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[2010] ZAGPPHC 36
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Group Five Construction (Pty) Limited v Minister of Water Affairs and Forestry (39161/05) [2010] ZAGPPHC 36 (5 May 2010)
IN THE HIGH COURT OF SOUTH
AFRICA
(NORTH
GAUTENG
HIGH COURT, PRETORIA)
Date: 2010-05-05
Case Number: 39161/05
In the matter between:
GROUP FIVE
CONSTRUCTION
(PTY) LIMITED
Plaintiff
and
THE MINISTER OF
WATER AFFAIRS AND FORESTRY
Defendant
JUDGMENT
SOUTHWOOD J
[1] The plaintiff
claims from the defendant payment of a number of amounts pursuant to
a written agreement
(‘the
contract’) entered into on 28 November 1995 in terms of which
the plaintiff undertook the construction of the
Injaka Dam and
Appurtenant Works (‘the Works’) at the Sabie River
Government Water Scheme for a contract price of R147
231 618,60. The
contract consists of a number of documents including the General
Conditions of Contract (‘GCC’) which
provide for
compensation and additional amounts to be paid by the defendant to
the plaintiff in the circumstances provided for.
[2] Clause 61 of
the GCC provided for the reference of disputes to mediation. On 14
November 2000 the parties entered into a written
agreement
(‘Amendment 1’) in terms of which they agreed that
Amendment 1 replaced the provisions for mediation in clause
61(2) of
the GCC and that where a dispute, but for the provisions of Amendment
1, would have been referred to mediation in terms
of clause 61(1)(e),
such dispute would be referred to the Dispute Review Board (‘DRB’)
created by Amendment 1 (‘DRB1’).
In March 2004 the
parties entered into a second written agreement (‘Amendment 2’)
having a similar effect to Amendment
1: i.e. that disputes would not
be referred to mediation in terms of clause 61 of the GCC, but would
be referred to a DRB created
by Amendment 2 (‘DRB2’).
[3] In his special
plea the defendant raises prescription. The defendant contends that
claims A-D were referred to the DRB created
by Amendment 1; that the
plaintiff did not accept the recommendations of the DRB; that the
plaintiff gave notice to the defendant
that it intended to refer each
claim to court; that each claim fell due in terms of section 12(1)
of the Prescription Act 68 of
1969 (‘the Act’) on the
date on which the plaintiff gave notice of its intention to refer the
matter to court; that
the dates were all more than three years
before the plaintiff served its summons on the defendant and,
accordingly, that claims
A-D have become prescribed in terms of s 11
of the Act.
[4] In its
replication
the plaintiff denies that the amounts claimed in claims A-D became
due in terms of s 12 of the Act at any time prior
to the completion
date. The plaintiff alleges that the completion date was 4 March
2003 which was the date reflected in the final
approval certificate
dated 5 March 2003 issued in accordance with clause 55(1) of the GCC.
The plaintiff contends that the prescription
period of three years
did not elapse between 4 March 2003 and 2 December 2005. In the
alternative, the plaintiff alleges that
prescription was interrupted
in respect of each the plaintiff’s claims (i.e. A-D) by service
within the prescribed prescription
period, of a process whereby the
plaintiff claimed payment of the debts as contemplated in s 15(1) of
the Act and that such interruption
persists. In the further
alternative, the plaintiff contends in respect of the claim of R7 601
195 referred to in paragraph 22(c)
of the particulars of claim, that
prescription commenced to run on 6 October 2004, the date on which
the plaintiff gave notice
of its intention to refer the claim to
court and 3 years did not elapse before summons was served on 2
December 2005.
[5] S 10 of the Act
provides that a debt shall be extinguished by prescription after the
lapse of the period which in terms of the
relevant law applies in
respect of the prescription of such debt. In terms of s 11(d) the
period of prescription applicable to
the claims is three years. S
12(1) provides (ss (2), (3) and (4) are not applicable) that
prescription shall commence to run as
soon as the debt is due.
[6] The question of prescription
depends upon the date upon which the debts became due. If they
became due on the dates upon which
the plaintiff gave notice that it
intended to refer them to court they clearly prescribed as the
plaintiff’s summons was
served more than three years after the
last of these dates.
[7] The word ‘debt’
clearly includes any liability arising from and being due or owing
under a contract – see
Leviton
& Son v De Klerk’s Trustee
1914
CPD 685
at
691;
HMBMP
Properties (Pty) Ltd v King
1981
(1) SA 906
(N)
at
909A-B. A debt is ‘due’ when it is immediately claimable
by the creditor or conversely, immediately payable by the
debtor –
see
HMBMP
Properties (Pty) Ltd v King supra
at
909C-D;
The
Master v IL Back and Co Ltd
1983
(1) SA 986
(A)
at
1004F-H. This means that there has to be a debt immediately
claimable by the creditor, or, stated in another way, that there
has
to be a debt in respect of which the debtor is under an obligation to
perform immediately – see
Evins
v Shield Insurance Co Ltd
1980
(2) SA 814
(A)
at
838;
The
Master v IL Back and Co Ltd supra
1004D-E;
Deloitte
Haskins & Sells v Bowthorne Hellerman Deutsch
1991
(1) SA 528
(A)
at
532G-I.
[8
] The
primary issues raised by the special plea and the replication thereto
are:
(1) whether each claim became
enforceable/payable on the date on which the plaintiff gave notice of
its intention to refer the matter
to court (claim A, 6 September
2001: claim B, 30 October 2001: claim C, 22 February 2002 and claim
D, 20 March 2002): or
(2) whether the
claims became enforceable/payable only on the date of final approval
(i.e. 4 March 2003); alternatively
(3) whether
prescription was interrupted in respect of each of claims A, B, C and
D by service within the prescription period of
a process whereby the
plaintiff claimed payment of the claims as contemplated in s 15(1) of
the Act;
(4) whether the
claim of R7 601 195 referred to in paragraph 22(c) of the particulars
of claim only became enforceable/payable on
6 October 2004 when the
plaintiff gave notice of its intention to refer the matter to court.
[9
] At
the pre-trial conference the parties agreed that the issues raised by
the plea of prescription and the replication should be
decided
separately from all the other issues in terms of Rule 33(4) and at
the commencement of the trial an appropriate order was
made. The
parties also agreed on certain facts for the purpose of deciding the
prescription issues in terms of Rule 33(4) (these
facts are set out
in a separate document entitled ‘Admitted Facts for Purposes of
a Separated Issue in terms of Rule 33’)
and that the defendant
would close its case in terms of Rule 39(13) on the basis of the
agreed facts and that the plaintiff would
lead such evidence as may
be found to be admissible on the referral agreement whereafter the
defendant would lead its evidence
in rebuttal.
