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25 June 2024 in which I upheld the Applicant’s claim against the Respondent
for payment of the sum of R14 808 636.80 for professional services rendered
in terms of a Service Level Agreement concluded between the parties.
[2] I will refer to the parties as they were referred to in the original application.
[3] Leave to appeal is sought by the Respondent on the following grounds:
a. First, that I erred in dismissing the Respondent’s special plea of
arbitration on the basis that the pre-conditions required for the arbitration
in terms of the Service Level Agreement had not been complied with .
b. Second, that I erred in having regard to the allegations contained in the
Applicant’s supplementary affidavit, in circumstances in which leave to
file the supplementary affidavit had not been granted .
c. Third , that I failed to apply the Plascon -Evans test correctly or at all to
the factual disputes between the parties.
d. Fourth , that my reliance on the judgment of KwaZulu -Natal Joint Liaison
Committee v MEC for Education, KwaZulu Natal and Others1 was
misplaced.
The First Ground of Appeal
[4] In raising its special plea of arbitration, the Respondent did not plead that the
pre-condition s for arbitration stipulated in clause 26.1.1 of the Service Level
Agreement had been complied with. During oral argument , I questio ned
counsel for both parties about this and both confirmed that no attempt had been
made to comply with the pre -condition s set out in the Service Level Agreement.
1 2013 (4) SA 262 (CC).
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[5] It is well established that the onus is on the party applying to stay a matter by
reason of an arbitration clause to show:
a. the existence of the arbitration agreement or clause;
b. the existence of a dispute between the parties;
c. that the dispute between the parties is covered by the arbitration
agreement or clause; and
d. that all pre -conditions in the agreement for the arbitration have been
complied with.
[6] There having been no compliance with the fourth and final requirement, the
Respondent failed to discharge the onus resting upon it.
[7] Richtown Construction Co (Pty) Ltd v Witbank Town Council 1983 (2) SA 409
(T) is authority for the proposition that an order referring a matter to arbitration
stands to be refused for want of compliance with the necessary pre -conditions
stipulated in the arbitration agreement.
[8] I am accordingly of the view that the Respondent’s special plea of arbitration
was correctly dismissed and that there is no merit in the first ground of appeal.
The Second Ground of Appeal
[9] It is correct that I had regard to the contents of the Applicant’s supplementary
affidavit for purpose s of my ruling. It is also correct that I did not grant leave for
the admission of the supplementary affidavit. This was an oversight on my part
which occurred in the circumstances set out below:
a. While the Applicant alluded in the supplementary affidavit to the fact that
“leave to supplement the founding affidavit” was sought, no formal
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application for such leave was ever made by the Applicant.
b. The Respondent, for its part , did not , at any stage:
(i) raise the fact that leave to admit the supplementary affidav it had
not been granted;
(ii) object to regard being had to the supplementary affidavit in the
circumstances; or
(iii) seek an opportunity to answer to the supplementary affidavit in
the event that it was admitted.
c. Neither the practice notes nor heads of argument fil ed by the parties
made any reference to the need to obtain leave for the admission of the
supplementary affidavit.
d. Both parties conducted their case s and argued the matter on the basis
that the supplementary affidavit was “in ”. Notably, the Applicant relied ,
in oral argument , quite significant ly on facts which were pleaded in the
supplementary affidavit. At no point in its oral argument did the
Respondent object to this on the basis that the supplementary affidavit
had not been admitted. O n the contrary, as I have stated, the
Respondent conducted its case and presented its argument as if the
supplementary affidavit had been admitted.
[10] In these circumstances, my failure to admit the supplementary affidavit was an
oversight. Had my attention b een pertinently drawn to it, or had I considered
the issue more explicitly, I would have done so. My intention, which, as
consequence of my oversight, was not properly given effect to in the judgment ,
was to admit the supplementary affidavit, particularly given that no objection
had been raised to it and the case was being conducted on the basis that it was
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already in. My oversight in failing to admit the supplementary affidavit therefore
constituted a patent error. In the circumstances , I intend to correct the patent
error by amending the order I previously granted to admit the supplementary
affidavit.
[11] This disposes of this ground of appeal.
The Third Ground of Appeal
[12] The Respondent did not explicitly identify the factual dispute s it contends
existed between the parties and ought to have been resolved in terms of the
Plascon -Evans rule. I accept of course that factual disputes in application
proceedings fall to be resolved with reference to the Plascon -Evans rule, but in
the view that I take of the matter, there were no real fa ctual disputes between
the parties.
[13] As I stated in my judgment, the Respondent’s sole defence to the Applicant’s
claim on the pleadings was that the professional services contracted for in the
Service Level Agreement, had not been budgeted for.2 Given however the
manner in which this was pleaded, and the fact that the Respondent did not
plead that the Service Level Agreement had been entered into without authority
or that it fell to be set aside on any basis, this simply did not rise to the level of
a legally cognisable defence. It was on this basis (and not on the basis of any
factual dispute between the parties ), that I ruled against the Respondent.
[14] There is accordingly no merit in this ground of appeal.
Fourth Ground of Appeal
[15] The Respondent, as noted above, criticised my reliance on the judgment of the
Constitutional Court in Kwa-Zulu Natal Joint Liaison Committee v MEC
Department of Education, Kwa -Zulu Natal and Others 2013 (4) SA 262 (CC).
2 Judgment at para 20.
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[16] In my vie w such criticism is misplaced. I cited the judgment as authority for the
proposition that the Respondent cannot, where a binding contract has been
concluded and payment has fallen due in terms thereof, seek to evade payment
on the basis that it has not bee n properly budgeted for. Fundamentally however,
as I have stated above, I ruled against the Respondent on the basis that it had
not put up a legally cognisable defence to the Applicant’s claim.
[17] This ground of appeal does therefore not assist the Respondent.
[18] Finally, the Respondent urged me to take cognisance of the fact that it intends
to introduce new evidence on appeal (in the event that leave is granted) which
according to it will demonstrate that the appointment of the Applicant was
unlawful and therefore void ab initio and invalid and ought to be reviewed and
set aside. While I take note of this, this cannot constitute a self standing ground
permitting me to grant leave to appeal. In order to grant leave to appeal, I must
be satisfied that there is a reasonable prospect that another Court would rule
differently. As the Supreme Court of Appeal held in MEC Health, Eastern Cape
v Mkhita and Another [2016] ZASCA 176:
“An applicant for leave to appeal must convince the court on proper
grounds that there is a reasonable prospect or realistic chance of
success on appeal. A mere possibility of success, an arguable case
or one that is not hopeless is not enough. There must be a sound
rational basis to conclude that there is a reasonable prospect of
success on appeal.”3
[19] For the reasons given above, I am not so satisfied.
[20] I accordingly make the following order:
1. My order handed down on 25 June 2024 is amended by the insertion of the
following paragraph:
3 At para 17.