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[2021] ZANCHC 40
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Scarliweb (Pty) Ltd t/a Cooling Solutions Projects and Another v Sedtrade (Pty) Ltd (Reg No: 2004/014721/07) and Others (1953/2020) [2021] ZANCHC 40 (30 July 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
Case
No: 1953/2020
Heard
on: 28/05/2021
Delivered
on: 30/07/2021
Reportable:
YES/NO
Circulate
to Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
SCARLIWEB
(PTY) LTD t/a COOLING SOLUTIONS
PROJECTS
First Applicant
ROBURN
CONSTRUCTION
CC
Second Applicant
and
SEDTRADE
(PTY) LTD
(Reg No: 2004/014721/07)
First Respondent
SOL
PLAATJE
UNIVERSITY
Second Respondent
AECOM
SOUTH
AFRICA
Third Respondent
THE
STANDARD
BANK
OF SOUTH
AFRICA
LIMITED
Fourth Respondent
JUDGMENT
MAMOSEBOJ
[1]
This case involves a tender agreement awarded by the Sol Plaatje
University,
the second respondent, to the first respondent who is
also the main contractor, Sedtrade (Pty) Ltd, during 2019 that went
wrong
between the main contractor and its sub-contractors. The tender
was for the construction and upgrading of certain civil engineering
infrastructure works for the University. This is the return day for
the rule
nisi
and the applicants are seeking the confirmation
of the rule, which is opposed.
[2]
Sedtrade's scope of work entailed the following: to build a
combination
cricket oval and two rugby/soccer fields and to provide
ring mains which carry electricity, data fibre optic, water (potable
and
fire), wastewater (grey water for irrigation), sewerage and TABS
supply to all future buildings on the South Campus of the University.
[3]
The applicants submitted their tenders to Sedtrade as sub-contractors
to render the aforementioned services, which were accepted and
confirmed by appointment letters. On 10 April 2019 Mr Piet Grabler,
Construction Manager for Sedtrade, addressed the appointment letter
to Scarliweb (Pty) Ltd t/a Cooling Solutions Projects, with
contract
particulars SX 05 Mechanical/TABS Ring Main SPU South Campus Erf 2155
Kimberley Phase 1. Scarliweb's work was to install
Tabs Ring main
piping which included testing and acceptance by the Engineer and any
remedial work necessary for acceptance but
excluded excavation,
bedding, and backfilling and the construction of the chambers. The
value of the sub contract is R4,966,713.00
and excludes VAT. On
30 October 2019, a second appointment letter was addressed to the
first applicant in respect of Phase 2 of
the project to the value of
R2,478,956.00 excluding VAT.
[4]
The second applicant's appointment letter dated 10 April 2019 with
sub
contract particulars specified as the installation of all
services (P, NP, FW, Sewer, GW, data, Irrigation, BW, and Rising Main
Sewers for SPU South Campus Erf 2155 Kimberley, Phase 1). The value
of this contract is Rl0,152,294.90 excluding VAT.
[5]
The regulatory framework governing the standard upon which the
parties
operate is the Subcontract Agreement and Provisions of
Contract (Fourth Edition, 2011) incorporating General Conditions of
Subcontract
2011 for use in connection with Subcontract Works for
Civil Engineering Construction.
[6]
The General Conditions of the Sub-contract makes provision for the
settlement
of disputes between the parties. Of importance are Clauses
15.1 and 15.2, which stipulates:
"15.1
If any dispute shall arise between the Subcontractor and the
Contractor, either during the progress or after
the completion of the
Subcontract Works, or after the determination of the employment of
the Subcontractor under this agreement,
as to the construction of
this agreement , or as to any manner or things arising thereunder,
in
the first instance an attempt shall be made to settle the dispute
amicably.
Should all attempts to settle the dispute or difference
amicably fail, such dispute or difference
shall be referred to the
appointed
representative
of
the
Contractor,
or
the
Contractor's
site
agent if
no
representative is appointed,
for his determination by
written decision to the Subcontractor. The said decision shall be
delivered within 14 days of the date
of request and shall be final
and binding upon the parties
unless the
Subcontractor,
within 14 days of receipt thereof, by written notice to the
Contractor
disputes the decision,
in
which case the matter shall be referred to an adjudicator.
Should
the Contractor's representative or site agent fail to deliver his
decision within 14 days he shall be deemed to have given
a decision
rejecting the Subcontractor's contentions or claims. The adjudicator
shall be appointed by agreement of the parties
failing which by the
President of the South African Federation of Civil Engineering
Contractors upon request of the Subcontractor.
