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JUDGMENT
TWALA J (MOKOSE J and MOHOSI J Concurring)
Introduction
[1] There are two central issues which ar e raised i n this appeal : first is whether the
Court is entitled to mero motu raise a point of law when determining the issues ;
and second is the duration of the service level agreement.
[2] This is an appeal against the whole of the judgment and order of the court a quo,
per Francis J, handed down on 3 November 2022 which dismissed the appellant’s
claim and that each party pays its own costs . An application for leave to appeal
was dismissed w ith costs by the court a quo. Leave to appeal to this Court was
granted on petition by the Supreme Court of Appeal .
Factual Background
[3] The facts foundational to this case are mostly common cause and are as follows:
on 4 December 2015 the respondent awarded a tender and appointed the
appellant as a project manager of a project known as the Lungile Mtshali Poverty
Alleviation Project (“the Lungile Mt shali Project”). On or about December 2015
the appellant and the respondent concluded a contract , the service level
agreement, (“SLA”). In terms of the preamble to the SLA, the appellant was
appointed a s the project manager for the Lungile Mt shali Project for a period of
three years commencing on 11 December 2015 to 11 December 2018.
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[4] It is undisputed that the letter of appointment mentions the period of appointment
as thirty -six (36) months and the SLA concluded between the parties thereafter
in its preamble mention s the period of the contract as from 11 December 2015
until 11 December 2018 . It is further common cause that the SLA only mentions
and deal s with phase 2. There were disagreements between the parties as early
as March 2016 with regard to certain provisions of the SLA. The d isagreements
persisted until September 2016 when the respondent instructed the appellant to
suspend its performance unde r the SLA . Further, that under the mayoral decision
the Lungile Mtshali project, as it was detailed in the SLA, would not continue
and would no longer be honoured by the respondent.
[5] The appellant accepted the repudiation and demanded the damages arising out of
the repudiation – hence the institution of these proceeding to claim damages for
the loss of its bargain being the net profi t which it would have made in relation
to the portion of the outstanding period for phase 2 and phases 3 and 4 of the
Lungile Mtshali project in the remaining years of 2017 and 2018.
[6] The appellant’s claim for loss of profit in relation to the outstand ing period of
phase 2 was settled between the parties and the settlement agreement was made
an order of Court in terms of Rule 34 of the Uniform Rules of Court.
[7] During the hearing of this case , the Court a quo , realising from the evidence that
was tendered before it , that a point of law was implicated in terms of section 33
of the Local Government: Municipal Finance Management Act1 (“MFMA”) ,
directed the part ies to make submissions before judgment was made. The
appellant failed to make submissions b ut instead debated the matter on its heads
of argument.
1 56 of 2003 .
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Parties ’ Submissions
[8] The app ellant submitted that the Court a quo had no power to invalidate the
contract between the parties. The respondent never pleaded non-compliance with
section 33 (1) of the MFMA as a defence. There was no reason for the appellant
to amend its plea to address the issue of comp liance with section 33 (1) of the
MFMA since there was no case made out by the respondent in the papers for it
to answer. The submissions requeste d by the Court a quo when it mero motu
raised the issue of non -compliance with section 33 (1) of the MFMA , so the
argument went, are not evidence and can therefor e not be relied upon.
[9] The respondent never sough t the invalidation or review of the contract on the
basis of section 33 (1). The respondent sought the agreement, upon which already
a settlement has been reached between the parties and made an order of Court,
to be interpreted so as to cut down its duration to twelve (12) months to render it
lawful. The Court a quo ignored the provisions of clause 9 .1 of the SLA dealing
with the interpretation of the SLA and granted an order which none of the parties
sought.
[10] There is nothing wrong with the Court raising a point of law mero motu, so it
was contended, but it is for the Court to deal with issues that are presented by the
parties for adjudication. I t is for the parties to set out and define the nature of
their dispute in the pleadings and for the Court to adjudicate that dispute and that
dispute alone. In the instance as in this case, where the Court mero motu raises a
point of law that emerges from the evidence and is necessary for the decision of
the case, the Court must ascertain that no prejudice will be caused to any party
by it deciding the point of law.
