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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST PROVINCIAL DIVISION, MAHIKENG

 

CASE NO.: 1330/2017

Reportable: YES/NO

Circulate to Judges: YES/NO

Circulate to Magistrates: YES/NO

Circulate to Regional Magistrates: YES/NO

In the matter between:

 

MARANG INC (PTY) LTD	Plaintiff
and
THE MEMBER OF THE EXECUTIVE COUNCIL (MEC) FOR THE NORTH WEST DEPARTMENT OF TOURISM	1st Defendant
DEPARTMENT OF TOURISM: NORTH WEST PROVICE	2nd Defendant

 

CORAM: MFENYANA J

 

Delivered: This judgment was handed down electronically by circulation the parties’ legal representatives via email. The date for hand-down is deemed to be 21 October 2024 at 10h00

 

ORDER

i)             The special plea pertaining to service of the notice in terms of section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 is dismissed.

 

ii)            The defendants shall pay the costs occasioned by the dismissal of the special plea jointly and severally, the one paying the other to be absolved.

 

iii)           The plaintiff’s claim is dismissed with costs.

 

JUDGMENT

MFENYANA J

 

INTRODUCTION

 

[1]          The plaintiff, Marang Inc (Pty) Ltd (Marang) sued out a summons against the first and second defendants (defendants), claiming an amount of R1 710 000.00 plus R13 906 500.00 for amounts allegedly owing in respect of an agreement it concluded with the second defendant.

 

[2]          The genesis of the dispute between the parties can be traced back to 29 June 2015 when the parties concluded a written agreement for provision of education learnership and internship services for 1000 and 200 learners respectively.

 

[3]          In terms of the agreement the defendants would pay the plaintiff an amount of R1 710 000.00 (one million seven hundred and ten thousand rand) upon approval and acceptance of the plaintiff’s proposal, and signature of the agreement.  The defendants would further pay various amounts to the plaintiff at specific intervals, and upon the achievement of various milestones stipulated in the agreement, as follows:

 

3.1.          R17 000 000.00 (seventeen million rand) on submission of 1000 learnership agreements, programme roll-out plan, learnership agreements by the plaintiff, a stipend of R1 500.00 (one thousand five hundred rand) per month by the second defendant and a list of selected learners.

 

3.2.          R7 200 000.00 (seven million two hundred thousand rand) on submission of 200 internship / learnership agreements, roll- out plan, a stipend top-up by the defendants at R2 500.00 per month, and a list of selected learners.

 

3.3.          R22 260 000.00 (twenty-two million two hundred and sixty thousand rand) on submission of the first quarterly progress report based on an approved roll-out plan, site visit report and the second invoice.

 

3.4.          R24 260 000.00 (twenty-four million two hundred and sixty thousand rand) on submission of the second quarterly progress report based on an approved roll-out plan, site visit report, second invoice, and the uploading of learnership logbooks on the CATHSSETA MIS system.

 

3.5.          R24 260 000.00 (twenty-four million two hundred and sixty thousand rand) upon submission of the third quarterly progress report based on an approved roll-out plan, site visit report, uploading of learnership logbooks on the CATHSSETA MIS system, and the third invoice.

 

3.6.         R20 000.00 (twenty thousand rand) upon the final loading of learner assessments on the CATHSSETA MIS System and submission of moderation reports, verification report and quality assurance approval by CATHSSETA ETQA, close -out report and programme impact analysis.

 

[4]          On 29 June 2015 the plaintiff issued an invoice in the amount of R1 710 000.00 to the second defendant. In terms of the invoice, the amount was for “Approval and acceptance of the Marang Inc. Pty Ltd Skills proposal and signing of Service Level Agreement.”

 

[5]          The plaintiff contends that it complied with all its obligations in terms of the agreement, as a consequence of which the defendants were obliged to pay it the amount of R1 710 000.00 stipulated in the agreement upon signing of the service level agreement. The plaintiff further contends that the defendants have repudiated the agreement, and that the plaintiff has accepted the repudiation and communicated its acceptance to the defendants on 4 August 2016. 

 

[6]          Lastly, the plaintiff contends that as a result of the repudiation of the agreement by the defendants which resulted in the cancellation of the agreement, it has suffered damages in the amount of R13 906.500.00 (thirteen million nine hundred and six thousand five hundred rand). According to the plaintiff, the said amount represents the profit that it would have earned had the defendants complied with their obligations, calculated at 15% of the total amount payable to the plaintiff in terms of the agreement.

