Mkhondo Local Municipality v Bicacon (Pty) Ltd and Another (986/2016) [2020] ZAMPMBHC 18 (8 October 2020)

IN THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION (MAIN SEAT)

CASE NUMBER: 986/2016

In the matter between:

MKHONDO LOCAL MUNICIPALITY APPLICANT

and

BICACON (PTY) LTD FIRST

RESPONDENT

MPUMALANGA ECONOMIC GROWTH AGENCY SECOND

RESPONDENT

In Re:

BICACON (PTY) LTD PLAINTIFF

MPUMALANGA ECONOMIC GROWTH AGENCY FIRST

DEFENDANT

MKHONDO LOCAL MUNICIPALITY SECOND

DEFENDANT

JUDGMENT

KGOELE J

1. The applicant (the Municipality) seeks relief to have the default judgment which was granted by this Court on 21 February 2017 rescinded. The application for rescission is brought in terms of Rule 42 of the Uniform Rules of Court (The Rules), alternatively common law. In addition, the applicant requests this Court to grant condonation for the late filing of this rescission

application.

2. The summary of the factual background to the application is as follows: During November 2013, the second respondent (Mega) and the first respondent (Bicacon) concluded a written agreement in terms of a public procurement process to deliver civil engineering services in respect of the water infrastructure known as the “Driefontein to Iswepe and Haartebeesfontein water Bulk Line “. On or about 1 December

2014, Bicacon delivered a letter to the Municipality in terms of which it claimed payments of about R3 899 212.27 including

VAT, from the Municipality.

3. The Municipality responded to Bicacon by denying liability for the claims. Amongst others, the Municipality claimed that they did not have a contract with Bicacon. In the period that followed, two action proceedings were instituted by Bicacon against the Municipality. The first was in the North Gauteng High Court which then had jurisdiction under case number 87155/2015 (the North Gauteng case) and the second was under case number 986/2016 in Nelspruit after it was proclaimed as a separate Provincial High Court (the Mbombela case). The latter is the case which is the subject of this rescission application.

4. In the North Gauteng case, Hughes J granted an exception which was sought by the Municipality wherein they were the defendant on the basis that the particulars of claim of Bicacon (plaintiff then) did not disclose a cause of action. In the Mbombela case, Makgoka J as he then was, granted a judgment by default on 21 February 2017 of an amount of R5 319 140-62 plus interest against the Municipality. In March 2017, the Municipality launched the current application to obtain what in its mind is a speedy resolution to an erroneous judgment. The application is only opposed by the first respondent.

RULE 30 AND 30A APPLICATION

5. The applicant brought an application in terms of Rule 30 and 30A on the 7 June 2018 in which it sought to have the late filing of the opposing affidavit of Bicacon in the rescission application to be declared an irregular step. It requested that it be spared of the need to file further papers in the rescission application until Bicacon had filed a condonation application on notice in respect to the late filing of the opposing affidavit to the rescission application. Although Bicacon made submissions in support

of the dismissal with costs of the Rule 30 and 30A application, and that further that this application should be heard together with this rescission application, it appears that Counsel representing Bicacon is mistaken because, there is a Court Order already granted in this respect which has been filed. The Court Order reveals that it was obtained by agreement between the parties and as correctly stated by Counsel representing the Municipality, the application was removed from the roll and Bicacon, was granted leave to deliver its late replying affidavit in the application for rescission by not later than 13 August 2019. However, costs were reserved. It is these costs which the applicant also seeks an Order thereof against Bicacon, which ruling I will deal with later in this judgment.

CONDONATION OF THE LATE FILING OF THE RESCISSION APPLICATION

6. The Municipality sought condonation for the late filing of its rescission application. Bicacon indicated in paragraph 6.2 of its opposing affidavit that it did not suffer any prejudice occasioned by the late filing of this application and therefore does not oppose it. In the absence of any prejudice suffered by the Bicacon, coupled with the prospect of success of the application of rescission brought by the applicant as it will become apparent later in this judgment, the condonation application is hereby granted.

