THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 102/2024
In the matter between:
INZALO ENTERPRISE MANAGEMENT SYSTEMS
(PTY) LTD APPELLANT
and
CHIEF ALBERT LUTHULI MUNICIPALITY RESPONDENT
Neutral citation: Inzalo Enterprise Management Systems (Pty) Ltd v Chief
Albert Luthuli Municipality (102/2024 ) [2025] ZASCA 85
(11 June 2025)
Coram: NICHOLLS and UNTERHALTER JJA and NORMAN AJA
Heard : 21 May 2025
Delivered : This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal
website and released to SAFLII. The date and time for hand -down of the
judgment is deemed to be 11h00 on 11 June 2025.
Summary: Contract – interpretation – delivery of data – overbreadth of the
order -remittal and referral for the hearing of oral evidence.
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ORDER
On appeal from: Mpumalanga Division of the High Court, Mbombela (Roelofse
AJ, sitting as a court of first instance ):
1 The appeal is upheld with costs.
2 Paragraphs 2 and 3 of the order of the high court is set aside and replaced
with the following:
‘(i) The matter is remitted back to the Mpumalanga Division of the high
court;
(ii) The matter is referred to the hearing of oral evidence before a judge
to be allocated by the Judge President or Deputy Judge President of the
Division on the following question: what data, if any, is the applicant
entitled to secure by way of de livery up from the respondent upon the
Master Agreement coming to an end by effluxion of time?
(iii) The judge so allocated will determine the further terms upon which
the referral to oral evidence is ordered;
(iv) The costs incurred to this point in the proceedings will be determined
after the hearing of oral evidence.’
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JUDGMENT
Unterhalter JA (Nicholls JA and Norman AJA concurring):
[1] The appellant, Inzalo Enterprise Management Systems (Pty) Ltd (Inzalo)
and the respondent, Chief Albert Luthuli Municipality (the Municipality), in
2018, concluded an agreement , styled the Master Agreement. Under the terms of
the Master Agreement, Inzalo provided what are described as designated services
to the Municipality by installing and managing designated software and
hardware. The designated services are many, but they include the management of
the Municipality’s financial accountin g, project management, treasury and cash
management, valuation roll management, land use , human resource and payroll
management, and building contro l management, and revenue management. It is
apparent that these services are essential to the discharge by the Municipality of
many of its essential statutory functions.
[2] The Master Agreement came to an end on 30 June 202 3 by the effluxion
of time. The Municipality, on 22 March 2023, invited bids for the provision of an
integrated financial system that would render services to the Municipality after
the end of the Master Agreement. On 10 July 2023, the Municipality wrote to
Munsoft (Pty) Ltd (Munsoft) to accept its tender. This came to the attention of
Inzal o. Inzalo’s attorneys then wrote to the Municipality on 27 July 2023 . They
objected to the tender process that had been followed by the Municipality, and
threatened legal proceedings to interdict any final award of the tender. The
Municipality’s attorneys promptly responded . The Municipality undertook that
Munsoft would not commence their duties until the adjudication before the tend er
appeal board of Inzalo’s objections to the award of the tender. Inzalo was invited
to extend the Master Agreement, month by month, and provide the Municipality
with immediate access to the system that Inzalo used to render services to the
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Municipality. Inzalo’s attorneys wrote to the Municipality’s attorneys on 3
August 2023 . In sum, Inzalo declined to render any further services, given that
the Master Agreement had lapsed, without the Municipality concluding a further
contract with Inzalo. Inzalo indicated that, without prejudice to its rig hts to
challenge the award of the tender, it would migrate the Municipality’s data to its
chosen service provider, but at the Municipality’s cost. Inzalo also reminded the
Municipality of outstanding amou nts that remained due and payable.
[3] This exchange did not result in any resolution. The Municipality demanded
access to what it described as ‘the captured data’. On 17 August 2023, the
Municipality brought an urgent application. It complained that data in the
possession of Inzalo was critical to the functioning of the Municipality; that
Inzalo had ‘switched off’ the system, and that the Municipality’s new service
provider required the data for continued use by the Municipality.
[4] In its amended notice of motion , the Municipality sought the following
substantive relief :
‘All Data files and documents on the Inzalo EMS Financial System which will include but not
limited to the following:
(2) That the Respondent be directed to make all the capture data of the Applicant, which
data is described as follows:
2.1 Data files and documents
2.2 Financial data (CSV dump of the entire financial information which includes but not
limited to the following below)
2.3 Invoices and billings, accounts receivable and payable files
2.4 Customer information
2.5 Vendor information
2.6 Communications
2.7 User Accounts
2.8 Applications
2.9 databases (including usernames and password)
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2.10 Operating System files and configurations
2.11 All full backup that was run on FMS system as at 27/07/2023 for the C:/D:/ dives (sic).’
I shall refer to this as the amended relief.