 

[7]          The defendants have defended the action. In their defence, they raise a special plea to the effect that the plaintiff failed to comply with the provisions of the Institution of Legal Proceedings Against Certain Organs of State Act (the Act)[1] in that the notice prescribed in section 3 (1) and (2) of the Act was only served on the defendants on 12 August 2016 and was not delivered to the Head of the Department. On that basis, the defendants aver that the plaintiff is barred from claiming damages against the defendants. 

 

[8]          On the merits, they aver that in terms of the agreement, the second defendant is not obliged to pay any amount to the plaintiff, until such time that the second defendant has received the mandatory grant from the CATHSSETA. This, the defendants contend in their plea, constitutes a suspensive condition. They further contend that payment of all the amounts agreed on for the entire project was conditional upon receipt of the mandatory grant from CATHSSETA.

 

[9]          It is further the defendants’ contention that it did not receive the mandatory grant from the CATHSSETA and is thus not liable to the plaintiff for the agreed amounts. The defendants further aver that whatever obligations could have arisen in terms of the agreement are “void ab initio” by virtue of the non-fulfilment of the suspensive condition, and thus no valid obligation arose for the second defendant to pay the management fee of R1 710 000.00 to the plaintiff. The defendants further deny that they have repudiated the agreement. They however deny that the plaintiff has met all its obligations in terms of the agreement. They also deny that the plaintiff has suffered any damages and challenge the quantum of damages claimed by the plaintiff.

 

SPECIAL PLEA

 

[10]       It is necessary to first deal with the special plea raised by the defendants. They contend that the plaintiff failed to serve the demand in terms of section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act[2] (the Act) on the head of department.

 

[11]       It is not in dispute that the plaintiff’s demand was served on the defendants. The only issue appears to be that it was served on their legal department and not on the head of the department. The law is trite in this regard: “A notice must be served’ on an organ of state by delivering it by hand … .”[3]  The purpose of a notice in terms of section 3(1) of the Act is to ensure that the relevant state organ is apprised of the matter and afforded an opportunity to investigate the matter and make an election whether to make payment of the debt or defend the matter.

 

[12]       The defendants’ first witness, Ms Neo Sephoti (Sephoti) conceded that she received the plaintiff’s demand from the legal department where it had been served. It is on that basis that instructions to defend the matter were issued and pleadings exchanged. As the adage goes, ‘the rest is history’.

 

[13]    There can therefore be no doubt that the department of Tourism received the notice and acted on it. It opted to defend the matter as it did. It also bears mentioning that at although at the hearing of the matter, the special plea was not proceeded with any degree of enthusiasm by the defendants, in the written submissions on behalf of the defendants, counsel submitted that no instructions were received from the defendants’ attorneys whether or not to persist with the special plea. The defendant’s thus left the matter in the hands of the court. There is no merit to the special plea. 

 

PLAINTIFF’S CASE

 

[14]       In support of its claim, the plaintiff called one witness, Mr Benedict Motau (Motau). Motau testified that he is the chief executive officer (CEO) of the plaintiff. He established the plaintiff in 2013. Prior thereto he worked in related matters for a period of approximately 10 years. He informed the court that he has extensive knowledge in the field of training.  His various qualifications and managerial experience in the fields of commerce, marketing and communication, also attest to his expertise in matters of training and related aspects. Motau is also trained as a facilitator in skills development and is qualified as a training moderator.

 

[15]       Relevant to the claim, Motau testified that on 8 June 2015 he, and with other companies were invited to make presentations for provision of educational learnerships and internships. Following the presentation, an agreement was concluded between the plaintiff and the second defendant on 29 June 2015 represented by Motau and Mr Charles Ndabeni (Ndabeni), the then acting head of Department. The terms of the agreement are not in dispute between the parties.

 

[16]       Motau further testified that it was his responsibility in terms of the agreement, to assist the defendants in obtaining funding from the CATHSSETA. Because the defendants paid a monthly levy to the CATHSSETA they were entitled to receive a mandatory grant, as of right, he further stated.  Pursuant to the conclusion of the agreement, Motau testified that the plaintiff attended meetings with the defendants and the CATHSSETA in order to compile a proposal to the CATHSSETA for the discretionary grant.

