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2024
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[2024] ZAMPMBHC 53
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Izingwenya 210 Investments CC and Another v Bushbuckridge Local Municipality (277/2018) [2024] ZAMPMBHC 53 (7 August 2024)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(MPUMALANGA DIVISION,
MBOMBELA)
CASE
NO: 277/2018
(1)
REPORTABLE:NO
(2)
OF INTEREST TO OTHER JUDGES: YES
(3)
REVISED: YES
DATE: 07/08/2024
SIGNATURE
In the matter between:
IZINGWENYA
210 INVESTMENTS CC
First Plaintiff
JUSLO
SECURITY SERVICES CC
Second Plaintiff
and
BUSHBUCKRIDGE
LOCAL MUNICIPALITY
Defendant
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 07 August 2024 at 10:00.
JUDGMENT
MASHILE J:
INTRODUCTION
[1]
Following an award of a tender bid to the Plaintiffs (“the
JV”), the Defendant (“the
Municipality”) appointed
the JV. The letter of appointment stipulates that the Municipality
and the JV (“The Parties”)
are required to conclude a
service level agreement (“SLA”). Pursuant to the letter
of appointment, the parties entered
into the SLA on 9 December 2013.
Notwithstanding that the agreement was concluded on 9 December 2013,
it was deemed to have commenced
on 1 December 2013. On 18 March 2014,
the Municipality called a meeting of the parties to advise the JV
that it had been placed
under administration.
[2]
The administration status of the Municipality implied that it had to
adopt austerity measures
to ameliorate its poor financial position.
Still on that day, the Municipality informed the JV that it was
intending to reduce
the number of security guards to be posted to
manage the amount that it was paying to the JV. The parties then
agreed that the
JV would reduce the overall number of security guards
posted to sixty. After the revision of the number of security guards
to be
posted, the JV alleges that the Municipality unilaterally cut
the rates per guard posted but undertook to revert to the agreed
rates during the next cycle, which it never did.
[3]
On 20 January 2018 the JV instituted this contractual damages action.
It did so believing that
the unilateral revision of the amount
payable per guard constituted repudiation of the SLA. The
Municipality is defending this
action and has delivered a special
plea based on prescription. If the JV survives the special plea of
prescription, it argues that
the particulars of claim neither make a
case for repudiation nor breach consequently it stands to be
dismissed or that an absolution
from the instance should be granted.
FACTUAL MATRIX
[4]
Despite that this Court could have determined the special plea and
either dismissed or upheld
it, I directed that it would be cost
effective and time saving for the parties to proceed to address the
Court on merits in case
I became inclined to dismiss the prescription
argument instead of having to obtain yet another date to address
merits. Below I
describe a terse background of the facts against
which this matter ought to be considered. The JV was specifically
founded for
purposes of acting as the service provider of the
Municipality providing security of the premises, property, personnel
and clients
of the Municipality. After being awarded the tender bid,
the parties concluded the SLA on 9 December 2013.
[5]
Although the agreement was concluded on the aforesaid date, the
parties deemed the agreement to
have commenced on 1 December 2013
culminating on 30 November 2016. The parties agreed further that the
Municipality would pay the
JV a total fee of
R504 971.20
per month calculated at a rate of
R7 858.40
per Grade C
armed guards and at
R7 258.40
for forty-five grade D/E unarmed
guards. At a meeting of the parties on 18 March 2014, the parties
concluded that due to the poor
economic outlook of the Municipality,
the JV would reduce the number of posted security guards to sixty.
The Municipality then
unilaterally proceeded to revise the rate to:
5.1
R7 858.40
to
R6 500.00
reckoned from June 2014 to
December 2015 per Grade C guards;
5.2
R7858.40
to
R6 955.00
to be reduced later in
January 2016 to July 2017.
[6]
On the same date, the Municipality unilaterally reduced the Grade D/E
guards rate as follows:
from
R7 258.40
to
R6 200.00
reduced from June 2014 to December 2015 per Grade D/E guards and from
R7 258.40
to
R6 634.00
reduced later in January 2016 to
July 2017. The JV asserted that the Municipality undertook to
retrospectively rectify the rates
in respect of the remuneration of
the JV but failed. The only witness of the Municipality denied that
the Municipality had made
an undertaking to revert to the original
rates during the next cycle.
[7]
The SLA having expired by the effluxion of time on 30 November 2016,
the Municipality extended
the agreement on a month to month basis,
with a letter dated 1 December 2016, until a new service provider was
appointed. On 3
July 2017 the Municipality advised the JV that the
month to month agreement would terminate on 7 July 2017.
