Case Law[2025] ZAGPPHC 1208South Africa
Department of Public Works v Mvela Phanda Construction (Pty) Ltd and Others (58654/2012) [2025] ZAGPPHC 1208 (20 May 2025)
Headnotes
between the DPW and Mvela Phanda at the offices of the DPW. A letter from Mvela Phanda to the DPW of 12 February 2009 records that a “Mr Molebe”, informed Mvela Phanda at the meeting that the DPW intended cancelling the contract and that Mvela Phanda should submit “their cost for cancellation” to the DPW. “Mr Molebe” was said to be Mr Malebye on instructions given to his Counsel by Mr Malebye himself. Mr Malebye, would later, however, dispute that he was present at the meeting of 10 February 2009. Mvela Phanda forwarded its ‘cost of cancellation’ as requested by the DPW in an amount of R46 711 019.39. [7] On 19 February 2009, Mr Mabuso, the Deputy Director: Project Management Support, and Project Manager on the contract informed Mr Potgieter that he had “presented a draft request for cancellation to the COO” who happened to be Mr Malebye. Mr Malebye as with his belated denial that he was at the meeting of 10 February 2009, initially sought to deny that such request was submitted to him. [8] The DPW ultimately cancelled the contract on 13 March 2009. Mr Malebye, as the Chief Operations Officer, following line authorisations in the DPW, signed in support of the recommendation to cancel the contract. Mr Moroka of the DPW, on even date, duly informed Mvela Phanda of the cancellation of the contract by the DPW by way of letter, confirming in no uncertain terms that: “Claims for damages are to be dealt with strictly in accordance with the clause referred to above [39.2]. The Department offers to honour its obligations to settle any proven claims in the form of damages and/or loss of profit as provided for in the Conditions of Contract.” [9] The cancellation fee had to be determined in terms of clause 39.2 of the contract which provided that: “39.2 The employer shall be entitled at any time to unilaterally terminate or cancel this agreement or any part thereof. Save for the following the contractor shall not be entitled to claim any other amounts whatsoever in respect of s
Judgment
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# South Africa: North Gauteng High Court, Pretoria
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## Department of Public Works v Mvela Phanda Construction (Pty) Ltd and Others (58654/2012) [2025] ZAGPPHC 1208 (20 May 2025)
Department of Public Works v Mvela Phanda Construction (Pty) Ltd and Others (58654/2012) [2025] ZAGPPHC 1208 (20 May 2025)
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SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
Number: 58654/2012
Reportable:
YES /
NO
Circulate
to Judges: YES /
NO
Circulate
to Magistrates: YES /
NO
Circulate
to Regional Magistrates: YES /
NO
In
the matter between:
DEPARTMENT
OF PUBLIC WORKS
PLAINTIFF
and
MVELA
PHANDA CONSTRUCTION (PTY) LTD
FIRST
DEFENDANT
NCHUAPE
SOLOMON MALEBYE
SECOND
DEFENDANT
MPELO
CONSTRUCTION CC
THIRD
DEFENDANT
TEBOGO
ORIGINEOUS MOLOISANE
FOURTH
DEFENDANT
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives by e-mail. The date
and time for
hand-down is deemed to be 15h30 on 20 May 2025.
ORDER
It
is ordered that:
1.
The first and second defendant, are liable for payment of the sum of
R33 726
705.90 plus interest at the prescribed rate of interest, from
11 October 2012 (date of service of summons) to date of payment,
jointly and severally, the one paying, the other to be absolved.
2.
The first and second defendant shall pay the costs of suit, which
costs shall
include the costs of two counsel, where so employed.
JUDGMENT
PETERSEN
J
Introduction
[1]
The plaintiff, the Department of Public Works (‘the DPW’)
instituted action
against the first defendant Mvela Phanda
Contsruction (Pty) Ltd (‘Mvela Phanda’) and the second
defendant Nchuape Solomon
Malebye (‘Mr Malebye’) on 10
October 2012, claiming payment of the sum of R33 726 705.90 plus
interest from date of
summons to date of payment. The third defendant
Mpelo Construction CC (‘Mpelo Construction’) and the
fourth defendant
Tebogo Origineous Moloisane (Mr Moloisane) were
cited but no relief is sought against them.
[2]
The DPW advances four main claims, with alternatives. The claims
against Mvela Phanda
(Claims A, B, C and the alternatives) is
essentially based on the
condictio indebiti
. The claim against
Mr Malebye (Claim D with an alternative in delict) is based on his
contract of employment with the DPW. Having
regard to the nature of
the claims it is emphasized that the claims for purposes of this
matter have nothing to do with corruption
or fraud.
Background
[3]
When South Africa won the right to host the 2010 Soccer World Cup a
plethora of contracts,
pursuant to successful tenders, were awarded
to upgrade infrastructure in anticipation of the influx of visitors
from across the
globe. The Skilpadshek Border Post at the South
Africa-Botswana port of entry formed part of such infrastructure
upgrades.
[4]
Mvela Phanda was awarded two tenders relevant to the Skilpadshek
Border Post. The
first contract involved the upgrading of the border
post itself. The second contract involved the upgrading of
accommodation or
housing for the staff - the Skilpadhek Border Post
Residential Contract. The present matter turns on the second contract
concluded
between the DPW and Mvela Phanda on 27 August 2008 by way
of a standard Joint Buildings Contracts Committee (JBCC) agreement
(‘the
contract’).
[5]
The DPW handed over the site to Mvela Phanda on 22 October 2008. On 3
November 2008,
the Health and Safety Consultant of Mvela Phanda
stopped any further operations at the site following the discovery of
tunnels
and holes caused by previous manganese mining around the
site. The construction site was deemed unsafe, and construction was
rendered
impossible. Mvela Phanda duly informed the DPW.
[6]
On 10 February 2009 a meeting was held between the DPW and Mvela
Phanda at the offices
of the DPW. A letter from Mvela Phanda to the
DPW of 12 February 2009 records that a “
Mr Molebe
”,
informed Mvela Phanda at the meeting that the DPW intended cancelling
the contract and that Mvela Phanda should submit
“
their cost
for cancellation
” to the DPW. “
Mr Molebe
”
was said to be Mr Malebye on instructions given to his Counsel by Mr
Malebye himself. Mr Malebye, would later, however,
dispute that he
was present at the meeting of 10 February 2009. Mvela Phanda
forwarded its ‘cost of cancellation’ as
requested by the
DPW in an amount of R46 711 019.39.
[7]
On 19 February 2009, Mr Mabuso, the Deputy Director: Project
Management Support, and
Project Manager on the contract informed Mr
Potgieter that he had “
presented a draft request for
cancellation to the COO
” who happened to be Mr Malebye. Mr
Malebye as with his belated denial that he was at the meeting of 10
February 2009, initially
sought to deny that such request was
submitted to him.
[8]
The DPW ultimately cancelled the contract on 13 March 2009. Mr
Malebye, as the Chief
Operations Officer, following line
authorisations in the DPW, signed in support of the recommendation to
cancel the contract. Mr
Moroka of the DPW, on even date, duly
informed Mvela Phanda of the cancellation of the contract by the DPW
by way of letter, confirming
in no uncertain terms that: “
Claims
for damages are to be dealt with strictly in accordance with the
clause referred to above [39.2]. The Department offers to
honour its
obligations to settle any proven claims in the form of damages and/or
loss of profit as provided for in the Conditions
of Contract
.”
[9]
The cancellation fee had to be determined in terms of clause 39.2 of
the contract
which provided that:
“
39.2 The employer
shall be entitled at any time to unilaterally terminate or cancel
this agreement or any part thereof.
Save for the following the
contractor shall not be entitled to claim any other amounts
whatsoever in respect of such termination
or cancellation of this
agreement. The employer shall be obliged to pay the contractor as
damages and/or loss of profit the lesser
of:
39.2.1 An amount not
exceeding ten per cent (10%) of the contract sum;
39.2.2 Ten percent (10%)
of the value of incomplete work;
39.2.3 The contractor's
actual damage or loss as determined by the employer after receipt of
evidence substantiating any such damage
or loss.”
[10]
The essentialia of the sub-clauses of clause 39.2 is to be
interpreted as follows. In terms of
clause 39.2.1 a cancellation fee
not exceeding 10% of the contract sum of R374 392 624.62 was provided
for. This sum could not
however be paid without having regard to
clauses 39.2.2 and 39.2.3, which could only be determined upon proof
from Mvela Phanda
of the value of incomplete work; or evidence
substantiating such loss which was at the discretion of DPW; and
determined by DPW
upon receipt of such proof. The proof could include
loss of profit by Mvela Phanda. The contract could not be
circumvented and
therefore No other amounts could be claimed ro for
that matter agreed upon, other than those calculated in terms clauses
39.2.1.
to 39.2.3.
[11]
On 12 October 2009, Mr Malebye, the then Acting Director-General of
the DPW, approved payment
of the ‘
cancellation fee
’
purportedly in lieu of the damages or loss that Mvela Phanda suffered
because of the termination of the contract. The ‘
cancellation
fee
’ was paid to Mvela Phanda on 13 October 2009.
The
claims against Mvela Phanda
Claim
A
[12]
The DPW alleges in Claim A that it paid Mvela Phanda an amount of R33
726 705-90 on or about
13 October 2009, in the
bona fide
and
reasonable, but mistaken belief that it was owing to Mvela Phanda.
The DPW further alleges that the amount paid as a cancellation
fee
was not owing as Mvela Phanda had not furnished the DPW with evidence
substantiating any actual damage or loss as required
by clause 39.2.3
of the contract because of the cancellation of the contract by the
DPW.
[13]
Mvela Phanda asserts the DPW, submitted, without basis, its annual
financial statements for its
previous financial year and argued that
its profit percentage for the entire company for that year, and not
only its construction
component, would have been repeated on the
contract. The DPW therefore claims that it could not determine, the
actual damage or
loss suffered by Mvela Phanda as required by clause
39.2.3; and resultantly the requirements of clause 39.2.3 were never
met.