[11] The appellant submitted further that the Court a quo had no power to raise new
issues not transversed in the pleadings and should not have insisted that the
parties deal with the point of law by way of submissions since that is not
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evidence. It was not the case for the respondent that there was a breach of section
33(1) of the MFMA nor was there any evidence before the Court that the SLA is
in breach of the provisions of section 33(1). There was no basis – on the
pleadings, facts or argument – for looking into whether and then holding that the
contract was illegal.
[12] For the Court to raise and deal with the issue of illegality, so says the appellant,
the illegality must have been obvious ex facie and it must be necessary . It was
not clear from the face of it since there was no evidence led in court to
demonstrate whether or not the con tract was one contemplated in section 33(2)
in which case section 33(1) would not apply. The Court a quo should have
ignored the point of law since it was not clear from the papers and was not
necessary to decide the case. There was no evidence before the Court that the
contract was not one contemplated in section 33(2) to enable it to arrive at the
decision to invalidate the contract as illegal .
[13] The appellant says the duration for the contract between the parties was a period
of three years. The SLA states in its preamble that the appellant is the appointed
project manag ement company for the Lungile Mtshali Poverty Alleviation
Project from 11 December 2015 to 11 December 2018. Further, clause 1.1. 5 did
not give the end term of the SLA but provided tha t the contract would be from
the date of signature, which is 23 December 2015 until revised or a mended.
[14] Clause 1 of the Bid Document2 provides that the project duration for LMCHP
Phase 2 is twelve (12) months from the start of the contract. However, the Project
Management agreement will be for a period of 3 years (36 months ) after signing
the appointment letter and service level agreemen t, subject to performance
reviews which will be undertaken on an annual bas is. It was contended further
that no performance reviews were undertaken, and no amendments were made
2 Ekurhuleni Metropolitan Municipality Contract Number: A – CRM 01/2016 .
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to the contract. The letter of appointment has the duration of the appointment as
from the date of award until 30 June 2018.
[15] Since it is not clear what clause 1.1.5 of the contract means , so it was argued,
regard must then be had to the preamble to give it a meaning. Clause 1.1.5 leaves
the contract operative beyond twelve mont hs until it is ‘revised or amended or
updated ’. In the interpretation of the preamble, one would never arrive at the
conclusion that the duration of the contract is twelve months as contended by the
respondent. The preamble should be read and interpreted as part of and
embodying the terms of the contract , even if it is not an operative provision of
the contract .
[16] Although the SLA mentioned only phase 2, the things to be done and services to
be provided in phases 3 and 4 were for the same as those listed and provided in
phase 2. The appellant says that the contract only specifies the duration of twelve
months in relation to phase 2 and that this period applies solely to phase 2 of the
project . However, the appellant, so it was contended, was appointed as project
manager of the Lungile Mtshali project for a period of three years up until the
11 December 2018. The amount to be paid for the project was a sum of
R9 025 800 (nine million , twenty -five thousand , eight hundred rand) (Exclusive
of Vat) per annum and with an escalation clause based on the consumer price
index.
[17] The appellant says that although the SLA provided f or its bi-annual review , no
such review had taken place. There is no provision in the SLA which entitles the
respondent to terminate the contract – hence it was not entitled to repudiate the
contract as it did on 3 September 2016. Furthermore, so it was contended, i t is
impermissible to import the post contractual conduct of the parties to vary,
contradict or add to the terms of the contract . Most importantly , for subsequent
conduct to be admissible, it must disclose the common intention of the parties .
