Rudnat Projects v Nketoane Local Municipality & others (2870/2013) [2021] ZAFSHC 135 (25 March 2021)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Case number: 2870/2013 In the matter between:

RUDNAT

PROJECTS

PLAINTIFF and

NKETOANE

LOCAL MUNICIPALITY 1st

DEFENDANT

PHUMELELE LOCAL MUNICIPALITY 2nd

DEFENDANT

SETSOTO LOCAL

MUNICIPALITY 3rd DEFENDANT

DIHLABENG LOCAL MUNICIPALITY 4th

DEFENDANT

CORAM: NAIDOO, J

HEARD ON: 17 -18 March 2020, 23 April 2020; 17 November 2020; 23, 24 26 February 2021

JUDGMENT BY: NAIDOO, J

DELIVERED ON: 25 MARCH 2021

[1] The plaintiff issued summons against the four defendants, namely the first defendant, Nketoane Local Municipality (Nketoane), the second defendant, Phumelele Local Municipality (Phumelele), the third defendant, Setsoto Local Municipality (Setsoto) and the fourth defendant, Dihlabeng Local Municipality (Dihlabeng), for payment of monies owed to it for professional services rendered. The relief claimed in the summons reads, inter alia, as follows:

“Wherefore the Plaintiff claims from the Second Defendant, alternatively from the First, Second Third and Fourth Defendants’ payment by one, the other to be absolved:

30.1 Payment of R5 287 036,43

30.2 Interest on the aforementioned amount, calculated at 15.5% per year a tempore morae from 13 April 2013 until date of final payment.

30.3 That the Second Defendant be ordered to pay the costs of the action. Alternatively, that the First, Third and Fourth Defendants be ordered to pay the costs jointly and severally, payment by one the other to be absolved, in the event of the Plaintiff being unsuccessful against the Second Defendant only.”

[2] A brief background to the matter is that the National Department of Water Affairs (DWA) made funding available, in the form of Regional Bulk Infrastructure Grants (RBIG), for a water service regional bulk infrastructure programme for the provision of water to the inhabitants in the jurisdictional areas of the first to fourth defendants. The allegation is that the four defendants held a meeting and decided that the second defendant, Phumelele, would be the leader/coordinator of the project. On or about 18 March 2009, Phumelele sent a letter to the plaintiff instructing it to conduct a water services feasibility for Setsoto and Dihlabeng, and to reconcile and consolidate the existing feasibility studies undertaken by Nketoane and Phumelele. A Joint Venture (JV) was established to undertake this work, comprising the plaintiff, Mot Professional Services Consultants and Mol Procon CC, and the work was divided amongst them. Mot Professional Services Consultants undertook the feasibility study for Nketoane, Mol Procon for Setsoto and the plaintiff for Phumelele and Dihlabeng . At some stage, Mot Professional Services Consultants were unable to continue with the feasibility study for Nketoane and withdrew from the JV. The study for Phumelele and Dihlabeng was almost complete, so the plaintiff was requested to take over and complete the feasibility study for Nketoane, which it did.

[3] The aim of these various studies was to achieve implementation readiness. For this purpose an Implementation Readiness Report (IRR) would be produced. The plaintiff alleges that it did in fact produce such a report, which was accepted by DWA as well as the four defendants. From the evidence and the papers it is apparent that numerous meetings were held monthly, where, amongst others, the plaintiff’s representatives, either Ms Crawley, Mr Wagenaar, or both, and the representatives of the four defendants were in attendance. It is also apparent that there was participation by all present at those meetings. At various meetings there were discussions regarding progress in respect of the IRR, the challenges faced by the defendant municipalities, and in some instances the solutions to the challenges. I will refer to these meetings in greater detail, if necessary, later in this judgment. The evidence for the plaintiff, which is not in dispute, is that the plaintiff presented its IRR to DWA, the 4 defendants and other stakeholders on 21 October 2010. The report was apparently well received and implemented.

[4] The plaintiff’s involvement in the implementation of the water services project in terms of the IRR for Nketoane continued until it learned in October 2011, that Nketoane had appointed another consultant, Khatho Consultants, to implement the project. The plaintiff then rendered an invoice to Nketoane for the services rendered, which was not paid. The plaintiff thereafter instituted the current action.

[5] At the commencement of the trial, the plaintiff advised the court that it was no longer proceeding against the second and fourth defendants, as the matter in respect of those two defendants had been settled. Consequently, the court would be called upon to decide:

2.1 if there was a contract in this matter;

2.2 whether the plaintiff rendered services;

2.3 the amount of the plaintiff’s claim.

