About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2011
>>
[2011] ZASCA 115
|
|
Msc Depots (Pty) Ltd v WK Construction (Pty) Ltd and Another (157/10) [2011] ZASCA 115 (8 June 2011)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No:
157/10
In the matter between:
MSC
DEPOTS (PROPRIETARY)
LIMITED
.........................................................
Appellant
and
WK CONSTRUCTION
(PROPRIETARY) LIMITED
WYNFORD’S
CIVIL & DEVELOPMENT
CC
..................................................
Respondent
Neutral
citation
:
MSC
Depots (Pty) Ltd v WK Construction (Pty) Ltd & another
(157/10)
[2011] ZASCA 115
(08 June 2011)
Coram:
MPATI
P, BRAND, LEWIS, SNYDERS and MAJIEDT JJA
Heard
03
March 2011
Delivered:
08 June 2011
Summary:
Contract –
breach of – contractor entitled to cancel where no opportunity
afforded to remedy defects in construction
works.
ORDER
On
appeal from:
Eastern
Cape High Court (Port Elizabeth) (Chetty J sitting as court of first
instance):
The
appeal is dismissed with costs, which shall include the costs of two
counsel.
JUDGMENT
MPATI
P (
BRAND, LEWIS,
SNYDERS and MAJIEDT JJA concurring):
[1]
The
issue in this appeal is whether absolution from the instance should
have been granted at the close of the appellant’s
case. The
respondent, a joint venture comprising of WK Construction (Pty)
Limited and Wynford’s Civil and Development CC,
both carrying
on business as civil contractors in Port Elizabeth, was the first
defendant in the court below in an action for damages
instituted by
the appellant. On 15 September 2006 the parties concluded a written
agreement in terms of which the respondent was
to carry out certain
construction works, described in the particulars of claim as
‘comprising bulk earth-works, paving, storm
water, water and
sewerage reticulation and mast lighting’ at the appellant’s
container park in Despatch in the Eastern
Cape. In simple terms, the
respondent was engaged to construct a container depot where the
appellant, a shipping company, was to
store, in containers, motor
vehicle parts which it would deliver, when required, to Volkswagen
South Africa, a motor manufacturer,
at its premises in Uitenhage.
[2] The
second defendant in the court below was PD Naidoo and Associates
(Naidoo) a firm of consulting engineers, which had been
appointed by
the appellant to carry out the necessary design work for the
container depot which was to be undertaken by the respondent
and to
carry out the site monitoring of all civil works to be done on the
project. The third defendant was an association, which
was a joint
venture between the second defendant and a firm or partnership of
quantity surveyors. It was appointed by the appellant
as project
manager. Its function was that of principal agent. The lis between
the appellant and the third defendant fell away when
they settled the
matter before the commencement of the trial. A settlement was also
reached, during the course of the trial, between
the appellant and
Naidoo, leaving the respondent as the only defendant in the case.
[3] The
terms of the construction agreement between the appellant and the
respondent are contained in a standard building agreement
commonly
known as the JBCC series 2000, prepared by the Joint Building
Contracts Committee Incorporated. The construction of the
depot was
to be in accordance with the design prepared by Naidoo. According to
Mr George Georgiev (Georgiev), a transport economist
employed by the
appellant, container depots operated by the appellant have to be
specifically designed so as to withhold heavy
loads of handling
equipment such as reach stackers and to withhold the weight of the
containers. Reach stackers are very heavy
machines which lift and
move heavy containers with loads of about 25 tons at a height of
between four and six meters or more. The
surface of the depot
therefore has to be even as an uneven surface would be dangerous for
the machines and drivers. Georgiev testified
that he informed the
designers (Naidoo) of these requirements. In fact, during May 2005
representatives from Naidoo visited Rosslyn
near Pretoria, where the
appellant operates a container depot and where between 30 and 35
containers are moved per day. Naidoo
were given the same requirements
as those pertaining at Rosslyn for the construction of the container
depot at Dispatch. Two reach
stackers used at Rosslyn were Fantuzi
45K models with a carrying or lifting capacity of 45 tons.
[4]
Construction
at the Despatch site commenced on 4 August 2005. In terms of the
agreement the civil works were to be carried out in
accordance with
drawings prepared and supplied by Naidoo. As the construction works
continued, several interim payments were made
to the respondent in
terms of the agreement.
1
By 17 January 2006 the construction of the depot was virtually
completed. On 31 March 2006 an interim certificate was issued by
the
principal agent for payment of the sum of R827 392.03 and on 25 April
2006 Georgiev approved payment of that amount. Operations
on that
part of the depot where empty containers were to be stored commenced
during April 2006 and the contract between the appellant
and
Volkswagen SA came into operation on 16 June 2006. Two Fantuzi reach
stackers were used. In May 2006 and before payment was
made of the
amount certified, deflections were noticed in the area of the depot
over which the reach stackers frequently traversed
when empty
containers were being moved around.
