Department of Public Works v Mvela Phanda Construction (Pty) Ltd and Others (58654/2012) [2017] ZAGPPHC 1102 (20 October 2017)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 58654/2012

20/10/2017

In the matter between:

DEPARTMENT OF PUBLIC WORKS

PLAINTIFF

and

MVELA PHANDA CONSTRUCTION (PTY) LTD

FIRST DEFENDANT

NCHUAPE SOLOMON MALEBYE

SECOND DEFENDANT

MPELO CONSTRUCTION CC

THIRD DEFENDANT

TEBOGO ORIGINEOUS MOLOISANE

FOURTH DEFENDANT

JUDGMENT IN THE APPLICATION FOR ABSOLUTION FROM THE INSTANCE AT THE CLOSE OF THE CASE FOR THE PLAINTIFF

PETERSEN AJ:

[1] This is an application for absolution from the instance by the first and second defendants' at the close of the case for the plaintiff. No specific relief has been sought against the third and fourth defendants' in this matter.

[2] The test for absolution from the instance at the close of the case for a plaintiff is trite. In Gordon Lloyd Page and Associates v Riveira 2001 (1) SA 88 (SCA) at paragraph 2, Harms JA restated the test set out in Claude Neon Lights (SA) Pty Ltd v Daniel 1976 (4) SA 403 (SA) at 409 G-H as follows: "...when absolution from the instance is sought at the close of the plaintiff's case, the test to be applied is not whether the evidence led by the plaintiff establishes what would finally be required to be established, but

whether there is evidence upon which a court, applying its mind reasonably to such evidence, could or might (not should, nor ought

to) find for the plaintfif. (Gascoyne v Paul and Hunter, 1917 T.P. D. 170 at p.173, Ruta Flour Mills (Pty) Ltd v Adelson(2), 1958 (4) SA 307 (T))"

This implies that a plaintiff has to make out a prima facie case - in the sense that there is evidence relating to all the elements of the claim (my emphasis) - to survive absolution because without such evidence no court could find for the plaintiff (Marine &Trade Insurance Co Ltd v Van der Schyff 1972 (1) SA 26 (A) 37G-38A; Schmidt Bewysreg 4t h ed. 91-92). As far as inferences from the evidence are concerned, the inference relied upon by the plaintiff must be a reasonable one, not the only reasonable one (Schmidt 93) ...

The Court ought not to be concerned with what someone else might think; it should rather be concerned with its own judgment and not that of another "reasonable" person or court. Having said this, absolution at the end of the plaintiff s case, in

the ordinary course of events, will nevertheless be granted sparingly but when the occasion arises a court should order it in the interests of justice..."

[3] The plaintiff has advanced four main claims, with alternatives thereto. Claims A, B, C and the alternatives thereto relate to the first defendant and are essentially based on the condictio indebiti. Claim D relates to the second defendant and is based on his contract of employment with the plaintiff with an alternative claim in delict. Having regard to the nature of the claims it is emphasized that the claims have nothing to do with corruption or fraud. The focus of this judgment will therefore be predicated solely on the pleaded claims.

[4] A brief background of historical events giving rise to the litigation in this matter is opportune. When South Africa won the right to host the 2010 Soccer World Cup a plethora of contracts, pursuant to successful tenders, were awarded to upgrade infrastructure in anticipation of the influx of visitors from across the globe. The Skilpadshek Border Post at the South Africa-Botswana port of entry formed part of the infrastructure upgrades. The first defendant was awarded two tenders relevant to the Skilpadshek Border Post; the first contract involved the upgrading of the border post itself and the second contract the upgrading of accommodation or housing for the staff - the Skilpadhek Border Post Residential Contract. The present

matter relates to the second contract. When construction pursuant to the second contract commenced it was discovered that underground

tunnels caused by previous mining in the area, rendered any construction work impossible.

