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IN THE CONSTITUTIONAL COURT OF SOUTH AFRICA
CC CASE NO:
SCA CASE NO: 1357/17
CASE NO: EL257/14 In the matter between:
BUFFALO CITY METROPOLITAN MUNICIPALITY APPLICANT
and
METGOVIS (PTY) LTD RESPONDENT
AFFIDAVIT
I, the undersigned,
ELIAS NKOSIVUMILE MAKHANYA
do hereby make oath and state that:
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1. The facts set out in this affidavit are true and correct and are within my personal knowledge and belief unless otherwise indicated. Where I rely on information from other people I verily believe such information to be true.
2. I am an adult male person and an admitted attorney of the High Court of South Africa practising as such under the name and style, Makhanya Attorneys, Office 201, Second Floor, Foschini Building, Argyle Street, East London.
3. I have been the Applicant’s attorney of record in the court a quo since the time the Applicant appointed my firm to defend the legal action in this matter until todate. I am duly authorised to make this petition and depose to this affidavit for and on behalf of the Applicant.
The parties
4. The Applicant is Buffalo City Metropolitan Municipality, established in terms of section 12 of the Local Government: Municipal Structures Act 117 of 1998, with its head office at 10th Floor, Trust Centre, Oxford Street, East London (hereinafter
“BCMM”).
5. The Respondent is Metgovis (Pty) Ltd, a private company duly registered in terms of the Company Laws of the Republic of South Africa with its principal place of business at 1st Floor, Building 4, 39 Hilton Avenue, Hilton, KwaZulu- Natal. Service of this application will be effected at the offices of its attorneys Don Maree Attorneys, Tecoma Street, Berea, East London.
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Leave to appeal
6. This application is made in terms of rule 19 of the Constitutional Court rules for leave to appeal against the whole of the orders and judgments of His Lordship Mr Justice Smith made on 15th August 2017 and 21 November 2017 respectively, in the East London Circuit Local Division as well as the order of the Supreme Court of Appeal issued on 12 March 2018 to the Constitutional Court of South Africa.
7. On 15th August 2017 the Court a quo granted judgment against the Applicant in favour of the Respondent for:
“(a) Payment of the sum of R395 021.57;
(b) Interest on the aforesaid amount at the legal rate from date of demand;
( c) Costs of the suit.”
8. A copy of the judgment of the court issued on 15 August 2017 incorporating the order is attached hereto marked “ENM1”.
9. The Applicant brought an application for leave to appeal against the said judgment and order of the court a quo. The application for leave to appeal was
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refused. A copy of the judgment incorporating the order refusing leave to appeal is annexed hereto marked “ENM2”.
10. The Applicant filed a petition before the Supreme Court of Appeal. The petition was refused. A copy of the order issued by the Supreme Court of Appeal is annexed hereto marked “ENM3”.
The issues which are of public importance
11. The central issue for determination is whether the Court a quo did not misapply South African law on conclusion of a tacit contract involving the Applicant, an organ of State, on procurement of a service provider, the Respondent, when it found that “Where a response has been requested from a party and that party has failed to respond, a tacit contract may be inferred, “when according to ordinary commercial practise and human expectation firm repudiation of such assertion would be the norm if it was not accepted”, (McWillams v First Consolidated Holdings (Pty) Ltd 1982 (2) SA 1 (A) at p.10E-G”.
12. The question raised in paragraph 11 hereabove requires a final determination by the Constitutional Court of the exact onus which the Respondent bore in order to establish the said tacit contract between the Applicant (an organ of State) and itself.
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13. The said questions should be resolved by the Constitutional Court in order to develop common law to harmonise it with section 217 of the Constitution of the Republic of South Africa which provides that:
“217. Procurement
(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods and services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.”
14. In this regard, the Supreme Court of Appeal (the SCA) has settled the question of the doctrine of estoppel on procurement matters.1 In Contractpros2 the SCA found that “it is settled law that a state of affairs prohibited by law in the public interest cannot be perpetuated by reliance upon the doctrine of estoppel.”
15. The last question for determination is what exactly a party contracting with an organ of State (if it can conclude a tacit contract with an organ of State) is required to allege and prove to establish the said tacit contract?
15.1 In the court a quo, the Court did not require the Respondent to negate the Applicant’s version that on 15 March 2013 the Municipal Manager of the Applicant made a decision that “In regards to the issues raised, be advised that we accept the interim arrangement proposed in your letter
1 Provincial Government of the Eastern Cape and others v Contractprops 25 (Pty) Ltd [2001] 4 All SA 273
2 Ibid,
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dated 29th October 2012, to the extent that the licence agreement be renewed until 30th June 2013 only.” This letter was admitted with the consent of the Respondent. A copy thereof is annexed hereto marked
“ENM4”.
