specific functions. The excluded functions are
the following
matters: the passing of by-laws; the approval of budgets; the
imposition of rates, taxes, levies and duties as well
as the raising
of loans. Therefore, delegation of all these matters is absolutely
prohibited by the constitution. The powers in
respect of these
special class of functions are constitutionally delegated to a local
organ and to the local organ of government
only. The powers in
respect of this special class of functions can never be delegated
further to any sub-structure of that local
organ let alone its
functionary.
[17] It is crystally
clear that the power of a local organ of government to appoint its
functionaries is not one that may not be delegated.
Since delegation
of such powers is not absolutely and expressly prohibited in terms of
section 160(2), it may consequently be delegated
in terms of section
238. This is so because the power to appoint administrative managers
does not permanently resides in the highest
echelons of the local
government, namely a municipal council. This interpretation is in
keeping with the rule:
expressio unius est exclusio alterius –
CHOTABHAI v UNION GOVERNMENT AND ANOTHER
1911 AD 28.
[18] In terms of section
82(1)(b), Local Government Municipal Structures Act No. 117/1998 a
municipal council is empowered to appoint
a deputy municipal manager.
In the instant case, the municipal council of the 1
st
respondent delegated such authority to its municipal manager who
exercised such power. See a document marked annexure “D1” which
appears on page 494 of the paginated record. The delegation of the
functions of the municipal manager to the acting municipal manager
was approved of and adopted by the 1
st
respondent on the
25
th
April 2006. The contention that Mr. Segalo was not a
departmental head but merely an acting head of a department was
shallow argument.
The powers conferred on an acting head are
precisely the same as those of a permanent but absent or still to be
appointed departmental
head.
[19] The municipal
council of the 1
st
respondent had original authority and
not derivative authority to appoint. And the same municipal council
delegated its original
authority to its municipal manager whom it
empowered to appoint an acting municipal manager from a specific pool
of its identifiable
employees. The delegation of the authority to
appoint an acting municipality was thus not a delegation of a
delegated power. It
follows, therefor, that the principle of
delegatus non potest delegare
does not apply here. But even
if it did, it would still not prohibit sub-delegation of the powers
we are here concerned with. Section
59(2), Local Government:
Municipal System Act no. 32/2000 provides for such sub-delegation.
[20] That a power which
entails no discretion or little discretion in respect of a delegate
can be sub-delegated without really offending
the spirit, purpose and
objective of the principle
delegare potestas non potes delegare
was affirmed in the case of
NELSON MANDELA METROPOLITAN
MUNICIPALITY v GREYVENOUW CC
2004 (2) SA 81
SECLD at
paragraph 50 on 98 F where the court held per Plasket AJ:
“
The
principle against delegation of delegated powers is not offended in
these circumstances. It is intended to ensure that when discretionary
powers are vested in an official because of his or her seniority,
responsibility or expertise, the purpose of the empowering provision
cannot be defeated by a delegation of authority to another official
who does not possess the requisite qualities.”
Also see Baxter:
Administrative Law
at page 439.
In
casu
the
municipal manager exercised almost virtually no discretion in
appointing the said deponent as an acting municipal manager in
terms
of the strict power delegated to him. He did not have a free and
unlimited discretionary power to select whosoever he preferred.
It
was even prescribed to him from which small class of senior officials
he could make an appointment. It is a matter of logic
and not debate
that an acting departmental head is for all practical intents and
purposes a departmental head.
[21] The applicant
heavily relied upon a decision of
W A MNGOQI v THE CITY OF CAPE
TOWN AND OTHERS
delivered on the 19
th
May 2006.
There the court itself clearly drew a distinction between, firstly
the appointment of a municipal manager which matter
could not by
delegated on the one hand and secondly the determination of the
condition of employment of a municipal manager on the
other which
could. Van Zyl J writing for the unanimous full bench said the
following at paragraph 104:
“
[104] Mr
Binns-Ward contended that, upon a proper construction of the
provisions of section 82(1) of the
Structures
Act,
read with sections 59 and 60 of the
Systems
Act,
the power to appoint a municipal manager vests exclusively in the
municipal council and is not capable of being delegated at all.
I
agree with this contention. In terms of section 60(1) of the
Systems
Act
the municipal council’s power to deal with issues such as
remuneration, benefits or other conditions of service of the
appointee
may be delegated to an executive mayor or executive
committee only. Any such delegation must, however, be effected
within a “policy
framework, a term which is not defined in the
Systems
Act
but which appears to be expressed in section 59(1) of such Act as “a
system of delegation that will maximise administrative and
operational efficiency and provide for adequate checks and balances”.
The absence of any reference in section 60(1) to the delegation
of
the decision regarding the appointment of a person to the position of
municipal manager supports that construction.”
I am in respectful
agreement.
See
60(1) as summarised spells out which matters a municipal council may
competently delegate to its executive committee or executive
mayor.
[22] The aforegoing
decision is the correct exposition of the law as regards the legal
position pertaining to the appointment of what
I may call a permanent
municipal manager – for a lack of a better descriptive adjective.
The appointment of such an official is
the exclusive prerogative of a
municipal council. However, the decision does not support the
applicant’s case in any way. Here
unlike there the objection
raised
in limine
revolves around the appointment of a
temporary municipal manager, in other words an acting manager to be
precise. Whereas section
82(1) prohibits a municipal council from
delegating to anybody whatsoever its exclusive power to appoint a
municipal manager it does
not have a similar prohibitive provision as
regards delegation of the power for the appointment of an acting
municipal manager –
vide section 60(1)(b), Local Government:
Municipal Systems Act No. 32/2000.
[23] In
W A MNGOQI
V THE CITY OF CAPE TOWN AND OTHERS
supra
at paragraph
109 Van Zyl J said in an
obiter dictum:
“
By
contrast, the power to appoint an acting municipal manager has been
expressly delegated to the executive mayor....”
In the instant case, I
may paraphrase the words of Van Zyl J by saying that by contrast, the
power to appoint an acting municipal
manager has been expressly
delegated to the permanent municipal manager in terms of a document
marked annexure “D1”. Such delegation
does not entail
determination of conditions of service such as remuneration, period
of contract, fringe benefits or ancillary conditions.
Therefore the
implied prohibition in section 60(1)(b) Local Government: Municipal
Systems Act No. 32/2000 does not apply.
[24] It is significant to
bear in mind that the respondent’s deponent whose sworn statement
is central to the applicant’s preliminary
objection was appointed
an acting municipal manager and the powers of the municipal manager
delegated to him on the 25
th
April 2006. That earlier
decision of the 1
st
respondent taken in collaboration with
its municipal manager has not been nullified. It’s still stands,
with or without its legal
imperfections if any. In these proceedings
I am grappling with the later decision taken on the 12 May 2006.
It
being the case, the applicant cannot now be heard to say that the
earlier decision of either the appointment of the acting municipal
manager or the delegation of the power relating thereto was illegal
or irregular in this application for review of an entirely different
decision, a decision to terminate the agreement.
[25]
OUDEKRAAL
ESTATES (PTY) LTD v CITY OF CAPE TOWN AND OTHERS
2004 (6) SA
222
(SCA) at 242A per Howie P
et
Nugent JA:
“
Until
the Administrator's approval (and thus also the consequences of the
approval) is set aside by a court in proceedings for judicial
review
it exists in fact and it has legal consequences that cannot simply be
overlooked. The proper functioning of a modern State
would be
considerably compromised if all administrative acts could be given
effect to or ignored depending upon the view the subject
takes of the
validity of the act in question. No doubt it is for this reason that
our law has always recognised that even an unlawful
administrative
act is capable of producing legally valid consequences for so long as
the unlawful act is not set aside.”
[26] It is not the
applicant’s case that the earlier decision of the 1
st
respondent relating to the delegation of its powers or the
appointment of the acting municipal manager has since been set aside
or
that any application is pending to have it set aside. Therefore,
it is of no consequence for the purpose of this application before
me
whether such earlier decision of the 1
st
respondent or the
2
nd
respondent was regular or not. Until it is set aside,
it cannot be ignored and more importantly the decisions made and the
acts
performed by such an acting municipal manager are deemed valid.
They cannot be wished away. Their legal force and effect must be
respected and obeyed.
[27] The duly appointed
municipal manager, Dr. Malakloane who is also the 2
nd
respondent in
casu
, stated in a rejoinder affidavit that he
had read the answering affidavit by the acting municipal manager, Mr.
