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[2024] ZAFSHC 387
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Winners of Success Trading 7 CC v Jehovah Jireh Orphanage Home and Another (5394/2022) [2024] ZAFSHC 387 (27 November 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable: YES/NO
Of
interest to other Judges: YES/NO
Circulate
to Magistrates:YES/NO
Case
no: 5394/2022
In
the matter between:
WINNERS
OF SUCCESS TRADING 7 CC
Plaintiff
(Registration
number: 2006/014073/23)
and
JEHOVAH
JIREH ORPHANAGE HOME
First
Defendant
SCOTT
JOHNSON
Second
Defendant
Coram:
Van
Zyl, J
Heard
: 27
May 2024
Delivered
:27
November 2024
Summary
:
Contractual
claim - specific performance – only the first defendant
defended the action – the first defendant closed
its case
without the presentation of any evidence – the plaintiff failed
to make out a prima facie case for the relief sought.
Action
dismissed, with costs, counsel`s fees to be taxed on scale B.
ORDER
1. The action is
dismissed, with costs, which costs are to include the reserved costs
of 24 April 2024, with counsel`s fees
to be taxed on scale B.
JUDGMENT
Van
Zyl, J
[1]
The plaintiff instituted action against the first and second
defendants for payment of an amount of R1 679 380.02.
The action was defended by the first defendant only.
The
pleadings:
[2]
Following several amendments to its particulars of claim, the
plaintiff averred as follows in its amended particulars of claim:
‘
5.
On or about 19 July 2021,
the Plaintiff represented by Standford Kojana who is a Site Manager
and the Defendants’ duly represented
by Lebogang Tau in his
capacity as a representative member, entered into a verbal agreement
to build an orphanage home and some
of the terms were reduced in
writing. See attached Annexure “WS2” –
appointment letter.
6.
The terms of the
agreement were as follows:
6.1 The terms of
the verbal agreement were reduced in writing as contained in the
appointment letter as follows:
6.1.1 The Plaintiff
to build an orphanage home at Thaba Bosiu, QwaQwa. Letter of
appointment is attached hereto marked
Annexure “WS2”.
6.1.2 The building
amount is for an amount of R14 000 000.00… which
after negotiation the parties agreed
on amended amount of
R5 175 000.00… including VAT. See attached
quotation marked Annexure “WS3”.
7.
The Defendant further
introduced to the Plaintiff its Project Manager who was going to do
the day to day running at the project,
Mr Tau.
8.
On 7 August 2021, the
project for construction commenced until 13 June 2022 after the
Project Manager unilaterally terminated the
project and instructing
the Plaintiff to leave site. See attached e-mail dated 13 June
2022 marked Annexure “WS4”.
9.
The Plaintiff complied
and proceeded to build the required building in terms of the
specifications provided by the Defendant and
approval of such
milestone by its appointed Project Manager.
10.
The Plaintiff further on
request by the Project Manager deviated and did additional work at
the request and approved by the Project
Manager.
11.
The work carried out and
approved by the Project Manager after presenting a quotation by the
Plaintiff.
12.
At the time of the
termination of agreement, the Defendant was indebted to the Plaintiff
in the amount of R1 236 000.00…excluding
deviation
extra work.
13.
The amount of extra
additional work completed on request by the Defendant amount to
R443 380.02… inclusive of VAT.
14.
The Defendant is failing
or refusing to pay the Plaintiff for such work completed in the
amount of R1 679 380.02…’
[3]
In its plea the first defendant admitted the contents of paragraphs
5, 6 and 7 of the amended particulars of claim. It
further
pleaded as follows:
‘
AD PARAGRAPH
8 THEREOF:
7.
7.1 The First
Defendant admits that the construction commenced on 13 June 2022.
7.2 The First
Defendant admits that it terminated the agreement between the First
Defendant and the Plaintiff and pleads that
such termination was
lawful.
7.3 Annexure “WS4”
is not attached to the Plaintiff’s amended particulars of
claim. The First Defendant
is thus unable to plead thereto.
7.4 The remainder
of the averments contained in the paragraph under reply are denied.
AD PARAGRAPH 9
THEREOF:
8.
8.1 The averments
contained in the paragraph under reply are denied.
