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[2022] ZAGPJHC 158
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TUV SUD South Africa (Pty) Ltd v Eskom Holdings Limited (2020/11544) [2022] ZAGPJHC 158 (18 March 2022)

IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:  2020/11544
REPORTABLE:
YES
/ NO
OF
INTEREST TO OTHER JUDGES:
YES
/NO
REVISED.
18/03/2022
In
the matter between:
TÜV
SÜD SOUTH AFRICA (PTY)
LTD
Applicant
and
ESKOM
HOLDINGS
LIMITED
Respondent
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
Parties / their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The
date of the
judgment is deemed to be 18 March 2022.
JUDGMENT
MALINDI
J:
Introduction
[1]
The claimant, TÜV SÜD South
Africa (“
TÜV”
)
alleges that:
1.1
It was a contractor to the respondent Eskom
Holdings Limited (Eskom) from March 2015 to the end of 2017. The
services it provided
to Eskom were carried out at Eskom’s Matla
power station (“Matla”).
1.2
Its claims are for payment in respect of
services rendered in September, October and November 2017. These are:
1.2.1
for the balance owing by Eskom to it for
services rendered in September 2017, and for the full amount in
respect of services rendered
in October and November 2017; and
1.2.2
the amounts owed by Eskom to TÜV, were
checked and verified by Eskom in payment assessment
certificates/payment applications,
as being due, owing and payable.
[2]
Eskom resists the claim on the following
grounds:
2.1
Whereas the applicant’s case is that
these services were rendered exclusively in terms of a Task Order,
the respondent disputes:
2.1.1
the contract relied upon by the applicant;
2.1.2
that the services were rendered; and
2.1.3
that it is indebted to the applicant for
the monies claimed in these proceedings.
2.2
Eskom avers that the applicant was made
aware of the Eskom’s position as far back as September 2018.
2.3
The applicant thereafter took close to two
years before instituting these proceedings in Court even though it
appreciates that there
is a dispute resolution mechanism in terms of
which disputes between the parties ought to be resolved.
2.4
Eskom contends further that:
2.4.1.
There are disputes on the terms of the agreement,
2.4.1.
TUV’s interpretation of the terms of
the hybrid agreement that is relied upon do not support its claims.
Background
[3]
The applicant and the respondent concluded
a written agreement in January 2015 in terms of which the applicant
could provide boiler
and turbine NDE services in sections, and
maintenance during outages on an “as-and-when” basis for
a period of two
years at Eskom’s Matla power station (“the
agreement”).
[4]
The agreement was concluded pursuant to a
tender process in terms of which the applicant submitted a tender to
Eskom, which was
thereafter accepted. Eskom at all material times
recognised that the agreement was concluded pursuant to a tender
submitted by
the applicant.
[5]
The start date for the agreement was
2 March 2015, and the duration of two years was to lapse on
1 March 2017.
[6]
The agreement comprised of the following:
6.1
The standard form NEC3 Engineering and
Construction Short Contract (June 2005) (“the standard
conditions”);
6.2
The agreement and Contract Data;
6.3
The Pricing Data;
6.4
The Scope of Works, including the Works
Information; and
6.5
The Site information.
[7]
The agreement contained a dispute
resolution mechanism in terms of which disputes between the parties
would be referred, first to
adjudication, and if unresolved, to
arbitration.
[8]
It is common cause that the agreement was
extended. What is in dispute is how this agreement was extended and
what the terms were.
8.1
The applicant contends that it was extended
for six months when “de Jager … advised the applicant’s
construction
manager … Lazarus Govender … that the
respondent needed to extend the works agreement for 6 months”.
The applicant
concedes that this alleged extension was without any
formal written agreement;
8.2
Eskom, however, contends that De Jager had
no authority to extend the agreement on its behalf, and that the
agreement was in fact
extended through the written Task Order.
[9]
It is common cause that a Task Order was
issued to the applicant by Eskom. The Task Order was signed by Clive
McDermid (“McDermid”)
on behalf of Eskom, and Lazarus
Govender (“Govender”) on behalf of the applicant.
McDermid is recorded in the Task
Order as the “Employer’s
Delegated Authority”.
[10]
The terms of the Task Order are as follows:
10.1
Works were to be carried out in the Matla
power station’s Unit 6;
10.2
The agreed starting date was 1 July
2017;
10.3
The agreed completion date was 30 September
2017;
10.4
The “Total of the Prices for this
Task Order” was R13 274 502.
[11]
The terms of the Task Order are confirmed
by the applicant as follows in its founding affidavit:
“
The
work to be carried out under the task order was described as ‘Unit
6 MGO [Mini General Overhaul] Boiler Inspections and
NDT’, with
an agreed start date of 1 July 2017, and an agreed task
completion date of 30 September 2017.”
[12]
The Task Order makes no reference to the
(NEC) standard conditions, or to De Jager being Eskom’s
representative.
[13]
Further to the above background, the
following transpired in respect of the contractual relationship
between the parties:
13.1.
TÜV, as does its predecessor TÜV
SÜD South Africa Pro-Tec (Pty) Ltd (“Pro-Tec”),
provides specialist
quality assurance services in respect of
components including boiler, turbine, high pressure piping and
auxiliaries, during scheduled
and unscheduled outages, and other
normal maintenance activities associated with the power plant.
13.2.
TÜV and Pro-Tec have provided these
services to Eskom at Matla since 2011, in respect of components and
services supplied to
Eskom by third parties.
13.3.
In August 2014, Eskom put out for tender a
contract for the provision of “Boiler and Turbine NDE Services,
inspections and
running maintenance during outages including monthly
maintenance on an “as and when” required basis at Matla
Power
Station for a period of 2 years”.
13.4.
Pro-Tec was the successful tenderer
resulting in the conclusion of the works agreement described in
paragraphs 19 to 21 of the founding
affidavit.
14.
The conditions of contract applicable to
the works agreement were the NEC3 Engineering & Construction
Short Contract of June
2005 (ECSC3), and the period of this contract
was from 2 March 2015 to 1 March 2017.
15.
In September 2016, the works agreement was
ceded and delegated from Pro-Tec to TÜV as appears from TÜV’s
letter
of 14 September 2016. This letter was addressed to
Eskom’s Pitzer at Matla Station. The cession and delegation was
accepted
by Eskom through its representative/contracts manager, Johan
de Jager, who signed the consent on 29 September 2016.
16.
In February 2017, De Jager advised TÜV
of the need for a 6-month extension to the works agreement at
unchanged rates (as requested
by Eskom’s Pitzer).
17.
Apart from the informal extension of the
works agreement, on 20 March 2017 Eskom issued a task order for
“Unit 6 MGO
Boiler Inspections and NDT”. As originally
issued this task order refers to an agreed starting date of 1 July
2017,
an agreed task completion date of 30 September 2017, and
the total of the prices of R13 274 502 (excluding VAT).
18.
The task order was issued with attachments.
It is not necessary to deal with these annexures.
Issue
for Determination
19.
The issue for determination is whether the
applicant is entitled to payment by the respondent of an aggregate
amount of R5 961 441.25
(five million nine hundred and
sixty-one thousand four hundred and forty-one rand and twenty-five
cents) (excluding VAT), for services
rendered in September, October
and November 2017.
20.
The applicant seeks to found a claim or its
claims on the basis of the Task Order issued on 20 March 2017 for
services which the
respondent has not paid for or has part-paid in
respect of the September services. The question that arises is
whether the Task
Order was a self-standing agreement or part of the
NEC3 agreement of 20 January 2015.
21.
In paragraph 32.2 of its replying affidavit
the applicant states:
“
The
works carried out pursuant to the extended works agreement period are
not to be confused with the works carried out by the applicant
in
terms of the task order.”
22.
In oral argument Mr Kemah SC, appearing for
the applicant, submitted that the respondent’s submission that
the Task Order
is a stand-alone contract is wrong as the Task Order
is subject to the original contract, that is, the agreement of
January 2015
as extended.
23.
The extension to the works agreement under
Contract No 4600056231 was confirmed by the applicant in its letter
of 21 February
2017. The relevant Task order issued on 20 March
2017 for Unit 6 MGO: NDT and Boiler Inspection coincides with the
scope of
work set out in the agreement, the site and its duration. I
am satisfied that the Task Order has to be construed and interpreted

