University of Venda v Eagle's 911 (Pty) Ltd and Others (1495/2020) [2025] ZALMPTHC 6 (28 March 2025)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

LIMPOPO LOCAL DIVISION, THOHOYANDOU

CASE NO: 1495/2020

REPORTABLE: NO

OF INTEREST TO THE JUDGES: NO

REVISED: YES

DATE: 28/03/2025

SIGNATURE: TE MATUMBA, AJ

In the matter between:

UNIVERSITY OF VENDA

APPLICANT

and

EAGLE'S 911 (PTY) LTD

FIRST RESPONDENT

DR KHATHUTSHELO NORMAN HADZHI

SECOND RESPONDENT

PURCHASING CONSORTIUM SOUTHERN

THIRD RESPONDENT

AFRICA NPC (REGISTRATION NO: 99/23736/99)

Heard on: 27 November 2024

Delivered on: 28 March 2025

JUDGMENT

Matumba, AJ

Introduction

[1] In this matter, the applicant seeks an order for contempt of court against the first and second respondents (the "respondents"), alleging that they have failed to comply with the court order. The applicant is the University of Venda (the "University"), which entered into an Emergency Medical Service ("EMS") contract with the first respondent, Eagle's 911 (Pty) Ltd (hereinafter referred to as "Eagles"). This EMS contract was set aside on 25 July 2023 during review court proceedings aimed not only at reviewing the contract but also at enabling the University to recover any debts owed by Eagles. The review served before Phatudi, JP, who issued an order by agreement between the parties (hereinafter referred to as the "court order"), which, inter alia, required that:

"3.1 The First Respondent is to file with this Court, within thirty (30) days hereof, an audited statement of expenses incurred, the income received and the net profit it would have earned under the EMS services[sic] contract”.

[2] In these proceedings, the University asserts that Eagles and the second respondent, Dr. Khathutshelo Norman Hadzhi, have failed to comply with the aforementioned order and should be declared to be in contempt of court. Furthermore, the University requests that Dr. Hadzhi be committed to imprisonment for contempt of court for a period of 30 (thirty) days, with the condition that this imprisonment be suspended for 2 (two) years, provided that Eagles complies with the court order within 14 days of the granting of the order sought in this application.

[3] The respondents opposed the application, contending that Eagles has complied with the court order by filing an Agreed-Upon Procedure ("AUP") report prepared by Ms. TN Mashanda of Njapa Accountants and Auditors Incorporated, believing it aligned with the court order.

[4] After hearing the application on 27 November 2024, I issued an ex­tempore order, dismissing the application and ordering the University to pay wasted costs. Following this, on 22 January 2025, the University applied for leave to appeal without first requesting the underlying reasons for that order.

[5] On 31 January 2025, nine days after the filing of the application for leave to appeal, the University filed a notice requesting the reasons for the order, without withdrawing its application for leave to appeal.

[6] The non-withdrawal of the application for leave to appeal resulted in its scheduling for hearing on 28 February 2025. During this hearing, counsel for Eagles and the University contended that the matter should be removed from the roll due to the absence of reasons for the ex-tempore order. Consequently, the matter was removed from the roll with costs in the cause to enable the court to provide the reasons for the order, which I hereby present.

[7] The court had to consider whether the respondents' actions constituted contempt, given their interpretation of the court order and its associated legal obligations. In this judgment, I will first address the procedural error concerning the manner in which leave to appeal was sought, followed by a discussion of the issue of urgency of the matter, before ultimately turning to the substantive issue of contempt.

Procedural error

[8] In its application for leave to appeal, the University outlines the errors allegedly committed by the court as follows:[1]

"1. The Learned Judge erred in finding that:

1. 1 The Applicant is not in contempt of paragraph 3.1 of the order of this Court of 25 July 2023 that required the First respondent to file with this Court within 30 days hereof an "Audited Statement" of expenses incurred, the income received and the net profit it would have earned under the disputed EMS services contract.