[5] The result was that the contract had to be cancelled and the payment of a cancellation fee had to be determined. The calculation of the cancellation fee was regulated by a standard Joint Buildings Contracts Committee (JBCC) contract entered into between the plaintiff and first defendant. Clause 39.2 of the JBCC contract regulates the calculation of the cancellation fee and provides as follows:

"39.2 The employer shall be entitled at any time to unilaterally terminate or cancel this agreement or any part thereof. Save for the following the contractor shall not be entitled to claim any other amounts whatsoever in respect of such termination or cancellation of this agreement. The employer shall be obliged to pay the contractor as damages and/or loss of profit the lesser of:

39.2.1 An amount not exceeding ten per cent (10%) of the contract sum;

39.2.2 Ten percent (10%) of the value of incomplete work;

39.2.3 The contractor's actual damage or loss as determined by the employer after receipt of evidence substantiating any such damage or loss."

The cancellation fee which was calculated in terms of clause 39.2.1 rather than 39.2.3 is at the centre of the dispute.

[6] CLAIM A: The plaintiff paid the first defendant an amount of R33 726 705-90 on or about 13 October 2009, in the bona fide and reasonable, but mistaken belief that it was owing to the first defendant.

[7] The plaintiff alleges that the amount paid as a cancellation fee was not owing as the first defendant had not furnished the plaintiff with evidence substantiating any damage or loss it might have suffered as

a result of the plaintiff's cancellation of the agreement as required in terms of clause 39.2.3 of the JBCC contract.

[8] CLAIMS BAND C: The plaintiff has made two concessions in relation to claims B and Cat the close of its case:

"In relation to claim 8 , the plaintiff accepts that the first defendant submitted its valuation of work done to the project quantity surveyor on 1O February 2009. The plaintiff concedes that this puts an end to claim 8. In relation to claim C, the plaintiff accepts Mr Potgieter's concession that the amounts claimed for insurance and security were, as per the bill of quantities, based

on price, not cost. The plaintiff concedes that this puts an end to claim C."

[9] I accept that these concessions are well-founded and do not propose to deal with the merits of the said claims, except insofar as it may be relevant to the question of costs.

[10] CLAIM D: The claim is based on the second defendants' contract of employment with the plaintiff, for the duration of his occupation of the position of Acting Director­ General of the plaintiff. In general it is averred that that he was required to observe the utmost good faith towards the plaintiff and to refrain from doing anything that might prejudice or detract from the rights, assets or interests of the plaintiff, and that he was bound to observe all legislative provisions applicable to the position of Director-General, including the provisions of the Public Finance Management Act (the PFMA), with specific reference to subsections 38 to 42.

[11] In specific it is alleged that the second defendant as at 12 October 2009 knew, or ought reasonably to have known, that the cancellation fee was not owing, as the first defendant had not furnished the plaintiff with evidence substantiating any damage or loss it might have suffered as a result of the plaintiff's cancellation of the agreement as required by clause 39.2.3. That by approving the payment of the cancellation fee by the plaintiff to the first defendant, the

second defendant acted wrongfully and intentionally or negligently by contravening section 38 of the PFMA, committing an act of financial misconduct and/or permitting unauthorized, irregular, fruitless and wasteful expenditure. That the second defendant's approval of the payment to the first defendant constituted a contravention of section 38 of the PFMA and a breach of Treasury Regulations 12.2.1(e) and 12.2.2 (National Treasury Regulations (March 2005)), read with section 76(1)(h) of the PFMA, in breach. of his employment contract with the plaintiff.

[12] The plaintiff alleges that the second defendant is liable either in contract or in delict whether jointly or severally with the first defendant, to make payment to the plaintiff the sum of R33 726 705-90.

[13] The evidence of the plaintiff is premised predominantly on an investigation by the Special Investigative Unit (SIU) and rests primarily on the evidence of three witnesses, Mr Marinus Giani, Ms Carin de Bruin and Mr Frans Johannes Potgieter. Mr Giani and Ms de Bruin's investigation and observations are premised, amongst others, on documents obtained from TransUnion ITC and bank statements and invoices of the first, third and fourth defendants' respectively. Mr Potgieter's evidence is premised on his involvement, amongst others, in the issue of the determination of the cancellation fee. Ms de Bruin is the author of the SIU Interim Report.

