Minister of Labour, of the Government of the Republic of South Africa v Fedics Group (Pty) Ltd (711/2002) [2007] ZAECHC 43 (14 June 2007)

FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

ECJ no: 164

PARTIES: The Honourable Minister of Labour of the Republic of the Government of the Republic of South Africa

vs

The Fedics Group (Pty)

REFERENCE NUMBERS –

Registrar: 711/2002

Magistrate:

HIGH COURT: MTHATHA (TRANSKEI DIVISION)

DATE OF HEARING: 12 JUNE 2007

DATE DELIVERED: 14 JUNE 2007

JUDGE(S): E REVELAS

LEGAL REPRESENTATIVES –

Appearances:

for the State/Applicant(s)Appellant(s): ADV PV MSIWA for the accused/respondent(s): ADV TJM PATERSON (SC) & ADV REDPATH

Instructing attorneys:

Applicant(s)/Appellant(s): STATE ATTORNEYS

Respondent(s): JF HEUNIS AND ASSOCIATES

CASE INFORMATION –

Topic:

Keywords:

NOT REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSKEI DIVISION)

Case No: 711/2002

Date Heard: 12/06/07

Date Delivered: 14/06/07

In the matter between

THE HONOURABLE MINISTER OF LABOUR

OF THE GOVERNMENT OF THE REPUBLIC

OF SOUTH AFRICA Applicant

and

THE FEDICS GROUP (PTY) Respondent

JUDGMENT

REVELAS J:

[1] The applicant seeks to rescind a judgment of this court, handed down on 17 June 2004, and wherein it was held that the applicant (then the defendant) was indeed a party to an agreement signed as long ago as 20 June 1996, and which was cancelled by mutual agreement in February 2002. The matter came before his Lordship, Mr Justice Miller, on 24 May 2004, for hearing. The learned judge ordered the defendant to pay the costs of the hearing, which was paid. The defendant now wants to dispute the authority of a Mr Engelbrecht who according to the agreement itself, acted on behalf of the defendant when the agreement was concluded. The matter has a long history, which I do not propose to set out in great detail. I will commence with the conclusion of the agreement in question.

[2] In terms of the agreement, the respondent (then the plaintiff) was appointed to manage the catering facilities at the Transkei Training Centre, (which in 1998 became the Wild Coast Training Centre), at a weekly managing fee. The plaintiff would be reimbursed for all expenses incurred in the course of managing the catering facilities at the defendants’ canteen in Bernard Schulz Drive in Ikwezi Township, Mthatha, which it in fact did for four years.

[3] Clause 15 of the agreement prevented the parties to the agreement from ceding, assigning, or making over their rights or obligations to any third party without the written approval of each other. Clause 12 of the agreement made provision for the determination of disputes arising from the agreement by way of arbitration.

[4] When the agreement was cancelled, the defendant was in arrears in an amount of R257 497,74 in respect of its monthly payments to the plaintiff, for almost a year. The plaintiff subsequently referred a dispute about the aforesaid unpaid monthly accounts to arbitration, in accordance with the arbitration clause contained in the agreement, and became the claimant for the amount owed. In its response to the plaintiff’s claim, the defendant denied “emphatically” that he is “effectively the other party” to the agreement and stated that the other party to the agreement was the Wildcoast Training Centre, alleged to be an autonomous institution against which the plaintiff hadinitially lodged a claim. When the contract was signed, the Transkei Training Centre was not a company with a separate legal entity. It was

only registered as a company in terms of Section 21 of The Companies Act 61 of 1973 in1998, two years after concluding the agreement.

[5] The arbitration proceedings were then stayed, and the plaintiff instituted trial proceedings by way of summons, seeking a declarator in the terms granted in the judgment of Miller J, which the defendant now wants to rescind. In order to succeed, the defendant must show, under the common law, sufficient cause, which would include a full and reasoned explanation for the default, together with the setting out of a bona fide defence which has reasonable prospects of success.

[6] When the matter came before Miller J for trial, the defendant, represented by counsel, sought a postponement from the bar despite the fact that the plaintiff had well in advance warned the defendant that it would oppose such an application, which should in any event have been brought by way of a formal application.

[7] The reasons advanced for wanting the postponement was that the defendant was having difficulty in locating witnesses, but it was said that a witness may be available the next day. If the witness was not available, the defendant said it would then make a substantive application for a postponement the next day. Because the defendant’s instructing attorney was not in court, counsel had no instructions as to why the witness was only available the following day, as opposed to the day on which the postponement was sought. Counsel also could not explain the defendant’s failure to bring a formal application for the postponement.

[8] Miller J found the reason relating to the possibility of a witness being available the next day, to be speculative and unimpressive. To permit the defendant to have an extra day to make a substantive application, he held to be unacceptable, considering the long notice that the defendant had of the trial. The learned judge held the reasons put up by the defendant for needing a postponement, to be unsound, and that the need arose from a lack of interest in the trial, which was evidenced by the defendant’s failure to attend a pre-trial conference, (ten letters were written by the plaintiffs’ attorneys in an attempt to convene a pre-trial conference) and to bring a formal application for the postponement.