15.2 The letter of the Respondent dated 29 October 2012 was discovered by the Respondent, in its discovery affidavit delivered on 11 March 2015 as item15 of Part 1 of the First Schedule. A copy is attached hereto marked
“ENM5”.
15.3 On 30 June 2013 the Applicant’s witness Mr Christopher Lourens, who is the Municipal Valuer, who sat in the initial Bid Adjudication Committee for the contract which ended on 30 June 2013, was instructed by his immediate supervisor to tell Mr Mathew Duminy, the Respondent’s on-site technician, that the contract had expired and that he should vacate the defendant’s premises. Duminy, however, did not heed this instruction and instead told him that he had spoken to Ms Chaning, the Respondent’s Managing Director, who instructed him not to vacate the premises.
15.4 Mr Lourens testified that his officials and himself accessed the Metval system because they believed that it was purchased and therefore owned by the Applicant. On 10 October 2013 Applicant’s senior management realised that the Respondent and its aforesaid technician was still in the premises. It instructed Mr Lourens to use municipal police when a need
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arises to remove Respondent from municipal premises by force. Indeed the Respondent was kicked out of the municipal premises.
15.5 There was no tacit contract as alleged or at all. The Respondent did not allege and prove, in its summons and evidence in chief any official and their authority with whom Ms Channing, the Managing Director of the Respondent contracted. Ms Channing knew who to deal with in the Applicant’s institution and knew the processes on how to contract with a local government like Applicant. The Respondent had participated in a competitive bidding process for the contract which expired on 30 June 2013.
16. The Respondent, in this matter, is required not only to allege and prove the tacit
contract, but to negate the Applicant’s version set out in sub-paragraphs 15.1 – 15.6 hereabove.
17. In so far as the Respondent failed to negate the Applicant’s version aforesaid, the Court a quo developed the common law on assessment of the two versions by the parties and excluded the requirement which is well established in our law.
18. The Constitutional Court is requested to determine if the High Court correctly developed the common law in that regard; in particular, that the court a quo failed to draw an adverse inference against the Respondent for failing to call Mr Duminy who, on 30 June 2013, was instructed to vacate the municipal premises,
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in view of the evidence of Ms Channing to the contrary that during 30 June 2013 to 10 October 2013 “there had not been any written or oral requests from the defendant for the plaintiff to terminate the services or to vacate the premises.”3
19. The municipal manager of the Applicant made a decision on 15 March 2013 that the initial contract would not be extended beyond 30 June 2013. He did not change that decision nor did he respond to further letters of the Respondent which requested an extension of the contract. Instead, on 30 June 2013 the Respondent was instructed to vacate Applicant’s premises. The municipal manager did not enter into a tacit contract with the Respondent.
20. It was incumbent upon the Respondent to allege and prove that the subordinates of the municipal manager with whom the Respondent said it entered into a tacit contract with, had actual or ostensible authority to overrule the decision of the municipal manager dated 15 March 2013, not to renew the contract beyond 30 June 2013, and to enter into such tacit contract. The Respondent did not even make an attempt to allege in its summons such officials or their authority nor did it prove the allegations during evidence-in-chief.
21. As a result, the court a quo should have granted leave to appeal on the following grounds of appeal:
3 Para.15 of annexure ENM1: judgment on merits of court a quo
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“1. His Lordship erred, in effect, in finding that an organ of state, such as the Municipality, can conclude a tacit contract without any official or person being identified as having represented such organ of state, and having authority to do so. This is particularly the case where no actual or ostensible authority has been established.
2. His Lordship erred in not finding that the onus rest with the Plaintiff to prove that it contracted with officials of the Municipality who had the requisite authority to do so. The Plaintiff failed to prove that the officials it claimed to have concluded a tacit contract with had the necessary authority to contract on behalf of the Defendant. Section 56 and 57 of the Systems Act specifically provides responsibilities to particular officials to contract on behalf of a local authority. Section 59 of the Systems Act provides for delegations to the officials of the Defendant. Absent such delegations, no authority could be imputed upon any official, in particular, the authority to bind the Defendant to a contract.
3. His Lordship erred in finding that the Defendant admitted that the Plaintiff rendered services on behalf of the Defendant between the period 1 July 2013 to 10 October 2013. In this regard, His Lordship misconstrued the Defendant’s admission. The Defendant did not take issue with the amounts claimed, if the Plaintiff proved its claim, and, the fact that its junior staff
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used the software system under the belief that the Defendant had purchased it and owned it.
