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[2020] ZASCA 55
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City of Tshwane Metropolitan Municipality and Another v Moipone Fleet (Pty) Ltd (57/2019) [2020] ZASCA 55 (27 May 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 57/2019
In
the matter between:
THE
CITY OF TSHWANE
METROPOLITAN
MUNICIPALITY FIRST
APPELLANT
MOEKETSI
EMMANUEL MOSOLA SECOND
APPELLANT
and
MOIPONE FLEET
(PTY)
LTD RESPONDENT
Neutral
citation:
City
of Tshwane Metropolitan Municipality and Another v Moipone Fleet
(Pty) Ltd
(Case
no 57/2019)
[2020] ZASCA 55
(27 May 2020)
Coram:
CACHALIA,
ZONDI and DLODLO JJA and LEDWABA and MABINDLA-BOQWANA AJJA
Heard:
No
oral hearing in terms of
s
19
(a)
of
the
Superior Courts
Act 10 of 2013
.
Delivered:
This
judgment was handed down electronically by circulation to the
parties' representatives by email, publication on the Supreme
Court
of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 10h00 on 27 May 2020.
Summary:
Contempt
of court – alleged contravention not falling within the ambit
of court order –
whether contempt of
court established.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Mokose AJ sitting as court of
first instance):
1
The
appeal succeeds with costs, including costs consequent upon the
employment of two counsel.
2 The order of the court a quo is
set aside and is substituted with the following:
‘
The
application is dismissed with costs, including the costs of two
counsel.’
JUDGMENT
Mabindla-Boqwana
AJA (Cachalia, Zondi and Dlodlo JJA and Ledwaba AJA concurring)
Introduction
[1]
This is an appeal against the judgment and order of Mokose AJ of the
Gauteng Division of the High Court, Pretoria in which she
declared
the first appellant, the City of Tshwane Metropolitan Municipality
(the City) and the second appellant, Dr Moeketsi Emmanuel
Mosola (the
City Manager) to be in contempt of an order granted by Davis AJ
[1]
(the
Davis order) on 29 March 2017. The Davis order had directed the City
to comply with its obligations to procure vehicles under
a Public
Private Partnership Agreement (the PPA) concluded between it and
Moipone Fleet (Pty) Ltd (the respondent in this appeal)
on 24 March
2016. And further interdicted it from concluding an agreement to
procure vehicles from any other service provider pending
the final
determination of the dispute between the parties as to whether the
City had validly cancelled the PPA.
[2]
As a sanction for holding the appellants in contempt of the Davis
order, Mokose AJ imposed a sentence of
six months’ imprisonment on the City Manager, suspended for one
year on condition that there was no further contravention
of that
order.
She
also interdicted the City from purchasing certain vehicles from any
other service provider other than the Moipone Fleet pending
the
determination of the dispute referred to in the Davis order. On
the eve of this appeal Moipone Fleet abandoned the order
relating to
the City Manager. It had no doubt became clear to Moipone Fleet that
there was no basis for the contempt finding against
him as he had not
been cited as a party in the proceedings before Davis AJ.
[3]
The appeal is with the leave of the court a quo and parties agreed to
have it determined in terms of s 19
(a)
of the Superior Courts Act 10 of 2013 (the
Superior Courts Act).
[4
]
The issues in this appeal are thus whether the court a quo was
correct in holding the City in contempt of the Davis order and
granting the interim interdict against it. The facts
giving rise to the dispute are the following.
Brief
facts
[5]
On 24 March 2016, pursuant
to
a tender process for the procurement of fleet and fleet related
services, the City entered into two agreements with Moipone Fleet
to
supply and provide it with full maintenance lease and ad hoc rental
services of vehicles. One agreement pertained to the provision
of
non-specialised vehicles with a gross vehicle mass not exceeding 3
500 kilograms (Category A vehicles) and the other concerned
large
vehicles for waste management services (Category C vehicles).
The
duration of each agreement was
five
years. The PPA that is in issue in these proceedings relates only to
the provision of Category A vehicles.
[6]
In terms of clause 7.1 of the PPA the City would make payments to
Moipone Fleet in accordance with a schedule comprising capped
specified amounts for each financial year totalling R352 185 208.
That amount would be paid in respect of a maximum of 1 358 vehicles
over the life of the agreement as per clause 7.2. This amount also
represented the budget value of the agreement.
[7]
In March 2017, Moipone Fleet launched an urgent application before
Davis AJ, seeking an order, inter alia, compelling the City
to comply
with its obligations under the PPA, pending the finalisation of a
dispute with it that had been referred to arbitration.
It alleged
that the City had refused to accept delivery of a number of vehicles
from it and had, in breach of the PPA, placed orders
directly with
Moipone Fleet’s suppliers, instead.
