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2024
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[2024] ZAFSHC 201
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Matjhabeng Local Municipality v Lequbu Specialised Services (Pty) Ltd (3328/2021) [2024] ZAFSHC 201 (4 July 2024)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Reportable: YES/NO
Of Interest to other
Judges: YES/NO
Circulate to Magistrates:
YES/NO
Case no: 3328/2021
In
the matter between:
MATJHABENG
LOCAL MUNICIPALITY
Applicant
and
LEQUBU
SPECIALISED SERVICES (PTY) LTD
Respondent
IN
RE
:
LEQUBU
SPECIALISED SERVICES (PTY) LTD
Applicant
and
MATJHABENG
LOCAL MUNICIPALITY
Respondent
CORAM:
HEFER AJ
HEARD
ON:
8 APRIL 2024
DELIVERED
ON:
4 JULY 2024
[1]
This is an application in which the Applicant (Respondent in the main
application) seeks leave
to appeal against an order in terms of which
a Deed of Settlement, concluded between the parties, was made an
order of Court in
terms of Rule 41(4) of the Uniform Rules of Court.
[2]
For ease of reference and to avoid confusion, the Applicant herein
will be referred to as “
the Municipality”
whilst
the Respondent will be referred to as “
Lequbu”
.
Relevant
background facts
:
[3]
The Municipality appointed Lequbu during October 2020 to provide
certain services in particular
to conduct an emergency investigation
at the Municipality’s problematic sewer lines, provide a report
and to supervise any
necessary construction work to resolve any
issues that required immediate attention.
[4]
For these services rendered, Lequbu submitted seven Fee Claims of
substantial amounts, of which
five claims, totalling an amount of
R15,842,055.00 (Fifteen Million Eight Hundred and Forty-Two Rand and
Fifty-Five Cents) remained
unpaid.
[5]
The Municipality terminated Lequbu’s appointment on 1 April
2021.
[6]
Lequbu then brought an application against the Municipality for
payment of the abovementioned
amount in respect of the five unpaid
Fee Claims for services rendered by Lequbu.
[7]
The Municipality initially opposed the application but later
capitulated to the extent that it
acknowledged Lequbu’s
appointment and the services that it rendered. The application was
opposed by the Municipality, the
true dispute being that the fees
charged were not correct and payable in accordance with the agreement
entered into between the
parties, in short, the quantum of the amount
due to Lequbu.
[8]
When the matter served before Naidoo J during November 2021, the
parties agreed that the dispute
regarding the quantum be referred to
mediation to determine the amount which was actually due and payable
to Lequbu.
[9]
The agreement reached between the parties pertaining to the
determination of the quantum payable
by means of mediation formed
part of the order of Naidoo J (“
the mediation order”
).
[10]
The mediation order provided for,
inter alia
:
(i)
That the Municipality will, upon request by
the mediator, provide whatever supplementation and/or explanation
required regarding
its itemised Fee Claims;
(ii)
The mediator will certify the amount owing
and the amount so certified shall be the amount owing by the
Respondent to Applicant
in respect of the Fee Claims;
(iii)
In the event of any of the parties being
dissatisfied with the outcome of the certification, either party may
proceed with litigation
limited to the issue of quantification only.
[11]
During July 2022, the appointed mediator made its final determination
that the value of the services rendered
by Lequbu was R413,176.00.
[12]
Being dissatisfied with the certification by the mediator, during
October 2022 Lequbu notified the Municipality’s
erstwhile
attorneys of record that it would proceed to recover the full amount
claimed by Lequbu, which Lequbu maintained was due
and owing.
[13]
Approximately two months later, during December 2022, the
Municipality represented by then Acting Municipal
Manager, Dr V
Adonis, entered into a written settlement agreement in terms whereof
the Municipality agreed to pay Lequbu the amount
of R4,000,000.00 in
full and final settlement of the dispute. It is this settlement
agreement which formed the basis for the order
in respect of which
the Municipality now seeks leave to appeal.
Grounds
of application for leave to appeal
:
[14]
The grounds upon which the Municipality seeks leave to appeal are:
(i)
That the Court misdirected itself in not
finding that the annexures of the Applicant were not incorporated
into the founding affidavit
of Lequbu and therefore could not have
regard to such annexures at all; and
(ii)
Based on the documents and affidavits
before Court, the Court misdirected himself in not finding that there
is a material
bona fide
dispute of fact that could not have been resolved on the papers in
motion proceedings and which could therefore not have reasonably
allowed for the order to have been granted based on the settlement
agreement entered into.
[15] I
will now proceed to deal with these grounds relied upon by the
Municipality separately.
Lequbu
failed to incorporate annexures into founding affidavit
:
[16] Mr
Harms
, now appearing on behalf of the Municipality, submitted
in this regard that it is not open to an applicant to merely annex to
its
affidavit documentation and to request the Court to have regard
to it. What is required is the identification of the portions thereof
on which reliance is placed.
