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[2017] ZASCA 135
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Loch Logan Waterfront (Pty) Limited and Another v Bentel Associates International (Pty) Ltd Limited (147/2015) [2017] ZASCA 135 (29 September 2017)
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THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 147/2015
In
the matter between:
LOCH
LOGAN WATERFRONT (PTY) LIMITED
FIRST
APPELLANT
THE
TRUSTEES OF THE N GEORGIOU TRUST
SECOND APPELLANT
and
BENTEL
ASSOCIATES INTERNATIONAL
(PTY)
LIMITED
RESPONDENT
Neutral
Citation:
Loch
Logan Waterfront v Bentel Associates International
(147/2015)
[2017] ZASCA 135
(29 September 2017)
Coram:
Lewis,
Seriti and Petse JJA and Plasket and Schippers AJJA
Heard:
11
September 2017
Delivered:
29 September 2017
Summary:
Condonation: application
for condonation for late filing of appeal record not granted. Delay
excessive and inexplicable.
Cross
appeal: architect’s contract with employer not varied in
absence of written consent to delegation of employer’s
obligations; interest on amount awarded for fees and disbursements
claimed is to be calculated in terms of the
Prescribed Rate of
Interest Act 55 of 1975
; miscalculation of amount payable by trial
court corrected.
ORDER
On
appeal from:
Free
State Division of the High Court, Bloemfontein (Kruger J sitting as
court of first instance).
1 The appellants’
application for condonation in respect of the late filing of the
record and for the reinstatement of their
appeal is dismissed with
the costs of two counsel.
2 The cross appeal is
upheld with the costs of two counsel.
3 The order of the court
a quo is set aside and is replaced with:
‘
(a)
The N Georgiou Trust is ordered to pay the plaintiff the sum of R2
496 265.30 plus interest at
the rate of 15.5% per annum from 19 May
2009 to date of payment.
(b)
The N Georgiou Trust is ordered to pay the plaintiff’s costs
including those of two
counsel.’
JUDGMENT
Lewis
JA (Seriti and Petse JJA and Plasket and Schippers AJJA concurring)
[1]
The appellants in this matter are Loch Logan Waterfront (Pty) Ltd
(the company) and the Trustees of the N Georgiou Trust, to
which I
shall refer for convenience as ‘the trust’. I shall refer
to ‘the appellants’ collectively where
appropriate. The
respondent is Bentel Associates International (Pty) Ltd (Bentel), a
firm of architects with a national practice,
which has considerable
experience in the design and construction of shopping centres.
[2]
Some time in 2003, a representative of the trust, Mr T Koupis, met Mr
P R Bray of Bentel, to discuss the design and construction
of a
shopping centre in Bloemfontein, on land owned by the trust –
Loch Logan Waterfront. The name conjures u visions of
an attractive
and alluring site. In fact, it is a small dam adjacent to which a
number of restaurants and shops had been built
some years previously.
[3]
Bentel was awarded the mandate to design extensions to the existing
buildings by the trust in 2006, and the building was largely
completed in 2007. The dispute between the parties arose when Bentel
claimed from the trust payment of outstanding fees and disbursements
in the sum of R5 847 819, together with mora interest. It issued
summons against both the trust and the company, which now owns
the
land and the shopping centre. The trust and the company defended the
action, disputing the fees payable. They counterclaimed
for various
breaches of contract by Bentel in the provision of professional
services.
[4]
The trial proceeded before Kruger J in the Free State Division. In
December 2014 he handed down judgment, finding in favour
of Bentel
and against the company only. But the learned trial judge
awarded a very reduced amount as fees, as a result of
a
miscalculation – to which I shall return briefly as it is
common cause that the learned judge erred in this regard; interest
at
the rate of only nine per cent per annum, and no costs in respect of
its claims since Kruger J held that Bentel did not enjoy
substantial
success. The court granted absolution from the instance in respect of
the counterclaim. The issues in the cross appeal
are the award of the
incorrect amount for fees and disbursements; the rate of interest
payable; whether the company or the trust
was bound by the contract
(the locus standi issue); and the costs award.
