---

IN THE HIGH COURT OF SOUTH AFRICA

(Northern Cape Division, Kimberley)

 

Case number:	1217/2015
	vide 2622/2016
Date heard:	19/06/2020
Date delivered:	09/10/2020

 

In the matter of:

 

RENOSTERBERG LOCAL MUNICIPALITY                                Applicant/2^nd Defendant

 

and

 

JORIAN CONSTRUCTION                                                             1^st Respondent/Plaintiff

TSHENELO RESOURCES (PTY) LTD)                                        2^nd Respondent/First Defendant

Coram: Van Tonder, AJ

JUDGMENT

VAN TONDER, AJ

INTRODUCTION

[1]          This matter is firstly an application by the applicant (second defendant in the main action) for the setting aside of certain steps by the first respondent (the plaintiff in the main action), in terms of Rule 30(1) of the Uniform Rules of Court as irregular steps, namely that:-

1.1         The applicant's joinder into the main action by way of an amendment in terms of Rule 28 of the Uniform Rules of Court be set aside as an irregular step;

1.2         The first respondent's failure to comply with the provisions of Rule 10 of the Uniform Rules of Court, when joining the applicant into the main action, be set aside as an irregular step.

 

[2]        Secondly the matter consists of an exception raised by the applicant/second defendant/excipient in respect of the first respondent/plaintiff's amended Particulars of Claim dated 13 December 2017 (as well as the almost identical amended Particulars of Claim filed under case number 2622/2016) on the following basis:-

2.1        that the plaintiff failed to allege its compliance with the peremptory requirements of section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act, No 40 of 2002;

2.2        that in respect of claim 2, the plaintiff has failed to properly plead a valid cause of action for undue enrichment, by failing to expressly plead that:-

2.2.1        the second defendant was enriched,

2.2.2.       the plaintiff was impoverished;

2.2.3        the second defendant's enrichment was at the plaintiff's expense; and

2.2.4        the second defendant's enrichment was unjustified and/or without a legal cause.

 

2.3        that, in respect of the alternative claim pleaded in paragraph 19 of the Particulars of Claim, that the plaintiff had failed:

2.3.1.       to plead the terms of the settlement agreement,

2.3.2.       . to plead whether or not the settlement agreement was made an order of Court,

2.3.3.       . to attach a copy of the settlement agreement, and

2.3.4.       to plead the material breach on the part of the second defendant.

 

[3]        At the commencement of the proceedings, the second defendant withdrew its application in terms of Rule 30(1) and requested that the costs of the application be reserved for argument at a later stage.

[4]        The plaintiff, however, indicated that if these costs are reserved, the question will not be placed before Court at a further point in time, wherefore the costs should be adjudicated together with the exception.

[5]        Mr Grabler SC, on behalf of the plaintiff requested that the second defendant be ordered to pay the costs of the application on a punitive scale, i.e. on an attorney and own client scale.

[6]        In respect of the Rule 30(1) application the only issue remaining was the question of costs, although Mr Grabler had indicated that the merits of the application (or rather the alleged lack thereof) had to be considered in order to make a finding in respect of the costs of the application.

[7]        For the sake of clarity, the parties will throughout be referred to as in the action.

 

THE RULE 30 (1) APPLICATION

[8]          The basis of the application is set out by the second defendant in its founding affidavit as follows:-

"This Affidavit is deposed to in support of an application under Rule 30 to set aside the joinder of the Applicant in these proceedings. It is clear that the Applicant was joined by way of an amendment in terms of Rule 28 of the Uniform Rules of Court, instead of Rule 10(3) of the Uniform Rules of Court, which is an irregular step.”

 

[9]        The second defendant then refers to a Notice of Intention to Amend which was filed by the plaintiff to join the second defendant in the main action on 19 October 2016. The second defendant then attaches a copy of the aforesaid Notice of Amendment to its founding affidavit as annexure 'KB1'.

[10]       The Notice of Amendment referred to in its heading, states as follows:-

"BE PLEASED TO TAKE NOTICE that the Plaintiff intends to amend their particulars of claim in the abovementioned matters as follows, in lieu of the leave that was granted by this Honourable Court to join Renosterberg Municipality as 2^nd Defendant to the existing proceedings.”

 

[11]       This was followed by further amendments by the plaintiff, which resulted in the second defendant filing a notice to remove cause in terms of Rule 30 on 31 July 2019.

[12]       In the notice the second defendant contended that:-

"...the procedure followed by the Plaintiff when joining the Second Defendant in the proceedings constitutes an irregular step in the following basis:-

1.             The Plaintiff joined the Second Defendant in these proceedings by way of an amendment in terms of Rule 28 of the Uniform Rules of Court;

2.             In joining the Second Defendant, the Plaintiff failed to comply with the provisions of Rule 10 of the Uniform Rules of Court;

3.            The joinder of the Second Defendant by way of an amendment was procedurally flawed and/or irregular and renders the proceedings herein null and void."

