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2024
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[2024] ZAFSHC 335
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Metsimaholo Local Municipality v Unitrade 1047 (Pty) Ltd t/a Isidingo Security Services (245/2024) [2024] ZAFSHC 335 (25 October 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable
Case no: 245/ 2024
In
the matter between:
METSIMAHOLO
LOCAL MUNICIPALITY
APPLICANT
And
UNITRADE
1047 (PTY) LTD
t/a
ISIDINGO SECURITY SERVICES
RESPONDENT
Neutral
citation:
Metsimaholo Local Municipality v
Unitrade 1047 (Pty) LTD t/a Isidingo Security Services
(245/2024)
Coram:
Daniso J
Heard:
08 August 2024
Delivered:
25 October 2024
ORDER
1.
The applicant is granted leave to amend
paragraphs 1 to 7 of its plea and paragraphs 39, 42 and 88 of its
claim in reconvention)
within ten (10) days of this order.
2.
Leave to amend paragraphs 19, 21.5 to 21.6, 26
and 36 of its plea is dismissed.
3.
The applicant is liable to pay the costs on
scale C.
JUDGMENT
Daniso,
J
[1]
The applicant as defendant seeks the amendment of its plea
incorporating special pleas
and a counterclaim filed in resistance of
the action instituted by the respondent as plaintiff for an unpaid
invoice in the amount
of R2 903 599.41 relating to the
services rendered by the respondent in terms of a service level
agreement concluded
between the parties on 16 January 2023.
[2]
For the sake of convenience I shall refer to the parties as they are
referred to in
the action.
[3]
The agreement and its terms are not disputed. It is also not in
dispute that the defendant
terminated the plaintiff’s services
with effect on 30 November 2023 on the grounds of tender
irregularities and upon receipt
of the invoice. The defendant made an
undertaking to pay the invoice albeit on condition that the plaintiff
provided proof of payment
of its erstwhile employees’ salaries
who have since been absorbed by the current service providers.
[1]
[4]
The defendant’s current plea raises two special pleas and a
claim in reconvention. In the special
pleas, the defendant seeks the
dismissal of the plaintiff’s claim on the grounds of
non-compliance with the provisions of
the Institution of Legal
Proceedings Against Certain Organs of State, Act 40 of 2002 (The Act)
in that, prior to instituting the
legal proceedings, the plaintiff
failed to serve the defendant with a notice of its
intention
to institute legal
as contemplated in section 3(1)(a)
and a notice as provided for in s 4(1)(b) of the Act. The plaintiff
also failed the institute
these proceedings in terms of 5(1) of the
Act.
[5]
In respect of the merits, the defendant avers that the plaintiff had
previously claimed and was
paid for inflated and/or fraudulent
invoices and it is on that account that the defendant’s plea
incorporates a claim in
reconvention for the recovery of the amounts
totalling R5 184 099.87 for undue/overpayments of
fabricated and/or fraudulent
invoices that the plaintiff rendered for
the months January to October 2023 (claim A) and November 2023 (claim
B), including salaries
of the plaintiff’s erstwhile employees
paid by the defendant in the amount of R1.5million (claim C). In
applying the principle
of set-off, the plaintiff remains indebted to
the defendant in the amount of R2 571 510.11. The
acknowledgement of debt
is disputed on the grounds that the letter
was written before the defendant had discovered the discrepancies in
the plaintiff’s
invoices.
[6]
The plaintiff objected to the plea and raised an exception contending
that the special pleas are
unsustainable as the provisions of
the Act are not applicable to contractual claims, the plea does not
disclose a defence
and no cause of action has been set out in the
counterclaim.
[7]
Following the exception, the defendant launched an application to
amend its plea in terms of which
the defendant essentially withdrew
the special pleas and sought to address the plaintiff’s
objections directed at the remainder
of the plea on the merits
paragraphs 19, 21.5, 21.6, 26, 35, 36 and the claim in reconvention
paragraphs, 39, 42 and 88 as follows:
“
AD
PLEA ON THE MERITS:
2.