Segalo, and he confirmed
the averments contained in the opposing
affidavit to be true and correct. He also supported the relief
prayed for therein. By virtue
of section 238, RSA Constitution the
1
st
respondent was and still is expressly authorised to
delegate any power or function other that those expressly excluded in
terms of
section 160(1).
[28] For the reasons
given above I have come to the conclusion that the applicant’s
preliminary objection that the respondent’s
deponent lacked
authority to file an opposing affidavit on behalf of the respondent
was not well taken. The applicant’s point
in limine
must
therefore fail. The respondents are properly before the court. I
shall deal with the other points
in limine
as we go along to
deal with the specific relief in connection with which they were
raised.
* [29] I deal first
with prayer 1 of the notice of motion. On the 12 May 2006 the 1
st
respondent’s municipal council adopted resolution SA10/2006. Among
others, a decision was taken that the agreement between the
1
st
respondent and the applicant had to be cancelled with immediate
effect. Now the applicant seeks a review and setting aside of such
a
decision. Subsequent to the resolution the 2
nd
respondent
notified the applicant of the 1
st
respondent’s decision
to terminate the agreement. The letter in question was dated the
24
th
May 2006. The applicant was given a 30 day notice of
the 1
st
respondent’s intention to cancel the agreement.
The effective date of the termination was the 23
rd
June
2006. On the 14
th
May 2006 this application was launched
to have the decisions whereby the agreement was terminated set aside.
This is the real purpose
of this application although there are all
sorts of other technical reasons advanced on behalf of the applicant.
[30] I start with a
challenge to resolution SA10/2006. The first relief sought is to
have the resolution reviewed and set aside.
The challenge is based
on three grounds of invalidity. In the first place, Mr. Van Rhyn, on
behalf of the applicant contended that
resolution SA10/2006 was
ultra
vires
on the grounds that the municipal council of the 1
st
respondent contravened a number of Standard Rules and Orders which
regulate the conduct of proceedings in a local government council.
[31] It is common cause
that the said resolution was taken at a special meeting of the 1
st
respondent’s municipal council held on the 12 May 2006; that a
certain Mr. M. Gerber apparently a representative of Price Waters
Cooper, also attended the same special meeting and that he was
afforded an opportunity to address the municipal council.
[32] Mr.
Van Rhyn submitted that the municipal council violated rule 29 read
with rule 48 SRO by allowing Mr. Gerber to address the
meeting. Now
rule 29(1)(a) provides that a member of the public attending a
municipal council meeting may not address such a meeting
unless he or
she is a member of a deputation in terms of rule 48. This latter
rule 48(1) provides that anybody who wishes to obtain
an interview
with the municipal council must lodge a written application with the
municipal manager and must state the representation
he or she wishes
to make.
[33] According to the
applicant, it was irregular for Mr. Gerber to address the municipal
council of the 1
st
respondent. I am not persuaded by this
contention. It seems to me clear that the underlying aim of rule
29(1)(a) is to ensure orderliness
during the meetings of the
municipal council. The aim was not to prohibit members of the public
from addressing the municipal council
but rather to regulate the way
in which they can do so. The integrated common purpose of these
rules is to prevent possible disruptions
to the proceedings in the
municipal council meeting by random, unexpected and impromptu public
requests to address the council at
any time inopportune to a
municipal council.
[34] These
rules lay down a procedure to be followed by a member of the public
who on his own accord, wishes to have a collective
audience of the
members of the council. The phrase “anybody who wishes” clearly
conveys this message in a simple and straight
forward manner. As I
see it, these rules do not regulate the position of an outsider who
attends the meetings of the municipal council
not on his own accord,
but on the invitation of the municipal council itself and at the
request of the municipal council itself,
addresses its meeting. In
such a case the element of surprise is eliminated. The orderliness
and dignity of the proceedings are
not jeopardised. The speaker and
the council at large know about the visit well in advance and expect
a speech or an address by
an outsider well in advance. The purpose
for which the aforesaid rule was enacted is in no way undermined.
[35] Mr.
Danzfuss referred me to rule 16(6) SRO which provides that the
municipal council speaker may invite any person to attend
a meeting
of the municipal council. He argued that although this particular
rule does not expressly authorise such an invited guest
to address
the municipal council, it could never have been the intention of the
lawmaker in making the standard rules and orders
to prevent a
municipal council from inviting a non councillor to address the
members of the municipal council. I agree with this
submission. The
power of the speaker to request an outsider to address a municipal
council is implicit in the authority of the speaker
to invite.
[36] Mr.
Van Rhyn’s argument that rule 16(6) only regulates attendance and
not participation of outsiders fails to persuade me.
The attendance
of outsiders voluntary is adequately regulated by rule 29 and rule
48. Between these two rules there is a positive
link. However,
there is no apparent connection between rule 16(6) on the one hand
and rule 29 or rule 48 on the other. That alone
indicates to me that
rule 16(6) was designed for something more than mere attendance.
Nobody needs a speaker’s invitation to attend
a meeting of a
municipal council. However, an uninvited outsider is ordinarily an
observer. Giving an invited outsider a platform
to address
councillors adds mean, value and purpose to the speaker’s
invitation. If any outsider who wishes to address the council
is
welcome to do so, why is there no provision made in the same rules
for a council that wishes to have an outsider to address such
a
council?
[37] In
my view rule 16(6) provides a less cumbersome avenue for such a
scenario. The absence of a specific provision or rule which
caters
for this scenario tends to show that where a council itself invites
an outsider the strict and formal procedure laid down
in rule 29 and
rule 48 should not apply. Therefor the respondents were not required
to comply with rule 29 and rule 48 before Gerber
was asked to address
the meeting of the municipal council. The procedure laid down in
these rules does not apply. It is a lame
and almost absurd argument
to say it does. It is queer to invite a guest and then burden him
with such procedural formalities.
[38] The requirements of
the Standard Rules and Orders are clearly directory and not
peremptory. Vide
VENTER v RANDBURG TOWN COUNCIL
1968
(4) SA 302
(WLD) and
MAHARAJ AND OTHERS v RAMPERSAD
1964 (4) SA 638
(AD). What happened in the instant case was as
follows: The 1
st
respondent requested an investigation by
external investigators. Mr. Gerber was a member of the appointed
team of investigators.
He reported to the 3
rd
respondent,
the executive mayor of the 1
st
respondent. She had to
inform the 1
st
respondent about the forensic report. She
consulted with the speaker. Together they decided to afford Mr.
Gerber the opportunity
of explaining the forensic audit report to the
municipal council at large.
[39] The executive mayor
later proposed to the municipal council that the speaker allow Mr.
Gerber to present his forensic audit report
to the municipal council
and that the presentation be done behind close doors. No objections
were raised against the executive mayor’s
proposal. The
councillors unanimously supported the proposed procedure. Mr.
Gerber’s address entailed presenting his report,
elucidating its
contents or findings and answering questions by the councillors to
clarify the report. That was the extent he participated
in the
debate which revolved around his report afterwards. I can find
nothing irregular about his participation in those proceedings.
The
3
rd
respondent herself could as well have presented the
forensic audit report to the meeting of the municipal council.
However, it was
recognised by all the councillors that hearing the
story from the horse’s mouth would enhance better understanding of
the report
by the councillors before the vote was taken.
[40] In the case of
JOHANNESBURG CONSOLIDATED INVESTMENT COMPANY LIMITED v
MARSHALLS TOWNSHIP SYNDICATE, LTD
1917 AD 662
on 666 the
court observed that:
“
And
jurisdiction given in respect of a general subject matter must be
taken to include all powers reasonably required for the purpose
of
dealing fully with the subject assigned in accordance with the
conditions and requirements prevailing at the time. But only such
powers will be implied as are reasonably ancillary to the main
purpose.”
I hold the view that
Gerber’s address in the municipal council meeting was reasonably
required for the purpose of dealing fully
and effectively with the
investigative mandate assigned to him. The address was reasonably
ancillary to the main objective of forensic
investigation to ensure
clean administration in general and clean financial administration in
particular. No narrow view should
be taken of what is implied in the
express power granted to the speaker of a municipal council to invite
outsiders to the council
meetings. To do so would render rule 16(6)
meaningless and defeat the purpose of a discretionary power. The
restrictive construction
that the rule merely regulates attendance
and not participation of the speaker’s guest can only make a
municipal council a prisoner
of its rules. It falls to be rejected.
