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[2019] ZAMPMBHC 4
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Inzuzo Projects Engineers CC and Another v Department of Agriculture, Rural Development, Land and Environmental Affairs - Mpumalanga Province and Others (RATSHIBVUMO AJ) [2019] ZAMPMBHC 4; 320/2016 (15 October 2019)
THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA MAIN SEAT
CASE
NO: 320 / 2016
In
the matter between:
INZUZO
PROJECT ENGINEERS
CC FIRST
PLAINTIFF
SIPHO
MHLANGA SECOND
PLAINTIFF
and
DEPARTMENT
OF AGRICULTURE, RURAL
DEVELOPMENT,
LAND AND
ENVIRONMENTAL
AFFAIRS –
MPUMALANGA
PROVINCE FIRST
DEFENDANT
MEC
FOR AGRICULTURE, RURAL
DEVELOPMENT,
LAND AND
ENVIRONMENTAL
AFFAIRS –
MPUMALANGA
PROVINCE SECOND
DEFENDANT
HEAD
OF DEPARTMENT: AGRICULTURE,
RURAL
DEVELOPMENT, LAND AND
ENVIRONMENTAL
AFFAIRS –
MPUMALANGA
PROVINCE THIRD
DEFENDANT
Summary:
Civil
Law – Law of Contract, claim for damages based on repudiation
of a contract.
The application of principle
of pacta sunt servanda. The First Plaintiff signed a contract in
terms of which it was placed on the
panel of service providers to the
First Defendant. Projects were allocated to it and later withdrawn
due to poor performance. The
contract provided for steps to be taken
in case of breach or cancellation of contract. First Defendant not
complying with the contractual
provisions in terms of the contract
when withdrawing the projects claiming, this applied to cancellation
of a contract signed to
be in the panel, not the withdrawal of
projects awarded when in the panel.
Quantum –
No separation between quantum and merits. The duty for Plaintiff to
prove quantum.
Held – the
contract cannot apply in vacuum without project it was signed to
govern.
Held
further – When merits and quantum are not separated and party
is unable to prove quantum, proving merits is a futile
exercise.
J U D G M E N T
RATSHIBVUMO AJ:
1.
Introduction
.
This
is a claim for damages based on a breach of contract. The parties did
not agree to separate merits and the quantum pursuant
to Rule 33 (4)
and as a result, the trial dealt with both the merits and the
quantum. The Plaintiff’s claim is for an amount
just over R26
million.
2.On
18 December 2014, the First Plaintiff and the First Defendant entered
into a contract (Service Level Agreement – the
SLA) which was
to run for 36 months. This agreement followed the First Plaintiff’s
appointment as “professional consulting
engineers to assist in
planning, designing, implementing, monitoring and evaluating various
departmental infrastructure projects”
on 03 November 2014.
Based on the SLA, projects were allocated to the First Plaintiff as
an Engineering Contractor for the First
Defendant.
3.For
the duration of the SLA, four projects were allocated to the First
Plaintiff. Three of these were allocated around the same
time not
long after the signing of the SLA. Of these three, two were withdrawn
by the First Defendant on 20 April 2016 following
a dispute, and one
was allowed to run its course to the end. The fourth project was
allocated to the First Plaintiff several months
after the withdrawal
of the two projects. The two projects that ran their course to the
end are not in issue. It is the two that
were withdrawn that are
subject of the claim.
4.The
First Plaintiff claims that in withdrawing the two projects, the
First Defendant breached the SLA in that it did not adhere
to its
terms and conditions when it comes to cancellation of the contract.
It was averred that the First Defendant cancelled the
contract making
it impossible for the First Plaintiff to perform its part of the SLA.
Specifically, the Plaintiff was aggrieved
in that the projects were
withdrawn without the 5 days written notice provided for in the SLA
in case of breach by either party;
or the 7 days’ written
notice in case of a cancellation of a contract. The claim by the
Plaintiff was as such not based on
work done, but the breach of the
contract as a whole.
5.The
First Defendant disputed the First Plaintiff contention, saying the
contract was not terminated, but it ran its course for
36 months. The
signing of the SLA according to the First Defendant did not guarantee
the allocation of projects, and if they are
allocated, the First
Defendant reserved the right to withdraw them in case of
non-performance.
