In Ekurhuleni Metropolitan Municipality v Business Connexion (Pty) Ltd, the Supreme Court of Appeal (“SCA”) considered an application for reconsideration in terms of section 17(2)(f) of the Superior Courts Act, 2013 (“the Act”). The dispute between the parties had resulted in a hearing before the Johannesburg High Court. On 31 January 2023, the High Court found that there was a valid and binding agreement between the Municipality and Business Connexion. Consequently, the Johannesburg High Court ordered the Municipality to pay Business Connexion an amount of ZAR85 479 535.26 plus interest for the purchase of software licences and related services. The Johannesburg High Court refused the Municipality's application for leave to appeal. The Municipality's application for special leave to appeal to the SCA was also refused.
The Municipality then proceeded with an SCA reconsideration application. The President of the SCA referred the reconsideration application for hearing. The SCA first considered whether it had jurisdiction to hear the application.
The SCA explained that in terms of section 17(2)(f) of the Act, the President of the SCA is empowered to determine whether there are exceptional circumstances that warrant a reconsideration of a matter. If the President of the SCA exercises her discretion in favour of the Municipality, the matter is then referred to five judges. With reference to case law, the SCA explained that it was the court that determined whether exceptional circumstances existed in an application made in terms of section 17(2)(f) of the Act. If the SCA establishes that there are exceptional circumstances, the SCA has jurisdiction to grant the reconsideration application.
The SCA remarked that exceptional circumstances must entail something out of the ordinary. The SCA noted that the Municipality's main argument was based on Business Connexion's non-performance in terms of the contract between the parties. In support of its contention, the Municipality alleged that Business Connexion failed to show that there was delivery of the licences and software, which it was obliged to do, in order to succeed in its claim in the Johannesburg High Court.
In addition, the Municipality argued that there was an issue with the timing of the delivery, as the software was to be purchased on an ‘as-and-when required' basis. It was for these reasons that the Municipality contended that the Johannesburg High Court's judgment in favour of Business Connexion was incorrect.
Timing of delivery
The SCA remarked that the agreement between the Municipality and Business Connexion did not stipulate that the delivery of the software was on an ‘as-and-when-required' basis. There was also no suggestion in the correspondence between Business Connexion and the Municipality that the agreement was on an “as-and-when-required” basis. The SCA therefore found that the Johannesburg High Court correctly rejected the Municipality's argument on the issue of the timing of the delivery.
The Municipalities' non-performance argument
The SCA found that the licenses were delivered to the Municipality via email. Specifically, they were sent to the Municipality by Oracle Corporation (South Africa) (Pty) Ltd, a company that the Municipality knew that Business Connexion had purchased licenses from.
In addition, the SCA noted that the Municipality did not dispute this fact but simply put Business Connexion to the proof thereof. Furthermore, the SCA stated that the Municipality, in its cancellation letter to Business Connexion, advised that the agreement was being cancelled due to the Municipality's inability to pay Business Connexion. The letter made no reference to Business Connexion's failure to deliver the licenses.
In an argument before the SCA, the Municipality conceded that the reason it did not want the licences was because it was unable to pay for them. Considering this concession, the SCA highlighted that a party's inability to pay is not an acceptable defence to a contract entered voluntarily.
The SCA further found that it was undisputed that Business Connexion procured the licences and paid for them on the instruction of the Municipality. Consequently, if the Municipality's application was successful, Business Connexion would incur a loss of ZAR85 479 535.26. For these reasons, the SCA rejected the Municipality's arguments and concluded that the Johannesburg High Court's decision to dismiss the Municipality's defences could not be faulted.
The SCA held that there were no exceptional circumstances that warranted the SCA to grant the Municipality's reconsideration application. Consequently, the matter was struck from the roll and the Municipality was ordered to pay the costs of the reconsideration application including the costs of two counsel.
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