Similar sentiments were
expressed in
JOHANNESBURG MUNICIPALITY v DAVIES AND ANOTHER
1925 AD 395
on 403;
BRAKPAN TOWN COUNCIL v BURSTAIN
1932 TPD 336
;
GOUWS v ORANJE-VRYSTAAT ONGEDIERTE BESTRYDINGS-
EN WILDBESKERMINGSVERENIGING
1970 (1) SA 508
(AD) on 518H –
519D.
[41] At the request of
the 3
rd
respondent the speaker agreed that Mr. Gerber be
invited and that he be given the platform to address the council.
All the councillors
unanimously agreed to the proposal by the 3
rd
respondent. None of them raised any objection. The maxim of
“unanimous consent” is well known and recognised particularly in
our company law. I know of no sound reason why it cannot find
similar recognition in our local government law or public law to be
precise. By virtue of the maxim the courts have always been inclined
and prepared to condone non-compliance with a variety of formalistic
requirements or to attach no adverse consequences to such
non-compliance on the grounds that the stakeholders had unanimously
consented
to dispense with such formalities.
[42] In
GOHLKE &
SCHNEIDER AND ANOTHER v WESTIES MINERALE BEPERK AND ANOTHER
1970 (2) SA 685
(AD) the court held:
At 693 G:
“
After
all, the holding of a general meeting is only the formal machinery
for securing the assent of members or the required majority
of them,
and, if the assent of all the members is otherwise obtained, why
should that not be just as effective?”
At 694 E:
“
Because
the principle, as applied in those cases, is a sound one, giving
effect to the substance rather than the mere form of the
members'
assent, I think that we should accept it as being settled law.
Consequently, the assent of all the members and Sarusas,
as evinced
by the agreement of 28th January, 1965, rendered clause 8 binding on
all of them
just
as if they had approved it by ordinary resolution in general
meeting
.”
[43] The following
passage in
LEVY AND OTHERS v ZALRUST INVESTMENT (PTY) LTD
1986 (4) SA 479
(WLD) at 485F:
“
I
am hence of the opinion that the
unanimous
consent
of the shareholders of a company to a specific transaction has the
same effect and validity as the approval of such transaction by
a
general meeting of the company.”
Vide also
ADVANCE
SEED CO (EDMS) BPK v MARROK PLASE (EDMS) BPK
1974 (4) SA 127
(NCD) at 132F – 133D.
[44] The legal author
Lewin:
The Law Procedure and Conduct of Meetings
, 5
th
edition on page 27 refers to a passage by a British judge, Lord
Maugham in the case of
CARRUTH v IMPERIAL CHEMICAL INDUSTRIES,
LTD
(1937) 2 ALL England Law Reports 422 who had this to say
about the role of a chairperson or the speaker, if you will:
“
As
regards the conduct of such a meeting, that is a matter largely in
the hands of the chairman, with the assent of the persons properly
present. Just as documents which have to be presented to a meeting
can be taken as read, and just as a meeting can decide either
that an
untiring speaker shall be no longer heard, or that a much debated
question shall be put to the vote without further discussion,
so –
in my opinion –
the
holders of deferred shares were entitled to waive the objection to
the presence of strangers
,
including holders of ordinary shares, and if they choose to do so, it
would not, I think, be open to anyone to assert that the meeting
was
not being properly held within the meaning of art 71.
‘
The
conclusion at which I arrive is that, in the circumstances, the
meeting of deferred shareholders was properly convened, that the
objection which might have been raised to the presence of holders of
shares of another class was waived, that the poll was duly demanded
and that the extraordinary resolution was passed by the requisite
majority.”
[45] In that case, the
ordinary shareholders attended a special meeting convened exclusively
for differed shareholders in terms of
article 71 of the statute.
Notwithstanding the fact that the ordinary shareholders were legally
not supposed to attend such a special
meeting, those who were
entitled to attend such a meeting, in other words, the holders of the
special class of shares called deferred
shareholders did not object
to the presence of the ordinary shareholders. Because they did not
object to the presence of the strangers,
the court held that it was
not open to
anyone
to claim that the meeting was improperly
conducted and therefor irregular. The special resolution passed, not
unanimously but by
the requisite majority was found not to have been
tainted by illegality. Therefor the extraordinary resolution so
adopted was held
to be
intra vires.
[46] The applicant
contended that resolution SA10/2006 was invalidated by the
participation of an outsider. Mr. Van Rhyn relied on
the case of
D
THAMAE & TWO OTHERS v SETSOTO MUNICIPALITY & 31 OTHERS
where my brother Kruger J said on page 7:
“
Where
debate on a resolution takes place with the participation of a person
who is disqualified from taking part in the debate, the
subsequent
resolution of that body will be invalid, even though the disqualified
person did not vote.”
See Case No. 1742/2003
unreported decision of OPD.
[47] Briefly
restated the facts of that case were that the three applicants were
members of the African National Congress, the majority
party in the
municipal council of the Setsoto Municipality; that the first
applicant, the second applicant and the third applicant
were the
municipal council speaker, the municipal executive committee member
and the municipal council councillor respectively; that
the ANC
caucused shortly prior to the council meeting; that the caucus
decided to remove the applicants from their aforesaid positions;
that
the council meeting was held shortly after the said caucus for the
restructuring of the council; and that the chief whip of
the ANC
stood up in the council meeting where he announced the earlier
decision of his caucus for the restructuring of the council;
that no
debate took place in the council meeting afterwards.
[48] The facts in that
case are distinguishable from the facts in the instant case. In that
case, there was
no stranger
in other words a non councillor
who addressed the municipal council as in the instant case. In that
case unlike in this case nobody
participated in any debate. In that
case the decision to restructure the municipal council concerned was
taken outside the council
chamber by the ANC caucus and simply
imposed on the council by the majority party.
[49] Since no outsider
had participated in the council debate the passage relied upon by the
applicant was not the
ratio decidendi
but rather an
obiter
dictum
. Kruger J merely likened the caucus decision to an
external undue influence or predetermination which is a recognised
ground of
review of an administrative decision and in fact cited
KIRK
v WOODHOUSE LICENSING BOARD
1924 EDL 297
on 302 – 303. It
is conceivable that Kruger J might have reasoned that since it was
not the council but in fact the ANC, which
made the decision, the
chief whip or the announcer of such decision in a council meeting in
a deep sense, was analogous to an unqualified
outsider, although in
truth and in reality, Kruger J did recognise that the announcer was a
councillor.
Be that as it may, it is
trite law that a court of law is not bound by a statement of law or
observation made in passing but not
underlined by the facts for its
decision. An
obiter dictum
has little persuasive value.
[50] In
PIETERSBURG
CLUB LTD v PIETERSBURG LICENSING BOARD
1931 TPD 217
on p. 223
the court found that a certain Dr. Andrew has a personal animosity
against the club. Although he was a duly appointed
member of the
said liquor licensing board he was hostile because he had been
expelled as a member of the same club that was applying
for the
liquor licence, the court found that he was so biased against the
club that his personal animosity made him a disqualified
person from
attending the board meeting in which the application of the club for
a liquor licence was considered. The court held
that the fact that
such a hostile person participated in the relative discussion of the
board meeting vitiated the board’s decision.
See
EX PARTE SCHNEIDER
1950 (2) SA 807
(C) on p. 810.
[51] Needless to say no
such accusations or suggestion of personal animosity were levelled
against Gerber, the outsider in the instant
case. It was hardly the
applicant’s case, that had the third respondent herself presented
the report in stead of Gerber the municipal
council of the first
respondent would not have passed resolution SA10/2006. The essence
of the applicant’s case, as I have already
pointed out elsewhere in
the cause of this judgment, was that Gerber was disqualified from
participating in the debate because, as
the applicant said, Gerber
did not lodge a written application to the municipal manager for
consideration by the municipal council
speaker in terms of rule
48(1). I was not impressed by that argument. The first ground of
challenge must therefore fail.
[52] The
applicant also contended that resolution SA10/2006 was invalid on the
grounds that it was debated in camera and taken in
contravention of
section 21 Municipal Systems Act No. 32/2000 read with rules 94 and
95 and 98. Section 20(1) decrees that the meetings
of a municipal
council are open to the public. That is the general provision. But
there are exceptions to this general provision.