 

[17]       As to the amount of damages, Motau testified that customarily, the plaintiff’s pricing model is based on a 15% profit of the total amount payable. This is the same pricing model which the plaintiff used in the agreement with the defendants in this matter and was not disputed by the defendants.

 

[18]       It was Motau’s testimony further that the defendants did not comply with its obligations and did not make the initial payment of R1 710 000.00 stipulated in the agreement. He further stated that the defendants never informed him that the mandatory grant had not been received. It was only when he received the defendants’ plea that he learnt of it.

 

[19]       Lastly, Motau told the court that prior to terminating the agreement he made various demands for payment without success, and on 4 August 2016 the plaintiff served a notice on the defendants accepting the repudiation.

 

DEFENDANTS’ CASE

 

[20]       Two witnesses testified on behalf of the defendant, namely, Sephoti and Mr Ishmael Kgokong (Kgokong).

 

[21]       Sephoti testified that at the time relevant to these proceedings, she was the Head of Department of the second defendant, having substituted Ndabeni.  It was further her testimony that the plaintiff failed to provide any documentation is support of its claim, particularly that the CATHSSETA had paid the mandatory grant. She testified that as the second defendant did not receive the mandatory grant from the CATHSSETA, the plaintiff is not entitled to payment. According to Sephoti, there were no other funds for the mandatory grant, and the full application to the CATHSSETA for the funding of the learnership was not provided to her. Neither was a proposal from Marang or any other related documents.

 

[22]       Sephoti challenged the fact that the plaintiff provided no that any work was done. She however admitted that she received the tax invoice submitted by Marang, but stated that although it refers to a proposal, such proposal was ‘nowhere to be found’ until she left the department of Tourism. She confirmed that she refused to pay the amount claimed in the invoice, as it would have been unlawful to make an upfront payment before any work was done. Notably, she stated that she had never heard of a mandatory grant, and that she would not simply pay because the ‘contract’ stipulated that payment should be made. She added that even if there was a mandatory grant, she would still refuse to pay in the absence of the necessary documentation.

 

[23]       She testified that it was a requirement for a skills development fund provider to register on the CATHSSETA, but she could not confirm that the document provided by the plaintiff is from the CATHSSETA, stating that it could have come from anywhere as there is no evidence of its origin.

 

[24]       The defendant’s second witness, Kgokong testified that he is currently the chief director for the department of trade and industry. During 2015 he was with the second defendant also as a chief director. In relation to the present matter he testified that he was part of the meeting held on 8 June 2015 when Marang made its presentation. He was also the programme manager for the province. According to Kgokong the presentations made at the meeting of 8 June 2015 related to various aspects and not only skills development. He confirmed that a Service Level Agreement (SLA) was concluded with Marang, although he was not directly involved in its conclusion. He further testified that the department was not provided with a proposal or written presentation, which would ordinarily be provided to him as the programme manager.

 

[25]       When referred to the project proposal annexed to the plaintiff’s pleadings, Kgokong informed the court that he had no knowledge of it and reiterated that it was not presented at the meeting. He further testified that for the duration of his employment with the second defendant, no mandatory grants were received, stating that as a chief director and programme director, he would be privy to such information.

 

[26]       During cross- examination Kgokong testified that as a programme manager he was responsible for budgetary requirements for the programme and was privy to all expenditure relating thereto before it could be sent to the Head of Department. He further stated that all skills development matters were handled by him and his team as the skills development levy was his responsibility.

 

[27]       Kgokong further testified that he was not aware that an application for a mandatory grant had been done. He concluded that in terms of clause 3.3 of the agreement, the plaintiff was not entitled to payment as the mandatory grant had not been received from the CATHSSETA.

 

DISCUSSION

 

[28]       In its submissions, the plaintiff contends that the amount of R1 710 000.00 is an entitlement flowing from the agreement. Regarding the defence raised by the defendants that the agreement contains a suspensive condition, the plaintiff avers that it is the duty of the defendants to prove that they did not receive the mandatory grant from the CATHSSETA, as this is specifically within their knowledge. For this proposition the plaintiff places reliance on the decision of the Appellate Division in Pillay v Krishna[4] that for purposes of the defence they have raised, the defendants are regarded as claimants. They must satisfy the court that they are entitled to succeed on it. He further contends that the ‘quantum of evidence a party can be expected to adduce depends upon the amount of evidence at his disposal’. In so saying, the plaintiff avers that he has limited access to facts pertaining to payment of the mandatory grant.  While this may well be the position, it has no bearing on the facts of this matter. The nub of the matter is whether or not the agreement concluded by the parties contains a suspensive condition.