[
5] Mr
Eugene Blignaut, the appellant’s regional manager who was
located at the depot, had noticed the deflections and immediately
informed Georgiev who, having approved payment to the respondent as
certified, gave instructions by email on 4 May 2006 that payment
be
stopped. He did so on the assumption that the deflections were caused
as a result of some fault in the construction works. Certain
correspondence subsequently passed between the appellant’s
employees, Naidoo and the respondent and meetings were held to
discuss the matter. I shall return to these communications later. It
suffices, for present purposes, to mention that following
the initial
correspondence and the first meeting the respondent did certain
remedial work on the paving at the depot, but was instructed
by
Naidoo, on 22 May 2006, to stop the remedial work as the appellant,
according to Naidoo’s communiqué, did not feel
that the
method employed to remedy the defects was adequate. After further
correspondence had passed between the interested parties
and on 14
August 2006 the respondent gave notice to Naidoo, in terms of clause
38.2 of the agreement,
2
of its intention to cancel the agreement for the reason that the
appellant had allegedly breached its terms. A copy of the notice
was
sent to the appellant. On 29 August 2006 the respondent cancelled
the agreement and communicated this fact to the appellant
and Naidoo.
[6] Two
of the four material breaches alleged by
the
respondent as the grounds upon which the notice of cancellation was
issued were that (a) the appellant ‘failed to pay
the amount
certified in terms of clauses 31.9 and/or 34.1’ and (b) the
appellant prevented the principal agent ‘from
exercising his
independent judgment regarding the performance of his duties and the
contractor [was] being prejudiced by such action’.
An
additional material breach on the part of the appellant was alleged
in the letter of cancellation of 29 August 2006, viz that
the
respondent was denied the opportunity to remedy any default of which
it may have been guilty. The appellant denied that it
was in breach
of the agreement and stated, in a letter from its attorneys dated 11
October 2006, that the respondent had unlawfully
repudiated the
agreement by its ‘demonstrated intention of no longer wanting
to be bound’ by it. The letter stated
that the appellant
accepted the repudiation and terminated the agreement.
[7] The
appellant subsequently issued summons against the respondent, Naidoo
(as second defendant) and the principal agent (as third
defendant)
for payment of certain amounts as damages for breach of contract. As
I have mentioned, settlement was reached between
the appellant and
Naidoo and later also between the appellant and the principal agent.
The respondent counterclaimed for payment
of the R827 392.03
certified as due to it, R1 109 986.53 as damages for breach of
contract and R474 654.55 being money retained
by the appellant in
terms of the agreement. At the end of the appellant’s case the
court below (Chetty J) granted absolution
from the instance with
costs of two counsel as well as the qualifying expenses of the
respondent’s expert witnesses ‘in
respect of whom expert
summaries were filed’.
3
This appeal is with its leave.
[8] As
was
said in
Gordon
Lloyd Page & Associates v Rivera & another
,
absolution
at the end of a plaintiff’s case will, in the ordinary course
of events, be granted sparingly, but a court should
order it in the
interests of justice when the occasion arises.
4
The test to be applied by the trial court at that stage of the
proceedings ‘is not whether the evidence led by plaintiff
establishes what would finally be required to be established, but
whether there is evidence upon which a Court, applying its mind
reasonably to such evidence, could or might (not should, nor ought
to) find for the plaintiff’.
5
Thus, to survive absolution the appellant had to make out a prima
facie case by adducing evidence relating to all the elements
of its
claim.
[9] The
appellant’s claim against the respondent was based on two heads
viz (a) a breach of a material term of the agreement
;
and (b) an alleged repudiation of the agreement. The alleged breach
was grounded on clause 15.3 of the agreement which reads:
‛
15.3
On being given possession of the site the contractor shall commence
the works within the period stated in the schedule and
proceed with
due skill, diligence, regularity and expedition and bring the works
to:
15.3.1
. . .
15.3.2 Practical
completion in terms of 24.0.
15.3.3 Works
completion in terms of 25.0.
15.3.4 Full
completion in terms of 26.0.’
[10] T
he
following allegations were set out in the particulars of claim:
‘The
[respondent] breached clause 15.3 of the agreement inasmuch as it
failed to carry out the work with due skill, diligence
and regularity
in that:
The
specifications called for the project to include a paved surface of
the container park consisting of paving blocks laid in
a herring
bone pattern;
The
[respondent] laid the paving blocks unevenly over the entire site
with varying joint widths;
The
paving blocks are creeping and opening and the jointing sand between
the blocks is being washed out by storm water;
As
a result of the foregoing:
(i) the
storm water will reach the bedding sand on which the paving blocks
are laid;
(ii) once
saturated the bedding sand will allow further creep of the paving
blocks which will ultimately lead to failure of the
underlying
works.’
The
particulars of claim alleged further that a joint in the paving where
the herring bone patterns meet was failing due to lack
of interlock
which would ultimately lead to the failure of the underlying layers;
that concrete aprons surrounding two service
manholes in the paved
surface had failed as a result of lack of compaction around the
manholes; that large
settlements
and deflections had occurred along construction stake lines due to
incorrect construction processes and compaction;
and that the in-situ
material was poorly compacted, thus impacting on the bearing capacity
of the paving.
