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[2024] ZAFSHC 220
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Matjhabeng Local Municipality v Down Touch Investments (Pty) Ltd and Another (5000/2023) [2024] ZAFSHC 220; [2024] 4 All SA 827 (FB) (24 July 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO/YES
CASE
NO.: 5000/2023
In
the matter between
:
THE
MATJHABENG LOCAL MUNICIPALITY
Applicant
[1]
and
DOWN
TOUCH INVESTMENTS (PTY) LTD
First
Respondent
[2]
THE
SHERIFF: WELKOM
Second
Respondent
[3]
Coram:
M Opperman J
Heard
:
2 May 2024
Delivered:
24 July 2024. This judgment was handed down
in court and electronically by circulation to the parties’
legal representatives
via
email and release to SAFLII on 24 July 2024. The
date and time of hand-down is deemed to be 15h00 on 24 July 2024
Summary:
Rescission of judgment
ORDER
1.
The application for striking out is dismissed with
costs.
2.
The application for the relief sought in the
notice of motion dated 7 December 2023 is dismissed with costs. It is
ordered that
the Municipal Manager shall carry the costs
de
bonis propriis
and as between attorney
and client.
JUDGMENT
INTRODUCTION
[1]
The
words of the Municipal Manager of the Matjhabeng Local
Municipality
[4]
set
the scene and atmosphere for the application for the rescission of a
default judgement that lies before the court:
15.
In September and October 2023, the legal department of the
Municipality was metaphorically bombarded
with litigation, executions
and attachments.
16.
As a consequence, the Municipality failed to deliver a notice of
intention to oppose the application
prior to the expiry of the
dies
induciae
. Had the Municipality obtained proper notice of the
application it would have opposed it.
[2]
The application is not for a legality review of
the administrative actions that caused the prelude to this
application. The declaration
of the Municipal Manager, in his
replying affidavit, is just as crucial to understand the rationale
for the litigation that was
embarked on here. He unequivocally admits
and blatantly declares that a complete lack of governance and
maladministration reigned
at the Municipality when the agreements
with Down Touch were entered into and subsequent litigation happened.
[3]
He
does, however, not submit any prove of the allegations.
[5]
It is denied by Down Touch. This is what he says:
19.
My administration is intent on establishing good governance in the
municipality:
19.1. The
decade-long gravy train that existed at the municipality, has come to
a halt.
19.2. All
procurement must comply with the law, and the municipality's internal
supply chain management prescripts.
19.3.
Matjhabeng Local Municipality, the Free State Province, the
Attorney-General, the South African Police Service
(Hawks) and the
Free State Province's Special Investigating Unit have been reviewing
supply contracts, procurement processes, payment
processes, invoices,
compliance processes and reporting processes in Matjhabeng. We have
identified substantial irregularities
in the processes. We have also
identified criminal activities in the procurement and payment
processes, which have been transmitted
to the SAPS to investigate.
19.4. The
consequences are being managed by the Municipality under my watch as
municipal manager and accounting officer
of the Municipality
19.5.
External parties, such as criminal investigation and prosecution, are
not under control of the Municipality,
nor does the Municipality
intend to interfere or prejudice any of these external processes or
depose to any of the content of these
ongoing external processes.
19.6.
Suffice it to say, evidence of the irregularities in the supply chain
process affecting Down Touch's contracts,
and the implementation
thereof, have been identified by Matjhabeng, …
THE
PRELUDE TO THE APPLICATION AND THE HISTORY OF THE CASE
[4]
This case is unique in that it arises from a
settlement agreement that was made an order of court. The history of
the case is valuable.
[5]
The application is, principally, for the
rescission and setting aside of a court order in terms of rule 42(1)
alternatively, the
common law. The order is dated 19 October 2023
handed down by Hefer AJ in this case with number 5000/2023.
[6]
The order (“Hefer – order”)
reads that:
Having considered the
documents filed of record and having heard the legal practitioners,
IT IS ORDERED THAT:
1.
Consequent to the order granted by this court on 4 August 2022 under
case number 366/2022:
1.1
The Respondent is ordered to pay the Applicant the amount of R4 282
564.51.
1.2
The Respondent is ordered to pay interest on the aforementioned
amount, calculated from
30 days after which the invoices appended as
“JJC1” to the Founding Affidavit became due and payable,
at the prime
overdraft rate the Applicant's bank charges of it on any
overdue account upon the Applicant's overdraft facility.
2.
The Respondent shall pay the costs of this application on a scale as
between attorney
and client.
[7]
En
masse
applications
were brought before the courts at grave legal costs to the
Municipality as is shown in “JJC3” in the recent
past.
[6]
These were withdrawn; just for further litigation to ensue.
[8]
The Municipality stated in their founding
affidavit that:
27.
From August 2023 to November 2023, a number of urgent applications
were launched by the municipality
in this court, as well as in the
High Court, Gauteng Division, to stay execution of judgments,
including this order
, in applications termed 'section
152 applications' referring to the relevant
section 152
of the
Local
Government: Municipal Finance Management Act 56 of 2003
. After the
exhaustion of some of these urgent remedies, and continuation of
others; the Municipality reverted to the rescission
of default
judgments, such as those sought to be issued in favour of the first
respondent herein. None of these judgments were
judgments on the
merits in this matter: they turned on urgency, jurisdiction and Rule
7 of the Uniform Rules of Court. (Emphasis
added)
[9]
On 31 October 2023 the Municipality, apparently
for the first time, became aware that a writ of execution and an
attachment to the
value of R4, 28 million. The notice of motion for
the rescission application in
casu
was only filed on 7 December 2023. It seems from
the above that they were aware of the default judgment by October
2023.
[10]
The
366/2022 – order (Molitsoane – order) came from an
application wherein the following was claimed:
[7]
TAKE
NOTE that Down Touch Investments (Pty) Ltd (hereinafter referred to
as
"the
Applicant")
intends approaching
this court for an order in the following terms:
1.
The Respondent is ordered
to pay the Applicant the amount of R26 511 456.19.
2.
Respondent is ordered to
pay interest on the aforementioned amount at the applicable
rate
calculated from 30 days after date of an invoice until date of final
payment.
3.
The Respondent is ordered
to pay the costs of the application.
4.
Further and/or alternative
relief.
[11]
The matter was set down for hearing on Thursday 21
July 2022 but on 18 July 2022 this court received a letter from the
legal representatives
of the Municipality wherein it was informed
that the parties are in the process of drafting a settlement
agreement and that the
matter will not proceed. It was indicated that
a draft order would be presented to the court that will cause the
settlement agreement
to be made an order of the court. The parties
could not proceed on 21 July 2022 with this undertaking and the
matter was by agreement
postponed to 4 August 2022 for the same
purpose; to conclude the settlement in an order of the court. Both
parties were represented
by experienced counsel.
[12]
The
facts that gave rise to the litigation and the 366/2022 – order
is succinctly set out in the applicant’s heads
of
argument in the 366/2022 – case.
[8]
It is that
after
a tender process was followed, Down Touch was appointed on 27 March
2018 to perform services for the Municipality. This included
the
resealing and refurbishment of various roads and ancillary works for
a period of three years, as and when required.
[13]
On the strength of this
award, the parties concluded a Service Level Agreement. Not one of
the agreements, in whatever form, was
ever taken on review or
questioned over the years.
[14]
In the three years that
followed, Down Touch received various instructions under this
agreement to perform work. On each occasion,
it received an order
from the Municipality, performed the work and issued an invoice.
These documents were all appended to the
founding affidavit in case
366/2022.
[15]
In an emergency, it helped
the Municipality with the supply of water to inhabitants of the areas
of Hennenman and Ventersburg. This
is not disputed. Consequently,
Down Touch issued an invoice on 22 May 2020 in the amount of R106
400.00.
[16]
A further contract
was concluded in September 2020
,
after the
Municipality called for tenders for the appointment of a panel of
service providers for the hiring and letting of a so-called
yellow
fleet for a period of three years. Down Touch was appointed on 23
October 2020.
[17]
Consequently,
Down Touch provided these services on the back of work orders
received. This was primarily in December 2021.
