(1) REPORT ABLE: NO
(2) OF INTEREST TO OTHER
JUDGES: NO /
(3) REVISED . ~
DATE : ~f
SIGNATURE
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
In the matter between:
UNIE-TECH DEVELOPMENT INITIATIVE (PTY) LTD
(in liquidation)
and
THE MEC FOR THE DEPARTMENT OF
AGRICULTURE IN THE LIMPOPO PROVINCE
THE PREMIER OF THE LIMPOPO PROVINCE
THE MINISTER OF AGRICULTURE
JUDGMENT
The judgmenl and order are published and distributed electronically.
Case No: 23596/13
Plaintiff
First Defendant
Second Defendant
Third Defendant
2
Summary: Action instituted by liquidators of wound up company to claim amounts due on rendered
invoices in terms of a service level agreement between company and organ of state. Defendants
served counterclaim 5 years afier plea and raised special pleas of prescription, res iudicata and
non compliance with section 3 of act 40 of 2002. Plaintiff argued that counterclaim, absent
permission from Plaintiff or condonation of the court, impermissible by virtue of Rule 24(1) and
that counterclaim would in event have become prescribed. Held that counterclaim was prescribed
and that the issue in relation to Rule 24(/) thus moot. Defendants ' special pleas dismissed and
judgmen t granted in favou r of Plaintiff.
PA VAN NIEKERK, J
INTRODUCTION:
(1] Plaintiff is a company with limited liability, presently in liquidation, and represented by its
two duly appointed liquidators. First Defendant is the MEC for the Department of
Agriculture in the Province of Limpopo, Second Defendant is the Premier of the Limpopo
Province and Thid Defendant is the Minister of Agriculture. The three Defendants are all
joined in their official capacities.
(2) On 22 April 2013 Plaintiff instituted action against Defendants, claiming payment of the
amount of R2 425 663.17 allegedly due and owing pursuant to a Service Level
Agreement ("SLA j which was entered into between Plaintiff (then represented by a
director) and the Department of Agriculture in the Province of Limpopo ("DAPL") duly
represented by a certain Mr Robinson. The SLA was signed on 27 July 2007 and related
to the design, supply, and installation of irrigation systems and related infrastructure and
services managed by DAPL, for selected and identified irrigation schemes in that
province.
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BACKGROUND FACTS:
[3] The SLA provided for the rendering of invoices by Plaintiff to DAPL from time to time, and
payment by DAPL of those invoices. On 12 May 2009 the SLA was cancelled by the then
head of DAPL after Plaintiff was placed in provisional liquidation. At the time the SLA was
cancelled, certain invoices that were rendered remained unpaid.
[4] Plaintiffs claim relates to amounts allegedly owing in respect of the aforesaid outstanding
invoices rendered prior to cancellation of the SLA. At the commencement of the trial it
was recorded by the parties that the quantum of Plaintiffs claim based on the unpaid
invoices were agreed to be the amount of R2 229 575. 75 and the quantum of a
counterclaim which Defendants belatedly instituted during 2018 for alleged over-payment
and expenses which the Defendants had to incur following the cancellation of the SLA,
was also settled.
[5] On 9 June 2009 Plaintiff was finally wound up in terms of an order of this court and the
liquidators were duly appointed on 18 June 2009. The liquidators convened and
conducted an enquiry in terms of sections 417 and 418 of the Companies Act 61 of 1973
("the enquiry") during April 2010. During the enquiry and on 23 April 2010, an engineer
employed by of DAPL made the necessary valuations, calculations and reconciliations in
respect of unpaid services performed by Plaintiff in terms of clauses 2, 37, 44 and 46 of
the General Conditions of Contract for Works of Civil Engineering Construction (which
conditions were incorporated into the SLA) and concluded that the total outstanding
amount due to Plaintiff amounted to R2 425 663.17.