6.According
to the First Defendant, the SLA was an agreement signed when the
First Plaintiff was appointed into a panel of service
providers who
get allocated projects for the duration they serve in the panel. It
contends therefore that the withdrawal of the
projects was done in
accordance with the SLA because of the First Plaintiff’s poor
performance. This was done after a series
of complaints and warnings
that were given to the First Plaintiff in writing as provided in the
SLA and the First Plaintiff failed
to remedy the defects or
non-performance complained about.
7.As
for the quantum, the First Defendant argued that the pleaded case was
to the effect that the Plaintiff’s claim was based
on work done
and there was no work done for which the First Plaintiff was not
paid. Once the projects were withdrawn, no work was
performed by the
First Plaintiff.
8.
Issues
for determination:
The court is called
upon to determine whether in withdrawing the projects initially
awarded to the First Plaintiff, the First Defendant
breached the
contract and/or whether the act of withdrawing the projects in
question, resulted in the cancellation of the contract
and if so,
whether the said cancellation complied with the SLA pertaining to the
cancellation.
9.
Case for the Plaintiff
Mr.
Sipho Samuel Mhlanga:
He is the Second
Plaintiff, the Director and sole owner of the First Plaintiff. He is
a professional Engineer who qualified with
a B Tech in Civil
Engineering and Masters in Business Administration. He testified that
he submitted tender documents on behalf
of his Close Corporation (CC)
– the First Plaintiff and it was awarded the tender. He knew
nothing about being appointed
into a panel; for his CC was appointed
to provide services stipulated on paragraph 5 of the SLA. His
understanding of paragraph
17 of the SLA was that in case of breach
by the First Plaintiff, the First Defendant would issue a 5 days’
notice in which
details of the breach are elaborated. Paragraph 18 of
the SLA regulates the termination of the contract which should be
preceded
by a 7 days’ notice if such termination takes place
prior to 16 November 2017, which is the last day of the contract.
10.
After the SLA was signed, the First Plaintiff was
awarded three projects. First one was the Broiler House, the second
was One Stop
and the last one was the Mushroom project. He received
two letters from the Third Defendant by way of email dated 20 April
2016.
The first one was titled “First Warning Letter” and
the second letter was titled “Revised Allocation of Projects
for 2016/2017”. According to him, the first warning letter
contained no warning since it merely complained of the First
Plaintiff’s performance and concluded by informing him that for
those reasons, the First Plaintiff has been withdrawn from
the two
projects. The second letter repeated what is in the first letter and
concluded by informing him that the First Plaintiff
will be allowed
to continue with the Mushroom project under close monitoring by the
First Defendant who will review the project
after six months. No
warning letter or 5 days’ notice was given to him about the
breach by his CC or the 7 days’ notice
for termination of the
contract.
11.
Prior to these letters being sent to him,
meetings were held on site in which he or the First Plaintiff would
be represented, but
his representatives did not inform him of the
outcomes of these meetings. He denied that the relationship between
the First Plaintiff
and Atile Investments, the principal contractor
hired by the First Defendant to construct at the Broiler project, had
been eroded
as alleged in the “warning letter”. Even if
the relationship was eroded as such, he questioned the involvement of
the
First Defendant as a client. The First Plaintiff was never called
into a meeting with Atile Investments by the First Defendant.
12.
He denied that he allocated persons with no
skills to provide the engineering consultant services to Atile
Investments saying he
provided only skilled professionals. He
insisted that he was not made aware of any performance challenges as
averred in the two
letters from the First Defendant withdrawing the
projects previously allocated to the First Plaintiff. Aggrieved by
the turn of
events, he wrote a letter to the Third Defendant on 26
June 2016 demanding reasons for withdrawing the projects. He also
threatened
legal action over the withdrawal of these projects. He
received no response. The One Stop project was supposed to run for 16
months
while the Broiler project was allocated 7 months as it was
small. It is these periods for which he claims that the First
Plaintiff
should be compensated.
13.
Under cross examination, the following came
to light. The First Defendant pleaded that the First Plaintiff was
appointed into a
panel of service provider for a period of 36 months,
a fact that the Plaintiff “noted” in replication. The
Second Plaintiff
conceded that in noting he meant that he was aware.