[18]
The parties had consensus on
a so-called safety measure to avoid illegal and tenuous payments by
the Municipality; this also to
protect the Municipality. One material
term is relevant. It deals with the way invoices will have to be
certified by the contractor
for services rendered, and that the
Municipality must pay these within 30 days after receipt. The
Municipality in turn would certify
such invoices within 7 days, but
importantly:
Should
the invoices not be acceptable to the Municipality, the contractor
shall be informed within 14 days of receipt of the invoice.
Upon
receipt of proof referred to in clause 5.6 (the Invoices) of the
agreement, Matjhabeng shall verify information contained
therein
before processing any fee due and payable. Should the Municipality
not be satisfied with work done by the contractor, the
Municipality
shall request the contractor to rectify or improve the work done at
the contractor's costs.
[9]
[19]
The Municipality took no
issue with the invoices at all, and it did not make any attempt at
explaining why it did not take up with
Down Touch, at any stage, the
accuracy or not, of said invoices. This had to be done within 14 days
after the invoice was submitted.
[20]
It is clear and unambiguously so, that the
Municipality decided to settle the issue and comply and fulfill their
obligations in
terms of the contract and the claim
.
[21]
The above litigation ended
in the 366/2022 – court order on 4 August 2022 by Molitsoane J.
It states the following:
Having considered the
documents filed of record and having heard the legal practitioner/s,
IT IS ORDERED BY
AGREEMENT BETWEEN THE PARTIES THAT:
1.
The Respondent shall pay the Applicant the amount of
R26 511 456.19
(“capital amount”);
2.
The Respondent shall pay interest on the capital amount calculated at
the prescribed
rate of interest calculated from 27 January 2022 to
date of final payment;
3.
The Respondent will make payment of the outstanding capital amount
and interest
as follows:
3.1
An amount of R1 000 000.00 by 19 August 2022;
3.2
An amount of R500 000.00 per month with the first payment by
31
August 2022
and by the last day of each succeeding month until
final payment of the capital amount and interest;
3.3
All outstanding interest will be payable together with the last
payment, the amount of which
will be confirmed by the Applicant’s
attorneys 7 days prior to the final payment being due;
4.
In the event of failure by the Respondent to make payment of any
amount at the
date as specified above, the full outstanding balance
will immediately become due and payable and the Applicant will be
entitled
to without notice proceed with a writ of execution;
5.
Should the Respondent dispute any invoice payable as set out in the
application
they shall, within 60 days after date of this order
resolve such invoice with the Applicant. Such a dispute will have no
impact
on the payments as set out in prayer 3.1 and 3.2 above or the
capital amount and interest due but shall form part of the remainder
of the outstanding balance due by the Respondent to the Applicant in
the amount of R8 954 287.94
which does not form part of
this application
; (Emphasis added)
6.
Should the Respondent fail to actively partake in resolving such a
dispute, their
right to rely on this clause to stay payment on a
specific invoice will lapse. All invoices not in dispute will form
part of the
monthly payments as set out above;
7.
The Respondent shall pay the Applicant’s taxed or agreed costs.
[22]
From the evidence follows the common place fact
that the Municipality did not honour the Molitsoane – order and
the Hefer
– order was the result. Down Touch noted in their
affidavit that the Municipality: “has raised each and every
conceivable
defence open to it in the 366/2022 - case. This included
a case of uncertainty, failure to follow procurement regulations
etc.”
At the hearing of case
366/2022 the Municipality capitulated and ceased their defences and
the settlement agreement was reached.
[23]
Notwithstanding the contractually sacred
settlement agreement that was solemnised into a court order by
agreement between the Municipality
and Down Touch, and whilst
assisted by experienced counsel; the Municipality now attacks the
Hefer – order.
STRIKING
OUT
[10]
[24]
Before I can continue, the interlocutory
application for striking out of some statements by Down Touch in
their affidavits, must
be disposed of. I stated unequivocally in
court during the hearing that each case must be adjudicated on and
limited to its own
merits.
[25]
The peripheral debating by both the Municipality
and Down Touch is unwanted.
[26]
Papers must at all times be drafted with the
utmost respect to the administration of justice and the parties
involved. The remarks
and irrelevant issues, that are obvious and
speak for itself right through the papers, will be ignored by the
court in the instance
with the disdain it deserved. It was
unnecessarily strongly and emotionally worded by both parties but it
does not prejudice any
of the parties in the facts to be adjudicated.
The objective facts are the objective facts.
[27]
The Municipality, the same, made themselves guilty
of similar questionable statements as Down Touch. As was correctly
stated by
counsel for Down Touch in their heads of argument at 9.3:
“Allegations of fraud must be supported by particularity. Such
allegations should not find its way into an affidavit lightly. It
must be backed up by hard evidence, because fraud is not easily
found, much less inferred.”
[28]
The
Municipality admitted in their founding affidavit that they were:
“metaphorically bombarded with litigation, executions
and
attachments.”
[11]
[29]
As to the alleged hearsay evidence; Mr Mbambo did
file a confirmatory affidavit. The Plascon-Evans principle applies
and the testimony
must be accepted. If the Municipality was so
adamant about the evidence of Mr Small and Mr Kruger nothing
prevented them from dealing
with it in terms of the rules of court
and contesting the evidence of Mr Mbambo.
[30]
The whole of the defence of Down Touch is stated
unequivocally in their Practise Note:
Summary
of the First Respondent’s argument:
7.1
This application is an abuse. It is the latest attempt on the part of
the delinquent Municipality
simply not wanting to pay for services it
has already received.
7.2
None of the grounds alleged as a defence (belatedly) constitute any
grounds in law at all.
7.3
The application can only succeed if a
procedural irregularity is shown to have been committed
in the
process leading up to the granting of the default judgments. None has
been shown.
[31]
I am not satisfied that the applicant proved that
they will be prejudiced by any of the issues raised in the
application. The application
to strike out is dismissed with costs.
This brings me to the factual findings on the evidence.
FACTUAL FINDING
[32]
The averments in the affidavit for Down Touch, now
the first respondent, are the real proven facts on which the case
must be adjudicated.
The Plascon Evans principle causes it to be so.
I will refer to it later when I discuss the applicable law.
[33]
This
is what the first respondent aptly and supported by the objective
events in the case; submitted:
[12]
a.
The Municipality refuses to accept the
consequences that flow from the conclusion of a settlement agreement.
b.
The settlement entailed that the Municipality
would make full payment of the amount claimed in the first
application, it accepted
liability for the interest that was charged,
set out how the Municipality would embark upon payment of the
judgment debt, etc.
c.
Paragraphs 5 and 6 of the settlement agreement and
the order of the court expressly directed that the subject matter of
the first
application did not involve all outstanding payments to
Down Touch.
d.
The Municipality had offered to deal with invoices
that were issued on strength of the agreements but it did not form
part of the
dispute.
e.
In paragraphs 5 and 6 of the order the parties
agreed that the value of the remaining work was R8 954 287.91. The
Municipality would
be entitled to dispute any of those invoices with
the proviso that it would do so within 60 days after the date of the
order.
f.
Paragraph 6 of the court order stated that should
the Municipality fail in this agreed upon duty, it would forego its
right to stay
payment of any such a debt.
g.
As had undisputedly happened, the Municipality did
not dispute the invoices, nor did it at any stage dispute the
quantification
of the invoices. An enforcement of paragraph 6 of the
order was the consequence.
h.
Hefer AJ accepted the above evidence when he
issued the 5000/2023 – order. The 366/2022 – order made
it clear what was
going to happen with the approximately R8.9 million
debt in future, how it would be sorted out and if the Municipality
didn't do
what it was supposed to do, what would be the effect.
THE ISSUES
[34]
It took some careful reading of the papers to
ascertain all the defences and bases for the application for
rescission. The Municipality
squarely relies on rule 42(1) in that
the order was erroneously granted. I will list the issues later but,
in an attempt to sift
the wheat from the chaff I will start with the
heads of argument for the Municipality dated 23 April 2024. The
introduction is
helpful where it refers to the claim that is now
before court. It reads:
Introduction
1.
This application sought
the following substantive relief in the Notice of Motion,
some of
which has become moot subsequent to the institution of the
proceedings:
1.1.
