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2023
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[2023] ZAFSHC 375
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Razzmatazz Civil (Pty) Ltd and Another v MEC: Free State Provincial Government: Department of Police, Roads and Transport (2547/2019) [2023] ZAFSHC 375 (6 October 2023)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case number: 2547/2019
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
RAZZMATAZZ
CIVIL (PTY) LTD
First Plaintiff
CIVIL
TECH CONSTRUCTION CC
Second Plaintiff
And
THE
MEC: FREE STATE PROVINCIAL
Defendant
GOVERNMENT:
DEPARTMENT OF POLICE,
ROADS
AND TRANSPORT
HEARD
ON:
17
& 19 MAY 2023
WRITTEN HEADS OF ARGUMENT
DELIVERED ON 02, 19 & 22 JUNE 2023
JUDGMENT
BY:
DANISO, J
DELIVERED
ON:
06 OCTOBER
2023
[1]
The plaintiffs as a joint venture (the JV) sued the defendant (the
MEC) for idle construction
equipment and Occupational Health and
Safety costs (the OHS costs) arising from the suspension of the
construction Works relating
to the contract concluded by the parties
on 06 or 13 September 2016.
[2]
In terms of the contract:
[1]
2.1.
the JV was awarded a tender to upgrade the gravel road between
Schonkenville and Koppies in the
Free State for a contract amount of
R185 132 183.80 including VAT;
2.2.
the contract was to endure for a period of 36 months from 06
September 2016 to 19 November 2019;
2.3.
the JV would be entitled to invoice the MEC for work performed and
expenses incurred on a monthly
basis;
2.4.
the MEC agreed to remunerate the plaintiffs within 30 days of
receipt of the invoices (clause
6.10.6.2 of the GCC); and
2.5.
Mol Pro Consulting (Pty) Ltd was appointed as the MEC’s Agent
and Engineer.
[3]
It is common cause that the construction site was handed over to the
JV on 3 October
2016. On 04 October 2016 the JV was instructed by the
MEC’s Engineer not to establish site (setup on the construction
site
in preparation of construction) to avoid unnecessary costs and
claims for standing time due to the looming litigation that was
threatened by an aggrieved bidder, Raubex Construction (Pty) Ltd
(Raubex).
[2]
On 11 October 2016
the JV was instructed to establish site but not to commence with the
Works.
[4]
On 24 October 2016, Raubex launched an urgent application in this
court under case
number 5075/2016 seeking an interdict to prohibit
the construction Works pending review proceedings that Raubex
intended to institute
to set aside the award of the tender to the JV.
[5]
Raubex’s application was opposed by the MEC whilst the JV
elected to abide by
the court’s decision. An invoice for the
sum of R5 783 931.36 was subsequently presented to the
defendants on 26
October 2016. The invoice was paid on 07 December
2017.
[6]
On 01 November 2016, the construction Works were suspended by the
MEC’s Engineer
in terms of clause 5.11.1 of the GCC pending the
litigation (the first suspension). On 03 November 2016 the
interdict was
granted by agreement between Raubex and MEC.
[7]
On 07 November 2016 the JV notified the MEC in terms of clause 5.11.2
of the GCC of
its intention to claim for an extension of time and
compensation for standing costs as contemplated in clause 10.1 of the
GCC.
The MEC responded on 30 November 2016 by disputing the
applicability of the clauses relied upon by the JV and averred that
the
claim will not be honoured. The JV was instructed to de-establish
from the construction site. The dispute was ultimately referred
to
the Dispute Adjudication Board.
[8]
Raubex’s application was subsequently withdrawn on 11 August
2017. The JV’s
claims submitted on 06 April 2017 and 13 October
2017 were dishonoured essentially on the grounds that the JV had
breached the
terms of the contract therefore disentitled from
claiming damages it incurred as a result. The referral to the Dispute
Adjudication
Board did not yield the desired results for the JV.
[9]
It was on 15 September 2017 that the JV was informed that the
suspension has been
lifted and that they may resume with the
construction Works however, on 19 October 2017 the construction Works
were suspended yet
again and only uplifted approximately a month
later on 22 November 2017 (the second suspension). The JV’s
claim in respect
of the second suspension was accepted and the JV was
compensated accordingly.
[10]
In the particulars of claim, the JV claims an amount of
R47 878 658.50
computed at para 22 as follows:
“
22.1. The
costs of non-productive plant and/or construction equipment resulting
from the suspension of the contract in the
amount of
R48, 565,919.19
inclusive of Value Added Tax hereto appended marked “E”
minus the amount of
R2,090, 540.15
inclusive of Value Added Tax that was already granted by the
adjudication committee.
22.2. The costs
associated with time related costs in terms of Health and safety and
Environmental Management Plan in accordance
with the bill of
quantities resulting from the suspension of the contract, in the
amount of
R828, 000.00
inclusive of Value Added Tax.”
