Special Investigating Unit v Alfred Nzo Local Municipality and Others (EC02/2020) [2023] ZAST 7 (14 April 2023)

IN THE SPECIAL TRIBUNAL ESTABLISHED IN TERMS OF SECTION 2 (1) OF THE SPECIAL INVESTIGATIONS UNIT AND

SPECIAL TRIBUNALS ACT 74 OF 1996

(REPUBLIC OF SOUTH AFRICA)

CASE NUMBER:EC02/2020

THE SPECIAL INVESTIGATING UNIT

Plaintiff

and

THE ALFRED NZO LOCAL MUNICIPALITY

1st Defendant

KWANE CAPITAL FINANCIAL SERVICES (PTY) LTD

2nd Defendant

THE TSANTSABANE LOCAL MUNICIPALITY

3rd Defendant

JUDGMENT

Summary – civil procedure – application to amend the plaintiff’s particulars of claim in terms of Uniform Rule 17(4) to correct the citation of the second defendant. The circumstances do not justify the exercise of a discretion in favour of invoking this Uniform Rule in terms of Tribunal Rule 28(1). The proposed amendment objected to on the basis that an incorrect non-existent entity is cited, simply correcting the particulars of claim does not cure defect because the correct entity is not served, thus preventing it from raising plea of prescription. Held – objection is a red herring. The correct entity has notice of the main action; hence it

is opposing the proposed amendment. Nothing prevents it from filing a special plea of prescription once the amendment is effective.

MODIBA J:

[1] The plaintiff seeks to effect several amendments to its particulars of claim. Chief of these is a correction of the citation of the second defendant, cited as Kwane Capital Financial Services (Pty) Ltd (“KCFS”). A party who is not cited, Kwane Capital (Pty) Ltd (“Kwane Capital”) is opposing the application to amend.

[2] In the main action, the plaintiff seeks an order declaring unlawful and setting aside contracts concluded between the first defendant and KCFS for the rental of assets referred to in the impugned contracts as the yellow fleet as well as monetary judgment against KCFS in the amount of R60,736,633.86.

[3] Notwithstanding that since it is not cited, Kwane Capital is legitimately not party to the main action, it filed a notice to except to the plaintiff’s particulars of claim. In the notice of exception, Kwane Capital effectively complains that the plaintiff incorrectly cited KCFS as the second defendant. It is the party which ought to have been cited. In response, the plaintiff attempted to amend its particulars of claim to correct this alleged error. Kwane Capital objects to the proposed amendment on the basis that it does not correct the defect complained of. Hence the plaintiff seeks the

order referenced above.

[4] Kwane Capital relies on four grounds of opposition. Before I describe the grounds of opposition, it is apposite that I outline the applicable legal principles:

APPLICABLE LEGAL PRINCIPLES

[5] It is trite that in terms of Uniform Rule 28(1), a litigant may amend his or her pleadings at any stage of the proceedings before judgment. A court hearing an application for an amendment has a discretion to grant it. Such discretion must be exercised judiciously. The general approach to amendments is that they should be allowed unless the application is made in bad faith and would cause an injustice which cannot be compensated for an order for costs.[1] These principles are equally applicable to Tribunal Rule 15 which largely mirrors Uniform Rule 28(1).

[6] Kwane Capital has premised its objections to the proposed amendments on Uniform Rules 4(1)(a) and 17(4). In terms of Tribunal Rule 28(1), Uniform Rules only apply to Tribunal proceedings at the discretion of the presiding officer were their invocation serves to address a lacuna in Tribunal Rules. Therefore, to succeed in its opposition, Kwane Capital has to establish appropriate circumstances that justify the exercise of the Tribunal’s discretion to invoke the Uniform Rules it seeks to rely upon.

[7] I deal with these rules at pertinent points in the judgment.

FIRST GROUND OF OPPOSITION

[8] Kwane Capital has premised its first ground of opposition on Uniform Rule 17(4) which provides as follows:

“Every summons shall set forth — (a) the surname and first names or initials of the defendant by which the defendant is known to the plaintiff, the defendant’s residence or place of business and, where known, the defendant’s

occupation and employment address and, if the defendant is sued in any representative capacity, such capacity; and (b) the full names, gender (if the plaintiff is a natural person) and occupation and the residence or place of business of the plaintiff, and if the plaintiff sues in a representative capacity, such capacity”.

[9] It complains that the summons is defective for non-compliance with this Uniform Rule in that the instruction to the Sheriff on the face of the summons states that:

9.1 “inform Kwane (Pty) Ltd, a local municipality and whose domicilium citandi et executandi for purposes of these proceedings is Unit 23B, Catherine and West Building, Corner Catherine and West Street, Sandton, Gauteng…”; [emphasis added];

9.2 “inform Port St. Johns Local Municipality, a local municipality and whose domicilium citandi et executandi for purposes of these proceedings is Unit 23B, Catherine and West Building, Corner Catherine and West Streets, Sandton, Gauteng…”; [emphasis added];

9.3 “inform the defendants to file their notices of intention to defend with the “Registrar of this Court at East London…”. [emphasis added].

[10] Kwane Capital contends that KCFS and Kwane (Pty) Ltd are non-existent entities. A cursory search on the internet also shows that there is no Local Municipality in South Africa called Kwane (Pty) Ltd. Amending the name of the second defendant as proposed by the plaintiff and inserting the registration number does not cure the defects on the face of the summons and, accordingly, does not assist the plaintiff in achieving its cause.