4. His Lordship erred in finding that the Plaintiff pleaded and proved a tacit contract of a month to month basis from 1 July 2013 to 10 October 2013;
the Plaintiff failed to allege the full particulars of the officials of the Defendant and their conduct which proved unequivocally, the conclusion of a tacit contract.
5. His Lordship erred in not finding that the Plaintiff failed to prove in its evidence in chief the full particulars of the officials and conduct which proved a tacit contract for the applicable period. The Plaintiff mentioned names of certain officials from the finance department only under cross- examination, having failed to mention them in its pleadings and evidence.
6. His Lordship erred in not finding that the conduct of the Defendant’s junior officials including a senior official, a municipal valuer, in accessing the Metval system proved that the parties were not ad idem as to the use of the said software system, the Defendant’s officials being of the view that the system belonged to the Municipality, whereas, the Plaintiff believed that it was rendering a service.
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7. His Lordship erred in not according Christopher Lourens the status of a senior official, he being the municipal valuer for the entire Municipality. In this regard, his Lordship erred in finding that he would not know the existence of a contract concluded with other officials of the Defendant, if any, whilst it affected his department, the valuations department. He testified that he sat in the Bid Adjudication Committee which authorised the Plaintiff’s appointment in the initial three year contract and was given instructions by the Municipal Manager to inform the plaintiff to leave the premises as the contract had ended.
8. His Lordship erred in failing to find that there was no need to call the evidence of Andile Fani in view of the Plaintiff’s unequivocal admission of his letter dated 15 March 2013 in which he specifically limited a further extension of the initial contract to 30 June 2013 and no further. In this regard, His Lordship erred in attaching less weight to that administrative action, which was never challenged in a court of law by the Plaintiff.
9. His Lordship erred in drawing an adverse inference against the Defendant in not calling Andile Fani who was not party to the tacit contract nor was it alleged and proved that he conducted himself such that a tacit contract could be proved from his conduct.
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10. His Lordship erred in not drawing an adverse inference against the Plaintiff when it failed to call Mr Duminy who was instructed by the Defendant’s municipal valuer, to vacate the premises on 30 June 2013 as the contract had ended. Mr Duminy was later removed by force on 10 October 2013 when it was realised by senior management that he had not heeded the instructions to vacate. The Defendant’s evidence regarding Mr Duminy was uncontested.
11. His Lordship erred in not finding that failure to answer correspondence in the light of the letter dated 15 March 2013 by Andile Fani and an instruction that the Plaintiff vacates Defendant’s premises clearly indicated that there was no intention to create any obligations by way of a tacit contract.
12. His Lordship erred in finding that the Defendant’s special plea of prescription constituted a procedural irregularity.
13. His Lordship erred in not finding that on 15 March 2013 the Plaintiff was made aware by the Defendant that the contract would expire on the 30th June 2013. Furthermore, the Plaintiff’s representative was requested to vacate the premises as the Defendant claimed that the contract had
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expired. Furthermore, on the 10th October 2013 the Plaintiff’s representative was forcefully removed from Defendant’s premises as the Defendant claimed that the contract had expired. Therefore, the Plaintiff had the necessary facts to ground a claim for unjust enrichment.
Consequently, the claim for unjust enrichment arose (as at the latest) on 10 October 2013, and should have been pleaded as an alternative claim to the claim for specific performance of the contract. In the premises, His Lordship should have upheld the special plea of prescription.
13. In the circumstances His Lordship should have dismissed the Plaintiff’s claim.”
22. It is submitted that common sense dictates that the Applicant would never have instructed Respondent to vacate the Applicant’s premises on 30 June 2013 and kicked Respondent out of its premises on 10 October 2013, if there was a tacit contract between the parties which had been concluded on 1 July 2013. It is trite that for a tacit contract to be established it must be clear that there was consent by both parties to enter into such tacit contract.4
23. There are different viewpoints on the onus which the Plaintiff bears to allege and prove a tacit contract. These views should at once be resolved by the above Honourable Court as the apex court. The first view has been relied upon by the
4 Malamed and another v Cleveland Estate Malamed and Another v Vorner Investments (Pty) LTd 1984 (3) SA 155 (A)
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court a quo. It stated that “it is trite that the party alleging a tacit agreement must allege and prove the unequivocal conduct and circumstances from which the tacit contract is to be deduced.” In this regard, it relied on a formulation made by the Appellate division in Standard Bank of South Africa Ltd and another v Ocean Commodities Inc and Others5.
24. However, in Malamed matter, the Appellate division stated that “By analogy it could be said that a tacit contract should not be inferred unless there was proved unequivocal conduct capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged.”