[11] In
its plea the respondent denied that it was in breach of the agreement
as alleged and pleaded that the failures in the works
as listed in
the particulars of claim were manifestations of defects in the design
of the works. It also denied that it had repudiated
the contract. As
to the alleged breach the respondent pleaded in the alternative that
even if the defects enumerated in the particulars
of claim were not
attributable to defects in the design of the works they were
‘maintenance items that [it] was at all material
times willing
and able to repair and that could easily have been corrected’.
[12] Clause
38.6 of the agreement provides that the contractor (respondent) ‘may
not exercise his right in terms of 38.0 if
he himself is in breach of
a material term of this agreement’. The ‘right’
referred to in clause 38.6 is the
right to cancel the agreement on
grounds of the employer’s (appellant’s) default. Thus, to
have survived absolution
at the end of its case the appellant was
required to have adduced prima facie evidence relating to the
question whether (a) the
respondent was in breach of clause 15.3 and
therefore precluded from cancelling the agreement (clause 38.6) and
(b) whether the
appellant suffered any damages as a result of the
respondent’s alleged breach and repudiation. Failure to adduce
evidence
on any one of these issues would ordinarily prove fatal to
the appellant’s case.
[13] It
does
not appear to me to be in dispute that the appellant’s failure
to pay the amount of R827 392.03 certified by the principal
agent as
due and payable to the respondent, would have entitled the latter to
cancel the agreement,
6
absent a breach by itself of a material term. In the appellant’s
heads of argument, however, counsel submitted that should
it be held
for any reason that the respondent was not in breach of clause 15.3,
then the latter’s cancellation of the agreement
was in any
event invalid. Various reasons were proffered for this submission. I
consider it unnecessary to mention all of them
save one that deals
with the failure to pay the amount certified by Naidoo as payable.
Counsel contended that in its request for
further particulars for
trial to the respondent’s counterclaim the appellant enquired
how it was alleged to have prevented
Naidoo from exercising its
independent judgment. The response was that the appellant did so by
instructing Naidoo, against his
advice, not to facilitate payment to
the respondent.
In
this regard Georgiev denied in his testimony that he interfered with
Naidoo’s independent judgment. He went on to say that
the
decision not to pay the respondent was his and not Naidoo’s.
[14] It
will be recalled that the respondent’s letter of 14 August 2006
giving notice of its intention to cancel the agreement
was addressed
to Naidoo and the appellant was provided with a copy of it. Counsel’s
argument was accordingly that there was,
in the circumstances, prima
facie evidence before the court a quo that the respondent ‘had
purported
to cancel the agreement in circumstances where it was not entitled to
do so’. The implication was, as was a
rgued
before the court below, and in fact pleaded in the particulars of
claim, that the respondent was not entitled to cancel the
agreement
because no notice of an intention to cancel was given to the
appellant. In respect of that argument the court below said:
‘
Clause
38.2 of the JBCC 2000 provides that “
where
the contractor considers
cancelling
the agreement notice shall be given to the employer and the principal
agent of the default in terms of 38.1 . . .”.
The clause merely
requires that notice of the intended cancellation be given to the
employer. The mere fact that the letter was
addressed to the
[respondent] and copied to the [appellant] is a spurious complaint.’
7
I
agree with these sentiments, particularly because there was no
suggestion that the appellant never received a copy of the letter.
[15] I
also agree with the following reasoning by the court below in this
regard:
‘
It
is not in issue that [Naidoo] issued payment certific
ate
number 4 [certifying that R827 392.03 was payable to the respondent]
and that [the appellant] authorised such payment. What
then
transpired is that the [appellant’s] director, Mr
Georgiev,
countermanded
payment which in turn elicited a response from [Naidoo] that such a
recommendation would constitute a breach of the
agreement.
Notwithstanding, the amount was not paid, remains outstanding and the
[respondent’s] entitlement thereto has clearly
been
established. . . . The JBCC 2000 vested [Naidoo] with full authority
and obligation to act in terms of the agreement, but,
despite the
latter’s recommendation that payment be effected, the
[appellant] desisted from acting in compliance with the
principal
agent’s recommendation. In such circumstances there can be no
question that the [appellant] prevented [Naidoo]
from exercising its
independent judgment regarding the performance of its duty. Quite
clearly the [respondent] suffered prejudice
thereby, which entitled
it to cancel the agreement.’
8
The
court a quo also considered the other grounds upon which the
respondent intended to cancel the agreement and concluded that
upon
those too the respondent was entitled to cancel. It is not necessary
to refer to them. I am thus satisfied that provided it
was not in
breach the respondent was entitled to cancel the agreement. What now
requires consideration is whether the respondent
was in breach of
clause 15.3 of the agreement.
[16] The
clause required the respondent to proceed with ‘due skill,
diligence, regularity and expedition’ and bring
the works to
practical completion,
9
works completion
10
and final completion
11
in terms of clauses 24, 25 and 26 respectively. And a breach of
clause 15.3 by the respondent would entitle the appellant to cancel
the agreement.
12
Whether or not the clause contains a material term of the agreement
is of no consequence. Once there is a breach of it ‘the
materiality of the breach is irrelevant and the court will not
enquire into the conscionableness or unconscionableness thereof’.