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[18] The post -contractual conduct the respondent relied upon is an impermissible
attempt to say that the contract intended to say twelve months, even though it did
not. The contract does provide for what its duration is , but does not say twelve
months. The issue of twelve months , so the argument went, is only mentioned in
the bid document which say s the duration of phase 2 is twelve months . The post
conduct of the parties sought to contradict what the preamble and clause 1.1.5
says and therefore is in admissible.
[19] The appellant contended further that, there are four addenda which were
proposed amendments to the terms of the SLA. However, all of these proposed
amendments were never intended to address the duration of the SLA . Instead,
they focused on the provisions of clause 5 , which dealt with the project value ,
the onboarding of phases 3 and 4 , the five deliverables on phases 3 and 4 (similar
to phase 2 ) and the escalation which is in line with CPI .
[20] Only the fourth addendum, so says the appellant, attempt s to amend the duration
of the SLA since it states that the contract extends beyond the respondent’s third
financial year end , which is 30 June 2018 . Accordingly, the respondent will have
to apply for a deviation to extend the contract period from 30 June 2018 until
11 December 2018 to be in line with the dates stipulated in the initial agreement.
Again, there is no proposed amendment of the duration of the SLA from twelve
months to any other period.
[21] There was no common understanding that the contract was for tw elve months
which period is revealed by the subsequent conduct of the parties. The fourth
proposed amendment discloses a different intention which is that the contract
was always intended to be of three years’ duration. Again, so the argument went,
it is clear f rom the letter of support for appellant from Mr Murphy on 1 August
2016 , the report to the mayoral committee on 12 January 2017 and the evidence
of Ms Ntsikeni, who was involved in the project on behalf of the res pondent, that
the contract was for a period of three years.
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[22] The respondent in its submission conceded that it never requested an order to set
aside the SLA, nor did it seek to review or launched the review proceedings
against the SLA. It further conceded that, on 3 September 2016 it repudiated the
contract between itself and the appellant . However, the appellant in these
proceedings sought to claim damages to place itself in a better position than it
would have been had the respondent performed in terms of the SLA.
[23] The respondent says that the Court is entitled to mero motu raise a point of law
where it has not been pleaded by a litigant, and it appears from the evidence
which is led before the Court. This is permissible p rovided that it is necessary
and is clear from the evidence before the Court and there is no prejudice to any
party to the proceedings. The Court a quo was correct and co nducted the issue of
the point of law properly by requesting submissions from the parties in order to
avoid a miscarriage of justice , and the contract itself was sufficient evidence
before the court.
[24] The MFMA was supposed to have regulation s promulgated to put into effect
certain of its provisions including section 33(2). But no regulations have been
promulgated for the MFMA and therefore the evide nce the appellant asserts
should have been placed before the Court a quo to determine whether th e
agreement is one contemplated in section 33(2) was not required as section 33(2)
does not find application in this case. The evidence required which implicates
section 33(1) is the contract itself and no other evidence was necessary for the
determination of this case.
[25] Furthermore, so it was argued, the proposed amendment s were cognisant that the
contract was going to run beyond three financial years and Mr Maluleke also
accepted under cross examination , that the deviation appro val was intended to
address the fact that the amendments would allow the contract to run beyond the
normal three -year budgetary cycle of the respondent. Since the contract was to
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run beyond the normal three -year budgetary cycle, then it implicated the
provisions of section 33(1) of the act .
[26] The respondent says that clause 3 of the SLA is clear in that it states tha t the role
of the appellant as the appointed project management company is to facilitate a
fair transparent se lection and recruitment of phase 2 participants. Under the
heading of ‘key tasks ’, the appellant is to implement the LMCDP phase 2 at
approved wards in accordance with the Norms and Standards of the programme
throughout the contract period . Clause 5 of the SLA deals with the total c ontract
amount to be paid for phase 2 as a sum of R9 025 800 (nine million , twenty -five
thousand and ei ght hundred rand (excluding VAT) and has five items as
deliverables.