That this application be heard as an urgent
application in terms of Rule 6(12) of the Uniform Rules
of this
honourable Court and that the forms and service provided for in the
Rules be dispensed with, and the Applicant's non-compliance
with the
timeframes in the Rules be condoned.
This
relief
has
become academic: see section title URGENCY below.
1.2.
That the order granted by the High Court,
Free State Division, on 19 October 2023 in Case Number 5000/2023
shall be rescinded and set aside. The order is annexed to this Notice
of Motion as annexure
X1. This
annexure is also attached as
FA2 to the Founding Affidavit.
1.3.
That the warrants of execution and
attachments issued in this matter be set aside.
This relief will
follow setting aside and rescission; but is also
independently
sought (in the event rescission is not granted), based on
independent grounds.
1.4.
That all attached movables seized from the
applicant and in possession or under control of the second
respondent
at premises under control of the second respondent be released by the
second respondent to the applicant at such premises
at no cost to the
applicant.
This
relief
will follow
setting
aside and rescission; but at the time of this hearing, and in
terms of an
undertaking of the parties after institution of
this application; this relief is moot, as no movables are currently
seized and in
possession of
the second respondent.
1.5.
That the operation and execution of all
process be stayed pending judgment in the main application.
This
relief is necessary, as rescission, unlike
appeal, does not by
operation of law stay the operation and execution
of a
judgment in terms of
Section 18(1)
of the
Superior Courts Act 10 of
2013
. The grounds for this relief is Rule 45A of the Uniform Rules
of Court.
1.6.
That the First Respondent pay the costs of
this application on an attorney and client scale, including
the costs
of two counsel where so employed.
[35]
The issues that crystallised are:
a.
The order was erroneously issued and the applicant
relies on rule 42(1)(a). In the alternative, they rely on the common
law grounds
for rescission.
b.
The application of the
Institution of Legal
Proceedings Against Certain Organs of State Act No. 40 of 2002
as to
notice and service.
Section 3
was not complied with.
c.
Service of the notice for application of the
default judgment was not procedurally proper. (Rule 4(1)(a)(viii) of
the Uniform Rules
of Court read with
section 115(3)
of the
Local
Government Municipal Systems Act No 32 of 2000
.)
d.
The
Hefer – order is alleged by the Municipality to be a nullity
because of their version of the application of the
res
judicata
doctrine.
The Municipality maintains that the order does not flow from the
rights begotten from the previous court order, and the
order is
“fatally and irreconcilably inconsistent: either the relief in
Case Number 366/2022 is sought, or new relief is
sought.”
[13]
e.
Irregularities in the procurement process.
f.
The dispute and the settlement agreement.
g.
Alternatively, good cause for the default.
h.
Costs
SOME GENERAL REMARKS
[36]
The consternation, conflict and costs that
non-compliance with court orders and the rules of court have caused
in civil litigation
have become a menace in the administration of
justice. It affects justice and pollutes the sanctimony of the rule
of law.
[37]
The
significance of the execution of court orders cannot be denied. De
Vos
[14]
emphasised the
execution of court orders when he wrote that:
As former Chief Justice
Sandile Ngcobo pointed out in a public lecture, the judiciary needs
to retain the public’s confidence
in order for it to fulfil its
role properly. Public confidence was important, suggested Ngcobo CJ,
because it is necessary for
the effective performance of judicial
functions.
What was required was for members of the public to
recognise the legitimacy of individual decisions of the court
even when it disagreed with the outcome of such decisions
: in
other words, public opinion related to the institutional position of
a court and hence courts had to act in such a manner that
it retained
the confidence – if not always full agreement – of the
public it served.
…
If
members of the public come to believe that what matters is not what a
specific legal principle requires, but what those with
money and
power dictate, lawlessness in its most extreme form logically
follows.
(Emphasis
added)
To quote former Chief
Justice Ishmael Mahommed, “[u]nlike Parliament or the
executive, the court does not have the power of
the purse or the army
or the police to execute its will. The superior courts and the
Constitutional Court do not have a single
soldier. They would be
impotent to protect the Constitution if the agencies of the state
which control the mighty physical and
financial resources of the
state refused to command those resources to enforce the orders of the
courts. The courts could be reduced
to paper tigers with a ferocious
capacity to roar and to snarl but no teeth to bite and no sinews to
execute what may then become
a piece of sterile scholarship.”
[38]
The ease with which court orders are ignored by
litigants and counsel alike, and the Uniform Rules of Court just
disregarded, is
astounding.
In the
meanwhile, the justice system battles to maintain veracity because
the layperson cannot fathom the delays and the astronomical
costs
that makes access to justice unreachable.
The
Constitutional Court remarked in
Grootboom
v National Prosecuting Authority and Another
(C696/08)
[2009] ZALCCT 15 (18 December 2009) that:
[21]
The failure by parties to comply with the rules of court or
directions is not of recent
origin.
Non-compliance has bedevilled
our courts at various levels for a long time.
Even this Court has
not been spared the irritation and inconvenience flowing from a
failure by parties to abide by the Rules of
this Court. (Emphasis
added)
[39]
Parties
may not twist, manipulate and maneuver the rules of law as, when and
how it suits them; it simply destroys the administration
of justice.
Litigants have the right and the duty to keep each other accountable
to the rule of law. In the matter of Zipp v Zipp
[15]
Sutherland J said, and I agree, that:
Too often, legal
practitioners display sycophantic acquiescence in their client's
desires. This is wrong. Diligent and professional
advice includes
frankly telling a would-be litigant what the realities of the law
are. Indulging in litigation which serves only
to wear down the
opposition or protract the case is a violation of the duty of both
attorneys and counsel to the process of the
court. Litigation is not
a free for all. Our adversarial system of litigation does not license
practitioners, whether attorneys
or counsel, to ignore their duties
to the court which requires them to act so as to promote the efficacy
and efficiency of the
process of the court. When practitioners, in
their zeal for loyalty to their clients, abandon this duty they
behave unprofessionally.
(See: D.Ipp, 'Counsel's duties to the Court'
(1998) 114 LQR 63)
[40]
The Municipality did more than rely on rule
42(1)(a); they also attacked the legal veracity of the Hefer –
order. I will deal
with all the issues to put an end to the
litigation.
THE
LAW APPLICABLE TO APPLICATIONS FOR RESCISSION
[41]
Counsel
for the applicant, during the hearing on 2 May 2024, placed emphasis
on the Plascon Evans principle to be applied by the
court. The
consequence is that the applicant will have to stand and fall by the
law of applications. The Plascon Evans principle
allows courts to
make determinations on disputes of fact in application proceedings
without hearing oral evidence. The rule decrees
that in motion
proceedings, a final order may be granted if the facts stated by the
respondent, together with the admitted facts
in the applicant's
affidavits, justify the order. There are exceptions to the rule, such
as when allegations or denials are far-fetched
or clearly untenable.
The Plascon-Evans rule applies only to final relief and not
interlocutory matters.
[16]
[42]
Constitutional principles have come to play a
pivotal role in matters of this kind and specifically in rescission
applications.
In RGS Properties (Pty)
Ltd v eThekwini Municipality
2010 (6)
SA 572
(KZD) a mindful and balanced approach by courts adjudicating
these cases was the resolve to the constitutional challenge. The test
as summarized is:
a.
A court should not, in an application for the
rescission of a default judgment, scrutinize too closely whether the
defence is well
founded, as long as, prima facie, there appears to
the court sufficient reasons for allowing the defendant to lay before
court
the facts he thinks necessary to meet the plaintiff's claim.
b.
Where a defendant has never clearly acquiesced in
the plaintiff's claim, but persisted in disputing it, the court
should be slow
to refuse him entirely an opportunity to have his
defence heard.
c.
Judgment by default has been said to be inherently
contrary to the provisions of section 34 of the Constitution. This
section provides
that everyone has a right to have any dispute that
can be resolved by the application of law decided in a fair public
hearing before
a court, or, where appropriate, another independent
and impartial tribunal or forum.
d.
Therefore, in weighing up facts in an application
for the rescission of a default judgment, the court must balance the
need of an
individual who is entitled to have access to court and to
have his or her dispute resolved in a fair public hearing, against
those
facts which led to the default judgment being granted in the
first instance.
e.
