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[2017] ZASCA 23
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Asla Construction (Pty) Limited v Buffalo City Metropolitan Municipality and Another (894/2016) [2017] ZASCA 23; [2017] 2 All SA 677 (SCA); 2017 (6) SA 360 (SCA) (24 March 2017)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 894/2016
In
the matter between:
ASLA
CONSTRUCTION (PTY)
LIMITED
APPELLANT
and
BUFFALO
CITY METROPOLITAN MUNICIPALITY
RESPONDENT
THE
SOUTH AFRICAN CIVICS ORGANISATION
AMICUS CURIAE
Neutral
citation
:
Asla
Construction (Pty) Ltd v Buffalo City Metropolitan Municipality
(
894/2016)
[2017] ZASCA 23
(24 March 2017)
Coram
:
Ponnan, Cachalia, Swain and Dambuza JJA and Gorven AJA
Heard
:
23 February 2017
Delivered:
24
March 2017
Summary
:
Promotion of Administrative Justice Act 3 of 2000
:
ss 6
,
7
and
9
:
application in terms of
s 9
for extension of statutory period in
terms of
s 7
: substantive application required : no explanation for
entire duration of delay : failure to properly consider prejudice to
appellant
and members of public affected by decision : impugned
decision validated by unreasonable delay : unlawfulness of decision
not proved
by admissible evidence.
ORDER
On
appeal from
:
Eastern Cape Division of the High Court, Grahamstown (Revelas J)
sitting as court of first instance.
The
following order is made:
(a)
The appeal succeeds with costs, such costs to include the costs of
two counsel.
(b)
The order of the court a quo is set aside and replaced with the
following order:
In
case number 5246/2015;
‘
The
defendant is ordered to pay the plaintiff's costs, such costs to
include the costs of two counsel where employed.’
In
case number 5668/2015
‘
The
application is dismissed with costs, such costs to include the costs
of two counsel where employed.’
JUDGMENT
Swain
JA
(Ponnan,
Cachalia and Dambuza JJA and Gorven AJA concurring)
[1]
This appeal must be considered against the background of a desperate
need for adequate housing by the residents of Duncan Village,
which
falls within the jurisdiction of the Buffalo City Metropolitan
Municipality (the respondent). The dispute between the parties
arose
from the award of a contract by the respondent to Asla Construction
(Pty) Ltd (the appellant), with the object of addressing
this need.
The desperation of the residents is highlighted by the fact that the
South African Civics Association was admitted as
an amicus curiae to
set out the views and represent the interests of the community of
Duncan Village, in the resolution of this
dispute.
[2]
The first step in the proceedings was taken when the appellant sought
provisional sentence against the respondent before the
Eastern Cape
Division of the High Court (Grahamstown), based upon payment
certificates issued in terms of two contracts, namely
number
1319/2013 - the ‘Turnkey’ contract, concluded between the
parties on 30 May 2014, and number 1122/2010 –
the ‘Reeston’
contract, concluded between the parties on 14 January 2015. The
respondent opposed the relief sought
on the basis that the payment
certificates relied upon were predicated upon a valid appointment of
the engineers who issued these
certificates, which in turn depended
upon the validity of the contract. It was alleged that the conclusion
of the Turnkey contract
was unlawful but because the claim of the
appellant was not based upon this contract, but rather the Reeston
contract, it was not
necessary to challenge its validity. It was
further alleged that the Reeston contract was unlawful and void, ab
initio, because
of a failure by the respondent in awarding this
contract to comply with s 217 of the Constitution, as well as the
procurement legislation
and policies which were binding on the
respondent. Section 217 provides that in contracting for goods or
services an organ of state
must do so in a manner that is fair,
equitable, transparent, cost competitive and cost effective. The
respondent accordingly, by
way of a counter application, sought an
order reviewing and setting aside the award of the Reeston contract
to the respondent and
declaring that any payment certificates issued
in terms of this contract were void ab initio.
[3]
The court a quo (Revelas J), upheld the contentions of the
respondent. The learned judge accordingly declared the Reeston
contract
invalid, set it aside and declared the payment certificates
issued in terms of the contract void ab initio. The appellant's
action
for provisional sentence was accordingly dismissed with costs.
