City of Tshwane Metropolitan Municipality v Phanyane and Others (2024/032979) [2025] ZAGPPHC 551 (30 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

 

REPUBLIC OF SOUTH
AFRICA

IN THE HIGH COURT OF
SOUTH AFRICA

GAUTENG DIVISION,
PRETORIA

 

Case Number:
2024-032979

(1) Reportable: No

(2) Of interest to other
judges: No

(3) Revised: Yes

Date: 30 May 2025

In
the matter between:

 

CITY
OF TSHWANE METROPOLITAN MUNICIPALITY           
Plaintiff/Respondent

 

and

 

NAMADZAVHO
CALIFORNIA PHANYANE                               

First Defendant

 

STEPHENS
NOTOANE                                                              

Second Defendant

 

FRANCOIS
PIERRE COETZEE                                                 

Third Defendant/Excipient

 

FAIEK
ALEXANDER                                                                  

Fourth Defendant

 

This
judgment was handed down electronically by circulation to the parties
and/or their legal representatives by email and by being
uploaded
onto CaseLines. The hand-down date is deemed to be 30 May 2029.

JUDGMENT

DU PREEZ, AJ

 

INTRODUCTION

 

1.           
The plaintiff sued the defendants, among
other things, for a declaratory order that the defendants breached
section 32 of the Municipal
Finance Management Act [the
main claim] and their respective
employment contracts [the alternative
claim], and payment of R21,645,090.00
for irregular expenditure.

 

2.           
The third defendant excepted to the
alternative claim under Rule 23(1) on the basis that the plaintiff’s
particulars of claim
lack averments necessary to sustain a cause of
action.

 

THE ALLEGATIONS IN THE
PARTICULARS OF CLAIM REGARDING THE PLAINTIFF’S MAIN CLAIM

 

3.           
In the particulars of claim, the plaintiff
bases its main claim on the defendants’ breach of section 78
(read with section
32) of the Municipal Finance Management Act 56 of
2003 [the MFMA]
by failing to take all reasonable steps to prevent irregular
expenditure as defined in the MFMA and the damages in the amount
of
R21,645,000.00 as a result thereof.

 

4.           
The plaintiff alleges, among other things,
that:

 

4.1             
The defendants, who were members of the Bid
Evaluation Committee [the BEC]
that evaluated Tender U[…] [the
tender], failed to fulfil their
function and duty properly by:

4.1.1             
Not excluding the winning bidder by
disqualification for failure to meet the functionality test;

4.1.2             
Not complying with the requirements of the
Broad-Based Black Economic Empowerment Act 53 of 2003;

4.1.3             
Not enforcing the requirements of the
tender document; and

4.1.4             
Failing to evaluate the bid under the
specifications for a specific procurement under regulation 28 of the
Municipal Supply Chain Management Regulations and subparagraph 8.8 of
the Supply Chain Management Policy [the
defendants’ conduct].

4.2             
The defendants breached section 78 (read
with section 32) of the MFMA because they failed to take all
reasonable steps to prevent the resultant irregular expenditure;

4.3             
The Auditor General determined the
irregular expenditure to be R21,645,000.00; and

4.4             
The plaintiff thus suffered “harm”
with the financial consequences befalling the plaintiff.

 

5.           
The third defendant did not except to the
plaintiff’s main claim.

 

THE ALLEGATIONS IN THE
PARTICULARS OF CLAIM REGARDING THE PLAINTIFF’S ALTERNATIVE
CLAIM

 

6.           
The plaintiff bases its alternative claim
on the following allegations:

 

6.1             
The plaintiff and the defendants
(respectively and each representing himself, separately) concluded a
contract of employment [the contract];

6.2             
The material express, alternatively
implied, further alternatively tacit terms of the contract were:

6.2.1             
The defendants would be employed within the
plaintiff as senior employees and within management;

6.2.2             
The defendants would serve the plaintiff,
as and when, within its procurement processes and, in particular,
serve as members of
the BEC;

6.2.3             
The defendants would acquaint themselves
with all processes relating to the plaintiff’s procurement
processes and execute
their duties and functions in accordance with
law and the requirements of the plaintiff’s Supply Chain
Management Policy;

6.2.4             
The defendants would ensure and maintain a
culture of fairness, equitability, competitiveness,
cost-effectiveness, and transparency;

6.2.5             
The defendants would evaluate the bids in
accordance with the specifications for a specific procurement;

