Nicor IT Consulting (Pty) Ltd v North West Housing Corporation (2538/07) [2009] ZANWHC 26; 2010 (3) SA 90 (NWM) (9 July 2009)

IN THE HIGH COURT

OF SOUTH AFRICA

NORTH WEST HIGH COURT, MAFIKENG

CASE NO. 2538/07

In the matter between:-

NICOR IT CONSULTING (PTY) LTD …..................................................Excipient

and

NORTH WEST HOUSING CORPORATION …..................................Respondent

In re:

NICOR IT CONSULTING (PTY) LTD ….....................................................Plaintiff

NORTH WEST HOUSING CORPORATION ….....................................Defendant

JUDGMENT

LEVER AJ:

[1] The plaintiff (present excipient) served a simple summons on the defendant (present respondent) and subsequently its declaration claiming just over two million Rand being the balance allegedly due to the plaintiff in terms of certain written agreements entered into between plaintiff and defendant. In response the defendant filed a special plea and plea. The plaintiff then filed an exception to the defendant’s special plea on the basis that such special plea lacked the averments necessary to sustain a defence.

[2] The defendant set out its special plea in the following terms:

“1.

SPECIAL PLEA

In terms of section 3(1) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002, no legal proceedings for the recovery of a debt may be instituted against an organ of State unless –

(a) the creditor has given the organ of State in question notice in writing of his or her or its intention to institute the legal proceedings in question; or

(b) the organ of State in question has consented in writing to the institution of the legal proceedings without such notice.

2.

A notice in terms of section 3(1) must within six months from the date on which the debt became due be served on the organ of State.

3.

The Plaintiff’s alleged cause of action is based on an alleged contractual debt due to it by the Defendant.

4.

The Defendant is an organ of State as contemplated in Act number 40 of 2002.

5.

The Plaintiff has failed to comply with section 3 of the aforestated Act.

6.

The Defendant has not consented to the institution of legal proceedings without complying with section 3 of the said Act.

7.

The Plaintiff has neither applied to this Honourable Court for condonation for the abovestated failure, nor has this Honourable Court granted leave to institute the legal proceedings presently in question prior to filing of the summons herein.”

[3] The Plaintiff’s exception is set out in the following terms:

“TAKE NOTICE that the Plaintiff excepts to the Defendant’s special plea as lacking averments which are necessary to sustain a defence on one or more of the following grounds:-

1. The special plea is based on the provisions of Section 3(1) of the Institution of Legal Proceedings Against Certain Organs of State Act, 40 of 2002 (“the Act”) and is founded on the following allegations:-

1.1 A notice in terms of section 3(1) must within six months from the date on which the debt became due be served on the organ of State.

1.2 The Plaintiff’s alleged cause of action is based on an alleged contractual debt due to it by the Defendant.

1.3 The Defendant is an organ of State as contemplated in Act number 40 of 2002.

1.4 The Plaintiff has failed to comply with section 3 of the aforestated Act.

1.5 The Defendant has not consented to the institution of legal proceedings without complying with section 3 of the said Act.

1.6 The Plaintiff has neither applied to this Honourable Court for condonation for the abovestated failure, nor has this Honourable Court granted leave to institute the legal proceedings presently in question prior to filing of the summons herein.”

2. In terms of section 2(2) of the North West Housing Corporation Act, 24 of 1982 (“the Housing Act”) the Defendant is a corporation that is vested with locus standi and a separate legal personality.

3. “Organ of State” is defined in the Act as meaning:-

““organs of state” means –

(a) …

(b) …

(c) any functionary or institution exercising a power or performing a function in terms of the Constitution, or a provincial constitution referred to in section 142 of the Constitution;

(d) …

(e) …

(f) …

(g) …”

(although the plaintiff sets out the entire definition of “organ of state” contained in the Act, it is only paragraph (c) of such definition that is relevant for present purposes.)

4. The Defendant is a corporation established in terms of the Housing Act and is not an organ of state as defined in the Act.

5. ‘Debt’ as defined in the Act means, any debt arising from any cause of action:-

“(a) which arises from delictual, contractual or any other liability, including a cause of action which relates to or arises from any –

(i) act performed under or in terms of any law; or

(ii) omission to do anything which should have been done under or in terms of any law; and

(b) for which an organ of state is liable for payment of damages.