Leave to appeal to this Court was thereafter granted by the court
a
quo.
[4]
Central to the dispute before the court a quo was the appellant’s
contention that the respondent had failed to bring the
application
for the review and setting aside of the Reeston contract, without
unreasonable delay and within 180 days of its award.
Section 7 of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) provides as
follows:
‘
(1)
Any proceedings for judicial review in terms of section 6(1) must be
instituted without unreasonable delay and not later than
180 days
after the date –
(a)
subject to subsection (2)
(c)
,
on which any proceedings instituted in terms of internal remedies as
contemplated in subsection (2)
(a)
have been concluded; or
(b)
where no such remedies exist, on which
the person concerned was informed of the administrative action,
became aware of the action
and the reasons for it or might reasonably
have been expected to have become aware of the action and the
reasons.’
[5]
In addition, the appellant contended that the respondent had failed
to adequately explain the delay, which in all the circumstances,
so
it was contended, was unreasonable. Section 9 provides as follows:
‘
(1)
The period of –
(a)
. . .
(b)
90 days or 180 days referred to
in sections 5 and 7 may be extended for a fixed period, by agreement
between the parties or, failing
such agreement, by a court or
tribunal on application by the person or administrator concerned.
(2)
The court or tribunal may grant an application in terms of subsection
(1) where the interests of justice so require.’
[6]
The respondent however failed to incorporate as part of the
application to review the Reeston contract, an application for the
extension of the 180 day period in terms of s 9 of PAJA. The
relevance of PAJA was raised by the appellant in its opposing
affidavit
alleging that the respondent had failed to comply with the
provisions of s 7 of PAJA. In reply, the respondent averred that the
application had indeed been brought within the period of 180 days
stipulated in s 7 of PAJA, because the respondent (as represented
by
its council) only became aware of the unlawful administrative action
in awarding the Reeston contract on 28 October 2015. In
the
alternative, it was averred that the interests of justice justified
an extension of the period of 180 days contained in s 7
of PAJA.
[7]
The contention of the respondent that the time period only commenced
running once it became aware of the unlawful administrative
action,
is untenable. The issue of whether knowledge of the reviewable
irregularities in the decision sought to be reviewed was
required
before this period commenced running, was decided by this Court in
Aurecon South Africa (Pty) Ltd v Cape Town City
[2015] ZASCA
209
;
2016 (2) SA 199
(SCA) para 16, in the following terms:
‘
The
decision challenged by the City and the reasons therefore were its
own and were always within its knowledge. Section 7(1) unambiguously
refers to the date on which the reasons for administrative action
became known or ought reasonably to have become known to the
party
seeking its judicial review. The plain wording of these provisions
simply does not support the meaning ascribed to them by
the court a
quo, ie that the application must be launched within 180 days after
the party seeking review became aware that the
administrative action
in issue was tainted by irregularity. That interpretation would
automatically entitle every aggrieved applicant
to an unqualified
right to institute judicial review only upon gaining knowledge that a
decision (and its underlying reasons),
of which he or she had been
aware all along, was tainted by irregularity, whenever that might be.
This result is untenable as it
disregards the potential prejudice to
the respondent (the appellant here) and the public interest in the
finality of administrative
decisions and the exercise of
administrative functions.’
[1]
[8]
The respondent therefore required an extension of the period fixed by
PAJA within which to bring the application for review.
Section 9
contemplates a substantive application to the relevant court or
tribunal, by the person or administrator concerned. That
application
ought to have been made by the respondent when it first approached
the court for relief. It did not do so. Once the
appellant had raised
the issue of compliance with PAJA, the respondent was obliged to
launch an application in terms of this section
for an extension of
the fixed period. This application could thereafter have been
consolidated with the review application. The
correct procedure would
have ensured that the relevant facts were placed before the court a
quo, to enable it to exercise its discretion
properly.