[5]
In February 2015, Kruger J gave leave to appeal to this court against
that order to the appellants, and leave to cross appeal
to Bentel.
The appeal has, however, lapsed. The cross appeal was pursued and was
argued independently of the appeal, as will appear
below.
The
application for condonation of late filing of the record, and for
reinstatement of the appeal
[6]
Before considering the merits of the cross appeal, it is necessary to
decide whether we should condone the failure by the company
and the
trust to pursue the appeal timeously and properly. And if so, whether
to reinstate the appeal. The history of the proceedings
between the
noting of the appeal and cross-appeal and the date of the hearing of
the cross appeal is significant.
[7]
The notice of appeal was filed some six weeks after the cross appeal
was noted, on 26 March 2015. The rules of this court required
the
record to be filed on 4 June 2015. However, in May
2015 Mr J Gautschi SC, who has had the unenviable task
of dealing
with this matter as the appellants’ senior counsel, contacted
Mr I Zidel SC, Bentel’s senior counsel, to
discuss the fact
that the record was at that stage still incomplete. They agreed to
ask the registrar of this court for an extension
of time. The
attorney for the appellants, Mr A J Barnard, of EG Cooper Majiedt
(Coopers), confirmed that he would ask for an extension
of three
months ending in September 2015.
[8]
Mr Barnard advised Mr S Perlman of Fluxman’s attorneys
(Fluxmans), representing Bentel, on 2 June 2015 that the
transcription
of the court record was incomplete and that recordings
made by a Mr Badenhorst of Coopers were being used to reconstruct
portions
of the record. Mr Barnard advised that the reconstruction
would take time, and that Coopers’ ‘Appeals division’
would need a month in which to compile an index and do other work
attendant on the preparation of the record. Mr Perlman responded
on
30 March 2015, placing on record that Bentel had agreed to no more
than a three-month extension.
[9]
On 31 August 2015, Coopers wrote to Fluxmans reporting on progress in
the preparation of the record and requested a further
extension of
three months, in which time the firm would ‘in all likelihood
be able to file the required record’. After
consulting counsel,
Fluxmans advised that Bentel agreed that the appellants would be
given until 31 January 2016 to lodge a complete
record. The
transcript itself was required by the end of September 2015 and other
documents by the end of October.
[10]
On 12 October 2015 Fluxmans advised Coopers that the transcript was
inaccurate and incomplete. Witnesses’ names had been
confused,
and there were a number of other defects. By 2 November 2015, Coopers
had not responded to this letter. Fluxmans reminded
them of their
failure and a response was sent by Coopers on 17 November 2015. In
their reply, sent on 7 December, Fluxmans advised
that the
appellants’ ‘supine attitude’ to the compilation of
the record made it impossible for them to assist
with the record, and
that Coopers should proceed itself to comply with the rules of this
court.
[11]
In the same letter Fluxmans advised that, should Coopers fail to
comply with the rules of court, the appeal would lapse, but
that
Bentel would continue with the cross appeal. It also suggested that
Coopers make use of a professional record compiler instead
of relying
on its own staff.
[12]
On 21 January 2016, Fluxmans wrote to Coopers confirming that Mr
Barnard and counsel had met Mr Perlman the previous day, and
that Mr
Perlman had provided Mr Barnard with comments on draft indices.
Fluxmans also restated its position on the issues in the
cross
appeal.
[13]
A year after leave to appeal was granted, on 1 February 2016, the
appellants filed a record of appeal. Bentel regarded the
record as
defective, and the appellants were constrained to agree. It was not
annotated and contained numerous duplicated documents.
It had little
practical value. Considerable correspondence passed between Coopers
and Fluxmans, various different timelines were
agreed, and eventually
it was agreed that a proper record would be filed by 30 September
2016.