1.2 The First Respondent has complied with paragraph 3.1 of the order of this Court of 25 July 2023.

1.3 By filing an "Agreed Upon Procedure" report instead of an Audited Statement" of expenses incurred, the First Respondent complied with the Court Order.

1.4 Effectively finding that there is no difference between ''Audited Statements" and Agreed Upon Procedure" report which was filed by the First Respondent.

2. The Court ought to have found that:

2.1. The First Respondent together with the Second Respondent have failed to comply with paragraph 3.1 of the Court Order of this Court of 25 July 2023.

2.2. There is a difference between the "Audited Statements" and "Agreed Upon Procedure" report.

2.3. By filing an "Agreed Upon Procedure" report instead of filing an "Audited Statements", the First and/or the Second Respondents) have failed to comply with paragraph 3.1 of the order of this Court of 25 July 2023.

2.4. An ''Agreed Upon Procedure" report is not an audit as provided for in terms of the International Standards on Related Services (ISRS) 4400.

3. The Learned Judge ought to have found that the Applicant has satisfied all the requirements for an application for contempt of a Court Order, and further that the First and/or Second Respondents) are in contempt of paragraph 3.1 of the order of this Court of 25 July 2023.

4. The Court erred in finding that it was impossible for the First and Second Respondents to comply with the Court Order. Such a finding is not supported by the facts alleged by and on behalf of the Respondents. This finding clearly contradicted the allegations that were made by or on behalf of the Respondents. The Learned Judge failed to have regard for the following allegations by and on behalf of the First Respondent:[2]

4.1. "I sincerely believe that the First Respondent had complied with the Court Order."

4.2. "I respectfully submit that the report complies with clause 3.1 of the Court,... "

4.3. "I respectfully contend that the First Respondent has complied with the Court."

4.4. "I have already explained the basis upon which the report complies with paragraph 3.1 of the Court Order "

4.5. "My professional opinion, the report prepared by Njapa Accountants and Auditors dated 06 September 2023 complies with the Court Order."

5. The Court erred in awarding an adverse cost order against the Applicant. In making an adverse cost order against the Applicant, the Court failed to properly exercise its discretion Judicially taking into account that:

5.1. The Applicant is a public institution which is funded by the taxpayers.

5.2 The First and Second Respondents have already benefitted from a contract that was declared unlawful, invalid, and unconstitutional by the High Court.

5.3 The Applicant as a State Organ has a statutory and constitutional duty to recover any moneys paid unlawfully to the First Respondent.

5.4 The Applicant in this matter is enforcing the recovery of the money paid unlawfully to the First Respondent.

5.5 The chilling effect that adverse cost orders will have on public institutions trying to recover unlawfully paid moneys to beneficiaries of unlawful contracts.

5.6 It was clear that the Respondents had not complied with the Court Order.

6. For these grounds, the Applicant submits that the proposed appeal has reasonable prospects of success and that it raises important points of law that warrant consideration of a higher Court, and thus in the interest of justice that Leave to Appeal is granted as contemplated in section 17(1)(a)(i) and (ii) of the Superior Courts Act 10 of 2013."

[9] Except where it references the ex-tempore order, the entire application for leave to appeal is predicated on the comments made during the hearing of arguments. This offends the principle that judges may express initial impressions or pose questions during hearings that reflect their perspective on the case. These remarks do not constitute formal findings of fact or law; rather, they are non-binding. They do not carry the same weight as the written decision issued subsequently. Instead, these remarks serve to provide insight, clarify the judges' thoughts and guide the discussion. With this said, the University committed an error in procedendo, as it should have awaited the issuance of the reasons for the ex-tempore order before applying for leave to appeal.

Urgency

[10] In my view, contempt of court, especially when alleged to be ongoing, is a serious matter that necessitates prompt consideration, as it directly impacts the integrity of the judicial process. In Secretary of the Judicial Commission of lnquiry[3] the Constitutional Court held:

''[31] ... In Protea Holdings, the Court said that "if there was no continuing contempt of court ... then the hearing of this application as a matter of urgency in the Court vacation would not be justified".