[9]
The court a quo held that the decisive factor in exercising its
discretion whether to grant an extension, was its finding that
the
procurement in respect of the Reeston contract was not ‘legal
and regular’. This was based upon a finding that
the award of
this contract did not comply with the requirements of s 217 of the
Constitution. Accordingly, so held the court a
quo, the award of the
contract was consequently invalid and fell to be set aside. Because
of the serious breach of the section,
and the other statutory
instruments that regulated procurement in the context of local
government, the court a quo decided that
it was in the interests of
justice that the respondent be granted the requisite extension in
terms of s 9 of PAJA, to review and
set aside the award of the
contract. It added that ‘Accordingly, the invalidity of the
decision to award the Reeston contract
to the respondent cannot be
validated’.
[10]
This conclusion was erroneous. It was the product of a number of
misdirections committed by the court a quo.
(a)
It impermissibly decided the merits of the review application before
considering and determining the application for condonation.
In doing
so, it effectively precluded any finding that the application for
condonation should be refused on its merits, with the
result that any
unlawful award of the Reeston contract would be ‘validated’
by the delay.
(b)
It regarded the serious nature of the breach of s 217 of the
Constitution, as a complete bar to the ‘validation’
of
the award of the Reeston contract to the appellant, which could have
followed as a result of the delay in bringing the application
for
condonation.
(c)
It failed to consider whether the respondent had furnished a full and
adequate explanation for the entire duration of the delay.
(d)
It failed to properly consider the extent to which the appellant had
proceeded with the performance of the contract, and the
resulting
prejudice to the appellant in setting the contract aside at that
stage.
(e)
It failed to properly consider the nature and extent of the prejudice
to be suffered by the inhabitants of Duncan Village and
the broader
public interest, in setting the contract aside at that stage.
[11]
The manner in which the discretion to extend the statutory time
period should be exercised, was described in
Camps Bay Ratepayers’
and Residents’ Association & another v Harrison &
another
[2010] ZASCA 3
;
2010 (2) All SA 519
(SCA) para 54, in the
following terms:
‘
And
the question whether the interests of justice require the grant of
such extension depends on the facts and circumstances of
each case:
the party seeking it must furnish a full and reasonable explanation
for the delay which covers the entire duration thereof
and relevant
factors include the nature of the relief sought, the extent and cause
of the delay, its effect on the administration
of justice and other
litigants, the importance of the issue to be raised in the intended
proceedings
and the
prospects of success
.’
[My emphasis.]
[12]
Although a consideration of the prospects of success of the
application for review requires an examination of its merits, this
does not encompass their determination. In
Beweging vir
Christelik-Volkseie Onderwys v Minister of Education
[2012]
ZASCA 45
;
2012 (2) All SA 462
(SCA) paras 42-44, the proposition that
a court is required to decide the merits before considering whether
the application for
review was brought out of time or after undue
delay and, if so, whether or not to condone the defect, was rejected.
Thereafter,
in
Opposition to Urban Tolling Alliance v South
African National Roads Agency Ltd
[2013] ZASCA 148
;
2013 (4) All
SA 639
(SCA) paras 22, 26 and 43, it was decided that a court was
compelled to deal with the delay rule before examining the merits of
the review application, because in the absence of an extension the
court had no authority to entertain the review application.
The court
there concluded that because an extension of the 180 day period was
not justified, it followed that it was not authorised
to enter into
the merits of the review application. However, in
South African
National Roads Agency Limited v Cape Town City
[2016] ZASCA 122
;
2016 (4) All SA 332
(SCA);
2017 (1) SA 468
para 81, a submission
based upon this decision, namely that the question of delay had to be
dealt with before the merits of the
review could be entertained, was
answered as follows:
‘
It
is true that . . . this court considered it important to settle the
court's jurisdiction to entertain the merits of the matter
by first
having regard to the question of delay. However, it cannot be read to
signal a clinical excision of the merits of the
impugned decision,
which must be a critical factor when a court embarks on a
consideration of all the circumstances of a case in
order to
determine whether the interests of justice dictates that the delay
should be condoned. It would have to include a consideration
of
whether the non-compliance with statutory prescripts was egregious.’