23.1 In
addition, the JV is entitled to payment in the amount of R575 279.46
in terms of Clause 6.10.6.2 of the GCC,
in terms of Uncertified
Payment Certificate 1 it rendered to the Engineer on 26 October 2016.
This payment certificate associated
with costs was incurred for its
initial site establishment and was only paid by the Defendant on 7
December 2017.”
[11]
The JV contends that in terms of clause 5.11.2 of the GCC it is
entitled to its proven additional
delay related costs caused by idle
construction equipment and OHS costs consequent to the delay.
[12]
The claim is resisted essentially on the ground that the JV is
seeking damages resulting
from the suspension of the construction
Works but has failed to adduce any evidence to prove the damages it
allegedly sustained.
The suspension came about as a result of a court
interdict which amounts to a supervening impossibility with an effect
of
vis major
therefore, the MEC’s performance is
excused.
[13]
Mr Stewart James Fletcher (Fletcher) is a civil Engineer employed by
the first plaintiff as a project
manager. He gave evidence in support
of the JV’s claim whilst the MEC led the evidence of its chief
civil Engineer and project
manager Mr Tholang John Mosianedi
(Mosianedi) and Mr Stuart John Riddle (Riddle) an expert in
construction management. The summary
of the evidence proffered by the
witnesses follows hereunder.
[14]
Mr Fletcher testified that pursuant to the conclusion of the
contract, the JV concluded a lease agreement
with an entity named
Razzmatazz Trading and Investment 19 (Pty) Ltd for the duration of
the contract in terms of which JV hired
construction equipment for
the performance of the construction Works
[3]
and in terms of the contract, the JV was also required to ensure that
health and safety measures were in place upon the establishment
of
site.
[15]
As a result of the suspension of the Works, the construction
equipment and the labour of the salaried
personnel including those
overseeing health and safety requirements stood idle resulting in the
JV incurring additional delay related
costs. These additional costs
are provided for in the contract.
[16]
It was his testimony that at all material times hereto the MEC was
aware of the presence of the construction
equipment on site including
the employees.
[4]
In order to
minimise the financial implication for the MEC, the JV tried to
mitigate its losses. Letters were sent to other companies
in the
construction industry regarding all the equipment available to rent
and by also moving some of the equipment to another
site but due
financial challenges experienced in the construction industry at that
time not all the equipment was rented out and
due to lack of space at
the JV’s premises, the remaining equipment could also not be
accommodated.
[17]
Under cross-examination, he denied that the cause of the suspension
of the construction Works was as
a result of a court interdict
because the instruction to suspend the Works was given before the
court order in any event, in terms
of the contract the JV is entitled
to be paid for its standing time
costs
occasioned by to
the suspension of the construction
Works on the instruction of the MEC’s Engineer.
[18]
All the construction equipment that was established on site was
necessary and required for the work
to be done and despite the
suspension of the construction Works, the JV was still obligated to
pay the rentals in terms of the
lease agreement and also the salaries
of the personnel overseeing the OHS requirements namely: compiling
health and safety files,
medicals and insurances as provided for in
the contract therefore, the claim is not premised on a breach of the
contract. He was
not in possession of the proof of payment of the HOS
related costs. He also stated the rentals of the construction
equipment were
still not paid, the account is in arrears as the JV
had no funds to pay the rentals.
[19]
He confirmed that pursuant to the suspension of Works, the contract
was extended by a year as compensation
for the delay occasioned by
the suspension not related to the court interdict. An amount of
R2 593 560.00 (excluding
VAT) was also paid to the JV in
respect of idle construction equipment.
[20]
According to Mosianedi and Riddle, the cause of the suspension of
Works is attributable to the court
interdict therefore the MEC is not
liable for the costs in that regard that aside, the MEC can only be
liable to pay for the equipment
that was needed. The equipment
brought by the JV on site was not only unnecessary it was also
excessive.
[21]
Mosianedi also pointed out that “establishment of a site”
only refers to ablution facilities,
carports and electrical supplies
it has nothing to do with all the construction equipment that the JV
had brought on site. He told
the court that he visited the
construction site at least once a month from 15 September 2016
including during the suspension period
and what he observed were
mainly trucks, low beds and transporting equipment which were
absolutely not necessary to be there at
least until required and
needed. With regard to personnel, the JV only needed a team of three
(3) people only including the surveyor.