Whether such debt become due before or after the fixed date;” (Underlining inserted by the plaintiff)

6. The Plaintiff’s claim against the Defendant is for specific performance due in terms of the contract upon which the plaintiff’s cause of action is founded.

The Plaintiff is not claiming damages. Accordingly:-

6.1 the Plaintiff’s claim is not for a debt as defined in the Act;

6.2 the Plaintiff was not required to serve a notice in terms of Section 3 of the Act before instituting action against the Defendant.

Wherefore the Plaintiff claims an order:-

1. That the exception he upheld;

2. That the special plea he struck out;

3. That the Defendant pay the costs hereof.”

[4] It is common cause that the Plaintiff had not served the notice contemplated in section 3 of the Act. It is also common cause that the Defendant has not consented to the initiation of legal proceedings without the relevant notice. It is further common cause that the Plaintiff has not as yet sought condonation for its failure to serve the said notice. In these circumstances it was argued on behalf of the Defendant that in the event of the exception being dismissed, I should uphold the special plea and dismiss the plaintiff’s claim.

[5] As has already been stated the Plaintiff’s claim is for an outstanding balance due in terms of a written contract. Both Plaintiff and Defendant have characterised the Plaintiff’s claim as a claim for “specific performance”. In the circumstances of the Plaintiff’s claim it may well be corrected to describe it as a claim for specific performance. However, it is not necessary for me to deal with or decide this issue. For present purposes it is only necessary for me to recognise and distinguish between a claim where a party alleges that it has performed all of its obligations in terms of a contract and that it is now entitled to be paid the agreed amount, and a claim where a party claims that there has been breach of the contract and

as a result of such breach it claims damages. In short it is only necessary to distinguish between a claim enforcing the reciprocal

obligations due under a contract and a claim for damages arising out of a breach of contract.

[6] The Plaintiff in its exception to Defendant’s special plea raises two issues. Firstly, that Defendant is not an “organ of state” as defined in the Act. Accordingly, the Plaintiff contends that the Act is not applicable and that Plaintiff is not required to give the Defendant the notice contemplated in section 3 of the Act before it instituted the present action against the Defendant.

[7] “Organ of State” is defined in the Act and such definition has already been set out in the extract of the exception quoted above. For the purpose of evaluating the submissions made on behalf of both the Plaintiff and the Defendant as to whether the Defendant is an organ of State or not, it is useful and instructive to contrast the definition set out in the Act with the definition set out in the Constitution. In the Constitution:

“‘organ of state’ means –

(a) any department of state or administration in the national, provincial or local sphere or government; or

(b) any other functionary or institution

(i) exercising a power or performing a function in terms of the Constitution or a provincial constitution; or

(ii) exercising a public power or performing a public function in terms of any legislation,

but does not include a court or judicial officer.”1

The definition of organ of state in the Act as contained in clauses (a), (b) and (c) of such definition is essentially the same as that set out in section 239 of the Constitution. The material difference is that the definition in the Constitution includes a functionary or institution that exercises a public power or performs a public function in terms of any legislation. The definition in the Act does not go that far and does not include any functionary or institution performing a public power or performing a public function in terms of any legislation.

[8] Counsel for the Defendant, Mr Hitge, submitted that the Defendant is an ‘organ of state’ as defined in the Act. In support of this submission he argued that the State has an obligation to provide housing in terms of the Constitution2. That in terms of schedule 4 of the Constitution housing was a concurrent national and provincial competence. Mr Hitge then referred

the Court to section 19 of the North West Housing Corporation Act3, which clothes the Defendant with wide ranging powers, functions and duties in relation to the provision of housing within the province. On behalf of the Defendant, it was further submitted that, it is a public corporation wholly owned by the North West Provincial Government represented by the MEC for Local Government and Housing. That the Defendant is a publicly funded entity which is listed in part C of schedule 3 of the Public Finance Management Act4 (PFMA). That the Defendant exercises public powers and functions as contemplated in the North West Housing Corporation Act, read with the Constitution. Mr Hitge then concluded that on the basis of the submissions set out above that the Defendant fell within paragraph (c) of the definition of ‘organ of state’ contained in the Act.

