Maziya General Services CC v Minister of Public Works N.O and Another (Appeal) (CA 240/2022) [2024] ZAECMKHC 42 (6 February 2024)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION - MAKHANDA

Case No: CA 240/2022

In the matter between:

MAZIYA GENERAL SERVICES CC

Appellant

(Registration Number: 1999/014056/23)

and

THE MINISTER OF PUBLIC WORKS N.O.

First Respondent

TSHIYA INFRASTRUCTURE DEVELOPMENT (PTY) LTD Second Respondent

(Registration Number: 2013/060335/07)

APPEAL JUDGMENT

Makaula J:

A. Introduction:

[1] This is an appeal against an exception granted in favour of the first respondent (the first defendant) in the court a quo.

B. Background facts:

[2] The appellant (the plaintiff) and the second respondent (the second defendant), as a joint venture, entered into a written contract with the first defendant for the repair, renovation, and building of new accommodation at the Queenstown Police Station. The contract was to endure for a period of 36 months. The contract amount was R96 389 663.85 (Ninety-six million, three hundred and eighty-nine thousand six hundred and sixty-three rand and eighty-five cents). The joint venture commenced with the work on 19 February 2019.

[3] On 6 March 2020, the first defendant repudiated the contract based on non-performance by the joint venture. The repudiation of the contract was accepted by the plaintiff which owned 60% of the stake in the joint venture. The second defendant which obviously owned 40% remained supine. Having accepted repudiation, the plaintiff terminated the contract and elected to sue for damages in the amount of R11 958 171.72 (Eleven-million, nine hundred and fifty-eight thousand, one hundred and seventy-one rand and seventy-two cents) being 60% of the damages owed to it in terms of the joint venture.

[4] The claim was directed against the first defendant in terms of the contract. The plaintiff joined the second defendant as a party to the extent that it may have an interest and may be bound by any relief that could be granted against the first defendant. No relief was sought against the second defendant. The first defendant excepted to the summons on the grounds that it is vague and embarrassing alternatively, it failed to disclose a cause of action.

[5] The crux of the exceptions is firstly, that the first defendant argued that the plaintiff failed to plead any premise in fact or law upon which it, acting unilaterally (i.e. without the second defendant) could legitimately dispute the notice of cancellation issued by the first defendant and also elect to accept such repudiation. Secondly, the first defendant alleged that the plaintiff’s failure to allege a basis in fact or law upon which it could unilaterally enforce rights accruing to the plaintiff and the second defendant under the contract to which they were contracting parties as a joint venture rendered the particulars of claim to be contradictory, vague and embarrassing. Thirdly, the first defendant averred that absent any basis in fact and law upon which the plaintiff could unilaterally act on behalf of the second defendant as a party to the joint venture, and bind it and/or exercise and/or usurp its contractual rights of the joint venture for its own benefit, or absent any allegations upon which the plaintiff could pursue damages for its own account against the first defendant arising out of a contract to which the second defendant was a party with the plaintiff, the particulars of claim fail to disclose a cause

of action. Based on these grounds, the first defendant argued before the court a quo that the particulars of claim are excipiable.

[6] The court a quo, having dealt with the submissions by the parties, held that “by failing to plead the basis upon which the plaintiff can enforce rights stemming from a contract entered into between it, and the second defendant, on the one hand, being a joint venture, and the first defendant on the other, renders the plaintiff’s particulars of claim vague and embarrassing”.

C. Grounds of Appeal:

[7] The contention by the appellant is that the court a quo erred in its findings that the plaintiff failed to plead sufficient facts on the basis upon which the joint venture was formed and carried out its function. The contention by the plaintiff was that it pleaded the facts that gave rise to the joint venture; the 60% - 40% distribution ratio of the revenue; the conclusion of the contract between the joint venture and the first defendant; the facts leading to the cancellation of the contract and the acceptance of the repudiation by the plaintiff; and the split of the damages in terms of the joint venture agreement with the plaintiff claiming 60% of his pro tanto share in the joint venture agreement.

[8] The further contention by the plaintiff was that the court a quo should have found that the plaintiff’s particulars of claim sufficiently set out the allegations to which the first defendant was required to plead, setting out all the facts pertaining to the plaintiff’s locus standi to accept the repudiation and to institute legal action for the recovery of damages owed to it flowing from such repudiation.