RESCISSION APPLICATION

7. Although the Municipality rest its case on both the common law and Rule 42, its strongest point falls squarely in Rule 42 (1) (a). This is so because the Municipality raised the following four grounds which proved to be sound to support its application in terms of the Rules:

· There is a pending case under case number 87155/2015 before the North Gauteng Division;

· The said case involves the same allegations as those made under case number 986/2016 before this Court;

· The proceedings in North Gauteng Court were defended and an exception thereto successfully raised;

· Bicacon was thus barred from bringing the same action on the same facts and in respect of the same cause of action against the same party.

8. The Municipality contends that the said judgment was erroneously sought and granted because it dealt with a matter that was not yet finalized nor withdrawn in the North Gauteng High Court. The Municipality based this contention on the fact that the upholding of the exception by Hughes J did not amount to a removal or withdrawal of the Gauteng matter, and Bicacon, has not formally withdrawn those proceedings. Further that, Bicacon went to another Court, the Mpumalanga High Court Division, well knowing that the case in Pretoria was fully extant and required its attention, either to be withdrawn formally, or to rectify the exception. It failed to disclose these to the Court as per Makgoka J. Had the Court as per Makgoka J been appraised of this fact, so the argument continued, the default judgment would not have been granted.

9. Lastly that, once it has established an error or mistake, it need not proceed to deal with good cause. As far as the second requirement is concerned, it was submitted on behalf of the Municipality that this requirement need no further attention because of the fact that the judgment was granted by default is common cause between the parties.

10. It is trite law that Rule 42(1)(a) grants a Court the power to rescind or vary an Order or judgment erroneously granted in the absence of any party affected thereby.

11. It is prudent to point out from the onset that Counsel representing the Municipality is correct that the first requirement to the effect that the judgment must have been granted in the absence of the partly whose interest is affected by the judgment has been established by the applicant ex facie the papers before Court and nothing more need to be said. Further that, the requirement of good cause is fundamental in Rule 31(2) (a) applications, which the current application is not. Therefore, the crux of this application revolves around the question whether it has been established by the Municipality that the judgment was erroneously granted, and that the Court as per Makgoka J as he then was, had it been made aware of this fact that there was a pending case in North Gauteng High Court, it would have induced it not to grant the judgment.

12. The opposition of Bicacon to this application is basically that the default judgment was neither sought erroneously nor granted

erroneously. Although Bicacon admitted the fact that an exception was upheld by the North Gauteng High Court, its Counsel argued that in practical terms the only thing pending in that matter is an empty Court file. Their reasoning is that its particulars of claim were struck out on the basis that they never amounted to facts establishing any valid cause of action against the Municipality.

Expanding on this argument, they claim: “In legal terms it is of course now settled law that once an exception is upheld- it is the pleading that is destroyed- and not the case”. They relied on the case of Group Five LTD v Government of the Republic of South Africa[1] for this proposition.

13. Unfortunately, it appears that Counsel representing Bicacon did not comprehend the gist of the Group five case they are heavily relying on. I am saying this because the finding in this case to the effect that it is the pleading that is destroyed and not the case, does not at all advance and or support its case that the North Gauteng matter was not pending, or that what remained in that matter is an empty file. Secondly, contents of the page from where the quote was taken from were selectively referred to because in the very same page 791H which they quoted the Court said also remarked:

“the summons must therefore be seen as the first stone in the edifice of the action… When an exception is upheld, it is the pleading to which exception is taken which is destroyed. The remainder of the edifice does not crumble. Where in a liquid claim a declaration has been filed and exception is taken thereto, it is the contents of the declaration which will be struck out. The summons remains. The upholding of the exception does not carry with it the dismissal of the summons or of the action”

14. Thirdly in this case, the Court went further to say that this is the reason why normally leave to amend the particulars of claim is granted by our Courts. But an important further consideration which the Court dealt with in that matter was, what happens during the hearing of an exception if there was no mention at whatsoever of an application for leave to amend. Although the Court in the Group Five matter recognized that there is no provision in our Rules for dismissal of the action or defence where a pleading(s) had been successfully taken, it held that where there was silence on the face of the party facing the exception application, and where it is bound to be upheld, dismissal of the action was the only course open to the Court (s).