[14]
Fluxmans reminded Coopers of the timeline on 11 August 2016. In the
interim, Mr Gautschi had made valiant attempts to press
Coopers into
preparing the record properly. In his founding affidavit in an
application for reinstatement of the appeal and condonation
(filed
only on 18 July 2017, as to which see below), Mr Oosthuizen of
Coopers (who replaced Mr Barnard as the attorney involved
with the
appeal) referred to the many emails sent by Mr Gautschi chivying
Coopers, explaining what was needed and suggesting ways
in which
Coopers should proceed. The September 2016 deadline was, nonetheless,
not met.
[15]
Fluxmans’ correspondent attorneys in Bloemfontein, Matsepes,
wrote to the registrar of this court on 11 October 2016
asking how to
bring the matter to finality. The office of the registrar advised
Coopers the following day that the appeal had lapsed.
[16]
Despite this, Coopers wrote to Fluxmans on 12 October 2016 recording
an apology for the delay, and advising that Coopers had
asked a Mr J
Kumkaran to assist with the preparation of the appeal record. This
was at the suggestion of Mr Gautschi. Coopers committed
to filing the
completed record by 9 November 2016 and asked for agreement on that
date. Fluxmans responded that the appeal had
lapsed and that it was
not open to the parties to revive it by agreement. They repeated that
Bentel was proceeding with the cross
appeal.
[17]
It was only when the heads of argument for the appellants in the
cross appeal were received on 16 February 2016 that Bentel
was given
any indication that the appellants intended to apply for condonation
and reinstatement of the appeal. The registrar of
this court was
advised the following day by Mr Oosthuizen that the appellants so
intended. Coopers advised the registrar that the
appeal and cross
appeal should be heard together. It is not clear whether Coopers ever
copied this letter to Fluxmans or whether
they were advised of it.
Since no application was in fact forthcoming the cross appeal was set
down for hearing on 11 September
2017.
[18]
When this court was seized with the record in the cross appeal, and
the heads of argument of the parties, it made enquiries
through the
registrar on 4 July 2017 as to whether the appellants intended to
pursue the appeal. The court asked that the appellants
indicate their
intention by no later than 18 July 2017. That request elicited an
application for condonation and reinstatement,
served at the last
minute on 18 July, together with a new record of 18 volumes.
[19]
The court, in early August 2017, then indicated to the appellants
that the appeal could not be heard on the date of set down
for the
cross appeal, but gave leave to argue the application for condonation
and reinstatement at the outset of the hearing of
the cross appeal.
[20]
In his founding affidavit to the application, Mr Oosthuizen said that
after receiving the court’s letter of 4 July 2017,
‘final
and very intensive work was done by Mr Kumkaran to finalise the
appeal record’. He continued: ‘The appellants
have at all
times been resolute in pursuing this appeal and always believed
(supported by the views of counsel acting for the Appellants)
that
they have good prospects of success in their appeal . . .’ . No
fault, he said, could be attributed to the appellants
for the delay
in finalizing the appeal record.
[21]
It is trite that condonation is not there for the asking. A proper
explanation for the delay must be furnished. The only explanation
proffered by Coopers is that the transcribers let the appellants down
and they had to hire Mr Kumkaran to assist in producing the
record.
This does not explain – least of all excuse – the failure
on the part of Coopers to meet any deadline to which
they had
committed. Having failed to meet the September 2016 deadline, they
appeared to go into hibernation. If there had been
the slightest
progress in the preparation of the record, then Coopers did not
advise Fluxmans of this and did nothing to apply
for condonation and
reinstatement until asked by this court, in July 2017, to indicate
the appellants’ position. Between
February and July 2017
nothing was done to indicate what the further delay was.
[22]
Mr Kumkaran, who deposed to a supporting affidavit in the
application, said no more than that it was a complex and
time-consuming
process and that he had spent 179 days working on it,
but could not devote all his working time to the task as he is an
attorney
with other commitments. What is not explained is why Coopers
asked a private practitioner to prepare the record, rather than an
appeals record service. It is so that Mr Gautschi had suggested that
Mr Kumkaran assist with the task, but that does not explain
why the
task was taken away from Coopers’ appeal division or why a
professional service was not used as well.