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[6] On 30 April 201 O the liquidators of Plaintiff demanded payment from DAPL by way of a
letter which had the following features:
[6.1] The letter was addressed to «the Limpopo Provincial Government Department
of Agriculture , Private Bag X9487 Polokwane ", and the letter refers to the
enquiry held on 23 April 2010 and confirmed that the Department of Agriculture
for the Provincial Government of Limpopo, by means of a Mr Gouws, testified at
the enquiry on behalf of the Department of Agriculture and supplied the
liquidators with documentation from DAPL which were used in the enquiry;
[6.21 It was confirmed that, in terms of certain specified contracts the Department was
indebted to Plaintiff in the total amount of R2 425 663.17, while also specifying
the individual contractual amounts which made up the total amount.
[6.3] The letter concludes to record that the amounts are due and payable and a
demand was made for payment of the debt with a notification that an application
for payment of the amount would be launched, should it not be paid;
[6.4) That letter contains the following paragraph which alludes the DAPL to a
potential counterclaim which it may have and which reads:
"The Department after qualification of the amounts can prove a claim against the
insolvent estate, if the Department so desire. The Department is not entitled to
apply set-off after liquidation and more specifically is not entitled to apply set-off
of the unliquidated amounts".
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This paragraph clearly refers to amounts which the Department allegedly
intended to claim from Plaintiff but which amounts had to be quantified.
[7] On 10 May 2010 the office of the State Attorney, Pretoria, responded in writing to the
aforesaid letter, which response has the following features:
[7. 1] It was recorded that the letter of demand supra does not comply with " ... the
strict requirements of Act 40 of 2002, specifically sections 3 and 4 thereof' ;
[7.2] It was recorded that the Mapela project would be finalised within a month,
whereafter the DAPL would be in a position to quantify a counterclaim;
[7.3] Paragraph 5 of the letter contains the following:
"We will proof (sic) a claim against the liquidated estate in this matter. Please notify us
when the creditor's meeting will be convened".
[8] On 2 June 2010 the liquidators responded to the letter of the State Attorney supra, which
letter has the following features:
[8.1] It was (rather ineloquently) recorded that:
"In your letter referred to restrict (sic) requirements of Act 40 of 2002 and more
specifically section 3 thereof. The purpose of the Act, with respect, is to place you in a
position to know the facts of the particular case [You and your client knows the facts that
give rise to the debt extremely well]
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In this instance your client [with yourself being present] brought to the insolvency inquiry
documents in the excess of 400 pages setting out all the facts of this matter. You have
in your possession copies of the document that has been handed in at the insolvency
alternatively copies of the said documentation in your client's possession.
In the insolvency inquiry your client referred to all these documentation and confirms
the indebtedness of your client in the insolvent estate".
[8.2] The letter then again sets out particulars of the individual amounts which made
up the total claim of R2 425 663.17, with due reference to the SLA. The letter
again concluded with a demand that the Department pay the amount of
R2 425 663.17 to Plaintiff within 10 days failing which an application for payment
of the amount would be launched.
(9] On 15 September 2010 Plaintiff instituted an application in this court, seeking payment
of the amount of R2 330 47 4.49 based on 5 separate specified claims relating to different
identified sites which fell under the provisions of the SLA. In the founding affidavit of that
application, the Plaintiff relied on the testimony of Mr Gouws referred to supra which he
gave at the enquiry and where he testified that the DAPL was indebted to the Plaintiff.
[1 O] Defendants filed an answering affidavit wherein the Defendants did not place in issue the
terms of the agreement, or raised any defence on the merits of Plaintiffs claim save to
state that the evidence of Gouws was inadmissible, and that the application, for that
reason, should be dismissed. On 30 October 2012 De Klerk AJ dismissed the Plaintiffs
application with costs, and from a transcript of the proceedings it transpires that De Klerk
AJ was informed, after argument of the matter, that he could simply make an order
dismissing the application whereafter the Applicant (Plaintiff in casu) could still pursue its
7
remedies. De Klerk AJ did not deliver any judgment and neither of the parties sought
reasons for that order. From a perusal of the papers filed in that application, the transcript
of the argument of that matter to which the parties referred to in court, and the fact that
De Klerk AJ failed to deliver a judgment, the only reasonable inference to be drawn is
namely that the matter was not adjudicated on merits and it was accepted by all parties
at that time that there was no final pronouncement on the merits of Plaintiffs cause of
action.
