Mendelsohn NO and Others v Vondo and Another (18925/2015) [2016] ZAGPJHC 339 (7 December 2016)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 18925/2015

Reportable: No

Of interest to other judges: No

Revised.

7/12/2016

In the matter between:

JOHN JEREMY MENDELSOHN N.O FIRST PLAINTIFF/ FIRST RESPONDENT

THE DEMOCRATIC ALLIANCE OF

SOUTH AFRICA SECOND PLAINTIFF/ SECOND RESPONDENT

THE CITY OF JOHANNESBURG

METROPOLITAN MUNICIPALITY

THIRD PLAINTIFF/ RULE 30 APPLICANT

and

CHRIS FUZILE VONDO FIRST DEFENDANT

STEPHEN SACK

SECOND DEFENDANT/ EXCIPIENT

and RULE 30 APPLICANT

JUDGEMENT

COLLIS AJ:

INTRODUCTION

[1] This is a Rule 30 application, wherein the Third Plaintiff (‘CoJ’) contends that its citation as a party in the action proceedings was made without its consent and approval and constitutes an irregular proceeding.

[2] The Notice of Motion is quoted hereunder for ease of reference:

“KINDLY TAKE NOTICE that the City of Johannesburg Metropolitan Municipality or Third Plaintiff objects to the First and Second Plaintiff’s summons and particulars of claim that they constitutes an irregular step, and that in relation to the Third Plaintiff, they should be declared or ordered irregular and set aside, for the following:

1. On the face and contents of the summons and particulars of claim, the Third Plaintiff allegedly together with the First and Second Plaintiffs issued summons out of this Court calling upon the Sheriff of this Court to inform the First and Second Defendants that the Plaintiffs institute the action for the relief and on the grounds as set out in the particulars of claim.

2. In paragraph 3 of the particulars of claim it is inter alia alleged that the Third Plaintiff is joined as third defendant by virtue of the interest it has in the proceeds of the claim and an application will be delivered seeking a mandamus against it to compel it to ratify and pursue the claim with the First and Second Plaintiffs.

3. The formulation of these proceedings or in particular the particulars of claim, constitutes an irregularity in alleging and representing that the alleged Third Plaintiff is a party in these proceedings either as a plaintiff or defendant, in that:

3.1 The Third Plaintiff has never resolved to institute these or any other proceedings against the Defendants and as such did not institute the instant proceedings as the alleged Third Plaintiff.

3.2 In alleging that the Third Plaintiff as a party in these proceedings as such, the First and Second Plaintiff have failed to attach a resolution in which the Third Plaintiff may have resolved to institute these proceedings against the Defendants.

3.3 Since there has been no joinder application and an order for the joinder of the Third Plaintiff as such, the Third Plaintiff is not and has never been joined as a party in these proceedings either as co-plaintiff or defendant.

3.4 The application referred to in paragraph 3 of the particulars of claim is not such application for the joinder of the City of Johannesburg Metropolitan Municipality as a third plaintiff or to be made a party either as co-plaintiff or defendant.

WHEREFORE the City of Johannesburg or Third Plaintiff prays that:

(a) The summons and particulars of claim in relation to the Third Plaintiff constitutes an irregular step;

(b) The summons and particulars of claim in relation to the Third Plaintiff are set aside as irregular;

(c) The First and Second Plaintiffs pay the costs of this application;

(d) Granting the Third Plaintiff such further and/or alternative relief.”

BACKGROUND FACTS

[3] During May 2015, the First and Second Plaintiffs instituted two sets of proceedings, namely:

3.1. the application proceedings under case number 20823/2015; and

3.2. the action proceedings under case number 18925/2015.

[4] In the application proceedings under case number 20823/2015 the First and Second Plaintiffs are seeking an order reviewing and setting aside a resolution taken by the CoJ, to regularise and condone the irregular expenditure claimed in the action proceedings. In addition thereto, the First and Second Plaintiffs are seeking a mandamus to direct the CoJ to appoint attorneys to pursue the action proceedings for the recovery of the unauthorised and irregular expenditure claimed from the Defendants.

[5] In the action proceedings, the First and Second Plaintiffs also cited the CoJ as the Third Plaintiff wherein they are seeking an order against the Defendants, inter alia that they be held liable jointly and severally to pay to CoJ, an amount of

R 4 581 459 plus interest.