[27] The respondent submitted further that the SLA was for a period of one year and
it was in relation to phase 2 - hence no mention of phases 3 and 4 is made in the
SLA. There was no contract for phases 3 and 4, so the argument, for it was meant
to be attend ed to later by the parties and that is why there was an attempt to
amend the SLA, but those amendments were not effected. When considering the
subsequent conduct of the parties , it is clear that the proposed amendments were
intended to include phases 3 and 4 which are not part of the SLA since it
pertained only to phase 2 which was to run for a period of twelve months.
[28] It is clear from Clause 1 of the Bid Document that the duration of the LMCDP
phase 2 was for a period of 12 month s from the start of the contract because the
respondent was anticipating a merger with Lesedi Local Municipality which
merger would have added a further 14 wards which would have translated to a
further 420 learners. The preamble is merely a recital and is formu lated and
framed as a statement of fact, but it is not a term of the agreement between the
parties, nor can it impose substantive obligations on the parties.
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[29] Further, so it was contended, the preamble says that the appointment is from the
date of award whereas the clause 1.1.5 of the SLA says it is from the date of
signature of the agreement. Clause 1.1.5 says that the agreement is until it is
revised/amended or updated whereas the preamble says the ap pointment is until
11 December 2018. Therefore, so say s the respondent, the SLA must be
interpreted on its terms and no consideration must be given to the preamble for
it is inconsistent with the terms of the SLA. Further, the preamble contradicts the
letter of appointment which records that the appellant was appoint ed for the
period 3 December 2015 until 30 June 2018.
[30] The respondent says that the ap pointment of the appellant was an administrative
decision, and nothing should be made of the letter of appointment since it is
superseded by SLA which was concluded by the parties. The appointment letter,
so it was argued, appointed the appellant for a period of two and half years from
December 2015 to June 2018 as a project management service provider subject
to the appellant concluding an SLA. The terms of the SLA do not have to be the
same as those contained in the letter of appointment.
[31] The respondent submitted that, a final and critical interpretative p rinciple
relevant to this case is that, where the contract is capable of more than one
meaning, the Court should place that constructi on upon it which upholds it rather
than that which makes it illegal an d void.
[32] On the proper interpretation of the SLA, so it was argued, the SLA was only to
endure for a period of 12 months and was subject to a bi-annual review. Because
of the bi -annual review, which was meant to either revise, amend or terminate
the SLA , the respon dent was entitled to review and to terminate the SLA. The
respondent terminated the SLA in S eptember 2016 and since it terminated the
agreement earlier than it was entitled to , which was in December 2016, it settled
the claim of the appellant’s damages for the remaining period of 2016.
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[33] The plain contextual evidence of paragraph 1 of the Bid Document, so says the
respondent , is that bidders were asked to submit on the basis of performing in
respect of phase 2, a one -year project. The successful bidder would be appointed
for a longer period to a lso address subsequent phases subject to performance
reviews. The SLA provided for pha se 2 only and left it to the parties to negotiate
amendment s and revisions that would incorporate the subsequent phases. The
price escalations were not included in the SLA which reflects that the parties
would price phases 3 and 4 once they were incorporat ed into the bid.
[34] The respondent says that the appellant attempted to introduce the annual
escalation clause to the amounts as proposed in the pricing for phases 2 , 3 and
4 only during the proposed amendments long after the SLA was concluded. This
is so , so says the respondent, because as at March 2016 the appellant ’s
understanding was that the SLA made no provision for e scalations and would
have to be amended if escalations were to be addressed. The SLA did not make
provision for a duration o f 11 December 201 5 to 11 December2018 – hence the
proposed amendment of clause 1.1.5 which defines the duration of the SLA.
[35] The understanding of Mr Murphy and Ms Ntsikeni that the SLA was to operate
until December 2018 , so it was contended, is consistent with an interpretation
of the SLA providing for only phase 2 and leaving it to the parties to negotiate
the terms of phase s 3 and 4. There can be no doubt that the parties intended
when signing the SLA only to regulate only phase 2 of the projec t – hence no
mention of other phases , the pricing for those phases , nor was the escalation
included in the SLA nor did the parties address the possible incorporation of the
Lesedi Municipality into the respondent.