In its deliberation, the court will no doubt be
mindful, especially when assessing the requirement of reasonable
cause being shown,
that, while, among others, this requirement
incorporates showing the existence of a bona fide defence, the court
is not seized
with the duty to evaluate the merits of such defence.
f.
The fact that the court may be in doubt about the
prospects of the defence to be advanced is not a good reason why the
application
should not be granted.
g.
That said, however, the nature of the defence
advanced must not be such that it prima facie amounts to nothing more
than a delaying
tactic on the part of the applicant.
h.
An absolute constitutional rejection of default
judgments will not suffice because there is a persistent tension
between commercial
certainty and prompt remedies in law for
non-compliance with contracts and court orders, on the one hand; and
the right to access
to courts on the other hand.
i.
Each case must be adjudicated on its own merits
and there is no
numerus clausus
of factors. The law is that the court has a wide
discretion in evaluating good cause to ensure that justice is done.
j.
The explanation for default must be stated and be
reasonable. The default may not be willful and an attempt to delay
justice.
[43]
Rule 31(2) of the Uniform Rules of Court:
(a)
Whenever in an action the claim or, if there is more than one claim,
any of the claims is
not for a debt or liquidated demand and a
defendant is in default of delivery of notice of intention to defend
or of a plea, the
plaintiff may set the action down as provided in
sub-rule (4) for default judgment and the court may, after hearing
evidence, grant
judgment against the defendant or make such order as
it deems fit.
(b)
A defendant may within 20 days after acquiring knowledge of such
judgment apply to court
upon notice to the plaintiff to set aside
such judgment and the court may, upon good cause shown, set aside the
default judgment
on such terms as it deems fit.
[Sub-r. (2) substituted
by GNR.417 of 1997 and by GNR.61 of 25 January 2019.]
[44]
The proceedings that caused the default judgment
in
casu
were
not action proceedings. In
Makhomisani
N.O. and Another v SB Guarantee Company (RF) (PTY) Limited
(2019/41752) [2022] ZAGPJHC 179 (23 March 2022) it
was ruled that:
55
Rule 31 concerns default judgments granted in
action proceedings …
56
It is quite evident that Rule 31, concerning action proceedings, is
not applicable
to the current circumstances.
[45]
Rule 42(1) of the Uniform Rules of Court:
The court may, in
addition to any other powers it may have
mero motu
or upon the
application of any party affected,
(a)
rescind or vary: an order or judgment erroneously sought or
erroneously granted in the absence
of any party affected thereby;
(b)
an order or judgment in which there is an ambiguity, or a patent
error or omission, but
only to the extent of such ambiguity, error or
omission;
(c)
an order or judgment granted as the result of a mistake common to the
parties.
[46]
Harms
[17]
is correct when he pointed out with reference to case law that at
common law the court is entitled to rescind a judgment obtained
in
default of appearance provided sufficient cause is shown. This
includes a reasonable and acceptable explanation for the default
and
that on the merits the party has a bona fide defence.
The
application of this principle is limited to those few cases where the
application does not fall strictly within the limits of
rule 31 or
42
.
[47]
It
is claimed by the Municipality
[18]
that the default judgment was erroneously sought and granted;
alternatively, the applicant has shown that it has a reasonable
explanation for its default of appearance. It is their argument that
rule 42(1)(a) of the Uniform Rules of Court and the common
law, in
the alternative, find application. They are silent on rule 31(2) and
the delay in bringing the application. During argument
in court
counsel for the Municipality correctly submitted that rule 31(2) is
not applicable as action proceedings are not in play.
[48]
Counsel
for Down Touch claims
[19]
that
Rule 31(2)(b) is applicable and the law to be applied. The order was
not erroneously sought. Rule 42(1)(a) deals with procedural
irregularities and not the merits of the case. He referred to the
judgment of the Supreme Court of Appeal in
Freedom
Stationery (Pty) Limited and Others v Hassam and Others
(921/2017)
[2018] ZASCA 170
;
2019 (4) SA 459
(SCA) (30 November 2018):
[18]
… As Streicher JA explained in
Lodhi 2 Properties
Investments CC & another v Bondev Developments (Pty) Ltd
2007
(6) SA 87
(SCA) paras 25-27, the phrase ‘erroneously granted’
relates to the procedure followed to obtain the judgment in the
absence of another party and not the existence of a defence to the
claim. See also
Colyn v Tiger Food Industries Ltd t/a Meadow Feed
Mills (Cape)
2003 (6) SA 1
(SCA) paras 6 and 9.
Thus, a
judgment to which a party was procedurally entitled, cannot be said
to have been erroneously granted in the absence of another
party.
(Emphasis added)
[49]
He further argues that the common law does not
find application on the basis of the judgment of
Ellis
v Eden; Eden v Ellis and Another
(10604/2020)
[2022] ZAWCHC 112
;
[2022] 3 All SA 381
(WCC);
2023 (1) SA 544
(WCC)
(6 June 2022) wherein Rogers J then ruled that:
[54]
If, as I consider, rule 31(2)(b) is applicable, Mr Eden cannot escape
the 20-day time limit by falling back
on the common law, since
otherwise rule 31(2)(b) would be a dead letter. However, if I am
wrong in finding that rule 31(2)(b) is
applicable, the case for
rescission based on the common law confronts similar difficulties to
the case for rescission based on
rule 31(2)(b).
[55]
First, a defendant seeking common-law rescission of a default
judgment must establish good cause, and the
scope of that requirement
would be much the same as the good cause requirement in rule
31(2)(b). Second, although Mr Eden’s
claim for common-law
rescission is not subject to a 20-day time limit, common-law
rescission is a discretionary remedy. A claimant
seeking a
discretionary remedy may be non-suited if he or she delays
unreasonably in claiming the remedy, and this applies to common-law
rescission. Mr Eden thus needs to satisfy the court that his delay,
which was undoubtedly unreasonable, should be overlooked. The
20-day
period stipulated in rule 31(2)(b) provides at least a starting point
to assess what would be reasonable in the case of
a default judgment
granted by a Court on a claim for a debt or liquidated demand. For
the reasons I have given in my discussion
of rule 31(2)(b), I would
reject the claim for common-law rescission.
[50]
It
is trite that even though the applicant seeks the setting aside of
the warrants of execution and attachments, and suspension
of further
execution; execution has, according to the first respondent,
apparently already been effected and the money has been
paid out to
the first respondent. There is no relief sought for repayment.
[20]
[51]
The Municipality wants to put the merits of the
case before a court in pursuit of their right in terms of section 34
of the Constitution
of the Republic of South Africa, 1996.
[52]
Section 34 of the Constitution cuts both ways;
both the Municipality and Down Touch have a right to justice by the
effective application
of the administration of justice and the utmost
respect to the rule of law.
[53]
The case of
Venmop
275 (Pty) Ltd and Another v Cleverland Projects (Pty) and Another
(2014/14286) [2015] ZAGPJHC 176;
2016 (1) SA 78
(GJ) (3 August 2015) said it all and lays down the law:
[7]
The efficient conduct of litigation has as its object the judicial
resolution of disputes optimising
both expedition and economy. The
conduct and finalisation of litigation in a speedy and cost-efficient
manner is a collaborative
effort… Where practitioners neglect
their roles, it leads to the protracted conduct of the litigation in
an ill-disciplined
manner, the introduction of inadmissible evidence
and the confusion of fact and argument, with the attendant increase
in costs
and delay in its finalisation, inimical to both expedition
and economy.
[54]
I stated in previous cases that litigants may not
be allowed to turn their backs on the justice system and the court
and walk away
as, and when, and how it suits them and then return
when the shoe pinches. It often ensues that the party with due
knowledge of
the ongoing court case ignores the litigation and stays
away from court and then abruptly reacts when a warrant of execution
is
implemented. This cannot be tolerated by our courts anymore. It
has caused a scourge of unacceptable disrespectful litigation.
