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[2016] ZASCA 23
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Rumdel Cape v South Africa Roads Agency Soc Ltd (234/2015) [2016] ZASCA 23 (18 March 2016)
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 234/2015
In
the matter between:
RUMDEL
CONSTRUCTION (CAPE) (PTY) LTD/
EXR CONSTRUCTION HOLDINGS (PTY)
LTD/
MAZCON
JOINT
VENTURE
APPELLANT
and
SOUTH AFRICAN NATIONAL ROADS
AGENCY
SOC
LTD
RESPONDENT
Neutral
Citation:
Rumdel Cape v SA National
Roads Agency
(234/2015)
[2016] ZASCA 23
(18 March 2016)
Coram:
Maya AP, Leach, Seriti, Pillay and
Mathopo JJA
Heard:
16 February 2016
Delivered:
18 March 2016
Summary:
Declaratory order – should not be
issued where dispute has become only of academic interest and where
rights of the parties
are not determined.
ORDER
On
appeal from:
KwaZulu-Natal Local
Division, Durban (Lopes J sitting as court of first instance):
The
appeal is struck from the roll, with costs.
JUDGMENT
Leach
JA (Maya AP, Seriti, Pillay and Mathopo JJA concurring)
[1]
The appellant is a joint venture between two civil engineering
companies. In December 2010, it contracted with the respondent,
a
State owned company responsible for the construction and renovation
of the national roads system in this country, to effect improvements
to what is commonly known as the ‘Umgeni Road Interchange’
at the intersection of the N2/M19 roads in the vicinity
of
Springfield, Durban. The project was a substantial one, the agreed
contract price having been in excess of R352 million.
The
appellant subsequently applied to the KwaZulu-Natal High Court,
Durban for an order that, inter alia, directed the respondent
to pay
it an additional monthly cost of R926 000 (excluding VAT) as
from 4 June 2014 until completion or termination of the
contract, so
as to enable the respondent to secure the construction site and
protect its workers against violence on the part of
local residents.
The application was dismissed. With leave of the court a quo, the
appellant appeals to this court.
[2]
The parties’ construction agreement was recorded largely in the
form of an extensive and voluminous standard form contract.
[1]
Although it was specifically recorded therein that the appellant
could draw its local labour requirements from the whole of the
eThekwini Metropolitan Municipal area, the appellant undertook to
involve community participation and the ‘engagement and
training of labour recruited from local communities’. The
contract work entailed the construction of what is described as
multi-levelled curved flyovers and appurtenant works linking up with
or crossing over the N2 and M19 roadways ─ simply put,
an
extremely large clover-leaf intersection. The site was thus both
large and disjointed, comprising substantial areas both to
the east
and west of the N2 and north and south of the M19 roadway.
[3]
Under general condition 4.1 of the contract, the appellant, as
contractor, was ‘responsible for the adequacy, stability
and
safety of all site operations and of all methods of construction’.
In addition, general condition 4.8 required the appellant
to:
‘
(a)
comply with all applicable safety regulations,
(b)
take care for the safety of all persons entitled to be on the Site,
(c)
use reasonable efforts to keep the Site and Works clear of
unnecessary obstruction
so as to
avoid danger to these persons,
(d)
provide fencing, lighting, guarding and watching of the Works . . .
and
(e)
provide any Temporary Works (including roadways, footways, guards and
fences) which
may be necessary, because of the execution of the
Works, for the use and protection of the public and of owners and
occupiers
of adjacent land.’
[4]
The contract also made provision for the possibility of what might be
referred to as civil commotion. Thus, eg, general clause
17(3)(c)
provided that ‘riot, commotion or disorder within the country
by persons other than the contractor’s personnel
and other
employees of the contractor and sub-contractors’ would be an
‘employer’s risk’ which, if resulting
in damage,
would oblige the respondent to bear the cost. Furthermore, and of
particular relevance to the appellant’s claim,
general clause
19 dealt with so-called ‘force majeure’ and its
consequences. It provided, inter alia, as follows:
‘
19.1
Definition of Force Majeure
In
this Clause, “Force Majeure” means an exceptional event
or circumstance:
(a)
which is beyond a party’s control,
(b)
which such party could not reasonably have provided against before
entering into the
contract,
(c)
which, having arisen, such party could not reasonably have avoided or
overcome, and
(d)
which is not substantially attributable to the other party. Force
Majeure may include, but
is not limited to, exceptional events or
circumstances of the kind listed below, so long as conditions (a) to
(d) above are satisfied:
(i)
war, hostilities (whether war be declared or not), invasion, act of
foreign
enemies,
(ii)
rebellion, terrorism, revolution, insurrection, military or usurped
power, or civil
war.