 

[29]       The plaintiff avers that the agreement does not contain any suspensive condition but merely deferment of payment subject to certain conditions. The plaintiff takes issue with the fact that the defendants did not discover any documents to support their defence.

 

[30]       In the written submissions submitted on behalf of the plaintiff it is submitted that the plaintiff’s evidence was not properly challenged by the defendants, and on that basis alone judgment should be entered in favour of the plaintiff. It is an established principle that for a plaintiff to obtain judgment, it must discharge the onus to prove its cause of action on a balance of probabilities.[5]

 

[31]       The terms of the agreement are not in dispute. The only contention is whether the agreement creates a suspensive condition.

 

[32]       The general principle in respect of a suspensive condition is that when a contract is subject to a suspensive condition, no contract exists unless and until the condition is fulfilled and no reliance can be placed on the terms of the contract.[6] “Upon fulfilment of the condition the contract thus becomes enforceable. Non-fulfilment of the suspensive condition, however, renders the contract void ab initio, unless the parties have agreed otherwise.”[7]

 

[33]       In Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co Ltd 1963 (1) SA 632 (A), the Appellate Division held that:

 

“a party relying on the fulfillment of a suspensive condition must establish it.”

 

[34]       In the present matter, the plaintiff contends that the agreement is not subject to a suspensive condition. It is apposite to consider the terms of the agreement in this regard. Clause 3 in relevant part records:

 

“3.2      Marang Inc. shall be paid a fee by the North West Tourism on the following basis;

 

3.2.1   As an Independent Skills Development Consultancy, Marang Inc

shall be entitled to payment of a management fee equal to not less than R1 710 000 including VAT by North West Tourism department upon signature of the SLA.

 

3.2.2 …

 

3.3       The fee referred to in clause 3.2.1 above shall be invoiced by Marang Inc. to North West Tourism on a quarterly basis, provided that North West Tourism shall not be obliged to pay any amount to Marang Inc. unless North West Tourism has received the Mandatory Grant from CATHSSETA.

 

3.4       In addition to the fee referred to in clause 3.2 above, Marang Inc. shall be entitled to the fees set out in the agreed budget as set out in Annexure A. These fees relate to the entire project management of the Learnership Programme and Internship Programme.

 

3.5       A management fee to the value of R1 710 000 including VAT, shall be paid in advance by North West Tourism to Marang Inc. Further North West Tourism shall cede the payment of the Discretionary Grants by Cathsseta to Marang Inc. nominated account as the appointed skills development consultancy.

 

3.6       Marang Inc. shall be entitled to invoice North West Tourism in accordance with the milestones referred to in Annexure A.

 

3.7       Payment of Marang Inc.’s invoices by North West Tourism shall be made immediately on request or alternatively, within fourteen (14) days from date of receipt of invoice.”

 

[35]       What is apparent from the above clause is that while Marang was at liberty to invoice the amount of R1 710.000.00, which was to be invoiced on a quarterly basis, no obligation would arise for the second defendant to pay the plaintiff until it had received the mandatory grant from the CATHSSETA.  

 

[36]       By its very definition, a suspensive condition is ‘a condition which prevents an obligation arising unless and until a specific future event, certain or uncertain, occurs.’ Put simply, a suspensive condition suspends the rights and obligations until a specified future event has occurred. It is in the nature of a suspensive condition to defer obligations until a specific condition has been fulfilled. At the risk of being tautologous, I must underline that no legal obligations can become effective until the condition has been fulfilled.

 

[37]       In the specific circumstances of this case, there can be no doubt that clause 3.3 created a condition absent the fulfilment of which the second respondent was not obliged to pay the plaintiff.  The plaintiff’s right to receive payment, and the second defendant’s obligation to pay the amount of R1 710 000.00 were made subject to the payment of the mandatory grant by the CATHSSETA.[8] 

 

[38]       The plaintiff contends that the defendants have not provided any evidence for the defence they have raised, that the mandatory grant was not paid. It avers that as claimants in respect of the defence they have raised, the defendants have a duty to prove that they are entitled to succeed on that defence. This contention misses the point. The duty to prove that a suspensive condition has been fulfilled rests on the party who relies on such fulfilment.[9]  I do not understand the defendants’ case to be any more than that the agreement is subject to a suspensive condition, which has not been fulfilled. There is no reverse duty on a party to prove the contrary; that the condition has not been fulfilled. 