15.2
The opinion of the adjudicator
shall be final and
binding upon the parties for all disputes involving less than
R500,000. For disputes involving amounts in
excess of
R500,000, should one of the parties, within 28 days of receipt of the
opinion, express to the other in writing their dissatisfaction
with the opinion,
then that party may take the matter
to arbitration and/or litigation, provided arbitration and/or
litigation proceedings are instituted
within a further 28 days.
The
opinion
of
the adjudicator
shall
take
immediate
effect
and
shall be maintained
until such time as it may be overturned by arbitration and/or
litigation.
" (own emphasis)
[7]
The parties experienced late or non-payments of interim payments for
the
duration of the agreement. Despite issuing early warning
notifications to the main contractor, the breach persisted until
correspondence
dealing with breaches of their contract followed. In
the early warnings a phrase was included to sensitize Sedtrade that
the delays
or non-payment carries the potential of delaying to meet
the completion date of 21 August 2020. The first applicant attached
payment
certificates dated 30 September 2020 and 5 October 2020
marked "FA14" and "FA15". As appearing in the
founding
papers, Sedtrade currently owes the first applicant the
amount of R798,351.64 (Seven Hundred and Ninety-Eight Thousand Three
Hundred
and Fifty-One Rand and Sixty-Four Cents) and the second
applicant R6,192,252.91 (Six Million One Hundred and Ninety Two
Thousand
Two Hundred and Fifty Two Rand and Ninety One Cents).
[8
] The contract
completion date for Phase 2 was 21 August 2020. Subsequent
to the
completion of the Works, the applicants rendered final invoices and
certificates to Sedtrade, the outstanding payments remained
unpaid
despite demand. What is more absurd is that Sedtrade deducted the
entire amount as "Penalty Deduction" without
furnishing any
reasons for doing so to the applicants.
[9]
In the absence of any payment being made the applicants approached
this court
ex parte
and on an urgent basis seeking that a rule
nisi
be issued with a return date. On 4 November 2020,
Williams J granted the rule
nisi
in the following terms:
1.
That condonation be granted for the applicants' non-compliance with
the Court's
rules pertaining to form, periods and manner of service
and that this application be heard as an
ex parte
urgent
application in terms of the provisions of Rule 6(12) of the Uniform
Rules of Court;
2.
that a Rule
nisi
be issued, returnable on 4 December 2020, on
which day at 09:30, the respondents should give reasons why the
following order should
not be made a final order of Court:
2.1
That the second respondent be interdicted and restrained from
directly or indirectly paying
any due amounts in relation to contract
number: SPU C054 and/or SPU-SX05- ECSC-PM6 for the construction of
buildings and infrastructure
ring and main Roads within the Sol
Plaatje University's premises in Kimberley to the first respondent;
2.2
That the first respondent be interdicted and restrained from directly
or indirectly receiving
any due amounts in relation to contract
number: SPU C054 and/or SPU- SX05-ECSC PM6 for the construction
of buildings and infrastructure
ring main and Roads within the Sol
Plaatje University's premises in Kimberley from the second
respondent;
2.3
That the second respondent be ordered to pay any due amounts in
relation to contract number:
SPU C054 and/or SPU- SX05-ECSC-PM6 for
the construction of buildings and infrastructure ring main and Roads
within the Sol Plaatje
University's premises in Kimberley to the
Trust Account of the applicants' attorney of record with details
[1]
…
to be held until such time as the disputes between the applicants and
the first respondent
have been
finalised.
2.4
That the applicants be granted leave to approach the above Honourable
Court on the same
papers, duly amplified, for the payment of due
amounts into the bank accounts of the applicants upon finalisation of
the pending
investigation and/or adjudication of the disputes.
3.
In the event that payment has already been made by the second
respondent into the bank
account of the first respondent:
3.1
that the first respondent and/or any person acting under its
instruction and authority is
interdicted, prohibited and/or
restrained from paying such monies from the bank account held by the
first respondent, to any person
and/or institution, before the
disputes between the applicants and the first respondent has finally
been resolved either by agreement
between them or the duly appointed
adjudicator, alternatively an order of the High Court of South
Africa, Northern Cape Division,
Kimberley;
3.2
that the bank account(s) held by the first respondent and provided to
the second respondent
for purposes of receiving payments under the
awarded tender to which this application relates as referred to in
prayer 2.5
supra,
be frozen to the amount of
R6,990,604.55 (six million nine hundred and ninety thousand six
hundred and four rand and fifty five
cents) and the first respondent
be prohibited from paying out or transferring any funds from such
account(s) in contravention of
this order until such time as the
matter may be finalised;
3.3
that the second respondent be ordered to provide the details
pertaining to such bank account(s)
details provided and details
pertaining to payments made or to be made to the first respondent to
the applicants or the applicants'
attorney of record;
3.4
that the first respondent is interdicted and restrained from
requesting the second respondent
to pay funds due to the first
respondent in respect of contract number: SPU C054 and/or SPU-
SX05-ECSC-PM6 into any account other
than the account into which the
second respondent has been making payments to date of this
application (purportedly an account
held by the first respondent with
the fourth respondent) until such time as the matter has been
finalised.