[13]
A full and proper determination of the merits of the review
application was accordingly dependent upon a finding that the
respondent's failure had to be condoned. As stated in
Opposition
to Urban Tolling Alliance
supra, para 26;
‘
Absent
such extension the court has no authority to entertain the review
application at all. Whether or not the decision was unlawful
no
longer matters. The decision has been "validated" by the
delay . . . ’
It
was thus impermissible for the court a quo to have entered into and
decided the merits of the review application without having
first
decided the merits of the condonation application.
[14]
In deciding that the ‘serious breach of section 217 of the
Constitution’ was dispositive of the application for
condonation, the court a quo failed to have regard to what was said
in
Opposition to Urban Tolling Alliance
supra, para 36. A
submission that the 180 day time bar should be extended because it
was a requirement of the rule of law that the
exercise of all public
power should be lawful and the decision-maker had failed to act
legally, was rejected in the following terms:
‘
As
I see it, however, the argument is misconceived. While it is true
that the principle of legality is constitutionally entrenched,
the
constitutional enjoinder to fair administrative action, as it has
been expressed through PAJA, expressly recognises that even
unlawful
administrative action may be rendered unassailable by delay.’
[15]
This erroneous approach resulted in a failure by the court a quo to
properly consider whether the respondent had furnished
‘a full
and reasonable explanation for the delay which covers the entire
duration thereof’ (
Harrison
supra para 50). The only
explanation provided by the respondent for the delay, namely that it
only became aware of the alleged
irregularities relating to the award
of the Reeston contract, when a forensic report was presented to it
on 28 October 2015, was
no explanation at all.
[16]
There was a delay of fifteen months between the award of the contract
to the appellant and the institution of the review proceedings
by the
respondent. The Reeston contract was awarded to the appellant on the
7 August 2014 followed by its conclusion on the 18
December 2014.
Thereafter the respondent instructed the appellant to proceed with
the implementation of the contract on the 23
January 2015 and made
payment of the appellant's first claim in the amount of R2 221
587.37, on the 20 May 2015. On the 4 August
2015 a senior official of
the respondent Mr Vincent Pillay reported the alleged irregularities
in the conclusion of the contracts
with the appellant, to the
Executive Mayor, who reported to the Council of the respondent on the
25 August 2015. The council resolved
that these issues should be
investigated by an independent investigator and Ms York was
appointed. Her report became available
on the 21 October 2015 and
served before the Council of the respondent on the 28 October 2015.
The Council resolved that legal
advice be obtained as to the validity
of the appellant's claims. The application for a review of the award
of the Reeston contract
was thereafter launched during November 2015.
[17]
A glaring omission by the respondent is that no affidavit was
obtained from Mr Pillay. He would have been able to explain why
the
contract was awarded to the appellant, why the contract was signed
and why the appellant was thereafter instructed to proceed
with the
work. In addition he would have been able to explain why the first
payment was made, how he discovered that the award
of the contract
was irregular and why it took twelve months from the time the
contract was awarded, to discover this. An important
aspect that he
could have explained, were the steps that should have been taken by
the respondent to avoid what it maintains was
an unlawful award of
the contract. The respondent quite clearly failed to furnish a full
and reasonable explanation for the delay,
which covered its entire
duration.
[18]
The rationale for the rule that an application for the review of an
administrative decision should be launched without undue
delay, is
predicated upon a desire to avoid prejudice to those who may be
affected by the impugned decision. As was said in
Gqwetha
v Transkei Development Corporation Ltd & others
2006 (2) SA 603
(SCA) paras 22-24, the rule is based upon two
principles namely, that ‘
the
failure to bring a review within a reasonable time may cause
prejudice to the respondent . . . and . . . there is a public
interest element in the finality of administrative decisions and the
exercise of administrative functions . . . Underlying that
latter
aspect of the rationale is the inherent potential for prejudice, both
to the efficient functioning of the public body and
to those who rely
upon its decisions, if the validity of its decisions remains
uncertain. It is for that reason in particular that
proof of actual
prejudice to the respondent is not a precondition for refusing to
entertain review proceedings by reason of undue
delay, although the
extent to which prejudice has been shown is a relevant consideration
that might even be decisive where the
delay has been relatively
slight . . .
