IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
In the matter between:
QUICK LEAP INVESTMENTS 438 (PTY) LTD
and
THE DEPARTMENT OF HUMAN SETTLEMENTS
OF THE FREE STA TE PROVINCE
THE MAT JHABENG LOCAL MUNICIPALITY
THE MEMBER OF THE EXECUTIVE COUNCIL FOR '
CO-OPERATIVE GOVERNANCE, TRADITIONAL
AFFAIRS AND HUMAN SETTLEMENTS OF THE
FREE ST A TE PROVINCE
THE MINISTER OF HUMAN SETTLEMENTS
Coram: LoubserJ
Reportable/Not reportable
Case number: 1481/2018
PLAINTIFF
1st DEFENDANT
2nd DEFENDANT
3rd DEFENDANT
4th DEFENDANT
Heard: 11, 12, 13, 14 and 15 March 2024, 27 and 30 August 2024
Delivered: This judgment was handed down electronically by circulation to the parties'
legal representatives by ema il and by release to SAFLII. The date and time for hand down
is deemed to be 13:00 pm on 19 December 2024 .
Summary: Application for absolution from the instance at the close of the Plaintiff's case
- whether there is evidence upon which a Court, applying its mind reasonably, could or
might find for the Plaintiff.
ORDER
1. The application for absolution from the instance at the close of the Plaintiffs
case, is dismissed.
2. The costs of the application to be determined at the end of the trial.
JUDGMENT
LOUBSERJ
2
[1] In this matter the Court is now seized with an application by the 1st, 3rd and 4th
Defendants to grant an order of absolution from the instance at the close of the Plaintiff's
case. The 2nd Defendant has not participated in the trial proceedings at all. The application
was made after the Plaintiff presented the evidence of two witnesses, namely the managing
director of the Plaintiff, Mr. Johannes Petrus Oosthuizen and Mr. Bernard Jacob Balkin, a
forensic chartered accountant, whereafter the Plaintiff's case was closed.
[2] Before the merits of the application are considered, I deem it apposite to refer
briefly to the background of the proceedings that came before this Court.
[3] In August 2018 the Plaintiff made application against the Defendants on notice of
motion for a declaratory order in the following terms:
1. It is declared that the 1st Respondent's purported cancellation of the agreement
between the Applicant and the 1st Respondent pertaining to the development and
construction of social housing in Hani Park Informal Settlement as a registered
CDM Project is unlawful.
2. It is declared that this agreement is consequently still valid, in full force and effect
and enforceable.
3. It is declared that the Applicant has the right to continue with the agreed upon
works for the development and construction of the social housing as a registered
COM Project and the 1s1 Respondent is obliged to pay to the Applicant the agreed
upon compensation for such works.
4. It is declared that the 2nd Respondent's failure to, at its own costs, establish, install
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and complete a fully functional sewerage system at the relevant building site, has
no effect.
5. It is declared that once the 2nd Respondent has, at its own costs, established a
fully functional sewerage system at the relevant building site, wh ich sewerage
system should be capable of functioning within acceptable engineering standards
and should be able to convey waste water and sewerage from each house to the
main sewerage line of the 2nd Respondent, the Applicant and the 1st Respondent
are entitled to deal w ith the applicable carbon credits in terms of the aforesaid
agreements between them.
[4] This application was aimed at the specific performance of the agreement between
the parties, and only the 1st Respondent opposed the application. Wh ile the 2nd
Respondent did not oppose, the 3rd and 4th Respondents indicated that they wou ld abide
by the decision of the Court.
(5] The application was heard by Mo litsoane, J of this Division. He mentioned in his
judgment that the agreement concerned was a written land availability agreement (the
LAA ) entered into between the Applicant and the 2nd Respondent for the building of low~
cost housing. He further mentioned that the LAA was subject to certain suspensive
conditions, which conditions the Applicant averred have been fulfilled. The 1st Respondent,
however, contended that they have not been fulfilled, and as such no contract has come
into being. The learned Judge then found that there was a serious dispute of fact as far as
this issue is concerned. As a result, he referred the application to trial.
[6] Subsequently the Applicant, which now feature as the Plaintiff, filed a declaration
in wh ich the very same relief is ·sought as set out in para 3 above. Later on, the Plaintiff
amended its declaration to include a claim for damages against the 1st, 2nd and 3rd
Defendants in the alternative. This claim for damages amounts to the total sum of
R240 910 896.00. On the first day of the trial before this Court, the Plaintiff abandoned all
the relief sought in the form of the declaratory orders, and the Court was informed that the
Plaintiff was only proceeding on the damages claim that was pleaded in the alternative.