15. But the issue does not end here because the Supreme Court of Appeal (the SCA), in the same matter did not agree with this finding of the Court in its judgment reported in [1993] ZASCA 4; 1993 (2) SA 593 (A) 603 C-D and found, “this finding does not constitute the law and practice of our Courts”. The following SCA cases also buttressed the position of our law in this Country: Constantaras v BCE Foodservice Equipment (Pty) Ltd[2]; Ocean Echo Properties 327 CC v Old Mutual Life Assurance Co (South Africa) Ltd[3].

16. The Constitutional Court in the case of H V Fetal Assesment Centre[4] sealed the position of our law and practice when it referred to the SCA cases that are mentioned in the previous paragraph including that of Trope and Others v South African Reserve Bank[5] and remarked in paragraph 79 as follows:

“In upholding the exception, the High court also ordered the dismissal of the claim. This was unwarranted, the upholding of an exception does not inevitably carry with it the dismissal of an action. Leave to amend the particulars of claim should have been granted”.

17. In casu, although the North Gauteng High Court did not dismiss the action after upholding the exception, it did not specifically grant leave to Bicacon to amend the particulars of claim. This is so despite the fact that there was an indication in the heads of arguments of the Municipality that leave be granted to amend within 15 days of granting of the Order. But one finds solace in its Order because it was specifically couched as follows: “the particulars of claim are struck out”. This clearly shows that it was alive to the fact that the form of pleading that was attacked was the particulars of claim only. It did not dismiss the action.

18. The upshot of all of the above analysis of the authorities referred to above coupled with the manner in which the North Gauteng Court was phrased, is that the action/summons of Bicacon was not affected at all, it remained extant. Therefore, the argument of an empty file remaining at North Gauteng Court is ill- conceived. The effect of the Order absents a direction from it that Bicacon was granted leave to defend simply meant that, either of the parties had an opportunity if they want to, to take a further step

for the matter to come to a finalization stage in terms of our law, rather than having left this matter in the North Gauteng Court to remain hanging. Bicacon does not even begin to claim that the summons had lapsed therefore there was no action pending. This is not the case they pleaded and cannot be because, the exception judgment was granted on 22 April 2016 whereas the new summons was issued by Bicacon in this Division on or about 18 August 2016.Therefore, the matter was still pending in the North Gauteng High Court as it has not even been transferred to this Division.

19. Bicacon in its opposition also argued: “In the event that the first respondent (Bicacon) wished to proceed under case number 87155/2015 before the Gauteng Division of the High Court, Pretoria –it would have to resubmit entirely new particulars of claim which for the first time place facts establishing a valid cause of action against the applicant (the Municipality)”. Well, that maybe the case, but this does not give Bicacon the licence to issue out new summonses against the same party without first withdrawing the Gauteng action. They had various avenues at their disposal to deal with this. The correct procedure was to apply for leave to amend in that very same Court and apply for transfer of thematter or alternatively, should have made an application to transfer the matter to this division first and then apply for leave to amend its particulars of claim.

20. Bicacon further contends in its opposition that it would have to surmount a considerable hurdle of the fact that all the jurisdictional facts of the case clearly placed the matter before the Mpumalanga Division of the High Court. Without derogating to the generality of the argument, the fact that this Court was functioning as the Mpumalanga Circuit Court Mbombela then, does not advance any case of Bicacon. They still had the option of withdrawing the matter and or applying for transfer of the matter to this Court if the

jurisdictional facts posed an insurmountable hurdle, which facts I do not find.

21. It is trite law that in order to succeed with a plea of lis alibi pendens four requirements have to be comply with, namely:

· Pending litigation;

· Between the same parties or their privies

· Based on the same cause of action

· In respect of the same subject matter.

22. In Nestle (South Africa) Pty Ltd v Mars Inc[6] the court held that: -

“the defence of lis alibi pendens shared features in common with the defence of res judicata because they shared the common underlying principles that there should be finality in litigation. Once a suit has been commenced before a tribunal competent to adjudicate upon it, the suit should, generally, be brought to a conclusion before that tribunal and should not be replicated”.

23. The importance of the Nestle matter is that it in fact places an obligation upon the plaintiff to drive the matter to finality rather than to willy-nilly issue out summons time and again without thought for the time and costs aspects necessarily included therein. If conduct of this nature is allowed, our Court rolls will become more and more congested. This aspect of congestion was also discussed in Socratous v Grindstone Investment[7] where the Court held: -

“South African courts are under severe pressure due to congested court rolls, and the defence of lis alibi pendens must be allowed to operate in order to stem out unwarranted proliferation of litigation involving the same parties based on the

same cause of action and related to the same subject-matter”.