[9] When the application for a postponement was dismissed, counsel for the defendant excused himself and the matter proceeded in the absence of the defendant. The plaintiff led the evidence of one witness, Mr AP Ferreira, the Director of Operations for the Eastern Cape of the plaintiff. Being familiar with the agreement concluded, and having knowledge of its background, he stated that the catering facilities in question were managed by the plaintiff under the auspices of the defendant, the two parties had contracted with each other and all funds for the catering service at the Training College were provided by the defendant’s department.

In his judgment, Miller J noted that he was satisfied with the evidence of Mr Ferreira. He further accepted that because the defendant’s department was cited as a party in the written contract, the defendant, and not another autonomous third party, was a party to the arbitration agreement.

[10] Counsel for the defendant conceded that Miller J was correct refusing a postponement and continuing with the hearing on the evidence available. However, he sought an “indulgence” to “revisit” the matter, the gravamen of the defendant’s case being that Mr Engelbrechts’ lack of authority and the defendant’s change of judicial personality – so to speak – meant that the defendant clearly was not a party to the agreement. It was further submitted that the evidence needed to prove that the defendant was not liable in terms of the contract, (which was not available before) is now available and rendered the defendant’s prospects of success likely. Essentially, the defendant wanted to introduce a new defence. However, at the time of the hearing, the defendant had filed a notice to amend its plea, in order to put up a positive version which is substantially the same as the one advanced before me, but this amendment was never effected.

[11] The plaintiff, who opposes the recission application, has also applied to have certain averments made by Mr Sabelo Mgujulwa as well as a confirmatory affidavit deposed by Mr Sineke struck out. Once the averments are struck out, the defendant will be unable to show good cause or any prospects of success in this case. I dealt with both applications simultaneously. The averments in question need not be struck out. As they stand they do not assist in determining the questions before me.

[12] In his founding affidavit, Mr Mgujulwa of the State Attorney listed all the problems he had encountered in putting forward a proper defence for the defendant. Firstly, he said he had difficulty in briefing counsel on the day of the hearing before Miller J. He said he had also relied on Mr Pasha of the Legal Division of the defendant. He (Mgujulwa) could not assist Mr Pasha. The matter was also dealt with by Advocate Koyana and Mr Pasha but was never finalized. No affidavit by Mr Pasha is attached. He alleged that difficulties in dealing with the matter were exacerbated by the lack of or poor filing system in the Department in Pretoria. The file was also lost at one stage. He set out in great detail how he searched in vain for proof of the contract in question. These allegations were put forward to explain the delay in bringing this application. Mr Mguljwa nonetheless was adamant that Mr Engelbrecht had no authority (because he was a chief executive officer and not a civil servant) to contract on behalf of the Department. According to Mr Mgujulwa, only Mr Sineke who was the Director General of the former Department of Manpower (and who left that department in 1995) had the authority to contract on behalf of the Department and such authority could not be delegated. Mr Mgujulwa also stated that upon the closure of the Transkei Training Centre, it became difficult to trace its managing director. The Transkei Training Centre was established in terms of Sections 31 and 31A of the Manpower Training Act, 56 of 1981. This fact would not exclude Engelbrecht’s authority from the Department to conclude contracts for services to be delivered to the centre in question. If he is personally liable, because he had no authority to contract, then any claim against him has prescribed in any event. In this regard clause 15 of the contract is relevant. It reads: “Neither party may, without the approval in writing of the other party, cede, assign or make over its rights or obligations in terms of the Agreement to any third party.” The plaintiff never received any notice that the Department’s obligations were being signed over or ceded to a different party.

Therefore the Department must be liable to the plaintiff. The Department cannot be seen as disconnected from the centre’s

activities. It subsidized the catering services provided by the plaintiff there. Mr Engelbrecht therefore had to have the necessary authority.

[13] Mr Mgujulwa quite plainly deposed to a defence of which he has no personal knowledge. Based only on what he was told, the defence is based on hearsay. No probative facts were put forward which could support any of his contentions. His submission that Mr Engelbrecht lacked authority is entirely based on hearsay. It was open to the defendant to ask Mr Engelbrecht what position he held. The plaintiff communicated with him by way of e- mail so he was available. The defendant could easily have obtained his evidence but chose not to.

[14] There is no basis for the proposition that Mr Sineke was the only one who could contract with the plaintiff. He worked for the erstwhile Department of Manpower and has not stated anything of relevance on oath. He is not in a position, having left the Department in 1995, to shed light on what his successor may or may not have done.