[10] For present purposes, the
admitted facts may be summarised as follows:
(1) On 28 November 1995 the parties
entered into the contract, which consists of a number of documents
including the GCC;
(2) In terms of the contract the
plaintiff undertook the construction of the Injaka Dam and
Appurtenant Works (‘the Works’)
at the Sabie River
Government Water Scheme for a contract price of R147 231 618,60;
(3) The GCC include
a number of clauses which make provision for compensation and/or
additional payment to the plaintiff in the
circumstances described
therein;
(4) The GCC also contains a number of
clauses governing the procedure relating to claims for compensation
and/or additional payment
and the resolution of any disputes arising
out of such claims (collectively ‘the Dispute Resolution
Procedure’);
(5) In terms of clause 55(1) of the
GCC the Works would not be considered as completed in all respects
until a final certificate
(‘a final approval certificate’)
was delivered by the engineer to the plaintiff and the defendant
stating the date
on which the Works were completed and all defects
corrected in accordance with the contract;
(6) On 5 March
2003, acting pursuant to clause 55(1) of the GCC the engineer
delivered to the plaintiff and the defendant a final
approval
certificate in which the engineer certified that pursuant to the
final inspection held on 4 March 2003 the Works had been
completed
and all defects corrected in accordance with the contract;
(7) During the execution of the
contract the plaintiff made a number of claims for compensation
and/or additional payment pursuant
to the relevant clauses of the
GCC. In the pleadings these claims are referred to as claims A, B, C
and D;
(8) Claim A is a
claim for payment of R6 843 476,68 in terms of clauses 3(3) and 50(1)
read with clause 51 of the GCC.
In terms of clause
3(3) the contractor is deemed to have based his tender on the
technical data given in the Tender Documents and,
if in the
performance of the contract, any circumstances differ from this
technical data and this causes delay or additional cost
the
contractor shall be entitled to make a claim in accordance with
clause 51. In terms of clause 50(1) (read with clause 50(4))
if the
contractor encounters adverse physical conditions or artificial
obstructions which could not have been reasonably foreseen
by an
experienced contractor at the time of submitting his tender and the
contractor is of the opinion that additional work will
be necessary
which would not have been necessary if the particular physical
conditions or artificial obstructions had not been
encountered, the
contractor shall be entitled to make a claim in accordance with
clause 51. In the performance of the contract
the plaintiff
encountered circumstances and conditions in respect of the quantity,
quality and suitability of rock for use as concrete
aggregates
different from the technical data provided by the defendant in the
tender documentation and/or which constituted adverse
physical
conditions as a result of which the plaintiff became entitled to
payment of the amount claimed;
(9) Claim B is a
claim for payment of –
(i) R925 178,82 in terms of clause
42(1) and/or clause 26(7)(b) and/or 30; and
(ii) R1 696 089,62 in terms of clause
42(1) alternatively clause 45.
In
terms of clause 42(1) the contractor shall, on the written order of
the engineer, suspend the progress of the Works or any part
thereof
for such time or times and in such manner as the engineer shall order
and shall in respect of any delay or additional cost
of giving effect
to the engineer’s order be entitled to make a claim in
accordance with clause 51. In terms of clause 26(7)(b)
the
contractor shall be paid the cost of any services not covered by
clause 26(7)(a): i.e. the costs of services required to be
rendered
by the contractor which the contractor is deemed to have made
allowance for in his tender if sufficiently particularised
in the
tender documents which include taking and delivering to the
engineering test specimens from portions of the works already
constructed and carrying out tests on supplies of materials intended
to be incorporated into the Works and on any test specimens
from
portions of the Works. In terms of clause 30 the contractor shall,
if ordered by the engineer, search for the cause of any
defect and if
the defect is one for which the contractor is not liable under the
contract the cost of the work carried out by the
contractor in
searching shall be paid to him. In terms of clause 45, if any
circumstances occur which fairly entitle the contractor
to an
extension of time for the completion of the Works the engineer shall
grant such extension of time as is appropriate as a
claim in
accordance with clause 51. During the execution of the Works - the
plaintiff experienced problems in the execution of
the Works relating
to the concrete operations: the engineer instructed the plaintiff to
cease concreting activities (i.e. suspend
the progress of the Works);
the plaintiff incurred expenses and suffered loss as a result of
this suspension and the plaintiff
was required to carry out tests and
search for defects; the plaintiff was not liable for the defects
under the contract and the
cost of carrying out the tests was not
covered by clause 26(7)(a); the costs of searching for defects and
carrying out the tests
amounted to R925 178,82 and the additional
time related Provisional and General allowances amounted to R1 696
089,62;
(10) Claim C is a claim for payment
of –
(i) R1 745 679,44 in terms of clause
39 and/or 40 and/or 42(1) and 26(7) and/or 30;
(ii) R577 020,18 in terms of clause
42(1) alternatively clause 45; and
(iii) R7 601 195 in
terms of clauses 39 and 40.
In terms of clause
39 the engineer may at any time before the issue of the certificate
of completion require any variation of the
form, quality or quantity
of the Works or any part thereof and the value of such variations
shall be taken into account in ascertaining
the amount of the
contract price. In terms of clause 40 all variations ordered by the
engineer in accordance with clause 39 shall
be calculated by the
engineer, after consultation with the contractor, in accordance with
certain principles stipulated in the
clause. During the execution of
the Works - the earthworks were suspended by the engineer in terms of
clause 42(1); the plaintiff
carried out testing in terms of clause
26; the plaintiff searched for defects in accordance with clause 30;
the plaintiff effected
variations required by the engineer in
accordance with clause 39. The plaintiff incurred expenditure of R1
745 679,44 as a result
of the suspension of the earthworks. The
plaintiff is entitled to additional time-related Provisional and
General allowances of
R577 020,18 and is entitled to an additional
amount of R7 601 195 in respect of all variations required by the
engineer;
(11) Claim D is a claim for payment of
R7 987 186,90 in terms of clause 49 of the GCC.
In terms of clause
49(1), except as provided in clause 49 or elsewhere in the contract,
the rates and prices stated in the tender
would be final and binding
throughout the period of the contract. In terms of clause 49(2) the
value of certificates issued in
terms of clause 52(1) (excluding the
value of the special materials referred to in sub-clause (3)) would
be increased or decreased
by applying a ‘Contract Price
Adjustment Factor’ calculated according to the formula and
conditions set out in the
Contract Price Adjustment Schedule. In
terms of clause 49(3) price adjustments for variations in the cost of
special materials
would be made in the manner set out in the Contract
Price Adjustment Schedule. One of the variables in the Contract
Price Adjustment
Schedule formula was the ‘Labour Index’.
It was a tacit term of the contract that if this Labour Index was
discontinued
another reasonable measure would be applied. The Labour
Index was discontinued and the applicable statutory minimum wage
rate,
being another reasonable measure, must be applied.
