FILING SHEET FOR EASTERN CAPE JUDGMENT

								ECJ no: 164  

PARTIES:  	The Honourable Minister of Labour of the Republic of the 		Government of the Republic of South Africa 
					vs
		 The Fedics Group (Pty)

REFERENCE NUMBERS –
•	Registrar:  711/2002
•	Magistrate:
•	HIGH COURT: MTHATHA (TRANSKEI DIVISION)

DATE OF HEARING:  12 JUNE 2007 
DATE DELIVERED:    14 JUNE 2007

JUDGE(S):  E REVELAS

LEGAL REPRESENTATIVES –
Appearances:

•	for the State/Applicant(s)Appellant(s): ADV PV MSIWA
•	for the accused/respondent(s): ADV TJM PATERSON (SC) & ADV REDPATH

Instructing attorneys:
•	Applicant(s)/Appellant(s):  STATE ATTORNEYS  
•	Respondent(s):  JF HEUNIS AND ASSOCIATES

CASE INFORMATION –
•	Topic:
•	Keywords:

NOT REPORTABLE 

IN THE HIGH COURT OF SOUTH AFRICA
(TRANSKEI DIVISION)

							Case No:  711/2002
							Date Heard:  12/06/07
							Date Delivered:  14/06/07

In the matter between

THE HONOURABLE MINISTER OF LABOUR	
OF THE GOVERNMENT OF THE REPUBLIC
OF SOUTH AFRICA						Applicant

and

THE FEDICS GROUP (PTY)					Respondent

	JUDGMENT	

REVELAS J:

[1]	The applicant seeks to rescind a judgment of this court, handed down on 17 	June 2004, and wherein it was held that the applicant (then the defendant) was 	indeed a party to an agreement signed as long ago as 20 June 1996, and which 	was cancelled by mutual agreement in February 2002.  The matter came 	before his Lordship, Mr Justice Miller, on 24 May 2004, for hearing.  The 	learned judge ordered the defendant to pay the costs of the hearing, which was 	paid.  The defendant now wants to dispute the authority of a Mr Engelbrecht 	who according to the agreement itself, acted on behalf of the defendant when 	the agreement was concluded.  The matter has a long history, which I do not 	propose to set out in great detail.  I will commence with the conclusion of the 	agreement in question.  
	
[2]	In terms of the agreement, the respondent (then the plaintiff) was 	appointed             	to manage the catering facilities at the Transkei Training Centre, (which in 	1998 became the Wild Coast Training Centre), at a weekly managing fee.  The 	plaintiff would be reimbursed for all expenses incurred in the course of 	managing the catering facilities at the defendants’ canteen in Bernard Schulz 	Drive in Ikwezi Township, Mthatha, which it in fact did for four years.

[3]	Clause 15 of the agreement prevented the parties to the agreement from 	ceding, assigning, or making over their rights or obligations to any third party 	without the written approval of each other.  Clause 12 of the agreement made 	provision for the determination of disputes arising from the agreement by way 	of arbitration. 

[4]	When the agreement was cancelled, the defendant was in arrears in an amount 	of R257 497,74 in respect of its monthly payments to the plaintiff, for 	almost a year.  The plaintiff subsequently referred a dispute about the 	aforesaid unpaid monthly accounts to arbitration, in accordance with the 	arbitration clause contained in the agreement, and became the claimant for the 	amount owed.  In its response to the plaintiff’s claim, the defendant denied 	“emphatically” that he is “effectively the other party” to the agreement and 	stated that the other party to the agreement was the Wildcoast Training Centre, 	alleged to be an autonomous institution against which the plaintiff 	hadinitially 	lodged a claim.  When the contract was signed, the Transkei Training Centre 	was not a company with a separate legal entity. It was                                                                                                                                               	only registered as a company in terms of Section 21 of The Companies Act 61 	of 1973 in1998, two years after concluding the agreement.    

[5]	The arbitration proceedings were then stayed, and the plaintiff instituted trial 	proceedings by way of summons, seeking a declarator in the terms granted in 	the judgment of Miller J, which the defendant now wants to rescind.  In 	order to succeed, the defendant must show, under the common law, sufficient 	cause, which would include a full and reasoned explanation for the default, 	together with the setting out of a bona fide defence which has reasonable 	prospects of success.  

