Maxim Programme Development CC v The Municipality Of Maluti-a-Phofung

• Jurisdiction: South Africa
• Judge: Van der Merwe J
• Judgment Date: 07 December 2006
• Docket Number: 746/2004
• Court: Orange Free State Provincial Division
• Hearing Date: 05 September 2006
• Citation: 2007 JDR 0776 (O)

Van der Merwe J:

[1]

The plaintiff instituted action against the defendants by combined summons issued on 2 March 2004. The combined summons was served on the first defendant and the second defendant on 11 March 2004. In the particulars of claim the plaintiff relies on a written contract entered into on 20 November 2001 between the plaintiff and the first and second defendants ("the contract"). The claims of the plaintiff are for payment by the first and second defendants,

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jointly and severally, of the amount of R37 129,00 in respect of services rendered by the plaintiff before the cancellation of the contract and the amount of R749 223,53 in respect of damages resulting from the alleged breach of the contract by the first and second defendants.

[2]

The first defendant is a local municipality and accordingly as such a legal person. The first defendant is a local municipality within the district municipality of Thabo Mofutsanyana. Despite the fact that this district municipality is a statutory legal persona its "district council" was cited as the second defendant. I accept however, as all the parties did at the hearing before me, that the said district municipality is actually the second defendant. It is quite unclear why the third and fourth defendants were cited in this action, as they are not parties to the contract and no relief is claimed against them. The third and fourth defendants however did not enter appearance to defend and they took no part in the proceedings before me. In the contract the first and second defendants are collectively referred to as "The Municipality". Whenever reference is made in this

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judgment to the defendants, it must be understood as a reference to the first and second defendants.

[3]

The defendants each filed a special plea to the effect that the plaintiff failed to institute the present action within time limits set in the contract and that in the result the plaintiff's claims are unenforceable. The second defendant also filed a special plea in which it was averred in the alternative to the aforesaid special plea, that the plaintiff failed to comply with pre-conditions to the institution of legal proceedings contained in the contract and that in the result the action is barred and was actually instituted prematurely. This latter special plea was expressly abandoned by the second defendant during proceedings in terms of rule 37(4). In the particulars of claim the plaintiff alleged that it duly gave notice of its intention to institute this action in terms of the provisions of the Institution of Legal Proceedings against certain Organs of State Act, nr. 40 of 2002 ("the Act"). The plaintiff was obliged to give such notice as the definition of "organ of state" in the Act includes a municipality such as the first and second defendants. The defendants in paragraphs 11.2 and 12 of their respective pleas denied the plaintiff's

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averment. In the result and by agreement between the parties I ruled in terms of rule 33(4) at the commencement of the proceedings that the special pleas of the defendants as well as the pleas contained in paragraphs 11.2 and 12 of the first and second defendant's respective pleas, be adjudicated upon initially and separate from all other issues in the action and that all such other issues stand over for later determination, if necessary.

[4]

The provisions of the contract relevant to the adjudication of the special pleas, are the following:

"18.

Settlement of Disputes

The parties shall negotiate In good faith the view to settling any dispute or claim arising out of or relating to this agreement and may not initiate any further proceedings until either party has, by written notice to the other, indicated that such negotiations have failed.

19.

Mediation

Any dispute or claim which cannot to settled between the parties may be referred by the party concerned, without legal representation, to mediation by a single mediator. The mediator shall be elected by agreement between the

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parties or, failing such agreement shall be nominated by the President of the Law Society of South Africa. The cost of the mediation shall be borne equally between the parties.

20.

Arbitration/Litigation

If either party be unwilling to agree to mediation or be dissatisfied with the opinion expressed by the mediator or should the mediation fail then such party may:-

20.1

serve process instituting action arising out of such dispute or difference in a civil court; or

20.2

with the consent of the other party refer the dispute to arbitration by a single arbitrator to be mutually agreed upon; or

20.3

If the parties fail to agree on an arbitrator they will use an arbitrator to be nominated by the President of the Law Society of South Africa.

20.4

The arbitration shall be in accordance with the provisions of the arbitration laws of South Africa and shall be conducted in accordance with such procedure as may be agreed between the parties; or

20.5

Failing such agreement, in accordance with the rules for the conduct of arbitrations published by the Association of Arbitrators current rules at the date the arbitrator is appointed.

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