[14]
The case for the DPW is that, since one of the three amounts required
to apply the formula in
clause 39.2 was missing, no amount could be
determined in terms of clause 39.2 as being ‘
the lesser of’
the amounts calculated in terms of clauses 39.2.1, 39.2.2 and 39.2.3.
No amount could therefore be determined as the amount the
plaintiff
was “
obliged to pay the contractor as damages and/or loss of
profit
”.
[15]
In terms of clause 39.2, Mvela Phanda was therefore not entitled to
claim, “
any other amounts whatsoever
”, or to be
paid any other amounts by DPW, save for an amount calculated in
accordance with clause 39.2. The payment of the
cancellation fee of
R33 726 705.90 the DPW asserts was therefore in breach of clause
39.2.
Claims
B and C
[16]
The DPW made two well-founded concessions in relation to Claims B and
C at the close of its case.
Nothing more needs to be considered in
respect of these claims.
[17]
At most it should be noted that the DPW in relation to Claim B
accepts that Mvela Phanda submitted
its valuation of work done to the
project quantity surveyor on 10 February 2009, which puts an end to
claim B.
[18]
In relation to claim C, the DPW accepts Mr Potgieter's concession
that the amounts claimed for
insurance and security were, as per the
bill of quantities, based on price, not cost which puts an end to
claim C.
The
claim against Mr Malebye
Claim
D and its alternatives
[19]
Claim D is based on the contract of employment of Mr Malebye with the
DPW, for the duration of
his occupation of the position of Acting
Director General of the DPW. In general, it is averred that he was
required to observe
the utmost good faith towards the DPW and in so
doing to refrain from doing anything that might prejudice or detract
from the rights,
assets or interests of the DPW. He is said to have
been bound to observe all legislative provisions applicable to the
position
of Director-General, including the provisions of the Public
Finance Management Act 1 of 1999 (‘the PFMA’), with
specific
reference to subsections 38 to 42.
[20]
In specific it is alleged that Mr Malebye by 12 October 2009 knew, or
ought reasonably to have
known, that the cancellation fee was not
owing, as Mvela Phanda had not furnished the DPW with evidence
substantiating any damage
or loss it may have suffered following the
cancellation of the agreement by the DPW, as required by clause
39.2.3. The DPW asserts
that by approving the payment of the
cancellation fee by the DPW to Mvela Phanda, Mr Malebye acted
wrongfully and intentionally,
or negligently by contravening section
38 of the PFMA, committing an act of financial misconduct and/or
permitting unauthorized,
irregular, fruitless and wasteful
expenditure. The approval of the payment by Mr Malebye to Mvela
Phanda therefore constituted
a contravention of section 38 of the
PFMA and a breach of Treasury Regulations 12.2.1(e) and 12.2.2
(National Treasury Regulations
(March 2005)), read with section
76(1)(h) of the PFMA, in breach of his employment contract with the
DPW.
[21]
The DPW concludes that Mr Malebye is therefore liable either in
contract or in delict whether
jointly or severally with Mvela Phanda,
to make payment to the DPW the sum of R33 726 705-90.
The
defence of Mvela Phanda and Mr Malebye and replication by the DPW
[22]
Mvela Phanda and Mr Malebye plead that an agreement was concluded, at
a meeting in September
or October 2009, to bypass the requirements of
clause 39.2.3 of the contract. As a result of this agreement, and the
subsequent
payment certificate incorporating the agreement, they
plead that the cancellation fee was lawfully approved and paid.
[23]
The DPW replicates that the agreement between the DPW at instance of
Mr Malebye is invalid and
of no force and effect, and that the
resultant final payment certificate is invalid and of no force and
effect. The DPW pleads
that Mr Malebye had no authority to bypass
clause 39.2.3 of the contract. In particular, the DPW pleads that Mr
Malebye was faced
with a conflict of interest in dealing with Mvela
Phanda and was thus legally incapable of concluding a settlement
agreement with
Mvela Phanda, because of the commercial relationships
between Mvela Phanda, Mpelo Construction, and Messrs Moloisane and
Malebye.
Synopsis
of the evidence
[24]
The evidence of the DPW is premised predominantly on an investigation
by the Special Investigative
Unit (‘the SIU’) and rests
primarily on the evidence of three witnesses, Mr Marinus Giani (‘Mr
Giani’),
Ms Carin de Bruin (‘Ms de Bruin’) and Mr
Frans Johannes Potgieter (‘Mr Potgieter’).
[25]
Mr Giani and Ms de Bruin were seconded to the SIU to investigate the
cancellation of the contract,
and their investigation and
observations are premised, amongst others, on documents obtained from
TransUnion ITC and bank statements
and invoices of the first, third
and fourth defendants' respectively. Ms de Bruin is the author of the
SIU Interim Report. Mr Potgieter
who was employed by the DPW as its
Director: Quantity Surveying Services and his evidence is premised on
his involvement, amongst
others, in the issue of the determination of
the cancellation fee.
[26]
Mvela Phanda in defending the action actively participated in the
trial until the close of the
case for the plaintiff. Following an
appeal by the DPW against the granting of absolution from the
instance and the appeal to the
Full Court being upheld and the matter
referred for further trial, Mvela Phanda absented itself from the
trial. In the absence
of an appearance by Mvela Phanda, no evidence
was adduced on its behalf in defending the claim against it. Mr
Malebye was the only
witness who testified in support of his defence
of the action.
The
evidence of the SIU investigators and commercial relationships of Mr
Malebye with roleplayers in the contract
[27]
Mr Giani describes himself as a fraud investigator/forensic
investigator. He was seconded to
the SIU from October 2010 to March
2012. The scope of his investigation in a nutshell was “
to
profile the individuals that took part in the meeting that was held
on 5 October 2009 to determine whether there was any undisclosed
interest
.” He was instructed not to contact any of the said
individuals during his investigation. In compliance with his specific
mandate he relied, amongst others, on the database of TransUnion ITC
to compile a diagrammatic representation of links between the
aforesaid individuals (spider diagrams).
[28]
Ms de Bruin, who was likewise seconded to the SIU, is the author of
the Interim Report of the
SIU, a forensic accounting report, which
forms the basis of the claims in this matter. Ms de Bruin as with Mr
Giani was instructed
not to consult with any of the individuals who
attended the meeting of 5 October 2009. Ms de Bruin had regard,
amongst others,
to the report of Mr Giani, and invoices and bank
statements of the Mvela Phanda, Mpelo Construction and Mr Moloisane
defendants
in drawing inferences from payments made between links
identified by Mr Giani.
[29]
Mr Malebye does not dispute the correctness of the spider diagrams
demonstrating the links between
entities in which he and family
members and more specifically Mr Moloisane, had an interest.
[30]
The mandate of Mr Giani and Ms De Bruin was nothing more than
establishing any corruption or
fraud involved in the payment of the
cancellation fee. The overall picture emanating from their evidence
together with the evidence
of Mr Malebye reveals the following. Mr
Malebye was employed as Acting Chief Director: Transportation of the
North West Department
of Transport and Roads (‘the North West
Department of Transport’) from 2004 until April 2005 when he
was promoted in
May 2005 to Chief Director. He held this position
until June 2007.
[31]
Mr Malebye and Mr Moloisane are cousins and had a symbiotic business
relationship since 2006.
Mr Moloisane was the sole member of Mpelo
Construction. Mr Malebye was the sole member of a close corporation,
Malebye Business
Enterprises CC (‘Malebye Business’),
which was registered on 22 November 2001. Malebye Business traded in
livestock
and meat. Towards the middle of 2008, Malebye Business
purchased a filling station trading as Merli Motors. Merli Motors
falls
under the Malebye Business umbrella. According to Mr Malebye he
waited until July 2009 before he applied for a licence to trade.
Merli Motors, however, having been purchased as a going concern
continued trading in 2008 with the previous owner remaining to
transfer skills to the new station manager.
[32]
Mpelo Construction was party to successive service contracts with the
North West Department of
Transport from November 2006 to November
2007, a fact which Mr Malebye conceded he was aware of, but denies
that he had a hand
in the approval of those agreements. He downplayed
the fact that his cousin Mr Moloisane was doing business with the
Department
of Transport of which he was the Chief Director as pure
coincidence. He, however, readily conceded that Mr Molisane and
himself
were constantly on the lookout for lucrative business
opportunities between 2006 and 2010.
[33]
Mr Malebye was appointed the COO of the DPW on 20 March 2008. Mr
Moloisane having been very successful
in securing successive
contracts under the tenure of Mr Malebye at the North West Department
of Transport enjoyed the same level
of success at the DPW where his
cousin Mr Malebye was now the COO.
[34]
In July 2008, Mpelo Construction to start with, was appointed by
Mvela Phanda as a domestic subcontractor
for the Skilpadhek
Residential project. The following month, in August 2008, Mr
Moloisane secured with the DPW, through another
one of his
businesses, Mpelo Property Investments CC (‘Mpelo Property
Investments’) of which he was also the sole member,
a very
lucrative contract for the procurement of a lease of property for
nine (9) Cuban professionals. Mr Panaotis Andrea Gerolemou
(‘Mr
Gerolemou’) the chairman and a director of Mvela Phanda, who
was part of the negotiations related to the cancellation
agreement
features in this agreement.
[35]
On 18 August 2008, Mr S Vukela, purporting to sign as the “
Acting
”
Chief Operations Officer of the DPW, recommended that the Director
General approve the procurement of the lease of a house
situated at
1[…] H[...] B[....] Street, Groenkloof (‘1[…]
H[...] B[....]’) for the nine (9) Cuban professionals.