8.2 The First
Defendant pleads that the Plaintiff breached the terms of the
agreement,
inter alia
, by failing to complete the works and/or
stages of the works within the agreed times, and/or within the time
specified in the First
Defendant’s instructions and/or by
failing to complete the works and/or stages of the works within the
agreed budget, and/or
within the budget specified in the First
Defendant’s instructions, and/or by refusing to perform any
works without receiving
advanced payments from the First Defendant.
8.3 The aforesaid
failures by the Plaintiff constituted material breaches of the
agreement.
8.4 The First
Defendant, thus, as it was entitled to do, lawfully cancelled the
agreement.
AD PARAGRAPHS 10
AND 11 THEREOF:
9.
The First Defendant
admits that its Project Manager issued variation orders to the
Plaintiff from time to time. Such variation
and the costs
thereof were agreed upon from time to time.
AD PARAGRAPHS 12
AND 13 THEREOF:
10.
The averments contained
in the paragraphs under reply are denied. The First Defendant
specifically denies that the First Defendant’s
Project Manager
approved the work which the Plaintiff had done. Without
derogating from the generality of the aforesaid denial,
the First
Defendant denies further that any amounts are due and owing to the
Plaintiff.’
The
pre-trial minutes:
[4]
In the pre-trial minutes the parties recorded as follows at paragraph
5 thereof:
‘
5.
ISSUES FOR THE COURT TO DECIDE:
5.1 Whether the
termination of the agreement by defendant was lawful.
5.2 Whether the
plaintiff is entitled to any payment in respect of that which has
been invoiced.’
The
evidence:
[5]
Mr Samu Mhlanga
was the first witness who testified on behalf
of the plaintiff. He was the project manager of the plaintiff. Mr Tau
was the first
defendant`s project manager. On 19 July 2021 the
plaintiff and the first defendant concluded a partly written and
partly
oral agreement in terms whereof the plaintiff was to construct
an orphanage for the first defendant. This was subsequent to the
plaintiff having submitted a successful tender in this regard.
The ‘building amount’ was initially R14 000 000.00
and the estimated time frame for the project was 13 months. The
project commenced during August 2021. Initially three buildings
were
to be constructed. By December 2021 approximately 35% of the
buildings had been constructed. According to Mr Mhlanga in his
evidence in chief, the parties worked on a 30-day payment period and
the plaintiff produced an invoice at the end of a month for
payment
by the first defendant. The plaintiff carried the building costs and
then billed the first defendant. Certain material
was provided by the
plaintiff and certain other material by the defendant, but Mr Mhlanga
could not recall which party provided
which material.
[6]
During December 2021 the first defendant started experiencing
financial constraints and the plaintiff received no payment for
work
done. There was a consequent closure of the site between middle
December 2021 to 7 February 2022, which closure was initiated
by the
first defendant. Meetings were held between the parties on the site
to discuss the re-opening of the site and the continuation
of the
project. The financial constraints of the parties were discussed. The
first defendant wanted to continue with the project,
but the nature
of the project changed. The defendant was in a haste that the
children be accommodated as soon as possible. At that
stage there
were three buildings which were partially constructed. It was
consequently agreed between the parties that the plaintiff
will
restrict its work to the building which was the nearest to
completion. Initially it was supposed to be an administration block,
dining room, study area and playroom. It now had to be changed to
also serve as a dormitory for the children. Revised building
plans
were consequently drafted which reflected significant changes since
the dormitory had to provide for the separation of boys
and girls and
also a separation of the younger children. A change in the sewer line
was necessitated as a result of ablution facilities
which were now
necessary, drywall partitioning was necessary, the electrical layout
had to be changed as well as the lighting and
the ventilation. In the
original project the plaintiff would also have erected the roof, but
the erection of the roof was now the
responsibility of a different
contractor. That particular building was about 60% complete at that
stage. The contract value was
agreed upon between the parties to be
R4 500 000.00 excluding vat; hence R5 175 000.00
including vat. The plaintiff
received the above instruction on 7
February 2022 and was required to complete the project by 7 March
2022.