He was also aware that they could only do work that is pre-approved
by the
First Defendant.
14.
His tender documents that formed part of
the SLA provide that professional fees would be paid on time and cost
basis only for work
done to a maximum of 15% of the project value /
budget. Prior to the projects being withdrawn by the First Defendant,
the First
Plaintiff had submitted multiple invoices for the work done
in respect of these projects, and the First Defendant paid. He could
not provide information on how much was paid without the bank
statement that unfortunately he did not have with him. The value
of
the Broiler project was R12 211 174.24 of which 15% was
R1 831 676.11. R5 482 964.00 is the amount
claimed in this action for unpaid fees in respect of the Broiler
project. This is more than the 15% in the tender documents because
given the estimated time of completion; he would have approached the
First Defendant and asked for fees to be increased from the
maximum
of 15% to a higher tariff even though it is not provided for in the
SLA.
15.
One Stop was a far bigger project the total
value of which was in excess of R180 million. The First Defendant did
not have this
budget and as such, the project was done in phases over
the years. The value of the phase for which the First Plaintiff was
appointed
was R12 143 066.51 of which 15% is R1 821 459.09.
R18 102 272.00 was however claimed in this action
for
professional services that would have been rendered over a period of
16 months. This was because he had expected the First
Plaintiff to
work on the One Stop Project until the end of all the phases and his
calculations were based on that.
16.
R7 200 000.00 was claimed for
disbursement, travelling and miscellaneous expenses for the same
period. He however only
incurred R12 000.00 in expenses on
stationery of which he did not have the invoices. The rest of the
expenses were what he
expected the First Plaintiff would have
incurred had the project proceeded. The SLA however allowed him to
claim only the actual
expenses plus 5%. The R7 200 000.00
was the estimated expense that would have been incurred had the whole
project run
to the end on R182 million value, plus the 5%.
17.
He admitted that the VAT calculations in
the particulars of claim in respect of the two projects were wrong in
that the correct
amounts calculated on 14% should have been higher
than what is reflected. As for the R7 million and R875 000.00
general damages
claim, this was for the cancellation of the contracts
he had entered into with various institutions when he knew the
projects were
awarded to the First Plaintiff. These are the
institutions that were meant to provide services to the First
Plaintiff. He however
was not charged a cent by any of these
institutions and he also did not pay them anything, other than the
R12 000.00 referred
to above for stationery he was forced to
take by the supplier. The SLA continued to govern the relationship
between the First Plaintiff
and the First Defendant in respect of the
Mushroom project even after the two projects were withdrawn.
18.
He acknowledged the email exchange in which
he was either copied or sent directly coming from various employees
of the First Defendant
and from an employee of the site contractor,
Atile Investments. He also acknowledged the minutes of the meetings
held between the
First Plaintiff and Atile Investments and that Mr.
Nkosi represented the First Plaintiff in these meetings. Mr. Nkosi
however did
not report back to him as to what was said or reported in
the meetings. I will deal more with these meetings and emails later.
19.
By the time the projects were withdrawn,
the One Stop Project was already suspended because it was impossible
for work to progress
due to the community protest against any work
being conducted on site. The community claimed the site as theirs and
that only RDP
houses could be built there. He had no issues with this
suspension. He however took issues with the First Defendant
withdrawing
the that project based on the slow progress on Broiler
Project since these were two separate projects with separate
challenges.
20.
Case for the Defendant:
Mahlatsi
Aaron Mamabolo
: He is a qualified
engineer who at all material time was an employee of the First
Defendant. He represented the First Defendant
in a number of meetings
of the stakeholders involving the First Plaintiff and Atile
Investments pertaining to the Broiler project.
At the time of the
signing of the SLA, he was a candidate engineer. He explained that
due to internal lack of capacity in the department,
the First
Defendant would sign the SLA with external engineering consultants to
serve on the panel of engineering service providers
for two to three
years at a time. The SLA was for services in planning, designing,
implementing and monitoring and evaluation of
various departmental
infrastructure projects.
21.
Being in the panel did not guarantee
consultants that projects would be allocated to them. Once in the
panel, the Departmental Chief
engineer would allocate various
projects to them and also have internal individuals allocated to
supervise each allocated project.