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Legal Framework
[36] In order to put matter in the correct perspective, it is useful to restate the
provisions of the MFMA as they are relevant to the determination of the issues
in this case which are as follows:
“Contracts having future budgetary implications
33(1) . A municipality may enter into a contract which will impose financial
obligation on the municipality beyond a financial year, but if the
contract will impose financial obligations on the municipality beyond
the three years covered in the annual budget for tha t financial year, it
may do so only if –
(a) The municipal manager, at least 60 days before the meeting of the
municipal council at which the contract is to be approved –
(i) Has, in accordance with section 21A of the Municipal
Systems Act -
(aa) made public the draft contract and an
information statement summarising the
municipality’s obligations in terms of the
proposed contrac t; and
(bb) invited the local community and other
interested persons to submit to the
municipality comments or representations in
respe ct of the proposed contract; and
(ii) Has solicited the views and recommendations of –
(aa) the National Treasury and the relevant
provincial treasury ;
(bb) the national department responsible for local
government; and
(cc) if the contract involves the provisi on of water,
sanitation, electricity, or any other service as
may be prescribed, the responsible national
department;
(b) The municipal council has taken into account –
(i) The municipality’s projected financial obligations in
terms of the proposed contract for each financial year
covered by the contract;
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(ii) The impact of those financial obligations on the
municipality’s future municipal tariffs and revenue
(iii) any comments or representations on the proposed
contract received from the local community and other
interest ed persons; and
(iv) any written views and recommendations on the proposed
contract by the National Treasury, the relevant provincial
treasury, the national department responsible for local
government and any national department referred to in
paragraph (a) (ii) (cc); and
(c) the municipal council has adopted a resolution in which -
(i) it determines that the municipality will secure a
significant capital investment or will derive a significant
financial economic or financial benefit from the
contract;
(ii) it approves the entire contract exactly as it is to be
executed; and
(iii) it authorises the municipal manager to sign the contract
on behalf of the municipality.
(2) The process set out in subsection (1) does not apply to -
(a) contracts for long-term debt regulated in terms of section 46 (3);
(b) employment contracts; or
(c) contracts -
(i) for categories of goods as may be prescribed; or
(ii) in terms of which the financial obligation on the
municipality is below -
(aa) a prescribed value; or
(bb) a prescribed percentage of the municipality's
approved budget for the year in which the contract is
concluded.
(3) (a) All contracts referred to in subsection (1) and all other contracts that
impose a financial obligation on a municipality -
(i) must be made available in their entirety to the municipal
council; and
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(ii) may not be withheld from public scrutiny except as provided
for in terms of the Promotion of Access to Information Act,
2000 ( Act 2 of 2000 ).
(b) Paragraph (a) (i) does not apply to contracts in respect of which the
financial obligation on the municipality is below a prescribed value.
(4) This section may not be read as exempting the municipality from the provisions
of Chapter 11 to the extent that those provisions are applicable in a particular
case.
[37] At this stage, it is apposite to mention the clauses of the service level agreement
which are of relevance to the discussion that will follow which state the
following:
“Preamble
WHEREAS the Department Customer Re lations Management (CRM ) is responsi ble
for the implementation of the flagship poverty alleviation pro1ect – Lungile Mtshali
within Ekurhuleni , Metropolitan Municipality (EMM ),
AND WHEREAS Hlaniki Investment Holdings (H laniki) is the appointed project
management company to manage the Lung ile Mtshal1 Povert y Alleviation Project on
behalf of the City of Ekurhuleni from 11 December 2015 until 11 December 2018 .
NOW THERERFORE all parties to listed on th is service level agreement agree as
follows –
Clause 1. 1. 5
DURATION OF THE AGREEMENT :
from the date of signature of the Agreement un til the agreement is
revised/amended or upda ted.