SPECIAL PLEA –
PRESCRIPTION
[8]
The Municipality has raised the abovementioned special plea, which
may be dispositive of this
whole matter. In consequence, it has
become the sole issue making it practical to attend to it before
considering the merits. The
Municipality has pleaded the special plea
as follows:
“
1
The alleged debt sued for by the plaintiffs became due and payable on
14 March 2014
when the alleged cause of action being
repudiation is alleged to have occurred.
2
.
The debt is one that prescribes after a
period of three years in terms of
section 11(d)
of the
Prescription
Act, 68 of 1969
.
3.
Summons was served on the defendant on 20 January 2018, which is more
than three years
after the date on which the debt became due.
4.
In the premises, the debt sought to be claimed by the plaintiffs is
prescribed in terms of
section 11
of the
Prescription Act.”
>
ASSERTIONS OF THE
PARTIES
[9]
The special plea of prescription is based on the pleaded facts
outlined above. The Municipality
asserts that the cause of action or
the repudiation occurred on 18 March 2014 when it unilaterally
declared that the amounts would
be revised in the manner outlined in
the preceding paragraph. The claim for the difference was only
instituted on 20 January 2018.
The Action has, as such, prescribed
because it was brought after the lapsing of a period of three years.
[10] On
the contrary, the JV argues that the repudiation did not happen on 18
March 2014 but when the Municipality
refused to make retrospective
payment for the shortfall, which was when it gave notice to terminate
the month-to-month arrangement,
3 July 2017. The Municipality having
announced its intention not to pay retrospectively, as undertaken,
the claim has not prescribed,
maintains the JV.
LEGAL FRAMEWORK
[11]
The special plea is based on
Sections 11(d)
and
12
of the
Prescription Act, 68 of 1969
. It will therefore be convenient and
sensible to cite the pertinent parts of the sections. The Section
provides:
“
(a)
…
(b)
…
(c)
…
(d)
save where an Act of Parliament provides otherwise, three years in
respect of any other debt.”
[12]
Section 12
is headed: “
When
prescription begins to run
”
and it
provides:
“
(1)
Subject to the provisions of subsections (2) and (3), prescription
shall commence to run as soon as
the debt is due.
(2)
If the debtor willfully prevents the creditor from coming to know of
the existence of the debt,
prescription shall not commence to run
until the creditor becomes aware of the existence of the debt.
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor
and of the facts from which the debt
arises: Provided that a creditor shall be deemed to have
such knowledge if he
could have acquired it by exercising
reasonable care.”
[13] In
MEC for Health, Western Cape v M C
, the SCA held that the
required knowledge extends to the minimum facts necessary to prove a
claim and that a debt is due when it
is owing and payable. The
essentials of
Section 12
have been a subject before various Courts in
this country. Thus, the Constitutional Court in
Mtokonya v
Minister of Police
held that the facts of which the creditor
needed to be aware do not extend to the knowledge of the legal
consequences but simply
to those facts the creditor would need to
prove his claim against the debtor.
[14]
In the
MEC for Health: Western Cape
case
supra
,
it was stated that in an application where a party raises a special
plea of prescription two questions require examination. Firstly,
the determination of the primary facts, on one hand, and the
knowledge or deemed knowledge thereof, on the other. This means that
once the facts from which the debt arose (the primary facts) have
been determined, the enquiry turns to the creditor’s knowledge
of the primary facts. It is important to be cognisant of some overlap
of facts between these two distinct enquiries postulated
in
Section
12(3)
of the Prescription Act, 68 of 1969.
ANALYSIS
[15] It
is common cause between the parties that the period of prescription
for this claim falls under
Section 11(d)
of the
Prescription Act, 68
of 1969
, which I have cited
supra
. In other words, the period
is three years. It then becomes important to identify the date on
which prescription began to run in
this matter. It is trite that
prescription will begin to run when a debt becomes due. On the facts
of this case, it is the date
on which the JV alleges the repudiation
to have occurred. The date is 14 April 2014. Against that backdrop,
the starting point
should be repudiation.
[16]
Repudiation happens when a party to an agreement, without any legal
basis, advises the other to the agreement
or acts in a manner that is
reminiscent of a party who does not regard itself as still bound by
the terms and conditions of the
parties’ agreement. The
innocent party to the agreement has two options – it can either
accept or reject the repudiation.