6.2.6             
The defendants would exercise due care in
respect of evaluating the bids in accordance with the specification
for the specific procurement;
and

6.2.7             
The plaintiff would afford training and
remuneration to the defendants.

6.3             
The plaintiff has duly complied with its
obligations under the contract.

6.4             
The defendant, in breach of their
obligations under the contract, failed to:

6.4.1             
Ensure that the procurement process under
the tender was fair, transparent, equitable, and competitive because
the defendants failed
to disqualify the winning bidder when they
ought to have;

6.4.2             
Awarded and allocated B-BBEE points when
the winning bidder did not meet the requirements of the tender, in
that the winning bidder
is an unincorporated joint venture and ought
to have submitted a consolidated B-BBEE scorecard, the defendants
accepted and allocated
B-BBEE points on an individual basis;

6.4.3             
The defendants awarded the winning bidder
functionality points as follows:

(1)     
In respect of the criterion, proof of
experience in the supply, installation, testing and commissioning of
Meter Data Management
System, bidders were to submit authentic
letters of recent successfully completed projects with contact
details, and a maximum
of 25 points were to be allocated;

(2)     
Whereas the defendants scored the bidder a
maximum of 25 points even though the winning bidder provided only two
letters which complied
with the criteria and consequently, ought to
have been scored no more than 15 points;

(3)     
In respect of the criterion, proof of
experience in supply, installation, testing, and commissioning of
Head End System and requirement
to submit authentic signed letters
with a maximum of 20 available for allocation, the winning bidder was
appropriately scored by
the defendants and allocated the full
complement of 20 points;

(4)     
In respect of the criterion of proof of
experience in supply, installation, testing, and commissioning of the
Online Vending System,
the tender document required the submission of
three authentic, signed letters of a recently successfully completed
project with
contact details for a maximum points tally of 25;

(5)     
Whereas the defendants scored the winning
bidder 25 points despite the winning bidder submitting only one
authentic signed letter
(alternatively, reference letter) and thus
should only have obtained an allocation of no more than five points;

(6)     
In respect of the criterion for the Team
Leader with experience in the development of the Meter Data
management System, the Head
End System and the Online Vending System,
bidders were required to submit a curriculum vitae with relevant ICT
qualification, together
with reference letters of successfully
completed projects for a maximum points tally of 15 points;

(7)     
Whereas the defendants scored the winning
bidder the full points complement of 15 points despite the winning
bidder’s curriculum
vitae showing the staff member with only a
BSc Industrial Engineering without any relevant ICT qualification as
required per the
functionality evaluation criterion, and further, the
winning bidder failed to provide any reference letter of successfully
completed
projects and must have been a score of zero;

(8)     
In respect of the criterion for Team
Members with experience in the development of the Meter Data
Management System, the Head End
System and the Online Vending System,
bidders were required to submit a curriculum vitae with relevant ICT
qualification and four
reference letters of successfully projects
with a maximum points tally of 15 points to be allocated;

(9)     
Whereas the winning bidder submitted two
curriculum vitae for a trainer with a software engineering
qualification and a solution
architect with a BSc in Computer and
Software Engineering, and while these curriculum vitae did have the
relevant qualification,
no accompanying reference letters were
submitted and for that reason, the bidder ought to have been
allocated zero points;

(10)   
In the result, the defendants properly
fulfilled their function and duty; they would have scored the winning
bidder no more than
40 points instead of the 100 points they scored
and allocated to the winning bidder; and

(11)   
 Consequently, the winning bidder
ought to have been excluded by disqualification for failure to meet
the functionality test.

6.4.4             
The above scoring was in breach of the
defendants’ duties and obligations towards the plaintiff under
their contract.

6.5             
Due to this breach, the plaintiff has
suffered damages in that its process received a negative report
and/or audit finding from
the Auditor General, South Africa, in which
the procurement was found to be irregular and the resultant
expenditure was irregular.

6.6             
The defendants knew, alternatively ought to
have known, that failing to carry out their duties in line with the
contract’s requirements
would affect the plaintiff’s outlook
within government and, in particular, result in negative audit
findings.

6.7             
The defendants knew, alternatively ought to
have known, that negative audit findings by the Auditor-General South
Africa have financial
implications on and in relation to the
plaintiff’s budget and future allocations.

6.8             
As a result, the plaintiff suffered
irregular expenditures of R21,646,000.00, and the defendants are
jointly and severally liable
therefor, the one paying and the others
being absolved.

