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[2015] ZAGPJHC 47
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Ekurhuleni Metropolitan Municipality v VIP Consulting Engineers (Pty) Ltd and Another (2013/29145) [2015] ZAGPJHC 47 (6 March 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA,
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 2013/29145
DATE: 06 MARCH 2015
In the matter between:
EKURHULENI METROPOLITAN
MUNICIPALITY
....................................................
PLAINTIFF
And
VIP CONSULTING ENGINEERS (PTY)
LTD
......................................................
1ST
DEFENDANT
NILOTI CONSTRUCTION & CARPENTRY
CC
...............................................
2ND
DEFENDANT
J U D G M E N T
WRIGHT J
1. The plaintiff has instituted action
against the defendants. The first defendant, VIP has delivered a
special plea of prescription
which is to be determined by me. The
second defendant takes no part in the present proceedings. Mr LP
Mkize appeared for the plaintiff
and Mr AP den Hartog for VIP.
Neither side led any evidence.
COMMON CAUSE FACTS
2. The plaintiff appointed VIP as
consulting engineers to a particular building project on 12 February
2007. The appointment was
pursuant to a letter of that date setting
out VIP’s functions. Included in these functions were the
obligation to provide
construction administration, site supervision
and the monitoring of the building project. In particular, VIP was to
manage certification
of payments by the plaintiff to contractors. VIP
had to see to the successful completion of the project.
3. The plaintiff concluded a
construction agreement with the second defendant. Building commenced
and from time to time VIP signed
certificates in favour of the second
defendant on the strength of which the plaintiff made payments to the
second defendant.
4. On 18 August 2010 VIP issued a
certificate to the effect that the second defendant had abandoned its
contract with the plaintiff,
had failed to proceed with due diligence
and had unlawfully subcontracted its obligations. VIP proposed that
the plaintiff give
the second defendant fourteen days to prepare and
submit an action plan. VIP proposed further that if the second
defendant failed
to do as suggested by VIP the plaintiff terminate
its agreement with the second defendant.
5. On 19 August 2010 VIP wrote to the
plaintiff attaching a negative payment certificate. VIP said that the
certificate, in an amount
of R8 810 455,59 was a correction of
previous payment certificates based on incorrect quantities of
completed works and on incorrect
calculations. VIP stated that its
certificate was based on VIP’s estimate of the value of
permanent works completed to date
of certificate. In effect, VIP was
saying to the plaintiff that the plaintiff had overpaid the second
defendant in the amount of
the certificate.
6. On 23 August 2010 the plaintiff,
having received VIP’s letter of 19 August 2010 and its
accompanying certificate wrote
to VIP stating, among other things,
that the plaintiff would hold VIP responsible for any fruitless
expenditure it may incur due
to the incorrect certification by VIP of
amounts owed by the plaintiff to the second defendant.
7. On 1 March 2011 VIP wrote to the
plaintiff recommending that the plaintiff terminate its agreement
with the second defendant
and, as a matter of urgency appoint another
contractor for the completion of outstanding work.
8. On 22 February 2012 the plaintiff
wrote to VIP saying that it was considering terminating its agreement
with VIP.
9. On 16 August 2012 the plaintiff
wrote to VIP terminating their agreement. On the same day the
plaintiff sent a letter to the
second defendant terminating their
agreement.
THE CLAIM
10. The plaintiff claims damages for
material breach of contract. VIP is alleged not to have done its job
properly and to have colluded
fraudulently with the second defendant
in submitting false certificates to the plaintiff claiming payment of
money not actually
due by the plaintiff to the second defendant. The
plaintiff alleges that it has suffered damages as a result of VIP’s
breaches,
being the fair and reasonable cost of “doing the
remedial work and / or completing the works” less “funds
left
and / or available to complete the project or works under the
construction contract to the tune of R1 908 570,62 ” and less
certain retention money.
11. The plaintiff alleges that VIP’s
breaches occurred between December 2008 and November 2009. The
plaintiff does not allege
when it engaged the services of new
contractors to complete the works.
12. Particulars of claim do not allege
a repudiation of the agreement by VIP nor is there an allegation that
the agreement has been
cancelled by the plaintiff. The claim is
simply for compensatory damages for breach.
13. Summons was served on VIP on 16
September 2013.
THE SPECIAL PLEA
14. VIP’s plea is that the
plaintiff was aware of the breaches by 23 August 2010. The first
defendant seems to have pleaded
together section 12(1) of the
Prescription Act 68 of 1969 (to the effect that prescription shall
commence to run as soon as the
debt is due) and part of section 12(3)
(to the effect that a debt shall not be deemed to be due until the
creditor has knowledge
of the identity of the debtor and of the facts
from which the debt arises). As summons was served more than three
years after 23
August 2010 the claim is alleged to have prescribed.
15. VIP has not pleaded that the
plaintiff’s (unpleaded) cancellation of its agreement with VIP
on 16 August 2012 was out
of time.