[17] Mr
Harms
further submitted that in the absence of the primary
fact, if the Court disregarded Lequbu’s annexures, the alleged
secondary
fact, was merely a conclusion of law. It appears that in
dealing with this point, Mr
Harms
referred to all the
documents annexed to Lequbu’s answering affidavit.
[18]
These submissions by Mr
Harms
are indeed in accordance with what have been held by
Joffe
J
in
Swissborough
Diamond Mines v Government of the RSA
[1]
and the authorities referred to therein.
[19]
In the present matter, Lequbu’s facts pertaining to the relief
sought were set out in the founding
affidavit “
simply,
clearly and in chronological sequence and without argumentative
matter”.
[2]
It is clear from these facts as alleged and contained in the founding
affidavit with reference to the annexures to the founding
affidavit,
that Lequbu relied upon the contents of the settlement agreement
between the parties as a whole. The relevant terms
of the settlement
agreement, attached to the founding affidavit, are also referred to
in the founding affidavit of Lequbu. It is
further common cause that
the settlement agreement (and not the “
alleged”
settlement agreement as referred to by Mr
Harms
in his Heads of Argument), was indeed concluded between the parties.
[20]
This point relied upon by the Municipality, can therefore not be
upheld.
Dispute
of fact
:
[21]
In
Road
Accident Fund v Taylor and other matters
[3]
,
Van der Merwe JA said as follows:
“
[31]
Where the misappropriation of public funds is properly raised before
a Court, it must of course, deal
with it decisively and without fear,
favour or prejudice. But a Court has no general duty or power to
exercise oversight over the
expenditure of public funds. This is so
for three main reasons. The first is the constitutional principle of
separation of powers.
The second is that the exercise of such a duty
of power would infringe the constitutional rights of ordinary
citizens to equality
and a fair public hearing. The third is the
principle that the law constrains a Court to decide only the issues
that the parties
have raised for decision.”
[22]
Van der Merwe JA then continued as follows:
“
[36]
The essence of a compromise (
transactio
)
is the final settlement of disputed or uncertain rights or
obligations by agreement. Save to the extent that the compromise
provides
otherwise, it extinguishes the disputed rights or
obligations. The purpose of a compromise is to prevent or put an end
to litigation.
Our Courts have for more than a century held that,
irrespective of whether it is made an order of Court, a compromise
has the effect
of
res judicata
(a compromise is not itself
res judicata
(literally a matter judged) but has that effect)…
[40]
When requested to do so, a Court has the power to make a compromise,
or part thereof, an order
of Court. This power must, of course be,
exercised judicially that is, in terms of a fair procedure and with
regard to relevant
considerations. The considerations for the
determination of whether it would be competent and proper to make a
compromise an order
of Court, are threefold. They are set out in Eke
v Parsons
2015 ZACC 30
;
2016 (3) SA 37
(CC), par. 25 – 26
(Ake v Parsons).
[41]
The first consideration is whether the compromise relates directly or
indirectly to the settled
litigation. An agreement that is unrelated
to litigation, should not be made an order of Court. The second
consideration is whether
the terms of the compromise are legally
objectionable, that is, whether its terms are illegal or contrary to
public policy or inconsistent
with the Constitution. Such an
agreement should obviously not be made an order of Court. The third
consideration is whether it
would hold some practical or legitimate
advantage to give the compromise a status of an order of Court. If
not, it would make no
sense to do so.”
[23]
Van der Merwe JA then also stated that:
“…
the
power to make a compromise an order of Court, is derived from a
longstanding practice aimed at assisting the parties to give
effect
to their compromise. The clear import of Eke v Parsons therefore is
that this power is not derived from the jurisdiction
of the Court
over the issues that have been raised before it, but were
subsequently settled.”
[4]
[24]
Van der Merwe JA then summarised it as follows:
“
To
sum up, when the parties to litigation confirm that they have reached
a compromise, a Court has no power or jurisdiction to embark
upon an
enquiry as to whether the compromise was justified on the merits of
the matter or was validly concluded. When a Court is
asked to make a
settlement agreement an order of Court, it has the power to do so.
The exercise of this power essentially requires
a determination of
whether it would be appropriate to incorporate the terms of the
compromise into an order of Court.”
[25]
According to Mr
Harms
, if one has regard to what was stated in
the answering affidavit in that the alleged settlement agreement
constituted fraud, alternatively
misrepresentation on the part of
Lequbu, the application could not have succeeded and the application
should have been referred
to trial given that:
(i)
there existed a dispute of fact on the
papers, which dispute of fact could not have been resolved without
referring the matter to
oral evidence, alternatively trial; and
(ii)
if one applies the
Plascon
Evans
-test, and considers the facts as
stated by the Respondent together with the admitted facts in the
Applicant’s affidavit,
then Lequbu could not have succeeded
with its application.
