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[2024] ZAFSHC 281
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Man in One CC v Matjhabeng Local Municipality (6692/2023) [2024] ZAFSHC 281 (5 September 2024)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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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/N
Case
No. 6692/2023
In
the matter between:
MAN
IN ONE CC
APPLICANT
and
MATJHABENG
LOCAL MUNICIPALITY
RESPONDENT
JUDGMENT
BY:
MHLAMBI, J
HEARD
ON:
18 APRIL 2024
DELIVERED
ON:
05 SEPTEMBER 2024
[1]
The point for determination in this application is whether the
parties, through their attorneys,
concluded a compromise or
settlement agreement on 24 June or July 2020 for the payment of the
amount of R 25 000 000.00 (including)
for the provision of
security and guarding services to the respondent by the applicant.
[2]
The applicant’s case is based on a letter dated 24 June 2020
from the respondent’s
attorneys to the applicant’s
attorneys and reads as follows:
‘
Your
email dated 26 March 2020 as well as 19 June 2020 refers.
We have consulted with
client and we are of the view point that the amount outstanding is
exuberant and is client not prepared to
settle for the outstanding
amount of R 37 183 471.00.
We have been
instructed to settle the amount of R 25 000 000.00 which
amount to be paid in equal instalments as from January
2021 in order
for client to finalise the outstanding court orders in terms of case
number 1430/2018 and case 1239/2018, High Court
Bloemfontein. These
amounts to be paid over a 24 months’ period in order to
finalise the matter.
Should your client not
be willing to settle the amount we then suggest that the matter
should take its legal course and you are
then requested to ensure
that all court papers be served upon Bokwa Inc, 1 Cypress Crescent,
Jim Fourche Park. Welkom.
We trust that you will
find the above mentioned in order.
Yours
faithfully’
[1]
[3]
In 2009, the parties concluded a contract in which the applicant
provided security and guarding
services to the respondent for three
years. On expiry of the term, the respondent appointed the applicant
on a month-to-month basis.
Various disputes arose between the parties
in 2017/2018 about the month-to-month appointment, which led to the
court granting a
declaratory order against the respondent for its
indebtedness to the applicant for R 15 228 477.18. A
further judgment
was obtained under case number 1239/2018 for the
payment of services rendered. It would appear that the
respondent made undertakings
to liquidate the debts by way of
structured payments but failed to honor them. The respondent also
failed to pay for the security
and guarding services rendered from 1
August 2018 until 31 July 2019.
[2]
[4]
After a meeting that was held on 30 January 2020, where various
matters were discussed, the respondent
denied the liability to pay
for the security and guarding services rendered during the period 1
August 2018 until 31 July 2019,
contending that it had suffered
damages because of certain alleged non-compliance by the
applicant.
[3]
[5]
On 5 March 2020, the respondent, through its attorneys, addressed a
letter to the applicant, attaching
a copy of the damages and losses
it suffered, which were supposed to be covered by the applicant’s
insurance as determined
by the appointment contract. The letter
invited the applicant’s attorneys to meet with the respondent’s
attorneys to
finalize a draft settlement for the clients to verify,
confirm, and conclude in writing.
[4]
On 26 March 2020, the applicant’s attorney addressed a letter
to the respondent’s attorney stating that the applicant
would
be prepared to accept R37 183 471.00 for the month-to-month
contract from 1 August 2018 to 31 July 2019.
[5]
This elicited the response in the letter dated 20 June 2020 listed
above.
[6]
The applicant stated in the founding affidavit that it was prepared
to accept the offer, and its
attorney advised the respondent’s
attorney, Mr. Maritz, by telephone of its acceptance on/or about June
or July 2020. However,
the applicant’s attorney inadvertently
omitted to confirm its acceptance in writing.
[6]
From that time until 2023, when Mr. Maritz’s mandate was
terminated, the attorneys had various telephone conversations
relating
to the respondent’s commencement with the payment of
the R25 000 000.00. In this period, arrangements and
rearrangements
for the payment were orally agreed upon between the
attorneys.
[7]
In December 2022, the applicant’s attorney accepted the
respondent’s offer which was
made over the telephone by its
attorney to liquidate the R 25 000 000.00 in monthly
instalments of R 500 000.00
each from the end of January 2023,
with an enhanced payment of R 1 500 000.00 in March,
August, and December of each
year. On 2 March 2023, the applicant’s
attorney forwarded an acknowledgment of debt to the respondent’s
attorney for
signature. According to the applicant, the
acknowledgment of debt encapsulated the terms agreed upon with the
respondent’s
attorney.
[7]
[8]
On 31 October 2023, the applicant’s attorney forwarded a letter
to the respondent’s
municipal manager about the background and
the extensions granted for the debt payment. It was also stated that
should the letter's
contents not be disputed, the respondent would be
regarded as having acknowledged them. There was no response from the
respondent.
[8]
[9]
The applicant’s and respondent’s attorneys had various
subsequent telephone discussions.
At the beginning of 2021, the
respondent’s attorney informed the applicant’s attorney
that the respondent would only
commence with the repayment of the
settlement amount of R 25 000 000.00 from the end of June
2022. In June 2022, it was
agreed by both the parties’
attorneys that the payment arrangement should stay over until
December 2022.
[9]
The respondent
found it strange that the applicant failed to explain why the parties
did not sign the settlement in June 2020 when
it was made.