in terms of the agreement.
The
Claims
24.
It is common cause that services were
rendered in terms of the three claims. The respondent raises several
defences which raise
disputes on the validity of the Task Orders and
the assessment of the works, which in turn gives rise to the
appropriate dispute
resolution mechanism.
25.
The three amounts claimed are:
25.1.
The sum of R2 759 056.75
(excluding VAT);
25.2.
Interest on the sum of R2 759 056.75
calculated at the rate of 10.50%
a
tempore morae
from 14 November
2017 to date of final payment;
25.3.
The sum of R1 935 652.60
(excluding VAT);
25.4.
Interest of the amount of R1 935 652.60
calculated at the rate of 10.50%
a
tempore morae
from 15 December
2017 to date of final payment;
25.5.
The sum of R1 266 743.00
(excluding VAT);
25.6.
Interest on the amount of R1 266 743.00
calculated at the rate of 10.50%
a
tempore morae
from 14 January 2018
to date of final payment.
26.
Whilst it is common cause that previously
both Mr De Jager and Mr Managa had signed together, I note that the
assessment section
of the Payment Assessment Certificate is a bit
ambiguous regarding who does the certification between them. It says
“Certified
by Project Leader:” and then provides for the
name and signature. It then provides for “Project Manager:”
and
provides for the name and signature. The role of the Project
Manager is not defined as in that of the Project Leader. The would
be
signatories as certifiers are not set below “Certified by:”.
That leaves only Mr De Jager as a “certifier”.
27.
These amounts are claimed on the basis of
the assessments and verification thereof by the respondent in terms
of clauses 50.1 and
50.2 of the agreement. How the amounts were
assessed and invoiced cannot be disputed, save for the allegation
that the invoices
were not submitted to and signed by the designated
Employer’s representative for processing in terms of clause
4.3.
28.
The invoices were checked and verified by
the respondent’s Mr Johan de Jager as Project Leader but not
signed by the Project
Manager, Mr F Managa. On Mr Managa’s own
assertions in his affidavit he and Mr De Jager were responsible for
checking and
verifying the appellant’s invoices. They worked in
collaboration as Project Leader and Project Manager.
29.
The
case of
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[1]
enjoins the Courts, in the process of attributing meaning to the
words used in a document, such as the meaning to the use of the