[23]
Moreover, as Mr Perlman stated in his answering affidavit, the record
that was eventually furnished on 18 July 2017 mirrored
that which had
been agreed to in September 2016. And it is significant too that
Bentel was able to prepare the record in the cross
appeal timeously.
[24]
Mr Gautschi was placed in the invidious position of arguing that
condonation should be granted and the appeal reinstated. The
only
argument that he could advance was that the prospects of success in
the appeal were good and that the extraordinary and inexplicable
delay on the part of the appellants should be weighed against those
good prospects. But that is not enough. Prospects of success
are not
the only factor that a court takes into account when considering a
litigant’s request for an indulgence. They
must be
considered in the context of an excessive and unexplained delay.
[25]
The most recent judgment of this court dealing with the principles
governing the grant of condonation is
Mtshali
& others v Buffalo Conservation 97 (Pty) Ltd
(250/2017)
[2017] ZASCA 127
(28September 2017) in which Plasket AJA
discusses previous decisions of this court and the principles
determined. These include
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd & others
[2013] ZASCA 5
;
[2013] 2 All SA 251
(SCA) where Ponnan JA held that
factors relevant to the discretion to grant or refuse condonation
include ‘the degree of
non-compliance, the explanation
therefor, the importance of the case, a respondent’s interest
in the finality of the judgment
of the court below, the convenience
of this court and the avoidance of unnecessary delay in the
administration of justice’.
[26]
In
Darries v Sheriff, Magistrate’s Court, Wynberg &
another
1998 (3) SA 34
(SCA) at 40I-41E Plewman JA pointed out
that condonation is not a mere formality and will not necessarily be
granted even where
the failure to comply with the rules of court is
entirely attributable to a party’s attorney. He said:
‘
An
appellant should whenever he realises that he has not complied with a
Rule of Court apply for condonation as soon as possible.
Nor should
it simply be assumed that, where non-compliance was due entirely to
the neglect of the appellant’s attorney, condonation
will be
granted. In applications of this sort the appellant’s prospects
of success are in general an important though not
decisive
consideration. When application is made for condonation it is
advisable that the petition should set forth briefly
and succinctly
such essential information as may enable the Court to assess the
appellant’s prospects of success. But appellant’s
prospect of success is but one of the factors relevant to the
exercise of the Court’s discretion, unless the cumulative
effect of the other relevant factors in the case is such as to render
the application for condonation obviously unworthy of consideration.
Where non-observance of the Rules has been flagrant and gross an
application for condonation should not be granted, whatever the
prospects of success might be.’
[27]
In
Tshivhase
Royal Council & another v Tshivhase & another; Tshivhase &
another v Tshivhase & another
[1992] ZASCA 185
;
1992 (4) SA 852
(A) at 859E-F Nestadt JA pointed out that this court
‘has often said that in cases of flagrant breaches of the
Rules, especially
where there is no acceptable explanation therefor,
the indulgence of condonation may be refused whatever the merits of
the appeal
are’ and that this applies ‘even where the
blame lies solely with the attorney’. See also
Saloojee
& another NNO v Minister of Community Development
1965
(2) SA 135
(A) at 141B-H.
[28]
In my view, little more need be said. The failure on the part
of the appellants to comply with the rules of this court
has been
flagrant and inexplicable. They did not bother to apply for
condonation when they needed it. They sat back and allowed
Bentel and
this court to assume that they were not going to apply for
condonation and that the appeal had lapsed. And the
lack of any
explanation for failing to comply with deadlines to which they had
agreed is astonishing. Whatever prospects of success
there might be
fade into insignificance. Indeed, we might justifiably draw the
inference from the silence between October 2016
and July 2017 that no
one has much faith in the appeal that had been noted. No
representative of the appellants has gone on oath
to explain their
determination to pursue the appeal and to explain why they have made
no efforts to chase their attorneys.