[14] Mr Giani describes himself as a fraud investigator/forensic investigator. He was seconded to the SIU from October 2010 to March 2012. The scope of his investigation in a nutshell was "to profile the individuals that took part in the meeting that was held on 5 October 2009 to determine whether there was any undisclosed interest." He was instructed not to contact any of the said individuals during the course of his investigation. In compliance with his specific mandate he relied, amongst others, on the database of TransUnion ITC to compile a diagrammatic representation of links between the aforementioned individuals, so called spider diagrams.

[15] The information obtained by Mr Giani from TransUnion ITC is readily available to the public. Mr Giani, at no stage portrayed himself as an expert witness and readily conceded that he could not testify to any statement of fact made at paragraphs 3, 4, 5, 6, 7, and the first portion of paragraph 8 of his statement. At most his evidence begins and ends with his spider diagrams portraying links of identified targets.

[16] Ms de Bruin, who was likewise seconded to the SIU, is the author of the Interim Report of the SIU, a forensic accounting report, which forms the basis of the claims in this matter. Ms de Bruin as with Mr Giani

was instructed not to consult with any of the individuals who attended the meeting of 5 October 2009. Ms de Bruin had regard, amongst others, to the report of Mr Giani, and invoices and bank statements of the first, third and fourth defendants in drawing

inferences from payments made between links identified by Mr Giani.

[17] The plaintiff submits that whilst no direct evidence has been presented on the meeting held on 5 October 2009, it can be inferred from a letter written by Mr Brink, dated 08 October 2009, that the meeting

took place on 5 October 2009, and that "the plaintiff was represented at the meeting by the second defendant, Mr Molotsi, Mr Mekwa and Mr Mabuso; the first defendant by Mr Gerolemou, Mr Aziz-Joosub and Mr Cave; with Mr Brink representing the quantity

surveyors." The plaintiff submits that a witness would have to be called to explain why the second defendant has pleaded that the meeting took place at the end of September 2009. A careful reading of the evidence, however, demonstrates that it is not disputed that the meeting took place on 05 October 2009.

[18] The following emanates from the evidence of Mr Giani and Ms De Bruin. Their mandate was nothing more than establishing any corruption or fraud involved in the payment of the cancellation fee. The second defendant was the sole member of a close corporation, known as Malebye Business, since 22 November 2001. Merli Motors, a filling

station, falls under the Malebye Business umbrella. The second and fourth defendants became members of a business known as Ratsuapa

Enterprises on 04 November 2009. Ratsuapa Enterprises has been in existence since 6 May 2004. They have supplied the same address and contact numbers for purposes of CIPC registrations at different time periods. Mrs Patience Boitshoko Malebye is the second defendant's wife and a member of Ratsuapa enterprises. Mrs Malebye and the fourth defendant are both members of a business known as Baswiedi Cleaners CC since 17 February 2009. The fourth defendant is the sole member of Mpelo Property Investments CC, the third defendant. Mpelo Property Investments was paid an amount of R217 000 per month by the plaintiff for the rental of a property at 17 Herbert Baker Street, Groenkloof, which was initially owned by P Gerolemou Construction (Pty) Ltd. The property was later sold to Mr Panayiotis Andreou Gerolemou, a director of the first defendant, who in turn sold it to Flouspec Investments (Pty) Ltd. Mr Gerolemou was present at the meeting of the 05 October 2009. Several commercial transactions have been conducted between the first defendant to the third defendant and the third defendant to Malebye Business and Ratsuapa respectively. The first defendant paid the third defendant R12 357 201.41 as a subcontractor on the Skilpadhek Border Post Residential Contract.

[19] Mr Potgieter, a Quantity Surveyor by profession in the employ of the plaintiff since 2003, confirmed that the contract giving rise to the eventual cancellation fee, had to be cancelled to avoid "fruitless

expenditure". This fact was common knowledge to all the officials of the plaintiff assigned in the financial delegations as

set out in Exhibit "B" and the project management delegations assigned at the time. He was not present at the meeting

of 05 October 2009 where the decision was reached determining the calculation to be utilised in determining the cancellation fee.