Recalculation of the certificates issued in terms of clause 52(1)
results in
an increase of R7 987 186,90 payable by the defendant to
the plaintiff;
(12) The plaintiff
duly submitted claims to the engineer appointed under the contract in
relation to each of claims A-D and the
plaintiff has complied with
all procedural requirements of clauses 51 and/or 60 (whichever may be
applicable) leading to the procedures
of clause 61 of the GCC;
(13) The plaintiff has also complied
with the following procedural requirements of clause 61(1) of the
GCC:
(i) In terms of clause 61(1)(a) the
plaintiff may dispute a ruling given or deemed to have been given by
the engineer in terms of
clauses 51 and 60, provided that a Dispute
Notice disputing the validity or correctness of the whole or a
specified part of the
ruling has to be delivered by the plaintiff to
the engineer within 42 days;
(ii) In terms of clause 61(1)(c) the
engineer is to give his decision on the matters raised in the Dispute
Notice within 42 days,
failing which he shall be deemed to have given
a decision affirming, without amendment, the ruling concerned;
(iii) Either the plaintiff or the
defendant may then within 28 days after receipt of the notice of the
decision or after the decision
is deemed to have been given dispute
same by written notice to the engineer with a copy to the other
party, whereupon the matter
shall be referred immediately to
mediation in terms of clause 61(2) (clauses 61(1)(d) and (e));
(14) The provisions
of clause 61(2) dealing with mediation have been replaced by way of
Amendment 1 (14 November 2000) and at a
later stage by way of
Amendment 2 (March 2004);
(15)
Inter
alia
the
following provisions of Amendments 1 and 2 are relevant for purposes
of the special plea of prescription:
(i) Where the
dispute shall, but for the amendments, have been referred to
mediation in terms of clause 61(1)(e), it is to be referre
d
to the DRB established in terms of each of the two Amendments for its
recommendation on the relevant claim (clause 2 of both Amendments);
(ii) Recommendations of the DRB are to
be final and binding on the parties only to the extent that there is
written acceptance signed
by them, setting out in full detail that
which is accepted by the parties (clause 11 of Amendment 1; clause
12 of Amendment 2).
That is to be done within 30 days of the DRB
handing down its recommendation (clause 12 of Amendment 1; clause 13
of Amendment
2);
(iii) Clauses 13 of Amendment 1 and 14
of Amendment 2 both read as follows:
‘To
the extent that a recommendation or part thereof is not accepted in
writing by the Parties, either Party shall be entitled
to refer any
matter so unresolved to Court pursuant to clause 61(2)(g) of the
Conditions, provided that such Party shall, within
60 days of the
Board handing down its recommendation, give written notice to the
other Party and to the Board of its intention
to do so.’;
(iv) In the event of neither party
giving such notice within the 60 day period aforesaid, the
recommendation or part thereof that
has not been accepted by the
parties in writing shall lapse and the decision of the engineer or
part thereof not altered by acceptance
of the recommendation shall
become final and binding upon the parties (clause 14 of Amendment 1;
clause 15 of Amendment 2);
(16) The plaintiff
duly submitted various claims, including claims A-D to DRB1, which,
by agreement between the parties, dealt only
with the merits thereof,
not the quantum;
(17) No
recommendation of the DRB acting either in terms of Amendment 1 or in
terms of Amendment 2 in regard to claims A to D has
become final and
binding by the parties’ written acceptance as intended in
clause 11 of Amendment 1 or clause 12 of Amendment
2 (save that this
admitted fact does not apply in respect of the claim referred to in
22(c) of the particulars of claim which is
dealt with separately);
(18) B
oth
parties did not accept in writing the recommendation of DRB1 and/or
DRB2 in respect of any of the claims (clauses 12 and 13
of Amendment
1; clauses 13 and 14 of Amendment 2). The plaintiff gave notice in
writing within 60 days of each DRB recommendation
of the plaintiff’s
intention to submit the disputes to court and as a result, the
parties were entitled to pursue the dispute
without the decision of
the engineer becoming binding upon them. (Clause 14 of Amendment 1;
clause 15 of Amendment 2);
(19) The plaintiff
has complied with the procedural requirements of Amendment 1 and
Amendment 2 set out above for its entitlement
to give notice of its
intention to refer each of claims A-D to the Court, and gave such
notice timeously in regard to each of such
claims on the following
dates –
(i)
Claim
A
DRB1
gave its recommendation on 22 August 2001 and on 6 September 2001 the
plaintiff gave notice of its intention to have the matter
resolved by
court proceedings;
(ii)
Claim
B
DRB1
gave its recommendation on 22 October 2001 and on 30 October 2001 the
plaintiff gave notice of its intention to have the matter
resolved by
court proceedings;
(iii)
Claim
C
DRB1
gave its recommendations (on the merits only) on 7 February 2002 and
on 22 February 2002 the plaintiff gave notice of its intention
to
have the matter resolved by court proceedings. After attempts to
settle all claims between the parties, the quantum of only
the
component of Claim C referred to in paragraph 22(c) of the
particulars of claim was submitted to DRB2. DRB2 gave its
recommendation
in September 2004 and on 6 October 2004 the plaintiff
gave a further notice of its intention to refer the dispute to Court,
none
of the other claims having been submitted to either DRB1 or DRB2
in regard to quantum;
(iv)
Claim
D
DRB1
gave its recommendation on 15 March 2002 and on 20 March 2002 the
plaintiff gave notice of its intention to have the matter
resolved by
court proceedings;
(20) As at the date of delivery by the
plaintiff to the engineer of claims A-D (being claims for additional
payment or compensation
in terms of clause 51(1) or clause 60, to the
engineer acting in his capacity as such in accordance with the GCC)
none of claims
A-D had prescribed;
(21) None of claims
A-D have been ruled on in favour of the plaintiff by the engineer as
intended in clause 51(5) or 60(2) of the
GCC and all of them have
become susceptible to the further processing thereof in terms of
clause 61. They were not accommodated
in any later certificate and
were not incorporated in the engineer’s final payment
certificate when the final completion
certificate was issued as
contemplated by clause 52(10) of the GCC. Claims A-D were included
in the contractor’s final statement
to the engineer as
contemplated in clause 52(9) of the GCC and they were all unresolved
matters in dispute under clause 61 as at
the date of the issue of the
engineer’s final approval certificate dated 5 March 2003, as
contemplated in clause 52(9) and
52(10);
(22) The only part
of the contract relevant to prescription is the GCC annexed to the
particulars of claim as POC3(1) – POC3(52)
including the
appendix thereto annexed to the admitted facts and Amendment 1 and
Amendment 2 referred to in paragraph 6 of the
particulars of claim
and annexed thereto as POC5(1) to POC5(14) and POC6(1) to POC6(12)
respectively.
[11
] In
addition to these admitted facts the plaintiff tendered the evidence
of Mr Badenhorst Bartholomeus Theron, Mr Paul James Hopper
and Mr
Michael Harry Lomas and the defendant tendered the evidence of Mr
Ewert Jurgens Viljoen. The witnesses testified with reference
to the
agreed trial bundle, exhibit A. Mr Theron testified about the
background or surrounding circumstances of the contract.
He was for
a time the plaintiff’s project manager at the Works. Neither
party referred to his evidence during argument
and I find it of no
assistance in understanding or interpreting the contract.
Accordingly I shall not consider it further. The
plaintiff called Mr
Lomas and Mr Hopper to prove the facts alleged in paragraph 22(c) of
the amended particulars of claim. Mr
Viljoen also testified on this
issue. This evidence will be considered later.