[9] The plaintiff further premises its appeal on the fact that Rule 18(4) of the Uniform Rules of Court requires only a statement of material facts and not law, contrary to the finding of the court a quo.

[10] The plaintiff submitted that it was entitled to (a) accept the repudiation; (b) cancel the contract; and (c) sue for its equivalent share of damages.

D. First respondent’s argument:

[11] The argument by the first respondent, both orally and on paper before us, is somehow convoluted. It skirts around the argument that the plaintiff did not plead facts or law upon which it could act unilaterally in respect of:

(a) accepting repudiation of the contract.

(b) cancellation of the contract.

(c) it’s notice to the first defendant of the intention to institute legal proceedings, despite the fact that the contract was between the joint venture and the first defendant.

[12] Furthermore, the first defendant relies on clauses 7.1 and 2 of the joint venture agreement in arguing that neither the plaintiff nor the “Project Leader” of the joint venture had the authority to act unilaterally to cancel the contract.

E. Analysis:

[13] Clause 7.1 reads in part:

“. . . no party shall have the authority to bind or to make any commitment on behalf of the Joint Venture or any other party unless

such authority is expressed in writing by the parties jointly with regard to the Joint Venture or by a party individually with regard to that party”.

[14] Clause 7.1 talks to a party purportedly acting on behalf of the joint venture. This clause is specific and needs no further elucidation in that it precludes any party from binding or making a commitment “on behalf of the Joint Venture”. The plaintiff did not act on behalf of the joint venture but on itself as a member hence the joint venture is not a party to the action. The particulars of claim do not refer to the joint venture but to the two members of the joint venture. Therefore Clause 7.1 is not applicable.

[15] The relevant portion of Clause 7.2 relied upon by the first defendant is Clause 7.2.2 which requires the unanimous consent of the parties to the joint venture when dealing with the “process and terms and conditions of payment as applicable to the venture generally and to the parties individually”; unless the joint venture agreement had been terminated.

[16] The first defendant had repudiated the contract, the effect of which was that the contract had been cancelled. The joint venture agreement clearly stipulates in clause 3 that it was entered into for the duration of the project. This clause provides that the joint venture agreement shall be terminated upon, amongst others, any of the following: If the client makes material modification or alteration to the Project and the parties agree in writing to withdraw from the Project. By implication repudiation equates termination of the contract. Therefore, nothing precludes the plaintiff from pursuing its rights to sue for its pro rata share of the damages (if any).

[17] Rule 18(4) of the Uniform Rules of Court provides that every pleading shall contain a clear and concise statement of material facts upon which a pleader relies for his claim with sufficient particularity to enable his opponent to reply thereto. In order

to succeed, the plaintiff had to plead facts or details of the relief it sought so that the first defendant knew what order the court a quo was asked to make against it. It is a fundamental judicial process that the plaintiff establishes the facts relied upon and the court a quo had, on those facts, to apply the rules of law and draw conclusions as regards the rights and obligations of the parties[1]. In essence, the plaintiff, in terms of Rule 18(4) was not required to plead any basis in law other than facts upon which the court a quo could apply the rules of law.

[18] It is a basic principle that a pleading should be phrased such that the other party may reasonably and fairly be required to plead thereto. Pleadings must be lucid and logical and in an intelligible form; the cause of action must appear clearly from the factual allegations made[2].

[19] The first complaint, as expounded above by the first defendant is that the plaintiff failed to plead a basis in fact or law upon which it could act unilaterally in accepting repudiating, cancelling the contract, or suing for damages. Following Rule 18(4), I am not in agreement with the complaint raised by the first defendant. The plaintiff in paragraphs 5 and 6 pleaded the terms of the joint venture agreement. The joint venture was formed for purposes of tendering for the contract. The joint venture was to cease at the end of the contract. The relevant revenue to be realised from the contract was to be split at 60% - 40%, as stated above.