At the time the First Plaintiff
signed the SLA, there were about seven other consultants in the
panel. The Broiler project was
allocated to the First Plaintiff and
he was the internal person appointed to supervise it. The SLA was
signed in order to regulate
all the projects that could be allocated
for the duration that the consultant would be on the panel.
22.
The provision contained in the First
Plaintiff’s tender documents to the effect that the fees
payable for their services would
not exceed 15% of the project value
is standard with all other consultants and it is in line with ECSA,
DPSA and Public Works regulations.
Under no circumstances would this
figure be altered since it would be in contravention of the
regulations.
23.
Testifying about the Broiler Project, he
gave evidence that after it was handed over to the contractor, there
was a period of two
weeks during which he was on sick leave. He was
puzzled to realise on his return that throughout the two weeks he was
away, the
First Plaintiff failed to call a meeting of the
stakeholders. This meeting was necessary in that through it, the
consultant is
able to assess the progress, identify problems if any,
prepare minutes and report back to the First Defendant as the client.
He
wrote an email to the Second Plaintiff raising these concerns. He
is the author of a number of other emails that will be dealt with
in
some details later. According to him, the emails sent to the First
Plaintiff and its representatives suffice to be notices in
writing as
provided in the SLA and these were given to it providing more than
the 5 days’ notice; but several months’
notice.
24.
He chaired a number of meetings
between the First Plaintiff and relevant stakeholders. He also took
the minutes in these meetings.
The Second Plaintiff was constantly
absent, sending apologies through his representatives. He was
disappointed that even when issues
were out of hand and the Second
Defendant decided to call a meeting, an indication that the problem
was now escalated to the highest
office in the department, the Second
Plaintiff did not attend the meeting. He sent people who were not
capable of taking decisions
on behalf of the First Plaintiff.
25.
Amongst the concerns raised by him with the
First Plaintiff’s representatives are issues surrounding the
drawings he received
from Wandile (an employee of the First
Plaintiff) which were irrelevant for the Broiler Project in that they
were meant for 40 000
beds whereas the Broiler Project
specifications were for 25 000 beds. Again, the drawings which
had to be provided to the
contractor in order to start with the
project were not forthcoming from the First Plaintiff. A due date by
which the drawings had
to be in was set, but the date came and passed
with no drawings from the First Plaintiff. When the technical
foundation plan and
steel design were finally made available, the
spacing specification was wrong and the steel had to be altered which
was at an extra
cost paid by the constructor. This led to hostile
relationship between Atile Investments and the First Plaintiff.
26.
A day before the projects were withdrawn
from the First Plaintiff, a meeting was held it, the First Defendant
and Atile Investments
in which a breakdown in relationship between
Atile Investments and the First Plaintiff was exposed. This was due
to the latter’s
failure to provide the required technical
skills. Once the meeting was over, he, together with the First and
the Second Defendant
remained to discuss the way forward, and it was
decided that the projects should be withdrawn from the First
Plaintiff with exception
of the Mushroom project.
27.
Even after these projects were withdrawn,
another project was allocated to the First Plaintiff several months
later.
28.
Israel Leonard Silinda
:
He is an employee of the First Defendant who holds a position of a
Chief Director. He has been on this position with effect from
2018.
He has been an employee in the same department from 2011. Much of his
evidence centred on procedures followed by the First
Defendant
leading into the signing of the SLA or appointment into a panel of
service providers for the department. His evidence
is in line with
that of Mr. Mamabolo and as such I see no reason to repeat it in
details. He was able to enlighten the court regarding
the progress of
One Stop project currently of which the phase that the First
Plaintiff was allocated to do is now complete. According
to him,
failure by a consultant to deliver in respect of the project
allocated, cannot impact on other projects meaning each project
has
to be evaluated based on performance on that project.
29.