4.
The relief claimed in prayers 2.1 to 2.4 or 3.1 to 3.4 whichever be
applicable, shall
have immediate interim effect;
5.
First respondent be ordered to pay the costs of this application,
alternatively that
the first respondent and such other respondents
opposing the application be ordered to pay the costs of the
application jointly
and severally, the one paying the other to be
absolved;
6.
Due to the urgency of the matter, service of the interim order on the
respondents may
be effected on 6 November 2020 by:
6.1
service of a copy of the interim order by the legal representatives
of the applicants alternatively,
by the Sheriff of the above
Honourable Court, on the respondents on or before 6 November 2020 by
means of a fax and/or e-mail;
and/or
6.2 by service on a later
date, in terms of the Rules of Court.
[10]
In terms of the interim order, the second respondent, The Sol Plaatje
University, was ordered
to pay monies that were due and payable to
the applicants under the tender into the trust account of their
attorney. The fourth
respondent, Standard Bank of South Africa
Limited, was ordered to freeze the accounts Sedtrade held with the
bank which it (Sedtrade)
had provided to the University for purposes
of payments under the awarded tender to the amount of R6,990,604.55
(six million nine
hundred and ninety thousand six hundred and four
rand and fifty five cents). Sedtrade was prohibited from transacting
in those
accounts until the matter was finalised.
[11]
Standard Bank froze Sedtrade's bank accounts completely, which
prompted Sedtrade to anticipate
the return date of the rule
nisi.
The application served before Tlaletsi JP on 27 November 2020 and
extended the rule in the following terms:
1.
Extended the rule
nisi
to 22 January 2021;
2.
Discharged Clause 3 of the rule
nisi;
3.
Ordered the parties to report on the extent of the resolution of
the dispute on the return date;
and
4.
Costs to be dete1mined in due course or upon resolution of the
underlying
dispute. (Own emphasis)
[12]
On 22 January 2021 the matter was postponed by agreement between the
parties to 28 May 2021 for
the outcome of the adjudication pursuant
to a referral thereto. Since the parties could not agree on the
adjudicator, the Subcontractor
tasked the President of the South
African Federation of Civil Engineering Contractors (SAFCEC) with the
appointment of one upon
request.
[13]
Meanwhile, an independent adjudicator, Mr Bryan Westcott, had
completed his report on 14 May
2021, which was served and filed on 19
May 2021. The issues of both subcontractors were considered
separately. Gleaned from the
adjudicator's report, which contains,
among others, issues to be determined, prayers by both the contractor
and the subcontractor,
the statement of claim and the statement of
defence, the subcontractor's submissions in respect of the
contractor's statement of
defence, the adjudicator's deliberations
and reasoning, quantum and his decision on the merits and quantum,
the following is the
adjudicator's decision in respect of both
applicants:
13.1
The subcontractor is 11 days late in completing the "Works".
He is liable for penalties
for this period.
13.2
Interest on this amount is applicable as per the contract document.
13.3
A decision on holding retention money in the Trust account is not in
accordance with the subcontract
agreement and is beyond the
jurisdiction of this adjudicator.
13.4
After considering the contract interpretation questions, my decision
is that the subcontract
data prevails, and the quantum of the penalty
is therefore zero.
13.5
The adjudicator's costs are to be split 50:50 between the parties.
[14]
Sedtrade has expressed its dissatisfaction with the adjudicator's
decision and has indicated
its intention to refer the matter for
arbitration, alternatively to approach the High Court. While Sedtrade
is urging this Court
to hold the adjudicator's decision in abeyance
pending finalisation of the intended processes, the applicants seek
enforcement
of the adjudicator's decision. Essentially, the issue
that the applicants are seeking this Court to determine is whether
prayer
2.4 of the rule
nisi
can be confirmed or not.
[15]
To recap, prayer 2.4 reads:
That the applicants be granted leave
to approach this Court on the same papers, duly amplified, for the
payment
of the due amounts into the bank accounts of
the applicants upon finalisation of the pending investigation and/or
adjudication of
the disputes.
Mr
Grabler SC argued that 2.4 refers to approaching the Court on the
same papers, duly amplified. However, after the adjudication
report
the applicants have not filed an amended notice of motion or a
supplementary affidavit for payment to reflect the adjudication
and
how the figures were arrived at. Counsel further enquired if it will
be proper for this Court to confirm the rule
nisi.