By deleting the full
stop punctuation mark in paragraph 19 of the Plea and replace it by a
comma after the words “November
2023” and there and then
add the following words:
‘
the
rest of the contents hereof are denied. The defendant avers that over
and above the services which the plaintiff claimed payment
for, there
are claims for services allegedly rendered by the plaintiff which
were not sanctioned by the parties’ agreement
nor authorized by
the defendant; such as providing public safety drivers,
providing security at George pump site, snooker
pump site, clinic
pump site extra four security guards at Zamdela Stadium whereas no
guards were deployed at all, claim for four
guards at Harry Gwala
pump station whereas only two were deployed, Anker Hof flats and
Basement Gate.’
3.
By deleting paragraphs
21.5 and 21.6 entirely, and there and then substitute same with the
following:
21.5
The defendant avers that the plaintiff is not entitled of the money
claimed in his summons in
the amount R 2 903 599.41 or any
portion thereof on the basis that the plaintiff’s invoice for
November 2023, like
all previous invoices, is inflated and/or
fraudulent.
21.6
In the premises, the defendant will invoke the principle set-off to
recover the money paid to
the plaintiff on the inflated invoices or
fraudulent claims and/ or has enriched the plaintiff unjustifiably.
In the alternative,
the defendant will institute a conditional
counterclaim or claim reconvention only in the event it may be found
that the set-off
amount is not a liquidated amount or liquid debt
capable of being claimed by set-off.
“
21.7
The defendant further avers in terms of rule 22 (4) of the uniform
rules of this honourable court that
the defendant has instituted a
conditional claim reconvention against the plaintiff arising from the
parties’ agreement herein.
“
21.8
The defendant avers that on the giving of judgment on the defendant’s
conditional claim reconvention,
the plaintiff’s claim will be
extinguished either in whole or in part by the aforesaid claim in
reconvention.
“
21.9
The defendant will pray and / or request that judgment in the
plaintiff’s main action against
the defendant herein be stayed
or postponed sine die until final determination of the conditional
claim in reconvention or judgment
in the said conditional claim
reconvention is delivered.
4.
By remembering the
existing paragraph 26 as the new paragraph 26.1.
5.
By adding a new
paragraph 26.2 with the following words:
‘
26.2
Therefore, the defendant avers that the defendant has not
acknowledged its liability to pay the invoiced
amount claimed in the
summons. Any such perceived acknowledgement of liability was based on
fraudulent or inflated invoice, which
is illegal to pay.’
6.
By deleting existing
paragraph 36 in its entirety.
7.
By inserting new
paragraphs 35, 36, 37 and 38 just above the existing paragraph 35,
but below the existing paragraph 34, with the
following words:
35.
The defendant admits that the defendant was indebted to the plaintiff
for services rendered
in terms of the contract between the parties
for the period of November 2023, which is in the amount R2 571 510.
11 (two
million five hundred and seventy-one thousand five hundred
and ten rand eleven cents) on the grounds stated above.
36.
Defendant pleads, however, that its indebtedness towards plaintiff
was extinguished by set-off
on the facts stated above.
37.
The defendant therefore prays that the plaintiff’s claim be
dismissed with costs on
attorney and client scale including costs of
two counsel.
38.
Alternatively, the defendant prays that judgment on the plaintiff’s
claim must be
postponed indefinitely until such time there is a final
determination or judgment on the defendant’s conditional claim
in
reconvention.’
8.
By renumbering the
existing paragraph 35 to be the new paragraph 39, and the existing
paragraph 37 to be the new 40; thereafter,
all the subsequent
paragraphs to be renumbered accordingly.
AD CLAIM IN
RECONVENTION:
9.
By inserting the words
CONDITIONAL, just before “CLAIM” in the existing heading
of the CLAIM IN RECONVENTION.
10.
By inserting a
preamble to the CONDITIONAL CLAIM IN RECONVENTION, just above the
existing paragraph 39, with the following words:
‘
The
defendant’s claim in convention is conditional only in the
event of this honourable court finding that the defendant’s
set-off, either in whole or in part, is not based on a liquid debt or
liquidated amount which is capable of prompt ascertainment,
or its
money value has been ascertained, which the defendant persists on,
but in that eventuality, the defendant’s claim
in reconvention
shall take effect.’