[7]
The plaintiff was unable to meet the aforesaid time frame. The roof
construction only started in March 2022 and was completed
in May
2022. Because of the new design of the roof, it resulted in the
plaintiff having to do bigger beam filling. The plaintiff
could also
not work on the interior of the building before the roof had not been
finished by the other contractor. The plaintiff
communicated these
challenges to Mr Tau of the first defendant at the time. In-between
Mr Tau also initiated site closures from
time to time, for reasons
unknown to the plaintiff. There was also severe rainfall.
[8]
The first defendant paid deposits over to the plaintiff in respect of
the original project. According to the memory of Mr Mhlanga
the
plaintiff received two such payments – one in the amount of
R1 000 000.00 and one in the amount of R2 500 000.00.
The plaintiff ran into financial difficulties in executing the
variation orders. The firs defendant, however, did not want to
acknowledge that the financial constraints were due to all the
variation orders. The plaintiff had to buy material on credit and
it
saved funds on other projects to enable it to keep building on this
project. Mr Mhlanga referred to an email dated 8 June
2022,
attached to the amended particulars of claim as annexure ‘WS4’,
which he addressed to Mr Tau, in which he raised
his concern about
all the variation orders ‘passed on site’, since the
plaintiff communicated the price costs of the
variation orders in
writing, which were just orally approved by Mr Tau. Problems arose
when the plaintiff requested partial payment
of the variation orders.
[9]
On 13 June 2022 the first defendant terminated the mandate of the
plaintiff. According to Mr Mhlanga he did not know why it
was
terminated but was told that it was because the plaintiff ran behind
schedule with the project. The plaintiff contests the
termination
since it views the termination to be unjust and unlawful. According
to Mr Mhlanga it was impossible to have remained
within the time
frames because of the delays caused by the erection of the roof. The
said time frames were 7 February 2022 to 7
March 2022 when the
project was initially supposed to have been completed and thereafter,
after the delay caused by the roof, the
new project time was 7 March
2022 to 16 April 2022, whilst the roof was only finalised in the
second week of May 2022.
[10]
Mr Mhlanga denied that the plaintiff did not stay within its budget.
He explained that it was the variation orders that
resulted in
financial implications.
[11]
According to Mr Mhlanga the project was 95% complete at the time of
the termination of the plaintiff`s mandate. Had it
not been for the
delays caused by the erection of the roof, all the variation orders
and the site closures, the plaintiff would
have finalised the project
within the agreed time.
[12]
During cross-examination Mr Mhlanga conceded that it was a
prerequisite for payment in this instance that work done should
first
be measured and approved and only thereafter the plaintiff could
issue an invoice upon which it could request payment from
the first
defendant. Mr Mhlanga also conceded that he did not present any
evidence regarding any invoices in his evidence in chief.
[13]
The proposition was put to Mr Mhlanga that the plaintiff cannot base
its claim on a mere deduction of payments received
from the contract
value, since the contract value was variable subject to measurement
and approval which has to be quantified in
terms of the relevant bill
of quantities.
[14]
Mr Mhlanga was referred to the email of 8 June 2022, referred to
earlier, wherein it is stated by him that the amount
due to the
plaintiff by the defendant, is R1 675 000.00. Mr Mhlanga
responded that he does not agree with this amount.
[15]
It was put to Mr Mhlanga that according to the first respondent, all
work which had been measured, approved and invoiced,
had been paid by
the first defendant, to which Mr Mhlanga responded that the first
respondent is still in arrears.
[16]
Mr
Thabo Molefe
testified that he is the Director of the
plaintiff. In his said capacity he oversees and manages the plaintiff
in all aspects and
he was to ensure that all projects which the
plaintiff is awarded get done in time and he checks the overall
quality of work done.
[17]
Mr Molefe presented similar evidence as Mr Mhlanga regarding the
initial agreement of R14 000 000.00 and how
it was later
changed and re-negotiated to the agreement of R5 175 000.00.
I am therefore not going to repeat his evidence
in so far as Mr
Mhlanga already covered certain aspects in his evidence.
[18]
Mr Molefe testified that the first defendant paid the plaintiff the
amount of R1 000 000.00 on 17 February
2022 and the amount
of R2 500 000.00 on 4 April 2022. Mr Molefe testified that
the first defendant owes the plaintiff
the amount of R1 675 000.00,
calculated by subtracting the amount of R3 500 000.00 from
the contract price
of R5 175 000.00. When he was referred
to the fact that the amount claimed in the amended particulars of
claim is R1 679 380.02,
he responded that
R1 675 000.00 is the correct amount. The said amount
is for work completed, measured and
verified and for which the
plaintiff put in a claim for payment from the first defendant.