[55]
Litigants are the masters of their cases and not
their legal representatives. It should not be necessary for the court
to protect
the rule of law against litigants. The Constitutional
Court in
Zuma v Secretary of the
Judicial Commission of Inquiry into Allegations of State Capture,
Corruption and Fraud in the Public Sector
Including Organs of State
and Others
(CCT 52/21)
[2021] ZACC 28
;
2021 (11) BCLR 1263
(CC) (17 September 2021): was clear and
unyielding when it was ruled that:
[103] …If
our law, through the doctrine of peremption, expressly prohibits
litigants from acquiescing in a court’s
decision and then later
challenging that same decision, it would fly in the face of the
interests of justice for a party to be
allowed to willfully refuse to
participate in litigation and then expect the opportunity to re-open
the case when it suits them.
It is simply not in the interests of
justice to tolerate this manner of litigious vacillation.
[56]
It is the constant tug of war between contractual
freedom and the administration of justice that often prevails in
cases of this
nature that causes the complications. The litigants
here did not resolve their disputes in terms of the contracts. The
contracts
or agreements have not been legally challenged hitherto.
The settlement that was made an order of the court was not honored.
It
speaks volumes. Eksteen JA in
Basson
v Chilwan and Others
[1993] ZASCA 61
;
1993 (3) SA 742
(A) at 761 to 762 remarked that:
In Roffey's case supra
Didcott J refers to the dictum of
Jessel MR in Printing and
Numerical Registering Co v Sampson
(1875) LR 19 Eq 462
with
approval, where the learned Judge said at 465:
'If
there is one thing that more than another public policy requires, it
is that men of full age and competent understanding shall
have the
utmost liberty of contracting, and that their contracts when entered
into freely and voluntarily shall be held sacred
and shall be
enforced by courts of justice. Therefore, you have this paramount
public policy to consider that you are not lightly
to interfere with
this freedom of contract.
' (Emphasis
added)
[57]
In weighing up the public interest involved in the
principle of freedom of trade against the sanctity of contracts,
South African
law prefers the sanctity of contracts. The importance,
in the public interest, is that people should keep their promises.
The principle
of
pacta sunt servanda
,
particularly where parties contract on a basis of equality, is a
basic requirement of good faith. It is grounded therefore not
only in
law but also in morality.
[58]
Justice Ackermann in
Ferreira
v Levin NO; Vryenhoek v Powell NO
1996
(1) SA 984
(CC) at paragraph [26] described equal protection under
the law as: “a central consideration in a constitutional
state”.
These statements aim for
reasonable certainty, so that parties can go about their business
knowing the rules of the game; constitutional
economic integrity is
vital.
[59]
The
above goes to a basic civilized society. Bowden
[21]
discussed this dichotomy to be managed in a democracy:
R.G.
Collingwood has outlined three aspects of civilization: economic,
social, and legal. Economic civilization is marked not simply
by the
pursuit of riches—which might actually be inimical to economic
civilization—but by “the civilized pursuit
of wealth.”
…
[60]
It cannot be the law that when the existing regime
at the Matjhabeng Municipality does not approve of the settlement
agreement that
was made an order of court by the previous
administration;
mero moto
rescind
the agreement. There must be compliance until a so-called legality
self-review by a court of law was initiated and all the
facts of the
case were exposed and the
audi alteram
partem
dictum complied with. The court
must, in the end, rule in terms of the Constitution on a just and
equitable outcome. I will deal
with this hereunder again.
THE APPLICATION OF THE
INSTITUTION OF THE LEGAL PROCEEDINGS AGAINST CERTAIN ORGANS OF STATE
ACT NO. 40 OF 2002
[61]
In his heads of arguments for the applicant
counsel at paragraph 7.1 states that “Down Touch failed to
comply with the Institution
of Legal Proceedings Against Organs of
the State Act 40 of 2002, including section 3. The Act applies to all
proceedings for the
recovery of debt from a municipality.”
[62]
In
Matjhabeng Local
Municipality v Pakampho Electrical and Others
(911/2023)
[2024] ZAFSHC 153
(6 June 2024) counsel for the Municipality’s
argument was extensively dealt with and rejected:
[8]
In the First Respondent's answering affidavit, the deponent, Mr
Kruger, the First Respondent's
attorney of record, stated as follows:
“
As
a result of this claim not being delictual in nature no service in
terms of Act 40 of 2002 is necessary.”
[9]
Mr Snijders, appearing for the Applicant, is correct in his
submission that this defence is wrong in law.
However, his
reasons for this contention are not correct. According to him, the
notice requirement in Section 3(1) applies to a
debt which means “any
debt arising from the cause of action - which arises from delictual,
contractual or any other liability”.
[10]
In the matter of
Vhembe District Municipality v Stewarts &
Lloyds Trading (Pty) Ltd and Another
referred to by Mr Grobler,
appearing on behalf of the First Respondent, the Supreme Court of
Appeal has confirmed that when a litigant's
claim against an organ of
state is not a damages claim, the Act does not apply.
[11]
The claim by the First Respondent against the Applicant is not a
claim for damages. In
International Harvester v Ferreira
, it
was held that a claim for work done and material delivered is one for
a debt or liquidated demand.
[12]
In the present matter the claim by the First Respondent against the
Applicant is also a claim for a
debt or liquidated demand and the
notice in terms of Section 3 of Act 40 of 2002 was therefore not a
prerequisite.
[63]
Counsel
for the Municipality referred the court during the hearing of the
matter to two cases in support of his assertion that section
3 is
applicable to the process of the obtainment of judgment or order on
the facts of this case. These are
Minister
of Agriculture and Land Affairs v C J Rance (Pty) Ltd
(293/09)
[2010] ZASCA 27
;
2010 (4) SA 109
(SCA);
[2010] 3 All SA 537
(SCA) (25
March 2010) and
Botha
and Others v Eskom Holdings SOC Ltd
2024
(2) SA 322 (FB).
[22]
[64]
The Botha matter ruled that Eskom is not an organ
of the state in terms of section 1(1) of Act 40 of 2002 and does not
enjoy the
notice protection afforded by section 3. The issue to be
adjudicated was whether Eskom was an organ of the state. The claims
were
all for damages incurred due to fires. The case does not find
application here.
[65]
The CJ Ranch – matter also dealt with claims
for damages due to fires. The issue here was one of condonation for
the delayed
and late notice in terms of section 3. The case also does
not find application.
[66]
The deficiency alleged by the Municipality does
not exist in
casu
and
the argument is rejected. The Institution of Legal Proceedings
Against Organs of the State Act 40 of 2002 does not apply unless
damages are sought. A claim for work performed is not a claim for
damages.
[67]
The claim here is for work performed and payment
therefor that is outstanding in terms of a settlement between the
parties and determined
based on an order of court.
[68]
The defence of the Municipality that the order
was erroneously granted on this aspect is rejected.
SERVICE
[69]
The Municipality stated and admitted in their
founding affidavit that:
12.
On 22 September 2023, the application in Case 5000/2023
was served
on Mrs Bianca van der Spuy, a professional assistant in the legal
department of the Municipality.
The return of service is annexed
to the application (R:91).
13.
On that day, 22 September the Litigation Manager in the Legal
Department, Ms Tsholofelo Gaborone,
was in Bloemfontein appearing in
the High Court in a (sic) matters heard by Mme Justice Opperman on
behalf of the Municipality.
For reasons unknown to Ms Gaborone,
she did not gain knowledge of the application on that day, or any
time thereafter.
14.
At no time prior to judgment did this application come to the
attention of the Municipal Manager.
(Emphasis added)
[70]
The Municipality admits that the notice was served
on them. By implication on the above, in the least, was Ms Gaborone
authorised
to receive service of legal documents. She is not the
Municipal Manager. Mrs van der Spuy is a professional assistant in
the legal
department and in terms of the legislative decree and case
law that will be referred to hereunder, competent to receive the
notice.
[71]
The
content of the return of service as drafted by the sheriff stands
undisputed. It was served on Mrs van der Spuy and the evidence
of
Down Touch stands corroborated by the Sheriff: Welkom
[23]
that service must be on Mrs van der Spuy:
8.6
Ms Pienaar subsequently spoke to Mr
Small at the Welkom Sheriff’s office. This was on 9
February
2024. Mr Small confirmed to her that on each occasion he and Mr
Victor Mbambo, the deputy sherif, were called upon to
serve legal
process upon the Municipality, the Municipal Manager or his or her
secretary would instruct that the process must be
served upon Mrs van
der Spuy, or Mr Vanga (the Head of the Legal department in the
Municipality). Mr Mamba (sic) also confirmed
that the instruction was
changed at the end of January 2024, whereby the deponent had asked
that all legal process henceforth be
served on his office in
future.