[6]	When the matter came before Miller J for trial, the defendant, represented by 	counsel, sought a postponement from the bar despite the fact that the plaintiff 	had well in advance warned the defendant that it would oppose such an 	application, which should in any event have been brought by way of a 	formal application.  

[7]	The reasons advanced for wanting the postponement was that the defendant 	was having difficulty in locating witnesses, but it was said that a witness may 	be available the next day.  If the witness was not available, the defendant 	said it would then make a substantive application for a postponement the next 	day.  Because the defendant’s instructing attorney was not in court, counsel 	had no instructions as to why the witness was only available the following 	day, as opposed to the day on which the postponement was sought.  Counsel 	also could not explain the defendant’s failure to bring a formal application for 	the postponement.  
    	
[8]	Miller J found the reason relating to the possibility of a witness being 	available the next day, to be speculative and unimpressive.  To permit the 	defendant to have an extra day to make a substantive application, he held to be 	unacceptable, considering the long notice that the defendant had of the trial.  	The learned judge held the reasons put up by the defendant for needing a 	postponement, to be unsound, and that the need arose from a lack of interest in 	the trial, which was evidenced by the defendant’s failure to 	attend a pre-trial 	conference, (ten letters were written by the plaintiffs’ attorneys in an attempt 	to convene a pre-trial conference) and to bring a formal application for the 	postponement.  

[9]	When the application for a postponement was dismissed, counsel for the 	defendant excused himself and the matter proceeded in the absence of the 	defendant.  The plaintiff led the evidence of one witness, Mr AP Ferreira, the 	Director of Operations for the Eastern Cape of the plaintiff.  Being familiar 	with the agreement concluded, and having knowledge of its background, he 	stated that the catering facilities in question were managed by the plaintiff 	under the auspices of the defendant, the two parties had contracted with each 	other and all funds for the catering service at the Training College were 	provided by the defendant’s department.  In his judgment, Miller J noted that 	he was satisfied with the evidence of Mr Ferreira.  He further accepted that 	because the defendant’s department was cited as a party in the written 	contract, the defendant, and not another autonomous third party, was a party to 	the arbitration agreement. 

[10]	Counsel for the defendant conceded that Miller J was correct refusing a 	postponement and continuing with the hearing on the evidence available.  	However, he sought an “indulgence” to “revisit” the matter, the gravamen of 	the defendant’s case being that Mr Engelbrechts’ lack of authority and the 	defendant’s change of judicial personality – so to speak – 	meant that the 	defendant clearly was not a party to the agreement.  It was 	further submitted 	that the evidence needed to prove that the defendant was not liable in terms of 	the contract, (which was not available before) is now available and rendered 	the defendant’s prospects of success likely.  Essentially, the defendant wanted 	to introduce a new defence.  However, at the time of the hearing, the 	defendant had filed a notice to amend its plea, in order to put up a positive 	version which 	is substantially the same as the one advanced before me, but 	this amendment was never effected.  

[11]	The plaintiff, who opposes the recission application, has also applied to have 	certain averments made by Mr Sabelo Mgujulwa as well as a confirmatory 	affidavit deposed by Mr Sineke struck out. Once the averments are struck out, 	the defendant will be unable to show good cause or any prospects of success in 	this case.  I dealt with both applications simultaneously.  The averments in 	question need not be struck out.  As they stand they do not assist in 	determining the questions before me.    