undefined words of “Employer’s Representative” in
this case, to have regard to the context of the document as
a whole,
the circumstances giving rise to its existence, the language used in
the light of the ordinary rules of grammar and syntax,
the apparent
purpose to which it is directed, and attribute to it a sensible
meaning to it. In view of the role that Mr De Jager
has played since
the inception of the agreement in 2015 it is clear that he was a
designated representative to execute the agreement
and the Task Order
which took growth out of this agreement. Clause 4.3, read with
clauses 50.1 and 50.2 together with clauses 10.1
designate an
Employer’s representative as the person who is familiar with
the agreement and the works required to be performed
by the
applicant. Messrs De Jager and Managa were such persons whilst they
held the positions of Project Leader and Project Manager
at the
relevant period of the existence of the agreement and the carrying
out of the Task Order. In the absence of the definition
in the
agreement of “Employer’s Representative” and none
of the parties unable to point to any subsequent agreement
or minutes
of a meeting where such a designation was made of people different
from Messrs De Jager and Managa I hold that anyone
of them qualified
as such.
30.
The invoices and applications for payment
became due “three weeks after the next assessment day which
follows receipt of an
application for payment by the Contractor”.
They were all certified by De Jager on 19 March 2018, and became
due and
payable on 15 April 2018.
31.
Mr
Tshikila, appearing for the respondent, referred the Court to
Universal
Piling and Construction v VG Clements
[2]
and submitted that clause 50.1 requires the applicant to in fact had
“completed” the works in accordance with the works

information before an invoice becomes due and payable. He argued that
certification by an Employer Representative does not render
the
invoice due and payable as the invoice remains challengeable by the
employer. Para [26] in
Universal
Piling
does not deal with how the employer must satisfy itself of the “value
of the work carried out”. That exercise is to
be carried out by
the Employer Representative to whom the contractor presents the
assessment. Once so satisfied the Employer Representative
verifies
and, if satisfied, certifies the assessment. That is what happened in
this case. There was no need for the applicant to
demonstrate in
these papers that it had rendered these services as that fact had
been verified and certified by Mr De Jager. Mr
Managa’s
challenge to the assessments in December 2018 was belated as the
amounts had already become due and payable as certified.
That is what
the applicant’s claim is based on. It is not to prove that it
has performed the works carried out. As stated
in its replying
affidavit at paragraph 27.1:
“
I
deny that the applicant’s claims arise from an acknowledgment
of liability. The applicant’s claim arise from services

rendered for and on behalf of the respondent at its special instance
and request, which claims were (1) assessed by the applicant,
(2)
never corrected by the respondent, (3) never disputed by the
respondent, and (4) check and verified by the respondent. These

