Tunica Trading 104 v City of Mbombela (3550/2024) [2025] ZAMPMBHC 42 (23 May 2025)

Case No. 3550/2024

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER
JUDGES: NO

(3)
REVISED YES/NO

DATE: 23 May 2025

SIGNATURE

TUNICA
TRADING 104                                         

Plaintiff

and

CITY
OF MBOMBELA                                           

Defendant

JUDGMENT

MONTSHO-MOLOISANE AJ

[1.]           
This is an
application for Summary judgment brought in terms of Uniform Rule 32
of this Court. The Applicant in this application
is the Plaintiff in
the action instituted against the Defendant for payment of an amount
of R 5 754 244.06, which is
alleged to be outstanding in
respect of work done on the construction of the Nkululeko Circuit
road in Mbombela.

[2.]           
The Defendant
entered appearance to defend the action, subsequent to which the Plea
was filed.

[3.]           
The Respondent
opposes the application, and the basis for such opposition is set out
in its Answering affidavit.

[4.]           
The parties
will herein be referred to as in the main action.

Background
facts 

[5.]           
The cause of
action, as set out in the Particulars of claim, is based on what is
averred to be a Cession agreement concluded by
the Plaintiff, the
Defendant and MJ Mthombeni Construction (Pty) Ltd ((“MJ
Mthombeni”), in terms of which it was agreed
that the Defendant
would pay invoices for work done, directly to the Plaintiff, as the
sub-contractor,  and not to MJ Mthombeni
Construction as the
main contractor . A document titled “DIRECT PAYMENT AGREEMENT”,
was drafted and signed by representatives
of the Plaintiff, the
Defendant and MJ Mthombeni Construction on 06 April 2023, reflecting
the terms of the agreement. The amount
quoted and agreed upon by the
parties was stated an an amount not exceeding R 9 373 658.36,
payable once the Engineer
has certified such progress payment to be
properly due to the contractor.

[6.]           
It is averred
that in terms of the Direct Payment Agreement:

6.1.         
 the
Defendant paid the Plaintiff, an amount of R 788 649.30 on 25
July 2023; R 1 434 167.72 on 07 September 2023;
and R
396 586.31 on 15 November 2023;

6.2.         
MJ Mthombeni
paid the Plaintiff a total amount of R 1 503 851.44 being R
531 645.00 on 06 March 2023 and R 972 206.44
on 24 March
2023;

6.3.         
the Plaintiff
alleges that the Defendant and MJ Mthombeni paid a total amount of R
5 123 254.77, leaving a shortfall of
R 5 754 244.06.

[7.]           
In its Amended
Plea, the Defendant pleaded that:

7.1.         
the contract
for the construction of the Nkululeko Construction Circuit road, was
entered into between the Defendant and MJ Mthombeni
Construction,
subsequent to its appointment under BID number 306/2021, to construct
the Nkululeko Circuit road for the tendered
amount of R 18 653 251.62
(eighteen million six hundred and fifty three thousand two hundred
and fifty one rand and sixty
two cents). The appointment was governed
by the General Conditions of Contract for Construction Works, 3^rd
Edition, 2015;

7.2.         
the contract
on Bid 306/2021 was not concluded with the Plaintiff, and the
Defendant was not a party to the contract entered into
between the
Plaintiff and MJ Mthombeni Construction;

7.3.         
the Defendant
was approached by the representatives of MJ Mthombeni Construction
and the Plaintiff, due to lack of transparency
between them and
payments which were not forthcoming from MJ Mthombeni to the
Plaintiff. As a result the Defendant drew up the
said document titled
“DIRECT PAYMENT AGREEMENT” to quell any and all infights
between them, and avoid the impact thereon
on service delivery;

7.4.         
the amount of
R 9 373 658.36 was an estimate that was subject to
certification by an Engineer for actual work done, the
value of which
is subject to the original tendered rates submitted by MJ Mthombeni
Construction before the Bid was awarded, and
not the rates stated by
the Plaintiff in its Bill of Quantities rates agreed to between MJ
Mthombeni Construction and the Plaintiff;

7.5.         
that in terms
of the said DIRECT PAYMENT AGREEMENT, it is the Defendant’s
Engineer, and not MJ Mthombeni Construction, who
certifies completion
of works; and

7.6.         
the Defendant
denies that the agreement signed is a Cession.