[9] Mr Roos, on behalf of the Plaintiff, uses as his point of departure the fact that the Defendant is a corporation established by the North West Housing Corporation Act5. He then submits that one must look directly to the Constitution6 to determine whether the Defendant was exercising a power or function that would bring it within the parameters of paragraph (c) of the definition of ‘organ of state’ set out in the Act. To illustrate his point that different functionaries and entities obtained their status as ‘organs of state’ from different parts of the definition he referred to the matter of National Gambling Board v Premier, KWAZULU- NATAL and Others7. Mr Roos submitted that the Defendant got its powers and functions from its enabling Act8. That its powers and functions did not emanate directly from the Constitution. That as a result of the fact that part (b)(ii) of the definition of organ of state set out in section 239 of the Constitution (i.e. “exercising a public power or performing a public function in terms of any legislation, …”) was not repeated in the definition of ‘organ of state’ contained in the Act, the Defendant was not an organ of state as contemplated in the Act.

[10] It is common cause that the only part of the definition of ‘organ of state’ contained in the Act that the Defendant might fall under is paragraph (c) of such definition. There is also no provincial constitution in the North West Province, consequently one can only look to the national Constitution to determine whether the Defendant is an ‘organ of state’.

[11] In my view Mr Roos is correct when he submits that one must look to the Constitution to determine whether the Defendant is an ‘organ of state’. Although the National Gambling Board case9 deals principally with the issues relating to the exclusive jurisdiction of the Constitutional Court and the issue of direct access to the Constitutional Court, it does illustrate the point that different functionaries or entities obtain their powers and status as an organ of state from different sources. For example, the national board and Kwa Zulu Natal board “… are institutions ‘exercising a public power or a public function in terms of any legislation’ as provided for in para (b)(ii) of the definition (s.239 Constitution). The Premier and the Minister are functionaries ‘exercising a power or performing a function in terms of the Constitution or a provincial constitution as envisaged in para (b)(i) of the definition (s.239 of Constitution).”

[12] Although Mr Hitge did not articulate it in that way, the effect of his argument is that he wants the court to read paragraph (c) of the definition of ‘organ of state’ contained in the Act as if the words “… in terms of …” meant nothing more than “… set out in …” or “… contained in …”. If this were so this would lead to anomalies and an untenable situation. If for example, a non-government organisation (NGO) had as its main objective the raising of funds for the provision of low cost housing and in fact provides such housing to the indigent in South

African, on the reading of the definition implied by Mr Hitge’s argument that NGO for the purpose of the Act would be an ‘organ of state’ and it would be entitled to notice and institution of the action within 6 months as contemplated in section 3 of the Act.

[13] In the context of the possible anomalies set out set out above and in the light of the decision of the Constitutional Court in the matter of Mohlomi v Minister of Defence10, which dealt with the time bar and notice period contained in the Defence Act11, and which found that such section fell foul of the right to access to courts contained in the Interim Constitution12, the words “… in terms of …” must be narrowly construed. This approach is supported by the fact that

paragraph (b)(ii)13 of section 239 of the Constitution has been left out of the definition of ‘organ of state’ in the Act. It is further supported by the fact that such corporate entities that the legislature intended the Act to apply to, are specifically identified in paragraphs (d); (e) and (f) of the definition ‘organ of state’ contained in the Act. It is also supported by the fact that from the title of the Act and its preamble, it is clear that the legislature did not intend the Act to apply to all organs of state.

[14] In this context the words “… in terms of the Constitution …” connote that both the identity of the

functionary or institution and the power or function that he, she or it exercises, is identified in the Constitution itself. Put

differently, that the power or function exercised by the functionary or institution arises directly from the Constitution as is

illustrated by the case of the National Gambling Board v Premier KWAZULU-NATAL and Others14. Clearly then, the Defendant does not derive its powers or functions “… in terms of the Constitution”, it derives its powers and functions from its enabling Act, the North West Housing Corporation Act15. It therefore follows that the Defendant is not an organ of state as defined in the Act. This would be a sufficient basis to uphold the Plaintiff’s exception to the Defendant’s special plea. However, in case I am wrong in my interpretation of the definition of an organ of state in the Act, I turn to the second issue raised in the Plaintiff’s exception.