[22]
During cross-examination Mosianedi stated that the JV was informed in
writing that they must remove
the plant from site so that the MEC
would not be liable for the costs in that regard. When it was put to
him that the JV did not
have such a letter, his response what that
the letter was in his laptop. He went on to concede that pursuant to
the suspension
instructions on 4 October 2016, nothing more was done
or said to the JV regarding the construction equipment on site. He
reasoned
that it was not the responsibility of the MEC to keep on
reminding the JV to remove its construction equipment and whilst
there
was no law preventing the JV from bringing and keeping its
construction equipment onto the site the MEC can only be liable to
pay
for the equipment that was needed and that is what this what
Colto also provides. He also said the JV was not entitled to remove
the equipment from the construction site without his permission. He
also said he could not tell them to remove it because it was
not
known when litigation will be finalized. Another reason he offered
was that it would have been costly if the JV had to leave
the site
and then return. They were hoping that the litigation will be
resolved sooner. He could not recall that the experts said
the JV was
entitled to standing costs for that period.
[23]
With regard to the provisions of Colto, it was put to him that it
makes reference to “all equipment”
must be brought onto
the construction site, his response was that a contract can be
amended.
[24]
The quantum claimed by the JV was disputed because the invoices
submitted were unbundled they had to
be verified. That has since been
done.
[25]
Riddle compiled the joint minutes
[5]
with Mr Errol Tate on 4 May 2023 in terms of which, the experts
agreed that since the MEC was the cause of the delay between the
date
of the withdrawal of the interdict and the date on which the JV was
instructed to proceed with the construction work the standing
time
costs incurred during that period would be for the MEC’s
account. Any additional claims related thereto would constitute
double payment.
[26]
He testified that in terms of the parties’ tender programme the
equipment that was established
on site by the JV was excessive. They
had about thirty (30) trucks, excavating equipment and TLB on site
when only three (3) tipper
trucks would have been sufficient and this
is due to the fact that the JV was first required to survey the road
before undertaking
any construction for at least six (6) weeks.
Personnel on site was also unnecessary at that stage.
[27]
His cross-examination revealed that Riddle did not even go to the
construction site. He admitted that
he did not physically observe the
equipment but took into account what was contained in the tender
documents.
[28]
Thus is in short the summary of the facts before this court.
[29]
Having regard to the
viva voce
and the documentary evidence
(Exhibit “A” to “I”) presented by the
respective parties, I am not persuaded
that the MEC has delivered a
meritorious defence to the JV’s claim.
[30]
As correctly argued in the JV’s written heads, the facts of
this matter are generally of
common cause and with regard to the
disputed facts, the version proffered by the JV is to be preferred as
opposed to the MEC’s
version for the reason that, Fletcher gave
a good and succinct account regarding the circumstances under which
the construction
Works were suspended including the basis of the JV’s
claim.
[31]
His testimony that the delay in the construction Works was not
attributable to the court interdict
is corroborated by the MEC’s
witnesses who confirmed that the JV was instructed not to commence
with the construction Works
on 04 October 2016 approximately a month
before the interdict was obtained by Raubex on 03 November 2016. The
written instruction
to suspend the construction Works followed on 01
November 2016 again, before the court interdict was granted. I
accordingly agree
with the JV’s contention that the suspension
of the Works was not on account of the court interdict which would
constitute
a supervening impossibility akin to a
vis major.
[32]
It is also important to point out that the MEC
acquiesced
to the granting of the court interdict. I am unable to find that a
consent order can constitute a
vis
major
where
it was not an unforeseen event: a party would be discharged from
liability if it was prevented from performing its obligation
on
account of a
vis
major
but
not if the impossibility was due to its own fault, not unforeseeable
or unexpected.
[6]
[33]
I do not agree that with the MEC’s contention that the species
of the JV’s claim
is one of damages and that the JV must prove
a breach of contract in order to succeed with its claims. It was
explained in
Imprefed
(Pty) Ltd v National Transport Commission
[7]
that
where a contract makes provision for the handing over of the site to
a contractor.
A subsequent
suspension of the construction Works by the employer, or someone
acting on his behalf the claim to recover expenses
incurred in that
regard would be governed by the provisions of the contract and “the
amount recoverable is that which the
Engineer considers and certifies
as fair.”
[34]
Similarly, there is no merit to the MEC’s contention that
actual proof of payment of the
rentals for the construction equipment
is required to substantiate the JV’s claim of the additional
costs relating to the
lease of the construction equipment. I
disagree, the lease agreement, Exhibit “A” constitutes
sufficient proof
of the JV’s obligations in terms of the lease
agreement.
[35]
The MEC’s witnesses have relayed a mediocre and improbable
version regarding why the JV
is disentitled to its standing costs for
idle equipment and HOS expenses. Mosianedi and Riddle’s
evidence that the JV placed
unnecessary and unwarranted construction
equipment on site and thereafter failed to remove it to mitigate its
claim is gainsaid
by the provisions of contract (‘the Colto”).
See Exhibit “H” page 334, section 1302 para (a) titled
“GENERAL
REQUIREMENTS” and it states that:
“
Prior to
starting with construction, the contractor shall also move all
constructional plant and personnel to the site...”