The
Summary Judgment application

The
Founding affidavit

[8.]           
In its
application for Summary judgment, the Plaintiff refers to the
Defendant’s Plea to the Particulars of Claim, and contends

that:

8.1.         
the Defendant
paid the Plaintiff monies due to the main contractor, but in its Plea
denies that there was a valid Cession agreement
of the contract;

8.2.         
the
Defendant’s Plea that it was MJ Mthombeni Construction which
was appointed and not the Plaintiff, is vitiated by two
Acknowledgement Letters, issued on the letterheads of the Defendant,
titled “Municipal
Public Accounts Committee”
(“MPAC”), each signed by a Councillor in Ward 14, bearing
the City of Mbombela stamp marked AX1 and AX 2 to
the Founding
affidavit. Annexure AX1, reads as follows:

“This
letter serves to acknowledge that the Municipal Public Accounts
Committee has received the request to intervene in the issue
of
Tunica Trading 104, the committee will address the issue with
relevant department to pay the Tunica Trading 104 before 30 October

2024. This matter has been outstanding for a while due to unforeseen
reasons within the structure. We hereby confirm that all work
was
completed and finalised. The two projects in this regard are
Mountainview Road Upgrade and Nkululeko Circuit road. The values
is
as per cession agreement and attached outstanding invoices as
follows: (sic)

Project
1: R 6 670 000.00

Project
2: R 9 393 658.00

This
matter will be resolved and settled

Working
together in building better communities in a City of excellence for
an ultimate destination.

Yours
in Ward 14

Mr
B. Matsebula

MPAC
Researcher and Investigator”.

8.3.         
Annexure AX2
reads as follows:

“This
letter serves to acknowledge that the Municipal Public Accounts
Committee has received the request to intervene in the issue
of
Tunica Trading 104, the committee will address the issue with
relevant department to pay the Tunica Trading 104, before the
30
October 2024. This matter has been outstanding for a while due to
unforeseen reasons within the structure. We hereby confirm
that all
work was completed and finalised. The two projects in this regard are
Mountainview Road Upgrade and Nkululeko Circuit
road. The values is
as per Cession agreement and attached outstanding invoices. (sic)

Please
assist the bearer in accordance with the Council’s relevant
policy…

Yours
in Ward 14

Councillor
M…

01/09/2024”

[9.]           
The Plaintiff
further contends that:

9.1.         
the Cession
referred to was entered into in the amount of
                         R

9 373 658.36 and the Defendant cannot avoid liability in
light of the Direct Payment Agreement/Cession that it entered
into
with the Plaintiff and MJ Mthombeni Construction, and also that it
paid some money to the Plaintiff pursuant thereto, between
25 July
2023 and 15 November 2023.

9.2.         
that a
contractual right may be ceded by the cedent to the cessionary,
without informing the debtor, if the main contract between
the
parties is not altered or amended, and moreover, if the debtor
carries on dealing with the original creditor, the cedent, in
good
faith, the cessionary, which is the new creditor, is bound by the
contract, and the debtor cannot avoid liability.

[10.]        
The Plaintiff
further avers that at the time of completion of the work by the
Plaintiff, the Defendant had underpaid the Plaintiff
with the amount
of R 5 754 244.06.

[11.]        
In the
premises, it was contended, the Defendant is indebted to the
Plaintiff in  the amount of R 5 754 244.06 which
was
underpayment for the work completed by the Plaintiff, and in respect
of the Direct Payment Agreement.