FINDINGS
16. In my view the special plea is bad.
The plaintiff has not sued VIP for payment of the sum of R8 810
455,59. The plaintiff claims
damages for breach of contract, crisply
put, in the form of the fair and reasonable costs of completing the
works. The plaintiff
must have been entitled on receipt of the
negative certificate 19 August 2010 to consider its position. It
could not have been
obliged to accept, without more, an about face by
VIP in an amount of over R8m. VIP has not proved that by 23 August
2010 the
plaintiff knew:
16.1 that it would cancel its agreement
with VIP or
16.2 that it would engage replacement
contractors to complete the work not completed by the second
defendant or
16.3 the cost of completing the works.
17. In Minister of Public Works &
Land Affairs v Group Five Building Ltd
1999 (4) SA 12
(SCA) at page
25G Schutz JA, speaking for the majority of the court held that a
stage is reached when a defaulting contractor in
a building contract
is entitled to no more chances and that that is the earliest stage at
which the employer’s damages claim
could conceivably have
become due. Applying this reasoning to the present case, the second
defendant should, at VIP’s suggestion
in its letter to the
plaintiff of 18 August 2010, have been afforded at least 14 days’
opportunity to rectify its defects.
18. Mr den Hartog, for VIP argued that
Minister of Public Works is distinguishable from the present case. He
submitted that it is
the second defendant, not VIP which is in the
position of the defaulting contractor in Minister of Public Works. To
my mind this
is a distinction without a difference. The way the claim
is pleaded piggy-backs the claim for damages against VIP on the claim
for damages against the second defendant. Whether or not the
plaintiff’s claim is expiable or otherwise bad is not a
question
before me. VIP, having raised its special plea must take the
particulars of claim as it finds them.
19. In McKenzie v Farmers’
Co-operative Meat Industries Ltd
1922 AD 16
at 22 the court held that
the words “cause of action” meant “Every fact which
it would be necessary for the plaintiff
to prove, if traversed, in
order to support his right to the judgment of the Court. It does not
compromise every piece of evidence
which is necessary to prove each
fact, but every fact which is necessary to be proved ”. In
HMBMP Properties (Pty) Ltd v
King
1981 (1) SA 906
NPD at 909E Thirion
J held that in order to be able to institute action for the recovery
of a debt the creditor must have a complete
cause of action in
respect of it.
20. One must draw a distinction between
a debt and a cause of action. See Evins v Shield Insurance Co Ltd
1980 (2) SA 814
AD at 825E – H and CGU Insurance Ltd v Rumdel
Construction (Pty) Ltd
2004 (2) SA 622
SCA at 628A – D. In CGU
Jones AJA held that the debt is not a set of material facts or a
cause of action. The debt is that
which is begotten by the set of
material facts.
21. The meaning of the words “debt
is due” in section 12(1) is that there must be a debt
immediately claimable by the
creditor, or put differently, that there
is a debt in respect of which the debtor is under an obligation to
pay immediately. See
Van Reenen v Santam Limited
2013 (5) SA 595
at
paragraph 12. It is artificial for VIP to suggest that by 23 August
2010 VIP was under an obligation to pay the debt claimed.
22. Mr den Hartog relied on the
decision in Munnikhuis v Melamed NO
1998 (3) SA 873
WLD as authority
for the proposition that the debt claimed in the present case became
due when the plaintiff received the negative
certificate. He argued
that the plaintiff did not need to know the quantum of its claim for
the debt to have become due. In my
view the decision in Munnikhuis
does not assist VIP. Wunsh J, speaking for the full court said at
887F –H that “The
right to claim performance, and thus
the time when the debt is due, may arise only …. in the case
of property insurance,
[on] the date when the extent of the physical
loss is known – not the date of the final ascertainment of its
pecuniary extent
(Cape Town Municipality and Another v Allianz
Insurance Co Ltd
1990 (1) SA 311
C at 321F and 324A), or when the
creditor has performed, in whole or in part, as in the case of leases
and contracts for work.”
23. I would distinguish the present
case on two bases. Firstly, it is not a claim for performance of an
insurance contract. Rather
it is one for damages following the breach
of an engineering services agreement. Secondly, the plaintiff knew by
23 August 2010
only that VIP had made:
23.1 an allegation of breach of
contract by the second defendant and
23.2 tacitly, an admission that VIP
itself had made a mistake or mistakes in previous payment
certifications.
24. At best for VIP, the plaintiff, by
23 August 2010 may have had a claimable debt against VIP for
repayment of R8 810 455,59.
That claim has not been pleaded.
Order:
1. The first defendant’s special
plea of prescription is dismissed with costs.
GC WRIGHT J
JUDGE OF THE HIGH COURT,
GAUTENG LOCAL DIVISION,
JOHANNESBURG
On behalf of the plaintiff: Adv LP
Mkize
082 392 8837
Instructed by: Nkosi Nkosana Inc
011 894 6957
On behalf of the 1st defendant:
Adv AP den Hartog
082 413 6901
Instructed by: Harvey Nossel
011 786 9868
Dates of Hearing: 3 and 4 March
2015
Date of Judgment: 6 March 2015