[11] There is no merit to Kwane Capital’s first ground of objection. Kwane Capital has notice of the main action. It instructed its attorneys to file the notice of exception where it acknowledges that it is the entity which ought to have been cited as the second defendant. When the plaintiff tried to amend its particulars of claim to address Kwane Capital’s complaint, it objected to the proposed amendment and is opposing this application. By so doing, it has de facto assumed the position of the second defendant. The plaintiff has accepted this as it is has not taken issue with the fact that as a party who is not cited, Kwane Capital has no standing to oppose the amendment application.

[12] If the plaintiff is granted leave to amend its particulars of claim, the proposed amendment will cure the defect complained of in Kwane Capital’s notice of objection by properly joining it to the main action as the second defendant, thus, not only allowing it to defend the action but also allowing proper and full ventilation of the issues that arise between the parties.

SECOND GROUND OF OBJECTION

[13] Kwane Capital complains that the plaintiff elected to have the summons served in accordance with Rule 6(1)(d) of the Special Tribunal Rules. Accordingly, the Sheriff was obliged to serve the summons in accordance with Rule 4(1)(a) of the Uniform Rules. Kwane did not receive the summons as alleged by the plaintiff. The return of service, which was obtained from the Sheriff, states that it was served on “CHERYL FRAPPIER a person apparently not less than sixteen years of age and in the employ of KWANE CAPITAL FINANCIAL SERVICE (PTY) LIMITED accepted service. Rule 4[1] (a)(v)”.

[14] Rule 4(1)(a)(v) provides that:

“(1)(a) Service of any process of the court directed to the sheriff and subject to the provisions of paragraph (aA) any document initiating application proceedings shall be effected by the sheriff in one or other of the following manners:

(v) in the case of a corporation or company, by delivering a copy to a responsible employee thereof at its registered office or its principal place of business within the court’s jurisdiction, or if there be no such employee willing to accept service, by affixing a copy to the main door of such office or place of business, or in any manner provided by law”.

[15] Kwane Capital contends that there is no company called KCFS with its registered address or principal place of business at the address quoted in the return of service. There are at least eleven companies operating from Unit 23B, Catherine and West Building, Corner Catherine and West Streets, Sandton, Gauteng, some of which bear the prefix Kwane in their names. It can thus not be assumed that because the summons was served at the above address, it was correctly served on Kwane Capital. It can neither be said that Kwane Capital had notice of the summons merely based on it being served at the address where it operates with at least ten other companies. Accordingly, there has been no proper service on Kwane Capital, and this defect is not cured by the amendments proposed by the plaintiff.

[16] By objecting to the present particulars of claim being corrected, Kwane Capital essentially insists on fresh summons that comply with Uniform Rule 17(4) being issued and served on it. But on its own version, Kwane Capital has notice of the main action. This complaint is a red-herring and will only have a dilatory effect on the main action.

THIRD GROUND OF OPPOSITION

[17] Kwane Capital complains that since it has not been properly served, it is unable to file a special plea of prescription. This ground of opposition is another red-herring. Nothing prevents Kwane Capital from raising a special plea once the proposed amendment is allowed and it is properly cited on the plaintiff’s amendment particulars of claim.

CONCLUSION

[18] Kwane Capital stands to suffer no prejudice if the proposed amendment is effected. The application is not mala fide and causes no injustice to Kwane Capital. The amendment is effected timely to allow Kwane Capital to be properly cited and to defend the action should it so wish. For these reasons its grounds of objection stand to be dismissed.

COSTS

[19] Since it is seeking an indulgence, I would ordinarily saddle the SIU with the costs of this application notwithstanding that Kwane Capital opposed it.[2] But Kwane Capital’s grounds of opposition are frivolous, lack merit and have only had a dilatory effect on the proceedings. Under these circumstances, it is proper that Kwane Capital bears the costs of opposition.

[20] In the premises, the following order is made:

ORDER

1. The application succeeds.

2. The plaintiff is granted leave to amend within 5 days of this order, its particulars of claim as proposed in its undated notice of intention to amend filed at Caselines 047:1.

3. Within 10 days of expiry of the period in paragraph 2 of this order, the second defendant shall file its pleading in terms of Tribunal Rule 13(1), failing which it is ipso facto barred from doing so.

JUDGE L. T. MODIBA

PRESIDENT OF THE SPECIAL TRIBUNAL

Appearances

Attorney for the plaintiff Ms L Tyani, State Attorney, East London Counsel for the plaintiff Adv S Nankan Attorney for the defendants Ms T Radloff, Timson Wilks Attorneys Counsel for the defendants Adv D Dorfling SC assisted by Mr L Mokwena Date of hearing: Not applicable, application determined on the basis of papers filed. Last date of filing of heads of argument, 10 March 2023 Date of Judgment: 14 April 2023

Mode of delivery: this judgment is handed down by sending it by email to the parties’ legal representatives, loading on Caselines and release to SAFLII and AFRICANLII. The date and time for delivery is deemed to be 10 a.m.

[1] Moolman v Estate Moolman 1927 CPD 27 at page 29.

[2] President of The Republic of South Africa And Others V South African Rugby Football Union and Others 1999 (2) SA 14 (CC) at paragraph 51.