 

[13]       In its answering affidavit, served and filed on 03 October 2019, the plaintiff confirmed that it had in fact brought a substantive application for joinder and attached a Notice of Motion dated 07 July 2016 which notice was already served during July 2016.

[14]       The Notice of Motion clearly indicated that the plaintiff applied for an order in the following terms:-

"1.       That leave is granted for Second Respondent to be joined in the main action under case number 1217/15 as Second Defendant.

2.        Costs of the application if unnecessarily opposed.

3.        Further and/or alternative relief."

 

The aforesaid application was brought under case number 1463/2016.

 

[15]       The matter served on the unopposed roll of 09 September 2016 and Acting Justice Matlapeng granted an order as prayed for by the plaintiff, a copy of which order is also attached to the answering affidavit of the plaintiff.

[16]       The answering affidavit also emphasised that annexure 'KB1' attached to the founding affidavit, clearly indicates that leave had already been granted by the Court to join the second defendant, when the Notice of Intention to Amend was served. On that basis the plaintiff indicated that the second defendant's application is fatally flawed and cannot succeed.

[17]       The plaintiff also contended that the prayers as set out in the second defendant's Notice of Motion are unclear and non-sensical, and also contends that the second defendant had in fact taken a further step prior to giving Notice in terms of Rule 30 of the Uniform Rules of Court.

[18]       In its answering affidavit the plaintiff also sets out the following under the heading "TENDER":

"12.1     Given what I have stated above, it is my respectful contention that the matter should not proceed any further. This is so because the Applicant quite simply could never have received the relief it now seeks.

12.2        These anomalies cannot be cured and the application is doomed to failure.

12.3        In order to avoid the further incurring of unnecessary expenses, I call upon the Municipality to withdraw the application at this stage and to pay the Respondent's costs.

12.4        I call upon the Municipality to do so within five days of receipt of this Opposing Affidavit.

12.5        Should the Municipality fail to do so and bring an abrupt end to the application, I give notice already that Jorian will be forced to ask the court at the hearing of the application to not only dismiss the application but also to order the Municipality to pay the costs of the application on a scale as between attorney and own client."

 

[19]       It is common cause that the second defendant did not make use of or avail themselves of the plaintiff's tender and the second defendant even persisted with its application in terms of Rule 30 and dealt with the said application's merits in the its Heads of Argument that were filed on 17 June 2020. The application in terms of Rule 30 was only withdrawn on the morning of the commencement of the matter.

[20]       In those circumstances I am of the view that the second defendant should be ordered to pay the costs of the Rule 30 application on an attorney and own client scale.

 

THE EXCEPTION

[21]       The plaintiff issued Summons against the first defendant on the basis that the first defendant and the plaintiff had entered into a written agreement on or about 07 August 2013 in terms of which the first defendant appointed the plaintiff as subcontractor in respect of its appointment to attend to the works under project number      254640YNA UPGRADING OF DIRT STREETS TO PAVED STREETS IN PETRUSVILLE AND PHILLIPSTOWN - PHASE 2.

[22]       At the conclusion of the agreement the parties knew they had entered into the agreement based inter alia on the following facts: -

22.1      That the first defendant had secured a tender with the Renosterberg Municipality for the upgrading of existing gravel roads and streets to paved streets in the Phillipstown area.

22.2      The first defendant and said Municipality concluded a written agreement encompassing written changes to the general contract data and the general provisions of the General Conditions of Contract document of 2004.

 

[23]       The plaintiff then pleaded that it was not in possession of the contract concluded between the first defendant and the Municipality and so cannot annex it to the Particulars of Claim.

[24]       Having obtained the order to join the second defendant to the proceedings, the plaintiff amended its Particulars of Claim to its final Particulars of Claim which is dated 13 December 2017.

[25]       In the alternative to the claim against the first defendant as concisely and in general terms set out above, the plaintiff instituted an alternative claim called Claim 2 against the second defendant on the following basis:-

"12.

12.1    Plaintiff duly upgraded the dirt streets to paved streets ("the construction works'') in Petrusville and Phillipstown.

12.2    The aforementioned towns form part of the Renosterberg Local Municipality and its demarcated jurisdictional territory.

13.

13.1    The plaintiff and Renosterberg did not enter into any contract for the performance of the construction works mentioned herein, supra.

13.2    2 The construction works were done in terms of the subcontract agreement mentioned and pleaded herein supra.

13.3    The said construction works were handed over to Renosterberg after the stage of practical completion and certified accordingly.

 

14.     Renosterberg received and retained the benefit of the completed construction works and is in possession and ownership thereof.

15.

15.1    Despite having received the benefit of the completed construction works, Renosterberg failed to pay the full amount of the contract price to the First Defendant.