[15] The second aspect raised by the Plaintiff in its exception is that its claim is for a balance due in terms of a contract as opposed to a claim for damages arising from a breach of contract. The Plaintiff then submits that in those circumstances its claim falls outside the definition of ‘debt’ contained in the Act and that accordingly, it was not required to give notice and institute its claim within six months of the debt becoming due as required by section 3 of the Act.

[16] The definition of debt contained in the Act reads as follows:

“‘debt’ means any debt arising from any cause of action –

(a) which arises from delictual, contractual or any other liability, including a cause of action which relates or arises from any–

(i) act performed under or in terms of any law; or

(ii) omission to do anything which should have been done under or in terms of any law; and

(b) for which an organ of state is liable for payment of damages,

whether such debt became due before or after the fixed state.”

[17] Mr Roos, on behalf of the Plaintiff argued that in order to qualify as a debt in terms of the Act, both the requirements of sub-sections (a) and (b) of the definition of ‘debt’ are applicable because of the use conjunction “and” in the definition of ‘debt’. In other words, he argued, sub-section (b) qualified sub-section (a) in its entirety and that the consequence of that was, that in terms of the Act, ‘debt’ was confined to claims for damages whether such claims arose from contract, delict or any other cause. He argued that grammatically and linguistically the definition of debt in the Act was clear and that it was not capable of any other meaning and that was the end of the matter and that the court need go

no further. He argued that Plaintiff’s claim being for the payment of balance due in terms of a contract where Plaintiff alleges that it has fulfilled its contractual obligations is not a claim for damages. As such it falls outside the definition of debt contained in the Act and consequently, the provisions of the Act are not applicable to Plaintiff’s claim. It followed from that he argued that the Defendant’s Special Plea did not disclose a defence and that the exception ought to be upheld.

[18] Mr Hitge, on behalf of the Defendant, raised a number of arguments which will be dealt with hereunder. The first argument raised on behalf of the Defendant was that courts should read “and” for “or” or “or” for “and” in cases where such course appears better to give effect to the obvious intention of the legislator and the scheme of the Act. During the course of his oral submissions Mr Hitge indicated that the Defendant was no longer relying on the argument that “and” in the definition of debt in the Act ought to be read as “or”. Accordingly, nothing more needs to be said in relation to this argument.

[19] Mr Hitge, relying on a passage in Kellaway’s work on Legal Interpretation16, argued when construing the provisions in a repealing statute which are substantially identical with the repealed statute, judicial

decisions as to the interpretation of those provisions in the repealed statute may be referred to and applied. He then argued that

both the Act and its (now repealed) predecessors, have consistently been applied also in respect of contractual debts in which as he puts it, specific performance (as opposed to damages) have been claimed. In support of this contention two cases are referred to namely, Air Conditioning Design and Development (Pty) Ltd v Minister of Public Works, Gauteng Province17 and the case of Hakos Cabinet Makers (Pty) Ltd v Pretoria City Council18. In ‘Air Conditioning’ case, the Court appears to have assumed that the Act applies, it did not consider the question or decide it19. In regard to the Hakos case it pre-dates our present Constitution and insofar as it might be a precedent, it cannot be applied without due regard to the rights

afforded to both individuals and corporate entities in terms of the Constitution. In any event, it is not necessary for me to decide this issue as Defendant has not established that the 14 acts repealed or which have had certain sections repealed are substantially identical with the Act. In fact if one has a look at the Limitation of Legal Proceedings (Provincial and Local Authorities Act)20, it defines ‘debt’ as follows:

“‘debt’ means any debt arising from delict and, in relation to an officer, means any such debt of such officer for which the administration or local authority in whose service such officer is, is in law also liable;”

In these circumstances the Defendant is not entitled to rely on the above principle in order to enable it to refer to authorities decided in terms of the repealed statutes.

[20] Mr Hitge argues that, with reference to the case of S v Yelelo21, an interpretation that merely rests on the division of a provision into paragraphs must yield to an interpretation based on the

intention of the law-giver when the provision is read as a whole.