Mr
Malebye could not furnish any cogent explanation why Mr Vukela would
sign the recommendation as aforesaid, when he, Mr Malebye
was the
COO, save to state that he may not have been around that day. The
offer to lease 1[…] H[...] B[....] was ultimately
approved on
behalf of the Director General on 1 December 2008. The lease, which
was to run from 1 September 2008 to 31 August 2011,
was concluded
between the DPW and Mpelo Property Investments at a starting rate of
R22 971.00 per Cuban professional per month.
Mr Malebye, as with his
tenure at the North West Department of Transport, pleaded ignorance
about this lucrative contract which
his cousin Mr Moloisane had
secured with the DPW. He professed that whilst he knew Mr Moloisane
conducted business with government,
he was unaware of his business
dealings with the DPW.
[36]
The interest of Mr Gerolemou in 1[…] B[…] Street was
discovered by Mr Giani during
his investigation. He discovered that
ownership of 1[…] H[...] B[....] was transferred before Mr
Moloisane became involved.
The property 1[…] B[…]
Street was registered in the name of an entity P Gerolemou
Construction in 1994. In 2008,
the property was registered in the
name of Mr Gerolemou, the chairman, and a director, of Mvela Phanda.
The property would in 2009
come to be registered in the name of
Flouspec Investments (Pty) Ltd, a company owned by Mr Moloisane.
[37]
As pointed out by the DPW, it is extremely peculiar that when the DPW
began paying rent for the
lease of 1[…] H[...] B[....], the
rental payments were made to one of Mr Moloisane’s entities,
while the property
was owned by Mr Gerolemou. Again, pleading
ignorance, Mr Malebye testified that, even though he was COO of the
DPW at that time,
he knew nothing about this agreement.
[38]
Mr Malebye was appointed Acting Director General of the DPW on 2
April 2009. From 11 June 2009
to 7 July 2010, for some 13 months,
Mpelo Construction CC paid various amounts, totalling R1 264 361.60,
to Mr Malebye, mostly
through Malebye Business. Mr Malebye claimed
that Mpelo Construction purchased diesel for its trucks from one of
his businesses,
Merli Motors. This he claimed was the reason for
these payments which were made from at least July 2009 to August
2010. Invoices
for these payments starting on 27 July 2019 and ending
August 2010 were discovered by Mr Malebye on the eve of the
commencement
of the trial. Whilst purporting to be “Tax
Invoices”, the documents fail to reflect VAT numbers for either
Merli Motors
or Mpelo Construction.
[39]
Mr Malebye could provide no cogent explanation for the invoices save
to speculate that it was
generated pursuant to a contract between
Merli Motors and Mpelo Construction for the supply of,
inter alia
,
diesel by Merli Motors to Mpelo Construction. No contract as alleged
by Mr Malebye was discovered and none of the invoices make
any
reference to purchase of diesel. Mr Malebye was also unable to
explain the nature balances brought forward from month to month
by
Merli Motors.
[40]
On 04 November 2009, during his tenure as Acting Director General of
the DPW, Mr Malebye and
Mr Moloisane became members of Ratsuapa
Enterprises CC. Ratsuapa Enterprises which had been in existence
since 6 May 2004 was set
up as a startup to get family members into
business. Mr Malebye’s eldest sister was a member of Ratsuapa
Enterprises since
2004; his wife Mrs Patience Boitshoko Malebye and
brother-in-law were registered as members on 4 November 2009. Mrs
Malebye and
Mr Moloisane were also members of a business known as
Baswiedi Cleaners CC since 17 February 2009.
[41]
Several commercial transactions were conducted between Mvela Phanda
and Mpelo Construction; and
Malebye Business and Ratsuapa
respectively. Messrs Malebye and Moloisane have supplied the same
address and contact numbers for
purposes of CIPC registrations
at from time to time. Mvela
Phanda paid Mpelo
Construction R12 357 201.41 as a
subcontractor on the Skilpadhek Border Post Residential Contract.
[42]
Mr Malebye was under a duty to disclose, inter alia, his business
dealings or financial interests
to the DPW. Mr Malebye, admittedly
so, failed to disclose many of these interests from time to time. He
admitted that he did not
any time disclose his relationship with Mr
Moloisane and Mpelo Contruction.
[43]
On his failure to disclose in his Financial Disclosure Form (‘FDF’)
of 19 May 2008
his interest in Merli Motors which dealt in fuel, he
explained that since Merli Motors had not been acquired at the time
of his
disclosure but only around mid-2008, and started trading in
2009, he was only obliged to disclose this from 1 April 2009.
[44]
In his FDF of 9 April 2009, however, Mr Malebye as in his 2008
disclosure only disclosed his
interest in Malebye Business Enterprise
which traded in meat and livestock to the value of approximately R2
million, with no reference
to Merli Motors. In attempting to explain
his failure to disclose his business interest in Merli Motor which on
his own version
was only to be disclosed from 1 April 2009, he
claimed that he had made the disclosure “…
because
Merli Motors is a trading wing of Malebye Business Enterprises and as
a result it was disclosed on 09/04/2009 which is from
1 April 2009 –
that disclosure was made in terms of Malebye Business Enterprises as
the holding company
.” He added that the petrol business was
“
implied
” in Malebye Business Enterprises.
The
contract of employment of Mr Malebye (Claim D)
[45]
The crux of the claim of the DPW against Mr Malebye is his approval
of the payment of the cancellation
fee to Mvela Phanda. The DPW
asserts that Mr Malebye acted in breach of his contract of employment
and statutory duties, in circumstances
where he, as the Acting
Director General of the DPW owed the DPW the utmost good faith and to
act solely and exclusively in its
best interests. The DPW further
asserts that Mr Malebye was responsible for the effective, efficient,
economical and transparent
use of the resources of the DPW. To this
end the DPW maintains that Mr Malebye was required to act in
accordance with the terms
of the contract between the DPW and Mvela
Phanda and to avoid any conflict of interest in the exercise of his
duties.
[46]
To elaborate on the pleaded case of Mr Malebye by which he is bound,
the high watermark thereof
is that he did not breach his contract of
employment. The rationale for this defence being that the
cancellation fee was agreed
between the DPW and Mvela Phanda and
approved in the final payment certificate. As a further defence, Mr
Malebye raises the statutory
plea of waiver, thereby disputing the
applicability of the statutory duties asserted by the DPW in its
claim against him.
[47]
The DPW replicated that the alleged settlement agreement is invalid
and the payment certificate
which is inextricably linked to the
settlement agreement is accordingly invalid.
The
common law, Public Service Act and applicable Treasury Regulations
and provisions of the
Public Finance Management Act 1 of 1999
[48]
In terms of the common law of contract, Mr Malebye as an employee of
the DPW was required in
terms of his contract of employment to,
inter
alia
, perform tasks diligently, competently and efficiently; to
comply with all lawful and reasonable instructions given by the
employer;
to exercise reasonable care and skill; and to serve their
employer honestly, faithfully and in good faith.
[49]
Of these duties, the duty of good faith underscores the claim against
Mr Malebye. In
Ganes v Telecom Namibia
2004 (3) SA 615
(SCA)
at 626 E-F, para [25], the SCA confirmed the principle that an
employee may not “
place himself in a position which gives
rise to a conflict of interest as between himself and his employer
”.
[50]
Mr Malebye stood in a fiduciary position in relation to access he had
to, and the power in relation
to the assets and affairs of the DPW.
It was therefore incumbent upon him to act in the best interest of
the DPW in promoting its
interests. The SCA has expressed itself
clearly on the principles applicable to persons who occupy a position
of trust towards
another. In
Phillips v Fieldstone Africa (Pty)
Ltd and another
2004 (3) SA 465
(SCA) at 478E – 482D, paras
[29] – [34], the SCA dealt with the principles governing the
actions of a person who occupies
a position of trust towards another.
At para 30, the position is stated as follows:
“
Where one
man stands to another in a position of confidence involving a duty to
protect the interests of that other
,
he is not
allowed to
make a secret profit at the other’s
expense or
place himself in a position where his interests
conflict with his duty
. The principle underlies an
extensive field of legal relationship. …
It prevents
an agent from properly entering into any transaction which would
cause his interests and his duty to clash
. … There
is only one way by which such transactions can be validated, and that
is by the free consent of the principal following
upon a full
disclosure by the agent. …
Whether a fiduciary
relationship is established will depend upon the circumstances of
each case
. … But, so far as I am aware, it is
nowhere laid down that in these transactions there can be no
fiduciary relationship
to let in the remedy without agency. And it
seems hardly possible on principle to confine the relationship to
agency cases.”
[51]
At para 31, the SCA makes it plain that the rule is a strict one
which allows little room for
exceptions; it extends not only to
actual conflicts of interest but also to those which are a real
sensible possibility; the defences
open to a fiduciary who breaches
his trust are very limited: only the free consent of the principal
after full disclosure will
suffice.
[52]
Aside from the common law, the statutory duties and obligations of Mr
Malebye as the Acting Director-General
of the DPW, and by implication
as the Accounting Officer, derives from
Part 2:
section 38 to 42 of
the Public Finance Management Act 1 of 1999 (‘the PFMA’).
These duties relevant to the matter at
hand, include,
inter alia
,
ensuring that the department has and maintains effective, efficient
and transparent systems of financial and risk management and
internal
control; the effective, efficient, economical and transparent use of
the resources of the department; and the management,
including the
safe-guarding and the maintenance of the assets, and for the
management of the liabilities, of the department.