[10]
[10]
The respondent contended that the applicant’s case was based on
the three letters between the parties
dated 5 March 2020, 26 March
2020, and 24 June 2020.
[11]
According to the respondent, its attorney clearly stated that any
agreement between the parties would be subject to the respondent’s
approval and reduced to writing.
[12]
The negotiations were subject to verification, confirmation, and
signing or approval by the respondent for a legally binding
compromise
agreement to exist. The applicant had the same
understanding, it was contended. Hence, the applicant’s
attempts to send correspondence
and the concept acknowledgment of
debt to Bokwa Attorneys on 2 March 2023 requiring the respondent’s
signature. In the letter
of 24 June 2020, a caveat was added that
should the matter not be settled, it should take its ordinary course
of litigation. The
applicant failed to respond to this letter.
[11]
On the evaluation of the evidence, it is common cause that from 24
June 2020 until 2 March 2023, a period
of about two years and nine
months, there was no written communication or correspondence between
the attorneys about the payment
of the R25 000 000.00. The
crucial question is whether a compromise was reached between the
parties. In my view, it was
not. In its supplementary heads of
argument, the applicant argued that the respondent’s erstwhile
attorneys or Bokwa attorneys,
had ostensible authority to act on
behalf of the respondents. This is not an issue. The issue is whether
a consensus was reached
for R25 000 000.00 to be paid to
the applicant by the respondent.
[12]
It is clear from the letter of 24 June 2020 that Bokwa Attorneys had
the mandate at the time to settle the
matter between the parties. It
also indicated the route to be followed should settlement not be
reached. It was not responded to.
If the applicant alleges that it
reacted to the offer orally through its attorney, surely, taken into
account the parties’
tumultuous history and court battles, it
would have been prudent to cemented this relationship in one way or
the other. Despite
the inadvertent omission, nothing was done for
years to have a record of the relationship for posterity.
[13]
A compromise, as an agreement to resolve a disagreement, must comply
with the contractual principles of offer
and acceptance. In Be Bop a
Lula Manufacturing & Printing CC v Kingtex Market Marketing (Pty)
Ltd,
[13]
it was said that:
“
The
essential issue is whether an agreement of compromise was concluded:
one is concerned simply with the principles of offer and
acceptance.
The first question is whether the cheque accompanied by B the Credit
Request and Final Reconciliation constituted
an offer of compromise.
In other words, 'the proposal, objectively construed, must be
intended to create binding legal relations
and must have so appeared
to the offeree'
.
[14]
The court went on to say that although, generally,
a contract is founded on consensus, contractual liability
can also be
incurred in circumstances where there is no real agreement between
the parties. Still, one of them is reasonably entitled
to assume from
the words or conduct of the other that they were in agreement.
Reid
Bros (SA) Ltd v Fischer Bearings CO Ltd
observed that acceptance
of an offer should manifest by some unequivocal act from which the
inference of acceptance can logically
be drawn.
[15]
It is unclear why the applicant conceded an inadvertent omission when
it referred to the failure to respond
in writing to the respondent’s
offer. Was it a suggestion that it ought to have done so but failed?
The applicant relies
on telephone conversations to prove the
acceptance of the offer. It is trite that the person alleging the
compromise bears the
onus of establishing it. Save for the omission
of accepting the offer in writing, the applicant failed to confirm
the oral acceptance
in writing subsequently. So also, the applicant
failed to confirm in writing subsequent alleged arrangements and
re-arrangements
between the parties surrounding the payment of the
R25 000 000.00. No crucial witness testimony was presented
to bolster
the applicant’s case on the part of the oral
arrangements.
[16]
It took the applicant a long time to insist on a signed
acknowledgment of debt from the respondent. The significant
delay in
the follow-up and the failure of the applicant to confirm the
transactions in writing between the parties for years do
not
strengthen the applicant’s case. The telephone conversations,
on their own, are not sufficient to prove that a legally
binding
compromise was concluded. The applicant, as the party claiming the
existence of the compromise, bears the onus of proof.
[17]
Considering the facts, it is clear that the applicant should have
foreseen that a dispute of fact would arise
and that motion
proceedings were not the appropriate steed to saddle. I find that no
compromise was concluded between the parties
due to the applicant’s
failure to communicate its acceptance to the respondent. The
application must, therefore, fail.
[18]
It is trite that the costs should follow the event.
[19]
The following order issues:
ORDER:
1.
The application is dismissed with costs.
JJ
MHLAMBI, J
APPEARANCES:
On
behalf of the Applicant
Adv
M.C. Louw
Instructed
by:
Hill,
McHardy & Herbst Attorneys
BLOEMFONTEIN
On
behalf of the Respondent
Mr.
Dumisani S Qwelane
Instructed
by:
Qwelane
Theron & Van Niekerk Inc
BLOEMFONTEIN
[1]
Annexure
FA 7, page 70 of the Index.
[2]
Para
16 of the Founding Affidavit.
[3]
Para 19 of the Founding Affidavit.
[4]
Page
28 of the Index.
[5]
Para
20 of the Founding Affidavit.
[6]
Para
22 of the Founding Affidavit.
[7]
Para
24 of the Founding Affidavit.
[8]
Para
27 of the Founding Affidavit.
[9]
Para 22.2 of the Founding Affidavit.
[10]
Para 11 of the Answering Affidavit.
[11]
Para 1.3 of the respondent’s heads of argument.
[12]
Para
1.4
of
the respondent’s heads of argument.
[13]
2008 (3) SA 327.