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[2024] ZAMPMBHC 36
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Enza Construction (Pty) Ltd v Mpumalanga Economic Growth Agency and Others (5257/2022) [2024] ZAMPMBHC 36 (30 May 2024)
HIGH
COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA (MAIN SEAT)
Case No.: 5257/2022
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED
DATE:
30 May 2024
SIGNATURE
In
the matter between:
ENZA
CONSTRUCTION (PTY) LTD
Applicant
and
MPUMALANGA
ECONOMIC GROWTH AGENCY
First
Respondent
MPUMALANGA DEPARTMENT
OF PUBLIC
WORKS,
ROADS AND TRANSPORT
Second
Defendant
MPUMALANGA DEPARTMENT
OF ECONOMIC
DEVELOPMENT
AND TOURISM
Third
Respondent
This judgment was handed
down electronically by circulation to the parties and/or parties’
representatives by email. The date
and time for hand-down is deemed
to be
30 May 2024 at 10:00.
JUDGMENT
BHENGU
AJ
[1]
This is an interlocutory application for separation of issues in
terms of Rule 33(4) of
the Uniform Rules. The applicant seeks
judgment against the respondents on the basis of the admissions made
by the defendants in
their joint plea. The application is only
opposed by the second respondent.
[2]
In response to the interlocutory application, the second respondent
(second defendant) brought
a counter application where it sought to
distance itself from the joint plea that was filed by the office of
the State Attorney
on behalf of all defendants. The second defendant
seeks leave to withdraw admissions made in the joint plea filed and
leave to
file its amended plea. The counter application is opposed by
the applicant.
[3]
Both parties have agreed to the separation
of issues.
[4]
The preliminary issue before this Court is
to determine whether or not the amendment sought by the second
respondent should be granted;
and
[5]
Whether the applicant has made out a case for
default judgment in view of the counter application to amend.
Parties
[6]
The applicant in the interlocutory application is
the plaintiff in the main action and is the respondent in the counter
application.
[7]
The second respondent in the interlocutory
application is the second defendant in the main action and is the
applicant in the counter
application.
[8]
I will refer to the parties as they are cited in
the main action.
Background
facts
[9]
The
dispute between the parties has its genesis from a building contract
entered into between the plaintiff and the first defendant
on 01
April 2019 for the construction of the Mpumalanga International Fresh
Produce Market (“the contract”)
[1]
.
The terms of the contract are common cause between the parties, and I
need not restate them.
[10]
The second
defendant was initially not a party to the contract. In an agreement
of cession
[2]
entered into
between the parties and the Memorandum of Agreement between the
defendants
[3]
, the first
defendant ceded and assigned all its
rights,
titles, interest, responsibilities, liabilities, and obligations in
terms of the main agreement (Construction of New Mpumalanga
International Fresh Produce Market) to the second defendant.
[11]
On
the 24 November 2022 the plaintiff issued summons against the
defendants where the plaintiff sought, inter alia, an extension
of
time for the Practical Completion of the Works, payment of expenses
and losses occasioned by delay in the Practical Completion
of the
Works and associated preliminary costs.
[12]
In response to the plaintiff’s
particulars of claim the defendants, duly represented by the office
of the State Attorney filed
a joint plea on 26 April 2023. The joint
plea raised two special pleas for non-compliance with section 3(1)(a)
of the Institution
of Legal Proceedings against Certain Organs of
State Act 40 of 2002 and non-compliance with the provisions of
section 2
of the
State Liability Act 20 of 1957
, read with sections 3
and 5 of the Act.
[13]
In its joint plea the defendants admitted
the contents of the particulars of claim dealing with the description
of the parties and
the jurisdiction of the court. The defendants
pleaded as follows to the balance of the allegations in the
particulars of claim:-
“
AD
Paragraph 7 – 148 and sub-paragraphs thereof
The
defendant’s note the contents of the allegations herein and can
therefore not admit nor deny them”.
[4]
The
Legal Framework
[14]
The law
relating to amendments is settled as stated in the Constitutional
Court Judgment of Affordable Medicines Trust and Others
[5]
.
“
amendments will
always be allowed unless the amendment is mala fide (made in bad
faith) or unless the amendment will cause an injustice
to the other
side which cannot be cured by an appropriate order for costs, or
“unless the parties cannot be put back for
the purposes of
justice in the same position as they were when the pleading which it
is sought to amend was filed.”