[29]
In the circumstances the application for condonation for the late
filing of the appeal record and for reinstatement of the
appeal must
be dismissed with the costs of two counsel.
The
cross appeal
[30]
It will be recalled that the first issue in the cross appeal is the
miscalculation by the trial court of the fees and disbursements
owed
to Bentel. The second is the rate of interest which the unsuccessful
party should pay on the amounts outstanding, and the
date from which
it was payable. The third issue is whether the company had locus
standi in the matter – whether only the
trust was party to the
contract with Bentel or whether the company had been substituted for
it – and which entity was liable
to Bentel. The award of
costs is also in contention. I consider that the third issue, the
company’s locus standi, should
be determined first. That
entails a consideration of the documents constituting the contract
between the parties.
The
contract between the trust and Bentel
[31]
On 23 June 2003, Mr P R Bray of Bentel wrote to Mr T Koupis
representing the trust, thanking him for meeting to discuss the
invitation to Bentel to undertake the architectural work for the
proposed extension to Loch Logan. Mr Bray explained the nature
of the
contract that would be concluded, the fee that it would charge, and
made various recommendations, including as to the appointment
of a
time management consultant. The letter was annexed to the particulars
of claim as Annexure A.
[32]
Mr Bray wrote to Mr Koupis again in February 2004 thanking him for
Bentel’s appointment as architects for the Loch Logan
extension. He recorded that Bentel’s services would be in
accordance with the Institute of South African Architects’
terms of appointment, subject to some variations. The standard terms
(the architect’s contract) were annexed as Annexure
BA 1 to the
letter, which constituted Annexure B to the particulars. It
anticipated five work stages. The fifth work stage, to
be performed
by a Bloemfontein architect, entailed the contract administration and
inspection. It is common cause that a locally
based architect was
appointed for this purpose.
[33]
The terms of the agreement between the trust and Bentel were varied
on 8 November 2005 and 19 April 2006, each variation by
way of letter
from Bentel to the trust, signed by the parties. The variations are
annexed to the particulars as C and D. It is
not disputed that the
contract between Bentel and the trust was constituted by these
letters, which incorporated the standard terms
of the architect’s
contract.
[34]
Significantly, clause 4.6 of the architect’s contract, headed
‘Change of status of the parties’, read:
‘
Neither
party shall assign, sublet or transfer its interest in this agreement
without the written consent of the other, which consent
shall not
unreasonably be withheld.’
Clause
11.4, headed ‘Whole agreement’, read:
‘
This
agreement, including any annexures hereto, is the whole of the
contract between the parties and no variation hereof shall have
any
effect unless reduced to writing and signed by both parties. . . .’
The
sale of Loch Logan Waterfront by the trust to the company
[35]
Before the variation of the contract between the trust and Bentel on
19 April 2006 (Annexure D), on 20 October 2005, the trust
sold to the
first appellant, the company, the immovable property known as the
Loch Logan Waterfront for the sum of R200m. The property
was said to
be sold as a ‘going concern’, which would be an ‘income
earning activity’ and would remain
operative as such until its
transfer. The parties recorded that the company, as purchaser, should
be enabled to ‘continue
the rental enterprise’ from the
property’. Kruger J held that the sale agreement, together with
the conduct of the
company and of Bentel had the effect of
substituting the company for the trust in the architect’s
contract. Bentel argues
on appeal that there was no change in
parties.
Did
the company, by virtue of the sale, become a party to the architect’s
contract?
[36]
On 4 January 2006, a representative of the trust wrote to ‘suppliers’
advising that with effect from 1 December
2005, the Loch Logan
Waterfront was transferred to a new company – the first
appellant. Suppliers were requested to send
all accounts to the
company at a new address. This was followed by a letter from a Ms
Georgiou of the company to a Mr L Vimercati,
an employee of the
project manager which was an agent of the trust, requesting that VAT
invoices should be addressed in future
to the company. Mr Vimercati
forwarded the request to Mr R Leighton of Bentel, who in turn sent it
to another employee of Bentel
with a request to ‘resolve’.