11.
By inserting the
following new subsequent paragraph just after the existing paragraph
42, but above the existing paragraph 43, whose
numbering will follow
the sequence suggested above, in the following words:
43.
Upon being presented with the invoices for the period from January
2023 to October 2023,
the defendant effected payments of the
aforesaid invoices in the total amount of R3 200 877.26
(Three million two hundred
thousand eight hundred and seventy-seven
cents).
12.
By inserting the
following 4 new subsequent paragraphs just after the existing
paragraph 88, but above the existing paragraph the
words “CLAIM
B”, whose numbering will follow the sequence suggested above,
in the following words:
89.
It is common cause that the plaintiff and the defendant have
entered into a service level agreement as stated and pleaded above by
both parties.
90.
In the bona fide and reasonable belief that the plaintiff has
submitted accurate and reliable
invoices for the services rendered
from January 2023 to October 2023, the defendant effected payments of
all the invoices for the
aforesaid period.
91.
The aforesaid amount paid to the plaintiff as aforesaid was not
entirely owing nor due to
the plaintiff on the bases that the
aforesaid claims by the plaintiff were inflated or fraudulent or for
services never rendered
and/ or for services rendered without
authorization by either the parties’ contract.
92.
The plaintiff has nevertheless appropriated the aforesaid money paid
to the plaintiff by
the defendant.
93.
WHEREFORE the defendant claims for the repayment of the inflated
amount for services not
rendered and/ or for services rendered
without the sanction of the parties’ contract herein
.”
[8]
Acording to the defendant, the amendments are
intended to
clarify that the plaintiff is disentitled to the payment it seeks as
the defendant’s indebtedness towards the
plaintiff was
extinguished by set-off of the plaintiff’s debt towards the
defendant arising from the payments that the plaintiff
received based
on fraudulent and inflated invoices. The proposed amendment of
the
claim in reconvention is to assert the
defendant’s
conditional claim in reconvention for the
recovery of a large sum of money which should not have been paid to
the plaintiff. The
defendant contends that there is a genuine
dispute regarding the facts giving rise to the nature and/or
quantification of the plaintiff’s
claim and without clarity on
this dispute the plaintiff’s claim cannot stand in law,
accordingly, the amendment of the plea
ought to be granted with costs
in favour of the defendant
on attorney and client
scale.
[9]
The plaintiff objects to the amendment on the grounds that the
proposed amendments remain excipiable.
It is the plaintiff’s
case that the plea does not constitute a defence as the defendant
seeks to set-off the plaintiff’s
contractual debt by relying on
an unliquidated damages debt arising from undue payments, set-off is
not applicable to unliquidated
debts. The plaintiff contends that the
conditional claim in reconvention does not state upon which legal
basis is the defendant
entitled to reclaim the amount it allegedly
paid as salaries to the plaintiff’s former employeesand, except
to make general
averments regarding defendant’s entitlement to
reclaim undue payments, the averments that would sustain such a claim
are
not set out in the plea. Based on these reasons, the amendments
sought by the defendant will lead to the plaintiff filing a formal
exception which will no doubt lead to the striking out application of
the amended plea and counter claim at an additional costs
for all the
parties. The application ought to be dismissed with costs on scale C.
[10]
The principle applicable in the determination of applications of this
nature are trite: an application to
amend a pleading will be be
granted unless it is motivated by mala fides or it would cause an
injustice to the other party
which
prejudice cannot be alleviated by an appropriate costs order.
[2]
Significant
with the determination of this application is whether the amendment
will render the pleading excipiable
thus
susceptible to be struck out.
[11]
Set-off
extinguishes reciprocal
liquidated
debts capable of speedy and easy proof
involving
same parties and in their same capacities.