[7] In the amended declaration, it is stated that during the period 18th May 2016 and
23rd May 2016 the 1st Defendant repudiated the agreements between the parties by
terminating the contracts without any reason or valid ground for doing so. This constituted
a breach of the agreements, and the Plaintiff then elected to accept the 1st Defendant's
repudiation. It is further pleaded that, as a result of the breach, the Plaintiff was prevented
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from constructing the remaining 4 000 low-cost housing units at extensions 19 and 20 at
Thabong , in the Matjhabeng Local Municipality. It is further pleaded that the amount of
damages suffered by the Plaintiff as a consequence, represents the profit that the Plaintiff
would have earned from the construction of the 4 000 units.
[8] When it comes to the application for absolution at the close of the Plaintiff's case,
the test is whether there is evidence upon which a Court, applying its mind reasonably to
such evidence, could or might find for the Plaintiff. The test is not whether a Co urt should
or ought to find for the Plaintiff.1 In the present case, the evidence that the Court has to
consider, is mostly the evidence of Mr. Oosthuizen, because the evidence of Mr. Balkin
related only to the quantum of the Plaintiffs claim.
[9] The evidence of Mr. Oosthuizen relevant to the present enquiry, consisted of the
following in chief: The Plaintiff made a presentation to the Provincial Government with a
view to building houses in a clean environment. The Executive Committee of the
Government agreed that the plan could be implemented at Hani Park, Welkom , but then
the local municipality had to make land available for the project. The result hereof was a
written Land Availability Agreement (LAA) that was concluded between the Seco nd
Defendant and the Plaintiff on 4 April 2007. In terms of the agreement, the land that was
made available was identified as Extensions 19 and 20 of the area known as Thabong.
The land was made available for the development of a low-cost housing township by the
Plaintiff, on the basis that the Plaintiff would obtain funds from donors locally or
internationally to fund the project. Further, the 2nd Defendant undertook to proclaim the
township, service the stands, and create the infrastructure pertaining to roads, electricity
supply, water supply and sewerage. The onus of proclaiming the township rested on the
2nd Defendant.
[1 0] The LAA contained three suspensive conditions stated as follows:
"14 .1 This agreem ent is subject to the suspensive condition that the ow ner (2nd De fendant) shall
14.1.1 proclaim the Land, attend to the infrastructure pertaining to roads, water, electricity and
sewe rage
14.1.2 arrange for moveme nt of occupants on the individual plots to allow the Developer (Plaintiff)
to erect houses.
1 For instance, M cC arthy Ltd v Absa Bank Ltd 2010 (2) SA 321 (SCA ) at para 21
5
14.2 This agreement is further subject to the suspensive condition that the Developer (Plaintiff)
shall-
14.2.1 obtain funding from local or international donors w ithin 12 (twelve) months of date of
signature of this agreement."
[11] The agreement further stipulated that, if at the end of the period of 12 months the
land remains undeveloped, then in the absence of an extension of the agreement, the land
shall revert back to the council to be dealt with as they may deem fit. The agreement then
concludes with a clause stipulating that the agreement constituted the whole agreement
between the two parties and that no variation or cancellation shall be of any force or effect
unless and until it is reduced to writing and signed by the parties or their duly authorised
representatives.
[12] Mr. Oosthuizen further testified that the 2nd Defendant did in fact proclaim the land
and installed the sewerage system. After the period of 12 months relating to the LAA had
already run out the Plaintiff and the 2nd Defendant signed an Addendum to the LAA on 6
October 2008, whereby the period of the LAA was extended by another 6 months, namely
to 31 May 2009. Mr Oosthuizen testified that the sewerage system was installed and they
did obtain the funding of the project in terms of the initial project. This was followed by
another Addendum between the same parties signed on 15 April 2010, whereby the LAA
was extended to be valid until 1 June 2014. Then, on 18 May 2010, the 1st Defendant and
the Plaintiff entered into a written agreement in terms of which the 1st D efendant would pay
all monies due to the Plaintiff as per the agreed milestones set out in the agreement. When
this contract was signed, there was no objection to the validity thereof, Mr. Oosthuizen
testified. On the same day an Addendum was signed by the parties to make provisions for
the payment of R2 million upon completion of the first hundred foundations. The Plaintiff
then started building during the course of 2010.