[12]	In his founding affidavit, Mr Mgujulwa of the State Attorney listed all the 	problems he had encountered in putting forward a proper defence for the 	defendant.  Firstly, he said he had difficulty in briefing counsel on the day of 	the hearing before Miller J.  He said he had also relied on Mr Pasha of the 	Legal 	Division of the defendant.  He (Mgujulwa) could not assist Mr Pasha.  	The matter was also dealt with by Advocate Koyana and Mr Pasha but was 	never finalized.  No affidavit by Mr Pasha is attached.  He alleged that 	difficulties in dealing with the matter were exacerbated by the lack of or poor 	filing system in the Department in Pretoria. The file was also lost at one stage.  	 He set out in great detail how he searched in vain for proof of the contract in 	question.  These allegations were put forward to explain the delay in bringing 	this application.  Mr Mguljwa nonetheless was adamant that Mr Engelbrecht 	had no 	authority (because he was a chief executive officer and not a civil 	servant) to contract on behalf of the Department.  According to Mr Mgujulwa, 	only Mr Sineke who was the Director General of the former Department of 	Manpower (and who left that department in 1995) had the authority to contract 	on behalf of the  Department and such authority could not be delegated. Mr 	Mgujulwa also stated that upon the closure of the Transkei Training Centre, it 	became difficult to trace its managing director.  The Transkei Training 	Centre was established in terms of Sections 31 and 	31A of the Manpower 	Training Act, 56 of 1981.  This fact would not exclude Engelbrecht’s authority 	from the Department to conclude contracts for services to be delivered to the 	centre in question.  If he is personally liable, because he had no authority to 	contract, then any claim against him has prescribed in any event.  In this 	regard clause 15 of the contract is relevant.  It reads: “Neither party may, without 	the approval in writing of the other party, cede, assign or make over its rights or 	obligations in terms of the Agreement to any third party.”  The plaintiff never 	received any notice that the Department’s obligations were being signed over 	or ceded to a different party.  Therefore the Department must be liable to the 	plaintiff.  The 	Department cannot be seen as disconnected from the centre’s 	activities.  It subsidized the catering services provided by the plaintiff there. 	Mr Engelbrecht therefore had to have the necessary authority.

[13]	Mr Mgujulwa quite plainly deposed to a defence of which he has no personal 	knowledge.  Based only on what he was told, the defence is based on hearsay.  	No probative facts were put forward which could support any of his 	contentions.  His submission that Mr Engelbrecht lacked authority is 	entirely based on hearsay.  It was open to the defendant to ask Mr Engelbrecht 	what position he held.  The plaintiff communicated with him by way of e-	mail so he was available. The defendant could easily have obtained his 	evidence but chose not to.  	

[14]	There is no basis for the proposition that Mr Sineke was the only one who 	could contract with the plaintiff.  He worked for the erstwhile Department of 	Manpower and has not stated 	anything of relevance on oath.  He is not in a 	position, having left the Department in 1995, to shed light on what his 	successor may or may not have done. 

[15]	The plaintiff had filed a substantial discovery affidavit in which all the 	minutes of the Transkei Training Centre and its conversion from departmental 	training centre to an independent body (Wild Coast Training Centre) were 	canvassed.  At that point the defendant had already pleaded and the issue at 	stage was a “crisp” one – to borrow Millers J’s description of it.  Counsel 	could 	therefore have been briefed by the defendant to prepare for, and to 	conduct a defence on the merits and on the grounds put forward in this 	application.  There was no need for a postponement.  All the information 	necessary to put forward a proper defence in this matter, was available to the 	defendant long before the arbitration proceedings.  The explanation for the 	delays is therefore untrue. The defendant has not shown any good cause as to 	why it was not able to put up a proper defence on the date of the hearing and 	has demonstrated a deliberate intention to frustrate and delay matters at 	every turn. 

[16]	In my view, the defendant was wilful in electing not to pursue its defence at 	the hearing before Miller J, and wilfully risked an adverse finding.  An 	opposed application for rescission is just a further opportunity to delay the 	inevitable, namely the arbitration hearing and possible payment of the amount 	claimed.    

[17]	After it had been declared that the defendant was a party to the agreement, a 	pre-arbitration meeting was arranged for 3 June 2005, but was cancelled by 	the State Attorney, (due to the dilatoriness of the defendant) and 	rescheduled for 29 July 2005.  At this meeting the defendant submitted its 	defence which disputed Mr Englebrecht’s authority.  The defence was then 	incorporated in a formal notice of amendment by the defence, delivered on 26 	August 2005.  The plaintiff’s objection to the amendment sought by the 	defendant was 	upheld by the arbitrator on 10 February 2006, in the absence of 	the defendant who elected not to appear at the proceedings after giving notice 	of its intention to apply for rescission.  The ruling of the arbitrator in this 	regard, still stands.  It would appear that the present application is res judicata	between the parties, solely by virtue of this ruling on 10 February 2006. 