[20] In paragraphs 7 to 10 of the particulars of claim, the plaintiff pleads the terms of the agreement between the joint venture and the first defendant, and nothing turns on those paragraphs. However, in paragraphs 10 to 15A, the plaintiff pleads the facts which deal with the performance of the contract, repudiation by the first defendant on various grounds (culminating in the non-completion of the work by the plaintiff); the acceptance of such repudiation by the plaintiff; the unilateral cancellation of the agreement by the plaintiff; and the ultimate issue of the summons wherein the plaintiff quantified the damages and deducted 40% which is due to the second defendant. The above facts, as pleaded by the plaintiff, are clear and concise. They spell out the basis upon which the plaintiff claims only 60% of the proven damages and not 100% on behalf of the joint venture. Based on these facts, it is open to any legal eye that the claim is based on either joint or joint and several liability of the first defendant to the plaintiff and the second defendant. The joining of the second defendant as a party to the proceedings pre-supposes that the plaintiff was, even though no order was sought against it, aware that the law distinguishes between the liability of parties/creditors, jointly on the one hand and jointly and severally on the other. The distinction is telling when it comes to co-creditors deciding either to sue together or each to go alone, so to speak. It is common cause that, in terms of the lis, the plaintiff and the second defendant must be classified as co-creditors. The claim against the first defendant is for damages

pursuant to the repudiation of the contract and the subsequent cancellation thereof.

[21] Christie[3] quotes with approval the following passage by Marais J in BHT Water Treatment (Pty) Ltd v Leslie[4]:

“It seems to me that the intention of the parties is all important when one decides who may exercise the rights, and in what manner, and whether they can be exercised wholly or in part by one of the creditors, or whether they must be exercised by all the creditors

acting together.”

[22] Clearly, this confirms the view that, in classifying the rights of co-creditors it is essential to first ascertain what the parties intended. The intention of the plaintiff and the second defendant in forming the joint venture is clear in the agreement. It was to tender for this contract only, and thereafter, it stood to be dissolved. The revenue ratio was made specific at 60% - 40%.

[23] The difference between joint liability and joint and several liability of the co-debtor and creditors has been amply dealt with by the learned author in Christie[5] as follows:

“Shortly, co-debtors are said to be jointly liable when each is liable for its share of the one debt; jointly and severally liable when each is liable for the full amount of the same debt, and severally liable when each is liable for a separate debt. Co-creditors are said to be jointly entitled when each can claim its share of the one debt; jointly and severally entitled when anyone but not all can claim full payment of the same debt, and severally entitled when each has a claim for a separate debt. Liability in solidum or solidary liability means liability for the full amount of the debt, as in joint and several or (a rare usage) several but not joint liability”.

[24] The issue of joint and several entitlements of co-creditors also cropped up but was not decided, by Corbett J, as he then was, in Kotsopoulos v Bilardi[6], Corbett J dealt with but did not decide whether suing by one of the co-creditors amounted to a splitting of the debt he dealt with this in the context of whether a cession of a debt to two or more persons jointly and severally may validly be effected without the consent of the debtor. He observed as follows:

“Where a debt is owed to a number of creditors jointly and severally (or in solidum) it is regarded as a single obligation owed to a multiplicity of obligees. The debtor is entitled to choose to which of the co-creditors he wishes to pay the debt and payment to the creditor of his choice discharges the whole obligation as regards all of the creditors (Voet, 45.2.4). On the other hand, any one of the co-creditors may demand and receive payment of the whole debt. Moreover, according to Voet, 45.2.4, where a particular co-creditor has instituted action against the debtor to recover the debt and issue in the suit has been joined, the debtor loses his right of choice and is obliged to make payment to the creditor who has sued him (see also Wessels on Contract, 2nd ed., paras. 1565-7) (other references omitted). This being, in general, the essential character of a debt owed to co-creditors

jointly and severally, there is much to be said for the view that the cession of a debt to two or more persons jointly and severally does not amount to a splitting of the debt and does not impose additional burdens or duties upon the debtor; and that, therefore, it may be validly effected without the consent of the debtor. The only point which arises is whether each co-creditor would be entitled to claim and sue for a pro rata share of the debt only, thus creating a multiplicity of claims and actions. It may well be that in such a case the Court would take the view that, inasmuch as each co-creditor was entitled to claim the whole debt, action to recover a mere pro rata share would amount to an improper splitting of a single claim and would disallow this procedure under its general power to prevent an abuse of the process of the Court. I do not propose, however, to express any final opinion upon these points because this ground of invalidity was not advanced by the excipient’s counsel and consequently no argument thereon was addressed to the Court”. (Emphasis added).