[24]
[72]
The above said; the legislation provides as
follows:
a.
Rule
4(1)(a)(viii): “where a local authority or statutory body is to
be served, service shall be effected by delivering a
copy to the
municipal manager
or
a
person in attendance at the municipal manager’s office of such
local authority
or
to
the secretary
or
similar
officer
or
member
of the board
or
committee
of such body,
or
in
any manner provided by law;”
[25]
(Empasis added)
b.
Section 115(3)
of the
Local
Government Municipal Systems Act 32 of 2000
was also regarded in the
case of
Great
Kei Municipality v Danmist Properties CC
(ECJ 2004/032)
[2004]
ZAECHC 32
;
[2004] 4 All SA 298
(E) (10 September 2004) on issues of
this nature and as relevant. It reads that:
“
Any
legal process is effectively and sufficiently served on a
municipality when it is delivered to the municipal manager
or
a person in attendance at the municipal manager’s office.
”
(Emphasis added)
[73]
The legislation does not decree that unless
service is executed upon the Municipal Manager it is defective. It
cannot be the law
that if the Municipal Manager is not available no
service may occur. It will cause preposterous results on litigation
with organisations
such as local municipalities. The administration
of justice will suffer severely. What the “office of the
Municipal Manager”
can be defined as is also not clear. In the
least the “legal department” will suffice.
[74]
In
Mkhondo
Municipality v Voster and Another
(354/2019)
[2020] ZAMPMBHC 10 (14 April 2020) a similar situation presented as
in this case:
[8]
The return of service reflects that the notice of motion was served
on Ms. Mathebula working
at the Legal Department of the Applicant. It
is the same person to whom the court order was also served by the
Sheriff once it
was granted. The deponent to the Applicant’s
affidavit, the municipal manager, claims that the notice of motion
was not served
on him. It was only the court order that was served on
him.
[9]
It was finally submitted in support of the argument that the judgment
was erroneously sought
and erroneously granted; that the service by
the Sheriff was not in accordance with the
Local Government:
Municipal Systems Act 32 of 2000
and
Rule 4
of the Rules. In making
this submission, the Applicants relied on a decision by the Northwest
Division of the High Court of
Rustenburg Local Municipality v
Rennaisance Security and Cleaning Services CC
. In this decision
Hendricks J (as he then was) found that the service of summons on the
archives administration clerk was not a
proper service on the
municipality. Rescission of judgment was for this reason allowed.
[10]
The facts in this case can however be distinguished from those in
Rustenburg Local Municipality v Rennaisance Security and Cleaning
Services CC
in that in
casu
, the notice of motion was not
served on “the archives administration employee of the
municipality” who in all probability
would not have an idea on
what to do with the summons or the application so served as her work
has nothing to do with legal documents.
The notice was served on
an employee in the legal department of the municipality. This is the
department with the responsibility
to litigate on behalf of the
Applicant.
[11]
As an employee in the legal department, Ms.
Mathebula is presumed to be working with legal documents daily
and
would know what should be done when a notice of motion is served on
her.
The Applicant does not explain who
Ms. Mathebula is nor does it dispute that she is an employee working
in its legal department.
It also does not dispute that the court
order was served on the same person as reflected in the Sheriff’s
return of service.
[12]
In
Vhembe District Municipality v Stewarts & Lloyds Trading
(Booysens) (Pty) Ltd and Another,
the Supreme Court of Appeal
(the SCA) had to decide if the service executed by the Sheriff in the
same fashion complied with the
Local Government: Municipal Systems
Act 32 of 2000
. Just like in this case, the municipality only took
steps to rescind the judgment after receiving a writ of execution
that was
served on the same legal advisor in the employ of the
municipality. The court
a quo
had held that service was proper
and dismissed the rescission application. It also held that the
applicant did not have a bona
fide defence to the claim.
[13]
On appeal, the SCA confirmed the High Court’s finding that
the service on the legal adviser of the municipality was a proper
service in compliance with the
Local Government: Municipal Systems
Act 32 of 2000
. For these reasons, the argument that service on Ms.
Mathebula of the Applicant’s legal department was improper has
to fail.
(Emphasis added)
[75]
In the
Great Kei
Municipality v Danmist Properties CC
(ECJ
2004/032)
[2004] ZAECHC 32
;
[2004] 4 All SA 298
(E) (10 September
2004) the notice was not served at the address of the municipality.
It is dissimilar to this case. It came to
the fore that there was no
such entity as the Great Kei Local Municipality and that the
municipal offices at 27 Frontier Street,
Kei Mouth are not the main
offices of the actual municipality, namely the Great Kei
Municipality. The municipal manager’s
office is not situated at
27 Frontier Street, Kei Mouth but is situated at Komga. Furthermore,
contrary to what is stated in the
return of service, such service was
not effected at 27 Frontier Street but at the private residence of
Mrs. Lawrence.
[76]
As result of the dictum in the Supreme Court of
Appeal referred to above, I respectfully disagree with the finding of
Hefer AJ in
Matjhabeng Local
Municipality v Pakampho Electrical and Others
(911/2023)
[2024] ZAFSHC 153
(6 June 2024) wherein he ruled that the fact that
the return of service did not indicate that Mrs van der Spuy was
authorised to
accept service on behalf of the applicant nor the
municipal manager causes it to be ineffective service. There are also
some factual
differences in that Down Touch’s entitlement stems
from a previous court order granted by agreement between the parties.
The 5000/2023 – order is a so-called follow-on order, granted
by default because the invoices for service were settled. The
certification of the manner of service is not at issue here as in the
Pakampho Electrical – case.
[77]
The evidence is that it was common practise to
serve on Mrs van der Spuy, she was employed at the legal department.
The evidence
of the Sheriff: Welkom stands substantially unanswered.
As I indicated above; as to the alleged hearsay evidence Mr Mbambo
did
file a confirmatory affidavit. The Plascon-Evans principle
applies and the testimony must be accepted.
[78]
If I am wrong on the above; the Municipality
admitted that Mrs van der Spuy received the notice but they do not
explain why it was
not brought to the attention of Ms Tsholofelo
Gaborone. By implication Ms Gaborone was authorised to accept service
and not only
the Municipal Manager. There is not any explanation from
Mrs van der Spuy as to why she did not or if she did; bring the
notice
to the attention of the Municipal Manager.
[79]
It is ruled that service was executed in terms
of the law. The Hefer – order was not erroneously granted on
this aspect.
[80]
The
Municipality complains in their founding affidavit that the notice of
set down and thus no notice on enrolment on the unopposed
roll was
served on them. “The Municipality therefor was not aware that
the matter would be heard and was therefore not afforded
a right to a
fair hearing contrary to its rights protected in terms of section 34
of the Constitution.”
[26]
The law does not dictate that the notice of set down had to be served
on the Municipality because they did not defend the matter.
THE HEFER ORDER
ALLEGEDLY A NULLITY &
RES JUDI
CATA
[81]
As already indicated; the Municipality resists the
order of the court as to be a “nullity”. They maintain
that it is
void because of the
res
judicata
doctrine. The order does not
flow from rights begotten from the previous court order, and the
order is “irreconcilably inconsistent......”
[82]
I pause to point out that this defence does not go
to procedural errors; but the substantive defence of the Municipality
and the
merits of the case. I will adjudicate it for the sake of
finality.
[83]
No court order is a nullity. On 14 February 2022,
the Constitutional Court; Pillay AJ (Madlanga J, Madondo AJ, Majiedt
J, Mhlantla
J, Rogers AJ, Theron J, Tlaletsi AJ and Tshiqi J
concurring) ruled in
Municipal Manager
O.R. Tambo District Municipality and Another v Ndabeni
(CCT 45/21)
[2022] ZACC 3
;
[2022] 5 BLLR 393
(CC);
(2022) 43 ILJ 1019 (CC);
2022 (10) BCLR 1254
(CC);
2023 (4) SA 421
(CC) that:
Introduction
If the impression were to
be created that court orders are not binding, or can be flouted with
impunity, the future of the judiciary,
and the rule of law, would
indeed be bleak.