The same section
authorises a municipal council to hold its meetings behind closed
doors when the nature of the business being transacted
dictates that
it is reasonable to exclude the public.
[53] Rule
94 echoes the substance of the above general rule. It provides that
a municipal council may resolve to close any part of
its meeting, in
other words an open meeting of a municipal council may be converted
into a close meeting. A municipal council may
be decide by way of a
resolution that a certain particular item on its agenda be discussed,
debated and resolved behind closed doors.
That is precisely what
happened in this case. Only part and not the entire proceedings of
the municipal meeting were in camera.
This rule also spells out
circumstances which must prevail in order to justify the proposal and
ultimately the resolution to hold
a close council meeting.
Rule
95 regulates that a councillor may, when an item is put to order or
at any time during the debate on an item, propose that the
matter be
further transacted in closed session. Therefore this rule empowers
the municipal council where the discussion of a particular
item has
already started in an open meeting to stop the open discussion close
its meeting for the purposes of further discussion
of that particular
item and re-open the doors of the council chamber to the public once
the discussion of the item concerned has
been finalised.
[54] It was contended on
behalf of the applicant that from the minutes of the municipal
meeting held on the 12
th
May 2006 there was no indication
that the aforesaid section and the aforesaid rules were complied
with. See annexure “MM4”.
Mr. Rhyn’s contention is incorrect.
It appears that there was an explicit proposal that the report of
Gerber be presented and
discussed under item SA10/2006 in camera.
The formal procedure might not strictly have been adhered to in the
sense that no formal
resolution was taken. But objections were
invited but none were raised. The speaker therefor dispensed with
the formal resolution.
To the extent that there was or might have
been procedural deviation, the proceedings pertaining to the
particular item were somewhat
flawed.
[55] In the opposing
affidavit the deponent stated on behalf of the respondents that the
item in question entailed a sensitive matter
pertaining to certain
employees of the 1
st
respondent who were implicated in
certain irregular activities detrimental to the respondent’s
administration. The sensitive nature
of the item that was about to
be discussed made it reasonably necessary to exclude the public.
There can be no question about it.
Considering the inevitable
gravity of the harm, had the meeting remained open, to the employees
concerned, I am of the view that
the harm caused to the democratic
values of the transparent, open and accountable governing of local
affairs was proportionally less
harmful to the members of the public
who were excluded and denied their right to observe the workings of
the council than the harm
to the implicated employees.
[56] On the averments by
the respondents which I not seriously disputed by the applicants, I
find that there were much more compelling
reasons to close the doors
than to keep them open at the time the item in question was
discussed. The procedural deviation was not
so radical as to justify
the setting aside of the subsequent resolution passed in camera. The
aforesaid rules of procedure are directive
and not peremptory. I am
further fortified by rule 19(3) of the same Standard Rules and Orders
which provides that the chairpersons
ruling as to the procedure is
final unless it is contested in the next meeting. By their unanimous
adoption of resolution SA10/2006
the councillors thereby implicitly
signified that they condoned the speaker’s ruling. During argument
it was never contended on
behalf of the applicant that the speaker’s
ruling was subsequently questioned by any councillor. Therefor the
ruling with whatever
defects it may have, has now become final. It
cannot now be revisited and set aside at the instance of a
non-councillor for that
matter.
[57] Time after time our
courts have held that an applicant who seeks an order which nullifies
any decision of a regulatory organ
or any other body, necessarily has
to allege and prove that she or he was prejudiced by the alleged
irregularity. See for instance
the following cases:
JOCKEY
CLUB SA & OTHERS v FELDMAN
1942 (AD) 340 on 359;
ROBERTS
v CHAIRMAN LOCAL ROAD TRANSPORTATION BOARD AND ANOTHER(1)
1980 (2) SA 472
(CPD) at 477D- E and 479H;
RAJAH & RAJAH
(PTY) LTD & OTHERS v VENTERSDORP MUNICIPALITY & OTHERS
1961 (4) SA 402
(AD) at 407E – 408A;
GROVE PRIMARY SCHOOL v
MINISTER OF EDUCATION & OTHERS
1997 (4) SA 982
(CPD) at
996G -997I.
[58] In
this case, even if there had been an irregularity, there is virtually
no averment made to the effect that the applicant was
prejudiced by
the alleged irregularity which, as the applicant contended before me
stemmed from the council decision to discuss item
SA10/2006 in
camera. Certainly it was not the applicant’s contention that had
the item been discussed in an open council meeting
or put more
appropriately, that had the doors of the council chamber remained
open when the particular item was discussed, the council
would not
have passed the resolution complained of. I fail to see in what way
the presence of the members of the public could possibly
have
deterred the council from resolving the matter as it did.
[59] On the contrary, the
respondents have shown that certain specified employees of the 1
st
respondent would have been severely prejudiced if the council had
proceeded to discuss the sensitive matter with the doors of its
chamber still open and in the presence of the members of the public.
Moreover, it was not contended that the applicant’s deponent
or any
of its directors was physically present in the council chamber among
the members of the public before the public was evacuated
and the
doors closed. The applicant has therefor failed to show that the in
camera proceedings caused him to suffer any prejudice
which he
otherwise would not have suffered.
[60] It seems to me that,
for the sake of all concerned, including the respondents themselves
as well as the applicant itself, the
matter was conveniently and
advantageously discussed in camera.
COTTRELL v CAPE TOWN
COUNCIL
18 SC 296
as discussed by Dönges & Van Winsen:
Municipal Law, 2
nd
Ediction.
In my opinion the second ground of the challenge
must fail.
[61] The submission by
the council of the applicant that the respondents were attempting to
rely on Standard Rules and Orders which
they alleged had not been
adopted and which they, therefor contended were not binding appears
to be based on an incorrect premise.
The correct contention of the
respondent was not that the rules were not binding because the 1
st
respondent had never adopted them. The crux of their averment was
that the applicant did not aver in the founding affidavit that
the
1
st
respondent’s municipal council had adopted the
rules. In the absence of such a necessary averment it could not be
said that the
rules were therefor binding.
[62] In the light of the
above, council for the respondents contended that no case had been
made out in the founding affidavit that
these Standard Rules and
Orders had been adopted by the 1
st
respondent. Therefor,
he submitted that the applicant was not entitled to rely on the rules
it has not averred to have been adopted
by and binding on the 1
st
respondent. Be that as it may, I considered the substance of the
dispute and ignored the technical but valid objection raised by
the
respondents. The second ground of invalidity raised by the applicant
can therefor not be upheld. The respondents did not violate
the said
rules or the sections by debating the particular item in camera.
[63] In the third place
the applicant contended that resolution SA10/2006 was invalid on the
grounds that the municipal council of
the 1
st
respondent
without first hearing its version unilaterally adopted the resolution
in violation of the basic rule of natural justice.
Here the
applicant was particularly aggrieved by the segment of the resolution
which not only cancelled the agreement but also suspended
further
payments of money to the applicant by the first respondent. The
third ground of the attack of invalidity will now be examined.
[64] The parties were
bound to each other by a written agreement in terms of which they
performed their respective contractual obligations
until the 12 May
2006. The 1
st
respondent resolved on that day to
summarily ended the agreement with immediate effect and withhold
further payment to the applicant
of any money whatsoever pending the
final outcome of an investigation. Mr. Van Rhyn submitted that in
the circumstances of this
case the respondents should have afforded
the applicant an opportunity to state its case prior to adopting such
a drastic resolution.
[65] In support of his
submission council cited the following decided cases:
ADMINISTRATOR,
NATAL, AND ANOTHER v SIBIYA AND ANOTHER
[1992] ZASCA 115
;
1992 (4) SA 532
(AD),
LANGENI AND OTHERS v MINISTER OF HEALTH AND WELFARE AND OTHERS
1988 (4) SA 93
(WLD),
MYBURGH v DANIëLSKUIL MUNISIPALITEIT
1985 (3) SA 335
(NCD),
MINISTER OF HEALTH, KWAZULU, AND
ANOTHER v NTOZAKHE AND OTHERS
[1992] ZASCA 209
;
1993 (1) SA 442
(AD),
GRAND
MINES (PTY) LTD v GIDDEY NO
[1998] ZASCA 99
;
1999 (1) SA 960
(SCA),
TOERIEN
EN ‘N ANDER v DE VILLIERS NO EN ‘N ANDER
1995 (2) SA 879
(CPD),
SLAGMENT (PTY) LTD v BUILDING, CONSTRUCTION AND ALLIED
WORKERS’ UNION AND OTHERS
1995 (1) SA 742
(AD),
NTSHOTSHO
v UMTATA MUNICIPALITY
1998 (3) SA 102
(Transkei),
MINISTER OF SAFETY AND SECURITY AND ANOTHER v NOMBUNGU AND
OTHERS
2004 (4) SA 392
(Transkei High Court).