[6] The plaintiff led the evidence of two witnesses, Ms Hazel Crawley and Mr Pieter Johannes Wagenaar. After Ms Crawley’s evidence was led, the plaintiff applied for an amendment to its Particulars of Claim, which was opposed by the first and third defendants. After considering the application, the court granted leave to the plaintiff to amend its summons, which was duly done. After a further adjournment for trial in November 2020, the matter could not proceed as the first defendant had not filed its amended plea. The matter was then postponed for the hearing of further evidence, to 23, 24 and 26 February 2021. The plaintiff then called the evidence of Mr Wagenaar, and thereafter closed its case. The first and third defendants indicated that they wished to bring an application for absolution from the instance. Immediately prior to the hearing of that application, the plaintiff advised the court that it withdraws the action against the third defendant. The question of who should pay the third defendant’s costs stood over, as the plaintiff argued that it should be the first defendant. Conversely, the first defendant argued that the plaintiff, who has withdrawn the action against the third defendant, should be liable for those costs. The application for absolution was then argued by the first defendant and the plaintiff.

[7] Before I deal with the application for absolution, it is opportune to summarise the evidence led by the plaintiff in support of its case. Ms Crawley testified that she is the Administrative Manager of the plaintiff, which is a civil engineering firm in Harrismith in the Free State. She has held this position for 13 years, and performs all the administrative work for the plaintiff. She was very closely involved in the entire project for the water service regional bulk infrastructure programme, and attended all the monthly meetings. She gave details of how the plaintiff came to be involved in the water service programme, as I have outlined above, and detailed the work that the plaintiff had done in this matter. Ms Crawley testified that there was no tender process involved, and that the plaintiff was invited to provide its services in this matter. She also confirmed that Phumelele was the designated coordinator of the programme and that DWA had provided monies to Phumelele, which was to be divided amongst the four defendant municipalities to cover the costs of groundwater studies.

[8] She indicated that Nketoane participated in the programme, attended the monthly meetings and had ongoing interactions with the plaintiff, while the IRR was being completed, during the period that it prepared the preliminary design as well as the final design. The preliminary design and final design were part of the implementation of the IRR. Apart from the monthly meetings, there were also interactions directly between the plaintiff and Nketoane in respect of implementation. The plaintiff was thereafter informed by Nketoane on 7 October 2011, that Khato Consulting was appointed to implement the project. This was a year after the plaintiff’s IRR was approved. The plaintiff then issued an invoice to Nketoane for payment in respect of services rendered. The invoice was based on fees chargeable by the engineering profession as provided for in the relevant Government Gazette.

When Nketoane refused to pay, the plaintiff instituted legal action.

[9] Ms Crawley was cross-examined at length by counsel for Nketoane and Setsoto. She confirmed that they were not in possession of a resolution from Nketoane’s Council in respect of this project. She also confirmed that at the time of its appointment to render services, the plaintiff was advised by The Municipal Manager of Phumelele that the four municipalities had met and appointed Phumelele as the “champion” of the project. She was unable to comment on what was discussed and decided at that meeting, as the plaintiff was not involved at that stage.

[10] Pieter Johannes Wagenaar, testified that he is currently semi- retired but his involvement with the plaintiff was in the capacity of a management member. He is a civil engineer by profession. After the court dealt with an objection to this witness testifying as an expert, his testimony continued. He testified that he was also closely involved with the water service project that is the subject matter of this case. He led extensive evidence on the calculation of the fees which Nketoane was invoiced for, with reference to the tariffs prescribed by the Engineering Council of South Africa (ECSA), as published in the relevant Government Gazette. Mr Wagenaar is a registered member of ECSA. He further testified that the work, as reflected in the papers was done. He was also cross-examined at great length. He conceded that the plaintiff did not obtain a signed letter of appointment from Nketoane, nor was there a written agreement between the plaintiff. He indicated that the letter of appointment was requested several times from Nketoane, but was not forthcoming. Furthermore, he confirmed that there was no bidding process involved in this matter, and that Nketoane at no stage produced a resolution by its Council for Rudnat to render services for it.

[11] He continued to do the required work, trusting that the letter of appointment would be provided, because of the many meetings that they had with Nketoane, who also engaged with them to supervise the consultants involved with the Environmental Impact Assessment and Survey. The plaintiff was further called on to approve the accounts rendered by these consultants. He further indicated that Nketoane was present at all the meetings and continued to give progress reports on work being done on its behalf. At no stage did it raise any query about the plaintiff rendering the services or any objection thereto. The plaintiff closed its case after this witness testified.

[12] I turn now to the application for absolution from the instance. Uniform Rule 39(6) provides that:

“At the close of the case for the plaintiff, the defendant may apply for absolution from the instance, in which event the defendant or one advocate on his behalf may address the court and the plaintiff or one advocate on his behalf may reply. The defendant or his advocate may thereupon reply on any matter arising out of the address of the plaintiff or his advocate“

The parties correctly stated the position regarding an application for absolution at the close of the plaintiff’s case. The test generally applied in such an instance is whether there is evidence upon which a court applying its mind reasonably to such evidence, could or might (not should or ought to) find for the plaintiff. [Claude Neon Lights SA Ltd v Daniel 1976(4) SA 403 (A)]. In Gordon Lloyd Page & Associates v Rivera 2001(1) SA 88 (SCA) at 92 H-J, the Supreme Court of Appeal held that the court ought not to be concerned with what someone else might think, but that it should rather be concerned with its own judgment and not that of a ‘reasonable’ person or court. I align myself with this dictum. It has also been established in our lawthat if certain facts in issue are within the knowledge of the defendant the court should take this into account and more readily refuse to grant absolution from the instance [See Erasmus, Superior Court Practice, D1 532].