The
Answering affidavit

[12.]        
In the
Answering affidavit opposing Summary judgment, deposed to by the
General Manager: Corporate Services of the Defendant, it
is contended
that:

12.1.      
the Plaintiff
was never awarded Bid number 306/2021 subsequent to which the
Defendant entered into a contract for the construction
of the
Nkululeko Circuit road;

12.2.      
 the
rates payable to Mthombeni Construction were subject to the rates
tendered in the Bid submitted by MJ Mthombeni and not as set
out in
the Bill of Quantities submitted by the Plaintiff;

12.3.      
the Defendant
disputes the authenticity of the two Acknowledgement Letters, AX1 and
AX2, allegedly issued by the Municipal Public
Accounts Committee,
indicating that it had received a request to intervene in the issue
with the Plaintiff, and undertaking to
address the issue with the
relevant department to pay the Plaintiff before 30 October 2024;

12.4.      
that the role
of the said Committee is one of oversight, and that its appointment
is in accordance with Section 79A of the Local
Government: Municipal
Structures Act, no 117 of 1998 (“the Structures Act”).
The Court to the Confirmatory affidavit
deposed to Mr Kenneth Mkhonto
the Councillor in Ward 14, disputes that Annexure AX2 was written by
him, and states that it is not
his signature appearing thereon.

12.5.      
that it is
only a Municipal Manager who has the authority and is responsible for
the financial affairs of the Municipality in terms
of Section 60 of
the Local Government: Municipal Finance Management Act, no 56 of 2003
(“the Municipal Finance Management
Act”).

[13.]        
It is
contended that the Plaintiff’s claim should be dismissed as
Rule 32(1) requires that the claim be on a liquid document,
or for a
liquidated amount, which has not been established in casu.

The
Replying affidavit

[14.]        
In the
Plaintiff’s Replying affidavit, deposed to by its director, Mr
Louis Wessels, the historical background regarding the
advertised Bid
306/2021 and ultimate award thereof is outlined.

[15.]        
The Replying
affidavit further sets out the circumstances that culminated with the
agreement between the MJ Mthombeni Construction
and the Plaintiff,
and later on between the Plaintiff, MJ Mthombeni and the Defendant,
which is a Cession agreement. He contends
that:

15.1.      
the Defendant
made several payments directly to the Plaintiff, as a result of the
Cession agreement, accompanied by the completed
Bill of Quantities;

15.2.      
the Defendant
was aware that the total amount due, at the time of the signing of
the Cession agreement, was R 9 373 658.36,
in accordance
with Table A attached to the agreement, reflecting such amount, which
was signed on behalf of the COM, an acronym
for City of Mbombela, the
Defendant herein;

15.3.      
Councillor
Mkhonto, who deposed to the Defendant’s Confirmatory affidavit
disputing the authenticity of Annexure AX2, cannot
be trusted as he
is conflicted and that he might have deposed to the affidavit under
duress, in order to secure his employment.
The deponent further
questions the absence of an affidavit from Mr B Matsebula, who is
referred to as a neutral person, as he is
not an employee of the
Defendant;

15.4.      
the main
contractor confirmed that the work was completed; and

15.5.      
on the
totality of the evidence, the Defendant does not have a valid
defence.

Issues
for determination

[16.]        
The issues for
determination are, the following:

16.1.      
whether the
Plaintiff’s claim for Summary judgment is based on a liquid
claim or liquidated amount in money; and.

16.2.      
whether the
Defendant has disclosed a bona
fide
defence in its Answering affidavit.

Evaluation

[17.]        
 The
following facts are common cause as pleaded in the affidavits before
Court:

17.1.      
The Plaintiff
and MJ Mthombeni Construction had a subcontracting agreement in terms
of the Nkululeko Circuit road, which extended
to the payment that was
to be made to the Plaintiff for work done;

17.2.      
the
representatives of the Defendant and those of the Plaintiff got
together with MJ Mthombeni, of MJ Mthombeni Construction, and

concluded the Direct Payment Agreement for payment to be made
directly to the Plaintiff in respect of work or services completed,

to which Table A, that specified the amount of the said construction
project as not exceeding the total of R 9 373 658.36,
was
attached;

17.3.      
the only party
who signed Table A, is a representative of the Defendant, as that
signature appears where the phrase- “On
behalf of COM”
appears COM is an acronym for the City of Mbombela.