[53]
The Treasury Regulation 12.2 relied on by the DPW in its claim
against Mr Malebye, in relevant
part, provides:
“
12.2 Claims
against the state through acts or omissions [Section 76(1)(h) of the
PFMA]
12.2.1 An institution
must accept liability for any loss or damage suffered by another
person, as for a claim against the state,
which arose from an act or
omission of an official, provided –
(a)
the act or omission was the cause of the loss, damage or reason
for the claim
;
(b)
…;
(c)
the official acted in the course of his or her employment and was
not reckless, wilful or malicious
;
(d)
the official did not fail to comply with or ignore standing
instructions, of which he or she was aware of or could reasonably
have
been aware of, which led to the loss, damage or reason for the
claim, excluding damage arising from the use of a state vehicle
;
and
(e)
…
12.2.2
If in doubt,
the accounting officer of the institution must consult the State
Attorney on questions of law on the implementation
of paragraph
12.2.1
.
12.2.3
Except when
an institution has accepted liability in terms of paragraph 12.2.1,
an amount paid by the institution for losses, damages
or claims
arising from an act or omission of an official must be recovered from
the official concerned if the official is liable
in law to compensate
the institution.
12.2.4 The State Attorney
may only obligate the funds of an institution with the prior written
approval of the accounting officer.
12.3
Claims by the state against other persons
12.3.1 If the state
suffers a loss or damage and the other person denies liability, the
accounting officer must, if deemed economical,
refer the matter to
the State Attorney for legal action.”
(emphasis added)
[54]
Mr Malebye basis his special plea of waiver, to absolve him from any
liability for the payment
related to the cancellation of the
contract, on Treasury regulation 12.7.3. He specifically pleads that
the claim against him as
an official of the state, must be waived by
the state in terms of regulation 12.7.3 read with regulation 12.2.1.
He “
denies that any of the conditions in regulations 12.2.1
(a) to (g) were met
.” Regulation 12.7.3 provides that “
A
claim against an official must be waived if the conditions in
paragraph 12.2.1 (a) to (g) are not applicable
.”
[55]
The DPW pleads that the approval of the payment of the cancellation
fee by Mr Malebye constituted
a breach of Treasury Regulations
12.2.1(d) and 12.2.1(e); and that he acted recklessly or
intentionally and made an admission that
was detrimental to the State
without prior consultation with the State Attorney. The DPW and Mr
Malebye provide divergent submissions
in this regard.
[56]
The DPW only contesting regulations 12.2.1 (d) and (e), asserts that
Mr Malebye bears the onus
of proving that his approval of the payment
of the cancellation fee, when it was neither due nor payable, was not
reckless or intentional;
and the
onus
of proving that he did
not make an admission that was detrimental to the state without prior
consultation with the State Attorney.
A
comparative analysis of the evidence of Mr Potgieter and Mr Malebye
[57]
It would be prudent to deal with a comparative analysis of the
evidence by juxtaposing the evidence
of Mr Potgieter against that of
Mr Malebye, on the common cause and contentious issues.
[58]
Mr Potgieter, a Quantity Surveyor by profession who had been in the
employ of the DPW since 2003,
confirmed that the contract giving rise
to the eventual cancellation fee, had to be cancelled to avoid
“fruitless expenditure”.
This fact was common knowledge
to all the officials of the DPW assigned in the financial delegations
of the DPW; and the project
management delegations assigned at the
time. He was not present at the meeting of 05 October 2009 where the
decision was reached
determining the calculation to be utilised in
determining the cancellation fee.
[59]
Mr Potgieter testified that Mr Malebye was present at the meeting of
10 February 2009. Whilst
the letter from Mvela Phanda refers to a Mr
Molebe and not Mr Malebye, cross examination of Mr Potgieter by
counsel for Mr Malebye,
placed the reference to a Mr Molebe, as a
mistake, beyond dispute. It was pertinently put to Mr Potgieter, on
instruction of Mr
Malebye, that he recalls the meeting and whilst he
could not recall what transpired at the meeting, the letter recorded
what occurred
in relation to the cancellation of the contract and the
request for details of the damages suffered by Mvela Phanda.
[60]
In a strange twist of events, Mr Malebye, under cross examination,
and contrary to the version
put to Mr Potgieter that he, Mr Malebye,
was present at the meeting of 10 February 2009, denied being present
at the meeting. Mr
Malebye could advance no cogent reason why his
counsel put to Mr Potgieter that he, Mr Malebye, was in fact present
at the meeting.
Mr Malebye was also present in court when the version
was put. Such version was never withdrawn and stands as a true of
reflection
of the instruction to counsel from Mr Malebye. The
evidence of Mr Malebye contradicting this version, must be accepted
as recent
fabrication. The belated denial by Mr Malebye evinces a
clear impression that he seeks to distance himself from the meeting
of
10 February 2009 where the pivotal issue of cancellation of the
agreement was first raised. This belated attempt by Mr Malebye to
avoid any connection to the cancellation of the agreement as his
default response for the period between at least 13 March 2009
and 5
October 2009, save for what transpired on 5 October 2009, becomes
more evident below.
[61]
Under cross examination Mr Malebye conceded that it was correct that
a cancellation fee as recorded
in the letter of Mr Morake directed to
Mvela Phanda, had to be determined in accordance with clause 39.2. Mr
Malebye further conceded
that it was strange that the DPW would be
requesting Mvela Phanda on 10 February 2009, to submit its “
costs
”
of cancellation rather than substantiating its actual damage or loss,
since, on his version, he did not know at that date,
that the
contract would be cancelled. This concession by Mr Malebye leads to
the ineluctable deduction that he, as early as 10
February 2009, had
already contemplated the payment of a “
cancellation cost
”
to Mvela Phanda, rather than determining the amount due in terms of
clause 39.2.
[62]
Mr Malebye sought to deny that Mr Mabuso on 19 February 2009,
presented a draft request for cancellation
to him, in his capacity as
Chief Operation Officer. This proverbial second strike against Mr
Malebye demonstrates his tenacity
to shy away from any involvement in
the cancellation of the contract.
[63]
With Mr Malebye from 13 March 2009 seeking to distance himself from
any involvement in the cancellation
of the contract, until the
meeting of 5 October 2009; he persisted in his denial of being privy
to any of the letters, emails,
memoranda, claims and any other
documents for that matter, exchanged between the DPW and Mvela Phanda
between 13 March 2009 and
5 October 2009. He also denied being
briefed during this period on any claims or issues related to the
contract.
[64]
The evidence of Mr Malebye in denying any involvement in the issue of
the cancellation of the
contract between 13 March 2009 and 5 October
2009 must be considered against what transpired between 13 March 2009
and 5 October
2009. In this context, despite the evidence of Mr
Potgieter being heavily challenged at times, there is nothing to
gainsay the
material aspects of his evidence which is borne out by
objective facts.
[65]
Whilst the DPW decided not to call other witnesses involved in the
cancellation process, this
is not fatal to its case as Mr Malebye
argues. It is indisputable that Mvela Phanda submitted what it terms
its “
Provisional Contractual Claim
” in April 2009.
Bearing in mind that the clause 39.2 required Mvela Phanda to
substantiate its claim for consideration by
the DPW, it did nothing
more than provide a figure and record that it was for the DPW to
determine the amount in terms of clause
39.2.3. This prompted Mr
Mabuso to seek the professional advice and recommendation of Mr
Potgieter as he was the lead quantity
surveyor in the DPW and highly
respected for his expertise.
[66]
Mr Potgieter obliged and provided a response on 7 May 2009 in which
he states the obvious; that
the correspondence forwarded to the DPW
by Mvela Phanda, does not address the actual damage or loss suffered
by Mvela Phanda and
it is therefore not possible to determine an
amount due to Mvela Phanda, unless it were to be accepted that there
was no actual
damage or loss suffered. To address this impasse Mr
Potgieter suggested a meeting with Mvela Phanda.
[67]
As to what substantiation for its claim was sought from Mvela Phanda,
Mr Potgieter explained
that it was very difficult to be specific
since each contractor had their own way of pricing and calculating
their damages. It
was for this reason that clause 39.2 required of
Mvela Phanda to provide evidence (proof) for the DPW to consider. The
duty was
therefore on Mvela Phanda and not the DPW to substantiate
its alleged loss or damage. All that Mvela Phanda did was to disclose
its profit on other contracts and other sources of income from the
previous financial year.
[68]
A broad contention was put to Mr Potgieter that Mvela Phanda from a
commercial perspective suffered
a loss because of the cancellation of
the contract. Mr Potgieter disagreed. Mr Malebye confirmed Mr
Potgieter’s contentions
as correct. In essence, Mr Potgieter
testified that Mvela Phanda could have made a handsome profit from
the project, or they could
have under-priced or made a mistake in
their pricing resulting in no profit being made at the end of the
project. For these reasons,
he testified he needed to see the actual
documentation of Mvela Phanda; and that one cannot simply accept that
a contractor will
suffer a loss if a contract is cancelled.
[69]
It appears on recommendation of Mr Potgieter that the DPW meet with
Mvela Phanda, that Mr Mavuso,
on 12 May 2009 invited Mvela Phanda and
other officials of the DPW to an urgent meeting on 13 May 2009. The
recommendation of Mr
Potgieter for obvious reasons had to reach Mr
Malebye. This is evident from the recordal by Mr Mabuso, that on
instruction of Mr
Malebye, the matter had to be resolved before the
end of that week.
[70]
In this regard, it was put to Mr Malebye under cross examination that
he was rushing the process,
which he denied. He retorted that the
matter was urgent since the DPW “was
incurring damages as a
result of preliminaries which I have stated already, and penalties as
a result of the contractors standing
on site not actually
implementing by the Department not to proceed
...”. Mr
Malebye remained adamant in his resolve that the DPW was incurring
damages and penalties of between R3 and R4 million
at the time,
despite being confronted with the contention that this was not the
case, post cancellation of the contract. When requested
to consider
the basis of his insistence overnight, he returned to Court the
following day, conceding that no clause in the contract
provided for
the imposition of penalties and that his evidence was therefore not
correct.
[71]
It is clear, following the recommendation and professional advice of
Mr Potgieter, that the DPW
at the meeting of 13 May 2009 would insist
on Mvela Phanda and the private quantity surveyor Mr Brink to provide
“
documents to substantiate actual damages or loss suffered
by the contractor if there is any, to enable us to determine an
amount
due to the contractor
.”
