About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2019
>>
[2019] ZAFSHC 230
|
|
Raubex Construction (Pty) Ltd v Phumelela Local Municipality and Another (4204/2019) [2019] ZAFSHC 230 (28 November 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates:
NO
Case number:
4204/2019
In
the matter between:
RAUBEX CONSTRUCTION
(PTY) LTD
Applicant
and
PHUMELELA LOCAL
MUNICIPALITY
1st Respondent
THE MINISTER OF THE
DEPARTMENT OF
WATER AND
SANITATION
2nd Respondent
CORAM:
JP DAFFUE, ADJP
HEARD
ON:
28 NOVEMBER 2019
JUDGMENT BY:
JP DAFFUE, ADJP
DELIVERED ON:
28 NOVEMBER 2019
I
INTRODUCTION
[1]
A
construction company submitted a tender on invitation by a Local
Municipality for the construction of the Cornelis River Dam and
Appurtenant works. On 30 September 2016 the tender was awarded
to it by the Municipality and the contract works commenced
on 31
October 2016. On 22 July 2019 the Municipality’s agent,
the engineering company, RudNat, issued a final approval
certificate
to the construction company. Notwithstanding this, the Municipality
fails to make payment to the construction company
of certain
retention monies.
II
THE PARTIES
[2]
The
parties are Raubex Construction (Pty) Ltd, herein represented by Adv
JJ Buys, duly instructed by L&V Attorneys.
[3]
The
respondent is Phumelela Local Municipality, herein represented by Adv
SS Jonase, duly instructed by Ponoane Attorneys, Bloemfontein.
[4]
The
Minister of the Department of Water and Sanitation was cited as an
interested party. The Minister filed a notice that
he/she will
abide by the decision of the court.
III
THE RELIEF CLAIMED
[5]
Applicant
seeks payment of payment certificates 29 and 30 in the amounts of
R2 131 421.41 and R3 197 132.12
respectively
together with interest and costs on an attorney and own client scale.
IV
THE DEFENCES
[6]
I
found it difficult to understand the defences relied upon by the
respondent. It is perhaps apposite to summarised the averments
as follows:
6.1 The
Division of
Revenue Act
(“DORA”) is applicable and in terms thereof
the retention amount / fees “
has
been allocated for the 2019/20 financial year and Gazetted as such.
In this case the retention value should be in line
with the
contractual value of R89 808 331.49 Vat inclusive.
”
[1]
6.2 The claim for
payment of certificates 29 and 30 is irregular and unlawful as it
exceeds the contract value of the project
and the gazetted amount.
6.3 Although
applicant is entitled to a retention amount in respect of payment
certificates 1 to 24 in the amount of R4 422
025.90,
[2]
this amount is not payable as the respondent has made a
recommendation in favour of the applicant to the Department of Water
and
Sanitation for payment of this amount (and apparently the
Department has not come forth with any payment and/or failed to grant
permission for the amount to be paid).
6.4 The amounts
claimed far exceed the retention amount mentioned in the previous
sub-paragraph
[3]
.
6.5 The variation
of the contract amount has not yet been approved by National
Treasury
[4]
and any
increase of the contract price can only be valid upon approval by
National Treasury and the Department of Water and
Sanitation, Free
State Province.
[5]
V
EVALUATION OF THE EVIDENCE AND SUBMISSIONS BY THE PARTIES
[7]
It
is common cause that the initial contract price was R89 808 331.49
and that there was a contract price adjustment to
the contract of
R2 868 661.78.
[6]
[8]
It
is also common cause that a variation order was supported by the
Department of Water and Sanitation, Free State to increase the
contract price to R102 374 280.00.
[7]
The only issue that respondent has with the approval of the variation
order is that National Treasury has not approved the
increase in the
contract price. In this regard Annexure “FA15”
reads as follows: “
In
light of National Treasury requirement Phumelela Local Municipality
is advised to submit the VO to National Treasury for approval.
”
Respondent is vague in
the extreme as to what it did pertaining to the advice received from
the Department,
i.e
.
whether it applied for approval from National Treasury, if so when
and in such an event whether National Treasury granted the
approval
or not. Fact of the matter is that the letter of the Department
is dated 13 April 2018 and thus during the contract
works. More
than a year later the contract works were finalised and according to
the papers before me, nobody ever suggested
and/or complained about
the fact that the variation order was not approved by Treasury.
[9]
Respondent
could not rely on a bare denial in respect of the absence of approval
by National Treasury and more was expected of it
in light of the
judgment of the SCA in
Wightman
t/a JW Construction vs Headfour (Pty) Ltd and Another
[8]
and I quote:
“
[13]
A real, genuine and
bona
fide
dispute of fact can exist only where the court is satisfied that the
party who purports to raise the dispute has in his affidavit
seriously and unambiguously addressed the fact said to be disputed.