24. The principles behind a plea of lis alibi pendens and res judicata are, like in estoppel, also founded on public policy to avoid a multiplicity of actions in order “inter alia” to conserve the resources of the Courts and litigants. In the case of Cook and Others v Muller[8] the following was said:

“It is clear from this passage that the plaintiff in Wolff’s case had been the defendant in the Transvaal High Court and had accordingly filed a claim in reconvention. The Court nevertheless held that lis alibi pendens could properly be raised. Even if this does not strictly constitute a defence of lis alibi pendens, it is clear that the Court may, in the exercise of its discretion in controlling the proceedings before it, debar a person from ventilating a dispute already decided against him under the guise of an action against another party. See Burnham v Fakheer, 1938 N.P.D. 63. Although the previous proceedings had not even been between the same parties, the court there held that for the respondent to attempt to re-try an issue which had already been decided merely by changing the form of his action was an abuse of the processes of the Court, and was vexatious. See also Niksch v Van Niekerk and Another, 1958 (4) S.A. 453 (E) at page 456, and the English decision of Reichel v Magrath, (1989) 14 A.C. 665 (H.L.).

25. In the matter of Man Truck and Bus (SA) (Pty) Ltd v Dusbus Leasing CC and Others[9] it was held that: -

“the requirements of ‘same persons’ did not mean only the identical individuals who were parties to the earlier proceedings, but included persons who, in law, were identified with the parties to the proceedings. Whether someone had to be regarded as a so-called privy, or as being identified with the parties, depended upon the facts of each particular case”.

26. The following remarks made in the case of Caesarstore Sdot-Yam Ltd v World Marble and Granite 2000 CC & Others[10] in paragraph 43 to re-emphasize what was said in the matter of Cook above:

“The solution lies in a point made by Milne J in Cook, when he said: 'Even if this does not strictly constitute a defence of lis alibi pendens, it is clear that the Court may, in the exercise of its discretion in controlling the proceedings before it, debar a person from ventilating a dispute already decided against him under the guise of an action against another party.

27. The Court in the Caesarstore matter did not make a final finding on the issue of “same persons”. It does however appear, by the following obiter remark that the concept of “same persons” extends beyond the scope of “identical persons”. In this regard at paragraph 43 the Court remarked as follows:

“It may be that the requirement of 'the same persons' is not confined to cases where there is an identity of persons, or where one of the litigants is a privy of a party to the other litigation, deriving their rights from that other person. Subject to the person concerned having had a fair opportunity to participate in the initial litigation, where the relevant issue was litigated and decided, there seems to me to be something odd in permitting that person to demand that the issue be litigated all over again with the same witnesses and the same evidence in the hope of a different outcome, merely because there is some difference in the identity of the other litigating party.” [My own emphasis added]

28. It is clear from the above quoted authorities that the submission by Counsel representing Bicacon that the matter under case number 87155/2015 before the North Gauteng High Court would not have served as a basis for a plea of lis pendens in respect of the proceed before Makgoka J because the actions do not involve the same parties, the same cause of action including the fact that the action does not involve the same subject matter cannot past master in the circumstances of this matter. The fact that another party was added in the matter that was issued in Mbombela does not detract from the fact that this Municipality is still the same party that was before the North Gauteng matter in the same action that involved the same subject matter.

29. Furthermore, it cannot be true as Bicacon contends that the issue of cession was not raised in the North Gauteng matter. In paragraph 6 of the particulars of claim that were struck out in the North Gauteng matter, the issue of transfer of the agreement is pertinently dealt with by Bicacon against the Municipality and in particular, in paragraph 6.1.3, Bicacon alleged that:

“That since the Mkhondo water project was below 80% complete, MEGA Ceded all its rights and obligations to implement the aforementioned Project to the defendant”.