17.4.      
no date
appears on Table A;

[18.]        
Table A has no
probative value, as it was not signed by all three parties.

[19.]        
In any event,
even if this Court were to consider the Direct Payment Agreement as
being a Cession agreement, without having to have
regard to the
probative value of Table A, I am of the view that Clause 4.2 of the
agreement is crucial for the purpose of determining
whether the
Plaintiff has satisfied the requirements set out in Rule 32(1).
Clause 4.2 provides:

“ 4.2 
COM will only be obliged to effect payment to engaged Tunica Trading
in accordance to Table A, and to the amount not exceeding
         R
9 373 658.36 (nine million three hundred and seventy three
thousand,
six hundred and fifty eight rand and thirty six cents),
once the Engineer has certified such progress payment to be properly
due
to the contractor”.

[20.]        
Clause 4.2 is
therefore peremptory, as it accords with the General Conditions of
Contract for Construction Works, 3^rd
Edition 2015.

[21.]        
It is
important to state that in paragraph 6.3 of the Replying affidavit,
the deponent, who is the director of the Plaintiff, refers
to
Annexure “COC1” to the Summons where he avers the
following:

“6.3
The main contractor has confirmed that the work was done to
completion”.

[22.]        
 It
is appropriate to mention that Annexure “COC1” to the
Particulars of Claim, which is relied on by the Plaintiff in
this
application, is a letter issued on the letterheads of MJ Mthombeni
Construction, and is titled “Final Approval Certificate”.

The letter is signed on behalf of MJ Mthombeni Construction, and
Tunica Trading 104 (Pty) Ltd. The date 13 September 2023 is reflected

next to each signature. The letter states the Final Approval date as
01 September 2023, and states as follows:

“It
is hereby confirmed that the site and the works stated in the
contract above have been duly inspected by MJ Mthombeni Construction

5.16.1 of the General Conditions of Contract 2015. (Expiration of
Defects Liability Period).”

[23.]        
I also take
note that there is no reference in the Founding and Replying
affidavits, that an Engineer certified such progress payment
to be
properly due to the contractor, as contemplated in Clause 4.2 of the
Direct Payment Agreement, so as to justify the granting
of summary
judgment prayed for.

[24.]        
Another
important issue that needs to be addressed, is the authenticity of
the two Acknowledgement letters, referred to as Annexure
AX1 and AX2,
which were issued by the Ward 14 Councillors. The deponent to the
Defendant’s Confirmatory affidavit, Kenneth
Mkhonto, disputes
that he wrote the document, and states that it is not his signature
appearing thereon.

[25.]        
The veracity
of the contents of the Confirmatory affidavit is however disputed by
the director of the Plaintiff, Louis Wessels,
basing his contention
on the fact that Mr Mkhonto is still in the employ of the Defendant
and would therefore secure his employment.
This is no doubt
speculative.

[26.]        
In my view,
whether the two Councillors were authorised to make the kind of
financial commitments appearing in Annexures AX1 and
AX2, can only be
established by having regard to the statutory powers they have.

[27.]        
Section 79
A(1) of the Municipal Structures Act, which was referred to by the
Defendant’s Counsel, provides for the establishment
of the
Municipal Public Accounts Committee, whose functions, as stipulated
in subsection(3) thereof, are inter
alia, to
review the Auditor-General’s reports and comments, and make
recommendations to the Municipal Council based thereon; to
initiate
and develop oversight report on annual reports, and investigate
reports on any matter affecting the Municipality.

[28.]        
In terms of
Section 60 of the Municipal Finance Management Act, and as correctly
contended on behalf of the Defendant, it is only
the Municipal
Manager, as the accounting officer, who is authorised to make
financial decisions on behalf of the Defendant, and
not the Municipal
Public Accounts Committee or Councillors.

[29.]        
In my view,
the contention by Plaintiff’s Counsel that the two Councillors
made an assurance to the Plaintiff that the payment
was approved by
the Municipal Public Accounts Committee, is binding on the Defendant,
is not sustainable, based on the fact that
they are not authorised to
make financial decisions in terms of the provisions of the Municipal
Finance Management Act.