[12
] The
parties’ principal contentions regarding prescription are as
follows:
(1) The defendant
contends that on a proper interpretation of the contract, each of
claims A-D (including the paragraph 22(c) component)
became a debt
due as intended in s 12(1) of the Act on the date upon which the
plaintiff delivered the notice of its intention
to refer the claim to
court following the recommendation of DRB1 in terms of clause 13 of
Amendment 1;
(2) The plaintiff contends that on a
proper interpretation of the contract construed against the
admissible background and/or surrounding
circumstances:
(i) each of the
plaintiff’s claims became due on 4 March 2003, i.e. the date
certified as the final completion date;
(ii) alternatively,
the plaintiff contends that the plaintiff’s claims became due
when the plaintiff became entitled to submit
those claims to the
engineer and that the service by the plaintiff of those claims on the
engineer interrupted prescription as
contemplated by s 15 of the Act
(which prescription has not yet occurred) and such interruption
persists;
(iii) further
alternatively, the plaintiff contends that the parties agreed to
refer the component of claim C referred to in paragraph
22(c) of the
particulars of claim (i.e. the claim for R7 601 195) for
determination on quantum and that they thereby settled the
liability
aspect of that part of claim C and the defendant thereby expressly,
alternatively, impliedly, alternatively, tacitly,
agreed to pay
whatever amount was determined as the quantum on that part of claim
C, alternatively, that the time period for the
plaintiff to give
notice of its intention to have that part of claim C resolved by
court proceedings was extended accordingly.
The plaintiff contends
therefore that it is the second notice given on 6 October 2004, after
the defendant did not accept the
September 2004 recommendation of
DRB2 on quantum, that applies, not the earlier notice dated 7
February 2002. The plaintiff contends
therefore, that even if the
defendant’s contentions regarding the commencement of the
running of prescription are upheld,
the plaintiff’s claim
referred to in paragraph 22(c) of the particulars of claim has not
prescribed;
(iv
) The
defendant disputes the correctness of the plaintiff’s
contentions regarding the claim referred to in paragraph 22(c)
of the
particulars of claim on the following grounds:
(1
) The
defendant disputes that the ‘referral agreement’ alleged
pursuant to the amendment of the particulars of claim
of March 2010
was concluded and contends that the only operative agreements between
the parties dealing with the treatment of these
claims were Amendment
1 and Amendment 2;
(2) The defendant
contends that the contents of the referral agreement alleged is in
conflict with Amendments 1 and 2 and that any
evidence which may be
sought to be led by the plaintiff in support of the referral
agreement would be inadmissible in terms of
the parol evidence rule;
(3) All compulsory dispute resolution
procedures prescribed by the contract as a precondition for
litigation through court proceedings
had been concluded; and
(4) The fact that
the parties made a further attempt to settle the part of claim C
referred to in paragraph 22(c) of the particulars
of claim by
submitting the quantum thereof to the second DRB did not detract from
the right to refer the matter to court which
the plaintiff already
enjoyed pursuant to its notice of 22 February 2002.
[13] The legal
position regarding the payment of the contract price is
well-established. The contract is a civil engineering contract
(i.e.
it has a substantial civil engineering component) and is a contract
of
locatio
conductio operis faciendi.
In
terms of the contract the plaintiff was commissioned by the defendant
to deliver a finished product of work, the dam and Appurtenant
Works,
for remuneration – see
LAWSA
Vol 2 Part 1 2 ed
para
457. The general rule in such contracts is, that, in the absence of
contractual provisions to the contrary, the remuneration
is due and
payable only when the contractor has completed the entire work.
Consequently, before completion of the work, the contractor’s
claim for payment of the remuneration will be met with the
exceptio
non adimpleti contractus
–
see
Dalinga
Beleggings (Pty) Ltd v Antina (Pty) Ltd
1979 (2) SA 56
(A)
at
63A-D;
BK
Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk
1979
(1) SA 391
(A)
at
418A-419H;
Martin
Harris & Seuns OVS (Edms) Bpk v QwaQwa Regeringsdiens
2000
(3) SA 339
(SCA)
para
36;
Sifris
en ‘n Ander NNO v Vermeulen Broers
1974
(2) SA 218
(T)
at
222H-223D;
Simmons
NO v Bantoesake Administrasieraad (Vaaldriehoekgebied)
1979
(1) SA 940
(T)
at
946A-B. If the contract so provides the contractor will be entitled
to claim payment before completion of the entire work –
see
Dalinga
Beleggings (Pty) Ltd v Antina (Pty) Ltd supra
at
63B-C;
Martin
Harris & Seuns OVS (Edms) Bpk v QwaQwa Regeringsdiens supra
at
355C-D;
Simmons
NO v Bantoesake Administrasieraad (Vaaldriehoekgebied) supra
at
946C. One example of a contractual stipulation providing for payment
of remuneration before the contractor has completed his
performance
in terms of the contract is the provision for interim payments.
Incorporating such a provision in the contract is
standard practice
and is done to enable the contractor to finance the work. The
incorporation of such a provision does not make
the contract
divisible. Before the contractor will be entitled to the final
payment he must complete the work in terms of the
contract –
see
Mouton
v Smith
1977
(3) SA 1
(A)
at
5E;
Martin
Harris & Seuns OVS (Edms) Bpk v QwaQwa Regeringsdiens supra
at
355C-D;
Simmons
NO v Bantoesake Administrasieraad (Vaaldriehoekgebied) supra
at
946D-E. When issued, an interim payment certificate creates, in
favour of the contractor, a separate and independent cause of
action
subject to the terms of the contract – see
Martin
Harris & Seuns OVS (Edms) Bpk v QwaQwa Regeringsdiens supra
at
355E-F;
Joob
Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture
2009
(5) SA 1
(SCA)
paras
27 and 28;
Thomas
Construction (Pty) Ltd (in Liquidation) v Grafton Furniture
Manufacturers (Pty) Ltd
1986
(4) SA 510
(N)
at
514I-515B.