6.9             
Despite demand, alternatively, the combined
summons constituting demand, the defendants have failed to make
payment of the irregular
expenditure.

 

THE RELIEF CLAIMED BY
THE PLAINTIFF

 

7.           
The plaintiff then claims judgment against
the defendants, jointly and severally (in respect of money judgment,
the one paying the
others being absolved) for an order:

 

7.1             
Declaring that the defendants breached the
MFMA and the plaintiff’s procurement processes;

7.2             
Declaring that the plaintiff is entitled to
recover a penalty from the defendants under section 32 of the MFMA;

7.3             
Declaring that the defendants are in breach
of the MFMA and their respective employment contracts and ordered to
pay R21,1645,000.00
in respect of the irregular expenditure;

7.4             
Directing, to the extent that the
defendants fail to make full and timely payment before their
retirement and/or resignation (as
the case may be), the plaintiff is
entitled and authorised to approach and endorse the defendants’
pension/provident fund
accordingly; and

7.5             
Ancillary relief.

 

THE THIRD DEFENDANT’S
EXCEPTION

 

8.           
The third defendant’s exception is
based on:

 

8.1             
The plaintiff’s alternative claim not
complying with Rules 18(4), 18(10), and 20(2) [‘the
first exception’]; and

8.2             
The plaintiff’s failure to allege,
insofar as the alternative claim is concerned, that it had suffered
“any loss or damage because of the
deliberate or negligent unlawful actions”
of any of the defendants, including the third defendant [‘the
second exception’].

 

9.           
The third defendant alleges that he is thus
prejudiced because:

 

9.1             
The alternative claim does not contain a
clear and concise statement of the material facts upon which the
plaintiff relies for such
claim, with sufficient particularity to
enable the third defendant to reply thereto; and does not set out the
damages purportedly
claimed by the plaintiff in a manner that enables
the third defendant to assess the quantum thereof reasonably;

9.2             
The facts stated by the plaintiff in the
alternative claim do not support the conclusion of law which the
plaintiff seeks to deduce
from such facts; and

9.3             
The third defendant is, as far as the
alternative claim is concerned, unable to determine what case it is
called upon to meet.

 

10.        
The third defendant seeks an order that the
exception be upheld with costs and the plaintiff’s alternative
be set aside.

 

DISCUSSION

 

GENERAL REMARKS

 

11.        
When
a plaintiff pleads a cause of action, the particulars of claim must
contain every fact which would be necessary for the plaintiff
to
prove, if traversed, to support the plaintiff’s right to
judgment. It does not comprise every piece of evidence needed
to
prove each fact, but every fact necessary to be proved.[1]

 

12.        
On a proper reading of the amended
particulars of claim, it appears that the plaintiff’s
alternative claim is based on a breach
of contract, as may be gleaned
from the following:

 

12.1          
It bears the heading “ALTERNATIVELY
– BREACH OF CONTRACT”; and

12.2          
The plaintiff alleges that:

12.2.1          
The conclusion of employment contracts with
the defendant and their terms and conditions;

12.2.2          
The plaintiff complied with its obligations
under the employment contracts;

12.2.3          
The defendants breached their employment
contracts for the reasons stated above; and

12.2.4          
The plaintiff suffered damages because the
defendants breached their employment contracts.

 

13.        
A
party wishing to claim damages resulting from a breach must allege
and prove:[2]

 

13.1          
The contract;

13.2          
The breach of the contract;

13.3          
Damages;

13.4          
A causal link between the breach and
damages; and

13.5          
That the loss was not too remote, i.e.,
general or special damages.

 

14.        
As
the plaintiff’s claim is based on alternative causes, the third
defendant is entitled to except to one or more of the
alternatives.[3]

 

15.        
The third defendant has excepted to the
plaintiff’s alternative claim on the basis that it lacks
averments necessary to sustain
a cause of action, and accordingly,
 he must:

 

15.1          
Confine
his complaint to the stated grounds of his exception;[4]
and

15.2          
Show
that upon every interpretation the alternative claim can reasonably
bear, no cause of action is disclosed.[5]

 

THE FIRST EXCEPTION

 

16.        
The third defendant’s first exception
is premised on the mere allegation that the alternative claim does
not comply with the
provisions of Rules 18(4), 18(10), and 20(2) of
the Uniform Rules of Court. He does not state in which respect the
alternative
claim does not comply with the provisions of these Rules.