Mr Molefe testified that the work
was verified by Mr Tau and he, Mr
Molefe, was also on site.
[19]
Mr Molefe also testified that the plaintiff remained within the
agreed budget and did not invoice the first defendant
for more than
R5 175 000.00. During cross-examination Mr Molefe testified
that although there were variation orders with
additional work, the
costs of such additional work is included in the amount of
R5 175 000.00.
[20]
With regard to a second email reflected on annexure ‘WS4’
attached to the amended particulars of claim, addressed
by Mr Tau to
Mr Mhlanga and Mr Molefe on 13 June 2022, Mr Molefe testified that he
attended the site meeting held on 14 June 2022,
which Mr Tau
described in his email as ‘the last day of Winners on site’.
He testified that at the said meeting they
discussed outstanding
invoices that still had to be paid. Thereafter Mr Molefe and Mr
Mhlanga left the site, but the plaintiff
still had workers on the
site who continued with the work. They had reached completion stage,
but there was additional work which
Mr Tau and fellow employees
attended to. They carried on painting, but 90% of the
painting work had been done and they
were attending to a few broken
tiles.
[21]
During cross-examination Mr Molefe conceded that the agreed contract
price is a variable amount which can fluctuate in
accordance with
actual work done. He also agreed that payment only becomes due once
work is completed, measured, certified and
an invoice is then
rendered to the first defendant by the plaintiff.
[22]
Mr Molefe was asked how outstanding invoices could have been
discussed during the meeting of 14 June 2022 if measurement
and
certification still had to be performed, to which he responded that
the measurement and certification did not take time. Mr
Molefe could
not provide any check sheet or document of what Mr Tau measured and
certified. It was put to Mr Molefe that Mr Tau
will testify that the
certification was done according to the bill of quantities, which Mr
Molefe confirmed and further testified
that the plaintiff issued
invoices based on the bill of quantities for work completed. When it
was put to Mr Molefe that certification
did not take place verbally,
Mr Molefe responded that he never saw a certificate during the
performance of the contract and that
Mr Tau verbally confirmed what
the plaintiff can be paid.
[23]
During further cross-examination, Mr Molefe testified that the
plaintiff had outstanding invoices in the amount of R1 675 000.00
which should be paid by the plaintiff and that was also the
instruction which was given to the plaintiff`s attorney of first
instance
for purposes of the institution of the action. With
reference to the claim for R443 380.02 for extra additional work
as set
out in the amended particulars of claim, Mr Molefe testified
that there was such additional work done that can be proved. Mr
Molefe
testified that the plaintiff did furnish its invoices to its
legal representatives. With regard to the amount of R1 236 000.00
claimed in the amended particulars of claim, Mr Molefe testified that
it is ‘for work completed as per emails exchanged’
and
thereafter added that it was for approved work.
[24]
When asked what was the amount reflected on the invoice on which the
plaintiff relies for purposes of its claim, Mr Molefe
testified that
although he does not have the invoice in front of him, it was for the
amount of R1 679 380.02. Mr Molefe
was then confronted with
the fact that he testified in his evidence in chief that that amount
is incorrect, to which he responded
that there is a reason for the
R4 000.00 difference. Mr Molefe then explained that part of the
money which Mhlanga testified
about was for work done in 2021.
According to Mr Molefe he oversees the finances, but that Mhlanga
drafts and submits the claims.
It was then put to Mr Molefe that Mr
Mhlanga did not testify that he submitted a claim for R1 675 000.00
as claimed in
the amended particulars of claim, to which Mr Molefe
responded that it was indeed a claim and it was submitted to the
first defendant.
[25]
It was put to Mr Molefe that Mr Tau will testify that he, Mr Molefe,
did not attend the meeting of 14 June 2022, that
only Mr Mhlanga
attended. Mr Molefe then responded that he is not sure whether he
attended. However, he then conceded that he did
indeed not attend the
meeting and that only Mr Mhlanga attended. It was further posed
to Mr Molefe that Mr Tau testified
will testify that no measurement
and certification took place on that day, to which Mr Molefe
responded that they looked at the
work on the 13
th
and
they put together all the invoices and handed it to the defendant.