(iii)
riot, commotion, disorder, strike or lockout by persons other than
the contractor’s
personnel and other employees of the
contractor and sub-contractors,
(iv)
munitions of war, explosive materials, ionising radiation or
contamination by radio- activity,
except as may be attributable to
the contractor’s use of such munitions, explosives, radiation
or radio-activity, and
(v)
natural catastrophes such as earthquake, hurricane, typhoon or
volcanic activity.
[5]
The site of the construction was in the immediate vicinity to what is
referred to as Wards 23 and 25, areas in which the residents
live in
informal settlements in economically deprived circumstances. These
people, naturally, regarded the project as a potential
economic
windfall and, after the site was handed over in March 2011, they
immediately brought pressure on the appellant to draw
its labour
requirements for the project exclusively from their ranks. From the
outset, this was associated with threats of violence
and led to
interference with the appellant’s on-site activities. Thus in a
letter addressed to the appellant on 11 May 2011,
the ‘community
of Ward 25’ (who described themselves as ‘not emotionally
well’) demanded that their ‘CLO’
be employed on
site and stated that ‘no job will continue without doing our
wishes there will be fire works’ and that
‘this is
starvation and we have starved for a long time we rather die if need
be’.
[6]
This set the tone of an unfortunate saga of on-going disturbances
caused by local residents. Wage demands, labour unrest and
on-site
violence led to numerous work stoppages. A wildcat strike in April
2014 led to the appellant dismissing almost its entire
workforce and
replacing them with workers from the greater eThekwini area. The new
workforce was in turn subjected to vicious attacks
and threats of
violence. In the light of the issues as they were ultimately argued
in this court, however, it is unnecessary to
detail the history of
these various occurrences leading up to May 2014.
[7]
In this court, the appellant relied solely on incidents of violence
that occurred on two days that month. On 20 May 2014, a
group of some
40 persons made their way from Ward 23 to one of the main gates in
the site perimeter. The police and the appellant’s
own security
officials site were alerted, and rushed to the gate where the group
was attempting to stop vehicles entering the site.
A while
later, one of the appellant’s security officials was attacked
by a group of individuals who threw rocks at his vehicle.
At about
the same time, another employee was stoned in another sector of the
site. A few hours later, a worker was attacked and
struck on the head
by a rock thrown at him. It shattered the hard-hat he was wearing and
led to him being hospitalised. In another
incident, a rock was hurled
at the driver of a water tanker belonging to the appellant,
shattering the windscreen of the vehicle.
In addition, a foreman of
the appellant making his way to the site offices was attacked by some
five people, two of whom were armed
with handguns and the others with
knives. He was dragged into nearby bushes and was only saved
from harm by the fortuitous
arrival of a police vehicle. That evening
a bakkie of the appellant was stoned and damaged.
[8]
A few days later, on 27 May 2014, members of the appellant’s
staff working in the vicinity of Ward 25 were attacked by
about 20
members of that community. In the course of the incident, a
foreman was struck on the leg by a rock thrown at him,
causing a
wound that required stitches. Another foreman was attacked in his
vehicle whilst trying to escape from a violent group
of persons
hurling rocks, one of which narrowly missed his head. The vehicle
itself was badly damaged. A surveyor working for the
appellant was
also attacked by another group who threw rocks at him and his
vehicle. Yet another foreman was accosted by a number
of persons who
attempted to abduct him from the site. Fortunately he was able to
fight them off and made his way to safety. In
another sector of the
site, the appellant’s security team needed to fire plastic
bullets at a group of attackers in order
to ward them off.