assessed claims were continually acknowledged by the respondent, as
being due, owing and payable.”
32.
All
three claims are valid and a claim lies in each even though the Task
Order was designed to end on 30 September 2017. The
orders were
issued on 20 March 2017. In
Legator
McKenna Inc & Another v Shea
[3]
it was held that a defendant or respondent cannot escape liability on
the basis that it had not contracted the claimant to deliver
the
services as long as the respondent has consumed the services. In such
instances fairness to both parties requires the consumer
to pay for
services consumed without protest. I hold so in this case too. The
Supreme Court of Appeal expressed its unequivocal
approval of the
Wilken
v Kohler
rule that
“…
where
both parties have performed in accordance with the provisions of an
agreement, albeit unenforceable, the purpose of the transaction
has
been achieved and that there is therefore no reason to interfere with
the existing state of affairs.”
[4]
33.
Put differently:
“…
if
both parties to an invalid agreement had performed in full, neither
party can recover his or her performance purely on the basis
that the
agreement was invalid.”
[5]
34.
The
Wilken v
Kohler
rule, applied in this case,
means that Eskom cannot escape liability where TÜV has delivered
on its obligation and Eskom has
consumed the service. Eskom’s
protestation that TUV had already been paid R10 800 of the R13m
contract does not avail
it to refuse to pay for the extra consumption
of the services delivered by TUV without reservation.
35.
The suggestion that because the Task Order
designates Mr Clive McDermid as the “Employer’s Delegated
Authority”
renders the claims invalid as a result of having
been verified and certified by Mr De Jager is a red herring. First,
the respondent
asserts throughout that Messrs De Jager and Managa
were the respondent joint executors of the Task Order and that the
verification
and certification was inadequate/insufficient merely for
the lack of Mr Managa’s signature. There is no claim that Mr Mc
Dermid was the “Employer’s
Representative
”
for these purposes. Secondly, it can be surmised that Mr McDermid was
delegated to enter into an agreement (contract) to
procure these “as
and when” services which probably fall within his contract
limit. I was not addressed on this but
it is a safe supposition.
36.
As
the applicant’s cause of action has remained the same in its
founding affidavit as in the replying affidavit, I do not
comprehend
how the case of Treasure the
Karoo
Action Group and Another v Department of Mineral Resources and
Others; Global Environment Trust and Others v Tendele Coal
Mining
(Pty) Ltd and Others
[6]
assist the respondent’s submissions on the connection between
the agreement and the Task Order. As held above I find that
the
respondent was not prejudiced in any way by the elaboration in the
replying affidavit of the applicant’s case. It is
not the
respondent’s case that it was deprived, unfairly, of the
opportunity to adduce further evidence to meet a new cause
of action
or disprove any material allegations.
37.
I
am satisfied that on the application of the
Plascon-Evans
[7]
rule
the respondent’s alleged dispute of facts is not a genuine
dispute of facts. On the case pleaded by both parties and
the
evidence in the affidavits, this case is capable of final resolution.
It is mainly a question of interpretation of the agreement
and the
Task Order. Material facts are common cause.
Dispute
Resolution Mechanism
38.
Having traversed all of the respondent’s
defences, it remains to determine if the dispute as a whole or any
part thereof should
have been referred to arbitration as contended by
the respondent.
39.
I
have found that there exist properly executed and processed payment
assessment certificates that make the applicant’s case

insurmountable on the merits. Therefore the situation is one where
the respondent is simply refusing to pay or failing to pay without

there being a dispute on the cause of action or any aspect of its
merits. The cases of
Body
Corporate of Greenacres v Greenacres Unit 17 CC & Another
[8]
and
PCL
Consulting (Pty) Ltd t/a Phillips Consulting SA v Tresso Trading 119
(Pty) Ltd
[9]
have laid to bed the question as to what constitutes an arbitrable
dispute. Failure or refusal to pay does not constitute a dispute
as
to liability. The claimant can assert its rights in the Courts in
this regards. There is no question of liability to be determined
by
an arbitrator. As stated above, the respondent’s failure in all
the defences that challenge liability results in there
being no
dispute to be adjudicated through any form of alternative dispute
resolution mechanism.
Conclusion
40.
As the respondent has not succeeded in any
of its defences and the applicant’s claim succeeds.
41.
In the circumstances the following order is
made:
1.
The respondent is to pay to the applicant:
1.1.
The sum of R2 759 045.75
(excluding VAT);
1.2.
The sum of R1 935 652.50
(excluding VAT);
1.3.
The sum of R1 266 743.00
(excluding VAT).
2.
Interest on each of the amounts above at
the mora rate of 10.5% from 15 August 2018 to date of payment.
3.
Costs of two counsel, including senior
counsel.
G
MALINDI
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
JOHANNESBURG
FOR
THE APPLICANT:
A Kemack
T
Ossin
INSTRUCTED
BY:

Lindsay Keller Attorneys
COUNSEL
FOR RESPONDENT:     T Tshikila
INSTRUCTED
BY:

AA Solwandle Attorneys
DATE
OF THE HEARING:
27 October 2021
DATE
OF JUDGMENT:

18 March 2022
[1]
2014 (4) SA 593
(SCA) at [18].
[2]
[2016] EWHC 3321
(TCC) at
[17]
to [20] and [26].
[3]
(143/2008)
[2008] ZASCA 144
(27 November 2008).
[4]
Wilken
v Kohler
1913
AD 135.
[5]
Legator
McKenna
at
[28].
[6]
[2018] 3 ALL SA 896
(GP); (1105/20190) [2021]
ZASCA 13.
[7]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A).
[8]
[2008] 1 All SA 421
(SCA) at 425 to 426.
[9]
2009 (4) SA 68
(SCA) at 73A.