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REPUBLIC OF SOUTH AFRICA



IN THE HIGH COURT OF SOUTH AFRICA
LIMPOPO DIVISION, POLOKWANE

CASE NO: 1249/2021



In the matter between :

SEKHUKHUNE DISTRICT MUNICIPALITY PLAINTIFF

And

BETRAM (PTY) LTD FIRST DEFENDANT

STANDARD BANK OF SOUTH AFRICA LTD SECOND DEFENDANT
_______ _____
JUDGEMENT


KGANYAGO J

(1)
(2)
(3) REPORTABLE: YES/NO ✓
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OF INTEREST TO THE JUDGES: YES/NO
REVISED .
DATE ........... . SIGNATURE: ............ .
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[1] The plaintiff has instituted an action against the defendants jointly and severally
in the form of claim A and B. In claim A the plaintiff is claiming the sum of
R22 210 224.00, and in claim B payment of bank’s interest which is still t o be
determined and calculated. According to the plaintiff’s lengthy particulars of
claim, during July 2013 the first defendant was a customer of the second
defendant. During April 2013 the plaintiff invited tenders from potential
tenderers for the supply of approximately 38 000 precast VIP toilets to
structures in certain areas with in the area of jurisdiction of the plaintiff. The
first defendant submitted a tender to the plaintiff for the tender amount of
R188 894 071.95. Hexagon Technologies CC (Hexagon) which is not a party
to the proceedings submitted a tender to the plaintiff in the amount of
R168 298 642.89.

[2] The plaintiff awarded the first defendant the tender to supply 14 517 precast
VIP toilets titled section A for R55 911 585.00. Hexagon wa s awarded 16 920
precast VIP top structures for R59 368 190.40 titled section B. The plaintiff
alleges that after the award of the tender to both the first defendant and
Hexagon, it entered into a partly written, partly oral agreement with both
parties for the supply and delivery of precast VIP toilets. It alleged that in
terms of the bill of quantities the first defendant was supposed to supply 5 806
double pit toilet top structures and 8 711 single pit top structures. The plaintiff,
first defendant and He xagon entered into a written cession agreement. In
terms of the cession agreement, Hexagon has ceded to the first defendant its
right, title and interest in and to its claims against the defendant for goods sold
or services rendered to the plaintiff.

[3] The plaintiff alleges that it had concluded an agreement with the first and
second defendant. In terms of the agreement, plaintiff would pay the first
defendant upon issue of an invoice by the first defendant to the plaintiff all
amounts due to the fir st defendant upon completion of a payment certificate
by the consulting engineers, responsible for both section A and B of the
projects, certifying that the quality of goods supplied and delivered and prices
are correct.

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[4] On 27th June 2013 the plaintiff and defendants entered into a partly written and
partly oral agreement. The terms of the said agreement w ere that the first
defendant would open a bank account into which plaintiff would pay R59 368
189.80 as advance payment for th e section B project which ha s been ceded
by Hexagon to the first defendant, and also R55 911 585.00 as advance
payment for project A. The second defendant undertook not to allow any
transaction to be effected on the account without prior written consent of the
plaintiff’s municipal manager. In the event of default by the first defendant, the
plaintiff would be entitled to issue an instruction to the second defendant to
pay back to plaintiff the full amount held in the account.

[5] Plaintiff paid the sum of R115 279 775.40 on the 23rd July 2013 into the bank
account of the first defendant held at the second defendant. The plaintiff
alleges that in breach of the agreement, the first defendant withdrew or
electronically transferred the sum of R100 000 00 0.00 from the account to an
unknown destination. Plaintiff makes no claim to the remaining balance of
R15 279 775.40 against the defendants, but went on to state that
fundamentally the revised savings/balance claim of R22 210 224.00 includes
the R15 279 775.40. As per the particulars of claim, the plaintiff’s claim
against the second defendant is based on alleged breach of mandate.

[6] According to the plaintiff, for the period October 2013 to June 2015, the first
defendant supplied and delivered 14 237 precast VIP toilets top structures
consisting only of single pit toilet top structures at a rate of R2 500.00 per unit,
to the value of R35 592 500.00 in respect of section A. The plaintiff alleges
that the first defendant had breached the agreement as it had delivered 14
237 single pit toilet structures instead of 14 517, and had also failed to deliver
the required quantity of the double pit toilet structures. The plaintiff alleges
that for the period 17th October 2013 and 25th June 2015 payment certificates
totalling an amount of R38 531 988.60 were issued in respect of the amount
due to the first defendant. According to the plaintiff in terms of the payment
certificates in respect of section A of the project, a retention amoun t of R3 379
000.00 was due and payable . The plaintiff state that the consulting engineer
had certified that from the total bid amount of R55 911 585.00 a savings
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and/or a balance of R17 379 596.40 remained, which balance was due and
payable to the plaintif f.