13
It will give effect to the clause that confers the right to cancel
(clause 36.1 in this case) upon such a breach. But it does not
follow
that the term breached is necessarily material. In the present
matter, however, it is unnecessary to embark upon an enquiry
on
whether or not clause 15.3 contains a material term of the agreement.
I shall assume, without deciding, that it does, particularly
because
counsel for the respondent did not suggest otherwise and accepted, it
seemed, that the respondent would not have been entitled
to exercise
its right to cancel the agreement had it been in breach of clause
15.3.
[17]
The design for the container depot made provision for the
construction of a number of layers consisting of different materials
which had to be compacted to specific strengths. The two upper levels
were stabilized with cement. The surface consisted of a concrete
pavement made of paving blocks laid on bedding sand in a herring bone
pattern. According to Mr Binks Marais, an engineering surveyor
employed by the respondent but who testified for the appellant, the
levels of the different layers were marked on a number
of
wooden pegs that he placed
into
the ground at specific points in the construction area as indicated
in the design documents. Each individual layer was compacted
to its
correct level as marked on the wooden pegs, which were removed after
the second stabilized layer was compacted. Steel pegs
were then used
to mark the level of the paving blocks.
[18] I
mentioned earlier that upon discovery of the deflections in the
paving of the container depot, letters (electronic and otherwise)
were exchanged between the relevant parties and meetings were held in
an attempt to resolve the problem. The first meeting was
held on site
on 8 May 2006, where it was agreed that the respondent would attend
to the affected areas. The method of the remedial
work to be
undertaken was agreed upon as also a number of other aspects, one of
which was to test the whole area to the loads of
the Fantuzi reach
stackers and containers. Immediately after the testing the respondent
commenced with remedial work. On 10 May
2006 Georgiev wrote to
certain individuals involved in the project, including Mr Calvyn
Ferreira of the respondent, advising inter
alia that the appellant
wanted ‘to perform further investigations on the problem’
and also requesting Naidoo and the
respondent ‘to discuss the
design and the work done’ with a certain Mr Giovanni Belfiore.
The respondent responded
by writing to the quantity surveyors on 15
May 2006 advising that all material tests done on the project
‘complied with the
requirements as specified’. It
reminded that in terms of clause 4.1 of the agreement
14
it was ‘neither responsible nor liable for the design of the
works’. As has been mentioned above, the respondent was
instructed to stop the remedial work on 22 May 2006. A further
meeting was then held on 5 June 2006 between representatives of
Naidoo, the joint venture (third defendant) and the respondent, at
which a report prepared by Naidoo dated 31 May 2006, following
certain tests conducted on control samples, was discussed. Certain
recommendations were made in the report, but the parties at
the
meeting agreed that an independent commercial laboratory be appointed
to conduct soil
tests.
The report had also noted that grading of the bedding sand did not
conform to specification as it was
too
fine. It was thus agreed at the meeting that the respondent would
submit a report to Naidoo on the availability of the specified
sand.
[19] On
9 June 2006 a Mr Potgieter,
the
regional director of Naidoo, addressed a letter to the appellant in
which the following appears in the third paragraph:
‘
It
is now evident that the current design was based on a 10 year life
span and does not comply with the original brief (
e.g.
20 year life based [on] anticipated traffic).’
Naidoo
did not admit, however, that the deflections observed at the
container depot were
occasioned
as a result of design life specification as, according to them, it
was patent from a trial hole that had been excavated
‘that the
in-situ layer works [were] not in accordance with normal standards or
specifications’. In the meantime, the
respondent had, on 29 May
2006, advised Naidoo that it was appointing an independent third
party engineer, at its own cost, to
check the design life of the
pavement structure. It appointed Ninham Shand Consulting Engineers
who subsequently submitted their
report dated 30 June 2006.
15
In it Ninham Shand questioned the design of the pavement. A design
computer program known as the ‘Lockpave program’,
specifically used for the design of segmental block pavements,
indicated that ‘a much thicker pavement would be needed for
in-situ soil conditions’. The program was used to ascertain the
weight-bearing capacity of pavement at the depot by loading
certain
data onto it. Ninham Shand also advised in their report that remedial
measures in respect of the pavement would be difficult.
I mention
these issues to show that from the outset the respondent placed the
suitability or adequacy of the design for the container
depot as the
cause of the deflections.
[20] After
the respondent had given notice of its intention to cancel the
agreement a further meeting was held on 17 August 2006
between
representatives of both Naidoo and the respondent. In an unsigned
minute of the meeting it is recorded that the respondent
objected
to a suggestion by Naidoo that an additional layer
be constructed, but expressed its preparedness to remedy the
construction joints if found to be below specification. The
respondent
made it clear, it seems, that it would not bear the cost
of remedying the construction joints in the event of a possible
design
inadequacy. However, the remedial work on the pavement was
undertaken by another construction company in accordance with
measures
prescribed by Mr Richard Doyle, a civil engineer, who was
mainly involved in roads and civil infrastructure and commercial
development.