[18]	Apart from all the other factors which militate against rescinding the 	judgment handed down three years ago there is the fact that the defendant had 	complied with the costs order contained in that judgment.  Counsel for the 	defendant submitted that the payment in terms of the costs order was no 	indication of acquiescence in the order.  Counsel for the plaintiff argued to the 	contrary, and referred me to the case law in this regard.  In Bongers v 	Ekstein 1908 T 910, an unsuccessful plaintiff was debarred from appealing 	because he had paid the costs ordered in the judgment, unconditionally, and 	before noting his appeal.  In 	that judgment Wessels J held that the payment 	of costs is prima facie proof of acquiescence in the judgment.  

[19]	Counsel for the plaintiff referred me to the judgment of Erasmus J where the 	learned judge relied on the Bongers judgment in the unreported matter of  	BOE Bank (Pty) Ltd vs G E Rieger CA 923/2003 (EC) dated 25 January 	2006, and that the appeal in question was prerempted, since the appellant 	acquiesced in the judgment of the court a quo, when its attorneys settled the 	taxed bill for the costs ordered under the magistrate’s judgment, prior to 	noting its appeal.  In his judgment, the learned judge also inter alia referred to 	the judgments in Clarke v Bethal Co-Operative Society 1911 TPP 1152, at 	1158, Hlatswayo v Mare and Deas 1912 AD 242 at 259,Dabner v South 	African Railways Harbours 1920 AD 583 at 594 and the judgment in 	Cohen v Cohen 1980(4) SA 435 (2, AD) where the aforesaid cases were 	discussed.   

[20]	Erasmus J endorsed the approach of Fieldsend CJ in the Cohen matter 	(supra), which is that no particular rules apply to the operation of the 	preremption of an appeal and each case must be decided on its own particular 	facts and attendant circumstances.  I, with respect, also adopt the aforesaid 	view.  To settle a bill of costs per se, will not always constitute acquiescence	 in a judgment.  The test is an objective one.  In the matter before me, 	considering all the delays and the particular facts, a rescission must be 	prerempted.  	The imputed acquiescence – if I may call it that – is just one 	aspect of a cumulative set of circumstances which dictate that the application 	falls to be dismissed.   

[21]	The defendant has not made it clear whether or not he seeks rescission under 	the common law or Rule 31(2)(b).  I have dealt with the matter from both 	perspectives.  Under the common law the defendant has no case as set out 	above.  Rule 31 (2)(b) of the Rules of Court, which requires a litigant to bring 	an application for rescission with 20 days of knowledge of the judgment, 	showing good cause, was also flouted in this matter.  The defendant had full 	knowledge of the judgment since counsel for the defendant, who had 	unsuccessfully applied for a postponement, remained in court and thus knew 	the outcome.  However the defendant took a further two years to bring the 	application.  I was asked for an indulgence.  An indulgence, like condonation 	(of which there was no mention either), is not merely for the asking. There are 	no grounds to indulge the defendant or to condone the delays.    

[22]	The protracted litigation between the parties in this court and the arbitration 	proceedings in question, has been caused solely by the defendant’s dilatory 	tactics which has been highly prejudicial to the plaintiff.  Even the recent 	withdrawal of the defendant’s local attorneys was in an irregular notice of 	withdrawal.  I can only infer mala fides on the part of the defendant from the 	manner in which it chose to litigate.  Consequently a punitive costs order is 	warranted.   

[23]	In the circumstances the application is dismissed with costs and such costs are 	payable on an attorney and client scale.  

________________________
 E REVELAS 
JUDGE OF THE HIGH COURT 

On behalf of the Applicant (Defendant):     	  Adv PV Msiwa
Instructed by:			 	   	  The State Attorney

On behalf of the Respondent (Plaintiff):		Adv TJM Paterson SC 								with Adv N Redpath 
Instructed by:					JF Heunis and Associates 	

Date of Hearing:					12 June 2007	
Date of Judgment:					14 June 2007