South Africa: High Courts - Gauteng

A .../rw

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 21072/2005

DATE: 03/08/2007

UNREPORTABLE

In the matter between:

OSCON DOMEMESTIC INSTALLATIONS CC PLAINTIFF

VS

POLOKWANE LOCAL MUNICIPALITY DEFENDANT

JUDGMENT

BOSIELO J

INTRODUCTION

1.

What happened in this matter can be aptly summed up by

reference to the old adage "Procrastination is the thief of

time." The plaintiff is a close corporation duly registered in

terms of the Close Corporation Act. The defendant is a local

authority properly established in terms of section 11 of the

Local Government: Municipal Structures Act, 117 of the 1998

(the Structures Act").

2.

2

During or about August 2001, the defendant put up public

tenders for the installation of electrical reticulation networks

in the township of Seshego under tender no 8/2/1/1­

E 19/2001. Pursuant to this tender, the plaintiff submitted his

tender. It is common cause that there were 20 other tenders

submitted for consideration. It is not in dispute that, after

considering all the tenders, the defendant awarded the

tender to another tenderer and not the plaintiff. Furthermore

it is common cause that the tender has been fully executed

by the successful tenderer.

LEGAL ISSUES

2.1 The plaintiff avers that this tender was governed by the

2.2

Preferential Procurement Policy Framework Act, 5 of 2000

(Procurement Act) read with Part 2 of the Preferential

Procurement Regulation of 2001.

Furthermore the plaintiff avers that it scored the highest

points as contemplated by section 2 (f) of the Procument Act.

Based on this, the plaintiff asserts that it should have been

declared as the successful tender and a fortiori the tender

2.4

3

should have been awarded to the applicant. In fact, the

plaintiff asserts that in the circumstances, the defendant was

under a duty to award the tender to the plaintiff. As a further

bow to it's string, the plaintiff relies on the provisions of

section 33 of the Constitution of the Republic of South Africa,

Act 108 of 1996 (the Constitution) which entitles everyone to

administrative action which is lawful, reasonable and

procedurally fair.

Flowing from the above exposition, the plaintiff avers that by

awarding the tender to another tenderer, the defendant

acted unlawfully and in breach of its constitutional duty to

ensure

lawful,

reasonable

and

procedurally

fair

administrative action. As a result, the plaintiff sued the

defendant for R509 644. 46 which represents the damage

allegedly suffered by the plaintiff.

The defendant is defending this action vigorously. In

addition to its main defence, defendant raised two points in

limine. The first point in limine is premised on prescription

whilst the second one is premised on the failure by plaintiff

to comply with the provisions of section 3 of the Institution of

Legal Proceedings Against Certain Organs of State Act 40

of 1992.

3.

STATUTORY FRAMEORK

3.1 Section 11 of the Prescription Act 68 of 1969 (Prescription

Act) is central and pivotal to the first point in limine. Section

11 (d) provides as follows:

"Periods of prescription of debts- The periods of prescription

of debts shall be the following:

(d) save where an Act of Parliament provides

otherwise, three years in respect of any other debt.

(3)A debt shall not be deem to be due until the

creditor has knowledge of the identity of the debtor

and of facts from which the debts arise: Provided

that a creditor shall be deemed to have such

knowledge if he could have acquired it by

exercising reasonable care."

3.2

It is clear from section 11 (d) of the Prescription Act, that

plaintiff is obliged to institute his claim within a period of three

(3) years of debt becoming due. This is so because there is

no Act for Parliament which provides otherwise. The crisp

question to be answered is when does a debt became due.

Mr Diamond for the plaintiff submitted that the debt herein for

the plaintiff only became due after the last payment was

made to the successful tender by defendant. He submitted

that this is so, because this is the only time at which plaintiff

will be in a position to know with certainty what his precise

damages are. Understandably, Mr Motsiri for the defendant

held the opposite view. He argued that plaintiff's alleged

claim became due on the date of the award of the tender to a

third party or at worst, on the date on which the plaintiff

became aware that the tender was awarded to a third party.