[14] Consistent
with the legal position the GCC provide that –
(1) The plaintiff shall –
(a) design (to the extent provided in
the Contract), execute and complete the Works and remedy any defects
therein in accordance
with the provisions of the contract, and
(b) provide all
superintendence, labour, material, Constructional Plant, Temporary
Works, including the design thereof, all requisite
transport and all
other things, whether of a temporary or permanent nature, required in
and for such design, execution and completion
of the Works and for
the remedying of any defects, so far as the necessity for providing
the same is specified in or reasonably
to be inferred from the
Contract (GCC6(1));
(2) ‘Works’
means ‘the Permanent Works together with the Temporary Works’;
‘Permanent Works’
means ‘the Permanent Works to be
constructed in accordance with the Contract’ and ‘Temporary
Works’ means
‘the Temporary Works required in connection
with the construction of the Permanent Works in accordance with the
Contract’
(GCC1(p), (v) and (z));
(3) the plaintiff shall in carrying
out its obligations comply with the engineer’s instructions on
any matter relating to
the Works (GCC6(3));
(4) as consideration for the
construction, completion and defects correction of the Works, the
defendant shall pay to the plaintiff
the Contract Price in terms of
the provisions of the Contract (GCC11);
(5) the quantities set out in the
Schedule of Quantities are the estimated quantities of the work and
they are not to be taken
as the actual and final quantities of the
Works to be executed by the Contractor in fulfilment of his
obligations under the Contract
and that the engineer shall measure
the quantities for the purpose of every payment certificate (GCC47);
(6) the plaintiff
is entitled to receive monthly payments in respect of –
(a) the estimated value of the
Permanent Works executed and calculated in terms of the Contract up
to the date of the Contractor’s
statement;
(b) such amount as the Engineer may
consider to be fair and reasonable for any Temporary Works or other
special items for which
separate amounts are provided in the Schedule
of Quantities; and
(c) any amounts additional to those
referred to which are due to the Contractor (GCC52);
(7) the engineer may by payment
certificates make any correction or modification of any previous
payment certificate which shall
have been issued by him (GCC52(8));
(8) the plaintiff
shall deliver to the engineer a final statement showing the value of
the work done in respect of which a certificate
of completion has
been issued and shall supply such further information as the engineer
may reasonably require and that the plaintiff
shall not be entitled
to any payment in respect of any matter which has not been included
in such final statement save as provided
for in clauses 30, 54 and 56
in respect of work executed during the Defects Liability Period or
clause 61 in respect of any dispute
(GCC52(9));
(9) when all contract work has been
completed, all final measurements agreed or, failing agreement,
determined by the Engineer and
all defects remedied the Engineer
shall, at the end of the Defects Liability Period (if any), issue to
the defendant and the plaintiff
a Final Payment Certificate, the
amount of which shall be paid to the Contractor within 28 days of the
date of such certificate,
after which no further payments shall be
due to the Contractor (save in respect of matters in dispute, in
terms of Clause 61, and
not yet resolved) (GCC52(10));
(10) the Engineer may issue
certificates of Practical Completion, Completion and Final Approval
(GCC54 and 55) and that –
(a) a certificate of completion will
be issued as soon as the work in the list provided to the plaintiff
at the time of issue of
the certificate of Practical Completion has
been completed (GCC54(2) and (4));
(b) a Final Approval Certificate shall
be delivered by the Engineer as soon as practicable after the
completion of the whole of
the Works or of the expiration of the
Defects Liability Period, as the case may be, or as soon thereafter
as any works ordered
during such period pursuant to Clauses 30, 54
and 56 shall have been completed in accordance with the Contract
(GCC55(1)); and
(c) the Works shall not be considered
as completed in all respects unless a Final Approval Certificate
shall have been delivered
by the Engineer to the defendant and the
plaintiff stating the date on which the Works have been completed and
all defects corrected
in accordance with the Contract (GCC55(1)).
[15
] The
plaintiff claims the additional amounts or compensation in terms of
various clauses of the GCC. Although these amounts fall
within the
definition of Contract Price (i.e. ‘the Tender Sum subject to
such addition thereto or deduction therefrom as
may be made from time
to time under the provisions of the Contract’ (GCC1(g))) the
defendant contends that the amounts claimed
are treated differently
by the relevant clauses which govern claims for additional payments
or compensation and the resolution
of disputes concerning such
claims. The plaintiff contends that these provisions (and others) do
not deviate from the general
principle already referred to which
means that the plaintiff did not become entitled to claim payment of
the additional amounts
or compensation until the work had been
completed and the final approval certificate issued.
[16
] The
dispute clearly relates to the interpretation of the contract and, in
particular, the clauses containing the dispute resolution
procedure.
At the outset it must be pointed out that the defendant is not
relying on an implied or tacit term of the contract
and that the
plaintiff’s contention that the interpretation must take place
in a manner consistent with the existing common
law and that any
deviation from the common law position would have to be in the
clearest terms, is not correct. The contention
is not borne out by
the case referred to,
Kaplan
v Incorporated Law Society, Transvaal
1981
(2) SA 762
(T)
at
786G and is contrary to the leading authority,
Coopers
& Lybrand v Bryant
[1995] ZASCA 64
;
1995
(3) SA 761
(A)
at
767E-768E where the relevant principles are set out:
‘
According to
the “golden rule” of interpretation the language in the
document is to be given its grammatical and ordinary
meaning, unless
this would result in some absurdity, or some repugnancy or
inconsistency with the rest of the instrument.
Principal
Immigration Officer v Hawabu and Another
1936
AD 26
at
31,
Scottish
Union & National Insurance Co Ltd v Native Recruiting Corporation
Ltd
1934
AD 458
at
465-6,
Kalil
v Standard Bank of South Africa Ltd
1967
(4) SA 550
(A)
at
556D. …
The mode of
construction should never be to interpret the particular word or
phrase in isolation (
in
vacuo)
by
itself. See
Swart
en ‘n Ander v Cape Fabrix (Pty) Ltd
1979
(1) SA 195
(A)
at
202C (
per
Rumpff
CJ):
“Wat
natuurlik aanvaar moet word, is dat, wanneer die betekenis van woorde
in ‘n kontrak bepaal moet word, die woorde
onmoontlik uitgeknip
en op ‘n skoon stuk papier geplak kan word en dan beoordeel
moet word om die betekenis daarvan te bepaal.
Dit is vir my
vanselfsprekend dat ‘n mens na die betrokke woorde moet kyk met
inagneming van die aard en opset van die kontrak,
en ook na die
samehang van die woorde in die kontrak as geheel.”
The correct approach to the
application of the “golden rule” of interpretation after
having ascertained the literal
meaning of the word or phrase in
question is, broadly speaking, to have regard:
(1) to the context
in which the word or phrase is used with its interrelation to the
contract as a whole, including the nature and
purpose of the
contract, as stated by Rumpff
supra;
(2) to the background circumstances
which explain the genesis and purposes of the contract, i.e. to
matters probably present to
the minds of the parties when they
contracted …
(3) to apply
extrinsic evidence regarding the surrounding circumstances when the
language of the document is on the face of it ambiguous,
by
considering previous negotiations and correspondence between the
parties, subsequent conduct of the parties showing the sense
in which
they acted on the document, save direct evidence of their intentions
…’
These rules
emphasise context and its effect on the meaning of words, a point
trenchantly made in
Aktiebolaget
Hässle and Another v Triomed (Pty) Ltd
2003
(1) SA 155
(SCA)
para
1 where the court said that when construing the language used in
documents (including contracts) ‘context is everything’.
[17] It is common
cause that all the claims originated either in clause 51 or clause 60
of the GCC. Clause 51 deals
inter
alia
with
claims for additional payment or compensation and clause 60 deals
with all other disagreements. Everything which must be done
in terms
of these clauses has a time limit, failing compliance with which, the
plaintiff would be barred from pursuing the claim
or dispute. The
clauses will be considered in turn.
[18] Clause 51 contains the following
relevant provisions –
(1) Within 28 days after the
circumstance, event, act or omission giving rise to a claim has
arisen or occurred the contractor must
deliver to the engineer a
written claim setting out –
(a) the particulars of the
circumstance, event, act or omission giving rise to the claim;
(b) the provisions of the contract
relied upon; and
(c) the amount of
money claimed and the basis of calculation thereof ((1)(a));
(2) Where the contractor cannot
reasonably comply with these requirements it is required to comply
with certain other minimum requirements
((1)(b));
(3) If the events or circumstances are
ongoing the plaintiff must, each month, deliver to the engineer
updated particulars of the
claim ((1)(c));
(4) If the contractor was not
reasonably aware of the relevant facts and circumstances the 28 day
period commences to run from the
date when the contractor should
reasonably have become so aware ((2));
(5) To enable the
extent and validity of the claim to be assessed the contractor and
the engineer
must record all facts and circumstances relating to the claim ((3));
(6) If the contractor fails to comply
with the aforementioned provisions it is barred from making the claim
((4));
(7) Unless provided otherwise in the
contract, within 56 days after the contractor has complied with its
obligations regarding the
making of the claim, the engineer must
deliver a written ruling on the claim and any amount allowed by him
must be included in
the next payment certificate ((5));
(8) If the engineer
fails to give his ruling within the period allowed (which may be
extended by agreement) he is deemed to have
given a ruling dismissing
the claim ((6)); and
(9) If before the
engineer’s ruling on the whole claim any amount thereof is
established to his satisfaction the amount must
be included in the
next payment certificate ((5)(b)).