[84]
The Constitutional Court reaffirmed above that a
court order is binding until it is set aside by a competent court,
and that this
necessitates compliance, regardless of whether the
party against whom the order is granted believes it to be a nullity
or not.
Importantly, however, the court
further confirmed that where an organ of state genuinely believes
that an order of court is a nullity,
then it has a duty in the public
interest to pursue an appeal to correct the illegality.
[85]
The court summed it up:
•
Court
orders granted by a competent court are binding until set aside by a
competent court in terms of section 165(5) of the Constitution,
irrespective of whether they are valid; and
•
Wrongly
issued judicial orders are not nullities.
[27]
[86]
It is trite that the case for Down Touch is that
the Municipality did not comply with the Molitsoane – order.
They had to
turn to the litigation that resulted in the Hefer –
order. They based their claim in the Hefer – order on the
breach
of the settlement after they followed the process prescribed
in the agreement and the Municipality did not perform in accordance.
I reiterate; this is the words of the Molitsoane – order:
5.
Should the Respondent dispute any invoice payable as set out in the
application
they shall, within 60 days after date of this order
resolve such invoice with the Applicant. Such a dispute will have no
impact
on the payments as set out in prayer 3.1 and 3.2 above or the
capital amount and interest due but shall form part of the remainder
of the outstanding balance due by the Respondent to the Applicant in
the amount of R8 954 287.94 which does not form part of this
application;
6.
Should the Respondent fail to actively partake in resolving such a
dispute, their
right to rely on this clause to stay payment on a
specific invoice will lapse. All invoices not in dispute will form
part of the
monthly payments as set out above;
[87]
Down Touch complied with the process above but the
Municipality ignored the claims payable on invoices supplied. This is
undisputed.
The amount of R4 282 564.51 is due and payable.
[88]
The defence of the Municipality is wrong in law.
The defence fails.
The
Molitsoane – order was the confirmation of a contract that
remained susceptible to future claims.
In
Democratic Alliance v Brummer
(793/2021)
[2022] ZASCA 151
(3 November 2022) the Supreme Court of Appeal
confirmed that:
[13]
The first question is to determine whether, as a matter of fact, the
same issue of fact or law which
was determined by the judgment of the
previous court is before another court for determination. This is so
because if the same
issue (
eadem quaestio
) was not determined
by the earlier court, an essential requirement for a plea of
res
judicata
in the form of issue estoppel is not met. There is then
no scope for upholding the plea. It does not, however, necessarily
follow,
that once the inquiry establishes that the same issue was
determined, the plea must be upheld. That is so because the court
considering
the plea of issue estoppel is, in every case, concerned
with a relaxation of the requirements of
res judicata
. It must
therefore, with reference to the facts of the case and considerations
of fairness and equity, decide whether in that case,
the defence
should be upheld.
IRREGULARITIES IN THE
PROCUREMENT PROCESS
[89]
The Municipality may not rely on alleged or
suspected irregularities in the procurement process here; it is the
proverbial figs
after easter. It is inefficient administration of the
law and abuse of power. The law is trite and the Constitutional Court
has
already spoken; the correct remedy in law is a legality review.
[90]
In
MEC for Health,
Eastern Cape and Another v Kirland Investments (Pty) Ltd
(CCT 77/13)
[2014] ZACC 6
;
2014 (5) BCLR 547
(CC);
2014 (3) SA 481
(CC) (25 March 2014) the Constitutional Court
criticised public officials for taking the law into their own hands
and delaying
compliance with contracts and court orders.
[65]
The reasons spring from deep within the
Constitution’s scrutiny of power. The Constitution
regulates all public power.
Perhaps the
most important power it controls is the power the state exercises
over its subjects. When government errs by issuing
a defective
decision, the subject affected by it is entitled to proper notice,
and to be afforded a proper hearing, on whether
the decision should
be set aside. Government should not be allowed to take shortcuts.
Generally, this means that government must
apply formally to set
aside the decision. Once the subject has relied on a decision,
government cannot, barring specific statutory
authority, simply
ignore what it has done. The decision, despite being defective, may
have consequences that make it undesirable
or even impossible to set
it aside. That demands a proper process, in which all factors for and
against are properly weighed.
[97]
… proceedings for judicial review must be instituted without
unreasonable delay and, … They
therefore retain lawful
consequence. No other approach is practicable.
[99]
So the absence of a jurisdictional fact does not make the action a
nullity. It means only that the
action is reviewable, usually
on the grounds of lawfulness (but sometimes also on the grounds of
reasonableness). …
[100]
… The narrow dispute for decision was whether the
invalidity of a preceding administrative act (the Administrator’s
grant of township development rights) entitled a local authority to
refuse to do something (approve an engineering services plan
for the
township) it would have been obliged to do if the Administrator’s
preceding act had been valid. The Court said
No. The
local authority could not simply treat the Administrator’s act
as though it did not exist.
Until
it was properly set aside by a court of law, it engendered legal
consequences.
[101]
The essential basis of Oudekraal was that invalid
administrative action may not simply be ignored, but may be valid
and
effectual, and may continue to have legal consequences, until set
aside by proper process.
[91]
The defence is rejected.
THE DISPUTE AND THE
SETTLEMENT AGREEMENT.
[92]
The disputes in the 366/2022 – case were
judged. It may not be raised again in litigation.
[93]
The settlement is a contract between the parties.
The contract was not complied with. The application of the Plascon
Evans principle
proved this beyond any doubt. Down Touch opted to
rely on the breach of contact remedy and not the contempt of court
remedy. It
cannot be faulted if the terms of the agreement are
regarded.
[94]
The Molitsoane – order
inter
alia
envisaged that the parties settled
a pending dispute between them concerning invoices that did not form
the subject matter of the
litigation. It gave the Municipality an
opportunity to dispute the invoices within a period stated in the
order resulting from
the settlement. The Municipality ignored this
right; the invoices were presented and submitted. The default
followed.
[95]
The first respondent is correct in their
submissions that a party litigating cannot undo a settlement on the
basis he or she got
a bad bargain. It operated
res
judicata.
Whether
or not a settlement agreement is made an order of court; it remains a
contract (
transactatio
)
and may be challenged on the basis of contractual defences such as
mistake, fraud, impossibility of performance, illegality and
the lack
of authority to compromise.
[96]
In
Provincial
Government North-West and Another v Tsoga Developers CC and Others
(CCT 91/15)
[2016]
ZACC 9
;
2016 (5) BCLR 687
(CC) (24 March 2016) it was ruled that:
[50]
I read both judgments to say that, if
on the face of the order, one is able to conclude that
what the court
has ordered cannot be done under the enabling legislation, the order
is a nullity and can be disregarded. These
cases are distinguishable
from the instant scenario and are not authority for the proposition
that the order of 16 May 2013 may
suddenly be of no force and
effect. On its face, that order is perfectly valid and
competent. If there be a need to
explain this, the so-called
nullity of the settlement order does not – so to speak –
jump out of the page, as was the
case with the nullity of the orders
in Changing Tides and Motala. There has to be an antecedent
step: proof of the grounds
of review.
In any event, it seems to me
that the applicants may well not be in a position to prove these
grounds. Eke stands in their
way. If the issues they raise did
not form part of the defences to Tsoga’s claim before the High
Court, they could have.
That they were not raised matters not.
(Emphasis added)
[97]
The ruling in
Eke
v Parsons
2016
(3) SA 37
(CC) states unequivocally:
[31]
The effect of a settlement order is to change the
status of the rights and obligations between the parties.
Save for
litigation that may be consequent upon the nature of the particular
order, the order brings finality to the
lis
between the
parties; the
lis
becomes
res judicata
(literally, 'a
matter judged'). It changes the terms of a settlement agreement to an
enforceable court order. The type of enforcement
may be execution or
contempt proceedings. Or it may take any other form permitted by the
nature of the order. That form may possibly
be some litigation the
nature of which will be one step removed from seeking committal for
contempt; an example being a mandamus.
