Spatialize (Pty) Ltd v City of Mbombela Local Municipality

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Mashile J
• Judgment Date: 15 May 2023
• Citation: 2023 JDR 1480 (MN)
• Hearing Date: 15 May 2023
• Docket Number: 1936/2019
• Court: Mpumalanga Division, Mbombela

Mashile J:

INTRODUCTION:

[1]

To avoid confusion, the Plaintiff and Defendant will be referred to as Spatialize and the Municipality respectively and parties will mean both. Following confirmation of the Municipality on 23 July 2015 that Bid No 26/2015 submitted by Specialize on 6 may 2015 has been successful, the parties concluded a Service level agreement ("SLA"). The bid concerned the appointment of a multi-disciplinary professional team for the establishment of a Strategic Programmes and Project Support Unit ("the SPPSU").

[2]

It is common cause that the SLA comprises the following documents:

2.1

a copy of the bid document (26/2015);

2.2

a copy of the appointment letter;

2.3

a copy of the acceptance letter;

2.4

a copy of the Contract Form (MBD7.2);

2.5

a copy of the General Conditions of Contract ("GCC"); and

2.6

annexure A.

[3]

These documents together with the SLA will henceforth be referred to as the main agreement to maintain consistency with the terminology adopted by the parties. Spatialize has instituted fourteen different claims for non-payment against the Municipality. When the parties presented arguments to Court to amplify their heads on 16 September 2022, seven of those claims had become settled while the balance of seven remained contested. As such, this case is about claims eight to fourteen. The parties agreed that

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claims nine to 14 are similar insofar as what ought to be alleged and established. Thus, they agreed, a finding on any of the six claims in favour or against one of them should apply to the rest of the claims.

TERSE BACKGROUND:

[4]

While the terms of the main agreement are essentially a matter of common cause between the parties, they are at variance in their interpretation of Clause 3 of the SLA and Clause 18 of the General Conditions of Contract ("GCC"). Generally, Clause 3 deals with commencement and duration of the main agreement. The subclauses that are relevant to this judgment are 3.1, 3.3 and 3.6. These clauses provide as follows:

"3.1

The contract period will be 36 months;

3.2

. . . .

3.3

The Municipality may, at its sole discretion, extend the duration of this agreement for a further period as it may deem necessary and agreed upon from time to time including but not limited to extending the agreement on a month to month basis;

3.4

. . .

3.5

. . .

3.6

The extension of this agreement shall be on the same terms and conditions as set out in this agreement unless otherwise agreed by the parties and such agreed terms shall be reduced to writing and signed by the parties."

[5]

Dealing with variations, Clause 18.1 of the General Conditions of Contract ("GCC") provides that:

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"In cases where the estimated value of the envisaged changes in purchase does not vary more than 15% of the total value of the original contract, the contractor may be instructed to deliver the goods or render the services as such in cases of measurable quantities, the contractor may be approached to reduce the unit price, and such offers may be accepted provided that there is no escalation in price."

[6]

Claim 8, does not turn on how the parties interpret the clauses that I have mentioned above but the Municipality argues that the problem lies in the manner in which it is pleaded in the particulars of claim. The Plaintiff's approach, on the other hand, is that this was an agreement between the parties to do work on certain specified terms for payment. Spatialize delivered, it being irrelevant whether or not through the medium of a third party, and the Municipality has short paid by an amount of R158 909.20.

ISSUES:

[7]

The issues for determination are simple and straight forward. Has Spatialize demonstrated that the Municipality is indebted to it in the amounts claimed under Claims 8 to 14?

CLAIM 8

[8]

The Municipality has pleaded this claim as follows:

"44.

On 02 November 2015, the plaintiff and the defendant agreed to extend the Main Agreement and entered into a written agreement ("Addendum 1"), a copy of which is annexed marked "POC 9". A copy of both the letter of appointment and letter of acceptance in respect of Addendum 1, are also included as part of POC9 hereto.

45

In terms of Addendum 1, the plaintiff was appointed to conduct feasibility studies for the purpose of registration of certain projects on the Public-Private Partnership process of National Treasury and certain projects to assist on deciding service delivery mechanisms. This appointment amounted to an amendment and constituted an extension to the Main Agreement in terms of clause 3.6 of the SLA.

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46

On 30 August 2017, the plaintiff submitted to the defendant invoice number SPAT046-1 for the payment of the amount in terms of payment certificate 25. A copy of this invoice and payment certificate is previously annexed marked "POC 3.1" to "POC 3.2" respectively.

47

Invoice SPPSU104 as referred to invoice in number SPAT046-1 was submitted for payment and duly paid. A copy of invoice SPPSU104 is annexed marked "POC 10".

48

However, an error was discovered by the plaintiff in respect of invoice SPPSU104 in that it did not include the plaintiff's 5% management fee. This amount payable in respect of the management was R158,909.20.

49

Subsequently, invoice SPAT046-1 was issued to the defendant which includes a reconciliation amount of R158 909.20. This amount remains outstanding.

50

The plaintiff has fulfilled its obligations in terms of Addendum 1 and performed its services in respect of this appointment.

51

Notwithstanding this, the defendant has failed to pay the outstanding amounts due to the plaintiff in terms of the invoices.

52

The defendant has failed to pay the amount claimed under this appointment.

53

As a result of the aforementioned, the defendant is indebted to the plaintiff in an outstanding amount of R158,909.20 in respect of invoice SPPSU104."

[9]

The Municipality is steadfast that the claim of the amount of R158 909.20 is not supported in Addendum 1 because Addendum 1 makes no reference to a 5% management fee. Moreover, the Addendum does not mention the agreement between a third party ("Lesela") and the Municipality nor does it make reference to payment of management fee.

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[10]

To the extent that the Municipality came to Court to meet a specific case of owing a particular amount of money to Spatialize, the basis of which is as described in Addendum 1, it is now surprised by the introduction of Lesela and the fact that the management fee pleaded is not shored up by the Addendum.

[11]

Spatialize characterises Addendum 1 as being an extension of the main agreement as contemplated in Clause 3.6 of the SLA. This is incorrect because Clause 3.6 deals with extension of time only and not scope of work. As such, it cannot be relied upon to support the extension to the scope of work agreed upon by the parties. On the basis of what Spatialize has pleaded therefore, claim 8 has no merit and is dismissed.

CLAIM 9

ASSERTIONS ADVANCE BY THE PARTIES:

[12]

Here the argument of the Municipality is that the amount claimed is not due and payable as it undermines the provisions of Clause 18 of the GCC. The purpose of Clause 18 of the GCC, asserts the Municipality, is to ascertain...