THE ISSUES FOR DETERMINATIO N
[11] As set out in paragraph [4] supra, the parties informed this Court at the commencement
of the hearing that the issue of the quantum of Plaintiffs claims based on the unpaid
invoices as well as the quantum of Defendants' purported counterclaim were no longer
in dispute. I was further informed by Plaintiffs counsel that the parties agreed that the
only issues which remained to be determined were namely whether the Defendants were
entitled to pursue their counterclaim as well as certain special pleas filed by the
Defendants. I was further informed that those issues were matters of legal argument, and
that it was therefore not necessary that any evidence be led.
[12] The Defendants' counsel was required to confirm the aforesaid arrangement as conveyed
by Plaintiffs counsel, and after a confusing address and lengthy debate, I was eventually
informed by Defendants' counsel that the matter could proceed on the basis that it be
accepted that the Plaintiff would be entitled to judgment on the agreed quantum, but for
the Defendants' counterclaim and/or any of the special pleas being upheld.
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[13) The effect of the aforesaid agreement was therefore that it was not necessary that any
evidence be led, and that the matter proceed on the basis that the parties argue the
remaining issues raised by the parties. These issues can conveniently be summarised
as follows:
[13.1] During 2018 Defendants amended their plea by introducing a counterclaim some
5 years after filing the Defendants' original plea and two special pleas. Plaintiff
advanced argument in heads of argument that such amendment and
introduction of that counterclaim was impermissible in terms of the provisions of
Rule 24(1) because neither the Plaintiff nor the Court gave permission to
introduce such a counterclaim which was not filed simultaneously with the
Defendants'plea. In either event, so argued the Plaintiffs counsel, any such
claim instituted in 2018 by the Defendants based on the purported cause of
action as formulated in the Defendants' purported counterclaim prescribed
because the facts underlying that purported counterclaim was known to the
Defendants at the time when the insolvency inquiry was conducted. The issues
for determination are therefore whether the Defendants' counterclaim was
before court properly, and if so, whether such counterclaim had become
prescribed;
[13.2) Defendants raised two special pleas against Plaintiffs particulars of claim in the
pleadings, firstly that Plaintiff failed to comply with section 3(1) of the Limitation
of Legal Proceedings against certain organs of State Act 40 of 2002, and
secondly a special plea that the Plaintiffs claims have prescribed because the
contract was cancelled during 2009. Defendants thereafter amended the
pleadings by introducing a third special plea to the effect that the claims by
9
Plaintiff have been dismissed by De Klerk AJ in the application referred to supra ,
as result of which the Defendants are entitled to raise the defence of res judicata.
(14] The aforesaid special pleas and legal points will be dealt with separately hereunder.
DEFENDANTS ' COUNTERCLAIM
(15] During October 2018 the Defendants served amended pages, introducing the
counterclaim referred to supra for payment of the amount of R4295317.23.
Approximately 8 years prior to that being the 10th of May 201 O, the office of the State
Attorney. Pretoria, referred to the fact that the Defendants intended to institute a claim
as set out in the quotation of that letter contained in paragraph [7) supra . The Defendants'
counterclaim was therefore instituted approximately 10 years after the State Attorney
confirmed their awareness of the existence of a counterclaim. Plaintiff objected to the
belated institution of this counterclaim on the basis that Plaintiff did not consent to the
late institution of the counterclaim, contrary to Rule 24(1), and Defendants failed to seek
permission from the court for the late institution of the counterclaim. Plaintiff also raised
the point that, even if the belated introduction of that such counterclaim would be
permissible, the counterclaim became prescribed.
[16] Any counterclaim which Defendants may have instituted during 2018 clearly become
prescribed in terms of the provisions of section 12 of the Prescription Act 68 of 1969. This
was conceded by counsel acting on behalf of Defendants during argument. The
Defendants' belated counterclaim can therefore not be entertained and the issue whether
the Defendants instituted that counterclaim contrary to the provisions of Rule 24(1)
becomes moot.