Applicable
legal principles:
[26]
Plaintiff seemingly seeks to enforce what it alleges to be due to it
in terms of the agreement. It consequently
constitutes a claim
for specific performance, for purposes of which the plaintiff is
required to prove the following:
1. The
existence of and the terms of the contract;
2.Compliance by the
plaintiff with its antecedent or reciprocal obligations under the
contract or some justification for non-performance;
2. Failure to
perform the contract by the defendant;
3. If the
claim is one for payment of money, the quantum of the plaintiff’s
claim.
See
RM Van de Ghinste
and Co (Pty) Ltd v Van de Ghinste
1980(1) SA 250 (C).
[27] With regard to
prima facie proof, the following is stated by CWH Schmidt
et
H
Rademeyer,
Law of Evidence
, at para 313:
‘
The normal meaning
of
prima facie
proof (or evidence) is that it is
proof (evidence) calling for an answer. It is conclusive proof of the
point in issue unless evidence
is produced to rebut it. Thus
Stratford JA stated in
Ex parte Minister of Justice: In re R
v Jacobson and Levy
1931 AD 466
478:
If the party on whom lies
the burden of proof, goes as far as he reasonably can in producing
evidence and that evidence “calls
for an answer” then, in
such case, he has produced
prima facie
proof, and,
in the absence of an answer from the other side, it becomes
conclusive proof . . .
In
R v
Mantell
1959 1 SA 771 (C) 776H Bloch J
pointed out that
prima facie
evidence is more than
merely “some evidence”. It is evidence “of such a
character that if unanswered it would
justify men of ordinary reason
and fairness in affirming the question which the party on whom
the
onus
lies is bound to maintain”. It thus
amounts to evidence calling for an answer – evidence placing an
evidential burden
on the opponent.
The
merits of the action:
[28]
Mr Zwane appeared on behalf of the plaintiff and Mr Van der Merwe on
behalf of the first defendant. Both legal representatives
filed heads
of argument in support of their respective submissions, for which I
wish to express my gratitude.
[29]
From the pleadings already cited above, considered in conjunction
with the evidence, it is evident that it is,
inter alia,
the
case of the plaintiff that:
1. ‘The
plaintiff
complied and proceeded to build
the required
building
in terms of the specification provided by the Defendant
and
approval of such milestone by its appointed Project Manager
.’
[Paragraph 9 of the amended particulars of claim – my
emphasis.]
2. At the
termination of the agreement the first defendant was indebted to the
plaintiff in the amount of R1 236 000.00,
excluding
deviation extra work.
3. The amount of
extra additional work completed on request by the first defendant
amounts to R443 380.02, inclusive
of vat.
[30]
The above averments were denied by the first defendant in its plea to
the amended particulars of claim.
[31]
As correctly pointed out in the first defendant`s heads of argument,
the plaintiff did not plead any terms of the agreement
in relation to
payment. However, the following emerged from the evidence of the two
witnesses who testified on behalf of the plaintiff,
either in their
evidence in chief and/or by concessions made during their
cross-examination:
1. The ‘contract
value’ or the ‘budget’ of R5 175 000.00
which had been agreed between the
parties, was a variable amount.
2. A Bill of
Quantities was applicable to the agreement between the parties and
the plaintiff was entitled and compelled to
charge fees in accordance
with the Bill of Quantities.
3. The plaintiff
would become entitled to payment during the course of the execution
of the project if and when:
3.1 The
plaintiff reached certain milestones which were either agreed between
the parties or specified by Mr Tau; and
3.2 Mr Tau
had measured the work done; and
3.3 The
plaintiff rendered an invoice to the first defendant calculated on
the basis of the Bill of Quantities; and
3.4 Mr Tau
certified the amount of the said invoice as being due and payable to
the plaintiff.
[32]
The main issues in dispute turn out to be the following:
1. Failure by the
first defendant to perform in terms of the contract; hence, whether
the termination of the agreement by
the defendant was lawful.
2. Compliance by the
plaintiff with its obligations under the contract; therefore, that
payment is due to the plaintiff.
3. The quantum of
the plaintiff`s claim.