[6] The citation of the CoJ as per the summons reads as follows:

“The third plaintiff is the City of Johannesburg Metropolitan Municipality (“CoJ”), with its principal place of business at the Metro Centre Building, 158 Civic Boulevard, Braamfontein, Johannesburg. The CoJ is joined as the third plaintiff by virtue of the interest it has in the proceeds of this claim and an application will be delivered seeking a mandamus against the CoJ compelling it to rectify and pursue this claim with the first and second plaintiffs.”

[7] In the action proceedings the cause of action is premised on the statutory liability created by section 32(2) of the Municipal Finance Management Act (‘MFMA’).[1]

[8] The relevant section reads as follows:

“A municipality must recover unauthorised, irregular or fruitless and wasteful expenditure from a person liable for that expenditure unless the expenditure, is-

(a) in the case of unauthorised expenditure, is-

(i) authorised in an adjustments budget; or

(ii) certified by the municipal council, after investigation by a council committee, as irrecoverable and written off by the council; and

(b) in the case of irregular or fruitless and wasteful expenditure, is after investigation by a council committee, certified by the council as irrecoverable and written off by the council.”

[9] The section quoted above imposes an obligation on a municipality to recover unauthorised, irregular or fruitful and wasteful expenditure unless they fall under certain exclusionary categories. The relevant statutory provision is peremptory and does not afford a municipality a discretion to recover such expenditure.

[10] It is common cause that at the time when the summons was issued, the CoJ did not authorise, by way of a resolution, the institution of action proceedings against the Defendants. In fact the CoJ had on or about 30 July 2014, resolved to “condone” the irregularity thereby indicating a lack of willingness to pursue the recovery of the unlawful expenditure. Furthermore, as at 13 June 2016, the First and Second Plaintiffs had withdrawn the action proceedings against the Second Defendant.

WHAT THEN CONSTITUTES IRREGULAR PROCEEDINGS?

[11] Uniform Rule 30 provides as follows:

“(1) A party to a cause in which an irregular step has been taken by any other party may apply to court to set it aside.

(2)…………….……………………………………………………………………………………………………………………………………………………………………

(3) It at the hearing of such application the court is of the opinion that the proceedings or step is irregular or improper, it may set it aside in whole or in part, either as against all the parties or as against some of them, and grant leave to amend or make any such order as it seems meet.

(4)………………………………………………………………………………………………………………………………………………………………………………………………”

[2]

[12] The irregular step contemplated by the sub-rule must be a step which advances the proceedings one stage nearer to completion.[3] The rule applies to irregularities of form and not of matters of substance.[4] In particular, specific defences such as lack of locus standi and prescription are raised by special plea and not by way of application under this rule.[5]

[13] Apparent from the Notice of Motion in the interlocutory to the action proceedings, is that the CoJ as Third Plaintiff, attacks its locus standi in these proceedings as opposed to challenging its citation as a party. The general rule in determining a party’s locus standi was set out in the decision of Cabinet of the Transitional Government for the Territory of South West Africa v Eins 1988 (3) SA 369 (A) at 388B, namely, that a person who claims relief in respect of any matter must establish that he has a direct interest in that matter in order to acquire the necessary locus standi to seek relief.

[14] The First and Second Plaintiffs allege that the Third Plaintiff has a direct interest in the outcome of the action proceedings. It is precisely on this basis read together with the statutory provision of section 32(2) of the MFMA that the First and Second Plaintiffs allege that the Third Plaintiff must be cited in the action proceedings. It bears mentioning that in the event that the claim succeeds, it is the Third Plaintiff who will benefit from any monies recoverable from the First Defendant.

[15] It is so that the general rule in regard to the institution or defence of legal proceedings by or against a municipality, is that such proceedings must be authorised by the council of the municipality. Such authority is usually afforded by means of a resolution of the council or committee possessing delegated authority in that regard.[6] As previously mentioned, no resolution in this regard was taken by council, prior to the institution of the action proceedings.

[16] The question that therefore needs to be considered, is whether the absence of such a resolution constitutes an irregularity as contemplated by Rule 30. If so whether such irregularity causes prejudice to the Third Plaintiff, as contemplated by the Rule. Lastly, if indeed there is prejudice, whether the Court should exercise its discretion in favour of the CoJ having regard to the relevant circumstances.