According to Blignaut, the remedial work commenced
‘mid-2007’ and was completed towards the middle of
December 2007.
But the depot was in use throughout (since June 2006),
with empty and full containers being moved and stored.
[21] Doyle
was also the author of a report that had been requested by the
appellant from Vawda Thornton, a firm of consulting civil
and
structural engineers. Their brief was to undertake a visual
inspection of the depot and to comment on the failures there. Doyle
visited the site on 9 November 2006 and noticed decimations on the
paving at regular intervals along the path traversed by the
wheels of
a reach stacker. His conclusions (as contained in the Vawda Thornton
report) are the basis of the factual allegations
in the appellant’s
particulars of claim and conclusions drawn from them, as quoted in
paragraph 10 above. During his testimony
Doyle was referred to a
report prepared by Naidoo in August 2006 (which was discussed at the
meeting of 17 August 2006 between
Naidoo’s and the respondent’s
representatives) and another report prepared by Mr Galilodien
Waggiet, a civil engineer
technician specialising in materials and
doing business through a company trading as Indlela Soils Laboratory.
Waggiet’s
company was commissioned by the respondent to
undertake an investigation of the settlements or depressions at the
depot. I shall
refer to his report as ‘the soils report’.
[22] Doyle’s
testimony on his findings and conclusions may be summarised thus: His
observations as reflected in his (Vawda
Thompson) report were much
the same as those recorded in the soils report, which noted, inter
alia, the presence of oversize material
such as gravel (quarry) and
stone within the layers and varying thickness of the bedding sand
below the interlock paving blocks.
During the remedial work he noted
that 40 per cent of the bedding sand was in excess of the
specification required by the South
African Bureau of Standards. The
compaction of the bedding sand varied between a thickness of 20mm to
50mm across four test pits
whereas the specified thickness is 15mm to
35mm. Several timber level pegs were found within the layer works. It
seemed that the
paving blocks, which should have been laid from one
side for the interlock to meet up perfectly, were laid from two
different directions,
which made it almost impossible to meet
properly. The result was a butt joint with a series of cut blocks
which dramatically weakened
the load characteristics of the pavement.
The blocks started to break up against the butt joint and the joint
consequently failed.
The manholes were damaged by the reach stackers
running over their concrete aprons. Doyle conducted an independent
test of the
bedding sand and noted that it did not meet the required
grading. A large percentage of it was considerably finer. As to the
oversize
material (he referred to the stone as ‘boulders’)
in the layer works he said the effect would be that during compaction
the compaction equipment would ride over it ‘without actually
acting on the material that surrounds [it]’, with the
result
that the desired compaction around the large material would not be
achieved. The same would apply to the area around the
timber pegs.
The in-situ material, he said, was poorly compacted, thus impacting
on the bearing capacity of the pavement.
[23] Importantly,
Doyle confirmed what he noted in his report that the design works
(for the depot) by Naidoo were deficient in
three respects, namely
(a) the absence of beams to restrain the paving blocks from
substantial movement (caused by the weight of
the load over areas
where there was an excess in the bedding sand) so as to keep creeping
of the blocks to a minimum; (b) the manhole
aprons were not designed
to have sufficient strength; and (c) no provision was made for
drainage of both surface and subterraneous
water. In
cross-examination he added that there was also a defect in the design
of the layer works in that there was no specific
instruction for
their stabilization with lime. He concluded, however, that the
failures in the pavement at 10 meter intervals across
two lines
traversed by the reach stackers were indicative of a construction
issue and not due to the defect in the layer works.
He said the
failures would have been the result, possibly, of the contractor’s
failure to properly compact the layer works
at ‘grid lines’
along which level pegs would be placed indicating the level of the
layer works. But he conceded that
if the layer works design was
insufficient for the pavement to take the load to which it was
subjected, then the layers will deflect.
He also agreed with a view
expressed by Dr Brian Shackle,
16
an engineer, in a summary of his expert opinion, that the absence of
the drainage mentioned above was ‘a very serious design
defect’.
[24] Except
for the finer grading of the bedding sand and the damaged manhole
aprons, which were not in issue before us, the aforegoing,
according
to counsel for the appellant, constitutes the evidence of a breach by
the respondent of clause 15.3 of the agreement,
in that it all
indicates that prima facie, at least, the respondent failed to
construct the container depot in accordance with
the design. Counsel
submitted, however, that this in itself does not amount to a breach
of clause 15.3 because an isolated defect
in the works would not
constitute a breach. But where a failure to construct in accordance
with the design results in the pavement
failing, rendering it
unsuitable for the purpose for which it was intended, so the argument
continued, this must surely constitute
a failure to carry out the
works with either ‘due diligence’ or ‘due skill’.
I may mention that during
cross-examination of Doyle it was suggested
that the butt joint in the paving was created because of an
instruction to the respondent,
by Naidoo, to lay the interlock paving
blocks from opposite ends. I am prepared to accept, for present
purposes, and as counsel
for the appellant submitted, that such an
instruction did not constitute a contract instruction as defined in
clause 1 of the agreement.