[9]
For completeness I should mention that, 31 May 2014, three
unidentified males held up a security supervisor of the appellant
at
gun point in the vicinity of a mobile crane which was then set
alight. This incident was dealt with by the appellant filing
a SASRIA
claim under an insurance policy and was not taken as an incident
giving rise to the appellant’s force majeure claim
against the
respondent. By the same token, another incident in which one of the
appellant’s workers died after being stabbed,
was accepted as
having had its source in a private feud between the deceased and his
attacker, and fell to be excluded from consideration
in the issues we
were called upon to decide.
[10]
On launching the proceedings in the court a quo on 23 June 2014, the
appellant alleged that the events I have described had
led to such a
sad state of affairs on site that it found itself ‘at the
crossroads’ in regard to the project. It stated
it could either
try to continue and complete the contract (which would endanger its
employees) or invoke the force majeure provisions
in the contract and
stop executing the work. As it regarded it as unfair and
unreasonable for it to require its workforce
to continue in the
dangerous situation which then prevailed, and as the anticipated cost
of providing the necessary security measures
to enable the contract
to be completed would be R926 000 per month, it therefore sought
the following relief in its Notice
of Motion:
‘
1.
[That the matter be heard as urgent];
2.
that the Respondent pay to the Applicant the sum of R926 000.00
(excluding
VAT) per month for the period from 4 June 2014 until
completion or termination of the contact;
3.
alternatively to prayer 2 above that the Respondent be directed to
establish
security measures consistent with the security measures
offered to the Applicant on 4 June 2014 by [a security company] with
effect from 1 August 2014;
4.
that it be declared that the violent events particularised in the
Applicant’s
founding affidavit constitute force majeure as
contemplated in clause 19.1 of the contract between the Applicant and
Respondent.
5.
that it be declared that Applicant is entitled, at Applicant’s
election,
to claim release from performance in respect of the
contract as contemplated in clause 19.7 thereof;
6.
that the Respondent pay the costs of this application.’
[11]
The appellant’s monetary claim was presumably based upon the
provisions of clause 17(3)(c) as read with 19.4 of
the
agreement. (The latter provided that should the contractor
incur costs by reason of force majeure in certain circumstances,
including those envisaged in clause 19.1(d)(iii) it would be entitled
to be reimbursed by the respondent.) However, notwithstanding
the
wide ambit of these terms and the high level of violence that had
been directed at the appellant’s employees, the court
a quo
found that the appellant ‘has not demonstrated that it will be
prevented from performing any of its obligations under
the contract
by force majeure’ and that it did not accept ‘that the
point has been reached where the provisions relating
to force majeure
apply’. Consequently, it dismissed the appellant’s claim.
[12]
The reasoning of the court a quo may well have been flawed in certain
respects. For example, its conclusion that as the appellant
had been
able to overcome the difficulties on site by taking additional
security measures showed that there had not been force
majeure as
defined, appears to me to be somewhat illogical. But be that as it
may, in the light of what follows the correctness
of the court a
quo’s conclusion seems to me to be purely academic and
unnecessary to decide.
[13]
When the matter was called, Mr Kemp SC who appeared on behalf of the
appellant, informed us that as a result of developments
that had
taken place since the institution of the proceedings in the court a
quo he could not, in good conscience, ask this court
to issue an
order under prayers 2, 3 and 5 of the Notice of Motion quoted above.
We were informed that the contract has since been
completed which, in
itself, renders prayers 3 and 5 nugatory. In addition certain
developments have occurred relating to the monetary
claim in prayer
2, details of which have not been disclosed but which placed the
appellant in a position of not being able to seek
an order in the
terms prayed.
[14]
In the circumstances the appellant sought to persuade us to grant
merely the relief set out in prayer 4, namely, an order declaring
that the violent events particularised constitute force majeure as
contemplated in clause 19.1 of the contract. Moreover, as for
the
reasons mentioned above, as the events of 31 May 2014 in which a
mobile crane was set alight as well as the incident in which
one of
the appellant’s workers died after being stabbed can be
excluded from consideration, the appellant sought to limit
its
entitlement to a declarator solely to the violence that occurred on
20 and 27 May 2014.
[2]
[15]
The immediate difficulty is, of course, that even if this court was
of the view that the judgment in the court below was wrong,
it would
not as a matter of course issue the declarator the appellant seeks.