Common facts
It is common cause
that the SLA was signed long before any project was assigned to the
First Plaintiff. The SLA was applicable in
respect of all the
projects assigned to the First Plaintiff and it continued to be the
regulator of further allocation of projects
to the First Plaintiff by
the First Defendant even after the Broiler and One Stop projects were
withdrawn. Out of each project,
the First Plaintiff would be entitled
to pocket an amount not exceeding 15% of the project value. Claims
were made and paid by
the First Defendant in respect of the Broiler
and One Stop projects the value of which was not disclosed to the
court. Before these
two projects were withdrawn, the First Defendant
made it clear in a series of meetings and emails that it was
displeased with the
expertise, professionalism and general services
rendered by the First Plaintiff in respect of the Broiler project. No
such displeasure
was displayed by the First Defendant in respect of
the One Stop project.
30.
Issues in dispute:
There is dispute as
to whether there was a breach of the contract by the First Plaintiff
and if so, whether the First Defendant
acted in accordance with the
SLA. Again, there is dispute on whether the First Defendant, in
withdrawing the two projects repudiated
or cancelled the SLA
entitling the First Plaintiff to claim for damages incidental
thereto. The court also would have to determine
if the First
Plaintiff managed to prove the damages it suffered as a result, and
if so, the value thereof.
31.
Records of emails and meetings.
In
a meeting held on 05 November 2015 between the First Plaintiff, the
contractor and the First Defendant, the First Defendant recorded
a
number of deficiencies in how the First Plaintiff was adducing its
responsibilities. These were later reduced into minutes of
the
meeting. Amongst these was failure to timeously call for the
stakeholder’s meeting.
32.
The other concern was the changes in the
foundations which meant that the contractor would have to change the
columns and that the
steel frames would have to be altered. This
would have additional financial costs that the First Defendant could
not afford. Other
concerns were the failure by the First Plaintiff to
prepare payment certificates; failure to revise and review the BOQs
to be in
line with clear design specifications.
33.
The First Plaintiff was advised by the
First Defendant to engage a qualified structural engineer to do
design and correct specifications,
and to send monthly reports and
prepare agenda and minutes for the next meeting. The First
Plaintiff’s representative, Mr.
Nkosi apologised and promised
to improve since he would capacitate Wandile and a qualified
engineer.
34.
A report prepared by the First Plaintiff on
the Broiler Project dated July 2015 reflects that the project was
already allocated
to it during the period of the report. In an email
from Mr. Mamabolo to Mr. Jiyane (a person who was allocated to the
First Plaintiff
as the contact person on behalf of the First
Defendant), the author complains about the report from the First
Plaintiff which was
inadequate in format and information. This email
was copied to the Second Plaintiff and he did not respond thereto.
35.
In another email dated 29 October 2015,
sent to the Second Plaintiff, Mr. Mamabolo complains that the First
Plaintiff missed the
deadline of 23 October 2015 to provide the
construction drawings or approved design drawings in line with the
construction contract
laws, CESA and ECSA regulations. The First
Plaintiff was as such asked to attend to these issues urgently. The
Second Plaintiff
again did not respond to this email or remedy the
cause of complains. Several other emails were sent to the Second
Plaintiff with
various concerns to be rectified by the First
Plaintiff, without which Atile Investments, could not commence or
continue with the
construction work. These emails triggered no
response from the First or the Second Plaintiff.
36.
Legal position.
GB
Bradfield
[1]
quotes with
approval the phrase by Lewis J in in
Schlinkmann
v Van der Walt
[2]
where he said,
Repudiation
is in the main a question of the intention of the party alleged to
have repudiated. As was said by Lord Coleridge LCJ
in Freeth v Burr
(1874) LR 9 CP at p 214: “the true question is whether the acts
or conduct of the party evince an intention
no longer to be bound by
the contract”, a test which was approved by the House of Lords
in Mersey Steel Co v Naylor (1884)
9 AXC 434. In Re Rubel Bronze and
Metal Co and Vos [1918] 1 KB at p 322 McCardie J said as follows:
“The doctrine of repudiation
must of course be applied in a
just and reasonable manner. A dispute as to one or several minor
provisions in an elaborate contract
or a refusal to act upon what is
subsequently held to be the proper interpretation of such provision
should not as a rule be deemed
to amount to repudiation… But
as already indicated, a deliberate breach of a single provision in a
contract may under special
circumstances and particularly if the
provision be important, amount to repudiation of the whole bargain...