17
In this instance a representative of the respondent, Mr Ferreira,
sent an email to a representative of the site engineer, a Mr
Danford,
saying: ‘. . .
the
paving contractor can split the area in three equal area[s], a row of
headers’
.
As mentioned earlier, Mr Ferreira was a representative of the
respondent and not of the principal agent.
[25] Before
I consider counsel’s contention on the existence of prima facie
evidence of a breach, by the respondent, of clause
15.3 of the
agreement I propose to deal briefly with the evidence of two further
witnesses who testified for the appellant. One
of them, Waggiet, has
already been mentioned above – he is the author of the soils
report. Doyle agreed with counsel for
the respondent in
cross-examination that he was not qualified to express a view on the
number of layers the pavement should have
had or the strengths of the
layer works in order to withstand the load of the reach stackers. He
testified that in his review of
the material he ‘felt that
there was a deficiency in the design’ and therefore had it
checked by Mr Johan McLeod who
he believed to be ‘highly
experienced in road rehabilitation’.
[26]
McLeod
is a civil engineer employed by Eyethu Engineers, a firm of
consulting engineers. He was approached by Doyle, who gave him
the
soils report and asked him for his opinion on how long the pavement,
in respect of which the report had been prepared, would
last. He was
also given certain information relating to the type of vehicles that
would be used on the pavement and their loads
and the number of times
a load would pass over the pavement (referred to as ‘repetitions’)
during its design life.
Using a computer program designed by Dr
Shackle (the Lockpave program), into which he fed the information
made available to him,
he concluded that the pavement would not last
20 years as required by the appellant, but would last for only 3.8
years. To a question
as to what his conclusions would be had the
deflections been noticed within a month of the first use of the
depot, and at a time
when the repetitions were less than the figure
given to him for purposes of calculating the life of the pavement, he
said he would
assume that there was
possibly
a construction related problem that resulted in even earlier
failures. McLeod could not make a definitive statement that there
was
indeed a construction deficiency in the pavement, because, he said,
he had not been to the site but only looked at the soils
report and
drew his conclusions of a possible construction fault from the
Lockpave program. In running the test (on the program)
he used the
Naidoo design specifications. He agreed in cross-examination that the
actual pavement was ‘modularly stronger’
than the Naidoo
design, that is the work as constructed was better than designed;
that the materials used in the top four layers
were better than those
required by the design and that the compaction in those layers was
higher than the levels of compaction
required in terms of the
contract.
[27] Waggiet’s
responsibility as a soils technician is to identify materials, good
or bad, for road building construction
and buildings. Although his
instruction to investigate the deflections at the depot came from the
respondent, the investigation
works were supervised by Naidoo. He
confirmed his report and testified that if there was insufficient
compaction of the bedding
sand under the paving blocks there would be
movements in the paving and that a very weak lower layer would cause
a depression (when
subjected to heavy loads). From four test pits
excavated at the depot he found evidence of oversize aggregate and
sandstone boulders
that exceeded specification. But contrary to the
assumptions made by McLeod, Waggiet testified in cross-examination
that (a) the
compaction of the layers was substantially higher than
that specified in the contract document (design); (b) density tests
done
on the lower and upper sub-base levels revealed that the
contractor (respondent) had done its work to a standard better than
specified
in the design; and (c) the material used in the
construction of the pavement was of good quality and ‘met the
requirements
specified for that class of material’. He also
testified that the cemented layers were well constructed and that an
air compressor
(commonly referred to as a jack hammer) was used to
excavate through the upper and lower sub-base levels. The exercise
took longer
than was envisaged.
[28] When
one considers Waggiet’s findings and conclusions one finds it
difficult to understand how McLeod could have drawn
an inference of a
possible construction problem in the layer works. Despite the
oversize material the compaction of the layers
was higher than
specified. It is manifest from Waggiet’s testimony that the
presence of oversize material and timber pegs
in the layers was not
the cause of the deflections, ie their presence did not compromise
the compaction process in the layers.
I therefore agree with the
court a quo when it said:
‘
The
evidence ad
duced
is moreover insufficient to establish [I would add; ‘even prima
facie’] that the deflections which occurred along
the stake
lines were attributable to incorrect construction processes or
compaction. The Indlela report confirms that the compaction
was
properly executed, and, upon an appraisal of the evidence adduced on
behalf of the [appellant], I am unable to find that the
[respondent]
did not perform the work properly.’
18
[29]
Did
the failure to compact the bedding sand evenly and to specification
and the laying of the paving blocks from opposite ends contrary
to
design result in the pavement failing, rendering it unusable for the
purpose for which it was intended, or did it contribute
to the
failure of the pavement? Counsel for the appellant contended that if
the answer is in the affirmative the respondent would
have failed to
carry out the work with either ‘due diligence’ or ‘due
skill’. The short answer is to be
found in the Ninham Shand
report, read with Waggiet’s evidence referred to above. Around
30 June 2006 the appellant knew
what was contained in the Ninham
Shand report. Georgiev confirmed that he had received it, although he
stated at first that he
could not remember when he received it. This
report was clear that the weak sub-grade would be unable ‘to
carry the very
large surface loads’ and that bearing capacity
failure will take place in it and in the overlying layers. In these
circumstances
‘deflections, chipping and cracking of the block
pavers are to be expected’. It can therefore not be contended
successfully
that the failure to compact the bedding sand and the
laying of the paving blocks from opposite ends resulted in the
pavement failing.