[72]
Counsel for Mvela Phanda initially insisted that Mvela Phanda was not
present at the meeting
of 13 May 2009, but was constrained to later
apologise when it was clear from Mr Potgieter’s evidence that
Messrs Gerolemou
and Cave were present. There is no evidence to
gainsay the evidence of Mr Potgieter on what transpired at the
meeting. He testified
that the third option envisaged by clause
39.2.3 which involved the question of loss of profit, was discussed
at the meeting.
[73]
There is no need for a detailed exposition of what was raised at the
meeting. The documents submitted
by Mvela Phanda, and the fact that
Mr Gerolamau at some stage was angered and questioned what Mr
Potgieter wanted by banging on
the table, was overtaken by Mvela
Phanda ultimately submitting their revised claim in terms of clause
39.2.3. Titled “
Contractual Claim
” same was
forwarded by Mr Mabuso to Mr Potgieter on 27 July 2009.
[74]
Mr Potgieter was still not satisfied by the calculations, raising
concerns about the profit percentage
relied on, which was not project
specific, and the addition of substantial amounts to the construction
revenue of Mvela Phanda
which were not related to the Skilpadhek
project or any of the other construction projects of Mvela Phanda in
the year under review.
He provided a detailed exposition of why he
questioned the correctness of the calculation, which stood
unchallenged. To exacerbate
this, Mr Potgieter highlighted in his
report of 29 July 2009 to Mr Mabuso, that the auditors of Mvela
Phanda had “
qualified their report stating that the pages
(40 to 42) which is the calculation of profit does not form part of
the annual financial
statements and is presented as additional
information. They have not audited the information and [do] not
express an opinion thereon
.”
[75]
Resultantly, Mr Potgieter recommended that Mvela Phanda be requested
to submit audited statements
confirming the percentage claimed as
loss of profit, on which recommendation Mr Mabuso acted. As at the
end of July 2009, it therefore
remains clear that the DPW insisted on
strict compliance with clause 39.2 and specifically clause 39.2.3.
[76]
Mr Potgieter’ was heavily criticised in cross examination for
his view that the auditors
of Mvela Phanda had qualified their
report. This attack was premised on the auditors stating at some
point in their report that
they are not qualifying their opinion. The
contention is, however, contradicted by the fact that the auditors
pertinently state
in the same paragraph that they had not audited the
information at pages 40 to 42 of the financial statements “
and
accordingly do not express an opinion thereon
.” Further,
they record at page 1 of the financial statements that: “
The
following supplementary information [at pages 40 – 42] does not
form part of the annual financial statements and is unaudited
.”
[77]
The claimed profit of 11.66% was therefore not without qualification
and exacerbated by the follow
up letter from the auditors of 4 August
2009. In that letter the auditors state “
Because the above
procedures do not constitute either an audit or a review made in
accordance with [international standards] (or
relevant national
standards ...), we do not express any assurance on the calculation of
net profit percentage
.”
[78]
It is therefore unsurprising that Mr Potgieter was loath to accept
the validity or correctness
of the claimed profit of 11.66%. Mr
Potgieter added that even if the 11.66% figure was correct, it was
insufficient as the audited
statements needed to demonstrate
“
sufficient information
” from which “
to
know the construction projects that they were involved in, as well as
the profits made on projects that they were involved in
up to that
point in time. That could have been a good starting point to try and
finalise the actual loss for the specific contract
in question
.”
[79]
As matters stood on 4 August 2009 with the “audited reports”
and supplementary letter
from the auditors, and the view of Mr
Potgieter that Mvela Phanda had failed to satisfactorily produce any
evidence of actual loss
to the DPW; Mr Potgieter met with Mr Mabuso
and Mr Brink on 11 August 2009, in endeavouring to settle the matter.
They met to discuss
the approach to follow to determine the amount
that could be construed as damage or loss. Mr Brink, consequently,
seeing eye to
eye with Mr Potgieter, sent a letter to Mr Mabuso on 11
August 2009 setting out his calculations in terms of clauses 39.2.1,
39.2.2
and 39.2.3 of the contract. The upshot is that Mr Brink
calculated an amount of R20 415 627.04 in terms of clause 39.2.3, on
an
assumption that the 11.66% profit calculation by the auditors
could be proved as actual loss, with the reservation that “
Even
if one assume that the 11.66% profit on turnover is realistic for all
their work in the 2009 year, this percentage cannot merely
be applied
to the total contract amount of this project
.”
[80]
Since neither Mr Brink nor Mr Potgieter accepted the 11.66% as loss
of profit, Mr Brink decided
to draw a distinction between the work
done in terms of the contract by Mvela Phanda (determined by him at
45%) as against the
work to be done by its nominated subcontractors
(determined by him at 55%). Mr Potgieter acquiesced in this approach
by Mr Brink.
The meeting of 11 August 2009, however ended, with Mr
Potgieter still insistent on his request for “
specific
information to determine the potential loss of profit and that it was
up to the project manager [Mr Mabuso] to obtain the
relevant and
additional information from the contractor
.”
[81]
That Mr Malebye was appraised of this meeting, despite his
protestations of not being involved
between March and October 2009 is
evident from the fact that Mr Potgieter received a telephone call
from Mr Malebye. According
to Mr Potgieter, Mr Malebye during tis
call accused him of delaying the settlement of the claim. Mr Malebye
resultantly informed
him that the matter would be taken further with
Mr Mabuso who was seated in front of him. Mr Potgieter was
subsequently excluded
from any further involvement in the
determination of the cancellation amount.
[82]
Mr Malebye instructed his counsel to put to Mr Potgieter when he
testified in 2016 that he, Mr
Malebye could not recall the said phone
call and could not comment on it. Memory being fickle, in evidence in
2023, Mr Malebye
testified that he in fact recalled the phone call
and the circumstances giving rise to the call. Mr Mabuso arrived at
his office
claiming that he could not find Mr Potgieter. With
specificity, Mr Malebye testified that Mr Mabuso informed him of his
meeting
with Mr Potgieter and Mr Brink on 11 August 2019. Mr Malebye
phoned Mr Potgieter and indeed asked him what his problem was,
confirming
what Mr Potgieter had testified but denying that he
accused Mr Potgieter of delaying the settlement.
[83]
Following Mr Mabuso’s meeting with Mr Malebye, and the
effective exclusion of Mr Potgieter
from the matter, Mr Mabuso sent
an email to Mr Cave of Mvela Phanda on 24 August 2009. In this email
he set out what was termed
a “
Proposed Final Settlement by
Employer
in the amount of R20 415 627.04. This amount was the
amount calculated by Mr Brink which formed the subject matter of the
meeting
of 11 August 2009. The email was forwarded by Mr Cave to his
fellow director, Mr Joosub, with the message “
Please discuss
with me
”. Mr Malebye as a default response, disputes being
aware of this settlement proposal sent by Mr Mabuso to Mr Cave. He
maintains
that it was not discussed with him or authorised by him.
[84]
The settlement proposal in all probability was not accepted by Mvela
Phanda. This much is clear
from the fact that a facsimile was sent by
Mr Mabuso to Mr Cave of Mvela Phanda on 30 September 2009 headed
“
Cancellation Settlement
.” The facsimile
referenced an email sent to the DPW by Mr Cave on 29 September 2009,
which was not discovered. The circumstances
giving rise to this
cancellation settlement in September 2009 is shrouded in uncertainty
save for the fact that Mr Mabuso in his
facsimile recorded that the
DPW had elected to apply clause 39.2.3 of the contract, and that
Mvela Phanda was requested to furnish
the DPW with a tax invoice in
the amount of R27 761 273.48 (including VAT) as “….
as
approved by the Acting Director General
…” to
enable the DPW to process payment.
[85]
Mr Malebye vehemently denied approving the settlement amount of R27
761 273.48 or the sending
of the facsimile by Mr Mabuso. He was at
pains to explain why Mr Mabuso recorded that he, Mr Malebye, had
approved the settlement
amount save to suggest that Mr Mabuso had
made a mistake. Mr Malebye denied the contention that he had
discussed the matter with
Mr Cave and increased the settlement
amount. In the absence of a cogent explanation from Mr Malebye in the
face of a document which
speaks for itself, it is unlikely that Mr
Mabuso made a mistake in identifying approval of the increased
settlement amount at the
instance of Mr Malebye.
[86]
The clandestine settlement proposal of 30 September 2009 clearly did
not come to fruition as
a meeting was arranged between the DPW and
Mvela Phanda for 5 October 2009. According to Mr Malebye he was
invited to the meeting
by Mr Mabuso. The DPW was represented by Mr
Malebye, Mr Molotsi and Mr Brink. Mvela Phanda was represented by Mr
Cave, Mr Gerolemou
and Mr Aziz Joosub. Mr Malebye could not explain
why Mr Potgieter was not invited to the meeting and testified that he
could not
remember if he asked Mr Mabuso to call Mr Potgieter to the
meeting.
[87]
Despite Mr Malebye earlier testifying that it was important that all
in the delegations line
signed before him and that the Chief
Director: Legal Services Mr Ka-Mbonane was required to sign to ensure
that the conduct of
the DPW was “
in line with
” the
provisions of the contract, and that “
we are not doing
anything unlawful in terms of that kind of cancellation
”,
Mr Ka-Mbonane and Ms Motsisi, the Chief Financial Officer were not
present at the meeting of 5 October 2009. Mr Malebye
claimed that he
had not arranged the meeting and that “
Otherwise I could
have invited everybody who was actually in the line of signing the
cancellation application from the onset
.”. Ironically Mr
Malebye attended the meeting of 5 October 2009, chaired the meeting
which he did not call, and yet failed
to raise the absence of these
officials.