[66] In none of the cases
cited above could I find any authoritative support for the contention
of the applicant that because the
respondents did not observe the
audi alteram partem
rule before terminating the agreement, the
respondent’s decision must be set aside. With one exception only
namely
GRAND MINES v GIDDEY NO
supra
the rest
are characterised by one common feature. The feature is that the
relationship between the parties was based on the unequal
terrain of
employment. The instant case is distinguishable on that score.
[67] Mr. Danzfuss, on the
other hand submitted that the rule of natural justice
audi alteram
partem
rule did not apply in the instant case where the aggrieved
party complains of a unilateral termination of a civil agreement
where,
as in the instant case, the parties had contracted on an equal
footing and the decision did not entail the exercise of public power.
I am in respectful agreement. The law tells us that only
administrative actions must be procedurally fair.
[68] As
regards the procedural fairness of an administrative action, section
3, Promotion of Administrative Justice Act No. 3/2000
provides:
“
3. Procedurally
fair administrative action affecting any person
(1) Administrative action which
materially and adversely affects the rights or legitimate
expectations of any person must be procedurally
fair.
(2)
(a) A fair administrative procedure depends on the circumstances of
each case.”
The question therefor
arises whether the termination of the agreement by the 1
st
respondent without first affording the applicant opportunity to give
its reasons why the agreement should not be terminated was an
administrative action as section 3
supra
envisages.
[69] In the case of
CAPE
METROPOLITAN COUNCIL v METRO INSPECTION SERVICES (WESTERN CAPE) CC
AND OTHERS
2001 (3) SA 1013
(SCA) the court grappled with
section 33, 1996 RSA Constitution which provides that everyone has
the right to an administrative action
which is lawful, reasonable and
procedurally fair. At 1023B the court observes:
“
The
section is not concerned with every act of administration performed
by an organ of State. It is designed to control the conduct
of the
public administration when it performs an act of public
administration ie when it exercises public power...”
[70] At 1023H the
court
further observes:
“
The
appellant is a public authority and, although it derived its power to
enter into the contract with the first respondent from statute,
it
derived its power
to
cancel the contract
from the terms of the contract and the common law. Those terms were
not prescribed by statute and could not be dictated by the appellant
by virtue of its position as a public authority. They were agreed to
by the first respondent, a very substantial commercial undertaking.
The appellant, when it concluded the contract, was therefore not
acting from a position of superiority or authority by virtue of
its
being a public authority and, in respect of the cancellation, did
not, by virtue of its being a public authority, find itself
in a
stronger position than the position it would have been in had it been
a private institution. When it purported to cancel the
contract it
was not performing a public duty or implementing legislation; it was
purporting to exercise a contractual right founded
on the consensus
of the parties in respect of a commercial contract. In all these
circumstances it cannot be said that the appellant
was exercising a
public power.”
[71] I hasten to point
out that in its judgment the Cape High Court in the above case had
earlier ruled in favour of the said close
corporation but on appeal
to the SCA the finding of the court
a quo
was overruled.
In
casu
none of
the parties contended that the cancellation was based on any
particular statutory authorisation. In the case of
CAPE
METROPOLITAN COUNCIL
supra
, at 1025C the court
stressed that the cancellation had its
fons et origio
in the
contract law domain and not in the public law domain. The learned
judge decided:
“
It
purported to cancel the contract, not on the ground of being
satisfied of the existence of any of the circumstances referred to
in
reg 22, but on the ground that substantial fraudulent claims had
actually been submitted and that such
fraudulent
claims
constituted a material breach of contract entitling the appellant to
cancel in terms of the law of contract.”
[72] For the reasons
advanced above I have come to the conclusion that the termination of
the agreement was not an administrative
action. It follows therefor
that it was not open to the applicant to contend that the 1
st
respondent’s termination of the contract which gave rise to the
withholding of the money was invalid on account of the perceived
lack
of procedural fairness. That being the case, I have come to the
conclusion that the natural rule of justice, the
audi alteram
partem
rule does not come into play.
[73] Now that all the
three grounds on which the applicant relied in support of its prayer
for the review and nullification of resolution
SA10/2006 have fallen
by the wayside, the resolution has to remain as a valid decision of
the municipal council of the 1
st
respondent. This then
disposes of the first issue. On review the applicant is not entitled
to such a relief.
* [74] Next I
proceed to deal with prayer two of the notice of motion. Here the
relief sought by the applicant is that the respondents
be directed to
provide the applicant with a copy of the forensic report. The
presentation of such report precipitated the termination
of the
agreement. It stands to reason therefor, that the real source of the
pain is the sudden severing of the commercial ties which
started on
the 20
th
May 2005. The deal was evidenced by three
important documents, which I shall discuss later in connection with
the third relief.
[75] It is undisputed
that on the 12
th
May 2006 the municipal council of the 1
st
respondent held a special meeting at which a forensic audit report
was presented and discussed. The minutes of the meeting were
recorded, as reflected in annexure “mm4” to the founding
affidavit. The forensic audit report painted an unfavourable picture
as regards to the applicant’s business dealings with the 1
st
respondent. The municipal council of the 1
st
respondent
after listening to Mr. Gerber and after debating the report resolved
to terminate the agreement for the maintenance of
the street lights
in the 1
st
respondent’s operational area.
[76] Pursuant to the
adoption of resolution SA10/2006 the 2
nd
respondent
executed the resolution of the 1
st
respondent by writing a
letter on the 24
th
May 2006 to inform the applicant of the
1
st
respondent’s intention to terminate the maintenance
agreement within thirty days. Three weeks later on the 14
th
July 2006, to be precise, the applicant initiated these proceedings
to demand a copy of the forensic report which led to the termination
of the contract it had with the 1
st
respondent.
[77] Mr. Van Rhyn
submitted that, in the light of the first three annexures to the
founding affidavit, and specifically the respondent’s
failure to
react to the applicant’s letter, dated the 23
rd
May
2005, the applicant had at least a three year contract with the 1
st
respondent, and that the 1
st
respondent was not entitled
to terminate the said maintenance agreement within one year without
good reason. He then referred me
to the decision of
SEEFF
COMMERCIAL AND INDUSTRIAL PROPERTIES (PTY) LTD v SILBERMAN
2001 (3) SA 952
(SCA) and
McCAIN FROZEN FOODS (PTY) LTD v
BEESTEPAN BOEDERY (PTY) LTD
2003 (3) SA 605
(TPD). In
developing that argument further Mr. Van Rhyn submitted that the
applicant was entitled to have a copy of the forensic
audit report in
question.
[78] The
applicant requested for a copy of the said report in order to satisfy
itself that such a report contained sufficient reasons
to justify the
decision to terminate the agreement. However, the respondents
declined to make the required report available to the
applicant.
[79] Mr. Danzfuss
countered the above argument. He made the submission that the
applicant was precluded from seeking such a relief
from this court on
the ground that the extra-curial remedies had not been exhausted as
section 39(1) Promotion of Access to Information
Act No. 2/2000 read
with section 78 thereof provided. This was obviously the point taken
in limine
.
[80] As a general
proposition a public body such as the 1
st
respondent is
obliged to supply a copy of the required record to the information
seeker. Such a general obligation was re-affirmed
in the recent
decision of
CCII SYSTEMS (PTY) LTD v FAKIE AND OTHERS NNO (OPEN
DEMOCRACY ADVICE CENTRE, AS AMICUS CURIAE)
2003 (2) SA 325
(TPD) at 334G, a case where ODA Centre intervened as
amicus
curiae.
The respondent contended
in limene
that those and
other related legislative provisions have not been complied with. On
the contrary the applicant contended that it
did not comply with
provisions of the said legislation because such legislation was not
applicable to this case.