[5] The urgent application was heard by Roelofse AJ in the high court. He gave
an ex tempore judgment in which he found that Inzalo was not entitled to the
Municipality’s data and nothing in the Master Agreement provided otherwise. He
was also critical of Inzalo, and considered that it was holding the Municipality to
ransom in respect of data that it had no right to re tain. There is some discrepancy
in the order that appears in the transcription of the judgment and the court order
that issued from the Registrar of the high court. The former order, in relevant part,
reads as follows: ‘The Responden t shall deliver all data that it holds in its files in
such format as prescribed by the Applicant by no later than 25 September 2023
to the Applicant’ . The latter order , in relevant part, requires that: ‘The respondents
shall deliver all data files in such format as prescribed by the applicant by no later
than 25 September 2023 to the applicant’ . Inzalo was also ordered to pay the
Municipality’s costs. I observe that the description of the subject of the order s
differ s: all data appears to be broader than a ll data files. Inzalo sought leave to
appeal. Its application was dismissed by the high court, but granted on petition to
this Court.
[6] At the commencement of the oral hearing before us, counsel for Inzalo
helpfully made it clear that Inzalo did not intend to persist with a number of
preliminary points that it had taken in its answering affid avit. Rather, the issue
for us to decide was whether the Municipality was entitled to the order made by
the high court, in either of the versions set out above.
[7] The Master Agreement is very sparse in its treatment of who owns what
data. Much debate occurred before us regarding clause 7 of the Master
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Agreement, under the heading ‘Termination’: ‘This agreement may be terminated
by either party, without cause on 1 month’s or 30 calendar days’ written notice
of such termination to the other party. The customer reserves the right to all data
captured on the Designated Software’ . I shall refer to this provision as the
captured data provision and the data there referenced as the captured data. The
Master Agreement does not define the meaning of data nor captured data. It does
define Designated Software which in relevant part means, ‘ . . . the intellectual
property [of Inzalo] forming the principal subject matter of this Agreement’.
[8] The Municipality’s founding affidavit was of little assistance in order to
understand how the Master Agreement regulated the ownership of data. The
averment it made was this: ‘At the heart of any functioning municipality is the
availability of data. The da ta information, and the absence of data and availability
of the system for reporting and audit purposes may collapse the municipality, and
in this case the Applicant’ . While it may readily be appreciated that access to
Inzalo’s system in order to access th e data that the Municipality uses to discharge
its functions has importance, averments of such generality are of little assistance
to decide what data the Municipality is entitled to claim from Inzalo, upon the
lapsing of the Master Agreement.
[9] It is clear that under the Master Agreement Inzalo was required to render
services, defined as the ‘Designated Services’. To do so, Inzalo made use of its
Designated Hardware and Designated Software. The definition of the Designated
Software makes it plain that the intellectual property comprising this software
remains the sole property of Inzalo. As the matter was debated before us, I did
not understand counsel for the Municipality to contend that the Municipality had
any claim to the Designated Software u pon the lapsing of the Master Agreement.
The Municipality thus has no proprietary claim to the intellectual property of
Inzalo.
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[10] Yet the amended relief does not distinguish the intellectual property of
Inzalo from the generality of the captured data it sought. Furthermore, particular
categories of data that are identified in the amended relief include the intellectual
property of Inzalo. That would appear to be so in respect of ‘Applications’,
‘Operating System files and configurations’ and perhaps also ‘All full backup that
was run on the FMS system’.
[11] The order granted by the high court, in neither of its iterations, made any
effort to differentiate types of data to which the Municipality and Inzalo may have
a claim. The one order refers to ‘all data files’ and the other to ‘all data that it
holds in its files’. These descriptions are very broad and include Inzalo’s
intellectual property. The Master Agreement vests no proprietary claim in the
Municipality to such property. On the contrary, it specifies that Inzalo is the sole
proprietor of the intellectu al property attaching to data embodied in the
Designated Software . Neither the founding affidavit of the Municipality , nor the
judgment of the high court , provide any other basis upon which the Master
Agreement permits, upon its lapsing, that the Municipality may procure the
delivery of Inzalo’s intellectual property. Once this is so, the widely framed order
of the high court cannot stand.
[12] If the intellectual property incorporated in the Designated Software
remains the property of Inzalo, what then comprises the captured data to which
the Municipality claims a right in terms of the captured data provision. Here too,
the Master Agreement is not helpful. The captured data provision confers a right
on the Municipality. But what is the content of that right , and in what
circumstances may it be exercised?
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[13] Counsel for the parties sought assistance in the interpretation of the
captured data provision from other provisions of the Master Agreement. Inzalo
referenced provisions that allow Inzalo no longer to support the Designated
Software upon termination of the Master Agreement or the licence granted to
Inzalo; and to suspen d the use of the Designated Software upon material and
unremedied breach, including non -payment. Furthermore, Inzalo emphasised that
under the Master Agreement, upon termination or cancellat ion, the Municipality
may no long er use the Designated Software, ‘unless a specific written
arrangement is made and agreed between the Parties’ . Such an agreement is what
Inzalo had offered to conclude with the Municipality after the lapsing of the
Master Agreement, but no agreement was concluded. Whatever then the captured
data might consist of, the Municipality could not claim it because its retrieval
required the use of the Designated Software to which the Municipality had no
claim.