[15]
Harms
[6]
provides as follows regarding withdrawal of an admission in a plea:-
“
the admission
in a plea cannot be withdrawn or otherwise amended by an ordinary
notice of intention to amend (or notice of amendment):
a substantive
application to court is required. It must be shown that the admission
was made in error and that the plaintiff would
not suffer material
prejudice if the amendment were granted.”
Analysis
[16] In
determining whether or not to grant the withdrawal of the admissions
sought by the second respondent and
the proposed amendment to its
plea, the Court has to consider the circumstances that led to those
admissions being made and the
reasons put forward for the withdrawal
and amendment.
[17] In
an affidavit deposed to by Mr Gustav Ludwick, a Director: Legal
Services in the employ of the second defendant,
the following is
stated as circumstances that led to the admissions and reasons for
the amendment:-
“
The department
instructed the state attorney to enter an appearance on its behalf,
and further to appoint counsel to consult and
prepare a plea. Shortly
thereafter, the attorney to whom the matter was allocated to handle
transferred from the Office of the
State Attorney in Nelspruit to the
State Attorney in Polokwane. He, however, had failed to appoint
counsel and nothing further
was done at the time.
“
The absence of
an appointed and dedicated counsel to the matter severely prejudiced
the opposition of the action and when ENZA served
a notice of Bar to
file a plea, attorney Mdluli in the Office of the State Attorney
Nelspruit prepared and filed the plea on 26
April 2023. That plea was
drafted without consultation with the department…The purported
admissions should never have been
made, instead attorney Mdluli
should have taken proper instructions from the department…should
have prepared a proper plea’’.
[18]
The plaintiff’s counsel argued that the amendment does not
comply with the provisions of Rule 28(4)
in that it seeks to withdraw
previously made admissions and replace them with bare denials. He
submitted that should the court
allow the amendment; it will result
in a plea that is excipiable. He further argued that the amended plea
admits the material allegations
of fact contained in the particulars
of claim. In the result, there is no issue for trial. He asked the
Court to adjudicate on
both special pleas and grant judgment in
favour of the plaintiff on the strength of the defendant’s plea
which disclosed
no defence. He contended that the Second defendant
failed to provide reasonable explanations for the withdrawal.
[19]
On looking at the joint plea in question, Mr Mdluli, the State
Attorney failed to respond to 141 averments
in the particulars of
claim. It is clear that the joint plea did not comply with the
requirements of Rule 22 which states as follows:-
“
The defendant
shall in his plea either admit or deny or confess and avoid all the
material facts alleged in the combined summons
or declaration or
state which of the said facts are not admitted and to what extent and
shall clearly and concisely state all material
facts upon which he
relies”.
[20] I
agree that the joint plea failed to put forward any defence to the
plaintiff’s claim and amounted
to an admission of the
plaintiff’s claim with a value in the region of one hundred
million rands. The second defendant contended
that if the amendment
is refused it will suffer prejudice of having to proceed to trial
without presenting a proper case before
the court. Regarding
prejudice to the plaintiff, the second respondent contended that no
prejudice will be suffered by the plaintiff,
in that, the plaintiff
will still be entitled to judgment if the matter proceeds to trial
and the court find in its favour.
[21]
Having regard to the explanations given by the second defendant that
the State Attorney drafted the joint
plea without taking
instructions, I am persuaded that the error that the second defendant
seeks to correct is not with malice.
[22]
On the
question whether the amendment would result in a plea that is
excipiable for failure to disclose defence, the plaintiff’s
counsel referred this Court to a principle that was enunciated in
Trans-Drakensberg Bank Ltd
[7]
where the court held that a party who wishes to change or add to its
pleadings must explain the reason and “
show
prima facie that he has something deserving of consideration, a
triable issue”.
[23]
The determination of whether the amended plea raises a triable issue
can only be done having regard to the
averments made in the second
respondent’s amended plea. In answering this question, the
second defendant’s counsel
argued that an admission of a
provision of a contract does not amount to admitting that the
plaintiff is entitled to the relief
sought. He referred to several
paragraphs in the amended plea where the second defendant had
outlined its defence to the plaintiff’s
claim. Of importance is
the fact that with its amended plea, the second defendant raised
three special pleas. The special plea
dealing with non-compliance
with
section 2
of the
State Liability Act, 20 of 1957
have since was
abandoned by the second defendant during argument.