[8]
The City contended that the PPA had lapsed due to the fact that the
suspensive conditions contained in clause 2.1 had neither
been
fulfilled, nor lawfully waived. The agreement had therefore lapsed
and thus permitted it to deal directly with Moipone Fleet’s
suppliers. Davis AJ, however, found against the City and made an
order which, inter alia, read as follows:
‘
1. The
Respondent [the City] is directed to comply with its obligations
under the Public Private Partnership Agreement (“the
agreement”) concluded between the Applicant [Moipone] and the
Respondent on 24 March 2016 pending the final conclusion of
any
process, application, action or arbitration whereby the validity of
the agreement is finally determined or until such time
as the
agreement is validly cancelled.
2. The
Respondent is interdicted and restrained from appointing and/or
concluding any agreement with any other service provider
for the
rendering of the services that the Applicant is obliged to render in
terms of the agreement pending the final determination
of the
validity or valid cancellation thereof as aforesaid.’
[9]
The City’s application for leave to appeal the Davis order was
sought and dismissed. A further attempt to appeal to this
Court was
also dismissed, no doubt because the order was interlocutory and
therefore not appealable.
[10]
Subsequent to the Davis order further litigation ensued between the
parties in which Moipone Fleet sought to enforce the PPA.
The first
such application served before Vuma AJ. Here the City was accused of
issuing purchase orders for managed maintenance
of category A and C
vehicles in breach of clause 39 of the agreement and of the Davis
order. I deal with clause 39 shortly. Vuma
AJ found that the Davis
order required ‘the immediate cessation by the City from
dealing with Bulldozer and Xmoor at the
expense of the PPP agreement
since anything contrary by the City seeks to undermine the said
order.’
[2]
However
the order she granted prohibiting such dealing was later rescinded
for reasons that are not germane to this appeal.
[11]
In July 2018 a further urgent application, which is the subject of
this appeal, was brought before Mokose AJ. Moipone Fleet
sought a
declaratory order that the appellants were in contempt of the Davis
order. Compliance with that order as well as an interdict
was
also sought the effect of which would restrain the City from issuing
‘Purchase orders and/or appointing and/or concluding
any
agreement with any service provider. . . pending the
final determination of the validity or valid cancellation
thereof. . .’ The complaint in this instance was that
the City had
procured
103
light delivery vehicles (the vehicles) from a service provider other
than Moipone Fleet in violation of clause 39 of the agreement
as well
as the Davis order.
[12]
Clause 39, which lies at the heart of the dispute, is an exclusivity
clause in favour of Moipone Fleet. It provides as follows:
‘
39.1 In
consideration for the Private Party [Moipone] rendering the Services
in terms of this Agreement, the City shall (save as
may be provided
expressly to the contrary in this Agreement), for the duration of
this Agreement and during any period of termination
notice given in
terms of this Agreement,
source
all its fleet requirements from the Private Party
.
In this regard it is recorded that this exclusivity shall relate
solely to the provision by the Private Party of vehicles which
cater
for the Function of the vehicles. The City shall accordingly be
entitled to source additional fleet requirements from a third
party
only if and to the extent that:
39.1.1 the Contractor is unable
to fulfil such requirements in which event the loss of exclusivity
shall apply only to the extent
that, and for so long as, the Private
Party cannot perform the particular requirement in question under
this Agreement; or
39.1.2 the City is acting in
terms of a right granted in terms of the SLA, to source a vehicle
from a Third Party.
provided that the City may,
subject to giving the Private Party prior written notice thereof,
undertake the outsourcing of a particular
service, an aspect of which
may include the provision of a vehicle provided that:
39.1.3 the main purpose of that
outsourcing is to obtain a service and not the use of a vehicle; and
39.1.4
the outsourcing shall not be used to circumvent the provisions of
this Agreement, in particular the principle that
the City shall
source all its fleet requirements exclusively from the Private Party.
(Emphasis added.)’
[13]
In response to Moipone Fleet’s allegation that the City was in
breach of this clause, the City maintained that it had
purchased the
vehicles directly from the original manufacturer through a
transversal contract procured by National Treasury, to
which Moipone
Fleet had consented and in which it had participated. A procurement
of this nature was not prohibited by the PPA.
According to the City,
the exclusivity for which provision is made in clause 39 applied only
to the leasing of vehicles and matters
related thereto. It had no
bearing on outright purchases, which was the subject of the present
complaint. It further maintained
that it had exhausted the
procurement value limit of R70 125 385 allocated to be spent on
procuring vehicles from Moipone Fleet
under the PPA for the 2017/2018
financial year and that there was no longer a lawful basis to procure
new vehicles from it. Any
further procurement of vehicles from
Moipone Fleet under the PPA, the City submitted, would therefore have
constituted irregular
expenditure and would not have been
cost-effective.