15.2    Plaintiff's invoices which were rendered to the First Defendant, were subsumed under the invoices of the First Defendant rendered to Renosterberg for payment.

16.

16.1    As a result of the aforementioned failure by Renosterberg to pay the full contract price, Plaintiff did not receive payment in regard to the invoices referred to herein, supra, as (B) and (C) respectively.

16.2    The amount outstanding in terms of the (B) and (C) forms part, but not limited to, the outstanding contract price owed by Renosterberg to the First Defendant.

 

17.        In the premises the Plaintiff has suffered damages in the amount of R5,274,681.58 as a result of Renosterberg's failure to pay the contract price despite receiving and retaining the benefit of the completed construction works.

18.        Renosterberg is therefore unjustly enriched at the expense of the Plaintiff.

19.        In the further alternative to the Plaintiff's case set out in paragraphs 8 to 18, the Plaintiff claims as follows:-

19.1      the First Defendant appointed the Plaintiff as a subcontractor to perform the works indicated, after the Plaintiff had challenged the Second Defendant's awarding of the main contract to the First Defendant, and in terms of what the Plaintiff contended to be an irregular tender process;

19.2      the First and Second Defendants were the First and Second Respondents in the application issued in this court under case number 954/2013;

19.3      that dispute was settled between all the parties on or about 07 August 2013, and as indicated in the existing paragraph 3 of these particulars of claim. The Second Defendant however partook and indeed was a party to the agreement thus concluded, and was represented by its Municipal Manager duly authorised to so enter into the agreement;

19.4      alternatively, and should the court find that the Second Defendant indeed was not a party to the agreement so concluded on 07 August 2013, the Second Defendant consented to the settlement of the dispute between the Plaintiff and the First Defendant thus and in substantial compliance with clauses 6.1 and 6.2 of the General Conditions of Contract concluded between the First and Second Defendant. The Plaintiff is not in possession of a copy of this agreement between the First and Second Defendants, but pleads that both the First and Second Defendants are so in possession;

19.5      as a consequence of the settlement agreement, alternatively the Second Defendant consenting to the settlement of the dispute between the Plaintiff and the First Defendant in the review application, the Plaintiff continued to perform the work stated hereinabove and rendered intermittent payment certificates to the First Defendant;

19.6    the Second Defendant in turn incorporated such payment claims into its claims submitted to the Second Defendant for payment;

19.7      the Second Defendant effected payment of these certificates as stated in paragraph 8 of these Particulars of Claim;

19.8      the Plaintiff thus acted as subcontractor for the First Defendant with the consent and approval - and for the benefit of the Second Defendant;

19.9      accordingly, the Plaintiff is entitled to claim payment from the Second Defendant directly, alternatively an order in terms of which Second Defendant is ordered to pay the claimed amount to the First Defendant and the First Defendant to pay the Plaintiff.

20.        The Plaintiff therefore claims from the First and Second Defendant, payment by one, the other to be absolved, in the amount of RS,274,681.00 and further relief."

 

THE PARTIES' CONTENTION

[26]       Mr Mthombeni, on behalf of the second defendant, submitted that ex facie the pleadings in its entirety, the plaintiff has failed to allege its compliance with the peremptory provisions of section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act No 40 of 2002.

[27]       He contended that the Act makes it clear that no legal proceedings for the recovery of a debt may be instituted against an Organ of State unless the creditor has given the Organ of State notice in writing of his or her intention to institute legal proceedings and that notice was sent to the relevant designated official. In these circumstances, he submitted, that the plaintiff has failed to make the necessary averments to disclose the cause of action.

[28]       In his argument Mr Mthombeni relied on the matter of Blue Chip 2 (Pty) Ltd t/a Blue Chip 49 v Ryneveldt and Others[1], which in paragraph 20 held that:-

"In order to disclose a cause of action to enforce a claim emanating from a default of a credit agreement an averment of compliance with section 129 must be contained in the summons and proved. Delivery of as 129 notice forms part of the cause of action. It is an essential component of a plaintiff's cause of action. It must occur before a cause of action can be said to have arisen. Absent compliance therewith there would be no cause of action."

 

[29]       Mr Grabler on the other hand, argued that in contrast to section 129, of the National Credit Act No 34 of 2005, the non-compliance of which cannot be condoned, the non­ compliance with section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act, can in fact be condoned. He submitted that this is an important distinction between the two matters and argued that the compliance with section 3 of the latter act does not form part of the cause of action, as in the present matter.

[30]       He furthermore argued that it was for the second defendant to plead non-compliance thereto, and that the plaintiff would then, in any event, have the opportunity to apply for the necessary condonation in this regard, if required.