It held that-

"the element of urgency would be satisfied if in fact it was shown that [the] respondents were continuing to disregard the order .... If this be so, the applicant is entitled, as a matter of urgency, to attempt to get the respondents to desist by the penalty referred to being imposed."

[32] A similar point was made in Victoria Park Ratepayers' Association, in which it was said that -

"[c]ontempt of court has obvious implications for the effectiveness and legitimacy of the legal system and the judicial arm of government. There is thus a public interest element in each and every case in which it is alleged that a party has willfully and in bad faith ignored or otherwise failed to comply with a court order. This added element provides to every such case an element of urgency."

[33] In that case, the Court went further to state that -

"it is not only the object of punishing a respondent to compel him or her to obey an order that renders contempt proceedings urgent: the public interest in the administration of justice and the vindication of the Constitution also render the ongoing failure or refusal to obey an order a matter of urgency. This, in my view, is the starting point: all matters in which an ongoing contempt of an order is brought to the attention of a court must be dealt with as expeditiously as the circumstances, and the dictates of fairness, allow."

[11] In light of the allegations of ongoing contempt and the authority established in Secretary of the Judicial Commission of Inquiry, I found that there was no need for the University to further justify the urgency of the matter. Considering the seriousness of contempt allegations and the potential implications of the allegations on the integrity of the judicial process, I deemed it essential to address the matter promptly to uphold the authority of the court and heard the matter on an urgent basis.

Contempt

[12] A contempt of court is the deliberate, intentional refusal or failure to comply with a court order.[4] All orders of court, whether correctly or incorrectly granted, must be complied with until they are properly set aside.[5] Non-compliance with court orders could be addressed with contempt proceedings.[6] The burden of proving contempt lies with the party alleging it. They must demonstrate that the other party had knowledge of the order and that there was non-compliance.[7]

[13] In this case, by agreement between the parties, Eagles was ordered to file an audited statement of expenses incurred, the income received, and the net profit that it would have earned under the EMS contract. In order to do this, Eagles engaged the services of Ms. Mashanda to prepare the statement. After examining the terms of the court order, Ms. Mashanda advised Eagles to file an AUP report for the following reasons:[8]

"An agreed-upon procedure is a standard a company or client outlines when it hires an external party to perform an audit on a specific test or business process."

"Refer to the specific test on 3.1 of the court order which equate to "agreed upon procedure" what was agreed was the verification of:

1) Expenses incurred - which were provided on table 1 under A.

2) Income received - which was provided on table2 under B.

3) Net profit that would have been earned by the company under disputed contract table 5 under C.

The above were agreed by the court order as the court order specified that we must verify the expenditure incurred, income received. "

"An Agreed-Upon Procedure Engagement differs From a Financial Statement Audit in Two Primary Ways: First, the scope of the engagement is much narrower, as the auditor is only required to perform the specific procedures agreed upon."

[14] In consequence, Eagles filed an AUP report which, according to Ms. Mashanda, is an audit report. According to the University, an AUP report is not an audit report. In this regard, the court accepts the University's position that an AUP report is not an audit report. This is based on the general knowledge that an AUP involves an auditor performing specific procedures that have been agreed upon by the entity under audit and third parties involved. In this instance, the auditor reports on the factual findings of these procedures, without expressing an opinion or assurance. An audit, on the other hand, is conducted by an independent auditor who conducts a comprehensive examination of the entity's financial statements and underlying records and provide an opinion on whether the financial statements present a true and fair view of the entity's financial position and performance in accordance with the applicable financial reporting framework.