Clause 1.2.3
REVIEW OF THE SLA :
SLA will be sub ject to b iannua l reviews by all Parties s ignatory to the
agreemen t
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Clause 3
ROLE Of HLANIKI INVESTMENT HOLDJNGS AS THE APPOINTED PROJECT
MANAGEMENT COMPANY :
Hlaniki will play a critical ro le across the lifecyc le of the Lung ile Mtshali
Poverty Alleviation Projec t programme including but not limited to –
(a) …
(b) ,
(c) Facilitate a fair transparent selection and recruitment of phase 2
participants
(d) …
KEY TASKS
TASKS
(a) …
(b) …
(c) Implement the LMCDP Phase 2 at appr oved wards in accor dance with the
Norms and Standards of the programme . Where a ward has a different
approach to the one agreed, work with the ward in ensuring that they
achieve the programme objective throughout the contract period .
Clause 5
PROJECT VALUE
The total a mount for the completion of th is project is R9 025 800.00 excluding
VAT and escalations as set out below ……….
Clause 7
DISPUTE RESOLUTION
7.1 The parties should always ens ure an d promote coordinate d and
harmonious working relationshi p to avoid dispute s amongst the
departments .
7.2 Should any party wis h to declare a dispute in te rms of this agreement
the dispute sha ll be declared in writing an attempt to resolve the
dispute via a meeting betwee n the Head of Department Customer
Relations Management within 7 (seven) calendar days of said
declaration shall be made an d a written copy of said dispute delivered
by hand to t he City Ma nager or his/her designated official
7.3 In the event that the Head of Department Customer Re lations
Management is unable to resolve the dispute for any reason the dispute
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shall be referred in writing to the City Manager or his /her designa ted
official within 7 (seven ) calendar days for resolution The City
Manage r’s decision shall be fina l and binding upon the parties .
Clause 8
NON -COMPLIANCE. WITH LEGISLATION AND EMM POLICY
Any Party to this agreement or any o ther interested person may report
to the City Manager any alleged non -compliance with any provisions
of the SLA or the laws of t he Republic of South Africa
8.1 NON -PERFORMANCE OF HLANIKI AS PROJECT
MANAGER
a) In the case of Hlanik i’s contract n ot performing in line
with the agreed S LA Objectives an d scope of the
Project, the issue w i11 be REPORT ED to the City
Manager in addition to being discussed with Hlaniki
b) The escalation to the City Manager in line with
Service D elivery Commitments that EMM has to its
citizens . It must therefore be noted that the City
Manager will take approp riate "MEASURES and
CHARGES" so that there is an improvement to the
service delivery pro visions for the citizens who are
part of the Poverty Allevi ation Project.
8.2 …
Clause 9
APPLICABLE POLICIES AND COMPLIANCE WITH THE LAW
9.1 The interpretat ion performance and implementation of this
agreement sha ll be governed by and constr ued in accordance
with the Ekurhule ni Metropo litan Mu nicipality and policies
and laws of the Republic of South Africa
9.2 Without limitation of any obligations a nd/or rights under any
law, the Parties sha ll comply with any other by -law, policies,
acts, regulations nationally and/or internationally recognized
standards, in which by law and practice the party is required
to adhere to.”
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Discussion
[38] There is no doubt in my mind that the determination of this case lies in the
interpretation of the SLA . Furthermore, it is trite that where it is clear that the
intention of the parties is to conform with the law, the court should interpret the
contract, if possible, in such a way that it does not transgress the provisions of
any statu te3.
[39] It is now settled that t he general rule of interpretation of documents is that regard
must be had to the ordinary grammatical meaning of the words used in the
document, the context in which they are used and the purpose of the document.
Put differently, in interpret ing a document regard must be had to the triad which
is the words, context and the purpose of the document.