Counsel
contended that there is a marked departure from the amount claimed by
the applicants in the founding papers, page 31 and
32 and in Ms
Bester's heads of argument, page 12. What is immediately noticeable
is that the figure for certificate 5 is exactly
the same, R459,918. l
8, while the amount for certificate 7 differs with regards to the
first three digits: in the founding papers
it appears as R177,006.18
while in the heads it is R117,006.18. This may be a typing error in
the heads because the same figure
of R177,006.18 appears in the
payment certificates marked "FA 14" and "FA15".
In as far as the second applicant's
claim is concerned, the amount
appearing in the founding papers for certificate 14 is R4,707,406.68
plus R266,699.00 for soil provided,
plus R753,734.08 for materials
returned, plus a retention amount of R464,413.15, all to the total
amount of R6,192,252.91. Whereas
in the heads the amount for
certificate 14 is R3,272,397.12 plus retention fees ofR283,762.21.
It
was therefore contended on behalf of Sedtrade that because the
calculations are so markedly different and the applicants cannot
correct the figures in the heads of argument, the rule
nisi
should
be discharged and the applicants are to be ordered to pay the costs
of the application including costs of the previous two
appearances.
[16]
Ms Bester submitted the following as the correct breakdown of the
figures that this Court can
order:
Amount due to the first
applicant
R 576,924.36
Amount due to the second
applicant
R3,272,397.12
Sub
Total
R3,849,321.48
Plus Total retention fees
to be preserved on Trust
R
421,133.76
Total
due
R4,270,455.24
Less amount in
Trust
R2,217,160.67
Total
R2,053,294.57
[17]
The argument, on behalf of Sedtrade, that the failure by the
applicants to file an amended notice
of motion or a supplementary
affidavit after receiving the adjudicator's report should result in
the dismissal of the application,
does not have merit. The order by
Tlaletsi JP was to the effect that the parties were to report on the
extent of the resolution
of the underlying dispute on the return day.
The submission of the adjudicator's report, in my view, complies with
such an order.
[18]
The applicants, in Prayer 2.4, are seeking payment into their
accounts upon finalisation of the
pending investigation and/or
adjudication of the disputes. The adjudicator's report is clear and
unambiguous in terms of the resolution
of the dispute between the
parties, that the subcontractors should not pay any penalty for their
11 day delayed completion of work.
There is no reason why the report
does not fulfil the prayer in 2.4.
[19]
The fact that there are certificates to confirm actual work done and
calculations to be verified
before payment, does not support the
application for payment not to be effected. The issue is not 'how
much' but whether the applicants
are entitled to payment or not. Once
the answer is in the affirmative, the question of the exact figures,
in my view, is an exercise
that can be confirmed and finalised by the
parties based on the available records.
[20]
Once the adjudicator has issued his decision there is no reason for
it not to be binding
on the
parties.
A
notice of dissatisfaction does not excuse
;
any party, in this instance Sedtrade, from giving effect
to the adjudicator's decision. It
is
my
view
that
the
adjudicator's
decision
is
enforceable
despite
any
future
arbitration.
Couched differently,
the
parties
to
an
adjudication
decision
must give prompt effect thereto unless it has been
revised
in
an
arbitration
award. See
Stefanutti
Stocks
[2]
;
Esor Africa
[3]
Tubular
Holdings.
[4]
I
therefore find that the applicants are entitled to
payment of
amounts due to them for services rendered.
[21]
In as far as costs are concerned there is no reason why they should
not follow the result. The
costs, which were earlier reserved, should
also follow suit.
[22]
In the result, the following order is made:
Para 2.4 of the rule
nisi
is hereby confirmed and the first respondent, Sedtrade (Pty) Ltd,
is ordered to pay the amounts due to the applicants with costs
which
includes costs of 27 November 2020 and 22 January
MAMOSEBO
J
NORTHERN
CAPE
HIGH
COURT
For
the applicant:
Adv. R Bester
Instructed
by:
VHL Attorneys Inc
c/o Engelsman Magabane
Inc
For
the first respondent:
Adv. S Grabler SC
Instructed
by:
Raees Chochia Attorneys Inc
c/o Haarhoffs Inc
[1]
I deemed it unnecessary to include the bank details
[2]
Stefanutti Stocks (Pty) Ltd v S8 Property (Pty) Ltd (20088/2013)
[2013] ZAGPJHC249 (23 October 2013)
[3]
Esor Africa (Pty) Ltd/ Franki Africa (Pty) Ltd JV v Bombela Civils
JV (Pty) Ltd SGHC case no 12/7442
[4]
Tubular Holdings (Pty) Ltd v DBT Technologies (Pty) Ltd
(06757/2013).