The request was further confirmed by Mr Vimercati on 30 March 2006.
[37]
From that time onwards, Bentel sent VAT invoices to the company. The
significance of this, the company contends, is that by
sending tax
invoices to the company, Bentel agreed in writing to vary the
architect’s contract by making the company, rather
than the
trust, a party to the contract. And indeed, as I have said, Kruger J
found that by its conduct, Bentel had agreed to a
variation of the
parties to the contract. He did not explain how the submission of tax
invoices amounted to a written variation,
signed by the parties.
[38]
On appeal, Bentel argues that there are a number of indicia that
there was no change in the agreement in writing, as required
by its
terms. I have already referred to one – the variation of the
architect’s contract on 19 April 2006 (Annexure
D) took place
after the sale of Loch Logan Waterfront by the trust to the company.
Yet the variation agreement was between the
trust and Bentel. It was
clearly envisaged that Bentel’s mandate continued to be with
the trust.
[39]
At site meetings after the sale and transfer of the property to the
company, the trust continued to be the entity to which
Bentel and
other agents were obliged to meet their obligations. For example, the
minutes of a meeting dated 25 April 2006 reflect
that ‘for
contractual purposes the client is to remain the N Georgiou Trust’.
[40]
The appellants argue, on the other hand, that the fact that tax
invoices were sent, after the sale, to the company rather than
the
trust, reflects an intention on the part of Bentel that it accepted
the company as the other contracting party. That seems
to me to be
not only contrary to the provisions of the architect’s
contract, which deals with the manner of variation, but
also contrary
to the other evidence. For the kind of variation for which the
appellants contend to be effective, Bentel would
have had to agree to
the delegation of its obligations to the trust by the latter to the
company. The mere invoicing of another
entity does not amount to an
agreement to delegate. It is, as Bentel argues, nothing more than a
payment arrangement – Bentel
agreeing to accept payment of its
fees and disbursement by the company rather than the trust.
[41]
G B Bradfield
Christie’s
Law of Contract in South Africa
7 ed p 536, in dealing with delegation, points to a number of
situations where a creditor requests a debtor to make payment to
a
third party, but which do not amount to a delegation. The mere
rendering of an invoice to a third party cannot, in the absence
of
agreement on the part of a creditor, amount to a delegation.
[42]
As against this, the appellants argue that a letter of demand in
terms of s 345 of the Companies Act 61 of 1973, threatening
liquidation, was sent by Bentel to the company on 16 September 2008.
This was not followed through. In May 2009, Bentel issued
summons
against both appellants claiming some R6m and Bentel proceeded to
claim summary judgment against both. The appellants argue
that the
inability of a witness for Bentel to explain why summons was issued
against both appellants, and why summary judgment
was sought against
both, shows that it regarded the company as a party to the
architect’s contract. In my view, the evidence
is irrelevant.
It goes not to agreement on delegation of the trust’s
obligations to Bentel, but to subsequent legal proceedings.
[43]
In argument before us, Bentel asserted that it had claimed against
both the trust and the company ex abundante cautela. But
in any
event, it argues, the pleadings did not make any case against the
company, and in the plea the appellants did not assert
that the
company, rather than the trust, was party to the architect’s
contract.
[44]
Bentel’s particulars of claim relied on the contracts reflected
in Annexures A to D. These all reflected the trust as
the party to
the architect’s contract. In its plea, the appellants did not
dispute that these were the written contracts
on which Bentel relied,
but pleaded that the company ‘took over all the rights and
obligations from’ the trust, including
‘the rights and
obligations towards [Bentel]’. Bentel, in its request for
further particulars for trial, asked when
and how the ‘taking
over’ had occurred and whether there was any written agreement
in this regard. The response of
the appellants was that ‘it was
not in dispute between the parties that the relevant parties to the
claim are the plaintiff
and [the company]’. This is hardly a
proper response: there is no allegation that the trust ceded its
rights and delegated
its obligations to the company, with Bentel’s
consent, in writing. That was what was required in order to show that
the trust’s
obligations to Bentel had been delegated to the
company. Invoices sent by Bentel to the company, at the request of
the company,
hardly amount to a written agreement that the trust
could delegate its obligations to the company.