[26]
In the matter of
Global
Environment Trust v Tendele Coal Mining (Pty) Ltd
[5]
the Supreme Court of Appeal referred to the judgment for leave to
appeal in which the Court observed that the factual allegations
relied upon by the Appellant, for the most part, were incorrect and
unsubstantiated. For that reason the application was dismissed.
The
Supreme Court of Appeal then commented in this regard as follows:
“
That,
ought to have led to the dismissal of the application for leave to
appeal. Surprisingly, it did not.”
[6]
[27] I
again scrutinised the opposing affidavit by the Municipality. I wish
to quote the relevant portions of
this affidavit:
“
27.
It is indeed so that the agreement was signed some months after the
mediator made a ruling that he could only
find that an amount of
R413,176.60 is due and owing to the Applicant. This is a far cry from
the amount now claimed in terms of
the agreement.
28.
On 23 December 2022, when signing the agreement, the then Acting
Municipal Manager, Dr Vuyo Adonis (Adonis),
signed the agreement
after being informed by the legal team of the Municipality. It bears
mentioning that Adonis only acted as
Municipal Manager for a month,
which makes the timing of the signing of the Settlement Agreement
extremely suspicious.
29.
Acting on the strength of advice received by Mr Vanga Mtutuzeli and
Mr Bertus Maritz, he signed the
agreement, believing he is acting in
the best interest of the Municipality.
30.
Adonis signed the agreement in order to resolve 4 (four) other
pending cases pertaining to then sewerage
problem within the
Municipality. These cases are inter alia the Oppenheimer Golf Club,
Dr Op’t Hof and 7 others, Oarabile
(Pty) Ltd and the Sompena
Trading (Pty) Ltd disputes.
31.
The agreement was also signed to avoid any further delays in fixing
the problems and to avoid further
fruitless and wasteful
expenditure.”
[28]
These portions of the Municipality’s answering affidavit, nor
any other part thereof, lends support
to Mr
Harms
’
contention that the alleged settlement agreement constituted fraud,
alternatively misrepresentation on the part of Lequbu.
The answering
affidavit of the Municipality does not contain any factual
allegations to this effect.
[29] Mr
Harms
further contends that if one take into consideration the
preamble to the settlement agreement which refers to the involvement
of
Bloem Water as well as the National Treasury and National
Department of Water and Sanitation, it is clear that Dr Adonis and
the
Court had been deceived and misled with regard to why or under
what circumstances the disputed settlement agreement was entered
into. Again, this was not alleged in the answering affidavit.
[30]
Considering the context in which reference were made to these two
entities, it cannot be concluded that there
were any deceit or
misleading with regard to why or under what circumstances the
settlement agreement was entered into.
[31]
The same applies in regards to the clause contained in the settlement
agreement to the effect the Lequbu
consented that the matter be
removed from the court roll and that each party will be liable for
its own legal costs. Technically,
the wording of this clause appears
not to be correct in that the matter was not enrolled at that stage.
However, the application
was still live and pending and it is quite
significant also that the order of Naidoo J did not provide for the
legal costs pertaining
to such application.
[30]
In
Eke
v Parsons
[7]
the Constitutional Court held that:
“
A
Court must thus not be mechanical in its adoption of the terms of the
settlement agreement. For an order to be competent and proper,
it
must, in the first place ‘relate directly or indirectly to an
issue or
lis
between the parties’. Parties contracting outside of the
context of litigation may not approach a Court and ask that the
agreement be made an order of Court …”
[31] It
is clear from the wording of the settlement agreement that it was
directly related to an issue between
the Municipality and Lequbu.
[32]
Taking into account the considerations to be applied with regards to
the provisions of
Section 17(1)
of the
Superior Courts Act 10 of
2013
,
[8]
I am not convinced that
another Court will come to a different conclusion. Therefore, the
application for leave to appeal must
fail and the Municipality is to
be held liable in respect of the costs thereof.
Therefore, I make the
following order:
Order
:
The application for leave
to appeal is dismissed with costs.
HEFER AJ
Appearances
on behalf of the Applicant:
Adv
CLH Harms
Instructed
by: BMH Attorneys
c/o
Pieter Skein Attorneys
Bloemfontein
On
behalf of Respondent:
Adv
WA van Aswegen
Instructed
by: Peyper Attorneys
Bloemfontein
[1]
1999
(2) SA 279 (TPD)
[2]
Reynolds
NO v Mecklenberg (Pty) Ltd 1996 (1) SA 75 (WLD).
[3]
2023
(5) SA 147 (SCA)
[4]
Par. [42]
[5]
2021 (2) All SA 1 (SCA)
[6]
Par. [98]
[7]
supra
at par. [25]
[8]
Mont Chevaux Trust v Goosen 2014 JDR 235 (LCC)