[88]
Mr Malebye went into the meeting of 5 October 2009, in the absence of
the expertise of Mr Potgieter,
Mr Ka-Mbonane and Ms Motsisi. This in
circumstances where Mr Malebye on his persistent version was unaware
of what transpired between
13 March 2009 and 5 October 2009. Mr
Malebye o his version went into the meeting, not having been briefed
and armed only with his
memorandum for the cancellation of the
contract of 13 March 2009.
[89]
Significantly, in evidence in chief Mr Malebye testified that he
received presentations in the
meeting “
from the department
as well as Mr Brink and Mvela Phanda and in the proceedings there was
a little bit of a misunderstanding or
disagreement and I asked the
contractor which is Mvela Phanda to excuse us so that we could have a
departmental meeting
”. The discussion in the departmental
meeting “
is that we need to implement the contract
conditions so that Mr Brink could come with a figure in order to
finalise the settlement
that will be agreeable to … the
department as well as the contractor
.”
[90]
In cross examination Mr Malebye confirmed that he asked Mr Brink to
explain his figures for the
respective settlement options and then
gave Mvela Phanda an opportunity to respond to Mr Brink’s
calculations. He recalled
that Mvela Phanda rejected Mr Brink’s
calculation in terms of clause 39.2.3 and that they were “prepared
to resort
to legal action”. Mvela Phanda’s delegates were
asked to leave the room to afford the DPW to caucus in private. Later
in cross examination, Mr Malebye disputed that he testified in chief
that he received presentations from the DPW and Mvela Phanda
before
he asked the contractor’s representatives to leave the room.
[91]
At this point in his evidence, Mr Malebye testified that the meeting
started with everyone in
attendance, and with Mr Brink making his
presentation. Mr Brink did not say what Mvela Phanda’s position
was. When Mvela
Phanda was asked to leave the room, Mr Malebye did
not know what Mvela Phanda’s position was. Mr Brink then
presented the
facts and figures, after Mvela Phanda left the room,
and informed Mr Malebye for the first time that Mvela Phanda had
rejected
an offer.
[92]
When confronted with the letter of Mr Brink of 8 October 2009
regarding the meeting of 5 October
2009, Mr Malebye took another
about turn and sought to dovetail his evidence on to the recordals of
Mr Brink. Mr Malebye was invited
to comment on the recordals in Mr
Brink’s letter.
[93]
When asked to comment on the recordal that “
In conclusion to
the discussions that followed, Mr Malebye remarked that in the
absence of a suitable template for calculating 39.2.2
and 39.2.3,
various interpretations are possible
.”. Mr Malebye
testified that he was concerned that the DPW and Mvela Phanda were
using different variables in coming to their
figures and “
Given
all the history of the matter or whatever the case might be, these
are the calculations; these are the basis of the calculations.
Hence
in this particular meeting I referred the whole matter back to Mr
Brink and the team
.” This is said to have taken place once
Mvela Phanda was requested to return to the room; and when he told
the DPW and Mvela
Phanda to reach an agreement on what variables they
would use to calculate the amounts referred to in the whole of clause
39.2.
[94]
On Mr Brink’s recordal that “
He [Mr Malebye] was also
doubtful whether the quantity surveyor’s [Mr Brink’s]
interpretation would stand up in court
.”, Mr Malebye
confirmed the correctness of the statement but was unable to furnish
a coherent answer why Mr Brink’s
interpretation would not stand
up in court. Notably Mr Malebye has no legal background or legal
qualifications.
[95]
Mr Malebye further confirmed the correctness of the recordal by Mr
Brink that he “
Mr Malebye decided to give the contractor the
benefit of the doubt as far as the interpretation of 39.2.3 was
concerned
.” When pointed out to Mr Malebye that his version
differed from what Mr Brink recorded, he endeavoured to reconcile the
two
versions by insisting that no agreement was reached at the
meeting, once again contradicting his pleaded case. The DPW correctly
in my view submit that by applying contorted argument, Mr Malebye was
not prepared to admit the obvious: that by giving Mvela Phanda
the
benefit of the doubt, he had accepted Mvela Phanda’s
calculations on clause 39.2.3 and had rejected Mr Brink’s
calculations.
[96]
The proverbial nail in the coffin for Mr Malebye with his attempts at
explaining away his pleaded
case, came when it was pointed out to him
that Mr Brink recorded that the option of clause 39.2.3 was no longer
considered. This,
as it was the highest value of the three and that
he Mr Malebye instead opted for the lesser of the options envisaged
in clauses
39.2.1 and 39.2.2, based on the quantity surveyor’s
(Mr Brink’s) calculations and with no additional interest
payments.
Mr Malebye in a turnabout denied the correctness of these
recordals and testified that he was “
absolutely certain
”
that what Mr Brink had written is not correct.
[97]
The persistent insistence by Mr Malebye that no agreement was reached
at the meeting of 5 October
2009 was dealt a death knell when it was
pointed out to him that Mr Brink concluded his letter by recording
that “
The delegates from Mvela Phanda then rejoined the
meeting and the chairman [Mr Malebye] informed them of the decision.
They accepted
the offer and agreed to forfeit any further claims for
P & G and interest. The quantity surveyors [Mr Brink] were
instructed
to process the final payment which must include the final
account and the settlement amount as agreed
.” Again,
confronted with the obvious, Mr Malebye disputed what Mr Brink had
written and insisted that the parties were to
go back “
and
find each other so that we have an agreed figure and come back with a
proper submission or a motivation
.”
[98]
Mr Malebye denied that he instructed Mr Brink to process the final
payment with the figure as
agreed. According to Mr Malebye, Mr Mabuso
and his team went back with Mr Brink, consulted the team from
Mvela Phanda
and reached an agreement
without his involvement, and brought the agreement to him.
[99]
When the Court pointed out the anomalies in his evidence to Mr
Malebye, he persisted in his version
that no agreement was reached at
the meeting of 5 October 2009 and contended that paragraphs 6.5 and
6.6 of his plea do not reflect
the correct position. When afforded an
opportunity to reflect on his evidence overnight, Mr Malebye returned
to Court the following
day and insisted that no agreement was reached
at the meeting of 5 October 2009. He also maintained that his pleaded
case similarly
stood and did not contradict his evidence.
[100]
After much cross examination by
Adv Burger SC
, Mr Malebye
finally conceded that he had provided different versions on what was
agreed at the meeting of 5 October 2009; and confirmed
that an
agreement was reached on the cancellation fee at the meeting of 5
October 2009.
The
statutory plea of waiver
[101]
The statutory plea of waiver (special plea) raised by Mr Malebye must
be considered against the backdrop of the
evidence as aforesaid.
Since Mr Malebye has raised a special plea of waiver, and bears the
onus of proving same, it is apt to consider
what evidence if any Mr
Malebye adduced in this regard, and the argument advanced on his
behalf.
[102]
Adv Phukubje
for Malebye advances the following argument on
behalf of Mr Malebye on the special plea of waiver. In what he refers
to as the
second hurdle (Regulation 12.2.2(e)), he submits that
unless the DPW shows that the damages it suffered arose as a result
of the
circumstances contemplated in regulation 12.2.1(e), then, any
claim against Mr Malebye (assuming it existed) is automatically
waived
in terms of the provisions of regulation 12.7.3.
[103]
Adv Phukubje
contends that the determination whether the
condition in Regulation 12.2.2(e) applied to the circumstances of the
claim against
Mr Malebye depends on an interpretation of the Treasury
Regulations. Relying on the unreported judgment in
Minister of
Safety and Security v Gardner
(CA 250/2008) [2009] ZAECGHC 38 (2
July 2009) at para [10] he maintains that it on the plain meaning of
its wording, the Regulations
in question do not give a remedy or
create a debt where there was none before. The Regulations he
contends do not prescribe requirements
for a cause of action which
were not required before. The wording and content of the Regulations
he further contends lays down
the procedure for recovering loss or
damage or damages in respect of which there is already a complete
cause of action.
[104]
No issue is taken by Mr Malebye with the two delegations of power in
terms of the PFMA are common cause between
the plaintiff and the
second defendant. With reference to the Financial Delegations and
Project Management Delegations,
Adv Phukubje
contends that the
DPW’s reliance on the provisions of regulations 12.2.1 and
12.2.2 in the circumstances is clearly without
merit in that the
evidence presented to Court showed that when the decision was taken
to terminate the contract, the DPW was made
fully cognisant of the
financial repercussions in the order of R30 million and which would
amount to fruitless and wasteful expenditure;
the decision to
terminate was signed off by all the relevant officials in the
department including the then Director-General, as
well as the
Director: Legal Services; and there can be no suggestion that the
Financial Delegations and/or Project Management Delegations
require
any input from the State Attorney and/or the Director: Legal Services
in respect of the approval of the final payment.
[105]
In my view, the submissions that Mr Giani and Ms De Bruin gave no
evidence relevant to the second main issue or
that Mr Potgieter’s
evidence was not tendered in respect of the issues arising from
regulation 12, does nothing to advance
the case for Mr Malebye on
whom the onus rests for his special plea of waiver. It is what Mr
Malebye tenders as evidence on this
score that this Court must
consider.
[106]
What relevant evidence did Mr Malebye tender in support of his
special plea of waiver? The simple answer is none.
Tangentially, the
case for Mr Malebye on his special plea of waiver is predicated on
legal argument predicated on an interpretation
of the contentious
Treasury Regulations. The argument of Regulations 12.2.1 read with
12.7.3 was advanced as follows. In terms
of Regulation 12.1.1 the
State is its own insurer; and in terms of regulation 12.7.3 the
State’s employee is entitled to
the benefit of that cover,
unless it is forfeited because one of the conditions in regulation
12.2.1(a) - (g) is applicable.