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DEFENDANTS' SPECIAL PLEA OF RES JUD/CATA
[17] From the contents of paragraph [1 O] supra, it is clear that the court which adjudicated the
application referred to in that paragraph did not adjudicate the merits of the Plaintiffs
cause of action. The onus for a successful plea of res judicata rests on the party raising
that defence.1 In casu the Defendants failed to provide any information which can
substantiate any argument that the court which dismissed that application, pronounced
on the merits of Plaintiffs claims in this action.
(18] Defendants' counsel persistently argued that the mere fact that the application was
dismissed with costs, amounts to a dismissal of Plaintiffs cause of action which entitles
Defendants to raise the special plea of res judicata . That submission is legally untenable
because it is not the form of the order granted but the substantive question that was dealt
with by the Court which made the order, which should be considered.2
[19] An order dismissing an application equates to a judgment of absolution from the instance
which does not constitute a bar to a subsequent action.3
1 Erasmus, Superior Court Practice, at page D1, Rule 22-33 and the cases cited there, in particula r: Haatson v Paton
(1907) 28 NLR 12; Lowrey v Steedman 1914 AD 532.
2 MV Wisdom C United Enterprises Corporation v STX Pon Ocean Co. Ltd 2008 (3) SA 585 {SCA) paragra ph 9.
3 Roil Commuters' Action Group and others v Transnet Ltd and others 2006 (6) SA 86 (CJ at 74H to 75.
See also: Vena v Vena and Another NO 2010 (2) SA 248 (ECP} at paragraph 8.
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[20] In summary; the learned Acting Judge dismissed the application which equates to
absolution from the instance, Defendants failed to provide any factual evidence which
confirms that the court hearing that application disposed of the merits of Plaintiff's claims
against Defendants, and the record of those proceedings as referred to in paragraph [1 O]
supra clearly indicates that the court dismissed the application on the legal points raised
by the Respondents in that application (Defendants in casu) namely that the evidence of
Gouws was impermissible. It is patently clear that the learned Acting Judge did not
dispose of that application on the merits of Plaintiffs cause of action.
[21] The Defendants' special plea of res judicata therefore stands to be dismissed.
DEFENDANTS' SPECIAL PLEA OF PRESCRIPTION
[22] Defendants counsel argued that prescription commenced on 12 May 2009 being the date
on which the SLA was cancelled. During argument Defendants' counsel argued that the
liquidators were appointed on 18 June 2009 and therefore became aware of the Plaintiffs
claims on that date or thereafter. On direct questioning, it was impossible to obtain any
comprehensible submission from Defendant's counsel why the liquidators should have
been aware of the Plaintiffs claims on the date that they were appointed as liquidators,
or at which stage thereafter they should reasonably have been aware of the claim.
[23] Be that as it may, it is common cause that the liquidators held an inquiry during which
inquiry an employee of DAPL provided a reconciliation, based on the invoices rendered
by Plaintiff, confirming the indebtedness of DAPL to the Plaintiff.
[24] The facts in casu in relation to the insolvency inquiry, during which the liquidators became
aware of the existence of the Plaintiffs cause of action against the Defendants are on all
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fours with a judgment of this court delivered by Sardiwalla J.4 In that judgment the learned
Judge referred to the fact that proceedings by and against a company is suspended by
virtue of the provisions of section 359(1) of the Companies Act until a liquidator is
appointed. In paragraph [24] of that judgment, the learned Judge held that the liquidators
could only become aware of the cause of action upon the conducting of an inquiry in
terms of the provisions of section 415 of the Companies Act and, having regard to the
provisions of section 12(3) of the Prescription Act, prescription could only run from that
date.
[25] On the common cause facts in this matter it is clear that the liquidators became aware of
all the facts underlying the indebtedness of DAPL to Plaintiff when Gouws testified during
the enquiry and produced the necessary documents, reconciliations and other
information which confirmed that indebtedness and the quantum thereof.