[81] The
report compiled by Price Waterhouse Cooper constitutes a record as
envisaged and defined in section 1, Promotion of Access
to
Information Act No. 2/2000. This averment by the respondent is not
disputed by the applicant. Section 78 read with section 11(1)(a)
provides that an information seeker whose request for information has
been turned down by the possessor thereof can approached a
court of
law for an order in terms of section 82 only if the procedure
prescribe by the legislative act has been followed and the
internal
remedies have been exhausted.
[82] Section
3, Act No. 2/2000 provides that this statute applies to: (a) a
record of a public body and (b) a private body irrespective
of when
such a record came into existence. The information seeker’s
request has, in terms of section 11(1), to comply with all
the
procedural requirements of this legislation.
The
applicant relied on section 7 for its contention that this particular
legislation does not apply. The section provides:
“
7. Act
not applying to records requested for criminal or civil proceedings
after commencement of proceedings
(1) This Act does not apply to a
record of a public body or a private body if-
(a) that
record is requested for the purpose of criminal or civil proceedings;
(b) so requested after the commence-ment of such
criminal or civil
proceedings, as the case may be; and (c) the production of or access
to that record for the purpose referred to
in paragraph (a) is
provided for in any other law.
(2)
Any record obtained in a manner that contravenes subsection (1) is
not admissible as evidence in the criminal or civil proceedings
referred to in that subsection unless the exclusion of such record by
the court in question would, in its opinion, be detrimental
to the
interests of justice.”
[83] It
seems to me that the section disqualifies a request by an information
seeker whose aim is to use the required information
in connection
with pending legal proceedings if there are other avenues through
which the required recorded information of a public
or a private body
or entity can be accessed. The underlying theme of the section is
that where there are other remedies available
prescribed by any other
legislation such remedial avenues and not those created by this
particular legislation have to be followed
first.
[84] In the case of
RAIL
COMMUTER ACTION GROUP AND OTHERS v TRANSNET LTD t/a METRORAIL AND
OTHERS
(No 1)
2003 (5) SA 518
(C) at 587I the court held per
Davis J
et
Van Heerden J:
“
As
submitted by applicants' counsel, the purpose of s 7 is seemingly to
prevent the Information Act from having any impact on the
law
relating to discovery or compulsion of evidence in civil and criminal
proceedings...”
See also
DAVIS v
CLUTCHCO (PTY) LTD
2004 (1) SA 75
(CPD) at 86C.
[85] The applicant’s
request for the required information was first made on the 29
th
May 2006. Mr. Sizephe, applicant’s attorney, wrote in a letter
which now appears on page 99 of the record:
“
In
the light of the above and in terms of the
Promotion
of Access to Information Act, No. 2 of 2000
our instructions are to demand from you, as we hereby do, copies of
the
Price
Waterhouse Cooper
report, ...”
[86] About
two weeks later, Mr. Mayekiso, the applicant’s chief executive
officer, stated, in paragraph 11.2 of the founding affidavit,
the
reason why the applicant required the said report:
“
So
it is imperative that the Applicant be furnished with the copy of the
said report as the Applicant cannot enforce any of its rights
or
exercise any remedy (in) the situation without knowing the contents
of the said report;”
[87] In
is therefor crystally clear that it is indeed the applicant’s case
that it requires the information contained in the report
for the
purpose of enforcing its rights. The applicant makes it quite clear
from the outset not only that it required the report
for the purpose
of asserting its rights by way of civil proceedings but, and this is
very important, also that its request to access
the information
contained in the report emanated from this particularly legislative
act. There can be no shadow of doubt, that the
applicant’s request
is governed by the legislation we are here dealing with.
[88]
Section
39(1)(b)
empowers the information officer of a public organ to refuse
access to a record in certain circumstances. But even before such
officer
can consider such request the prescribed procedure must have
been complied with by the information seeker. Of vital importance is
the procedural requirement that a prescribed minimum period of 30
days has to be allowed for the consideration of the report by the
information officer of the public body or private body concerned. It
was never done in this case. The prescribed moratorium necessary
for
the consideration of the request was not observed by the applicant.
It was violated. Certain things are sacrosanct in law.
This period
is one of them.
[89] However, generous I
may want to be to the applicant as regards the procedural defects of
its request, I find myself unable to
ignore such a serious procedural
violation of the 1
st
respondent’s right. As already
pointed out the applicant’s request was made on the 29
th
May 2006, these proceedings were initiated fifteen days later, on the
14
th
June 2006, to be precise. Therefor the applicant
violated the respondent’s rights as protected by
section 25.
[90] It follows therefor
that since no compliant and valid request has ever been made for the
required record, it cannot be argued
that the 1
st
respondent has refused to furnish the applicant with a copy of the
report in question. Since no valid request was ever delivered
to the
information officer of the 1
st
respondent, such
information officer was, accordingly, not at all called upon to make
a decision whether to refuse or to accede to
any request. It is a
simple matter of logic.
[91] In view of the
aforegoing conclusion it becomes academic to consider the vigorous
argument pertaining to the question of whether
any unit of the South
African Police has been place in possession of the said forensic
report for the purpose of investigating criminal
charges against the
directors of the applicant. The heated debate before me sparked off
by two irreconcilable exhibits: exhibit
“A” dated the 23
rd
August 2006 by Advocate M.P. Mdlana on behalf of the National
Prosecuting Authority was handed in by counsel for the applicant on
the one hand whereas exhibit “AA” dated the 22
nd
August 2006 by Detective Inspector E. Crous on behalf of Welkom
Police was handed in by the counsel for the respondents.
[92] The former wrote in
a
letter
that no such forensic report by Price Waterhouse
Cooper had been handed to the National Prosecuting Authority after
12
th
May 2006 and that there was no investigation against
the applicant by any unit of the South African Police. The latter
averred in
an
affidavit
that the South African Police Service
was in possession of the forensic report by Price Waterhouse Cooper
and that such a forensic
report formed part of the investigation
against the applicant which started during the year 2005, under the
police reference Welkom
Cas 93.04.2005.
The letter was exhibited
in an attempt to show that there was no good cause for the
refusal
by the 1
st
respondent to give the applicant access to
the record. The affidavit was exhibited for the contrary purpose.
On the facts as examined
and digested the issue is premature and does
not arise. It is a secondary issue. It can only arise provided the
primary issue has
been established. Seeing that the applicant has
been failed to jump over the first hurdle, the valid request, the
primary issue,
this is where the train has to stop. We cannot
proceed any further. The secondary issue falls away. We are not
there yet. We
cannot proceed to that bridge as yet. For now the
argument about the particular point is premature, fruitless and
academic. It
does not arise. It follows therefor that the
respondent’s preliminary point
in limine
was well taken.
This then disposes of the second prayer sought by the applicant. The
applicant is not entitled to the second relief.
I would therefor
dismiss this particular leg of the motion.
* [93] I turn now
to the third relief sought which is prayer 3 of the notice of motion.
In the final analysis I am called
upon to consider whether or not
the 1
st
respondent was entitled to terminate the agreement
as he did and withhold payment due to the applicant. To do so it is
necessary
to take a closer look at annexure “mm3”. It is the
applicant’s case that the agreed duration of the agreement is three
years
and that this documentary evidence supports the applicant’s
contention. However, the respondent’s case is that the agreed
duration
of the agreement was a month to month period and that
annexure “mm3” does not support the applicant’s contention.
[94] The version of the
applicant was that during March 2005 the 1
st
respondent
invited tenders for the street lights maintenance. The closing date
for the submission of the tenders was the 5
th
April 2005.
The applicant tendered and submitted its tender, annexure “mm1”,
on the 5
th
April 2005. On the 20
th
May 2005
the 1
st
respondent informed the applicant by way of a
letter, annexure “mm2”, that it had awarded the tender to the
applicant. The applicant
states that it accepted the awarding of the
tender, annexure “mm3”, a letter dated the 23
rd
May
2005. Since the respondents did not react to the letter, such
failure, justified an inference that the respondent accepted the
applicant’s assertion that the duration of the agreement was indeed
three years as stipulated in clause 3.18 of the tender documents,
annexure “mm1”.
[95] The version of the
respondents was that last year it identified certain service
providers and invited them to submit quotations
for streetlight
maintenance. The electric service providers so approached and
invited were provided with documentation containing
conditions and
schedules applicable to the quotation for completion. The
documentation appended to the founding affidavit as annexure
“mm1”
was an incomplete part of the quotation documentation which the
respondents had handed to the applicant. The applicant
submitted its
quotation on the 5
th
April 2005. The applicant’s
documentation, annexure “mm1”, was incomplete because it did not
contain the first page of the
quotation documentation the respondent
had originally handed to the applicant. The respondent averred that
a document appended to
the opposing affidavit as annexure “o2”
was a true replica of the missing first page of the quotation
documentation.