[45]
The pleadings thus do not bear out the contention of the appellants
that the company had been substituted for the trust as
the party to
the architect’s contract with Bentel. The party alleging a
delegation must prove it. (
Van Achterberg v Walters
1950 (3)
SA 734
(T) at 745.) But in any event, the appellants did not plead a
proper delegation.
[46]
Kruger J in the trial court took into account the oral evidence of Mr
Koupis, representing the appellants. He testified that
it was common
in developments of the kind embarked upon that the developer creates
a separate entity to ‘ring-fence’
the risk. This was what
had happened when the trust sold the property and business as ‘a
going concern’. The sale of
the property was expressly stated
to be that of a ‘going concern’. The contract recorded
that the property ‘will
remain active and operating as such
until its transfer’. It also recorded that the company would be
enabled by the trust,
as seller, ‘to continue the rental
enterprise conducted from the property’. This,
argued the appellants,
meant that all the obligations of the trust
were transferred to the company, and the company was not only
entitled to receive rentals
from tenants, but also obliged to pay
professionals who had contracted with the trust, such as Bentel.
[47]
However, the sale also recorded that:
‘
It
is specifically agreed that, as far as it may be necessary, the
Seller [the trust] shall enter into such Agreements as may be
necessary to assign its rights and obligations (but does not warrant
the other party will consent to the delegation) in terms of
the
contracts referred to above to the Purchaser [the company].’
Kruger
J did not consider whether there had been any delegation by the trust
of its obligations to Bentel, as envisaged in the sale,
and to which
Bentel had agreed. But he did take into account
that there was no evidence that any representative
of Bentel had ever
objected to the ‘taking over’ by the company of the
trust’s business.
[48]
Since there was no delegation pleaded, however, the evidence was
inadmissible:
Société
Commerciale de Moteurs v Ackermann
1981 (3) SA 422
(A) at 435C-D. The difficulty was that Kruger J
decided at the outset of the trial that he would allow all the
evidence that the
parties wished to lead, without objection, and
would determine admissibility at a later stage. In the end, he made
no rulings as
to admissibility, and so took into account evidence
that was irrelevant to the respective cases the parties had made out
in their
pleadings. As Bentel argued before this court, the practice
of allowing all evidence that a party wishes to adduce and making a
ruling as to admissibility later, is one that conduces to poor trial
management. It prolongs the trial and results in irrelevant
or
hearsay evidence being taken into account. (See in this regard
Price
Waterhouse Coopers Inc & others v National Potato Co-operative &
another
[2015] ZASCA 2
;
2015 (2) All SA 403
(SCA) paras 80 and 81.)
[49]
The final argument for Bentel that the company was not a party to the
architect’s agreement, and which I regard as conclusive,
is
that the entire contractual matrix in respect of the construction of
the Loch Logan Waterfront’s extensions would have
failed if the
trust were to have fallen away as a party. The principal contractor
for the project was the construction firm, Murray
and Roberts
Construction (Pty) Ltd (M & R). The main contract was between the
trust and M & R. The contracting ‘and
other parties’
were the trust, D Nel as principal agent (the architect representing
the Bloemfontein firm responsible for
supervision and final work);
Bentel as agent 1; the quantity surveyors appointed as agent 2; the
structural engineers as agent
3; the consulting engineers as agent 4
and project consultants as agent 5. A project manager and fire
consultant had yet to be
appointed.
[50]
All these professionals, including Bentel, were thus agents for the
employer – the trust. All continued to be responsible
to the
trust until the termination of the project. The trust’s
contract with M & R remained unaffected by the sale of
the
property and the business of the shopping centre by the trust to the
company. That was expressly agreed
to be so.