[19] Clause 60 contains the following
relevant provisions –
(1) within
20 days after a disagreement has arisen between the contractor and
the engineer the contractor may give written notice
to the engineer
to consider such disagreement ((1));
(2) within 14 days of receiving the
contractor’s written notice the engineer must give a written
ruling on the disagreement,
failing which the engineer is deemed to
have given a ruling dismissing the contractor’s contention
((2)).
[20] Clause 61 provides for the
contractor to dispute any ruling given or deemed to have been given
by the engineer in terms of
clauses 51 and 60:
(1)
the
contractor is entitled to give written notice to the engineer
disputing the whole or a specific part of the ruling, but, unless
the
contractor does so within 42 days after receipt of the ruling, or,
after a ruling is deemed to have been given, the contractor
has no
further right to dispute the ruling or any part thereof not disputed
in the notice ((1)(a));
(2) the engineer must give his
decision on the dispute by delivering it in writing to the contractor
and the employer ((1)(c)) and
must do so within 42 days after receipt
of a notice from the contractor requiring him to do so, failing
which, he shall be deemed
to have given a decision affirming without
amendment, the ruling concerned ((1)(c));
(3) the contractor
and the employer both have the right to dispute the engineer’s
decision or any part thereof by giving written
notice to the engineer
but, unless they do so within 28 days after receipt of the decision
or the deemed decision they shall have
no further right to dispute
any part of the ruling not specified in the notice ((1)(d));
(4) if either party gives notice
disputing the engineer’s ruling or any part thereof the dispute
must be referred immediately
to mediation in terms of clause 61(2)
((1)(e));
(5) a time limit is
provided for the appointment of a mediator ((2)(a)); legal
representation is not permitted ((2)(b)); a mediator
must give his
written opinion on the dispute as soon as reasonably practical
((2)(f)); the mediator’s opinion becomes binding
on the
parties only to the extent agreed to in writing ((2)(f)); the
dispute on any matter still unresolved must be resolved by
arbitration or court proceedings whichever is applicable in terms of
the contract ((2)(g));
(6
) if
the contract provides for determination of disputes by arbitration,
the matter shall be referred to a single arbitrator to
be agreed upon
by the parties, or, failing such agreement, within 28 days after
delivery to the parties of the mediator’s
opinion, nominated by
the President of the South African Institute of Civil Engineers
((3)(a));
(7
) if
the contract does not provide for the determination of disputes by
arbitration the dispute shall be determined by court proceedings.
[21] The relevant
clauses of Amendment 1 and Amendment 2 are set out in paragraph
[10](14) and (15) above. The effect of these
clauses is that instead
of being referred to mediation, disputes have to be referred to the
DRBs. Thereafter, because the parties
agreed that disputes must be
determined by court proceedings (see Appendix X to the Admitted
Facts) they were obliged to institute
such proceedings to determine
the disputes.
[22] Clause 61 and the two Amendments
do not indicate that court proceedings can be instituted only after
completion of the Works
even if they are payment of amounts which
fall within the definition of ‘Contract Price’. The
scheme created for the
determination of claims is:
(1) a ruling by
the engineer; if disputed
(2) a decision by the engineer; if
disputed
(3) a referral to the DRB; if
disputed
(4) court proceedings.
Provided the
contractor complies with the time limits the contractor is entitled
to proceed from one step to the next to have a
dispute about a claim
determined. According to the GCC in their original form the
institution of arbitration or court proceedings
could have followed
immediately after the parties had failed to resolve the dispute by
accepting the mediator’s opinion.
After the parties agreed
that disputes had to be settled by court proceedings this meant that
only court proceedings could be
instituted. The effect of the two
Amendments is simply that court proceedings must be instituted if the
parties do not resolve
their disputes by accepting the DRB’s
recommendation.
[23] I am therefore of the view that
before instituting court proceedings the contractor was obliged to go
through the dispute resolution
procedure, but, having done so this
impediment to litigation was removed and the contractor was entitled
to institute legal proceedings
forthwith as soon as he had given
notice. Accordingly prescription began to run no later than the
giving of notice. The question
is whether prescription began to run
before the commencement of the dispute resolution procedures as
contended by the plaintiff.
[24] If it is found
that prescription did not commence to run after completion of the
work the plaintiff contends that the running
of prescription
commenced before the parties began the dispute resolution procedures:
i.e. as soon as the causes of action for
the various amounts claimed
were complete, but that the running of prescription was interrupted
in terms of s 15(1) of the Act
by service on the engineer of each
claim.
[25] As already
pointed out prescription does not begin to run until the debt is due:
i.e. it is immediately claimable/payable
– see
Evins
v Shield Insurance Co Ltd
1980
(2) SA 814
(A)
at
838-839;
The
Master v IL Back and Co Ltd
1983
(1) SA 986
(A)
at
1004F-H or, when the creditor’s cause of action is fully
accrued and the creditor is able to pursue his claim – see
Deloitte
Haskins & Sells v Bowthorpe Hellerman Deutsch
[1990] ZASCA 136
;
1991
(1) SA 525
(A)
at
532H-I. The learned author of
Christie
The
Law of Contract in South Africa
5
ed
at
486 comments –
‘The same
test of recoverability has been expressed in different words: when
the debt is recoverable, owing and already
payable; immediately
claimable; when the creditor acquires a complete cause of action for
its recovery; or when the cause or
right of action accrues, which
may be taken as synonymous expressions’
In
McKenzie
v Farmers’ Co-operative Meat Industries Ltd
1922
AD 16
at
23 the court adopted the following definition of ‘cause of
action’ –
‘… every fact which it
would be necessary for the plaintiff to prove, if traversed, in order
to support his right
to judgment of the Court. It does not comprise
every piece of evidence which is necessary to prove each fact, but
every fact which
is necessary to be proved.’
and in
Evins
v Shield Insurance Co Ltd supra
at
838F-H the court quoted with approval the following meaning of ‘cause
of action’ in
Abrahamse
& Sons v SA Railways and Harbours
1933
CPD 626
–
‘The proper legal meaning of
the expression “cause of action” is the entire set of
facts which gives rise to
an enforceable claim and includes every
fact which is material to be proved to entitle a plaintiff to succeed
in his claim. It
includes all that a plaintiff must set out in his
declaration in order to disclose a cause of action. Such cause of
action does
not “arise” or “accrue” until the
occurrence of the last of such facts and consequently the last of
such
facts is sometimes loosely spoken of as the cause of action.’
The parties clearly accept that the
facts and circumstances giving rise to each claim had occurred by the
time it was submitted
to the engineer. However before each claim was
enforceable it had to proceed through the dispute resolution
procedure. That was
a contractual prerequisite for the
enforceability of the claim and was clearly a part of the plaintiff’s
cause of action.