[32]
Litigation antecedent to enforcement is not
necessarily objectionable. That is so because ordinarily a settlement
agreement and the resultant settlement order will have disposed of
the underlying dispute. Generally, litigation preceding enforcement
will relate to non-compliance with the settlement order, and not the
merits of the original underlying dispute. That means the
court will
have been spared the need to determine that dispute, which —
depending on the nature of the litigation —
might have entailed
many days of contested hearing.
[98]
The defence is
rejected.
GOOD
CAUSE & CONCLUSION
[99]
The impugned order
was not granted erroneously. If I am mistaken on the rule 42 –
defences; the Municipality did not explain
their default adequately.
The argument that the Municipality was poorly administrated and that
the community and service providers
must bear the brunt for it now,
is unconvincing. Service was proper and effective.
[100]
From the above it
follows that the default order was granted in compliance with the law
and the prayers for the relief in the rest
of the application must
fail. As indicated above; apparently execution was already effected
and the money has been paid out. There
is no claim for repayment in
casu.
[101]
The fact that the
Municipal Manager subjectively and honestly believes in their defence
does not raise it to bona fide in the sense
required here and in law.
[102]
The Municipality did
not meet the yardstick summed simplistically in
Breitenbach
v Fiat SA (Edms) Bpk
1976
(2) SA 226
(T) on page 228:
…
It
will suffice, it seems to me, if the defendant swears to a defence,
valid in law, in a manner which is not inherently and seriously
unconvincing
.
(Emphasis added)
COSTS
[103]
The application is
ambitious. It is a settlement solemnised into a court order between
parties represented by experienced counsel
that was simply not
complied with. The Municipality did not join the litigation when it
was invited to do so. The Municipality
did not stand behind the
allegations of fraud and corruption and take the service level
agreements on review. The Municipality
took the law into their own
hands and
mero
moto
disregarded
the order.
[104]
Costs
must follow the cause. Down Touch asked the court for a
de
bonis propriis
costs
order and on the scale C
[28]
as between attorney and client.
[29]
I am duty bound to grant a punitive costs order and to hold the
Municipal Manager accountable for the dismal litigation on the
rescission application. The taxpayer may not be mulcted with the
costs. I will not do the same with the application to strike out.
[105]
ORDER
1.
The application for striking out is dismissed with
costs.
2.
The application for the relief sought in the
notice of motion dated 7 December 2023 is dismissed with costs. It is
ordered that
the Municipal Manager shall carry the costs
de
bonis propriis
and as between attorney
and client.
M OPPERMAN J
Appearances
For
applicant:
JP
Snijders
Sandton
Instructed
by:
Botes
Mahlobogoane Van Heerden Attorneys
Vereeniging
c/o
Pieter Skein Attorneys
Bloemfontein
For
first respondent:
S
Grobler SC
Bloemfontein
Instructed
by:
Peyper
Attorneys
Bloemfontein
[1]
“
The
Municipality/Applicant”.
[2]
“
Down
Touch/First respondent”.
[3]
The
second respondent did not join the litigation.
[4]
Founding
affidavit dated 5 December 2023 at page 13 of the bundle indexed on
22 April 2024. Any reference to page numbers will
be to those in the
bundle except if otherwise indicated.
[5]
Home
Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan
Municipality
(225/2016)
[2017] ZASCA 77
;
[2017] 3 All SA 382
(SCA);
2018 (1) SA 391
(SCA) (2
June 2017):
“
[30]
… For, as Three Rivers (par 55) pointed out:
‘
A
party is not entitled to a finding of fraud if the pleader does not
allege fraud directly and the facts on which he relies are
equivocal. So too with dishonesty. If there is no specific
allegation of dishonesty, it is not open to the court to make a
finding to that effect if the facts pleaded are consistent with
conduct which is not dishonest such as negligence.’
[31] Of course,
allegations of fraud, dishonesty or bad faith must be supported by
particulars and the other party is entitled
to notice of the
particulars on which the allegations are based...
The matter of
Department
of Transport and Others v Tasima (Pty) Limited
(CCT5/16)
[2016]
ZACC 39
;
2017 (1) BCLR 1
(CC);
2017 (2) SA 622
(CC) (9 November
2016) is also applicable in that:
“
[165]
On the other hand, the allegations of fraud and corruption were not
properly made, and therefore should not be considered.
Tasima
vehemently denies the veracity of the allegations. These were not
properly ventilated before the High Court. I therefore
do not think
that the allegations can be considered in justifying the delay.”
[6]
Pages
88 to 91 attached to the answering affidavit of the first
respondent.
[7]
Notice
of Motion at pages 3 to 4 of case 366/2022.
[8]
Paragraph
3 of said heads of argument that is contained in pages 5 to 12. File
366/2022 was entered into evidence by the first
respondent. See
paragraph 6.1.1 of the answering affidavit of the first respondent
on page 63.
[9]
Paragraph
3.3 of the heads of argument for the applicant in case 366/2022.
[10]
Rule
6(15)
“
The
court may on application order to be struck out from any affidavit
any matter which is scandalous, vexatious or irrelevant,
with an
appropriate order as to costs, including costs as between attorney
and client. The court may not grant the application
unless it is
satisfied that the applicant will be prejudiced if the application
is not granted.”
[Substituted by GG 39715
of 19 February 2016 – Regulation Gazette 10566, Vol 608.]
[11]
Paragraph
15.
of the founding affidavit on page 13. Also see “JJC3”
and from pages 88 to 91.
[12]
Pages
65 to 67 of the 5000/2023 – case.
[13]
Page
18 at paragraph 32.3. of the founding affidavit.
[14]
De
Vos P
,
Flouting a court order: Government risks making a paper tiger of the
law
,
15 June 2015,
https://www.dailymaverick.co.za/opinionista/2015-06-15-flouting-a-court-order-government-risks-making-a-paper-tiger-of-the-law/
accessed on 9 July 2024.
[15]
Unreported
judgment in
GH
Zipp v LA Zipp
,
in the High Court of South Africa: Gauteng Local Division,
Johannesburg, Case number 2016/23915, judgment on 16 February 2017.
[16]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
(1984)
(3) SA 623
(A). In the case of
Thwala
v Miway Insurance Ltd; In re: Miway Insurance Ltd v Thwala
(A
230/21) [2022] ZAGPPHC 843 (8 June 2022) (Du Plessis AJ (with Davis
J) at [24] it was confirmed that a rescission application
is
interlocutory since it is associated with the main action. It is
only once an application for a rescission order is dismissed
that it
will have a final effect.
[17]
Harms
D: Civil Procedure,
Civil
Procedure in the Superior Courts
,
Part B High Court, UNIFORM RULE 42 VARIATION AND RESCISSION OF
ORDERS, Grounds, Last Updated: April 2024 - SI 79.
https://www.mylexisnexis.co.za/Index.aspx
accessed
on 19 July 2023.
[18]
As
per paragraph 7.3. of their heads of argument dated 23 April 2024.
[19]
Paragraphs
7 and 8 of his heads of argument dated 26 April 2024.
[20]
Heads
of argument for the first respondent at paragraph 1.1.
[21]
Brett
Bowden
,
Civilization and Its Consequences
,
https://doi.org/10.1093/oxfordhb/9780199935307.013.30, Published: 11
February 2016. Accessed on 19 July 2024.
[22]
The
judgment in the Botha case was confirmed on appeal in
Eskom
Holdings SOC Ltd v Botha and Others
(A97/2023)
[2024] ZAFSHC 204
(3 July 2024).
[23]
Confirmatory
affidavit of Victor Mbambo at pages 84 to 85.
[24]
Page
69.
[25]
Substituted
by GNR.1343 of 18 October 2019.
[26]
Paragraphs
18 and 19 on pages 13 to 14.
[27]
Paragraphs
[23] to [34].
[28]
Rule
67A addresses itself only to awards of costs as between party and
party. See
Mashavha
v Enaex Africa (Pty) Ltd
(2022/18404)
[2024] ZAGPJHC 387 (22 April 2024).
[29]
Paragraph
9.4 of the heads of argument for the first respondent.