[25] The only issue that was left open by Corbett J, in the Kotsopoulos matter is whether a creditor can claim for his pro rata share against a debtor as in the instant matter. The reservation expressed by Corbett J, of whether an action to recover a pro rata share would not in the exercise of a discretion by any court ceased with the matter, not amount to splitting of a single claim has been correctly dealt with by the learned author Christie[7] with reference to case law, as follows:

“The suggestion is an interesting one, but its validity is respectfully doubted. The court’s power to prevent an abuse of its process by splitting claims is unquestioned when the splitting goes to absurd lengths, but the power to prevent an abuse has certainly not become a rule that claims may in no circumstances be split, and, if there were such a rule, it would seem to conflict with Voet, who appears to contemplate one joint and several creditors suing for its own proportionate share. A joint and several creditor who has a good reason for suing individually for its proportionate share, such as the reluctance of co-creditors to press their claims or their departure from the country and apparent loss of interest in their claims, is not abusing the process of the court and there is no reason why its action should not be allowed to proceed. This conclusion is in accordance with Anglo-African Shipping Co (Rhod) (Pvt) Ltd v Baddeley, where Goldin J, after considering the second passage from Corbett J’s judgment in Kotsopoulos quoted above, nevertheless accepted that a joint and several creditor could sue for its pro rata share. In the case of a joint and several creditor who has acquired its rights by cession from a single creditor, however, the debtor will be able to challenge any enforcement of the claim by the joint and several creditor that has the effect of splitting the claim to the debtor’s prejudice, just as it could have challenged the cession if it had had the same effect. In the result, the law appears to be that a joint and several creditor can sue individually for its proportionate share unless it acquired its rights by cession and would, by so suing, be imposing a burden on the creditor that could not have been imposed but for the cession”.

In Bezuidenhout v Goldberg[8], Innes CJ dealing with the argument on exception based on the ground that a co-owner of the property was not joined as a party to the action reasoned thus:

“(W)here two persons jointly contract and one of them asks that the whole contract should be declared null and void, I think all parties to the contract should, as a general rule, be parties to the action. If PL Bezuidenhout did not desire to join as a co-plaintiff, he could very easily have been made a co-defendant”. (Emphasis added).

[26] Similarly, in this instance, the second defendant remained supine pursuant to the repudiation of the contract by the first defendant. It was within the rights of the plaintiff to join the second defendant. As a party to the proceedings, the second defendant had an opportunity to defend the action if it felt that the plaintiff trampled its rights. However, despite being joined as a party, the second defendant did not contest or defend the action taken by the plaintiff. It is unfortunate that this court is not privy to the reasons why the second defendant showed no interest in participating in the action. Be that as it may, the particulars of claim as they stand cannot be said to be excipiable for being vague and embarrassing.

[27] To me, whether the first defendant is liable to the plaintiff jointly and or jointly and severally, the pleading remains good and thus not excipiable for the reason that the second defendant is before court as a co-creditor, and it was incumbent upon it to defend the action if it would prejudice its rights going forward. The second defendant as an interested party was joined as a party and afforded a suit.

[28] In the circumstances, there is merit in the appeal, and it should be upheld. As a result, the following order shall issue.

1 The appeal is upheld with costs.

2. The order of the court a quo is set aside and replaced with the following:

“The exception is dismissed with costs”.

M MAKAULA

Judge of the High Court

Norman J: I agree.

TV NORMAN

Ellis AJ: I agree.

L ELLIS

Acting Judge of the High Court

Appearance:

Counsel for the Appellant:

Adv J Möller

Circle Chambers

Pretoria

Instructed by:

Van Der Bilt Attorneys

c/o Wheeldon Rushmere & Cole

Makhanda

Counsel for the First Respondent:

Adv JJ Nepgen

Chambers

Gqeberha

Instructed by:

State Attorneys

c/o Whiteside Attorneys

Date Heard:

24 July 2023

Date Delivered:

06 February 2024

[1] Erasmus: Superior Court Practice, Volume 2 D1-232A, Service 8, 2019.

[2] Trope v South African Reserve Bank 1992 (3) SA 208 (T) at 210G-H as cited in Erasmus supra at D1 – 234.

[3] Christie’s Law of Contract, 7th Edition at page 299.

[4] [1993] 3 All SA 126 at 128 ; 1993 (1) SA 47 (W) 51B

[5] ibid at 293.

[6] 1970 (2) SA 391 (C) at 397 D-H.

[7] ibid at page 301.

[8] 1905 TS 127 at 28.