 

17.        
During argument, the third defendant’s
counsel argued that:

 

17.1          
The consequences of the plaintiff’s
non-compliance are, among others, that the plaintiff does not allege
a causal link between
the breach of contract and the damages
allegedly suffered.

17.2          
The plaintiff claims damages in an amount
equal to the amount of the penalty imposed by the Auditor-General
(and relied on in the
main claim).

17.3          
This penalty does not necessarily equate to
the contractual damages suffered by the plaintiff, and the plaintiff
had to plead something
more to link the penalty amount to the breach
of contract [‘the argued
exception’].

 

18.        
The argued exception is not one of the
grounds upon which the third defendant’s first exception is
based. The third defendant
is bound by the grounds stated in the
first exception, namely that the mere non-compliance with Rule 18(4),
18(10), and 20(2) renders
the alternative claim excipiable. He
cannot, in argument, expand the grounds of the first exception. He
should have expressly stated
the argued exception to have relied on
it as a ground for his first exception.

 

19.        
Even if the court is wrong in this regard,
there is an alternative interpretation, namely that the penalty
indeed constitutes the
plaintiff’s contractual damages. The
plaintiff may prove these damages at trial.

 

20.        
Although
the alternative claim can be read in two or more ways because of the
omission of a necessary allegation, one of these readings
discloses a
cause of action, and the pleading is thus not excipiable.[6]

 

21.        
The third defendant’s first exception
stands to be dismissed with costs.

 

THE SECOND EXCEPTION

 

22.        
The third defendant’s second
exception is based on the plaintiff’s failure to allege,
insofar as the alternative claim
is concerned, that it had suffered
“any loss or damage because of the
deliberate or negligent unlawful actions”
of any of the defendants, including the third defendant.

 

23.        
A
contract gives rise to obligations, which means the parties to the
contract are subject to duties which they must comply with.[7]

 

24.        
Contractual
autonomy must be respected. When parties conclude a contract, their
rights and obligations must be found in the contract,
subject to the
obligations imposed and rights created by law.[8]

 

25.        
A
breach of contract occurs when a party to a contract fails to fulfil
a contractual obligation, whereas delict relates to other
forms of
wrongful conduct.[9]

 

26.        
Although
some commentators claim that breach of contract entails wrongful
conduct and is a delict,[10]
if a breach of contract were only a particular form of delict, the
requirements for breach of contract and delict would have been
the
same.

 

27.        
A plaintiff claiming damages based on a
breach of contract does not have to allege fault, i.e., the defendant
acted intentionally
or negligently. However, a party claiming damages
because of a delict must allege and prove fault.

 

28.        
The
conduct that constitutes the breach of contract may also constitute a
delict (i.e., it may infringe rights of the other party
that exist
independently of the contract).[11]
In such an instance, the plaintiff may claim either on breach of
contract or delict, or in the alternative.[12]

 

29.        
Nevertheless,
no
claim is maintainable in delict where the negligence relied on
consists in the breach of a contract term.[13]

 

30.        
The plaintiff, whose alternative
claim for damages is based on a breach of contract, does not have to
allege that the damages were
caused by “the
deliberate or negligent unlawful actions”
of any defendants.

 

31.        
The third defendant’s second
exception is thus without merit and must be dismissed with costs.

 

CONCLUSION

 

32.        
The court grants the following order:

 

The
third defendant’s exception is dismissed with costs on Scale A.

 

 

DB DU PREEZ

Acting Judge of the High
Court

Gauteng Division,
Pretoria

 

 

Date
of Hearing:       26 May 2025

Date
of Judgment:   30 May 2025

 

Appearances

 

On behalf of the
excipient/third defendant:        
Adv J Malan

                                                                                  

Instructed
by:

                                                                                  

Paul du Plessis Attorneys

Attorneys for the
Applicant/Excipient 3RD Floor, 3 Melrose Boulevard

568 Norval Street

Moreleta Park

Pretoria

Tel: 012 997 5368/9

Fax: 086 565 2726

Ref: PJ DU
PLESSIS/PC/PC0368 Email: paula@pduplessislaw.co.za
miso@pauplessislaw.co.za

 

On behalf of the
respondent/plaintiff:                  

Adv K Mvubu

                                                                                  

Instructed
by:

                                                                                  

Ncube Incorporated
Attorneys

Attorneys for the
Respondent

JSL Towers, Office SO304

255 Pretorius Street
Pretoria

0002

TEL: 011 880 4204

Email:
Cleo@ncubeinc.co.za

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