In every case the question
of repudiation must depend on the
character of the contract, the number and the weight of the wrongful
acts or assertions, the
intention indicated by such acts or words,
the deliberation or otherwise with which they are committed or
uttered and the general
circumstances of the case.” To this I
would add only that the onus of proving that the one party has
repudiated the contract
is on the party who asserts it.
37.
Applying facts to the law, it is important
to note that the contract between the First Plaintiff and the First
Defendant existed
long before any project could be allocated to the
First Plaintiff. This signifies that the existence of the contract
was not dependent
on projects being allocated. Furthermore, the fact
that no new contract had to be signed with each project being
allocated to the
First Plaintiff signifies that the allocation and
withdrawal of projects did not have direct impact of the SLA. But the
SLA did
not operate in vacuum. In other words, without projects to be
regulated, the SLA would just be a worthless piece of paper. There
are two important aspects I wish to zoom into provided for in the
SLA: the breach of contract and the termination thereof.
38.
The reference to breach of contract clearly
refers to works performance hence it provides for a period for each
party to rectify
the breach. This could not have been a reference to
a contract of being in the panel without any project being allocated
since
there is nothing to perform or remedy in the SLA in the absence
of projects. While it is true that the contract was signed upon
being
appointed into a panel of several contractors, the fact that no other
contract was signed with the allocation of projects
reflects that
this SLA was a major or umbrella contract that applied to all
projects allocated and those to be allocated in the
future. In
practice that implies that every project would be defined, guided,
governed and interpreted by the SLA as if it was
designed for that
project.
39.
I am satisfied that the First Defendant was
not happy with the performance of the First Plaintiff in respect of
the Broiler Project.
The First Defendant further considered this to
be in breach of the contract and it acted to show its
dissatisfaction. The First
Plaintiff was given several opportunities
to rectify its breach by way of meetings and emails which was several
weeks and months
prior to the withdrawal of the projects.
40.
As for the termination, the First Defendant
argues that the provision on termination in the SLA refers to the
termination of the
SLA and not the project. For this reason, there
was no need to give notice to the First Plaintiff since no agreement
was terminated.
If the argument to the effect that the termination of
the contract provided for in the SLA refers to termination of the
agreement
to be in the panel, it would entail that there is no
provision in the SLA on what happens when a party breaches the
contract and
constantly fails to remedy the breach. But that would be
absurd in that it would render the agreement toothless and therefore
irrelevant.
41.
Common sense dictates that when a party is
given time to rectify and fails, the other party would be entitled to
cancel the contract
and it follows that the termination of the
contract referred to in the SLA must have been in reference to
projects allocated. While
the First Defendant complied with the part
referring to the breach, it appears it was impatient and thereby
failed to comply with
the notice required when terminating the
contract. It should be noted that the SLA makes no provision for the
withdrawal of the
projects which in my understanding is just another
reference to cancellation of the agreement to allocate the project to
the particular
consultant, and in this case, the First Plaintiff. In
failing to adhere to the notice requirement, the First Defendant
displayed
the intention not to be bound by the contract any longer.
42.
The First Defendant’s intention not
to be bound by the terms of the agreement is laid bare when it comes
to One Stop Project
where it decided to withdraw the project without
any breach on the part of the First Plaintiff. The Supreme Court of
Appeal held
the following in respect of the doctrine of
pacta
sunt servanda
,
“
The
privity and sanctity of contract entails that contractual obligations
must be honoured when the parties have entered into the
contractual
agreement freely and voluntarily. The notion of the privity and
sanctity of contracts goes hand in hand with the freedom
to contract.
Taking into considerations the requirements of a valid contract,
freedom to contract denotes that parties are
free to enter into
contracts and decide on the terms of the contract. This court in
Wells
v South African Alumenite Company
1927
AD 69
at
73 held as follows: 'If there is one thing which, more than another,
public policy requires, it is that men of full age and competent
understanding shall have the utmost liberty of contracting, and that
their contracts, when entered into freely and voluntarily,
shall be
held sacred and enforced by the courts of justice.' Parties enter
into contractual agreements in order for a certain result
to
materialise. The fact that parties enter into an agreement
gives effect to their constitutional right of freedom to
contract,
however, the carrying out of the obligations in terms of
that contractual agreement relates to the principle of
pacta
sunt servanda
.