[24] I
must re-iterate that it is not incumbent upon this Court to make a
finding on whether the special pleas
and amended plea will be
successful at trial but to consider them for purposes of whether the
second defendant succeeded in raising
a triable issue that will be
decided at trial.
First
Special Plea - non-compliance with
section 3(1)(a)
of the Institution
of Legal Proceedings against Certain Organs of State Act 40 of 2002
[25]
Both
parties took time to address this Court regarding what constitutes a
“debt” in terms of the Act. Plaintiff contended
the
plaintiff’s claim is for payment arising out of contractual
obligations in terms of a principle building agreement and
therefore
is not a damages claim as contemplated in the Act. He argued
that damages claim for breach of contract are found
in the purview of
common law which is not the case in this matter. He
referred
this court to a decision in Vhembe District Municipality
[8]
where it was found that the provisions of Section 3 of the Act only
apply in a claim for damages against the organ of state.
[26]
Defendant’s counsel conversely contended that this matter is
distinguishable from Vhembe. He referred
to paragraphs 135.4 - 136 of
the plaintiff’s particulars of claim. He
submitted that these paragraphs clearly state that the plaintiff’s
claim is
for damages for loss it suffered as a result of the alleged
delayed instructions and therefore the provisions of the Act did
apply
to the claim. These paragraphs records that: -
“
135.4
the delay events which are depicted in the as-built programme
aforesaid…resulted not only in the plaintiff being entitled
to
an extension of time and additional time related P&G’s, but
also in the plaintiff suffering the expense and loss detailed
hereunder.
136 The plaintiffs
claim for expense and loss consists of two elements, namely:
a claim for the direct
expenses and losses incurred by the plaintiff in consequence of the
employer’s failure to comply with
its contractual obligations
in terms of the payment of certified amounts and the appointment of
necessary subcontractors”.
[27]
Having regard to the case as argued by both parties on this issue, I
noted the following:- The plaintiff’s
claim is for revision of
the date for practical completion of the works and the adjustment of
the contract value. In addition to
this claim, the plaintiff is also
claiming for expenses and losses occasioned by failure of the
principal agent
to timeously issue contract
instructions thereby resulting in a delay in the practical completion
of the works. The third claim
is for payments to the plaintiff of
amounts which had been certified by the principal agent as being due
to the plaintiff.
[28]
While it is clear to me that the plaintiff’s claim for revision
of the date for Practical Completion
of the Work and the claim for
payment of the certified amounts are quantifiable based on the
contact, there is however some doubt
as to whether or not the claim
for losses occasioned by the delay constitutes a claim for damages as
envisaged in the Act. Although
the plaintiff contended that the
adjudication of the special pleas can be separated from the main
action and decided without leading
any evidence, however, I am of the
view that this special plea cannot be conveniently dealt with
separately. I believe that the
trial court will be in a better
position to make such a finding after evidence have been led as to
how the amount claimed by the
plaintiff is computed.
Second
Special Plea – Referral to arbitration
[29]
The special plea avers that: -
“
in paragraph 49
of the Particulars of Claim, the plaintiff alleges that the cession
and assignment of the contract from the first
defendant to the second
defendant took place on 21 June 2022. The revised version of the
cession agreement relied on by the plaintiff
is attached to the
particulars of Claim as annexure POC 9. The cession agreement relied
upon by the plaintiff provides that if
there is a disagreement
between the parties which is not resolved within ten working days of
receipt of the notice of disagreement,
the dispute shall be referred
to adjudication and if either party is dissatisfied with the decision
given by the adjudicator, he
may give notice of dissatisfaction to
the other party, whereafter the dispute shall finally be resolved by
arbitration”.
[30]
The plaintiff argued that the special plea falls to be dismissed on
the basis that the arbitration clause
relied upon by the defendant
was introduced by way of a cession agreement which was signed on 14
March 2023 after the summons were
issued on 24 November 2022. The
plaintiff contended further that the court’s jurisdiction was
admitted in the joint plea.
[31]
While I’m
inclined to agree with the plaintiff in as far as when the revised
session was signed, which is after the summons
were issued, I however
note that there is a dispute between the parties on the status of the
cession agreement dated 21 June 2022
[9]
in as far as it was only signed by the plaintiff and not by the
defendants.