[107]
Mr Malebye would forfeit his cover in terms of Regulation 12.7.3 if,
in the circumstances pleaded by the DPW plaintiff,
the following
requirements are met. The DPW suffered “losses or damages”;
the losses or damages must be as a result
of (or caused by) Mr
Malebye; Mr Malebye is liable in law for the losses or damages; and
he “
without prior consultation with the State Attorney, made
an admission that was detrimental to the State
”.
[108]
Adv Phukubje
maintains that although regulation 12.7.3 only
refers to “paragraph 12.2.1(a) to (g)”, it cannot
sensibly be interpreted
to exclude the wording in regulation 12.2.2.;
and accordingly, the “admission” referred to in 12.2.1(e)
must be interpreted
to mean an admission made by the official (Mr
Malebye) himself; the admission must be made to a third party (who
has raised a claim
against the State for damages or loss suffered by
that third party); it must be made in respect of the claim against
the state
by a third party for damages or loss caused by the
official; and it must be a matter in respect of which the State
Attorney has
the power to deal with.
[109]
Adv Phukubje
resultantly submits that even if one were to
assume that Mr Malebye made an admission (of which no evidence was
tendered), the
“admission” was not in respect of losses
or damages suffered as a result of any conduct or omission on the
part of
Mr Malebye - the termination of the contract between the DPW
and Mvela Phanda was not caused by any conduct on the part of Mr
Malebye.
[110]
As to the claim under Regulation 12.2.1,
Adv Phukubje
submits
that the admission must be in respect of a “claim” raised
by a third party against the state. The “claim”
he
contends does not include claims made under a construction contract
which the State Attorney is not responsible to administer;
and would
mean that any contractual mechanisms regulating claims
must be ignored, thereby circumventing
the
provisions of the contract itself, which requires that the parties to
the JBCC contract must deal with the claims raised thereunder
themselves. This he submits puts paid to the DPW’s reliance on
regulation 12.2.1(e).
[111]
Adv Phukubje
further contends that Regulation 12.2.1(e) has no
relation to claims in respect of “
unauthorised, irregular or
fruitless and wasteful expenditure
.” And although
regulation 9.1.4 provides that the recovery of losses or damages
resulting from unauthorised, irregular or
fruitless and wasteful
expenditure must be dealt with in accordance with regulation 12, not
all the provisions of regulation 12
can apply to a claim to recover
such losses or damages.
[112]
As to consultation with the State Attorney before settling the claim
of Mvela Phanda, Adv Phukubje submits that
the relevant regulations
are not capable of such an interpretation and no evidence was
tendered that it is the law or practice
or custom for attorneys to be
part of discussions in regard to claims raised by a contractor during
the course of a construction
contract.
[113]
As to the “admission” made by Mr Malebye to the DPW, that
“
the admission, that the cancellation fee was owing, was
made by the second defendant to the first defendant and to the
plaintiff
on or before
12 October 2009
”, it
is contended that the cancellation fee was automatically payable by
the DPW in terms of the provisions of the contract
(i.e.
ex
contractu
) and Mr Malebye did not make any admission that the
cancellation fee was payable.
[114]
Adv Berger SC
for the DPW in relation to the special plea
contends that Mr Malebye acted recklessly and intentionally in
circumstances where
he knew that clause 39.2 of the contract applied
to the claim of Mvela Phanda; and that each of the three sub-clauses
of 39.2 had
to be determined. Failing the exercise envisaged by
clause 39.2 Mvela Phanda would not be entitled to be paid any
cancellation
fee whatsoever. The contention is further that Mr
Malebye knew that the DPW could not determine an amount in terms of
clause 39.2.3.
and therefore, intentionally decided to bypass clause
39.2.3 and opt for a calculation in terms of clause 39.2.2. Clause
39.2.3
is said to have been left out deliberately so that Mvela
Phanda could be paid.
[115]
The fact Mr Malebye insisted that he had nothing to do with the
contract after 13 March 2009, until the meeting
of 5 October 2009;
and had not appraised himself of developments in the matter, rendered
his conduct at the meeting reckless as
to the legal consequences of
his actions. This is said to have culminated in a deliberate intent
to ensure that Mvela Phanda was
paid a cancellation fee, whether or
not it had submitted evidence substantiating its actual damage or
loss as a result of the cancellation.
[116]
The undisclosed conflict of interests by Mr Malebye so the argument
goes exacerbates the matter. His lack of knowledge
as to what had
transpired between DPW and Mvela Phanda, Mr Malebye also went into
the meeting of 5 October 2009 without the expert
assistance of Mr
Potgieter, Mr Ka-Mbonane and Ms Motsisi. This too it is argued was
reckless as he had no idea what evidence, if
any, Mvela Phanda had
submitted to substantiate its actual damage or loss, nor whether
Mvela Phanda had substantiated its actual
damage or loss, nor what
legal options were available to Mvela Phanda if DPW could not
determine Mvela Phanda’s actual damage
or loss.
[117]
By excluding Mr Potgieter from the meeting of 5 October 2009, Mr
Malebye is said to have acted intentionally.
Further that the
exclusion of the Chief Director: Legal Service and/or the Chief
Financial Officer was done deliberately to manipulate
and control the
meeting to reach a settlement with Mvela Phanda, reckless as to
whether his conduct was lawful and/or in the best
interests of the
DPW. Despite his trust in Mr Brink, Mr Malebye by stating that Mr
Brink’s calculations would not stand up
in court, without legal
opinion acted recklessly.
[118]
The argument is further that, in offering Mvela Phanda a cancellation
fee calculated according to the formula
in clause 39.2.2, Mr Malebye,
without prior consultation with the State Attorney, made an admission
that was detrimental to the
state, i.e. that the cancellation fee was
due and payable to Mvela Phanda.
[119]
The DPW submits that, in approving the payment of the cancellation
fee, Mr Malebye failed to declare his conflict
of interest, and
failed to act in accordance with clause 39.2 of the contract, and in
the best interests of the plaintiff. His
conduct was deliberate and
reckless, ensuring that Mvela Phanda was paid the cancellation fee,
despite his knowledge that clause
39.2.3 of the contract had not been
complied with and that no cancellation fee was payable.
[120]
The DPW therefore submits in this Court that Treasury regulations
12.2.1 (d) and (e) have been met, i.e. they
are applicable within the
meaning of regulation 12.7.3; and that Mr Malebye has forfeited
protection under regulation 12.7.3, read
with regulation 12.2.1. and
his special plea of waiver must fail.
[121]
To my mind the issue in the special plea of waiver, viewed from the
perspective of the claim of the DPW, has nothing
to do with the
cancellation of the contract. It has everything to do with the
approval of the payment of the cancellation fee and
the circumstances
giving rise thereto.
[122]
In this regard Mr Malebye indeed acted recklessly when approving a
payment outside the terms of clause 39.2, in
circumstances where
evidence demonstrates overwhelmingly that he was heavily conflicted
and should have recused himself from any
discussions relevant to the
cancellation fee. I am persuaded by the argument of the DPW that the
special plea of waiver raised
by Mr Malebye must fail.
[123]
The remaining question is whether the DPW has overcome the hurdle of
its onus to prove that Mr Malebye breached
his contract of
employment.
Discussion
Claim
A
[124]
There was no basis for Mr Malebye and Mvela Phanda to circumvent
clause 39.2.3 of the contract. Clause 39.2 is
clear that no other
amounts can be paid in the event of cancellation of the contract,
other than as determined in accordance with
Clause 39.2. The
settlement agreement of 5 October 2009 is in direct violation of
clause 39.2. There was no other basis for determining
the
cancellation fee other than clause 39.2. If any doubt existed in this
regard, Mr Malebye who on his version went into the meeting
of 5
October 2009 without an inkling of what had transpired since February
2009, he was undoubtedly under an obligation to call
on those who
knew. On circumventing clause 39.2 with the settlement with Mvela
Phanda, outside of clause 39.2, legal advice should
have been sought.
[125]
The onus in a claim based on the
condictio indebite
is trite.
In
Recsey v Reiche
1927 AD 554
at 556, the court held that the
onus in an action based on the condictio indebite “lies
throughout the whole case”
on the DPW. The DPW bears the onus
of proving every element of the claim and included in this is the
excusability of the error.
In
Mabaso v Felix
1981 (3) SA 865
(A) at 872H, the court stated that “considerations of policy,
practice and fairness
inter partes
largely determine the
incidence of the onus of proof in civil cases, and I can conceive of
nothing unfair in and of no consideration
of policy or practice
militating against, expecting of a plaintiff who alleges that he paid
an amount of money in mistake of law,
to prove sufficient facts to
justify a finding that his error is excusable.” It is only once
a payment
in debite
has been proved, that the defendant has
the onus of proving that he was not enriched by the payment.
[126]
“No person” is to be enriched at the expense of another;
that is the thrust of a claim for unjustified
enrichment - Grotius
3.30.1.3. In
ABSA Bank v Leech
2001 (4) SA 132
(SCA) paragraph
18, the court reiterated that the payment had to be made in error
when in fact it was not owing. Beck's Theory
and Principles of
Pleading in Civil Actions, page 256, sets out the general
requirements of the
condictio indebite
: 1. the defendant must
be enriched; 2. the plaintiff must be impoverished; 3. the
defendant’s enrichment must be at the expense
of the plaintiff;
and 4. the enrichment must be ....cause (
sine causa
) i.e.
unjustified.
[127]
In
Iscor Pension Fund v Jerling
1978 (3) SA 858
(T) at 861 E,
the court in expounding on the elements of unjustified enrichment
found that the mistaken belief must have been reasonable;
and in
Willis Faber v Enthoven v Receiver of Revenue
[1991] ZASCA
163
;
1992 (4) SA 202
(A) at 220i the court found that there must have
been no legal natural or moral obligation to have made the payment.