Whether there has
been undue delay entails a factual enquiry upon which a value
judgment is called for in the light of all the relevant
circumstances
including any explanation that is offered for the delay . . . A
material fact to be taken into account in making
that value judgment
– bearing in mind the rationale for the rule – is the
nature of the challenged decision. Not all
decisions have the same
potential for prejudice to result from their being set aside.’
A
consideration of the consequences of setting a decision aside and any
resultant prejudice, was said to be an important consideration
(paras
33-34);
‘
.
. . [D]elay cannot be evaluated in a vacuum but only relative to the
challenged decision, and particularly with the potential
for
prejudice in mind . . .’ .
In
the exercise of the discretion to condone an unreasonable delay, the
prospect of the challenged decision being set aside is not:
‘
a
material consideration in the absence of an evaluation of what the
consequences of setting the decision aside are likely to be
. . .’
.
[19]
The prejudice to be suffered by the appellant in setting aside the
award of the contract, was dealt with by the court a quo
in the
following terms; ‘It cannot be disputed that the respondent
incurred substantial expenses by carrying out the applicants
instruction to proceed with the execution of the Reeston contract’.
It also found that ‘[i]t is not clear how much
construction
work has been done so far in terms of the contract. The contract
price was just over R74 million and so far about
R7 million has been
claimed for work done. It has to be accepted that the Reeston
contract is not near completion’. In this
finding it erred
because the appellant filed an affidavit shortly before the hearing
of the matter, which showed by reference to
engineers’
certificates annexed to the affidavit, that work in the total amount
of R30 863 832.70,
had been completed by the
appellant. The court a quo accordingly failed to properly consider
the extent of the appellant’s
prejudice, which was far greater
than the assumption it had made in the face of evidence to the
contrary.
[20]
Although reference is made in the judgment to the ‘convenient,
practical and laudable’ considerations behind the
award of the
contract to the appellant, no consideration was afforded to the
prejudice to be suffered by the inhabitants of Duncan
village, as a
result of the inevitable delay in providing them with adequate
housing, which would flow from a declaration of invalidity.
The
appellant set out how the interests of the community of Duncan
Village would suffer immeasurable prejudice if the award of
the
contract was set aside. The appellant had employed workers from the
local community who supported between 250 to 300 families,
offering
desperately needed job opportunities to the community. The South
African Civics Organisation in its capacity as the amicus
curiae for
the inhabitants of Duncan Village, submits that the community of
Duncan Village and surrounds, including Reeston, will
suffer
extensively if the respondent's challenge to the validity of the
award of the Reeston contract is upheld. It is alleged
that the
respondent did not consult the community before launching the review
application. Setting the Reeston contract aside will
result in untold
misery and hardship to the community, who have been waiting for
housing for years.
[21]
There is further evidence which is relevant in assessing the
prejudice to the appellant. The court a quo in granting leave
to
appeal recorded that shortly before the application for leave to
appeal was argued, the appellant filed an affidavit which disclosed
that since the launch of the review application, the appellant had
continued to perform the contract, with the ostensible permission
of
the respondent. The respondent did not object to the affidavit being
handed in, but submitted that the application for leave
to appeal had
to be considered on the evidence available when the matter was
argued. The court a quo however decided that in the
circumstances of
the case, such an approach would be imprudent and unfair. The new
evidence contradicted the courts earlier finding
that the contract
was not near completion and revealed that it now was. The court a quo
acknowledged that this erroneous finding
had influenced its decision
to grant the respondent an extension under s 9 of PAJA. For this
reason and others it granted leave
to appeal to this Court. In
Moseme
Road Construction CC & others v King Civil Engineering
Contractors (Pty) Ltd & another
[2010] ZASCA 13
;
2010 (4) SA
359
(SCA) para 17, in response to an argument by the appellant that
the contract was now near completion and that because of the
intervening
facts, the order of the court below should be set aside,
the following was stated:
‘
There
is a conceptual problem with the submission. The issue on appeal is
whether the order granted by the court below was correct
at the time
it issued. Supervening events cannot affect the answer, although they
might conceivably affect enforceability on the
ground of supervening
impossibility.’