[7] In relation to section B project, the plaintiff alleges the first defendant during the
period October 2013 and June 2014 supplied 11570 precast VIP toilets top
structures consisting only of single pit toilets top structures at the rate of R2
500.00 per unit to the total value of R28 925 000.00. The plaintiff alleges that
the first defendant had breached the agreement by delivering 5 350 single pit
toilets structures less than what was required in respect of section B, and also
that the plaintiff has failed to deliver the required quantity of double pit toilet
structures. According to the plaintiff , in respect of section B of the project,
there were payment certificates issued between 17 October 2013 and 26 July
2014 totalling R54 537 742.38. The p laintiff alleges that a retention totalling
R2 870 398.02 which is reflected on payment certificate 2, was credited to the
first defendant. According to the plaintiff, the total balances and/or savings in
respect of section A and B of the projects total to an amount of R22 210
224.02.

[8] The plaintiff alleges that it had authorised and consented to the release of
funds from the second defendant on the strength of the invoices issued by the
first defendant which were accompanied by the consulting engine er’s
payment certificates to plaintiff. According to the plaintiff, when it gave such
authorisation and consent it was unaware of the fact that the amount of R100
000 000.00 was allegedly already transferred from the account.

[19] The alleged discrepan cy in relation to projects A and B was picked up by the
Auditor General of South Africa (AG) during 2018 and it questioned the
plaintiff why the balances/savings were not recovered. The AG insisted on the
plaintiff recovering the balances/savings. The plai ntiff’s claim A against both
first and second defendants is for payment of a refund of R25 080 622.05.
According to plaintiff , the contract price adjustment escalation was
inapplicable. In the alternative to the claim of R25 080 622.05 the plaintiff
allege s that the first defendant is retaining the sum of R22 210 224 without
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any valid cause. In claim B the plaintiff is claiming interest against the
defendants.

[20] The second defendant had pleaded to the plaintiff’s particu lars of claim, whilst
the first defendant had raised an exception to the plaintiff’s particulars of claim
on several grounds. However, at the hearing of the exception the first
defendant limited its exception to 5 grounds which are: (i) the tender contract
1 and 2 precludes the con clusion of a tripar tite agreement; (ii) the cession
agreement was pleaded erroneously by the plaintiff as the plaintiff seek
erroneously against the first defendant contractual obligations of Hexagon; (iii)
the cession agreement precluded the conclusion of a tripartite agreement with
the defendants (it would not have precluded that with the bank); (iv) the
tripartite agreement which according to the plaintiff ’s head s of argument is the
only agreement relied upon as the cause of action and has not been plead ed
by the plaintiff that the first defendant had towards the plaintiff contractual
obligations not to transfer ; (v) and the plaintiff conflates contractual obligations
of the first defendant and Hexagon, and this is the fundamental flaws that runs
through the whole particulars of claim.

[21] The plaintiff had submitted that in its pleadings it had stated that there was an
oral transfer of obligations, and that will be cleared by oral evidence during
trial. The cession agreement does not provide for trans fer of obligations, and
they are not relying on the cession agreement only, but also on the oral
agreement. The non -variation clause does not apply to oral agreements, and
that the court must have the benefit of all the evidence at trial.

[22] In order to succeed an excipient has a duty to persuade the court that upon
every interpretation which the pleading in question can reasonably bear, no
cause of action is disclosed, failing which the exception ought not to be
upheld. In Living Hands v Ditz1 Makgoka J said:

“Before I consider the exceptions, an over view of the applicable general
principles distilled from case law is necessary:

1 2013 (2) SA 368 (GS) at para 15
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(a) In considering an exception that a pleading does not sustain a cause of
action , the court will accept, as true, the allegations pleaded by the plaintiff to
assess whether they disclose a cause of action.
(b) The object of an exception is not to embarrass one’s opponent or to take
advantage of a technical flaw, but to dispose o f the case or a portion thereof
in an expeditious manner, or to protect oneself against an embarrassment
which is so serious as to merit the costs of an exception.
(c) The purpose of an exception is to raise a substantive question of law
which m ay have the effect of settling the dispute between the parties. If the
exception is not taken for that purpose, an excipient should make out a very
clear case before it would be allowed to succeed.
(d) An excipient who alleges that summons does not disclose a cause of
action must establish that , upon any construction of the particulars of claim,
no cause of action is disclosed.
(e) An over -technical approach should be avoided because it destroys the
usefulness of the exception procedur e, which is to weed out cases without
legal merit.
(f) Pleadings must be read as a whole and an exception cannot be taken to a
paragraph or part of a pleading that is not self -contained.
(g) Minor blemishes and unradical embarrassment caused by a pleading can
be cured by further particulars”.