[20] The plaintiff, following a postponement of the matter to March 2017, elected not to call any of the available witnesses who were present at the meeting of 5 October 2009 with the second defendant. The credibility of the plaintiffs witnesses is not at issue. The court has been enjoined by the plaintiff to draw inferences from the evidence presented. My task is limited to exercising a judicial discretion on the evidence presented by the plaintiff in satisfying myself whether or not the plaintiff has made out, at the very least, a prima facie case on the elements of the claims.

[21] The onus in a claim based on the condictio indebite is trite. In Recsey v Reiche 1927 AD 554 at 556, the court held that the onus in an action based on the condictio indebite "lies throughout the whole case" on the plaintiff. The plaintiff bears the onus of proving every element of the claim and included in this is the excusability of the error. In Mabaso v Felix 1981 (3) SA 865 (A) at 872H, the court stated that "considerations of policy, practice and fairness inter partes largely determine the incidence of the onus of proof in civil cases, and I can conceive of nothing unfair in and of no consideration of policy or practice militating against, expecting of a plaintiff who alleges that he paid an amount of money in mistake of law, to prove sufficient facts to justify a finding that his error is excusable." It is only once a payment in debite has been proved, that the defendant has the onus of proving that he was not enriched by the payment.

[22] "No person" is to be enriched at the expense of another; that is the

thrust of a claim for unjustified enrichment - Grotius 3.30.1.3. In ABSA Bank v Leech 2001 (4) SA 132 (SCA) para 18, the court reiterated that the payment had to be made in error when in fact it was not owing. Beck's Theory and Principles of Pleading in Civil Actions, page 256, sets out the general requirements of the condictio indebite as follows:

"1. the defendant must be enriched;

2. the plaintiff must be impoverished;

3. the defendant's enrichment must be at the expense of the plaintiff; and

4. the enrichment must be ....cause (sine causa) i.e. unjustified."

[23] In Iscor Pension Fund v Jerling 1978 (3) SA 858 (T) at 861 E, the court in expounding on the elements of unjustified enrichment found that the mistaken belief must have been reasonable; and in Willis Faber v Enthoven v Receiver of Revenue [1991] ZASCA 163; 1992 (4) SA 202 (A) at 220i the court found that there must have been no legal natural or moral obligation to have made the payment.

[21] The plaintiff has adduced no objective facts of the meeting held on 05 October 2009 and its case is purely circumstantial premised on the links drawn by Mr Giani and Ms du Toit. What happened within the confines of the four walls of the meeting room remains shrouded in a veil of silence at the end of the plaintiff's case. No inferences can

be drawn where no objective facts exist. The corollary is that no objective fact can be drawn from an inference. In Feedpro Animal Nutrition (Pty) Ltd v Nienaber NO and Another (20866/2014) [2016] ZASCA 32 (23 March 2016), the following was said in the context of a stated case:

"[9] ... While a court may in a stated case, in terms of rule 33(3) of the Uniform rules, draw any inference of fact from the agreed facts as if proved at trial, the Rule presupposes that the agreed facts are adequately stated for determination of the issues in question. Where, as in this case, the agreed facts are discordant, ambivalent, and inadequately stated for purposes of deciding whether the Trust's counterclaim has prescribed, the process of inferential reasoning has no place.

[10] That said, what Feedpro seeks is for the court to embark upon a process of assuming certain core facts which are absent from the agreed facts...It is clear, therefore, that a stated case must be decided upon the agreed facts and any inferences of fact that may be drawn from them. In other words, it would be impermissible for a court, which is adjudicating a dispute on a statement of agreed facts, to have regard to, or assume facts, which fall outside the scope and ambit of the agreed facts..."

[22] The inferences the plaintiff seeks this court to draw are inferences premised on the mandate of Mr Giani and Ms du Toit to determine any corruption or fraud related to payment of the cancellation fee. The evidence of Mr Giani and Ms du Toit is so called after the fact evidence providing no insights into the meeting of 05 October 2009.