There will of course be instances where a bare denial meets
the
requirement because there is no other way open to the disputing party
and nothing more can therefore be expected of him. But
even that may
not be sufficient if the fact averred lies purely within the
knowledge of the averring party and no basis is laid
for disputing
the veracity or accuracy of the averment. When the facts averred are
such that the disputing party must necessarily
possess knowledge of
them and be able to provide an answer (or countervailing evidence) if
they be not true or accurate but, instead
of doing so, rests his case
on a bare or ambiguous denial the court will generally have
difficulty in finding that the test
is satisfied. I say ‘generally’
because factual averments seldom stand apart from a broader matrix of
circumstances
all of which needs to be borne in mind when arriving at
a decision. A litigant may not necessarily recognise or understand
the
nuances of a bare or general denial as against a real attempt to
grapple with all relevant factual allegations made by the other
party. But when he signs the answering affidavit, he commits himself
to its contents, inadequate as they may be, and will only
in
exceptional circumstances be permitted to disavow them. There is thus
a serious duty imposed upon a legal adviser who settles
an answering
affidavit to ascertain and engage with facts which his client
disputes and to reflect such disputes fully and accurately
in the
answering affidavit. If that does not happen it should come as no
surprise that the court takes a robust view of the matter.”
[10]
In
any event, applicant indicated that approval from National Treasury
is irrelevant pertaining to the claim for the remainder of
the
retention monies due to it as set out in certificates 29 and 30.
Applicant indicated with precision that retention monies
were
deducted in an amount equal to 10% of the original adjusted contract
price of R92 670 496.30 and that the variation
order has
nothing to do with the retention monies withheld. Respondent
should be in possession of 10% of R92 670 496.20
which it
deducted from the payment certificates issued from time to time.
[9]
It is apparent from the papers that payment certificates 29 and 30
represent the second half of the retention monies allegedly
due and
payable to applicant.
[11]
Applicant
issued a previous court application in respect of payment
certificates 27 and 28 in respect of the first half of the retention
monies due and payable, which also included an amount relating to the
variation order. That application was also opposed
by the
respondent, but Jordaan J granted orders in favour of applicant.
An application for leave to appeal that judgment
was dismissed by the
learned Judge and apparently an application for leave to appeal was
filed with the Supreme Court of Appeal.
It is mentioned by the
applicant that the respondent’s claim that it was unaware of
the variation order referred to above,
was found by Jordaan J to be
“
blatantly
and patently false and misleading.”
However
as mentioned, the variation order is irrelevant pertaining to the
applicant’s claim
in
casu
for the reasons set out above. Mr Jonase also submitted that
that application is to be distinguished from the facts
in
casu
.
There respondent denied liability, whilst a concession of liability
in an amount of about R4.4m has been made here.
[12]
I
do not understand on what basis respondent relies on the defence that
monies pertaining to the retention amounts have been allocated
or
earmarked for payment during the 2019/2020 financial year and
“
gazetted as
such”
.
Fact of the matter is that we are presently in the 2019/2020
financial year insofar as that year terminates on 31 March
2020. I
also do not understand the relevance of DORA as the respondent failed
to enlighten the court in this regard. Bare
allegations without
proper supporting evidence does not pass muster as set out in
Wightman
supra.
[13]
Respondent
tries to impress upon the court that payment of retention monies
would be irregular and unlawful expenses, or would be
tantamount to
irregular and unlawful expenditure, but in the same breath it
acknowledges that it owes retention monies, but only
in the amount of
approximately R4.4 million. This concession is irreconcilable
with all the other defences raised.
Mr Jonase submitted that
the parties are close to each other and that applicant should have
revisited its claim on receipt of the
figure stipulated by respondent
as the correct amount payable. I have a problem with this
approach. Firstly, no calculations
have been made by respondent
to show how it arrived at the figure. Secondly, this figure and
respondent’s concession
of liability came to the fore for the
first time in the answering affidavit. There is no allegation,
not to speak of proof,
that respondent disputed the correctness of
applicant’s claim prior to institution of the application and
pointed out what
was owing to applicant.
[14]
It
is trite law that payment certificates such as those relied upon by
applicant are regarded as liquid documents since these are
issued by
the employer’s agent. Therefore provisional sentence
summonses are often issued on payment certificates.
In
Joob
Joob Investments vs Stocks Mavundla Zek JV
[10]
Navsa JA, writing for a unanimous court, held as follows:
[11]
“
[27]
Gorven AJ pointed out, with reference to
Randcon
(Natal) (Pty) Ltd v Florida Twin Estates Ltd
1973
(4) SA 181
(D & CLD) at 183H-184H, that a final payment
certificate is treated as a liquid document since it is issued by the
employer’s
agent, with the consequence that the employer is in
the same position it would have been in if it had itself signed an
acknowledgment
of debt in favour of the contractor. Relying further
on the
Randcon
case (at 186G-188G), the learned judge held that similar reasoning
applied to interim certificates. The certificate thus embodies
an
obligation on the part of the employer to pay the amount contained
therein and gives rise to a new cause of action subject to
the terms
of the contract. It is regarded as the equivalent of cash. The
certificates in question all fall within this ambit.