If it accepts, it must cancel the
agreement and claim damages. Conversely, if it rejects the
repudiation, it can choose to sue
for specific performance.
[1]
[17] On
the pleaded version of the JV therefore, it became conscious of the
primary facts of the repudiation on
14 April 2014, what are these
primary facts? These were that following the agreement to reduce the
number of security guards to
an overall number of 60 at the rate of
R7 858.40
per guard for 15 Grade C guards and
R7 258.40
per guard for 45 Grade D/E guards, the Municipality unilaterally went
ahead and revised the rates from
R7 858.40
to
R6 500.00
per guard for Grade C and for the period June 2014 to December 2015
and
R6 955.00
per guard for the same Grade for the period
January 2016 to July 2017.
[18]
With regard to the Grade D/E, the Municipality reduced the amount of
R7 258.40
to
R6 200.00
per guard for the period June
2014 to December 2015 per guard. Finally, it reduced the amount of
R7
258.40
to
R6 634
per guard for the period January 2016 to
July 2017. The Municipality proceeded to pay the JV in line with the
revised amounts,
which the JV claims, were unilaterally amended.
[19] On
18 March 2014, the Municipality, in no unambiguous conduct, acted
like a party that did not regard itself
as still bound by the terms,
relating to the rates per Grade C Guard and Grade D/E guard laid down
in the parties’ agreement.
This is when the cause of action
based on repudiation arose and this much is alleged by the JV in its
particulars of claim. There
is plethora of authority that
prescription of a debt begins as soon as it is due. At the time when
the repudiation occurred, the
JV was aware that there would be a
shortfall in the amounts that the Municipality intended to pay as the
amount was clearly determinable.
As such, claims 1 and 2 have
undoubtedly prescribed.
[20]
The conclusion of this Court on the issue of prescription marks the
end of the road for the JV in respect
of the first two claims. That
said, it is important to state that even if this Court had dismissed
the special plea of prescription,
the claim for damages premised on
repudiation is not sustainable having regard to the averments in the
particulars of claim. The
claim for these damages is premature
insofar as the JV did not communicate its acceptance of the
repudiation, a crucial step that
would have brought the agreement to
an end allowing it to proceed to claim for damages occasioned
thereby.
CLAIM BASED ON THE
MUNICIPALITY’S FAILURE TO GIVE NOTICE TO TERMINATE THE
AGREEMENT
[21]
Turning to the so-called extension of the agreement between the
parties. The agreement provides for three
ways in which the agreement
can come to an end. These are the following:
21.1
By either party, for any reason, upon giving 30 (thirty) days’
notice in writing;
21.2
By any other circumstance and/or clause provided for in the
Agreement;
21.3
Automatically when the Agreement expired on the 30 November 2016.
[22] It
is common cause that the duration of the agreement was thirty-six
months commencing and terminating on
1 December 2013 and 30 November
2016 respectively. The agreement has, by the effluxion of time, come
to an end on 30 November 2016.
By a letter dated 1 December 2016, the
Municipality appointed the JV to provide the same services contained
in the previous agreement.
This was not an extension or revival of
the agreement because the letter extending the services of the JV to
the Municipality is
specific - the new agreement was to run based on
month to month.
[23]
The above being the case, the Municipality was not under any
obligation to give a thirty-day notice of its
intention to terminate
the agreement. This is obviously because the agreement that had such
a provision had come to an end by the
effluxion of time. The issue is
therefore – if the agreement is not extant anymore, why would
the Municipality be expected
to adhere to the terms thereof? It being
trite that a month-to-month agreement can be terminated at any stage
by furnishing a reasonable
notice, I am satisfied that the four-day
period that the Municipality afforded the JV was fair. As such, the
Municipality was within
its rights to terminate the month-to-month
agreement in the manner it did. There is thus no merit in Claim 3 of
the JV against
the Municipality.
[24] In
the result, all three claims stand to be dismissed. I make the
following order:
The claims are dismissed
with costs, including those of two Counsel, where so employed.
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
APPEARANCES:
Counsel
for the Plaintiff:
Adv
MR Maphutha
Adv
SJ Mavundla
Instructed
by:
Masinga
DS Attorneys
Counsel
for the Defendant:
Adv
HM Mbatha
Instructed
by:
Mpho
Mashiloane Attorneys
Date
of Judgment:
07
August 2024
[1]
Van
Rooyen v Minister van Openbare Werke en Gemeenskapsbou
1978
(2) 835 (A) at 845