[96] The 1
st
respondent’s operational domain was divided into four areas. The
applicant had been awarded the quotations in respect of all the
four
domains. However, the applicant’s quotation documentation in
respect of Virginia domain could not be found. Every set of
the
bundle of quotation documentation given to each interested
prospective service provider had a cover-sheet prefixed to it. In
the case of the applicant the cover sheets were annexure “03.1”
in respect of Allanridge/Odendaalrus domain, annexure “03.2”
in
respect Ventersburg/ Hennenman domain and annexure “03.3” in
respect of Welkom domain. The cover-sheets formed part of the
standard quotation documentation completed by all the prospective
service providers. Such a cover-sheet qualified the various
documents
customarily used for the purpose of an ordinary tendering
process.
[97] The applicant was
awarded a quotation on the 20
th
May 2005 as set out in
annexure “mm2”. The respondent’s annexure “mm2” was a
response to the applicant’s quotation,
annexure “mm1”. The
time period of the agreement was limited to a month to month
arrangement or work allocation according to
annexure “mm2”. The
quotation allocation process was a temporary relief. It was resorted
to because the tender allocation process
was retarded by several
complicating factors. The applicant’s letter, annexure “mm3”,
never came to the attention of the respondents.
Therefor the
respondents denied the applicant’s contention that the contract
period was 3 years. This then completes the version
of the
respondents.
[98] In a case where
there are no armed combatants on the battle field, but the battle is
fought by the firing of long range combat
missiles across the battle
lines into the enemy camp, the conflict between the warring forces
has to be adjudicated and resolved
on the facts as averred by the
defensive combatant and not the offensive combatant. Vide
PLASCON-EVANS
infra
.
[99] The respondents
contend that the standard quotation documentation the 1
st
respondent supplied to the applicant and indeed to all the
prospective service providers was endorsed as follows:
“
Please
note: The time period of 3 years mentioned in this document should
be ignored. The correct time period will be put in writing
with the
awarding of this tender.”
See
page 121 of the paginated court record.
[100] The
endorsement was printed on the cover-sheet, not just a loose
insignificant piece of paper, or a covering letter. The cover-sheet
was an important document, a detailed, descriptive and informative
index which systematically catalogued fifteen different types
of
forms. These are the forms which are collectively called tender
documents. It therefor makes sense to me to read that it forms
an
integral part of every tender documentation the respondents
ordinarily uses.
[101] In
the opposing affidavit Mr. Segalo makes a point that the ordinary
tender allocation process was plagued by numerous obstacles
which
retarded the finalisation of that tender process. The retardation
led the respondents to come up with a temporary solution.
This
speedy and interim measure was the extra-ordinary quotation
allocation process. The underlying idea for the short-term quotation
allocation process was never to abandon the long term tender
allocation process, but to render an important service while the
respondents
were still trying at the same time to sort out the
obstacles that were impeding the ordinary tender allocation process.
[102] Apparently
the respondents did not have distinct separate and special documents
specifically designed for the quotation allocation
process they were
embarking upon. So it was that they decided to improvise what they
already had. Documents ordinarily used in
connection with the tender
allocation process. They did this simply by adjusting the
cover-sheet. The first special feature of
the adjusted index was
that all references to the word tender in the traditional tender
allocation documentation supplied to the
prospective service
providers must be read as quotation. The second special feature of
the adjusted index was an endorsement I have
already referred to in
paragraph 78 above.
[103] The
endorsement was written in bold capital letters. It was written in
red. The rest of the index was written in black and
about 80%
thereof was written in small fine print. All these things were
obviously intended to give the endorsement remarkable maximum
and
conspicuous pro-dominance to anyone who cared to read the index. The
endorsement makes it pertinently clear that the three year
period in
clause 3.18 of annexure “mm1” does not apply. This is perfectly
understandable because the documents were intended
for a special
process, the quotation allocation process. The second part of the
endorsement also makes sense. It makes it perfectly
clear that the
respondents reserved unto themselves the exclusive right to determine
the contract period of the quotation allocation
process.
[104] Although poorly
worded and constructed, the endorsement conveys a clear and loud
message that the successful applicant or competitor
in the quotation
allocation process would be informed of the duration of the agreement
in the written quotation award in due course.
Such a quotation award
was made in favour of the applicant on the 20
th
May 2005,
annexure “mm2”. The contract period, the respondent’s
quotation award stipulates, is a month to month agreement.
Nothing
can be clearer. This then is the version of the respondents which
the law commands me to accept. And I do.
[105] The
respondents considered annexure “mm1” as amplified in accordance
with their version, to be an offer. I agree with this
contention. I
also agree that it was an offer relating to the invitation for the
submission of the quotation allocation process
and not the tender
allocation process as the applicant contended. The applicant
completed and submitted the quotation allocation
documentation fully
aware of the informative index as well as the important and
strikingly conspicuous red and bold endorsement strategically
printed
high up on the index, the very first page of the bundle of the
quotation allocation documentation. The fact that annexure
“mm1”
consisted of documents drafted by the respondents is of no
consequence. It does not change the legal status of this particular
document. It is an offer by the applicant, the offerer, to the
respondents.
[106] The author Christie
RH:
The Law of Contracts in South Africa
, 4
th
edition, on page 32 writes:
“
A
person is said to make an offer when he puts forward a proposal with
the intention that by its mere acceptance, without more, a
contract
should be formed.”
The respondents reacted
positively to the applicant’s offer. The respondents conveyed the
necessary quotation award to the successful
offeror, the applicant.
Such quotation award as embodied in annexure “mm2” was the
respondent’s acceptance of the offer made
by the applicant.
Therefor the 1
st
respondent became the offeree on the
acceptance of the offer. Christie, still on page 29, goes further to
say:
“
What
distinguishes a true offer from any other proposal or statement is
the express or implied intention to be bound by the offeree’s
acceptance.”
[107] It is my considered
view that annexure “mm1” was the applicant’s firm offer made as
it were, with the serious intention
that it be accepted, and more
importantly that upon its acceptance it would immediately bind the
offeror and the offeree without
something more on the part of the
offeror. Vide
WASMUTH v JACOBS
1987 (3) SA 629
(SWA)
at 633D.
[108] Quite in keeping
with the red endorsement on the first page of the applicant’s
offer, the respondents declared in their acceptance
thereto that they
have decided to fix the contract period and granted the quotation
award on the interim basis of a month to month
rendering of
maintenance services. To me this is also perfectly understandable.
The respondents were still hard at work to remove
the obstacles that
bogged down the tender allocation process, with is a long term
process of at least three years. The acceptance
of the offer by the
offeree for this short term arrangement was duly communicated to the
offeror. See annexure “mm2” dated the
20
th
May 2005.
The applicant acknowledged receipt. See annexure “mm3” dated the
23
rd
May 2006. Once that written acceptance of the offer
was communicated to the applicant by the respondent a valid short
term agreement
was concluded between the parties.
[109] The applicant had
it all wrong. On numerous occasions in the founding affidavit, the
applicant’s deponent repeatedly used
the word
tender
instead
of
quotation
. In paragraph 7.2 he stated:
“
The
applicant
accepted
the awarding of the said
tender
as per its letter to the 1
st
respondent dated the 23
rd
May 2005.”
[110] We know now that
the letter referred to was annexure “mm3”, that the alleged
tender was in actual fact the quotation, annexure
“mm1” in other
words the
offer
and that the alleged tender award was in
actual fact the quotation award, annexure “mm2” or better still
the
acceptance
of the offer. The above quotation or passage
extracted from the founding affidavit aptly demonstrates the
applicant’s misconceptions.
The applicant labours under the wrong
perception that annexure “mm2” was an offer by the respondent and
that annexure “mm3”
was the applicant’s counter offer. The
correct legal position is that the respondent had communicated
annexure “mm2”, that
is the offer acceptance, to the applicant.
There was nothing for the applicant as the offeror to accept after
the acceptance of
the offer was communicated to it. The accepting
business was the offeree’s business and not the offeror’s. That
is the basic
principle of the law of contract. By the 23
rd
May 2005 when the applicant purported to accept annexure “mm2” as
an offer and subsequently purported to make a counter offer,
through
annexure “mm3” there was no offer for him to accept. In law the
counter offer can only emanate from the offeree and
not the offeror.