[33]
In my view, it has become unnecessary to determine whether the
termination of the agreement by the defendant was lawful.
The reason
for this conclusion is that this aspect would only have become
relevant if the plaintiff has proven that it is entitled
to payment
and the quantum thereof, which the plaintiff, in my view, has not
done.
[34]
In this regard I am in agreement with the submissions in the heads of
argument of the first respondent that the plaintiff
should have
followed one of two ways to prove compliance with its reciprocal
obligations under the contract and the quantum of
its claim:
“
23.1 It
could have led evidence to show that the work done by it was in fact
certified by the First Defendant`s Project Manager
in which event the
onus of proving that the Plaintiff complied with its antecedent or
reciprocal obligations and the Plaintiff`s
quantum would have been
discharged as a certified payment certificate constitutes a liquid
document; or
23.2 It could
lead evidence regarding the work which it had actually done and the
actual value thereof in light of the
agreed BOQ in order to prove its
claim. This would of course have required the Plaintiff to deliver
expert notices as contemplated
in Uniform Rule 36(9) and to lead
evidence of such experts regarding the standard of the Plaintiff`s
work and the value which the
Plaintiff was entitled to charge for
such work in light of the agreed prices contained in the BOQ.”
[35]
The plaintiff followed neither of the aforesaid two avenues. It
merely relies on the ‘say so’ of its two
witnesses, whose
evidence definitely did not prove the said elements of the
plaintiff`s claim. Mr Mhlanga proffered no evidence
regarding the
certification of any work done by the plaintiff. Mr Molefe initially
testified that he was present on the site meeting
on 14 June 2022
when Mr Tau allegedly certified the work done by the plaintiff.
However, later in cross-examination Mr Molefe conceded
that he was
not present at the said meeting and could not provide any evidence
that whatever work may have been done by the plaintiff
was in fact
certified. The plaintiff furthermore failed to present any invoice in
its evidence.
[36]
The aforesaid failures by the plaintiff is exacerbated by the
differences in evidence between the two witnesses and between
the
witnesses and exhibit ‘WS4’ regarding the quantum of its
alleged claim. Furthermore, in the very same ‘WS4’
the
following was stated:
“
Attached to this
email is a bill of all completed works and prices previously quoted
when approval was given as per instruction
by Mr Tau. Kindly take
note that these works are complete or near completion and so will be
due for payment soon.”
Not only is the said
document not attached to the annexure and not presented in evidence,
but it is also indicative thereof that
the said work had not yet been
measured, approved and certified at the time.
[37]
In the circumstances the plaintiff did not even prima facie prove
that it had complied with its reciprocal obligations
under the
agreement and the alleged quantum of its claim.
[38]
In the absence of such prima facie proof no adverse inference can be
drawn against the plaintiff for not having called
Mr Tau as a
witness.
[39]
The plaintiff`s claim can consequently not succeed.
Costs:
[40]
There is no reason why costs should not follow the outcome.
[41]
With reference to Uniform rule 67A(3), read with Uniform rule 69(7),
I agree with
Ghubhelabm (Pty) Ltd v R.A.W. Truck Trading CC
(B3217/2023) [2024] ZAGPPHC 460 (26 April 2024), where the court
found as follows at para 27 of the judgment:
‘
Costs orders,
including the assessment of the appropriate Rule 69 scale, remain a
matter for the exercise of judicial discretion.’
[42]
In view of the totality of the factors to be considered in terms of
Uniform Rule 67(A)(3)(b), as well as the facts and circumstances
of
the present matter, I do not agree with the submission of Mr Zwane
that the appropriate scale of counsel`s fees is scale A.
In my view
the appropriate scale is scale B.
Order:
[43]
The following order is made:
1.
The action is dismissed, with costs, which costs are to include the
reserved costs of 24 April 2024, with counsel`s fees
to be taxed on
scale B.
C.
VAN ZYL, J
On
behalf of Plaintiff:
Adv
SM Zwane
Instructed
by:
Moshoana
Mabena Inc.
c/o
RC Ismael Attorneys
BLOEMFONTEIN
e-mail:
imabena@mmmlawinc.co.za
civil@rcilaw.com
On
behalf of First Defendant:
Adv
R van der Merwe
Instructed
by:
Blair
Attorneys
BLOEMFONTEIN