The relevant passage in Yelelo’s case goes a bit further than what is set out in Mr Hitge’s heads of argument; the relevant passage reads as follows:

“… want dit is duidelik, meen ek, dat ʼn vertolking wat bloot berus op die indeling van ʼn bepaling in paragrawe moet wyk voor ʼn interpretasie gegrond op die bedoeling van die Wetgewer wat duidelik spreek indien die bepalings as ʼn geheel gelees word …”22

Mr Hitge then argues that if one reads the definition of debt contained in the Act in that manner sub-paragraph (b) qualifies only subsection (i) and (ii) of sub-paragraph (a) of the definition. In other words the damages aspect applies only to an act performed under or in terms of any law, or an omission to do anything under or in terms of any law.

[21] I am not sure that the meaning Mr Hitge ascribes to the definition of ‘debt’ contained in the act emerges “clearly” when one reads the definition as a whole without it being divided into paragraphs and sub-paragraphs. However, for present purposes, I am prepared to assume that it is at least capable of such an interpretation.

[22] In order to settle the question of what meaning the definition of ‘debt’ should bear, I am entitled and required to look at the purpose and context of the Act. The extent to which I am entitled to go in considering the purpose and context of the Act is illustrated by the dicta of Schreiner JA in the case of Jaga v Dönges, Bhana v Dönges,23 which reads as follows:

“Certainly no less important than the oft repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of the principle. The first is that “the context”, as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limits, its background.”

The second point adverted to by Schreiner JA relates to whether one should first assign an ordinary meaning to the relevant section and then see if this ordinary meaning offends the purpose of the Act as revealed by its context or read the Act in its entirety and then set about determining the meaning of the relevant section in that context. Schreiner JA then concludes:

“The difference in approach is probably mainly a difference of emphasis, for even the interpreter who concentrates primarily on the language to be interpreted cannot wholly exclude the context, even temporarily; and even the interpreter who from the outset tries to look at the setting as well as the language to be interpreted cannot avoid the often decisive first impression created by what he understands to be the ordinary meaning of the language. Seldom indeed is language so clear that the possibility of differences of meaning is wholly excluded, but some language is much clearer than other language; the clearer the language the more it dominates over the context, and vice versa, the less clear it is the greater the part that is likely to be played by the context.”24

[23] The context, in the sense referred to by Schreiner JA quoted above, to which I will refer in the present circumstances includes the following:

(a) The preamble of the Act;

(b) The state of the law before the Act including certain of the repealed Acts;

(c) The Constitution.

[24] The preamble to the Act states explicitly that the Act deals with the differing periods of notice required for instituting legal proceedings against certain organs of state as well as the different periods of prescription of such debts and the need to harmonise those differing periods. Significantly, the preamble to the Act also contains the following passages:

“AND BEARING IN MIND THAT –

South Africa has moved from a parliamentary sovereign state to a democratic constitutional sovereign state;

The Bill of Rights is the cornerstone of democracy in South Africa and that the State must respect, protect, promote and fulfil the rights in the Bill of Rights;

Section 34 of the Constitution provides that everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public bearing before a court or, where appropriate, another independent and impartial tribunal or forum;

The right of access to courts may be limited to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom as contemplated in section 36 of the Constitution; …” (my emphasis)

The preamble goes on to state:

“AND RECOGNISING the need to harmonise and create uniformity in respect of the provisions of existing laws which provide for –

…

*different periods of prescription, by making the provisions of Chapter III of the Prescription Act, 1969, applicable to all debts;” (my emphasis)

From the extracts of the preamble set out above there are three important issues to note. Firstly, the State intended to respect, protect, promote and fulfil the rights in the Bill of Rights. Secondly, its point of departure was that the provisions of Chapter III of the Prescription Act, 1969, were applicable to all debts. Finally, insofar as it was necessary to limit the right of access to the courts such rights would be limited only to the extent that it is reasonable and justifiable to do so in an open democratic society as is required by section 36 of the Constitution.

[25] Clearly a wide definition of ‘debt’ in the Act would limit access to courts in much the same way as specified periods of notice and shortened periods of prescription would.

[26] In an attempt to justify a wider interpretation of the word ‘debt’ contained in the Act, Mr Hitge quoted a passage from Mohlomi’s case25, reads which reads:

“[9] … The conventional explanation for demanding prior notification of any intention to sue such an Organ of Government is that, with its extensive activities and large staff which tends to shift, it needs the opportunity to investigate claims laid against it, to consider responsibly and to decide, before getting embroiled in litigation at public expense, whether it ought to accept, reject or endeavour to settle them.”