[128]
As pleaded by the DPW in its cause of action on Claim A, based on the
condictio indebiti
, there was no legal basis for the payment
of the cancellation fee to Mvela Phanda, since clause 39.2 of the
contract had not been
complied with. Mvela Phanda was therefore
enriched and the DPW impoverished at the expense of the DPW, and the
payment was therefore
made
sine causa
, or
indebite
.
Claim
D
[129]
The trite position in our law is that the evidence adduced by Mr
Malebye must speak to his pleaded case. As a
reminder, Mvela Phanda
and Mr Malebye pleaded that an agreement was concluded, at a meeting
in September or October 2009, to bypass
the requirements of clause
39.2.3 of the contract; and as a result of this alleged agreement,
and the subsequent payment certificate
incorporating the agreement,
the cancellation fee was lawfully approved and paid. From his
evidence in chief Mr Malebye made it
clear that no agreement was
reached at the meeting of 5 October 2009. This indeed as submitted by
the DPW, constitutes a fundamental
contradiction of Mr Malebye’s
pleaded defence.
[130]
The anomalies and contradictions in the evidence of Mr Malebye, his
poor performance as an unreliable witness
evident from his tendered
evidence, gravely impacts his credibility. No reliance can be placed
on any part of the contradictory
evidence of Mr Malebye. Mr Malebye
failed to inspire any confidence in his evidence which was clearly
fabricated to divert attention
from the inescapable fact that he
ultimately decided to circumvent the contract by unilaterally
deciding that clause 39.2.3 should
not be considered.
[131]
I cannot agree with the contentions on behalf of Mr Malebye that the
claims of the DPW against Mr Malebye should
fail on the evidence of
the DPW. The Full Court in the appeal against the granting of
absolution at the close of the case for the
DPW in relation to the
meeting of 5 October 2009, opined at para 34 of its judgment, that:
“……
partial
yet crucial facts of that meeting leading to the impugned agreement
were placed before the trial court through the introduction
of the
memorandum of that meeting. Even if it were not so, the mere
realinace by the first and second defendants on the agreement
reached
in that meeting places on them the burden to give evidence thereof.
Considering the terms of clause 39.2 and the evidence
of Potgieter,
all that remained curious from the meeting of 5 October 2009 was an
explanation or justification for the contravening
decision, if any
lawful one existed.
Only the defendants, particularly the second
defendant, not the plaintiff, is obliged to give the relevant
evidence
.”
(emphasis added)
[132]
Mr Malebye was under a duty to ensure strict compliance with clause
39.2 of the contract. Neither Mr Malebye;
or Mvela Phanda despite its
protestations to Mr Potgieter on what he wanted from Mvela Phanda,
could circumvent clause 39.2. Mr
Malebye, as early as 10 February
2009 and 13 March 2009 in specific, was clearly acutely aware of what
was required in terms of
clause 39.2. Mvela Phanda was required to
furnish the DPW with evidence substantiating its actual damage or
loss as a result of
the cancellation of the contract. Nothing else
would suffice.
[133]
With Mr Malebye on his contradictory version, being unaware of what
transpired between 13 March 2009 and 5 October
2009, would have been
oblivious to the evidence purportedly provided by Mvela Phanda in
support of clause 39.2. He was, however,
as the evidence demonstrates
contrary to his plea of ignorance, aware at least on 11 August 2009
of the impasse between the DPW
and Mvela Phanda and Mr Potgieter’s
stance. After all, there is no other reasonable explanation why Mr
Potgieter was henceforth
excluded from dealing with the matter of the
cancellation fee. Mr Malebye therefore in August 2009 was aware of
the problem with
Mvela Phanda and the calculation of the cancellation
fee. Equally so, he had to be aware of Mr Brink’s proposed
calculations
in which Mr Potgieter notwithstanding his reservations,
acquiesced.
[134]
Mr Malebye entered a meeting without officials from the DPW, who are
strategic in the Financial Delegations. His
excuse, poor as it was,
is that he did not call the meeting and if he did, they would be
present. I re-iterate that nothing precluded
him from calling for
their attendance at the meeting. With knowledge a foresight of the
stance of Mr Potgieter who was highly regarded
as the expert of the
DPW in matters of this nature, he failed to call on him either.
Notwithstanding Mr Malebye’s materially
contradictory evidence
on the meeting of 5 October 2009, it is clear that he rejected the
analysis and calculation in terms of
clause 39.2.3 of Mr Brink. This
was figure in which Mr Potgieter acquiesced. He then unilaterally
decided, without attempting to
understand Mr Brink’s reasoning,
to reject Mr Brink’s input because Mvela Phanda rejected it.
[135]
Mr Malebye instead allowed settlement on an amount outside of the
strict terms of clause 39.2 simply because Mvela
Phanda threatened
legal action. So much more reason why Mr Malebye was at liberty as
the accounting officer of the DPW, to call
on the Chief Director:
Legal Services or the State Attorney for an opinion. The upshot of
this decision by Mr Malebye is that no
amount was payable to Mvela
Phanda. The arbitrary amount of R33 726 705.90 (including VAT) was
not justified.
[136]
Despite Mr Malebye pleading ignorance on the contractual
relationships with Government of his cousin Mr Moloisaine,
evidence
demonstrates that his own business dealings with Mr Moloisane and his
familial relationship with him, makes a mockery
of his plea of
ignorance. As made plain at para 31 of the SCA judgment in
Phillips
v Fieldstone Africa (Pty) Ltd and another
the rule is a strict
one which allows little room for exceptions;
it extends not only
to actual conflicts of interest but also to those which are a real
sensible possibility; the defences open to
a fiduciary who breaches
his trust are very limited: only the free consent of the principal
after full disclosure will suffice
.
[137]
Mr Malebye undoubtedly from the evidence was acutely aware that Mpelo
Construction CC was contractually connected
to Mvela Phanda. Mr
Malebye dismally failed to explain his failure to make very relevant
disclosures which tied him to Mpelo Construction.
Despite his late
discovery of purported “Tax Invoices” to explain sums of
money paid by Mpelo Construction to Merli
Motors which was owned by
himself, he fell on his own sword with these documents.
[138]
That there was actual conflict of interest on the part of Mr Malebye
is evidently clear from the evidence. Even
on his own version, a real
sense possibility is evident. In breaching his trust with the DPW his
employer, the defences available
to Mr Malebye are limited. As the
SCA made it plain, only the free consent of the principal will
suffice. It is unsurprising therefore
that the defence raised not
only by Mvela Phanda but also Mr Malebye is a very limited defence
claiming an agreement reached to
settle the matter. Mr Malebye adds a
rider to his defence by raining a special plea of waiver.
[139]
Mr Malebye was clearly conflicted, which precluded him from being
involved in any aspect of determining the cancellation
fee. With the
agreement between Mvela Phanda and the DPW at the instance of Mr
Malebye having been reached outside of clause 39.2,
such agreement
was invalid and of no force and effect. There is simply no room for
leeway in this regard. Notwithstanding, Mr Malebye
instructing Mr
Brink to prepare the final payment certificate, with the addition of
the words “as agreed”, the final
payment certificate
itself, which in ordinary parlance is unassailable unless set aside,
this is of no moment in the context of
the evidence in this matter
and is by no means legally binding on the DPW. The final payment
certificate was invalid.
[140]
Mr Malebye through his breach of clause 39.2 failed to act in the
best interests of the DPW and therefore failed
to observe the utmost
good faith towards the DPW, all to its prejudice.
[141]
The matter is further exacerbated by a memorandum sent by Mr Mabuso
to Mr Malebye seeking approval of the final
payment to Mvela Phanda
and in which he records that the payment is following “
consultation
with the Contractor, Departmental Quantity Surveyor and Private
Quantity Surveyor we recommend the implementation of
clause 39.2.3 as
stipulated above. This option is found to be Economical for the
Department
.” As the evidence reveals, however, the inputs
and calculations of Mr Brink (the private quantity surveyor) were not
considered
at the meeting of 5 October 2009 and Mr Potgieter (the
quantity surveyor of the DPW) was not present at that meeting. Even
more
curious, is that Mr Mabuso added that “
as the Employer
we engaged the contractor to address their concerns about sub-clause
39.2.3 as we proposed,
we resolved to apply sub-clause
39.2.2 to avoid unnecessary litigations
…”.
Conclusion
[142]
Claims A and D as formulated against Mvela Phanda and Mr Malebye by
the DPW, must accordingly succeed. Neither
Mvela Phanda nor Mr
Malebye were at liberty to conclude an agreement outside the
parameters of clause 39.2. The defence raised
by Mvela Phanda and Mr
Malebye predicated on this agreement is accordingly rejected.
[143]
Mvela Phanda failed to provide evidence or proof of actual loss as
required by clause 39.2.
[144]
Mr Malebye in concluding the agreement, being heavily conflicted as
the evidence demonstrates, undoubtedly breached
his contract of
employment with the DPW.
[145]
Mvela Phanda and Mr Malebye are accordingly liable to compensate the
DPW for the damages it suffered as result
of the payment of the
amount of R33 726 705.90.
Costs
[146]
Costs follow the result. Mvela Phanda and Mr Malebye are accordingly
liable for the plaintiff’s costs in
the prosecution of the
action, which costs are to include the costs of two counsel, where so
employed.
Order
[147]
In the result, it is ordered that:
1.
The first and second defendant, are liable for payment of the sum of
R33 726
705.90 plus interest at the prescribed rate of interest,
from 11 October 2012 (date of service of summons) to date of payment,
jointly and severally, the one paying, the other to be absolved.
2.
The first and second defendant shall pay the costs of suit, which
costs shall
include the costs of two counsel, where so employed.
AH
PETERSEN
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
Appearances
For
the Plaintiff
: Adv D Berger SC
Instructed
by
: Haffejee, Roskam Savage Attorneys
For
the First Defendant : No appearance at
Defendant’s Case
For
the Second Defendant : Adv M Phukubje
Instructed
by
: JV van Rensburg Kinsella Attorneys
sino noindex
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