 

[39]       In this matter, the plaintiff has not provided any evidence that the defendants received the mandatory grant upon the fulfilment of which payment of all amounts was subject. Something needs to be said about the stance adopted by the plaintiff in this regard. It completely rejects that the agreement was subject to a suspensive condition, which it interprets as a deferment of payment subject to certain conditions. - (my emphasis). On the other hand it contends that the defendants should prove that the suspensive condition was not fulfilled. It does not lie in the plaintiff’s mouth, having denied the existence of the suspensive condition, to insist on proof that the condition was not fulfilled. The plaintiff cannot approbate and reprobate. I have already stated that the law does not impose a reverse duty on a party to prove the non- fulfilment of a suspensive condition.

 

[40]       I do not see how deferring payment subject to certain conditions is any different from a suspensive condition or the effect of it. What the plaintiff avers is essentially that payment was suspended until the specified conditions were met.  The legal consequence of it is that the entire contract is void ab initio. This is by operation of law. The plaintiff cannot have it any other way.  

 

[41]       The plaintiff seems to be further placing reliance on the fact that it had issued an invoice, after the approval and acceptance of its proposal and signing of the SLA.  Indeed, the issuing of an invoice by Marang upon acceptance and approval of its proposal is a term of the agreement. The issue however does not end there. The agreement goes further to stipulate that the amount of R1 710 000.00 shall be invoiced on a quarterly basis and, provided the second defendant has received the mandatory grant from the CATHSSETA.

 

[42]       Consequently, the plaintiff’s contention that the defendant’s lack of payment amounts to repudiation cannot stand. Neither can the fact that the plaintiff’s chief executive officer was invited by the second defendant to a social event at the expense of the second defendant assist the plaintiff. It does not detract from the fact that it was a term of the agreement that the mandatory grant had to be paid before payment is made to the plaintiff. In any event, the social event preceded the conclusion of the agreement. Its link to the agreement has not been established. 

 

[43]       It was also never the plaintiff’ s case that the mandatory grant was paid by the CATHSSETA to the second defendant. Even if that were the case, the duty to prove such fulfilment of the suspensive condition rests on the plaintiff. This the plaintiff has failed to do. The contention that the plaintiff had limited access to information pertaining to payment of the mandatory grant does not assist the plaintiff.  The plaintiff was not without remedy. It could have, inter alia, invoked the relevant provisions of rule 35 to gain access to any documents it may have considered necessary to prove its case. I am however disinclined to delve further on this issue for the simple reason that it is not for the court to give advisory opinions on how a party should conduct its case.

 

[44]       Having found that there was no obligation on the defendants to pay the amount of R1 710 000.00 to the plaintiff, it follows that there is similarly no obligation to pay the amount of R13 906 500.00 for the balance of the agreement. The plaintiff’s claim falls to be dismissed. 

 

COSTS

 

[45]       The principles applicable to costs are trite. The successful party is entitled to its costs. I find no reason to deviate from this established principle. Having already concluded that the special plea raised by the defendants has no merit, it follows that the costs occasioned by the dismissal thereof should be borne by the defendants. There was no reason to persist with the special plea until the very end.   

 

[46]       With regard to the merits, the gravity of the plaintiff’s failure in making out a case for the relief it seeks justifies a costs order against the plaintiff.

 

ORDER

 

[47]       In the result I make the following order:

i)             The special plea pertaining to service of the notice in terms of section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 is dismissed.

 

ii)            The defendants shall pay the costs occasioned by the dismissal of the special plea jointly and severally, the one paying the other to be absolved.

 

iii)           The plaintiff’s claim is dismissed with costs.

 

 

   S MFENYANA

  JUDGE OF THE HIGH COURT

NORTH WEST DIVISION, MAHIKENG

 

 

APPEARANCES

 

For the plaintiff:	R Raubenheimer
Instructed by:	Hack Stupel and Ross c/o Smit Neethling Attorneys Mahikeng Tel: 018 381 0180 Email: cheryl@hsrnorth.co.za
For the respondents:	C J Zwiegelaar
Instructed by:	State Attorney Mmabatho Tel: 018 384 0269 Email: LMatshinyatsimbi@gov.za

Date reserved:                                  01 February 2024

 

Date of judgment:                            21 October 2024

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