My Peace Mali Investments (Pty) Ltd v Western Cape Department of Education and Others

The third respondent, Ben Peta Investment Holdings (Pty) Ltd, was awarded a tender by the second respondent, the Western Cape Department of Infrastructure, for construction works at Welgemeend NGK Primary School. Ben Peta commenced work in May 2023 but failed to meet the July 2023 completion deadline, completing only 55% of the works. The applicant, My Peace Mali Investments (Pty) Ltd, a small civil engineering enterprise, was introduced to Ben Peta to rescue the failing project. On 22 August 2023, they concluded a Service Level Agreement (SLA) appointing My Peace Investments as a sub-contractor for civil works valued at R1,808,572.19. The SLA provided that My Peace Investments would be paid within 5 days of Ben Peta receiving payment from the Department. My Peace Investments commenced work on 19 August 2023, procuring materials at its own cost. Despite Ben Peta having received over R1 million from the Department for completed works, it failed to pay My Peace Investments. My Peace Investments' repeated demands for payment were ignored. On 25 April 2024, the Department confirmed that further payments to Ben Peta were being processed and refused to stay payments pending resolution of the dispute. My Peace Investments launched urgent proceedings on 7 May 2024 to interdict the Department from making further payments to Ben Peta pending the outcome of an action for payment already instituted against Ben Peta.

• Whether the application was urgent and whether any urgency was self-created by the applicant.
• Whether there was a misjoinder of the first respondent.
• Whether the applicant established a prima facie right for an interim interdict despite having no direct contractual relationship with the Department.
• Whether the applicant satisfied the requirements for an interim interdict pendente lite.
• Whether a costs order was warranted against the Department in interim proceedings.

The application was granted. The second respondent was interdicted from releasing or paying R1,808,572.19 or any lesser amount to the third respondent in respect of the project, directed to preserve those amounts, and directed to pay to the applicant any amount awarded in a judgment against the third respondent on finalization of the action proceedings. The second respondent was ordered to pay the costs on scale B.

For purposes of an interim interdict to restrain a principal from making further payments to a main contractor pending action against that contractor, an applicant sub-contractor need not establish a direct contractual nexus with the principal. The prima facie right relied upon is the right to payment derived from the sub-contract, coupled with the risk that further payments to the main contractor will frustrate recovery. The absence of a direct contract between the applicant and the principal is not dispositive of the application for interim relief. A party who makes reasonable attempts to resolve a dispute before resorting to urgent litigation does not create self-urgency; urgency is measured from the point when it becomes clear that litigation is the only recourse.

A court will be slow to effectively non-suit a party seeking urgent relief in circumstances where that party has first made reasonable efforts to resolve its dispute with an opposing party instead of hurriedly rushing off to court. Litigation is a time-consuming and expensive business. It is dilatory conduct in its institution which is the mischief sought to be sanctioned by the rule against self-created urgency, not good faith and reasonable attempts to settle disputes before litigation is resorted to in the first place. In commercial matters, a crippling commercial loss is a factor which a court may legitimately consider when determining whether an urgent hearing is justified.

This case is significant for clarifying that a sub-contractor with no direct contractual relationship to a government department may nevertheless obtain an interim interdict restraining the department from making further payments to a main contractor pending an action for payment against that contractor. It underscores the principle that the prima facie right for an interdict can arise from the sub-contractual relationship, without needing privity with the principal. It also affirms that reasonable pre-litigation attempts to resolve disputes do not constitute self-created urgency and that commercial ruin is a legitimate factor in assessing whether substantial redress would be available at a hearing in due course.