[15] The next inquiry is whether the court ordered Eagles to file an audit or an AUP report. Eagles contends that the court order requires it to file an AUP report, as it limits the scope of the report to an audited statement of expenses incurred, the income received and the net profit it would have earned under the contract. I find Eagles' perspective to be valid, as the court's directive does not necessitate a comprehensive examination of its financial records, but rather focuses on specific aspects. In other words, the court order clearly outlines what the audited statement should contain, expenses incurred, the income received, and the net profit that would have been earned under the contract. This indicates a focus on specific, limited aspects rather than a comprehensive audit. Based on the wording of the court order and the scope of the audit it prescribes; I agree with Eagles' interpretation.

[16] As I have already stated, an audit comprises more than just a simple statement of expenses incurred, the income received and the net profit Eagles would have earned under the EMS contract. While these aspects are essential, the scope of an audit typically includes evaluation of financial risks and gathering of evidence to make an opinion on the examination of the balance sheet, income statement, cashflow statement, changes in equity, effectiveness of internal control systems to prevent fraud and ensure accurate financial reporting, and adherence to relevant laws, regulations, and accounting standards. The court order delineates the necessary components of the statement that should be filed, pointing towards a concentrated, focused report rather than an exhaustive audit report. Thus, it streamlines the process, suggesting that a straightforward report of expenses, income and profit should be filed, not an audit report with extraneous details that an audit would entail. This, in my view, demonstrates that the court order does not require the filing of an audit report. With this said, I found that Eagles did not commit contempt of court by filling an AUP report; therefore, the application had to be dismissed.

Is the court order unclear or ambiguous?

[17] The fact that Eagles and the University had interpreted the court order in different ways would have suggested that the court er might have been unclear or ambiguous. In my view, the court order is not open to more than one reasonable interpretation. Eagles' interpretation is the only reasonable interpretation of the two. I engaged with the University's interpretation and found it to be fundamentally flawed, as it overlooks the specific limitations set forth by the court order.

[18] It is established law that if an order can be reasonably interpreted in more than one way, it may be deemed ambiguous. Non-compliance would not result in contempt of court. In this case, I did not find the court order to be unclear or ambiguous, as I deemed the University's interpretation unreasonable.

Costs

[19] There is no reason for the University not to bear the costs. The general principle is that the unsuccessful party pays the costs of the successful party. Therefore, I found that the University should pay the costs.

Order

[20] In light of the above, I made the following order:

20.1 The application for contempt of court is dismissed

20.2 The applicant is ordered to pay wasted costs, on scale B.

TE MATUMBA

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA,

LIMPOPO LOCAL DIVISION,

THOHOYANDOU

Appearances:

For the Applicant: Adv. MM Mojapelo SC

Madima Attorneys

Thohoyandou

E-mail: legal@madimaattorneysinc@gmail.com

For the Respondents: Adv. RR Nkoana

(Appearing on 27 November 2024)

Adv. Makopa

(Appearing on 28 February 2025)

MacRobert Attorneys

Care of: Sigwavhulimu Attorneys Thohoyandou

E-mail: avniekerk@macrobert.co.za

Or: sigwavhulimuatt@yahoo.com

[1] Quoting all the grounds of appeal in this judgment serves to promote open discourse regarding the court's decision and enhance the clarity of the nuances of the case.

[2] I omitted the Notice's footnotes from the Notice that refer to the paragraphs of the Answering Affidavit where paragraphs 4.1 to 4.5 were quoted.

[3] Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State v Zuma and Others (CCT 52/21) [2021) ZACC 18; 2021 (9) BCLR 992 (CC); 2021 (5) SA 327 (CC) (29 June 2021).

[4] Tasima (Pty) Ltd v Department of Transport and Others [2016] 1 All SA 465 (SCA).

[5] Mkhoto and Others v Compensation Solutions (Pty) Ltd 2017 (11) BCLR 1408 (CC): 2018 (1) SA 1 (CC).

[6] MT v CT 2016 (4) SA 193 (WCC).

[7] Putco Ltd v TV and Radio Guarantee Co (Pty) Ltd 1985 (4) SA 809 (A).

[8] Paragraph 21.3, Answering Affidavit, page 104 of Bundle B.