[14]
However, Mokose AJ dismissed the City’s submissions and found
the appellants to have acted in contempt of the Davis order.
She also
granted the interdict against it referred to earlier. Before the
City’s application for leave to appeal against
her order was
heard, Moipone Fleet applied to the high court, in terms of
s 18
of
the
Superior Courts Act, for
the immediate operation and execution of
the order. The matter came before Tuchten J. He expressed
serious doubt as to the
correctness of the interpretation that Vuma
AJ and Mokose AJ had placed on clause 39. In his view, the clause
limited Moipone Fleet’s
exclusivity to the procurement of
leased vehicles for the City; it did not apply to vehicle’s the
City may wish to purchase
from any other service provider.
Accordingly, it was entitled to purchase vehicles, without breaching
this clause. He concluded
that:
‘
The
purchase of the vehicles would fall outside the agreement, and would
therefore not have been the subject of the prohibition
under the
order of Davis AJ, and therefore ought not to have been the subject
of a prohibition by [Mokose AJ] because it was the
purchase of
vehicles that was before [Mokose AJ] in the case that came before
her. So to summarise on this aspect I think that
there are distinct
prospects on appeal.’
[3]
[15]
He further questioned, quite rightly in my view, how the City Manager
could have been held to be in contempt of the Davis order
and given a
suspended sentence of imprisonment in the light of his defence to the
complaint against him. The learned judge emphasised
the trite
requirement of proof beyond reasonable doubt before a prison sentence
could be imposed, which was not met in this case.
[4]
Analysis
[16]
It is also trite that before a party may be found in contempt of a
court order, the breach must have been both wilful and mala
fide.
[5]
The
question is whether the conduct of the City contravened the Davis
order.
[17]
As I pointed out earlier the issue before Davis AJ was whether
suspensive conditions contained in clause 2.1 of the PPA had
been
fulfilled. The learned judge found that they had. It was on
that basis that an interdict was granted prohibiting the
City from
appointing other service providers to render the service that Moipone
Fleet was obliged to render pending determination
of the dispute
about the validity of the City’s cancellation of the PPA.
[18]
In the application before Mokose AJ, Moipone Fleet, broadened the
scope of the dispute that was before Davis AJ. A different
issue was
raised. Moipone Fleet was now placing reliance on clause 39 of the
agreement, the complaint being that by purchasing
vehicles from
other service providers the City was ‘sourcing’ its
fleet requirements from other service providers
in breach of clause
39. It contended that the words ‘
source
all its fleet requirements
’
encompassed purchases, leases and all vehicles acquired for use and
possession by the City. The City took issue with this
interpretation
contending that Moipone Fleet’s exclusivity was limited to the
leasing arrangement.
[19]
The conduct complained of before Mokose AJ was clearly not the same
as the issue that served before Davis AJ. On that point
alone, the
contempt application should have been dismissed. But a proper
interpretation of clause 39 also demonstrates conclusively
that the
court a quo erred in the interpretation it gave to the clause. I
examine this issue below after considering whether the
interim
interdict she granted against the City is appealable.
[20]
The interdict was almost identical in terms to that which was
given by Davis AJ, the notable difference being the inclusion
of
purchase orders and sourcing of Category A and C vehicles from any
third party other than Moipone Fleet. Her order was also
made pending
the determination of the validity or valid cancellation of the
agreement.
[21]
Interim orders are usually not appealable because they are not final
in effect. This was not an issue raised by either party,
but it is
important for this Court to deal with it. In
Atkins v Botes
this
Court held that:
‘
[A]
n
interim
interdict is appealable if it is final in effect and not susceptible
to alteration by the court of first instance. The decision
also
emphasised that in determining whether an order is final in effect,
it is important to bear in mind that “not merely
the form of
the order must be considered but also, and predominantly, its
effect”. The crucial question in the appeal is
therefore
whether the granting of the interim interdict was final in
effect.’
[6]
[22]
The answer to this would depend on whether the purchase of the
vehicles fell within the scope of the agreement, the validity
of
which was to be determined at a later stage. Mokose AJ did not
consider this issue at all.
[23]
The Court was thus called upon to interpret the reach of clause 39,
an issue as I have pointed out was entirely different from
what was
before Davis AJ. It is now established that when interpreting a
document, the point of departure is the language in question
read in
context and having regard to the purpose of the provision and the
background to the preparation and production of the document.
[7]
[24]
Clause 39 is not the clearest of provisions. It must however be read
and understood within the context and scheme of the PPA.
It is not
disputed that the procuring of the vehicles from Moipone Fleet was
through a leasing vehicle system. This much is evident
from the
agreement, starting with the “definitions clause”, which
refers to a ‘full maintenance lease’
and ‘lease
agreement’. The preamble refers to a “co-sourcing
mechanism” to achieve the purposes of the
agreement.