[13] The witness then went on to take some time in relating how the Plaintiff had battled
to have a functional sewerage system installed by the 2nd Defendant. The project of building
the houses could not move forward because the manhole systems were filled w ith rubble
and there was no flow from one manhole to another. The sewerage was spilling back all
the time. Eventually the Plaintiff engaged with the 1st Defendant in respect of this issue.
Although the 1st Defendant was upset about the issue, and although a Memorandum of
Understanding was signed with the 1st Defendant on 15 June 2012, the situation did not
improve. The Plaintiff complained about the non-functional sewe rage system on num erous
occasions, but received little or no response from the 1st and 2nd Defendants. The Plaintiff
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also complained about ·the fact that the 2nd Defendant had not yet completed the list of
beneficiaries for the houses, wh ich failure also delayed the building of the houses.
[14] After the 1st Defendant had terminated its contract with the Plaintiff, Mr. Oosthuizen
visited the building site and found another contractor there who was attempting to remedy
the dysfunctional sewerage system. He told the Court that the 1st Defendant had failed for
5 years to connect the sewerage system, and only now had they appointed someone to
rectify the problem after termination of the contract with the Plaintiff.
[15] The Memorandum of Understanding referred to by Mr Oosthuizen, recorded that
the Plaintiff and the First Defendant had committed in 2010 to a Public-Private Partnership
(PPS) to construct low cost housing on land belonging to the Second Defendant under a
C lean Development Mechanism Project under the Kyoto Protocol which would be
registered under that Protocol of the United Nations. That would eventually facilitate the
sale of carbon credits internationally or locally.
[16] In cross-examination M r Oosthuizen testified that the Plaintiff itself had initially
provided the funding for the project, and that no other funding was obtained at the time.
He approached the 1st Defendant only after the LAA was concluded. As for the LAA , he
conceded the suspensive condition that the Plaintiff had to obtain local of international
funding within a period of 12 months, and he conceded that extension 19 was only
proclaimed on 16 November 2014 and extension on 18 February 2012. Mr Oosthuizen
then confirmed that both the proclamations did not take place within the 12 month period
stipulated in the LAA or its addendum. He further conceded that every addendum was
signed after the expiry of the previous one. When it was put to him that the suspensive
condition of the installation of a sewage system was not fulfilled because what they
provided was not a fully functional sewage system, Mr Oosthuizen said that he disagrees
with this proposition.
[17] In re-examination Mr Oosthuizen testified that the 1st Defendant never told him
that the suspensive conditions have not been met. The 1st Defendant should have said if
there was a problem with the availability of the land concerned. They never conveyed to
him that there was no land availability agreement any more. With this, the testimony of Mr
Oosthuizen was concluded.
[18] The question now arising is whether a C ourt, applying its m ind reasonably to this
evidence, could or m ight find for the Plaintiff. On behalf of the Defendants it was submitted
that no Court could or might find for the P laintiff on the basis of the evidence presented by
7
Mr Oosthuizen. This is so, because two of the suspensive conditions of the LAA were not
fulfilled during the 12 months period, with the result that the LAA lapsed at the end of the
12 month period. As both the addendums were only concluded after the LAA lapsed, the
addendums could not revive the lapsed LAA. The two suspensive conditions concerned
were the ones relating to the proclamation of extensions 19 and 20 of the land, and the
creation by the 2nd Second Defendant of a sewerage system. The evidence of Mr
Oosthuizen confirmed that these two suspensive conditions were not fulfilled during the 12
month period of the LAA, it was contended.
[19] It was further submitted on behalf of the Defendants that, as a result, the Plaintiff
had no right in law to construct or to demand to construct houses on the land concerned.
It can therefore not claim any right in law to construct 4 000 houses on the land made
available in terms of the LAA , as that agreement had lapsed. The whole basis for the
agreements with the 1st Defendant was in fact absent when the LAA lapsed, the
subsidization agreement between the 1st Defendant and the Plaintiff came about only
because the Plaintiff assured the 1st Defendant and the Exco that he had land available by
means of the LAA. On the evidence of Mr Oosthuizen, the LAA had lapsed already by that
time, it was argued.
[20] On behalf of the Plaintiff it was submitted that the Defendants are only shifting the
evidentiary burden since they have raised special defenses to the effect that the
agreements with the Plaintiff were not lawful, but they want the Plaintiff to prove all the
essentialia of the contracts, including that they were lawful. It was submitted that the
suspensive conditions between the p t Defendant and the Plaintiff had no relevance to the
contract between the Plaintiff and the 1st Defendant. That contract does not even refer to
the LAA, and it does not contain any suspensive conditions. According to Mr Oosthuizen,
he was not told by anybody that the suspensive conditions were not complied with.