[36]
The JV’s evidence that it in order to mitigate its losses it
offered to rent out the equipment
to other contractors and some was
rented remains uncontroverted.
[37]
The key terms of the JV’s claim are embodied in clause 5.11 of
the GCC which deals with the
Suspensions of the Works
.
The relevant clause provides thus:
“
5.11.2.
unless such suspension or alteration is otherwise provided for
in the
Contract or by reason of some default or breach of the Contract by
the Contractor, the Contractor shall in respect of delay
to Practical
Completion and/or to proven additional costs of giving effect to the
Engineer’s order be entitled to make a
claim in accordance with
clause 10.1.”
[38]
The MEC’s reliance on clauses 5.3.1 and 5.12.3. of the GCC in
substantiation of its contention
that the JV is not entitled to rely
on clause on 5.11. 2 of the GCC is in my view unsound because, clause
5.3. deals with the
Commencement of the Works
by the
contractor it directs the contractor that:
“
Upon the
Engineering’s instruction the Contractor shall, save as may be
otherwise provided in the Contract or be legally or
physically
impossible, commence executing the Works. Such instruction shall be
subject to the submission by the Contractor, and
approval by the
Engineer, of documentation required before commencement with the
Works execution as set out in the Contract Data.”
and
[39]
Clause 5.12.3 also does not offer refuge to the MEC as it does not
gainsay the JV’s entitlement
to compensation for additional
costs occasioned by the suspension of the Works. It simply provides
that:
“
If an extension
of time is granted, the Contractor shall be paid such additional
time-related General Item, including for special
non-working days, if
applicable as are appropriate regarding any other compensation which
may already have been granted in respect
of the circumstances
concerned.”
[40]
There is nothing ambiguous about the terms of clause 5.11.2. Taking
into account the provisions
of the contract as a whole including the
General Conditions of Contract for Construction Works (the GCC)
second edition 2010 and
the Standard Specifications Document (the
Colto), the intentions of the parties and the purpose of this
provision are succinctly
set out. The position enunciated therein is
clear, it sums up the issue in contention
[8]
and confirms that the JV’s claim rests pertinently on the
provisions of clause 5.11.2 which entitles the JV to claim the
costs
for Practical Completion and/or proven additional costs and it
includes costs caused by idle construction equipment and OHS
costs
consequent to the delayed construction Works on the instruction of
the Engineer.
[41]
On the facts germane to this matter, the rates charged in the
invoices submitted by the JV for idle
equipment are in accordance
with the applicable guidelines, this fact was confirmed by Mosianedi.
[42]
The JV has succeeded in establishing its claim relating to idle
construction equipment on a balance
of probabilities. No sufficient
evidence has been adduced to prove how the amount of R828 000.00
relating to the claim of HOS costs
is arrived at.
[43]
The JV has substantially succeeded in its claims it is accordingly
entitled to the costs including
costs reserved on 05 October 2021.
ORDER
[44]
The order that I issue is the following:
1.
The defendant shall pay the plaintiffs:
1.1.
An amount of R46 475 379.04 in respect of idle construction
equipment;
1.2.
An amount of
R575 279.46 in respect of the interest for the
late payment of the plaintiffs’ payment certificate rendered on
26 October
2016;
1.3.
Interest on
the said amounts
a
tempore
morae
at the prescribed rate calculated at 10.25% per year from 14 November
2017 until date of final payment; and
1.4.
The costs of this application including the costs reserved on 05
October 2021.
N.S. DANISO, J
APPEARANCES:
Counsel on behalf
of Plaintiff:
Adv. S. Grobler
(SC)
Instructed by:
Graham Attorneys
BLOEMFONTEIN
Counsel on behalf
of Defendants:
Adv. N.A. Cassim
Instructed by:
The State Attorney
BLOEMFONTEIN
[1]
The copy of the appointment letter dated 6 September 2016 is
attached as Annexure “A” on the particulars of claim.
The relevant Conditions are embodied in the General Conditions of
Contract for Construction Works (the GCC) second edition 2010
and in
the Standard Specifications Document (Colto) as Annexures “B”
and “C”.
[2]
Page 13 of Exhibit “C” is a copy of a letter from the
MEC to the JV in that regard.
[3]
Exhibit “A” is a copy of the lease agreement signed on
16 September 2016. The rental payable is about R65 217.50
per
day.
[4]
Page 30 of Exhibit “C” is a letter dated 16 November
2016 addressed to the MEC in that regard.
[5]
Exhibit “I” page 40.
[6]
F
du Bois
Wille's
Principles of South African Law
9
ed (2007) at 849;
Kooij
v Middleground Trading 251 CC
2020
JDR 0659
(SCA).
[7]
1993
(3) SA 94
(A)
at 104 E-G
[8]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA),
para 18.