[14] The Municipality submitted that pursuant to the services rendered by
Inzalo under the Master Agreement, the Municipality provided data (input data)
to which the system of Inzalo was applied to produce outputs, that we might call
work product data. Captured data comprises, it was contended, input data and
work product data to which the Municipality has a right upon the lapsing of the
Master Agreement in terms of the captured data provision. This interpretation is
supported by the provision of the Master Agre ement that obliged the Municipality
‘regularly and periodically’ to back up data and information, and should the
Municipality not do so, the Municipality could request Inzalo to make back -ups
at the expense of the Municipality. If , it was argued, the Municipality was
required to make back -ups during the currency of the Master Agreement, it was
entitled to the data stored on these back -ups. That data consists of input data and
work product data. The Municipality indeed paid for thes e back -ups before the
Mast er Agreement lapsed. The captured data provision gives expression , it was
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argued, to the Municipality’s right to precisely the same data that it enjoyed by
way of access to back -ups, during the currency of the Master Agreement.
[15] These submissions, developed before us , travelled quite some distance
from what is to be found on the papers . How the types of data that were used and
generated in the course of the Master Agreement’s implementation were not
matters clearly set out in the exchange of affidavits. There are also disputes of
fact that arise on the papers concerning these matters. Furthermore, given that the
Master Agreement does not define what is meant by captured data , the
interpretation of clause 7 of t he Master Agreement is likely to benefit from the
ventilation of relevant extrinsic evidence that is not to be found on the affidavits
that serve before us.1
[16] What is plain is that the high court was in error in grant ing the order that it
did. The order is overbroad. As I have found, there was no basis to order Inzalo
to deliver -up its intellectual property to the Municipality. But overbreadth is not
its only infirmity. Even if Inzalo’s intellectual property is excised from the remit
of the order, there remains no clarity as to what other data falls within the scope
of captured data in terms of the captured data provision , if this provision is of
application at all. On this crucial issue the affidavits filed of record, permit of no
clear answer. Furthermore, there are disputes of fact as to how the Master
Agreement was implemented and what was to happen when the agreement came
to an end. Faced with this difficulty, the high court should not have made the
order that it did. Inzalo’s appeal must therefore succeed, and the order of the high
court must be set aside.
1 Capitec Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA
99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) and its understanding of University of Johannesburg v
Aukland Park Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC) .
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[17] What order should the high court have given? Inzalo submitted that the
founding affidavit of the Municipality failed to make out a case for the relief that
it sought, and hence its application should have been dismissed. It is true that the
averments in the founding affidavit are sparse in their treatment of what data
might constitute captured data and there is little to be found that assists to interpret
the captured data provision , as I have observed. However, the application was
brought as one of urgency , in circumstances where the Municipality then
considered access to data to be essential to the discharge of its public functions.
The affidavits that were then exchanged failed adequately to engage the issues
that have since come more clearly into focus on appeal. Since the litigation has
been pursued since the grant of the order, I must assume that the question as to
what data, if any, the Municipality was entitled to claim upon the Master
Agreement coming to an end remains a live issue. It would thus be desirable to
secure a definitive judgment, properly informed by relevant evidence that
properly ventilates the disputes of fact that divide the parties and assists to resolve
the question as to how the captured data provision is to be interpreted. To this
end, I propose to make an order remitting the matter to the high court so that it
may be referred for the hearing of oral evidence before a judge to be allocated by
the Judge President or Deputy Judge President of the Mpumalanga Division of
the hig h court.
[18] As to the question of costs, I nzalo had to bring this appeal to set aside the
order made by the high court. It has been successful in doing so. The costs of the
appeal must follow upon that result.
[19] In the result, the following order is made :
1 The appeal is upheld with costs.
2 Paragraphs 2 and 3 of the order of the high court is set aside and replaced
with the following:
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‘(i) The matter is remitted back to the Mpumalanga Division of the high
court;
(ii) The matter is referred to the hearing of oral evidence before a judge
to be allocated by the Judge President or Deputy Judge President of the
Division on the following question: what data, if any, is the applicant
entitled to secure by way of delivery up from the respondent upon the
Master Agreement coming to an end by effluxion of time?
(iii) The judge so allocated will determine the further terms upon which
the referral to oral evidence is ordered ;
(iv) The costs incurred to this point in the proceedings will be determined
after the hearing of oral evidence.’
______________________
D N UNTERHALTER
JUDGE OF APPEAL
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Appearances
For the appellant: P J J Zietsman SC
Instructed by: Di Siena Attorneys, Johannesburg
Honey & Partners Incorporated , Bloemfontein
For the respondent s: Z Z Matebese SC (with him L Zwane)
Instructed by: Mohlala Attorneys , Mpumalanga
Moroka Attorneys , Bloemfontein .