Mr Motsiri submitted that, based on his tender documents

which he had submitted, the plaintiff would have been able to

determine with ease and exactitude whatever damages he

may have suffered. He submitted that for the plaintiff to

submit that it could not compute its damages until such time

that the last payment was made to the successful tenderer is

seriously flawed and far-fetched. According to Mr Motsiri the

tender was awarded to the successful party on 18 October

2001. The summons were served on defendant on 23 June

2005, some three (3) years and eight (8) months after the

alleged debt became due.

6

I find it necessary to state that plaintiff formally applied for

condonation for having failed to

notice

serve the

contemplated by section 3 (1) of the Institution of Legal

Proceedings Against Certain Organs of State Act, 40 of

2002. This application was based on section 3 (4) (a) of the

Act. Section 3 (1) of the Act provides that+

"Notice of intended legal proceedings to be given to

organ of state.

(1)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 that legal proceedings-

(i) without such notice; or

(ii) upon receipt of a notice which does

not comply with all the requirements

set out in subsection (2).

(2) A notice must­

(a)

within six months from the date on

which the debt became due, served on

the organ of state in accordance with

section 4 (1); and

(b) (i)

briefly set out­

the facts giving rise to the debt; and

(ii)

such particulars of such debt as are

within the knowledge of the creditor.

(3) for purposes of subsection (2) (a)­

(a) a debt may not be regarded as being

due until the creditor has knowledge of the

identity of the organ of state of the facts

giving rise to the debt, but a creditor must be

regarded as having acquired such knowledge

as soon as he or she or it could have

acquired it by exercising reasonable care,

unless the organ of state wilfully prevented

him or her or it from acquiring such

knowledge; and

(b) a debt referred to in section 2(2) (a), must

be regarded as having become due on the

fixed date.

(4) (a) If an organ of state relies on a

creditor's failure to serve a notice in terms of

subsection (2) (a), the creditor may apply to a

court having jurisdiction for condonation of

such failure.

(b) The court may grant an application

referred to in paragraph (a) if it is satisfied

that­

(I) the debt has not been extinguished by

prescription;

(ii) good cause exists for the failure by the

creditor; and

(iii) the organ of state was not unreasonable

prejudiced by the failure.

(c)if an application is granted in terms of

paragraph (b), the court may grant leave to

institute the legal proceedings in question, 0

such conditions regarding notice to the organ

of state as the court may deem appropriate.

3.4 It should be clear from section 3 (4) of the Act that there are

certain clear jurisdictional facts which must be satisfied

before a court can condone any non-compliance with the

clear and peremptory provisions of section 3 (1) and (2) of

the Act. I will deal with these pre-requisites later in the

course of my judgement.

4.

LEGAL SUBMISSIONS

4.1 Mr Diamond, appearing for the plaintiff submitted that the

debt herein has not prescribed. He based his submissions on

the allegation that according to plaintiff, the debt did not

become due on 18 October 2001 (the date on which the

tender was awarded to the third party) but on the date on

which defendant effected final payment to the successful

tenderer. As I have alluded to above, Mr Motsiri was of a

different view. He submitted that the debt became due on 18

October 2001 when the tender was awarded to the

successful tenderer. He proceeded to submit that as

summons were only served three (3) years and eight (8)

months after the debt became due, plaintiff's claim had

prescribed.

4.2

It is common cause that the tender was awarded to a third

party during 18 October 2001. Furthermore it is not in dispute

that summons was only issued on 22 June 2005 and served

on the defendant some considerable period after the

statutory three year period as set out in section 11 (d) of the

Act. The only question which was needs to be resolved is:

when did plaintiff's debt become due. The direct and clear

answer to this question lies in section 12 (3) of the

Prescription Act which provides:

"12 (3) A debt shall not be deemed to be due until

the creditor has knowledge of the identity of the

debtor and of the facts from which the debt crises:

Provided that a creditor shall be deemed to have

such knowledge if he could have acquired it by

exercising reasonable care."

4.3 In my view, the plaintiff's debt or claim became due at the

time when he became aware that the tender was not awarded

to him. This date is 18 October 2001. It is a well-known fact

that a tenderer is expected to set clearly in his documents all

relevant information which impacts on the tender, including his

pricing. I fail to understand why an unsuccessful tenderer

should wait until the successful tenderer is paid his final

payment before he can compute his damages. Common

sense and logic informs me that the claim of an unsuccessful

tenderer is not dependent on the successful tenderer's pricing.