[17] Counsel appearing on behalf of the CoJ, amongst others, submitted that the First and Second Plaintiffs lacked authority to institute action proceedings on behalf of the CoJ and that such authority can be attacked in terms of Rule 7. I cannot find favour with this submission. In the present instance, the action proceedings were not instituted by the First and Second Plaintiffs against the CoJ, but the CoJ is itself a co-plaintiff together with the First and Second Plaintiffs, albeit by default, being cited as the Third Plaintiff. Secondly, the Third Plaintiff in the present instance has failed to invoke the provisions of Rule 7(1), disputing the authority of the First and / or Second Plaintiff.

[18] Counsel further submitted that because the municipality had resolved not to recover the unauthorised wasteful expenditure, there, as a result existed no competent claim and as such this goes to the root of the present application. Again, I cannot agree with this argument advanced by counsel. A determination as to whether the remaining Defendant is to be held liable for the expenditure that was incurred is a question which can only be resolved when the matter is properly ventilated before a trial court, after consideration of the entire evidence presented to its. It is not a determination which can simply be made on papers, most certainly not by means of interlocutory proceedings such as the present.

[19] Counsel also argued that the issue and question for determination by this Court is whether the Third Plaintiff has been joined in these proceedings as alleged by the First and Second Plaintiffs. In my view, the provisions of Rule 10 wherein a number of persons may be joined to proceedings as plaintiffs or defendants, similarly cannot find applicability in the present instance. The present proceedings were instituted with the CoJ already been cited as a party to the proceedings. This cannot be equated to a scenario where the proceedings were instituted at inception without the CoJ having been cited as a party.

[20] As stated above, a party applying to Court to invoke the provisions of Rule 30, must complain about an irregular step taken by any other party. Further, it follows that such a party, in the present instance the Third Plaintiff, must allege prejudice if the summons and the particulars of claim, were allowed to stand. To the matter at hand the CoJ has failed to allege any prejudice which might occasion it if the summons and particulars of claim are allowed to stand. The main basis for opposing its citation in the action proceedings is the allegation that a contrary decision was taken by the council, not to recover the expenditure.

[21] One other issue is worth mentioning. Municipalities, such as the CoJ must function within the relevant constitutional imperatives such as those set out in section 152 of our Constitution.[7] The section reads as follows:

Objects of local government.—(1) The objects of local government are ---

(a) to provide democratic and accountable government for local communities;

(b) to ensure the provision of services to communities in a sustainable manner;

(c) to promote social and economic development;

(d) to promote a safe and healthy environment; and

(e) to encourage the involvement of communities and community organisations in the matters of local government.

(2) A municipality must strive, within its financial and administrative capacity, to achieve the objects set out in subsection (1).

[22] Given the relevant constitutional imperatives including section 173 of our Constitution,[8] it simply cannot be contended that a local government is entitled to unreasonably refuse to hold accountable any person against whom the possibility of liability exists on the pleaded facts, notwithstanding that there is a case against such a person to answer.

ORDER

[23] Given the totality of the reasons alluded to above, I am of the view that the application is devoid of any merit and consequently the following order is made:

23.1 The application is dismissed with costs, including the costs attendant on the employment of two counsel.

____________________

C. J. COLLIS

ACTING JUDGE GAUTENG LOCAL DIVISION JOHANNESBURG

APPEARANCES:

COUNSEL FOR FIRST &

SECOND PLAINTIFFS / FIRST &

SECOND RESPONDENTS: DUNCAN

TURNER SC and C.GIBSON

INSTRUCTED BY: Read

Hope Phillips Thomas & Cadman Inc.

COUNSEL FOR THIRD PLAINTIFF /

RULE 30 APPLICANT (‘CoJ’): W.R.MOKARI

SC and V.P.NGUTSHANA

INSTRUCTED BY: Mogaswa

Incorporated Attorneys

DATE OF HEARING: 05

August 2016

DATE OF JUDGMENT: 07

December 2016

[1] Act 56 of 2003

[2] Uniform Rule 30

[3] Market Dynamics (Pty) Ltd t/a Brain Ferris v Grogor 1984 (1) SA 152 (W) at 153C

[4] Singh v Vorkel 1947 (3) SA 400 (C) at 406

[5] De Polo v Dreyer 1989 (4) SA 1059 (W) at 1061E

[6] Bestenbier v Goodwood Municipality 1941 (4) SA 199 (C) at 202C.

[7] Act 108 of 1996

[8] Section 173 Inherent power-The Constitutional Court, Supreme Court of Appeal and High Courts have inherent power to protect and regulate their own process, and to develop the common law, taking into account the interest of justice.