Mr Hitge submitted that the reasons for requiring prior notice of a claim were also applicable to claims where a balance was claimed as due in terms of a contract. Mr Roos on the other hand submitted where a claim for payment of a balance due in terms of a contract or where specific performance of a contract was claimed, the issues to be decided would generally be far narrower than the issues to be canvassed in a claim for damages, whether they are contractual or delictual damages. Consequently, Mr Roos argued the need for the protection set out in the “conventional explanation” in Mohlomi’s case26 would not arise in a claim for payment due in respect of contract. On the whole I would tend to agree with Mr Roos because the securing of evidence is central to being able to assess the claim responsibly. In a claim for damages the evidence is more likely to rely on the memory of individuals which it is desirable to secure at the earliest possible stage. By contrast a claim for payment in terms of a contract is more likely to rely on documentary evidence, such as contracts, delivery notes and correspondence.

[27] The legislation repealed by the Act shows at least two different types of claims were subject to restricted access to courts by way of providing special notice requirements and shortened periods for prescription. The first is where ‘debt’ was confined to those claims arising from delict27 and those that used a broader definition such as “any civil claims”28. The mere fact that the legislature inserted a definition of debt in the Act meant that it intended to standardise the type of claims that were subject to the restrictions of providing notice in terms of the Act. However, it does not mean that the legislature chose one or other of the types claim set out above.

[28] In the circumstances of this case, the preamble to the Act and the Constitution are of overwhelming importance when considering the context in which the Act came about. The effect of the Act is to limit a creditor’s right to access to the courts which is enshrined in section 34 of the Constitution. The purpose of the Act in this context is not merely to provide uniform periods for providing the required notice but to bring the limitation of the right to access the courts contained in the 14 repealed Acts within the parameters of section 36 of the Constitution. It is in this context that the definition of ‘debt’ contained in the Act must be interpreted.

[29] When a right is adversely affected by legislation and particularly when such right is one contained in the Constitution, the offending provision must be interpreted restrictively.29 If in interpreting the definition of ‘debt’ paragraph (b) qualifies the whole of paragraph (a), then the notice contemplated in section 3 of the Act would only have to be given when the claim is one for damages. If on the other hand paragraph (b) qualified only (i) and (ii) of paragraph (a) then any action would be subject to the provisions of section 3 of the Act.

[30] On a careful reading of the definition of debt contained in the Act, it is clear that paragraph (b) qualifies paragraph (a) as a whole. This in my view is the ordinary and natural meaning of the words as they are set out in the definition of ‘debt’ in the Act. Nothing that the Defendant has raised has persuaded me otherwise. This ‘ordinary and natural’ meaning has been considered within the context and purpose of the Act and I find that it does not offend against the purpose of the Act. More significantly this ‘ordinary and natural’ meaning makes fewer inroads into the rights of access to courts and equality enshrined in the Bill of Rights in the Constitution. As such this ordinary and natural meaning is to be preferred above a wider interpretation of the definition of ‘debt’ in the Act qualifies paragraph (a) of such definition and consequently a ‘debt’ for the purposes of the Act is confined to a claim for damages howsoever such claim arose.

[31] The only remaining issue to be considered is the issue of costs. There are a number of issues to be decided in respect of the costs. These include:

(a) The costs of the 26 March 2009 which were reserved;

(b) The Plaintiff’s contention that the Defendant’s special plea was frivolous and vexatious and that a punitive costs order should follow;

(c) Whether the Plaintiff is entitled to the costs of employing a Senior Counsel; and

(d) The Defendant’s contention that no order for costs be made, because there is no direct authority on the points raised in its Special Plea.

[32] The issues to be considered in relation to the costs of the 26 March 2009 and the Plaintiff’s contention that the special plea was frivolous and vexatious are intertwined. The only information that I have before me in relation to these issues is contained in the heads of argument filed by both Plaintiff and the Defendant. The Defendant contends that there was an agreement that the Defendant would withdraw its exception and that it would file a special plea instead, which would incorporate the terms of the exception and that the special plea would be argued at trial. Defendant contends that the Plaintiff broke this agreement by filing the present exception and setting such exception down for hearing. It was as a result of this that the matter was postponed on 26 March 2009. Mr Roos in his submissions did not seriously pursue the claim for a punitive costs order against the Defendant. In the present circumstances I have no acceptable basis on which to make such an order. Mr Roos further argued that the costs of

the postponement of 26 March 2009 should be costs in the cause of the present proceedings. In the light of the Defendant’s contention that the Plaintiff breached an agreement the only equitable order that I can make with regard to the costs of 26 March 2009 is to further reserve the costs of 26 March 2009 for the decision of the court in the main action.