The appellants argue now that the M & R contract was exceptional.
Various bank guarantees in favour of the trust
would have had to be
replaced if the company became the employer, and that would have been
a costly exercise – so the trust
remained in place as the
employer in the principal contract.
[51]
As Bentel argues on appeal, it would make absolutely no sense for M &
R to be contractually liable to the trust, but its
agents liable to
the company. It follows that the company had no locus standi to sue
for damages for breach of contract. And that
Bentel’s claims
for fees and disbursements are against the trust only.
Bentel’s
claim for fees and disbursements
[52]
As I have said, it is common cause that Kruger J erred in calculating
the amount that he found was due to Bentel. He failed
to take VAT
into account and thus awarded the sum of R578 580, instead of R2 496
265. The difference is substantial. Since the
parties are agreed on
the correct amount to be awarded, and as to the manner of its
calculation, there is no need to deal with
it and the cross appeal
must succeed in this respect too.
Mora
interest
[53]
Bentel claimed interest a tempore morae at the prescribed rate of
15.5% per annum. Kruger J awarded interest only at the rate
of nine
per cent per annum, reasoning that the contract itself made no
provision for mora interest, that it had been varied from
time to
time, and that the works had not yet been concluded. He thus also
held that it was fair that interest be payable only from
the date of
judgment.
[54]
The appellants argue that the amount claimed by Bentel was not
liquidated and thus interest at the prescribed rate was not
claimable. The argument loses sight of the fact that Bentel was not
claiming damages. It is true that there were disputes as to
whether
certain fees were owing, but that does not mean that the claim for
fees and disbursements was illiquid. It was determinable
by
calculation and required no exercise of judgement as to what should
be paid. It is plain that the trust was in mora in so far
as payment
of fees to the company was concerned.
[55]
The
Prescribed Rate of Interest Act 55 of 1975
provides that interest
shall run from the date on which payment is claimed by service on the
debtor of a demand or summons. (See
David
Trust v Aegis Insurance Co Ltd & another
[2000] ZASCA 108
;
2000 (3) SA 289
(SCA) para 39.) The summons was served on the trust
on 14 May 2009. Accordingly, the trust is liable to pay interest at
the rate
of 15.5% per annum on the sum of R2 496 265 from that date.
Costs
[56]
Kruger J in the trial court considered that Bentel had not enjoyed
substantial success in respect of its claim, and accordingly
awarded
it no costs. However, that was in large measure because he
miscalculated the amount payable to Bentel and imposed interest
at
the wrong rate. It seems to me that Bentel was entitled to all its
costs in respect of its claim, including those of two counsel.
The
trial court awarded Bentel only 50% of the costs in respect of the
counterclaim on the basis that it had pursued the wrong
defendant –
the trust. As I have already concluded, the trust was correctly cited
as a defendant.
[57]
In the result, the following orders are made:
1
The appellants’ application for condonation in respect of the
late filing of the record and for the reinstatement of their
appeal
is
dismissed with the costs of two counsel.
2
The cross appeal is upheld with the costs of two counsel.
3
The order of the court a quo is set aside and is replaced with:
(a)
The N Georgiou Trust is ordered to pay the plaintiff the sum of R2
496 265.30 plus interest
at the rate of 15.5% per annum from 19 May
2009 to date of payment.
(b)
The N Georgiou Trust is ordered to pay the plaintiff’s costs
including those of two
counsel.’
_______________________
C H Lewis
Judge
of Appeal
APPEARANCES
For
the First and Second Appellants:
J Gautschi SC (Heads of Argument also prepared by A J R
van Rhyn SC)
Instructed
by:
E G Cooper Majiedt Inc, Bloemfontein
For
the Respondent:
I J Zidel SC (with him D R van Zyl SC)
Instructed
by:
Fluxmans Inc, Rosebank
Matsepes
Inc, Bloemfontein