[28]
Stocks held three liquid documents, the equivalent of
acknowledgements of debt. It could have proceeded
to obtain
provisional sentence on them but chose to apply for summary
judgment.”
[15]
Mr
Jonase submitted that insofar as a dispute exists in respect of the
amount due and payable, the application should be dismissed
with
costs, alternatively the court should allow the parties an
opportunity to file further affidavits, or further in the
alternative,
the matter should be referred to oral evidence, costs to
stand over. I am not prepared to grant any of the orders
suggested
for the reasons set out herein.
[16]
I
am satisfied that applicant has made out a proper case for the relief
claimed. I agree with applicant that the contract
between the
parties provide for interest to be paid on outstanding and/or late
payments as calculated on the prime overdraft rate
of applicant’s
bank. I am also satisfied that respondent acted grossly
unreasonable to oppose the application and therefore,
in the exercise
of my discretion, a punitive cost order is warranted.
VI
THE CONDONATION APPLICATION
[17]
Respondent
brought an application for condonation for the late filing of its
answering affidavit. The application was opposed
by applicant,
but Mr Buys did not submit with any vigour that the application
should not be granted. It is clear that applicant
decided to
get finality in the matter and continued to file its replying
affidavit in the main application notwithstanding the
late filing of
the answering affidavit in that application.
[18]
Notwithstanding
an order granted on 17 October 2019, respondent failed to file its
condonation application on/or before 25 October
2019. It merely
filed the founding affidavit on 25 October 2019 while the condonation
application was filed three days later
and therefore contrary to the
aforesaid court order. Applicant in the main application filed
its answering affidavit timeously
and in accordance with the
aforesaid court order, but again, the replying affidavit of
respondent was filed on 19 November 2019
only and twelve days late. I
also noticed from the order granted by Jordaan J dated 28 February
2019 mentioned above, that respondent
had to apply for condonation
for the late filing of its answering affidavit in that case as well.
I must say that I am not
impressed with the manner in which the
respondent and its municipal manager in particular has dealt with the
matter in flagrant
disregard of the Rules and a court order. I
also noticed that the respondent’s founding affidavit in the
condonation
application was deposed to on an unknown date as neither
the deponent, nor the commissioner of oaths cared to comply with a
most
basic requirement by inserting the date. I decided to deal with
the application based on all the affidavits before the court, there
being no compelling reason to dismiss the condonation application.
I therefore granted condonation and ordered respondent
to pay the
costs of the opposed application. My order will again be
reflected hereunder for clarity purposes.
VII
ORDERS
The following orders are
issued:
1.
Condonation
is granted to respondent for the late filing of its answering
affidavit.
2.
Respondent
is liable for the costs of the condonation application, including
applicant’s costs in opposing the application.
3.
Respondent
is ordered to pay the amounts of R2 131 421.41 and R3 197 132.12
in respect of payment certificates 29 and 30 to
applicant.
4.
Respondent
shall pay interest, as calculated on the prime overdraft rate of
applicant’s bank, on all outstanding and/or late
payments to
the applicant, as calculated from 5 August 2019 until 3 September
2019 in the amount of R 42 336.45.
5.
The
respondent shall pay further interest at the rate of 10.5% per annum
on all outstanding and/or late payments from 4 September
2019 until
date of final settlement.
6.
Respondent
shall pay the costs of this application on an attorney and own client
scale.
J P DAFFUE, ADJP
On
behalf of Applicant
: Adv JJ Buys
Instructed
by
: L&V Attorneys
BLOEMFONTEIN
On
behalf of Respondent :
Adv SS Jonase
Instructed
by
: Ponoane Attorneys
BLOEMFONTEIN
[1]
Para 3 of the answering affidavit, p 87
[2]
Para 7, pp 88 and 89
[3]
Para 11, pp 89 and 90
[4]
Para 12, p 90
[5]
Paras 12 & 19, pp 90 & 91 respectively
[6]
Para 6.3.3 of the Founding affidavit, p 14, read with para 18 of the
answering affidavit, p 91
[7]
Para 6.3.4, p 14 read with p 18 of the answering affidavit, p 91,
read with annexure “FA15” on p 69
[8]
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at para 13
[9]
Paras 12.5 & 12.6, pp 23 & 24
[10]
2009 (5) SA 1 (SCA)
[11]
Ibid paras 27 and 28; see also QwaQwa Regeringsdiens v Martin Harris
& Seuns (OVS)
2000 (3) SA 339
(SCA) at 355 E - H