Furthermore, the agreements between the 1st Defendant and the Plaintiff, do not even refer
to the sewerage system. It does not contain any suspensive condition to that effect, it was
contended. In any event, nobody told the Plaintiff to stop the building of the houses
because the LAA is not in place. For all these reasons, the Plaintiff has put up a prima
facie case, it was argued.
[21] In view of all these submissions, the written agreement between the 1st Defendant
and the Plaintiff dated 18 May 2010 needs closer scrutiny. This agreement was signed by
the parties some 3 years after the LAA came into being. In the agreement the project
concerned is described as the development, improvement and/or completion of 300
8
housing units to be built in Hani Park, Matjhabeng Local Municipality. The building of the
300 units would serve as a pilot project under the stipulations of the Kyoto Protocol of the
United Nations. The units must be built with the period ending 31 March 2011. Further,
the 1st Defendant would facilitate the acquisition of a signed services and authentic land
availability agreement on or before the signing of the contractor's agreement. If the Plaintiff
has good reason for requesting delay in commencement or completion dates or in the
programme for sale of residential properties to beneficiaries, it may submit motivated
representations for the extension, to which the 1st Defendant shall give reasonable
consideration. The 1st Defendant also undertook to pay all monies due to the Plaintiff as
per the agreed milestones reflected in the agreement. Finally, the parties agreed that the
agreement thereto and the appendices correctly reflects the intention of the parties and
constitutes the entire agreement between the parties. No variation to the agreement shall
be of any force and effect unless reduced to writing and signed by the parties.
[22] In the first appendice to the agreement, the following appears: "If the contractors
has entered into a land availability agreement in respect of the land contained in the project, the
contractor hereby cedes to the Defendant in securitatem debiti for the obligations of the contractor
in all its rights, title and interest in and to the aforesaid land availability agreement." An
addendum to the agreement made provision for the advance payment to the Plaintiff for
the building of the first hundred foundations.
[23] In a Memorandum of Understanding signed by the parties on 19 June 2012 the
parties agreed that the Plaintiff would build altogether 6 000 houses. Phase 1 of the project
will consist of 300 houses, phase 2 of 1 700 houses and the balance of 4 000 houses will
commence in the 2014 - 2015 financial year will be completed during the 2016 - 2017
financial year. The building of the last phase of 4000 houses appear to be the bone of
contention in the present action for damages instituted by the Plaintiff.
[24] Notably, the agreement of 18 May 2010 was concluded between the 1st Defendant
and the Plaintiff. The 2nd Defendant was not a party to the agreement at all. There is no
reference to the LAA of 4 April 2007 or to any suspensive conditions, for that matter. The
nearest that the agreement comes to the LAA , is where it is stipulated that "if the contractor
has entered into a land availability agreement in respect of the land contained in the
project", then certain things will happen. This means that if the contactor has not entered
into such an agreement, then such things will not happen. More importantly, the 1st
Defendant undertook to facilitate the acquisition of a signed serves and authentic land
availability agreement by itself. With this undertaking the 1st Defendant made it clear that
9
it is not relying on the LAA of 2007 at all. The agreement was a new agreement concluded
between different parties that those who featured in the LAA . Assuming then that the
suspensive conditions of the LAA have not all been fulfilled and that the LAA has lapsed
irretrievably after its period of 12 months, then it surely cannot be said that this LAA
purported to form the basis of the new agreement that followed three years later. The new
agreement stands on its own legs. The failed LAA has not made the new agreement
unlawful.
[25) In terms of the new agreement, the 1st Defendant would pay to the P laintiff all
monies due for the building of the houses. I therefore find that so far, there is evidence
upon which a Court, applying its mind reasonably, could or might find for the Plaintiff.
[26] The following order is made :
1. The application for absolution from the instance at the close of the Plaintiff's
case, is dismissed.
2. The costs of the application to be determined at the end of the trial.
For the App licants (Defendants) in the
absolution application:
Instructed by:
For the Respondent (Plaintiff) in the
absolution application
Instructed by:
P .J. LOUBSER , J
Adv. N Snellenburg SC , with him Adv L
Bomela
The Office of the State Attorney,
Bloemfontein
Adv. D Mtsweni, with him Adv S Maelane
Chambers Attorneys, Potchefstroom
c/o Graham Attorneys, Bloemfontein