[25]
In interpreting clause 39, regard must be had to the Request for
Proposal document.
[8]
The
concept of co-sourcing arose from a recommendation in a study
commissioned by the City to ascertain the most suitable method
of
undertaking its fleet services. According to the Request for Proposal
document, co-sourcing of fleet services entails a hybrid
situation
where some fleet management functions are undertaken internally
whilst others are through the private sector. It says
that the City
requires ‘the use and enjoyment of the vehicles with no
intention of ownership’. Some of the objectives
for co-sourcing
its fleet provision and management were to develop in-house capacity,
ensure transport needs are met and to ensure
the City is divested of
the risks and responsibilities relating to owning and maintaining
vehicle fleets.
[26]
Moipone Fleet contends that it is within that stated objective that
clause 39 should be understood because acquisition of vehicles
through means other than the co-sourced mechanism would undermine the
stated objective. According to it, the relevant clause unequivocally
states that the City shall ‘source all its fleet requirements
from the Private Party’ which should be understood to
mean all
fleet requirements of the City (without the exclusion of purchasing)
would be met by Moipone Fleet. Its view is that the
clause does not
concern itself with the method of how those requirements would be
met.
[27]
I am unable to agree with this contention. It is not supported by the
scheme of the agreement or even by the Request for Proposal
document
that Moipone seems to rely on. Nothing in clause 39 read in the
context of the agreement indicates that the City was prohibited
from
purchasing vehicles from other suppliers. The fact that it had found
co-sourcing in the form of a leasing arrangement to have
been a cost
effective mechanism at the time, did not mean that it could not
embark on other cost effective methods to source its
fleet
requirements, including purchasing of its vehicles. To illustrate
this point it is alleged on behalf of the City that when
it purchased
the vehicles from the original manufacturer it spent R239 000 per
vehicle, including maintenance, whereas to lease
a vehicle would have
cost over R420 000 per vehicle, over a five year period.
[28]
Tuchten J’s observation that the purchase of vehicles fell
outside the purview of the agreement was undoubtedly correct.
Under
the circumstances, it is evident, in my view, that Mokose AJ’s
interim order was final in effect because the purchase
of the
vehicles, which her order prohibited, was not an issue that would be
revisited when the validity of the agreement was determined
at a
later stage. The interim interdict is thus appealable. Based on
my interpretation of clause 39, it should not have been
granted.
[29]
In light of that, it is not necessary to deal with the other issues
raised on behalf of the City, including the point that
it would have
exceeded its procurement value limit for the financial year or would
have been guilty of irregular expenditure had
it procured the
vehicles from Moipone Fleet. It is also not necessary to deal with
other grounds as to why wilful and mala fide
contravention of the
Davis order was not established.
[30]
In the result, I make the following order:
1
The
appeal succeeds with costs, including costs consequent upon the
employment of two counsel.
2 The order of the court a quo is
set aside and is substituted with the following:
‘
The
application is dismissed with costs, including the costs of two
counsel.’
__________________________
N P MABINDLA-BOQWANA
ACTING
JUDGE OF APPEAL
Written
submissions
For
appellants: K Tsatsawane SC, with K Magano and C Marule
Instructed
by: Gildenhuys Malatji Inc, Pretoria
Matsepes
Attorneys, Bloemfontein
For
respondent: Main heads of argument by M Sello SC
Supplementary
heads of argument by D Mpofu SC, with him M Sello SC and M Qofa
Instructed
by: Van Zyl Le Roux Attorneys, Pretoria
Phatshoane
Henney, Bloemfontein
[1]
Moipone
Group of Companies (Pty) Ltd v City of Tshwane Municipality
[2017] ZAGPHHC 149 para 11.
[2]
Moipone
Group of Companies (Pty) Ltd v City of Tshwane Metropolitan
Municipality and Another
[2017]
ZAGPPHC 1222 para 40.
[3]
Unreported
judgment:
Moipone
Group of Companies (Pty) Ltd v City of Tshwane Metropolitan
Municipality
case number 2018/5 1929 dated 8 November 2018 at 7.
[4]
Ibid.
[5]
Fakie NO v
CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) at 332.
[6]
[2011] ZASCA 125
;
2011
(6) SA 231
(SCA) para 6.
[7]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA)
para 18.
[8]
The
circumstances in which a contract was entered into may become
relevant in the interpretation process in ascertaining the intention
of the parties. See
Novartis
South Africa (Pty) Ltd v Maphil Trading (Pty) Ltd
[2015] ZASCA 111
;
2016 (1) SA 518
(SCA);
[2015] 4 All SA 417
(SCA)
para 27.