In
Brisley
v Drotsky
2002
(4) SA 1
(SCA)
(2002
(12) BCLR 1229
;
[2002] 3 All SA 363
;
[2002] ZASCA 35)
Cameron JA held
that judges must exercise 'perceptive restraint' (para 94) lest
contract law becomes unacceptably uncertain. Cameron
JA noted that
the judicial enforcement of terms, as agreed to, is underpinned by
'weighty considerations of commercial reliance
and social certainty'
(para 90). In the majority judgment in
Barkhuizen,
Ngcobo J endorsed Cameron JA's broader conception of the law of
contract as reflected in
Brisley
and affirmed that the Constitution requires parties to honour
contractual obligations that were freely and voluntarily undertaken.
The court further went on to say: 'While it is necessary to recognise
the doctrine of
pacta
sunt servanda
,
courts should be able to decline the enforcement of . . . a clause if
it would result in unfairness or would be unreasonable.
. . .'”
[3]
43.
Quantum
.
The
First Plaintiff has a duty to prove its case on both the merits and
the quantum since the two were not separated. From the pleaded
case,
the First Plaintiff claims to have performed its part and that the
First Defendant failed to make the payment. No evidence
was led on
what work it performed. The case of the First Plaintiff would
therefore stand or fall on damages suffered as a result
of the
repudiation of the contract by the First Defendant. There was a
concession by the First Plaintiff that there cannot be damages
suffered in circumstances where the contract provided for actual
expenses while there was no expense at all. Equally, when damages
pertain to a calculation of what the plaintiff would have earned had
the defendant honoured the contract, it is apposite for it
to prove
the rands and cents of what it was entitled to, what was paid and the
balance is.
44.
The
predicament the First Plaintiff sits with is the fact that in respect
of all these projects, claims were made and paid for.
I have no clue
on what the claims and the payments made entailed and what the
figures are. The Second Plaintiff was equally in
the dark as to the
exact value of the projects in particular, the One Stop Project,
giving the court just estimates. The exact
figures are necessary
because the court would allow a claim not exceeding 15% thereof as
provided in the SLA. The court finds it
difficult to award any amount
without indications of the amounts paid by the First Defendant so the
same is deductible from the
amount claimed. Counsel for the First
Plaintiff conceded that the court is in a difficult predicament when
these figures were not
quantified. I agree, save to say it is the
Plaintiffs in such a predicament. When a plaintiff merely alleges
that it suffered damages
without being able to quantify them, on that
ground alone, the claim shall fail.
[4]
45.
On this aspect alone, this case could have
been disposed of without much consideration of the merits. This is
because it is pointless
to prove the merits of which the quantum
cannot be proved or quantified. For plaintiff’s failure to
prove the quantum, the
claim stands to be dismissed.
46.
As for costs, I do not see any reason why
costs should not follow the outcome. As agreed in the SLA, costs
shall be on attorney
and client’ scale.
47.
Consequently, the following order is made.
The Plaintiff’s
claim is dismissed with costs; costs payable on attorney and client’
scale jointly and severally, the
one paying the other to be absolved.
_____________________
TV
RATSHIBVUMO
ACTING
JUDGE OF THE HIGH COURT
FOR
THE PLAINTIFF: ADV MJ MPSHE SC
INSTRUCTED
BY: ANTON RAMAANO ATTORNEYS
C/O
SWANEPOEL & PARTNERS
MBOMBELA
FOR
THE DEFENDANT: ADV AE AYAYEE
INTRUSCTED
BY: MAJAVU INCORPORATED
C/O
NYAKATYA INC
MBOMBELA
DATE
HEARD: 26-29 AUGUST & 10 SEPTEMBER 2019
JUDGMENT
DELIVERED: 15 OCTOBER 2019
[1]
“Christie’s Law of Contract in South Africa” 7
th
Edition, 2016 at p. 610-611.
[2]
1947 (2) 900 (E) 919.
[3]
Mohamed’s
Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd
2018 (2) SA 314
(SCA) at para 23-24.
[4]
Marion
Smith v Mountain Oaks Winery (Pty) Ltd & another
(1171/18)
[2019] ZASCA 123
(26 September 2019) at para 18.