[33] Dealing with the Defendant’s contention that no order as to costs should be made because there is no direct authority on the points raised in its special plea. All that needs to be said in regard to this submission is that by no stretch of the imagination can the Defendant be said to be litigating in the public interest. In my view there is no substance to this argument raised by the Defendant.

[34] Finally, in relation to costs, Mr Roos submitted that costs should follow the result and he further asked that if it is the practice in this division to include in the costs order the costs of employing a Senior Counsel. It appears that such a practice has not yet developed in this division. However, in my view it is inappropriate to leave such a decision in the hands of the Taxing Master. In the circumstances of this case I intend to decide this question on the novelty of the issues raised as well as the amount at stake. The issues raised in the matter were novel, neither Counsel nor I could find any authority directly in point. The Plaintiff’s claim is for an amount slightly in excess of two million Rand. In my view costs in this matter should follow the result and they should include the costs of employing a Silk.

[35] In the circumstances the following order is made:

(1) The Plaintiff’s exception is upheld.

(2) The Defendant’s special plea is struck out.

(3) The costs in relation to 26 March 2009 are further reserved for the decision of the court in the main action.

(4) The Defendant is to pay the costs of the exception and such costs are to include the costs of employing a Senior Counsel.

___

L. G. LEVER

ACTING JUDGE OF THE

HIGH COURT

APPEARANCES

DATE OF HEARING : 21 MAY 2009

DATE OF JUDGMENT : 09 JULY 2009

COUNSEL FOR APPLICANT : ADV J F ROOS SC

COUNSEL FOR RESPONDENT : ADV M G HITGE

ATTORNEYS FOR APPLICANT : Van Rooyen Tlhapi Wessels Inc.

ATTORNEYS FOR RESPONDENT: Smit Stanton Inc.

1Section 239 of the Constitution of the Republic of South Africa Act 108 of 1996.

2S.26 of the Constitution of the Republic of South Africa Act 108 of 1996

3Act 24 of 1982 – Both this Act and the Defendant were respectively promulgated and created in the former Republic of Bophuthatswana. – Both counsel agreed that this fact had no bearing on the issues before this Court.

4Public Finance Management Act 1 of 1999

5North West Housing Corporation Act 24 of 1982

6Op cit

7[2001] ZACC 8; 2002 (2) SA 715 (CC) @ 724 para 19 as read with footnote 7 in that judgment.

8N. W. Housing Corporation Act, supra

9Supra @ p724 para [19] read with footnote 7.

101997(1) SA 124 (CC)

11Section 113(1) Act 44 of 1957

12Constitution of the Republic of South Africa Act 200 of 1993

13This is the provision that states: “… exercising a public power or performing a public function in terms of any legislation …”

14Supra, p724 para [19] as read with footnote 7.

15Act 24 of 1982

16E. A. Kellaway, Principles of Legal Interpretation Statutes, Contracts & Wills, Butterworths, 1995, p.308

17[2005] ZAGPHC 12; 2005 (4) SA 103 (T)

18 1971 (4) SA 465 (T)

19Airconditioning case, supra, p108 – 109, paragraph 16

20Act NO.94 of 1970

21 1981 (1) SA 1002 (A)

22S v Yelelo, supra at p.1011 B - C

23 1950 (4) SA 653 (AD) at 662 G - H

24Jaga v Dönges, Bhana v Dönges, supra at 664 D-F

25Mohlomi’s case, supra – para [9] thereof.

26Mohlomi’s case, supra

27Such as contained in the Limitation of Legal Proceedings (Provincial and Local Authorities) Act No. 94 of 1970)

28Such as …

29I. N. Holeni v The Land and Agricultural Development Bank of South Africa [2009] ZASCA 9 (17 March 2009) para [18]