Nurcha Development Finance (Pty) Ltd v Emfuleni Local Municipality and Another (A5055/2018) [2019] ZAGPJHC 464 (21 October 2019)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION

LOCAL SEAT, JOHANNESBURG

CASE NO: A 5055/2018

DATE: 21 OCTOBER 2019

In the matter between: NURCHA DEVELOPMENT FINANCE (PTY) LTD APPELLANT and EMFULENI LOCAL MUNICIPALITY HALIFAX GROUP (PTY) LTD FIRST RESPONDENT SECOND RESPONDENT

JUDGMENT

THE COURT

1. On 13 June 2012 the first respondent Municipality, Emfuleni, appointed, as employer under a written construction agreement about to be concluded, the second respondent company, Halifax which company was to construct a traffic precinct in Emfuleni. Pursuant to the agreement thereafter concluded between the respondents, Halifax would have to wait for up to ninety days for payment from Emfuleni for work completed. Halifax, in order to ease its cash-flow concluded on 24 August 2012 a written loan agreement with the appellant, Nurcha which company would lend money to Halifax from time to time. Halifax would make repayments on the loan to Nurcha as and when Halifax received payments from Emfuleni. Emfuleni was not a party to the loan agreement.

2. Under clause 1.13 and clause 1.6 of the loan agreement read with clause 16 thereof Halifax ceded its claims against Emfuleni to Nurcha as security for the liability from time to time of Halifax to Nurcha. Specifically, under clause1.6 the “Ceded Rights” included the “Repayment Accounts Ceded Rights” and the “ Contract Income Ceded Rights”. These rights, in turn include, under clause 1.13 the borrower’s, that is Halifax’s “rights, title and interest in and to the Contract Income” and, under clause 1.45 “all of the Borrower’s rights, title and interest in and to the Repayment Account.” Under clause 16.5.2 Halifax, the borrower warranted to Nurcha that Halifax remains sole and beneficial owner of all ceded rights.

3. Under clause 1.46 read with clause 14 Halifax was obliged to ensure that all payments due to it from Emfuleni were to be paid by Emfuleni into an account referred to as a repayment account. This account was held by Halifax, in its own name at the Rosebank branch of FNB.

4. On 24 August 2012, and to strengthen Nurcha’s security Halifax granted written power of attorney to Nurcha to operate the account. This document is to be read with an agreement, concluded on the same day between FNB, Halifax and Nurcha under which all three parties agreed that Nurcha would operate the account. Under clause 2.2 of this tripartite agreement Nurcha requested FNB to open an account in the name of Halifax. Emfuleni was not party to either the power of attorney or the agreement relating to the operating of the account.

5. On 13 September 2012 Halifax informed Emfuleni in writing that Emfuleni was to make payment of amounts owing by Emfuleni to Halifax into the repayment account, that is the repayment account of Halifax at FNB, Rosebank.

6. On the same day, Ms Van Onselen, the Executive Secretary of the Emfuleni Municipal Manager signed a document in favour of Nurcha on receipt of the 13 September 2012 instruction referred to in the previous paragraph of this judgment reading “ Noted and accepted by employer, the employer hereby confirming that all terms of this instruction shall be complied with fully and further undertaking in favour of Nurcha, that it shall pay all monies due and payable in terms of the construction contract into the aforementioned repayment account ( including any such monies due and payable as a result of or arising from a termination thereof) until such time that all monies outstanding to Nurcha by the borrower in respect of the above project has been paid in full.

7. On 19 September 2012 Nurcha accepted in writing a written cession of book debts by Halifax to Nurcha. Emfuleni was not party to this agreement.

8. Nurcha claimed in the application before the court below and dismissed by it that Emfuleni owed Nurcha money otherwise owed by Emfuleni to Halifax for construction work done in Emfuleni.

9. There was much discussion in written argument presented to this full court and in oral argument before us about whether or not Nurcha’s

claim is based solely on the document signed by Ms Van Onselen as a selfstanding undertaking or whether Nurcha could rely on a claim as cessionary, or an adstipulator claim or on a stipulatio alteri in its favour. Emfuleni firmly denied the authority of Ms Van Onselen to do more than receive the document that she received. The same or similar relief sought by Nurcha in the present case has been the subject of much litigation in other cases, at least two of which have been decided by the SCA. We are of the view that a trial court aided by a full set of pleadings setting out in detail both sides’ cases is best placed to adjudicate the matter accurately.

ORDER:

1. The appeal is upheld in part.

2. The order of the court below is set aside and replaced with an order reading:

3. “1. The notice of motion stands as a simple summons.

2. The notice of intention to oppose stands as a notice of intention to defend.

3. The applicant is to deliver a declaration by 30 November 2019.

4. Thereafter the matter is to proceed as a trial action.

5. Costs reserved. “

4. The costs in the appeal are reserved for determination by the trial court.

______________________________________

FRANCIS J

HIGH COURT JUDGE

GAUTENG LOCAL DIVISION, JOHANNESBURG

WRIGHT J

GAUTENG LOCAL DIVISION, JOHANNESBURG

FISHER J

HIGH COURTJUDGE

GAUTENG LOCAL DIVISION, JOHANNESBURG

Appearances: On behalf of the Appellant: Adv DP De Villiers SC and Adv E Nhutsve Instructed by: DMO Incorporated Attorneys 011 463 6693 namhla@rmattorneys.co.za On behalf of the Respondents: Adv K Tsatsawane SC Instructed by: Ramatshila-Mugeri Attorneys 011 326 1703 katlego@rmattorneys.co.za

Date of Hearing: 21 October 2019 Date of Judgment: 11 November 2019