[40] In Tshwane City v Blair Atholl Homeowners Association4 the Supreme Court of
Appeal stated the following:
“It is fair to say that this Court h as navigated away from a narrow peering at words in
an agreement and has repeatedly stated that words in a document must not be
considered in isolation. It has repeatedly been emphatic that a restrictive consideration
of words without regard to context has to be avoided. It is also correct that the
distinction between context and background circumstances has been jettisoned. This
court, in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA
593 (SCA) ([2012] All SA 262; [2012] ZSCA 13), s tated that the purpose of the
provision being interpreted is also encompassed in the enquiry. The words have to be
interpreted sensibly and not have an unbusinesslike result. These factors have to be
considered holistically, akin to the unitary approach. ”5
3 Kotze v Frankel and Co 1929 AD 418 .
4 2019 (3) SA 398 (SCA) .
5 Id para 61
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[41] It is trite law that a Court may mero motu raise a question of law even if it is not
pleaded by any of the parties. However, there are certain requirements that need
to be complied with to avoid a miscarriage of justice in the case. Put in another
way, when a point of law is evident from the pleadings, but the parties have
misunderstood or overlooked it, the court is not only entitled but also obliged to
raise it and require the parties to address it . That is subject to the proviso that no
prejudice will be caused to any party by it being decided.
[42] The appellant in its assertion that the Court had no power to invalidate the
contract, referred this Court to the case of Fischer v Ramahlele6 where th e
Supreme Court of Appeal stated the following:
“Turning then to the nature of civil litigation in our adversarial system it is for the
parties, either in the pleadings or affidavits, which serve the function of both pleadings
and evidence, to set out and define the nature of their dispute and it is for the court to
adjudicate upon those issues. That is so even where the dispute involves an issue
pertaining to the basic human rights guaranteed by our Constitution, for ‘it is
impermissible for a party to rel y on a constitutional complaint that was not pleaded’.
There are cases where the parties may expand those issues by the way in which they
conduct the proceedings. There may also be instances where the court may mero motu
raise a question of law that emerge s fully from the evidence and is necessary for the
decision of the case. That is subject to the proviso that no prejudice will be caused to
any party by its being decided. Beyond that it is for the parties to identify the dispute
and for the court to deter mine that dispute and that dispute alone.7
It is not for the court to raise new issues not traversed in the pleadings or affidavits,
however interesting or important they may seem to it, and to insist that the parties deal
with them. The parties may have their own reasons for not raising those issues. A court
may sometimes suggest a line of argument or an approach to a case that has not
previously occurred to the parties. However, it is then for the parties to determine
whether they wish to adopt the new point. They may choose not to do so because of its
implications for the further conduct of the proceedings, such as an adjournment or the
need to amend pleadings or call additional evidence. They may feel that their case is
6 (203/2014) [2014] ZASCA 88 (4 June 2014)
7 Id para 13
19
sufficiently strong as it stands to require no supplementation . They may simply wish
the issues already identified to be determined because they are relevant to future matters
and the relationship between the parties. That is for them to decide and not the court.
If they wish to stand by the issues they have formulated, the court may not raise new
ones or compel them to deal with matters other than those they have formulated in the
pleadings or affidavits.8”
[43] The Court a quo cannot be faltered in deciding this case on the question of law
only. The Court a quo was dealing with a contract which has direct implications
on the public purse which made it necessary for it to determine the issue of the
point of law. To avoid any of the parties suffer ing any prejudice or to cause a
miscarriage of justice in deciding the case on the point of law, t he Court a quo
correctly invited the parties to make supplementary submissions . It was clear
ex facie the contract (SLA) , which was the requisite evidence before the Court ,
and the extensive evidence led by the appellant ’s witnesses , that the parties had
overlooked the question of law which was the provisions of section 33( 1).
[44] There is no merit in the contention that there was no evidence before the Court
a quo to demonstrate whether the contract falls within the remit of section 33(2)
or 33(1). The evidence before the Court was that the contract is for a period of
three years , from the date of 11 December 2015 to 11 December 2018 , and the
financial year end of the respondent is 30 June in each year. Thus, the contract
was extending beyond the three -year budgetary cycle – hence compliance with
section 33(1) was necessary.
