MTEC Rustenburg CC and Others v Capricorn District Municipality

On 22 February 2008, Dikgwetlo Trading CC (third applicant) and MTEC Holdings (Pty) Ltd entered into a joint venture agreement to bid for a tender issued by Capricorn District Municipality for construction of the Blouberg Landfill under project number CON – EO219/2008. The tender was awarded to the joint venture on 30 April 2008. On 15 September 2008, Dikgwetlo withdrew from the joint venture, and the respondent instructed Holdings not to continue with the work. On 29 July 2011, MTEC Rustenburg CC (the first applicant, which is a different entity from MTEC Holdings) issued summons against the respondent claiming payment for work done and services rendered under the tender. The second applicant, Ms Tsebe, described herself as the only member of the CC. The respondent defended on grounds including lack of locus standi and failure to serve notice in terms of section 3 of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002. On 19 September 2011, the CC and Ms Tsebe launched a condonation application. On 1 February 2013, Dikgwetlo was joined as second plaintiff but took no part in proceedings.

• Whether the applicants had locus standi to institute proceedings against the respondent
• Whether condonation should be granted for failure to serve notice in terms of section 3 of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002
• Whether there were reasonable prospects of success in the contemplated action
• Whether there was good cause for the failure to give notice as required by section 3(4)(b)(ii)
• Whether leave to appeal should be granted in terms of section 16(1)(b) and section 17(2)(f) of the Superior Courts Act 10 of 2013

The application for reconsideration was dismissed with costs, such costs to be paid jointly and severally by the first and second applicants, the one paying the other to be absolved.

A party who is a stranger to a contract (not a party to the agreement) lacks locus standi to sue on that contract and cannot successfully claim rights or remedies under it. For purposes of section 3(4)(b) of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002, an applicant seeking condonation for failure to give notice must demonstrate good cause, which includes showing reasonable prospects of success in the contemplated action. Where an applicant has no prospects of success because they are not a party to the contract on which their claim is based, condonation will be refused.

The court noted that the requirement of good cause in section 3(4)(b)(ii) involves examination of all factors bearing on fairness of granting condonation and proper administration of justice, including prospects of success, reasons for delay, sufficiency of explanation, bona fides of the applicant, and any contribution by other persons to the delay. The court cited Madinda v Minister of Safety and Security [2008] ZASCA 34; 2008 (4) SA 312 (SCA) para 10 for this proposition. The court also observed that Dikgwetlo Trading CC, although joined as a party, took no part in the proceedings either before the high court or the Supreme Court of Appeal.

This case clarifies the application of section 3 of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002, particularly the requirement of good cause for condonation of failure to serve notice. It emphasizes that prospects of success in the contemplated action are a critical factor in determining whether to grant condonation. The case also reinforces the principle that a party who is a stranger to a contract lacks locus standi to sue on that contract. It demonstrates the strict approach courts take when considering applications for reconsideration of refusals of leave to appeal, and the importance of establishing that the applicant is actually a party to the contract upon which the claim is based.