[15] The plaintiff had filed a substantial discovery affidavit in which all the minutes of the Transkei Training Centre and its conversion from departmental training centre to an independent body (Wild Coast Training Centre) were canvassed. At that point the defendant had already pleaded and the issue at stage was a “crisp” one – to borrow Millers J’s description of it. Counsel could therefore have been briefed by the defendant to prepare for, and to conduct a defence on the merits and on the grounds put forward in this application. There was no need for a postponement. All the information necessary to put forward a proper defence in this matter, was available to the defendant long before the arbitration proceedings. The explanation for the delays is therefore untrue. The defendant has not shown any good cause as to why it was not able to put up a proper defence on the date of the hearing and has demonstrated a deliberate intention to frustrate and delay matters at every turn.

[16] In my view, the defendant was wilful in electing not to pursue its defence at the hearing before Miller J, and wilfully risked an adverse finding. An opposed application for rescission is just a further opportunity to delay the inevitable, namely the arbitration hearing and possible payment of the amount claimed.

[17] After it had been declared that the defendant was a party to the agreement, a pre-arbitration meeting was arranged for 3 June 2005, but was cancelled by the State Attorney, (due to the dilatoriness of the defendant) and rescheduled for 29 July 2005. At this meeting the defendant submitted its defence which disputed Mr Englebrecht’s authority. The defence was then incorporated in a formal notice of amendment by the defence, delivered on 26 August 2005. The plaintiff’s objection to the amendment sought by the defendant was upheld by the arbitrator on 10 February 2006, in the absence of the defendant who elected not to appear at the proceedings after giving notice of its intention to apply for rescission. The ruling of the arbitrator in this regard, still stands. It would appear that the present application is res judicata between the parties, solely by virtue of this ruling on 10 February 2006.

[18] Apart from all the other factors which militate against rescinding the judgment handed down three years ago there is the fact that the defendant had complied with the costs order contained in that judgment. Counsel for the defendant submitted that the payment in terms of the costs order was no indication of acquiescence in the order. Counsel for the plaintiff argued to the contrary, and referred me to the case law in this regard. In Bongers v Ekstein 1908 T 910, an unsuccessful plaintiff was debarred from appealing because he had paid the costs ordered in the judgment, unconditionally, and before noting his appeal. In that judgment Wessels J held that the payment of costs is prima facie proof of acquiescence in the judgment.

[19] Counsel for the plaintiff referred me to the judgment of Erasmus J where the learned judge relied on the Bongers judgment in the unreported matter of BOE Bank (Pty) Ltd vs G E Rieger CA 923/2003 (EC) dated 25 January 2006, and that the appeal in question was prerempted, since the appellant acquiesced in the judgment of the court a quo, when its attorneys settled the taxed bill for the costs ordered under the magistrate’s judgment, prior to noting its appeal. In his judgment, the learned judge also inter alia referred to the judgments in Clarke v Bethal Co-Operative Society 1911 TPP 1152, at 1158, Hlatswayo v Mare and Deas 1912 AD 242 at 259,Dabner v South African Railways Harbours 1920 AD 583 at 594 and the judgment in Cohen v Cohen 1980(4) SA 435 (2, AD) where the aforesaid cases were discussed.

[20] Erasmus J endorsed the approach of Fieldsend CJ in the Cohen matter (supra), which is that no particular rules apply to the operation of the preremption of an appeal and each case must be decided on its own particular facts and attendant circumstances. I, with respect, also adopt the aforesaid view. To settle a bill of costs per se, will not always constitute acquiescence in a judgment. The test is an objective one. In the matter before me, considering all the delays and the particular facts, a rescission must be prerempted. The imputed acquiescence – if I may call it that – is just one aspect of a cumulative set of circumstances which dictate that the application falls to be dismissed.

[21] The defendant has not made it clear whether or not he seeks rescission under the common law or Rule 31(2)(b). I have dealt with the matter from both perspectives. Under the common law the defendant has no case as set out above. Rule 31 (2)(b) of the Rules of Court, which requires a litigant to bring an application for rescission with 20 days of knowledge of the judgment, showing good cause, was also flouted in this matter. The defendant had full knowledge of the judgment since counsel for the defendant, who had unsuccessfully applied for a postponement, remained in court and thus knew the outcome. However the defendant took a further two years to bring the application. I was asked for an indulgence. An indulgence, like condonation (of which there was no mention either), is not merely for the asking. There are no grounds to indulge the defendant or to condone the delays.

[22] The protracted litigation between the parties in this court and the arbitration proceedings in question, has been caused solely by the defendant’s dilatory tactics which has been highly prejudicial to the plaintiff. Even the recent withdrawal of the defendant’s local attorneys was in an irregular notice of withdrawal. I can only infer mala fides on the part of the defendant from the manner in which it chose to litigate. Consequently a punitive costs order is warranted.

[23] In the circumstances the application is dismissed with costs and such costs are payable on an attorney and client scale.

________________________

E REVELAS

JUDGE OF THE HIGH COURT

On behalf of the Applicant (Defendant): Adv PV Msiwa

Instructed by: The State Attorney

On behalf of the Respondent (Plaintiff): Adv TJM Paterson SC with Adv N Redpath

Instructed by: JF Heunis and Associates

Date of Hearing: 12 June 2007

Date of Judgment: 14 June 2007