[31]       In respect of the enrichment claim as set out in the Particulars of Claim, Mr Mthombeni submitted that the following four prerequisite requirements were not pleaded:

31.1       that the second defendant was enriched;

31.2       that the plaintiff was impoverished;

31.3       that the second defendant's enrichment was at the expense of the plaintiff; and

31.3       that the second defendant's enrichment was unjustified and/or without legal cause.

 

[32]       Mr Grabler on the other hand submitted that it was not expressly pleaded in such separate headings, but that the allegations as pleaded by the plaintiff, is sufficient to warrant and found an action for undue enrichment.

[33]       Relying on paragraph 15.1 and 15.2 of the Particulars of Claim, Mr Grabler argued that properly interpreted, the aforesaid paragraphs contend that the plaintiff had performed the work, that the plaintiff was impoverished (because of non-payment) and that the second defendant was enriched (because of its receiving and retaining the benefit) to the extent of the amounts indicated in the invoices and which forms the subject of the damages claim.

[34]       Mr Grabler further averred that the document must be read as a whole and that if evidence can be led that can disclose a cause of action, the document is not excipiable and it is only if no possible evidence on the pleadings can establish the claim that an exception can succeed.[2]

[35]       He furthermore argued that an overly technical analysis is not required, especially when dealing with enrichment claims with reference to the Kudu Granite Operations[3] and the Klokow[4] matters.

[36]       He submitted that, if the plaintiff can succeed to prove the averments contained in its Particulars of Claim, it will succeed with its action, as the proven facts will disclose a cause of action as required in MacKenzie v Farmers' Co-operative Meat Industries Ltd[5].

[37]       Mr Grabler also argued that the law does not require the pleading of a legal conclusion but only of the facts required to prove the required conclusion as set out in the matter of Makgae v Sentraboer (Kooperatief) Beperk, 1981 (4) SA 239 (T) at 244C.

[38]       In respect of the third leg of the second defendant's Exception, Mr Mthombeni argued that the plaintiff has failed to plead the terms of the agreement referred to in paragraph 19 and to which reference is made to as annexure 'A', and failed to plead whether the aforesaid agreement was made an order of Court. The plaintiff has also failed to attach a copy of the aforesaid agreement and failed to plead material breach on the part of the second defendant in order to establish a cause of action and that this rendered the plaintiff's Particulars of Claim fatally defective.

[39]       Mr Grabler on the other hand contended that the settlement agreement referred to in paragraph 19 is exactly the same agreement as referred to in paragraphs 3, 4, 5 and 6 of the Amended Particulars of Claim, and that no other manner of interpretation is possible in respect thereof. He further argued that the particulars of the agreement were sufficiently pleaded under claim 1 as set out above and submitted that the question whether the agreement was made an order of court does not form part of the cause of action between the parties.

 

THE MERITS

[40]       In respect of the argument regarding section 3 of Act 40 of 2002, as set out in The Free State Province v Terra Graphics (Pty) Ltd and An other[6], non-compliance therewith is not a ground for exception as it is up to the second defendant to plead non-compliance therewith.

[41]     The second defendant had the duty to persuade the court that upon every interpretation which the particulars of claim (including the annexures thereto) can reasonably bear, no cause of action is disclosed. "[7]

[42]       In respect of the requirements of an enrichment action, paragraph 13.1 and 18 of the Particulars of Claim must also be read together with the paragraph 15 referred to by Mr Grabler. Paragraph 13.1 reads as follows:-

13.1    The plaintiff and Renosterberg did not enter into any contract for the performance of the constructions works mentioned herein, supra.

….

 

18.    Renosterberg is therefore unjustly enriched at the expense of the plaintiff."

 

[43]       The aforesaid passages if taken as a whole, as the Court should, is sufficient to establish a cause of action of unjustified enrichment against the second defendant.

[44]      In respect of the alternative claim, and the Exception thereto on the basis that Annexure 'A', the agreement, is not attached and/or the terms thereof set out properly and/or properly pleaded, I agree with Mr Grobler's contention that it is clear from the pleadings as a whole, that annexure 'A' was indeed attached to the Particulars of Claim, and the terms thereof as pleaded against the first defendant under claim 1.

[45]       In these circumstances, the second defendant has failed to establish the requirements as set out in Lewis v Oneanate, supra.

[46]       I therefore make the following orders:-

1.           The Exception is dismissed with costs in respect of both case nr 1217 /2015 and case nr 2622/2016.

2.           The second defendant is ordered to pay the costs of the Rule 30 application in respect of case nr 1217 /2015 on an attorney and own client scale.

 

 

 

AG VAN TONDER

ACTING JUDGE

 

 

 

On behalf of the Applicant / 2^nd Def:     Adv. P. Mthombeni (oio Mjila & Partners)

On behaIf of the 1^st Resp/Plaintiff:         Adv. S. Grobler SC (oio Engelsman, Magabane Inc.)

On behalf of 2^nd Resp/ 1^st Def:               No appearance

---