[22]
In the affidavit in question, the appellant indicated that in the
event of leave to appeal being granted, it would apply for
the
admission of the evidence by this Court. Counsel for the appellant
relying upon the decision in
Rail Commuters Action Group v
Transnet Limited t/a Metrorail
[2004] ZACC 20
;
2005 (2) SA 359
(CC) paras 42 –
43 submitted that the evidence that the contract had been practically
completed by the appellant in the interim,
to the value of R 65 641
776.15 as at the 27 July 2016, should be admitted as evidence on
appeal. In
Transnet
the following was stated:
‘
The
Court should exercise the powers conferred by s 22 "sparingly"
and further evidence on appeal (which does not fall
within the terms
of Rule 31) should only be admitted in exceptional circumstances.
Such evidence must be weighty, material and
to be believed. In
addition, whether there is a reasonable explanation for its late
filing is an important factor. The existence
of a substantial dispute
of fact in relation to it will militate against its being
admitted.’
[2]
By
reference to the decision in
Colman
v Dunbar
1933 AD 141
at 161-3, relevant criteria in determining whether
evidence on appeal should be admitted were said to
be:
‘
.
. . the need for finality, the undesirability of permitting a
litigant who has been remiss in bringing forth evidence to produce
it
late in the day, and the need to avoid prejudice.’
[23]
The evidence is not disputed, is weighty and material to a
determination of the issues in this appeal. By its very nature it
could not have been produced at an earlier stage in the proceedings.
To exclude its admission would be prejudicial to the appellant
and
run counter to the interests of justice as it establishes that the
contract has been practically completed, with the ostensible
permission of the respondent. In addition the court a quo
acknowledged that its decision at the time had been based, upon
incorrect
facts. The evidence is accordingly admitted.
[24]
The delay by the respondents in launching the application for a
review exceeded 180 days and was therefore ‘unreasonable
per
se’ (
Opposition to Urban Tolling Alliance
supra para
26)
.
Even after this period an enquiry into the reasonableness
of the conduct of the respondent was necessary, in order to determine
whether the interests of justice dictate an extension of the time
period (
Opposition to Urban Tolling Alliance
supra para 26).
When regard is had to the abject failure by the respondent to furnish
a full and adequate explanation for the entire
duration of the
unreasonable delay, together with the severe prejudice to the
appellant and the inhabitants of Duncan Village,
caused by reviewing
and setting aside the Reeston contract, it is quite clear that the
court a quo erred in granting an extension
of the time period in
terms of s 9 of PAJA. The application for the review and setting
aside of the award of the Reeston contract
to the appellant, together
with the order declaring the payment certificates issued in terms of
this contract void ab initio, should
have been refused. The award of
the Reeston contract was accordingly ‘validated’, insofar
as this may have been necessary,
by the undue delay of the
respondent. The payment certificates relied upon are accordingly
valid.
[25
]
Strictly speaking an enquiry as to whether the court a quo was
correct in concluding that there had been a serious breach of s
217
of the Constitution in the award of the Reeston contract to the
appellant, is rendered unnecessary by this conclusion. I will
nevertheless do so as the court a quo based its finding on evidence
that was largely inadmissible.
The contention of the
respondent that the requirements of s 217 of the Constitution were
not complied with, was based entirely
on the evidence of Ms York. The
evidence was however in most parts inadmissible. The report she
compiled which formed the basis
for her affidavit was based on
documents provided to her by the respondent, as well as interviews
with persons in the respondents
employ. Documents relied upon in
formulating her views were not annexed to her affidavit and not all
of the documents referred
to were placed before the court a quo. No
confirmatory affidavits by the persons she interviewed were annexed
to her affidavit.
As a result her evidence in these respects
constituted inadmissible hearsay evidence. In addition she purported
to interpret and
express her opinion on the contents of certain
documents, which was the sole preserve of the court a quo. This
constituted irrelevant
and inadmissible opinion evidence. The
remaining evidence of Ms York, which was admissible and upon which
the court a quo was entitled
to rely, did not prove that the award of
the Reeston contract contravened the provisions of s 217 of the
Constitution.