SEEFF COMMERCIAL AND INDUSTRIAL PROPERTIES (PTY) LTD v
SILBERMAN
2001 (3) SA 952
(SCA).
[111] In
the instant case the letter annexure “mm3” by the applicant can
never be construed as a counter offer. It contains no
indication
whatsoever that a counter offer is made which is open for acceptance.
Instead it claims that the portion of the respondent’s
letter,
annexure “mm2”, in other words the respondent’s acceptance of
the offer is incorrect and that it contradicted clause
3.18 of
annexure “mm1”. But the same annexure “mm3” states that now
that the respondents have accepted the tender quotation
“mm1” by
means of annexure “mm2” “... binding contract between us” has
thereby been constituted. See page 85 of the
paginated record. At
best for the applicant annexure “mm3” was an acknowledgement of
annexure “mm2” which had already sealed
a valid and a binding
contract three days before “mm3” was penned down.
[112] In
any case the respondents averred that none of its functionaries was
authorised to accept annexure “mm3”. This is common
cause since
the applicant did not dispute it. But even if the respondents did
receive annexure “mm3” which allegation they deny,
their failure
to repudiate it, can never be construed as acquiescence because there
was simply no counter offer and there could not
have been one in the
circumstances.
[113] Above
all these reasons, the applicant’s offer annexure “mm2” itself
devastatingly militates against the applicant’s
own contention that
annexure “mm3” was a counter offer. It states:
“
This
tender (quotation) together with you(r) written acceptance thereof
shall constitute a binding contract between us.”
Vide page 17 annexure
“mm1” on page 58 of the record. As I have already pointed out
annexure “mm3” also correctly echoed
these same sentiments.
[114] The
quotation allocation documentation, annexure “mm1” considered as
it must together with annexure “03.1”, “03.2”
and “03.3”
which appear on page 163 to 165 of the record constituted an offer by
the applicant which contained nor fixed contract
period for the
contemplated agreement. It gave the respondents the latitude to
determine such a period and to advise the winner
accordingly when
awarding the quotation. For these reasons I am of the view that it
was within the province of the respondent’s
contractual rights to
cancel the agreement on 30 day notice as they did. This has a
bearing on the last relief sought by the applicant.
[115] Now, I am nearing
the end of the third issue - the final relief sought in terms of
prayer 3 of the notice of motion. In this
relief the applicant seeks
that the respondents be ordered to pay to the applicant all moneys
owed due and payable to the applicant
by the 3
rd
respondent. Its contention is that the respondents are wrongfully
withholding payments thereof. Such withholding, so argued counsel
for the applicant, was based on an invalid resolution. On behalf of
the respondents it was contended that there was nothing wrongful
about the withholding of payment because, as counsel for the
respondents argued, the withholding was based on a valid resolution
which was justified in the circumstances.
[116] I
have already found that the resolution, which was challenged by the
applicant, was perfectly sound and that no grounds existed
to have it
nullified. Notwithstanding such finding I shall for the purpose of
this leg of the notice of motion consider the relief
sought as a
separate and independent leg of the notice of motion.
[117] I point out that
the applicant did not ask that the first respondent be directed to
pay a specific amount. In its founding
affidavit the applicant
merely alleged that the 1
st
respondent was indebted to the
applicant in the amount of approximately R300 000,00. In the
opposing affidavit it was alleged that
the 1
st
respondent
owed nothing to the applicant and that, in fact, the converse was
true.
[118] It is therefor
clear and obvious that a real factual dispute exists as to really who
owes who and precisely what. I am of the
opinion that in the light
of the above allegations of facts, a genuine dispute on facts cannot
be resolved on the papers as they
stand. There is a need for oral
evidence to ventilate the alleged facts. In a case such as this,
where a genuine factual dispute
exists, the court has to decide the
matter in accordance with the version of the respondent.
PLASCON-EVANS (PTY) LTD v VAN RIEBEECK PAINTS (PTY) LTD
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) on 634.
[119] Applying this
principle to the allegations of fact at hand, I am moved to say, even
if I should accept as true, the applicant’s
version, namely that an
amount of approximately R300 000,00 is owed, due and payable to the
applicant by the first respondent, I
am nevertheless unable to
dismiss outright the respondents’ version as farfetched and false.
The first respondent’s version
that an amount of over R422 000,00
is owed by the applicant to the 1
st
respondent appears
plausible. This finding does not in any way suggest that I accept
the veracity of the 1
st
respondent’s version, far from
it. It simply means that, the respondents have, at least made out an
arguable case – a
prima facie
case, to use a common legal
lingo.
[120] In the replying
affidavit the applicant states that it will produce documentary
evidence in support of the amount owing by the
respondents to the
applicant by means of invoices and reminders addressed to the 1
st
respondent. Implicit in this averment is the inevitable conclusion
that the applicant concedes on its own version that it still
has to
quantify its claim-something it has not done on the founding
affidavit or indeed in any of the two subsequent affidavits.
This
averment strengthens the contention that the applicant should have
enforced its claim against the respondent by way of action
proceedings and not motion proceedings as has been done. It is
highly undesirable to adjudicate the merits by way of motion
proceedings
and the quantum by way of action proceedings. This is
precisely what the applicants are urging me to do. Even if I were
to dismiss
the version of the respondents as a farfetched and a
frivolous ploy with no substance and accept the version of the
applicant, still
this matter cannot be finalised before me. On the
applicant’s own say-so its claim of the money owed due and payable
to it has
not been accurately quantified.
[121] Besides the
aforegoing considerations, there is no averment in all the affidavits
filed on behalf of the applicant that prior
notice of the applicant’s
intention to institute these legal proceedings against the 1
st
respondent was ever given in terms of
section 3
, Act No. 40/2002.
The section must be read in conjunction with
section 5(2)
,
“Institution of Legal Proceedings against Certain Organs of the
State Act”. The former section provides that a prescribed minimum
period of 30 days calculated from the date on which the requisite
notice was served has to be allowed before legal proceedings are
instituted against an organ of the state. None of these peremptory
legislative provisions were complied with. This was a fatal
procedural defect. I could have dealt with this point
in limine
right from the onset. It would have completely wiped the applicant’s
entire case off at great expense. For the sake of the applicant,
I
decided to put it aside and to deal with the merits once and for all.
[122] In the
circumstances I have come to the conclusion that the relief sought by
the applicant cannot be granted. There is a clear
dispute of fact.
The dispute was foreseeable. The applicant took a calculated risk in
trying to enforce the disputed payment by
way of motion proceedings
instead of action proceedings. Besides, the point
in limine
referred to in the aforegoing paragraph, in fact spelled the end of
the matter without further ado. I would therefor dismiss this
claim
for payment which is the third leg of the notice of motion.
[123] The respondents
have been successful. Therefor they are entitled to the costs,
including the costs of previous postponement
unless it was otherwise
agreed
inter partes.
In my opinion the facts do not justify a
punitive order of costs on the scale between attorney and client as
was contended for by
Mr. Danzfuss. The two counsels were
ad idem
that the complexity of the matter justified the employment of two
counsels. Indeed each one of them was assisted by a junior. In
turn
each of them acknowledged that the victorious party should be
entitled to costs occasioned by the employment of two counsels.
This
is how I also see the matter.
[124] Accordingly
I make the following order:
124.1 As regards the
first prayer for the review and setting aside of resolution SA10/2006
the application is dismissed with costs.
124.2 As
regards the second prayer for a copy of the forensic auditing report
by Price Water and Cooper the application is dismissed
with costs.
124.3 As
regards prayer three for payment of certain money due to the
applicant in terms of the relevant agreement the application
is
dismissed with costs.
124.4 The
applicant shall pay such costs as on the scale between party and
party.
124.5 The
costs shall include those that were occasioned by the employment of
two counsels.
______________
M.H. RAMPAI, J
On
behalf of the applicant: Adv. A. J. R. van Rhyn SC
with
him
Adv.
P. D. P. Greyling
Instructed
by:
Sizephe
Attorneys
WELKOM
On
behalf of the respondents: Adv. F. W. A. Danzfuss SC
with
him
Adv.
M. D. J. Steenkamp
Instructed
by:
Moroka Attorneys
BLOEMFONTEIN
/em