[26] Prescription therefore commenced to run from the date of the enquiry and as a result, the
Defendants' special plea of prescription stands to be dismissed.
DEFENDANTS' SPECIAL PLEA OF NON-COMPLIANCE WITH SECTION 3 OF ACT 40 OF
2002
[27] This special plea is based on the submission that the liquidators failed to notify the
relevant Organ Of State (DAPL) in terms of section 3 of the Institution of Legal
4 Symes NO and Another v Stuart van der Merwe and Others (24400/2015) {2018] ZAGPPHC 885, paragraphs [21]
to {25].
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Proceedings Against Certain Organs of State Act 40 of 2002 ("ILPACOSA") that the
Plaintiff intended to institute the action.
(28] The Plaintiffs counsel argued that the letters of demand dated 30 April 2010 and 2 June
2010 respectively addressed by the liquidators initially to the DAPL and thereafter to the
office of the State Attorney, Pretoria, as referred to in paragraphs [6] and [8] supra,
constitutes compliance with section 3 of ILPACOSA. In support of this submission
Plaintiffs counsel relied on various judgments which held that the purpose of section 3 is
to provide notice in order to alert the organ of state to the pending claim so that it may
investigate and decide how to respond. Section 3 of ILPACOSA may be in the form of
a letter of demand and a perusal of the relevant authorities clearly confirms that it is not
the form, but the substance of that letter which determines compliance with section 3 of
ILPACOSA.5
[29] On a perusal of the aforesaid correspondence exchanged between the liquidators and
the DAPL, as well as the State Attorney, it is clear that:
(29.1] The letters refer to the insolvency enquiry where an official of that Department
confirmed the indebtedness of DAPL to Plaintiff;
5 Masindi v M EC Department of Health, Limpopo Provincial Government {2024) ZALMPPHC 1 paragraph 21
See also: Ledwaba obo Minor Children v MEC for Health, Limpopo Province {2025] ZALMPPHC 241 paragraphs
21 and 31.
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[29.2) There is reference to the SLA, confirming that contract as forming the underlying
cause of action;
(29.3) The individual amounts which are claimed in terms of the relevant individual and
identified sites are clearly stipulated.
[30] In my view there is no doubt that the aforesaid correspondence constitutes compliance
with section of 3 of ILPACOSA. Significantly, during argument the Defendants' counsel
made no attempt to illustrate why the aforesaid correspondence did not constitute a letter
of demand or contained the grounds for the claim, not surprisingly so because such an
argument would not have been supported by the facts.
[31) In the premises, the Defendants' special plea of non-compliance with section 3 of
ILPACOSA stands to be dismissed.
CONCLUSION
[32] Whereas any counterclaim which Defendants may have had, became prescribed, and
the three special pleas raised by Defendants stand to be dismissed, it follows that the
Plaintiff is entitled to judgment on the agreed amount of R2 229 575.75 with mora tore
interest from date of institution of the action to date of payment. In my view there is no
reason why costs should not follow the event.
IN THE PREMISES, I MAKE THE FOLLOWING ORDER :
(1] It is declared that any counterclaim which the Defendants intended to institute has come
prescribed virtue of the provisions of section 12 of the Prescription Act 68 of 1969.
15
[2} Defendants' special pleas are dismissed, with costs.
[3] Defendants are ordered to pay to Plaintiff the amount of R2 229 575. 75 with interest
thereon a tempore morae from date of service of the summons to date of payment.
[4] Defendants are ordered, jointly and severally, the one paying, the other to be absolved,
to pay Plaintiff's costs of the action, including costs of two counsel, costs of senior counsel
to be taxed on Scale C.
APPEARANCES
FOR PLAINTIFF:
INSTRUCTED BY:
FOR DEFENDANT:
INSTRUCTED BY:
PA VAN NIEKERK
JUDGE OF THE GAUTENG DIVISION,
PRETORIA
ADV J HERSHENSOHN
ADV R DE LEEUW
SCHABORT POTGIETER ATTORNEYS INC.
ADV MIHLANGA
STATE ATTORNEY