25. In the decision relied upon by the court a quo, the Appellate division went further than it has been stated, it said that “it must be proved that there was in fact consensus ad idem”6. Later, in the matter of Butters v Mncora7, the minority judgment set out the test for proof of a tacit agreement as follows in paragraph [34]:
“This appeal is about an alleged tacit agreement. As in all such cases, the court searches the evidence for manifestation of conduct by the parties that are unequivocally consistent with consensus on the issue that is the crux of the agreement and, per contram, any indication which cannot be reconciled with it. At the end of the exercise, if the party placing reliance on such agreement is to succeed, the court must be satisfied, on the conspectus of all evidence that it is
5 1983 (1) SA 276 (A) at 292 A-C
6 Standard Bank case, p 292 B-C
7 2012 (4) SA 1 (SCA)
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more probable than not that the parties were in agreement, and that a contract between them came into being in consequence of their agreement. Despite the different formulations of the onus that exist.”
Prescription
26. The court a quo criticised the Applicant for raising a special plea of prescription after the filing of the replication in which the claim for unjust enrichment appeared for the first time.
27. This criticism is unfair. The Respondent failed to amend its summons in order to establish its claim for unjust enrichment as an alternative claim. It is without doubt well known that all claims by a Plaintiff should be made in the summons. It is grossly irregular and unheard of that the Plaintiff should establish its claim in a replication.
28. The Applicant made a choice to adjust its pleadings by filing a special plea to the claim for unjust enrichment. The court a quo did not criticise the Respondent for this strange claim. It should not have been allowed by the court a quo.
29. In its original summons, the Respondent claimed an alternative claim for damages for alleged breach, in addition to the enforcement of its purported tacit contract. On 10 October 2013 the Respondent was kicked out of the Applicant’s
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premises by force. On that date, the Respondent had the minimum facts required for it to allege and prove a claim for unjust enrichment.8
30. The court a quo set a standard for the establishment of a special plea for prescription different from the one set by the above Honourable Court in Links v MEC for Health9, the CC did not require that “a debt only becomes due when the creditor acquires a complete cause of action and has knowledge of all the facts which it requires to plead its case and to succeed with its claim.” 10
31. The CC found that “in a claim for delictual liability based on the Aquilian action, negligence and causation are essential elements of the cause of action…Until the Applicant had knowledge of facts that would have led him to think that possibly there had been negligence and that this had caused his disability, he lacked knowledge of the necessary facts contemplated in section 12 (3)”.
32. On 29 November 2013 the Respondent issued a letter of demand in which its attorneys stated that “BCMM has informed our client that its view was that the licence agreement was valid until 30 June 2013. The letter of demand is attached to the summons as annexure “C” A copy is attached hereto marked “ENM6”. In the letter of demand it claimed R832 638.45. This capital sum was amended on 22 January 2016 and reduced to a sum of R395 021.57. The alternative claim for damages based on repudiation of contract was deleted in such amendment.
8 Minister of Finance and Others v Gore No 2007 (1) SA 111 (SCA)
9 CCT 29/15
10 Para. 26 page 12 of the judgment of the court a quo on merits
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33. In the premises, the Respondent had all the facts to allege and prove unjust enrichment on 10 October 2013 or at the latest when it drafted the letter of demand on 29 November 2013. It should have claimed unjust enrichment like all other litigants as an alternative claim to the claim for specific performance. The Applicant denied existence of the tacit contract as alleged or at all. A copy of the plea is attached hereto together with the copy of the summons marked “ENM7a and b” respectively.
34. With the greatest respect, Justice Smith erred and misdirected himself on prescription when he entertained an excuse by the Respondent that it waited for more than three years for the court a quo to mero motu raise the issue of illegality of the contract. There could never have been any such future approach by the court to raise that issue mero motu.
35. It is submitted that the claim for unjust enrichment prescribed on 10 October 2016 or at the very least on 29 November 2016, being three years from date the letter of demand was issued.
36. In the circumstances, His Lordship Justice Smith and the SCA should have granted leave to appeal against the whole of Justice Smith’s judgment and order.
37. May it please the above Honourable Court to grant leave to appeal to the Constitutional Court of South Africa, with costs to be costs in the appeal.
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ELIAS NKOSIVUMILE MAKHANYA
I certify that the Deponent has acknowledged that he knows and understands the contents of this Affidavit which was signed and sworn to before me at EAST LONDON on this 3th day of April 2018, and that all the provisions of the Regulations contained in Government Gazette Notice No R1258 of 21 July 1972, as amended by Government Gazette No 1648 of 19 August 1977 and No R1428 of 11 July 1980 have been complied with.
________________________
COMMISSIONER OF OATHS