[30
]
Again, I agree with the court below that ‘it is of fundamental
importance to . . . take cognisance of the fact that clause
15.3 has
a number of subparagraphs which, as a matter of common sense and
logic, requires that the entire section be read conjunctively’
and that ‘[i]t is apparent . . . that the clause identifies . .
. distinct phases in each of which duties and obligations
are cast
upon the contractor and the principle agent’. As has been
mentioned earlier, the clause requires the contractor
to proceed with
due skill, diligence, regularity and expedition and bring the works
to practical completion, works completion and
final completion. When
the deflections were noticed the works had substantially reached
practical completion and were being used
for the purposes for which
the pavement was intended, albeit that only empty containers were
being moved. And as counsel for the
respondent correctly argued, the
respondent was entitled to an opportunity, and in fact obliged, to
remedy defects that manifested
themselves in the works before or
after the works had reached practical completion. This was common
cause between the parties.
Indeed, on 7 and 14 March 2006 Naidoo
issued a list of areas that still required attention. Clause 24.3 of
the agreement reads:
‘
The
contractor shall give timeous notice to the principal agent of the
anticipated date of practical completion to enable the principal
agent to inspect the works on or before such date. Where, in the
opinion of the principal agent, after such inspection the works:
24.3.1
. . .
24.3.2
Has
not reached practical completion, the principal agent shall forthwith
issue a practical completion list defining the outstanding
work and
defects
to be rectified to achieve practical completion to the contractor.’
(My emphasis.)
And clause 26 provides
that –
‘
26.1
The
defects
liability
period for the works shall commence on the date of works completion
and at midnight (00:00):
26.1.1
(90) calendar days from such date.
.
. .’ (M
y
emphasis.)
Clause
27 makes provision for a latent defects liabili
ty
period and stipulates that defects that appear up to the date of
final completion ‘shall be addressed in terms of [clauses]
24
to 26’.
[3
1] It
was clear at the meeting of 8 May 2006 that all concerned (Naidoo,
the principal agent and the respondent) understood, correctly
so,
that the respondent was obliged to attend to the defects
(deflections) that manifested themselves on the surface of the
pavement.
And the respondent attended to them until it was stopped
from doing so on 22 May 2006. It was never suggested to the
respondent
that it was not proceeding with due skill and diligence to
bring the works to practical completion, works completion or final
completion.
The reason given, as contained in an email addressed to
the respondent dated 22 May 2006, was that the remedial work being
undertaken
was not adequate ‘in terms of taking into account
the longitudinal joints between layer works and the long term
stability’
and that Naidoo were ‘currently investigating
an alternative method that would be a long term solution’. By
then Naidoo
had discovered that the deflections were not the result
of the bedding sand being uneven, nor the laying of the paving blocks
from
opposite ends, but rather as a result of a fault in the
longitudinal joints between the layers. It is not in dispute that the
respondent
never received any instruction to continue with its
remedial work thereafter, or at least up to the date it gave notice
of its
intention to cancel the agreement.
[32
] I
agree therefore with the contention by counsel for the respondent
that the appellant failed to adduce evidence to show that
the
respondent was at any stage unwilling or unable to remedy any
problems that could be ascribed to defects for which it was
responsible. During his cross-examination it was put to Georgiev that
‘right up until the last day before this contract was
cancelled
by the contractor, [the latter] was still tendering to remedy defects
for which [it] was responsible . . .?’ Georgiev
answered in the
affirmative. And the fact that he might not have known who was at
fault, ie whether there was a construction or
design defect when he
continued to refuse payment of the amount of R827 392.03 due to the
respondent, because of the conflicting
reports of Ninham Shand and
Naidoo, does not assist the appellant.
[33
] Before
us counsel for the appellant argued that the nature of the tender by
the respondent to remedy its breach is not known;
that evidence may
well later show that there was no proper tender; that the onus was on
the respondent to show that it was prevented
from doing remedial work
and that Georgiev could not make admissions on matters not within his
personal knowledge. On the last
aspect I need only say that the
appellant cannot have its cake and eat it. Georgiev gave specific
evidence that the statement that
the respondent had tendered to
remedy defects for which it was responsible was correct. Counsel did
not take up that issue in re-examination
of Georgiev and it cannot
now be argued that Georgiev could not make that admission because it
was a matter outside of his personal
knowledge. On the issue of the
onus it must be remembered that we are not now dealing with the
respondent’s counterclaim.
We are dealing with the appellant’s
claim based on the respondent’s alleged breach by allegedly
repudiating the agreement.
It seems to me, therefore, that it is the
appellant who, at the end of its case, should have placed evidence
before the court below
that the respondent was unwilling or unable or
failed to remedy defects for which it was responsible as required by
the terms of
the agreement and that therefore it was in breach of the
agreement by purporting to cancel it whilst it was itself in breach.
As
I have mentioned, the appellant failed to adduce any such
evidence.