[26]
In the result it is unnecessary to consider an alternative argument
advanced by the appellant. This was that the requirements
of s 217 of
the Constitution were complied with when the appellant was appointed
as the turnkey implementing agent in terms of
the Turnkey contract,
to address the housing needs of Duncan village. The award of the
Reeston contract was a consequence of this
appointment and was
encompassed by the provisions of the Turnkey contract. Accordingly,
the requirements of s 217 of the Constitution
did not have to be
complied with in the award of the Reeston contract. It is likewise
unnecessary to consider the answer of the
respondent to this
argument. This was that the Turnkey contract was inchoate, because it
was subject to a condition precedent that
a funding agreement be
concluded between the appellant and the Provincial Department of
Human Settlements. No funding agreement
had been concluded, with the
result that the condition was not fulfilled and the contract did not
come into being.
[27]
I turn to consider the appellant's appeal against the court a quo's
dismissal of the appellant's claim for provisional sentence.
Before
the court a quo, the respondent’s sole ground of opposition to
the provisional sentence claim of the appellant was
that the payment
certificates prepared by the engineer and relied upon by the
appellant, were dependent upon his valid appointment
in terms of a
valid underlying contract (the Reeston contract). This defence was
upheld by the court a quo and provisional sentence
refused, but the
conclusion reached in this appeal renders the defence unsustainable.
On appeal however a new defence was advanced
by the respondent. The
respondent argues that not all of the payment certificates relied
upon by the appellant, support the claim
for payment. Payment
certificates numbers 1, 2 and 3 attached to the summons, were issued
in terms of the Reeston contract, whereas
payment certificate number
4 was issued in terms of the Turnkey contract. It is common cause
that the Turnkey contract did not
form the basis for the work
performed by the appellant. Payment certificate number 4 was
accordingly invalid as the engineer issuing
it did not have authority
to do so, not having been appointed under the Turnkey contract.
Counsel were however agreed that the
appellant would have been
entitled to provisional sentence in respect of payment certificates
1, 2 and 3, but not in respect of
payment certificate 4. The enquiry
was rendered moot because we were informed by both counsel that the
respondent had in the interim
made a without prejudice payment to the
appellant in respect of the Reeston contract, in an amount in excess
of R40 million. This
payment was based upon the extent to which the
respondent calculated that it had been unduly enriched by the
appellant's performance.
It was agreed between counsel that it would
no longer be permissible to grant provisional sentence against the
respondent, as the
payment excussed these earlier claims. Counsel for
the respondent however conceded that the appellant would be entitled
to the
costs of the application for provisional sentence.
[28]
The appellant in its heads of argument, sought an order for costs
against the respondent on the attorney and client scale,
based upon
the allegation that the respondent had not provided an honest
explanation for its delay in bringing the application
for review. In
addition the application for the review and setting aside of the
Reeston contract was not in the best interests
of either of the
parties, or the community, which is in desperate need of the housing
to be provided by the performance of the
contract by the appellant.
Counsel for the appellant did not however advance this contention in
argument. In my view a consideration
of all of the evidence does not
justify the grant of a punitive costs order.
[29]
In the result the following order is made:
(a)
The appeal succeeds with costs, such costs to include the costs of
two counsel.
(b)
The order of the court a quo is set aside and replaced with the
following order:
In
case number 5246/2015;
‘
The
defendant is ordered to pay the plaintiff's costs, such costs to
include the costs of two counsel where employed.’
In
case number 5668/2015
‘
The
application is dismissed with costs, such costs to include the costs
of two counsel where employed.’
_________________________
K G B Swain
Judge of Appeal
Appearances:
For the Appellant:
G M Budlender SC (with M Schreuder)
Instructed by:
Vos
Maree Inc c/o Wheeldon Rushmere & Cole, Grahamstown
Symington & De Kok,
Bloemfontein
For the
Respondent:
R G Buchanan SC
Instructed by:
Neville Borman &
Botha, Grahamstown
Bock & Van Es,
Bloemfontein
[1]
Approved in
City
of Cape Town v Aurecon South Africa (Pty) Ltd
(CCT 21/16)
[2017] ZACC 5
(28 February 2017) paras 40-44.
[2]
The repealed provisions of s 22
(a)
of the Supreme Court Act 59 of 1959 are now provided for in
s 19
(b)
of the
Superior Courts Act 10 of 2013
.