[23] The plaintiff further seeks to rely on the pleas of the defendants. The pleas of the defendants do not avail the plaintiff who bears the onus of proving that the payment was made in debite before the defendants' may be called upon to explain why they have not been enriched. There are no objective facts showing that the officials involved in the determination of the calculation were mistaken in their belief that the payment was due or that no legal obligation existed to justify the payment. The evidence falls shy of proving any of the elements of the condictio indebiti.

[24] Turning to the question of the second defendants' contract of employment. The evidence the plaintiff seeks the court to rely on in finding that the second defendant breached his contractual obligations with the plaintiff is essentially the same evidence dealt with above. The claim is thus inextricably linked to whatever transpired at the meeting of 05 October 2009 and in the absence of such evidence the only objective facts before this court is contained in the financial

delegations showing that second defendant had raised concerns about the "fruitless expenditure". I have had careful regard to the detailed submissions from counsel for the second defendant and counsel for the plaintiff on the contractual obligations of the second defendant in relation to the PFMA and the relevant regulations relied upon by the plaintiff. I do not propose to traverse those submissions in this judgment for the simple reason that there are no objective facts at the end of the plaintiffs case from which inferences can be drawn on these averments. Whilst the links established by Mr Giani after the fact may raise some eyebrows, the plaintiff is constrained to proving the elements of the claims it seeks to prove. There is no obligation on the second defendant to assist the plaintiff in proving its

case.

[25] Upon a careful preponderance of the totality of the plaintiffs evidenceat the close of its case, I am of the view that the plaintiffs case as it stands fails to prove the elements of the claims proffered against

the first and second defendants'. The evidence as its stands does not call for an answer by the defendants.

COSTS

[26] The first and second defendants seek a cost order on the scale as between attorney and client, to include the costs of counsel.

The first defendant in particular places reliance on In re Alluvial Creek Ltd 1929 CPD 532 at 535 where the court said:

"An order is asked that he pay the costs between attorney and client. Now sometimes such an order is given because of something in the conduct of a party which the Court considers should be punished, malice, misleading the Court and things like that, but I

think the order may be granted without any reflection upon the party where the proceedings are vexatious, although the intent may not have been that they should be vexatious. There are people who enter into litigation with the most upright purpose and a most firm belief in the justice of their cause, and yet whose proceedings may be regarded as vexatious when they put the other side to unnecessary trouble and expense which the other side ought not to bear. "

[27] The first defendant submits that the plaintiff had no genuine desire to prosecute the claims but appeared intent on leading evidence of a basket of greed and corruption.

[28] The second defendant seeks a punitive cost order on the submission that the plaintiff has made an unwarranted and unpleasant attack on the second defendant and proceeded from vexatious, reckless and malicious motives. The court is further urged to consider that the second defendant has defended the action with his own funds.

[29] I am not persuaded .that the plaintiff entered into litigation with vexatious or malicious motives or with no genuine desire to prosecute its claims. I am not convinced that the public purse would be utilized to embark upon fruitless litigation. However, considering the fact that the evidence presented up to close of the plaintiffs case which has fallen short of a prima facie case; and the fact that the defendants' have been put out of pocket on that basket of evidence, fairness dictates that same be remedied with an appropriate cost order. In respect of Claims B and C on which concessions were made at the close of the plaintiffs case, there is no basis on which costs should not follow the result.

[30] In the result:

1. Absolution from the instance is granted on Claims A, B , C and D and the alternatives thereto with costs on an attorney-client scale.

2. Costs are to include the costs of two Counsel in respect of the first and second defendants'.

AH PETERSEN

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

Appearances:

On behalf of the Plaintiff: Adv. D Berger with him Adv. A. Laher

Instructed by: Haffegee Roskam Savage Attorneys

On behalf of the First Defendant: Adv. Mcaslin with him Adv Z. Gumede

Instructed by: Frese Moll and Partners

On behalf of the Second Defendant: Adv. D. Van Zyl with him Adv. M Phukubje

Instructed by: Markram Incorporated Attorneys

DATE OF JUDGMENT: 20 October 2017