[13] Mr Shepstone argued that the plaintiff failed to establish its case in contract, especially if regard is had to Mr Wagenaar’s evidence, no contract between Nketoane and the plaintiff has been proven. In respect of the amendment to the Particulars of Claim, he argued that two new causes of action were introduced, namely, that of unjust enrichment and a claim based in delict. Mr Shepstone argued that these claims would in any event have prescribed by the time the amendment was effected. He advanced lengthy arguments in respect of the elements to be established in proving a claim of unjust enrichment, as well as that based in delict.

[14] The plaintiff countered that it had certainly placed sufficient evidence on record, via Ms Crawley and Mr Wagenaar, to show that there was an instruction to the plaintiff, that it had conducted the works over an extended period, with the knowledge of Nketoane who participated fully in the project. Mr Wagenaar’s evidence sets out clearly that the work was done and charged for in stages, and when viewed in conjunction with the evidence of Ms Crawley, such work was rendered and benefitted Nketoane. He argued that an order for absolution should not be granted, unless justice demands it.

[15]. In my view, issues relating to whether the plaintiff proved all the elements of the claim or whether prescription affects such claims, are not matters to be investigated or interrogated at this stage. Those are issues which can and should be interrogated at a later stage. In applications for absolution at the close of the plaintiff’s claim, the evidence tendered must be regarded as true, unless it is inherently and patently unacceptable or untrue. Such circumstances are not present in this matter. In my view, the true circumstances of this matter have been overlooked by Nketoane, in advancing some of the arguments it has.

[16] What is very clear from the papers is that the funding in this matter for the regional bulk integrated water programme came from DWA. Each municipality was the implementing agent. It was a project which was driven by DWA. In the case of Nketoane, an amount of R8 million was allocated to it from RBIG and would have been paid to Nketoane. Certain top-up financing was to be provided by it (Nketoane). It is clear from correspondence by DWA to Nketoane that such funding was for implementation of the project and included the IRR and preliminary designs. This was not a situation where the municipalities required services that would entail a bidding process, and a consequent contract between the municipality and the contractor for the rendering of services, which the municipality pays for. Cross-examination and argument along those lines are misplaced. The resolution of the Municipal Council, if any, would, in all probability, relate to the participation of the municipality in the regional water project. It cannot be expected, therefore, that a resolution would have been taken by the Municipal Council, appointing the plaintiff to provide services. This is information within the exclusive knowledge of Nketoane, and if revealed, may well negate the defences put to the plaintiff’s witnesses.

[17] It is very evident from the papers and the evidence that Nketoane participated fully, rendered regular progress reports in respect of the work being done by the plaintiff, and it engaged the plaintiff to supervise the Environmental Impact Assessment and Survey. The latter activity could not have been completed without extensive information regarding the route of the pipes being furnished to the consultant by the plaintiff. It is also evident, in my view, that Nketoane benefitted to a large extent from the work done by the plaintiff. The latter made numerous requests to Nketoane to sign a letter of appointment for purposes of audit and formalising the contract which would have come into existence when the plaintiff was instructed to render the services it did. Nketoane’s acceptance of the IRR and designs prepared by the plaintiff require interrogation to establish if it acted in terms of an agreement. Nketoane’s intransigence is reflected in its reluctance and/or refusal to sign the letter of appointment. This attitude extended even to the Funding Agreement which DWA required it to sign. The plaintiff was then requested by DWA to prevail upon Nketoane to sign the agreement. It now opportunistically argues that there was no letter of appointment or contract between it and the plaintiff, which entitled the plaintiff to claim payment for services rendered.

[18] As correctly pointed out by Mr Shepstone, unjust enrichment is an equitable remedy. This, in my view, entails that equity must prevail between the parties. Absolution from the instance will not be an equitable or just order at this stage. My further view is that applying my mind reasonably to the evidence, I could find for the plaintiff. Nketoane, if it so chooses, should explain how it became involved in this project, what motivated its participation, its extensive involvement with the plaintiff to secure the work done by the latter, and explain why it alleges that it is not liable to pay for services it has benefitted from.

[19] In the circumstances, the following order is made;

19.1 The application for absolution from the instance is dismissed, with costs.

S

NAIDOO J

On behalf of the Plaintiff: Adv S Grobler SC

Instructed by: Peyper Attorneys

101 Olympus Drive

Helicon Heights

Bloemfontein

(Ref: Ms S Meades)

On behalf of the 1st Defendant: Adv RC Shepstone

Instructed by: Lawrence Melato Attorneys

c/o Roussouws Attorneys

119 Pres Reitz Avenue

Westdene

(Ref: Mr JH Conradie)