[23] There are more than one agreement which are involved in this matter, which
are the general conditions of contract for construction works (GCCC) (which
contains the alleged n on-variation clause); cession agreement; and alleged
partly written and partly oral (so -called tripart ite agreement) . The alleged non -
variation clause in the GCCC read as follows:

“Deviations from and amendments to the documents listed in the Te nder Data
and any addenda thereto listed in the Tender Schedules as well as any
changes to the terms of the Offer agreed by the Tenderer and Employer
during this process of the offer and acceptance are contained in the Schedule
of Deviations attached to an d forming part of this Agreement . No amendments
to or deviations from said documents are valid unless contained in this
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Schedule, which must be duly signed by the authorised representative(s) of
both parties ”.

[24] The GCCC further provides that the ter ms of the contract are contained in
agreements and contract data (which includes this agreement). This
agreement will refer to the GCCC. Clause 1 of the definitions defines contract
as a means the subject of the agreement made in terms of the form of offer
and acceptance and such amendments or additions to the contract as may be
agreed in writing between the parties. Tender data has not been defined, but
what has been defined is contract data , which as been defined as means the
specific data, which together with these general conditions of contract,
collectively describe the risks, liabilities and obligations of the contracting
parties and the procedures for the administration of the contract. It is not clear
whether contract data and tender data refers to one and the same thing.

[25] The purpose of non -variation clauses is to guard against the disputes and
evidentiary difficulties that may arise from oral agreements. To protect both
parties against these, they expressly agree that oral amendments will be null
and void as between them. (See Brisley v Drosky2). The parties did not state
which documents are listed in the tender data. The GCCC which form part of
the plaintiff’s pleadings is unsigned, and the non -variation clause refers to
offer and acceptance contained in the schedule of deviations attached to and
forming part of this agreement. The offer and acceptance contained in the
GCCC is unsigned. Both parties did not raise any issue about the unsigned
GCCC and are relying on it even though it is unsigned.

[26] According to the first defendant, the non -variation clause in the GCCC do not
permit the first defendant to enter into the cession agreement or tripart ite
agreement. The non -variation agreement refers to tender data which has not
been defined in the GCCC. The GCCC refers contract data, and it is not clear
whether the contract data and tender data refers to one and the same thing.
From the non -variation clause , it is clear that no amendment or deviation of
any document will be valid unl ess reduced to writing and signed by both

2 2002 (4) SA 1 (SCA)
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parties or their authorised representatives. Beside the contract data there is
another agreement which forms part of the GCCC which is in the form of offer
and acceptance. On the offer and acceptance agreement, amendments or
additions to the contract may be agreed in writing between the parties. For
offer and acceptance agreement it seems that it is not peremptory for the
amendments or additions to the contract to be in writing. If that is the case,
this clause is i n conflict with the amendments or deviations which might be
effected in terms of the tender data. The two clauses will need a proper
interpretation in order to harmonize them. It must also be determined whether
contract data and tender data refers to one and the same thing.

[27] The defendant ’s exception is based on the interpretation of the non -variation
clause in the GCCC. In Sun Packing (Pty) Ltd v Vreulink3 it was held that as a
general rule, courts are reluctant to decide upon exception questions
concerning the interpretation of a contra ct. The GCC C contract regarding the
non-variation clause read together with the relaxation clause in the offer and
acceptance agreement regarding amendments and deviations, and whether
tender data and contract data refers to one and the same thing will nee d
evidence to be presented in order to put them in a proper perspective. That
can be done if full evidence is led at trial.

[28] It is not in dispute that the first defendant was awarded section A of the
contract, whilst Hexagon was awarded section B. T he plaintiff on its cause of
action relies on the alleged tripart ite agreement which the plaintiff refers as
partly written and partly oral. If the GCCC do es not permit the conclusion of
the tripart ite and cession agreement, the first defendant will be abl e to plead
to that, and it is not dependant o n Hexagon been a party to the proceedings. If
it is found that Hexagon is the one liable, it will be the plaintiff which w ill be
prejudiced out of its own making . The first defendant can still plead a special
plea of non -joinder . It can therefore not be said that upon every interpretation
which the pleading in question can reasonably bear, no cause of action is
disclosed. It follows that the first defendant’s excep tion stand s to fail.


3 1996 (4) SA 176 (A)
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[29] In the result the following order is made:

29.1 The first defendant’s exception is dismissed with costs.



KGANYAGO J
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA, LIMPOPO DIVISION , POLOKWANE


APPEARANCE S:

Counsel for the plaintiff : Adv SG Gouws SC
Instructed by : Verveen Attorneys
Counsel for the first defendant : Adv MP van der Merwe SC
Instructed by : Schoombee attorneys
Date heard : 23rd January 2025
Electronically circulated on : 25th February 2025