[34
] With
regard to the contention that evidence may well later show that no
proper tender was made, counsel relied on the following
passage from
the judgment of Wunsh J in
Etkind
& others v Hicor Trading Ltd & another:
19
‘
The
agreement, therefore, on the plaintiffs’ own approach to its
meaning and effect, provided for the allotment of the shares
in Hicor
without the receipt of the consideration and is, therefore, invalid.
Moreover, the plaintiffs are claiming performance
of the defendants’
obligations without their having fulfilled their obligations and
without a tender to do so, except a general
offer to perform their
obligations “insofar as any of (them) have not been complied
with”. This is not a proper tender.
Where the plaintiffs claim
performance and have not performed themselves, they had to tender to
fulfil their obligations (
Crispette
and Candy Co Ltd v Oscar Michaelis NO and Leopold Alexander Michaelis
NO
1947
(4) SA 521
(A) at 537).’
Again
we are not here dealing with a claim for performance of a contractual
obligation the performance of which was conditional
on the
performance of a reciprocal obligation by the claimant.
20
In the present matter the respondent’s entitlement to payment
of the amount certified, which payment was stopped by Georgiev,
was
not dependent, or conditional on, any reciprocal obligation on its
part. In any event, Georgiev’s evidence that performance
of
remedial work was tendered still stands.
[35
] I
agree with the court a quo that where a contractor is willing and
able to attend to defects that manifested themselves prior
to final
completion being reached in terms of clause 26, such contractor
cannot be in breach of clause 15.3 provided he remedies
such defects
with due skill, diligence, regularity and expedition.
21
There being no prima facie evidence that the respondent was in breach
of its obligations under clause 15.3 of the agreement at
the end of
the appellant’s case absolution from the instance was, in my
view, correctly granted by the court a quo.
[36
] The
appeal is dismissed with costs, which shall include the costs of two
counsel.
____________________
L
Mpati
President
APPEARANCES
APPELLANTS: C
J Pammenter SC
Instructed
by Shepstone and Wylie, Durban;
Matsepes.,
Bloemfontein
RESPONDENT: Nelson
SC
Joubert Galpin Searle,
Port Elizabeth;
Honey Attorneys,
Bloemfontein
1
Clause 31.1 provided that the principal agent ‘shall issue an
interim payment certificate every month until the issue of
a final
payment certificate . . ..’
Clause 31.9 stipulated
that the employer (appellant) ‘shall pay to the contractor the
amount certified in an interim payment
certificate within seven (7)
calendar days of the date of issue of the payment certificate.
Payment shall be subject to the contractor
giving the employer on
tax invoice for the amount due.’
2
The subclause reads: ‘where the contractor considers
cancelling this agreement, notice shall be given to the employer and
the principal agent of the default in terms of 38.1. Should a
default persist for (10) working days after the date of issue of
such a notice the contractor may give notice of cancellation to the
employer and the principal agent. Such cancellation shall
be without
prejudice to any rights that the contractor may have.’
3
The judgment is reported as
MSC
Depots (Pty) Ltd v WK Construction (Pty) Ltd & others
2011 (2) SA 417
(ECP).
4
Gordon Lloyd Page & Associates v Revera & another
2001 (1) SA 88
(W) para 2.
5
Claude Neon Lights (SA) Ltd v Daniel
1976 (4) SA 403
at
409G-H.
6
Clause 38.1 provides: ‘The contractor may cancel this
agreement where: . . .
38.1.6 The employer
fails to pay the amount certified in terms of 31.9 and 34.10.’
7
Para 16.
8
Para 21.
9
Practical completion is defined as ‘the stage of completion
where, in the opinion of the principal agent, completion of
the
works has substantially been reached and can effectively be used for
the purposes intended’.
10
Works completion means ‘the stage of completion where in the
opinion of the principal agent, the work on the works completion
list has been completed’.
11
Final completion means ‘the stage of completion where, in the
opinion of the principal agent, the works are free of all
defects’.
12
Clause 36.1 provides: ‘The employer may cancel this agreement
where the contractor:
3.6.1.1
Fails to comply in terms of 15.1 or 15.3
3.6.1.2
Refuses to comply with a contract instruction subject to17.2.’
13
Compare
Oatorian Properties (Pty) Ltd v Maroun
1973 (3) SA
779
(A) at 785A–C.
14
Clause 4.1 stipulates: ‘The contractor shall not be
responsible for the design of the works other than the contractors’
or his sub-contractors’ temporary works. The contractor shall
not be responsible for the primary co-ordination of the design
element.’
15
The date reflected on the report as 30 June 2005 was erroneous.
16
He was to testify for the respondent.
17
A contract instruction is defined as ‘a written instruction
signed and issued by or under the authority of the principal
agent
to the contractor’.
18
Para 11.
19
Edkind & others v Hicor Trading Ltd &
another
1999 (1) SA 111
(W) at 127B-C.
20
Cf
Crispette and Candy Co Ltd v Oscar Michaelis No and Leopold
Alexander Michaelis No
1947 (4) SA 521
(A) at 537.
21
Para 22.