The mere fact that parties are locked in dispute
on a point of law or
fact does not necessarily entitle either of them to an order
declaring which standpoint is correct. Generally
speaking, a court
does not act in an advisory capacity by pronouncing upon
hypothetical, abstract or academic issues. Instead,
in order to
entertain an application for declaratory relief, a court must be
persuaded that the applicant has an interest in an
existing, future
and contingent right or obligation that will be determined by the
declarator and that its order will be binding
upon other interested
parties.
[3]
If it is so satisfied, the court then exercises a discretion whether
to grant or refuse the order sought. In doing so the court
may
decline to deal with the matter where there is no actual dispute,
where the question raised is, in truth, hypothetical, abstract
or
academic, or where the declarator sought have no practical effect.
[4]
[16]
The appellant faces difficulty on both legs of this two-stage
inquiry. The declarator the appellant sought was ancillary to
an
order that, by reason of the existence of force majeure, the
respondent should pay it a substantial sum of money on a monthly
basis until the contract had come to an end. The statement of
the appellant’s counsel that the appellant had not ‘abandoned’
this monetary claim but had decided merely to no longer persist
therein, is more a matter of semantics than substance. The simple
truth is that the appellant no longer seeks this court to order
payment of the money it claimed at the outset. The order of the
court
a quo dismissing that claim must therefore stand and the principal
claim to which the declarator was inextricably linked
is no longer a
live issue.
[17]
So while there is no doubt that the parties do not agree on whether
the circumstances on site on 20 and 27 May 2014 were such
as to
constitute force majeure as envisaged by the contractor, there is no
existing, future or contingent right or obligation in
respect of
which a declarator in that regard would be determinative.
Counsel for the appellant argued that there might well
be future
disputes between the parties in which the issue of force majeure
might arise, and that in resolving those disputes the
appellant did
not want to be faced with the judgment of the court a quo to the
effect that there had not been force majeure. But
such a dispute is
nowhere suggested on the papers, and sight must not be lost of the
fact that the argument in this court related
solely to the events of
20 and 27 May 2014. This illustrates the underlying problem
that the outcome of any future case in
which one of the parties might
seek to rely upon force majeure will have to be determined in the
light of its own peculiar facts
and circumstances, and a finding of
this court relating to only two specific days of violence and
disturbance is likely to be of
hypothetical use only.
[18]
In these circumstances, as the principal relief sought by the
appellant in the court a quo is no longer being sought, the appellant
has not shown that there is an existing, future or contingent right
or obligation in respect of which a declaratory order in the
terms
sought would be binding. This court should therefore decline to
exercise its discretion to adjudicate upon such a declarator.
This in
no way places this court’s seal of approval upon the decision
of the court a quo. All it entails is a decision that
this court, in
the exercise of its discretion, should not adjudicate upon what has
become an abstract or academic issue. The appeal
should therefore be
struck from the roll.
[19]
The appeal is struck from the roll, with costs.
____________________
L E Leach
Judge
of Appeal
Appearances:
For
the Appellant:
K J Kemp SC
Instructed
by:
Cox Yeats Attorneys
Durban
McIntyre & Van
der Post
Bloemfontein
For
the Respondent:
G D Harpur SC
Instructed
by:
Edward Nathan Sonnenbergs
Durban
Webbers
Bloemfontein
[1]
The
conditions of contract for construction (1999 ed) prepared by the
International Federation of Consulting Engineers, as amended,
together with additional amendments prescribed by the South African
National Road Agency Limited.
[2]
Detailed in
paras 7 and 8 above.
[3]
Maccsand
(Pty) Ltd & another v City of Cape Town & others
[2011] ZASCA 141
;
2011 (6) SA 633
(SCA) para 39, and
Cordiant
Trading CC v Daimler Chrysler Financial Services (Pty) Ltd
[2005]
ZASCA 50
;
2005 (6) SA 205
(SCA) at para 16.
[4]
West
Coast Rock Lobster Association & others v Minister of
Environmental Affairs and Tourism & others
[2010] ZASCA 114
(22 September 2010) para 45-46;
[2011] 1 All
SA 487
(SCA).