[26] Strictly speaking that is the end
of the plaintiff’s argument. Nevertheless, on the assumption
that that conclusion
is wrong, the second leg of the argument will be
considered.
[27] The plaintiff
contends that the submission of each claim served to interrupt the
running of prescription in terms of s 15(1)
of the Act. For the
purposes of considering this contention it will be accepted that
prescription commenced to run before the
delivery of the claim to the
engineer. S 15(1) of the Act provides that –
‘The running of prescription
shall, subject to the provisions of subsection (3), be interrupted by
the service on the debtor
of any process whereby the creditor claims
payment of the debt’
and s 15(6) provides that –
‘For the
purposes of this Section, “process” includes a petition,
a notice of motion, a rule nisi, a pleading
in reconvention, a third
party notice referred to in any rules of court, and any document
whereby legal proceedings are commenced’.
The plaintiff
contends that it is sufficient to interrupt prescription if the
process served is a step in the enforcement of a
claim for payment of
the debt and that prescription was interrupted by the delivery to the
engineer of the written claim under
clause 51(1). For this
contention the plaintiff relies on
Cape
Town Municipality and Another v Allianz Insurance Co Ltd
1990
(1) SA 311
(C);
Primavera
Construction SA v Government North West Province
2003
(3) SA 579
(B);
Naidoo
& Another v Lane & Another
1997
(2) SA 913
(D);
First
Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd
1981
(4) SA 380
(W)
and
LAWSA
Vol 21 1
st
Reissue
para
147.
[28] The wording of
the section does not support the contention. S 15(6) clearly
provides that the process which interrupts the
running of
prescription must be a document whereby legal proceedings are
commenced. It is obviously intended to be all-embracing.
Furthermore the authorities relied on by the plaintiff do not support
the contention. None of the cases referred to extends the
meaning of
process to include a claim delivered to an engineer pursuant to the
provisions of a construction contract. In
Cape
Town Municipality v Allianz Insurance Co Ltd supra
the
plaintiff issued summons for a declaratory order that the defendant
was liable to indemnify the plaintiff. The court held that
the
service of the summons interrupted prescription (330H-335C). In
Primavera
Construction SA v Government North West Province and Another
the
court did not decide that a claim for arbitration is a process which
would interrupt the running of prescription for the purposes
of s
15(1) of the Act (601E-603I). In
Naidoo
and Another v Lane and Another supra
the
court held that an application to join a defendant was not a process
which interrupted the running of prescription and that
when the
amended summons and particulars of claim were served on that
defendant the claim had prescribed (918A-921H). In
First
Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd and
Another supra
the
court held that service of an application for an interim attachment
(without a claim for payment of a debt) was not service
of a process
whereby the creditor claims payment of the debt for the purposes of s
15(1) of the Act. Finally,
LAWSA
Vol 21 1
st
Reissue
para
147 emphasises that s 15(1) requires service of a process by which
legal proceedings are effectively commenced for payment
of the debt
in question.
[29] The clear
wording of s 15(6)
(see
e.g.
Associated
Paint & Chemical Industries (Pty) Ltd v Smit
2000
(2) SA 789
(SCA)
para
19) is consistent with the clear wording of s 6(1)(b) of the
Prescription Act 18 of 1943 which provided that prescription was
interrupted by service on the debtor of any process whereby action
was instituted. In
Santam
Insurance Co Ltd v Vilakasi
1967
(1) SA 246
(A)
the
majority judgment said at 253H that –
‘… It is clear that the
service referred to in sec 6(1)(b) must be service whereby action is
instituted as a step
in the enforcement of the claim or right. The
underlying reason why such a service interrupts prescription is that
the creditor
has thereby formally involved his debtor in court
proceedings for the enforcement of his claim.’
And in
Neon
and Cold Cathode Illuminations (Pty) Ltd v Ephron
1978
(1) SA 463
(A)
the
court commented on these provisions at 470G-471B as follows:
‘Then sec. 6
deals with the interruption of the running of prescription.
Inter
alia
it
says in sec. 6(1)(b) that:
“Extinctive prescription shall
be interrupted by service on the debtor of any process whereby action
is instituted.”
“Action” is defined in
sec. 1 as:
“Any legal proceedings of a
civil nature … for the enforcement of a right”
and “debtor” is defined
as:
“a person against whom a
right is enforceable by action”
The effect of
those provisions is, I think, that, in order to effectively interrupt
prescription under sec. 6(1)(b), there must
at least be (a) a right
enforceable against the debtor in respect of which extinctive
prescription is running, and (b) a process
served on that debtor
instituting legal proceeding
s
for the enforcement of that very right or substantially the same
right. RAMSBOTTOM, J. (later J.A.), said in
Park
Finance Corporation (Pty) Ltd v Van Niekerk,
1956
(1) SA 669
(T)
at
p673B:
“The process
referred to in sec 6(1)(b) must, I think, be a process by which
action is instituted to enforce the right which
would otherwise be
rendered unenforceable by lapse of time. In other words, the action
must be an action to enforce a particular
right, so that if one
person has two rights against another, the institution of an action
to enforce one only will not interrupt
prescription in respect of the
other”
With respect I
agree with the
dictum
,
except that, in the light of other authorities to be mentioned later,
I would qualify the phrase “the right which etc”
by
substituting therefor “the same or substantially the same right
as would otherwise be rendered unenforceable by lapse
of time”.
For the substance rather than the form of the previous process must
be considered in determining whether or not
it interrupted
prescription.’
In
De
Bruyn v Joubert
1982
(4) SA 691
(W)
at
696A-B and
Naidoo
and Another v Lane and Another
1997
(2) SA 913
(D & CLD)
at
921D-F the court said that these
dicta
are
equally applicable to the provisions of s 15 of the Act. I
respectfully agree.
.
[30] Since
submission of a claim to the engineer clearly does not constitute
service of a legal process whereby legal proceedings
are commenced,
delivery of the claims to the engineer did not interrupt the running
of prescription. If prescription had commenced
to run in respect of
the claims before they were delivered to the engineer they have
become prescribed.
[31] The last
matter which must be considered is whether the parties entered into
the ‘referral agreement’ as alleged
in paragraph 22(c) of
the plaintiff’s amended particulars of claim and, if so,
whether this affects prescription of the claim
for R7 601 195. It is
common cause that in March 2004 the parties entered into Amendment 2
and that at about the same time they
agreed to submit claim 20 (the
claim referred to in paragraph 22(c) of the particulars of claim) and
claim 34 (claim E in the particulars
of claim) to DRB2 for a
recommendation on the quantum of claim 20 and the validity and
quantum of claim 34. The question is whether
the agreement to refer
these claims to DRB2 incorporated the terms alleged in paragraph
22(c) of the particulars of claim or was
merely part of an ongoing
process to settle all claims as the defendant alleges.