30. This paragraph says it all. In my view, the issue of same subject matter, same cause of action is thus satisfied.

31. I am thus satisfied that the Municipality made a case that the default judgment was erroneously sought, and further that, had the Court as per Makgoka J been advised of these details and facts of this pending proceedings in the North Gauteng High Court, it would not have granted the order or judgment. All the requirements of Rule 42 (1)(a) has thus been met by the Municipality. I am of the view that even though there is merit in the common law ground relied upon by the Municipality, there is no need to analyse this ground because the Rule 42 (1)(a) ground on its own is capable of disposing the issues before Court in totality.

COSTS

32. In addition of to the fact that the costs should follow the result, the Municipality also submitted that costs reserved previously in the Rule 30 and 30A application which was resolved by agreement between the parties should be awarded in its favour. They claim that by applying for a rescission, they sought to ensure that the current proceeding yielded a speedy resolution to an erroneous judgment. This effort was stifled away by Bicacon as it delayed to file an answering affidavit timeously and also, to rectify a cause of complaint in the Rule 30 application.

33. On the other hand, Bicacon bemoans that the Rule 30 and 30A application was completely unnecessary and entirely dilatory to the rescission application. It was purely technical as it failed to raise any prejudice suffered by the Municipality. As far as costs of the rescission application itself, Bicacon contends that the general principle is that a party seeking an indulgence should ordinarily pay all such costs and costs of opposition that are in the circumstances reasonable and not vexatious and frivolous. Therefore, the Municipality should be ordered to pay the costs including the costs previously reserved.

34. I choose to start with the last submission by Bicacon. In my view, the opposition of Bicacon was ill-conceived and not reasonable in the circumstances of this matter. The Municipality wrote to Bicacon to decry the manner in which the default judgment was obtained. Had Bicacon reacted positively and promptly, the need to litigate to this extent would not have arisen. What makes this opposition unreasonable is the fact that they opposed this matter well knowing that they indeed had not withdrawn the summons in the North Gauteng Court, a fact which they admitted from the onset. They knew very well or ought to have known that no two summonses can exist

at the same time even if it is in two different Courts. When they were made aware of this, they should have easily accepted this fact and not have defended the matter based on technical baseless defences. As indicated above, they came to this Court in hardly three months after an exception was upheld without amending their pleadings, which is a sign of forum shopping. They still relied on the case that was long overturned by the SCA in persisting with their defence.

35. In addition to the above, the application of the Municipality has nothing to do with an indulgence regarding a non-observance of Court procedure, but is for permission to enforce its rights which were affected by the clandestine manner in which an Order was obtained. They managed to establish that the rescission is warranted and there is no reason why the costs should not follow the results. The position could have been different if Bicacon could not have insisted on its baseless opposition.

36. As far as the reserved costs are concerned, the issues there were amicably resolved by the parties and it will not be fair to punish each of them with the said costs. I will therefore make an order that each party should pay its own costs in this regard.

37. The following Order is made:

37.1 The default judgment and Order granted by Makgoka J on 21 February 2017 is hereby rescinded;

37.2 The applicant is granted leave to file its pleadings in the main action within 15 days of the date of this judgment;

37.3 The first respondent is ordered to pay the costs including the costs of Counsel;

37.4 No order of costs is made with regard to the costs reserved previously for the hearing of the Rule 30 and 30A application.

.

_____________________________

APPEARANCES:

Legal representative of the Applicant: Adv Mathaphuna

Instructed by:

Mohlala Attorneys,Nelspruit

Email address: office@mohlalainc.co.za

Counsel for the Respondent:

Adv Tisani

Instructed by:

Diale Mogashoa Attorneys

c/o Kruger and Partners Inc, Nelspruit

Email address:

lkieser@kmprok.co.za

Date reserved: 20 AUGUST 2020

Date handed down: 8 OCTOBER 2020

[1] (Minister of Public Works and Land Affairs) 1991 (3) A 787 (T) at 791H

[2] 2007 (6) (SCA) at 348H 349a

[3] 2018 (3) SA 405 (SCA) at 409 C.

[4] 2015 (2) SA 193 (CC)at 219 A-B

[5] [1993] ZASCA 54; 1993 (3) SA 264 (A) at 269-I

[6] 2001 (4) SA 542 (SCA)

[7] 2011 (6) SA 325 (SCA)

[8] 1973 (2) (NPD)

[9] 2004 (1) SA 454 (W)

[10] 2013 (6) SA 499 (SCA)