Conclusion
[32]
Having considered the issues placed in dispute by the second
respondent in the amended plea and the reply
by the plaintiff, I am
satisfied that the amended plea does raise triable issues that
require proper ventilation at the trial.
[33]
The Court
stated the following in Nedbank v Haresh
[10]
:-
“
In amendment
applications, the emphasis is on achieving a result that would ensure
proper ventilation of the fundamental issues
between the litigants to
satisfy the interests of justice”.
[34]
Though the plaintiff may be prejudiced by the amendment in that the
plaintiff will not obtain its default
judgment sought and will have
to wait for a trial date, I take note that the matter is still in the
early stages of litigation.
The parties have not yet discovered, and
no evidence has been led by either party. This led me to believe that
the prejudice that
will be suffered by the defendant should the
amendment be refused far outweighs that of the plaintiff. I am of the
view that the
order for costs in the plaintiff’s favour will
recompense the prejudice suffered. I therefore grant the second
respondent
leave to file an amended plea.
Default
judgment against the first and second defendant
[35] It
is common cause that the separation application was only opposed by
the second defendant. The plaintiff’s
counsel contended that
the first and second defendant are still bound by the admissions made
in the joint plea as they have not
been withdrawn as parties, he
asked the court to grant judgment in favour of the plaintiff against
the two defendants. I am not
persuaded with this argument. This
is because in paragraph 3 of the notice of motion for separation the
plaintiff set out
its relief claimed as follows:-
“
The Employer’s
Special Pleas are dismissed, and judgment is granted in favour of the
Applicant…”.
I am of the view that it
will be premature to grant default judgment at this stage as it is
still in dispute who is the “Employer”
between the three
defendants. This finding is made in reference to the two agreements
of cession dated 21 June 2022 and that of
23 March 2023.
[36]
Having granted the second defendant leave to file its amended plea,
it follows that the plaintiff’s
application for default
judgment should fail.
Costs
[37]
The second defendant asked for costs against the plaintiff including
costs of two counsels. He contended
that the plaintiff should have
withdrawn the application for default judgment and not opposed the
application to amend.
[38] I
agree with the plaintiff’s counsel that irrespective of the
decision granting leave to amend, it
is trite that the party seeking
the amendment should bear the costs of the amendment. In this matter
I find that such costs should
include the plaintiff’s costs for
bringing the application for separation and default judgment. It is
common cause that the
joint plea that the second defendant seeks to
amend was filed on 26 April 2023. It took the plaintiff filing the
separation application
for the second defendant to realize that it
should apply for the amendment.
[39] In
the result, I make the following order: -
1.
The plaintiff’s application for default judgment is dismissed.
2.
The second defendant is granted leave file its amended plea.
3.
The second defendant is ordered to pay the plaintiff’s costs
occasioned
by the amendment including costs for the separation
application. Such costs include the costs of two counsels on a party
and party
High Court scale.
JL
BHENGU AJ
ACTING
JUDGE OF HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, (MBOMBELA)
For
the plaintiff:
Adv
KJ Trisk SC
Adv
AC Russell
Instructed
by Paul Friedman & Associates
c/o Christo Smith
Attorney Inc
For the Second
Defendant:
Adv TP Kruger SC
Adv F Storm
Instructed by
Thobela Attorneys
Date of Judgment:
30 May 2024
[1]
Particulars
of claim para 7-9 (Annexure POC 1 Principle Building Agreement)
[2]
Agreement
of cession dated 14-03-2023 (Annexure SD1
[3]
Memorandum of agreement between the defendants dated 11 February
2021 (Annexure POC5)
[4]
Defendants’ plea para 5 – Page 259 of the bundle
[5]
Affordable Medicines Trust and Others v Minister of Health and
Another (CCT27/04)
[2005] ZACC 3
;
2006 (3) SA 247
(CC) para 9
[6]
LTC Harms Amler’s Precedents of Pleadings 9 ed (2018) –
Part A - 4
[7]
Trans-Drakensberg Bank Ltd (under Judicial Management) v Combined
Engineering (Pty) Ltd and Another
1967 (3) SA 632
(D) at 641
[8]
Vhembe District Municipality v Stewarts & Lloyds (397/2013)
[2014] ZASCA para 12
[9]
Agreement
of cession dated 21 June 2022 (Annexure POC 9)
[10]
Nedbank Limited v Haresh (11969/2015) [2022] ZAKZDHC 19 (11 May
2022) para 31