[45] Moreover, when considering the subsequent conduct of the parties when th ey
were nego tiating the amendments to the SLA, one of the proposed amendments
was the regularisation of the contract in order to make it to comply with the
provisions of section 33(1). The parties realised that the contract was of long
duration as it extend ed beyond the three budgetary years of the respondent. This
was also confirmed in evidence by the witness, Mr Maluleke in his testimony
8 Id para 14 .
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before the Court a quo. In my judgment the Court a quo was entitled and correctly
decided the point of law which was ex facie before it and was necessary in
deciding the case .
[46] Relying on the case of Kotze quoted above , the appellant contended that the
Court a quo should have interpreted t he contract in a manner that made the
contract legal and not void since it is clear that the intention of the parties was to
conform with the law. I disagree. It was impossible for the Court a quo to ignore
the illegality of the contract which is dealing with the public funds and has direct
impact on the budgeting of the respondent which in the end will affect service
delivery. The Court cannot simply interpret the contract to save it when it is clear
that it does not comp ly with the law.
[47] Before this Court and relying on the case of South African Reserve Bank v
Khumalo and Another9 that it was entitled to support the order on any relevant
ground and is not confined to supporting it only for the reasons given by the co urt
a quo, the respondent persisted with its contention that the SLA was concluded
in relation to phase 2 only and was to endure for a period of twelve months at a
total sum of R9 025 800. Further, the respondent contended that the Court a quo
made an error by not interpreting the contract to avoid making it illegal and void
since the intention of parties was clearly not to engage in an illegal contract.
[48] In the South African Reserve B ank case, the Supreme Court of Appeal stated the
following:
“An appeal lies against an order that is made by a court and not against its reasons for
making the order. It follows that on appeal a respondent is entitled to support the order
on any relevant g round and is not confined to supporting it only for the reasons given
by the court G below. In this court the respondent did not seek to support the order on
any ground other than that, given by the court below, which was that the regulation
under which it was made did not conform to the authorising statute and was thus
invalid, subject to one subsidiary issue that I will come to. This means that the principal
9 (235/2009 [2010] ZASCA 53.
21
issue on which the appeal turns is whether the full bench was correct in its conclusion
on the inv alidity of reg 22C (1) for the reasons that it gave. If the respondent fails on
that issue and on the subsidiary issue that I referred to, then the order that it made falls
to be set aside, and the challenge to the validity of the order falls to be dismissed. The
remainder of the notice of motion did no more than foreshadow a review application
that was yet to be brought and need not concern us .”10
[49] Considering the finding of this Court that the Court a quo could not be faltered in
its decision, it is unnecessary to devote time on the question and issues raised by
the respondent re garding the duration of the SLA.
Conclusion
[50] The ineluctable conclusion is that the Court a quo cannot be faltered having
decided the case on the question of law which it raised mero motu for it was
entitled to do so when it appeared ex facie the evidence before it. The Court a
quo could not simply i gnore the illegality committed by parties on the basis that
it was not int ended for this case has implications on the public purse and the
budget of the respondent which will impact on service delivery. The inescapable
conclusion is therefore that the appeal falls to be dismissed.
Costs
[51] In its judgment, the Court a quo found it necessary to order that each party pays
its own costs. However , the Court a quo adopted a different view when it was
dealing with the application for leave to appeal and ordered the appellant to pay
the costs of that application. Thus, I can find no reason why the costs in this
appeal should not follow the result .
10 Id para 4 .
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Email: clive@sgvattorneys.co.za
Delivered: This judgment and order was prepared and authored by the Judge whose
name is reflected and is handed down electronically by circulation to the
Parties/their legal representatives by email and by uploading it to the
electronic file of this matter on Case Li nes. The date of the order is
deemed to be the 8 April 2025.