In my view, the plaintiff's argument on this aspect is patently

absurd and far-fetched. It is clear that, for reasons best known

to plaintiff, plaintiff delayed in instituting action against the

defendant. Section 11 (d) of the Act is very clear. It is

abundantly clear that plaintiff's claim has prescribed.

4.4 It should be clear that section 3 (3) (a) of the Institution of

Legal Proceedings Act Against Certain Organs of State Act is

couched in similar to the above-quoted section. It should be

clear from my finding above that the fact that plaintiff's claim

has prescribed has a direct relation to the second point in

limine based on non-compliance with section 3 of the

Institution of Legal Proceedings Against Certain Organs of

State Act. I have already alluded to the fact that it is common

cause that plaintiff failed to comply with section 3 (1) of the

Act. However plaintiff applied formally for condonation of his

non-compliance with the section. According to section 3 (4) (b)

a court may grant such condonation if it is satisfied that:

(i) the debt has not been extinguished by prescription;

(ii) good cause exists for the failure by the creditor, and

(iii) organ of state was not unreasonably prejudiced by

the failure.

4.5

Based on section 3 (4) (b) (i), it follows logically that as I

have already found that the debt herein has prescribed, the

application for condonation should fail Regrettably, this

effectively disposes of the application for condonation as I

cannot revive a claim which has prescribed. However, in

order to complete the picture, I deem it prudent to deal with

the question whether the plaintiff has shown good cause for

his non-compliance with section 3 (1) of the Act. It is

common cause that after the tender was awarded to a third

party, plaintiff brought a review application in this court to

have the defendant's decision to award the tender to a third

party reviewed and set aside. it is furthermore common

cause that the application was struck off the roll due to lack

of urgency. It is clear from the papers that

after the

application was struck off plaintiff sat idly until sometime in

April 2005 when it suddenly instructed new attorneys to

pursue this matter. Plaintiff's explanation for this patent

ineptitude is manifold. Firstly, plaintiff avers that after his

attorney, Mr Steyther died, his matter lost momentum.

Regrettably, plaintiff fails to offer any explanation as to why it

did nothing to ensure that this claim is properly and diligently

attended to. Plaintiff avers that it only became aware during

July 2005 when it consulted a new attorney that this claim

was never prosecuted. This cannot be the truth. It is

important to note that plaintiff does not state that before it

consulted with its new attorneys, it had no knowledge of its

claim. Moreover plaintiff stated unequivocally at paragraph

7.9 his affidavit, that "it became apparent that my claim

against Respondent was never taken any further." It should

reasonably clear from this statement that plaintiff had

instructed its previous attorney to lodge its claim. However

due to the intervening death of Mr Steytler his claim was

unfortunately allowed to die. Plaintiff fails to explain why Mr

Steytler did not issue the required notice in terms of section 3

(1) whilst he was still alive. Furthermore, plaintiff failed to

explain to the court exactly when did Mr Steytler die. It is not

clear whether his matter was assigned to another attorney in

the firm where Mr Steytler was a partner. If this matter was

taken over by another attorney where Mr Steyler was a

partner, then an explanation must be given as to why that

attorney neglected this matter and did not take plaintiff's

claim any further. Regrettably there is no such explanation. It

should be clear that the application for condonation suffers

from a serious paucity of relevant information to explain the

non-compliance by plaintiff with the Act. In the result, I am

unable to find that there is good cause to condone the

plaintiff's failure to comply with section 3 (1) of the Act.

In the result and for aforegoing reasons, I find that the

plaintiff's claim has prescribed. Furthermore, I find that

plaintiff failed to comply with section 3 (1) of the Act and

further that plaintiff has failed to show good cause for

condonation of his non-compliance with section 3(1).

Consequently, I hereby make the following order:

1. The two special pleas raised by the defendant are

upheld.

2. Plaintiff's claim is dismissed with costs, which costs

shall include the costs of two counsel.

L.O BOSIELO

JUDGE OF THE HIGH COURT

Heard on the

: 1 June 2007

For the Plaintiff: G J Diamond

Instructed by : K.P Seabi & Associates

For the Defendant: S D Motsiri

Judgement Delivered: 03 August 2007