[3]
On the facts germane to this matter, the plaintiff’s claim
against the defendant is for a liquidated debt. It arises from
the
defendant’s obligation to pay the invoice in terms of the
agreement and its money value has been ascertained whereas,
the
defendant’s claim asserted in the proposed amendment does not
involve a liquidated debt as it arises from “unjustly”
payments made to the plaintiff without any legal obligation. A claim
based on unjustified payments resorts under a damages claim
of which
its money value is not
capable
of speedy and easy proof
,
the plaintiff’s debt is thus not compatible to the defendant’s
debt. Set-off does not apply to illiquid and
incompatible
debts.
[4]
It would be unsound to
allow an amendment that will render a plea excipiable as it will be
struck out thereby prejudicing the plaintiff
in the further conduct
of its case.
[5]
The objection to the proposed amendments directed at the plea on the
merits is this decided in favour of the plaintiff.
[12]
Turning to the proposed amendments of the claim in reconvention
(claim A and B). It is trite that a
mutual
debt which cannot be set-off due to its incompatibility to the
plaintiff’s claim can be asserted in reconvention.
[6]
I do not detect any deficiencies in the proposed amendments. The
essential pre-requisites which must be pleaded in an enrichment
action are present namely that, the defendant has been impoverished
by having made payments to the plaintiff in the bona fide belief
that
the payment was due whereas it was not due as the invoices related to
services which were not rendered or were rendered outside
the scope
of the agreement without the defendant’s authorization. The
plaintiff was enriched by the underpayments at the
expense of the
defendant. I hold that t
he
conditional claim in reconvention does
sustain
a clear cause of action,
[7]
the
objection to the proposed amendments is dismissed.
[13]
The defendant has made no attempt to address the plaintiff’s
objections against the defendant’s
claim (claim C) for
reimbursement of the salaries paid to the plaintiff’s
employees. Nevertheless, the plaintiff’s
liability to pay its
former employees’ salaries arises from a contract of
employment. In the instant matter, there is no
legal basis that has
been proffered by the defendant for foisting itself into the contract
concluded between the plaintiff and
its former employees. The
amendment would be unsound.
COSTS
[14]
The plaintiff has substantially succeeded with its opposition. The
plaintiff is accordingly entitled to the costs.
ORDER
(1)
The
applicant is granted leave to amend paragraphs 1 to 7 of its plea and
paragraphs 39, 42 and 88 of its claim in reconvention
within ten (10)
days of this order.
(2)
Leave
to amend paragraphs 19, 21.5 to 21.6, 26 and 36 of the applicant’s
plea is dismissed.
(3)
The
applicant is liable to pay the costs on scale C.
NS
DANISO, J
APPEARANCES:
Counsel
on behalf of the applicant / defendant:
Adv.
MS Sikhwari SC
Instructed
by:
Ntleru
INC.
C/O
Amade & Company INC.
BLOEMFONTEIN
Counsel
on behalf of the respondent / plaintiff:
Adv.
S Grobler SC
Instructed
by:
Woodhead
Bigby INC.
C/O
Lovius Block INC.
BLOEMFONTEIN
[1]
Annexure “B” of the plaintiff’s declaration is a
copy of the defendant’s letter dated
on
14 December 2023.
[2]
Uniform rule 28(10);
Moolman
v Estate Moolman
1927
(CPD)
27 at 29
;
Trans-Drankensburg Bank Ltd
(
under
judicial management
)
v
Combined Engineering (Pty) Ltd
1967(3)
SA 632
(D) at 639.
[3]
Schierhout
v Union Government (Minister of Justice)
1926
AD 286
at 289;
Blakes
Maphanga Inc v
Outsurance
Insurance Co Ltd
2010
(4) SA 232
(SCA)
Para 14-15;
Christie’s
The
Law of Contract in
South
Africa
, 8 ed p 577 at 12.3.2.
[4]
Botha
v W Swanson & Company (Pty) Ltd
1968
(2) PH F85
CPD.
[5]
De
Klerk and Another v Du Plessis and Others
1995
(2) SA 40
TPD at 43I-44A.
[6]
Uniform rule 22(4).
[7]
McCarthy
Retail Ltd v Shortdistance Carriers
CC
2001
(3) SA 482
(SCA).