[32] In the plaintiff’s amended
particulars of claim the plaintiff alleges that during or about March
2004 and at Johannesburg
(in plaintiff’s further particulars
this becomes Rivonia, Johannesburg alternatively Pretoria) the
parties entered into a
‘referral agreement’ with the
following material terms –
(1) the parties agreed to refer the
para 22(c) claim to DRB2 for a recommendation on quantum;
(2) the defendant
would pay in settlement of the para 22(c) claim whatever amount was
ultimately determined as the quantum of the
para 22(c) claim
(following the procedure contemplated in the contract) (in
plaintiff’s further particulars it becomes clear
that this
would be by acceptance by the parties or by court proceedings);
(3) the time period
stipulated in the contract for the giving by the plaintiff of either
of its intention to have the para 22(c)
claim resolved by court
proceedings would be calculated with regard to the date of the
quantum recommendation (in plaintiff’s
further particulars this
would be done in terms of the referral agreement and Amendment 2).
Significantly, the
plaintiff alleges that the agreement was concluded ‘orally
alternatively tacitly; alternatively tacitly
as a term or terms of
Amendment 2’ and that the material terms were agreed ‘expressly
alternatively impliedly alternatively
tacitly’. Nowhere does
the plaintiff allege that the defendant admitted liability for the
claim and that all that remained
to be determined was its quantum.
Pleading in this manner is a clear
indication that the pleader is very uncertain about the facts.
The defendant denies that such an
agreement was entered into. The effect of the defendant’s plea
is that claim 20 (i.e.
the claim set out in para 22(c) of the
particulars of claim) and claim 34 (i.e. claim E in the plaintiff’s
particulars of
claim) were referred to DRB2 in terms of Amendment 2,
claim 20 on quantum only and claim 34 on both merits and quantum, as
part
of an ongoing attempt to settle all claims.
[33] The evidence on this issue
consisted of the correspondence in exhibit A which preceded the
referral of the two claims to DRB2
and the evidence of the witnesses.
The plaintiff tendered the evidence of Mr. Lomas who was the
plaintiff’s CEO at the time
and Mr. Hopper who was the
plaintiff’s commercial director at the time. The defendant
tendered the evidence of Mr. Viljoen
who was the engineer. The
correspondence in exhibit A is obviously the most reliable evidence
as to what took place and what was
discussed and agreed and must be
preferred to the memories of the witnesses who testified some 6 years
after the event and had
no other means of refreshing their memories
than the letters themselves. It is striking that the correspondence
does not purport
to confirm an agreement with the terms alleged in
the particulars of claim and that save for the submission of the
claims to DRB2
does not even refer to an agreement or understanding
about any of the other alleged material terms. It is also striking
that the
particulars of claim which accompanied the summons on 2
December 2005, when the facts of the matter must have been fresh in
the
minds of the witnesses, did not allege the agreement now alleged.
This was also not alleged in the other action which the plaintiff
instituted against the defendant, but withdrew, and was only alleged
in the amended particulars of claim delivered in March 2010.
Against
that background the plaintiff’s witnesses were unimpressive and
not credible and as far as the plaintiff’s
case is concerned
unhelpful. The evidence of Mr. Vijoen was far more preferable.
[34] Not surprisingly, in view of the
manner in which the agreement was pleaded, neither of the plaintiff’s
witnesses testified
that the agreement alleged had been entered into
expressly on a specific occasion. Mr. Lomas was involved in
attempting to settle
all the plaintiff’s claims with the
defendant and when it became clear that no overall settlement could
be achieved and that
claims 20 and 34 would have to be submitted to
DRB2 in terms of a second Amendment he handed over the matter to Mr.
Hopper. The
real thrust of Mr. Lomas’ evidence was that he had
negotiated at a high level with senior officials of the Department
and
that they had admitted that the defendant was liable for claim
20. However Mr. Lomas did not state that they expressly admitted
liability on a specific occasion. He testified, as I understood his
evidence, that this was his understanding. Perusal of the
correspondence shows that Mr. Lomas did not record an express
admission or even an understanding that the defendant was liable.
Significantly, neither Mr. Lomas nor Mr. Hopper testified that Mr.
Lomas conveyed the fact of the admission to Mr. Hopper. It
is clear
that Mr. Hopper was not aware of such an admission. It is also clear
that Mr. Hopper did not consider that the defendant
accepted
liability for whatever amount was determined. His letter of 15
January 2004 (A25-26) shows that he understood that the
recommendation of DRB2 would be given to the parties and they would
then meet in order to discuss the settlement of the claims.
Neither
the correspondence nor the evidence of Mr. Hopper shows that the
parties considered all the matters alleged to be material
terms of
the referral agreement. Mr. Hopper readily conceded that the
submission of the quantum of claim 20 to DRB2 was not on
the basis
that the defendant had accepted liability and that the submission of
claim 20 to DRB2 was simply another attempt to see
whether a
settlement could be achieved.
[35] Mr. Viljoen’s evidence was
clear and coherent and accords with the contents of the
correspondence in exhibit A. He confirmed
what the correspondence
indicates: that claims 20 and 34 were referred to DRB2 as part of an
ongoing process to settle all the
claims.
[36] In the premises the plaintiff has
not proved that an agreement was entered into as alleged in paragraph
22(c) of the particulars
of claim. It is clear from the evidence
that the parties simply agreed to submit the claims to DRB2 in an
attempt to try and settle
all the claims. It cannot be found that
any of the material terms alleged was a tacit term of that agreement.
[37] Neither can it
be found that the doctrine of quasi-mutual assent is applicable. The
plaintiff relies on the following statement
of the principle in
Smith
v Hughes
(1871)
LR 6 QB 597
at
607 –
‘If, whatever a man’s
real intention may be, he so conducts himself that a reasonable man
would believe that he was
assenting to the terms proposed by the
other party, and that other party upon that belief enters into the
contract with him, the
man thus conducting himself would be equally
bound as if he had intended to agree to the other party’s
claims’
It is clear that the plaintiff’s
representative, Mr. Hopper, did not propose the alleged terms of the
referral agreement
to Mr. Viljoen and he therefore did not conduct
himself as if he had accepted these terms.
[38] In the absence of the agreement
alleged the plaintiff’s contention that the parties agreed to
extend the period for the
giving of notice to refer the para 22(c)
claim to court cannot be upheld. Prescription therefore ran from the
date of the first
notice and the para 22(c) claim has prescribed.
[39] The defendant
has therefore shown that the plaintiff’s claims A, B, C and D
have prescribed and the defendant’s
special plea must be
upheld.
[40
] The
parties agree that costs must follow the result and that the costs of
two counsel should be allowed. Both sides were represented
by two
counsel.
Order
[41
] I The
defendant’s special plea of prescription in respect of claims
A, B, C and D is upheld;
II Claims A, B, C and D are
dismissed;
III The plaintiff is ordered to pay
the costs of this hearing including the costs consequent upon the
employment of two counsel.
_____________________
B.R. SOUTHWOOD
JUDGE OF THE
HIGH COURT
CASE NO:
39161/2005
HEARD
ON: 16 April 2010 to 20 April 2010
FOR
THE PLAINTIFF: ADV. G. HARPUR SC
ADV.
N. LANGE
INSTRUCTED
BY: Ms. S. Lancaster of Macrobert Inc.
FOR
THE DEFENDANT: ADV. R.J. RAATH SC
ADV.
P.M. MTSHAULANA SC
INSTRUCTED
BY: Mr. McGregor of the State Attorney, Pretoria
DATE
OF JUDGMENT: 5 May 2010