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[2019] ZAKZPHC 54
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Abajabuli Project Services CC v Uthekela District Municipality (AR35/18) [2019] ZAKZPHC 54 (1 July 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWA-ZULU
NATAL DIVISION, PIETERMARITZBURG
CASE
NO: AR35/18
In
the matter between:
ABAJABULI
PROJECT SERVICES CC
Appellant
(Plaintiff in the Court a quo)
and
UTHUKELA
DISTRICT MUNICIPALITY
Respondent
(Defendant
in the Court a quo)
Coram:
Koen, Ploos van Amstel JJ
et
Jikela AJ
Heard:
21 June 2019
Delivered:
1 July 2019
ORDER
On appeal
from
the High Court of South Africa, KwaZulu-Natal
Division, Pietermaritzburg (Poyo-Dlwati
J sitting as the court of
first instance):
1
Paragraph
(a) of the order of the court a quo is amended to read as follows:
'(a) Itis declared that the termination by the defendant
of the
service agreement between it and the plaintiff was procedurally in
accordance with the terms of clauses 3.1.2 and 9.2.1.3.3
of the
General Conditions of Contract for Construction Works (2010)
published by the South African Institute of Civil Engineering.'
2
The
appeal is otherwise dismissed with costs.
JUDGMENT
Koen
J
(Ploos van
Amstel J et Jikela AJ concurring):
Introduction:
[1]
This is an appeal against paragraph (a)
of the order of the court a quo which determined that:
'The
termination by the municipality of the services agreement between it
and the plaintiff was lawful and in accordance with the
terms of the
GCC agreement entered into between the plaintiff and the
municipality'.
In what follows in this judgment
the plaintiff/appellant shall be referred to as 'the contractor', the
respondent as 'the municipality',
and the services agreement simply
as 'the contract'.
[2]
The contractor was the successful
tenderer in respect of a contract for the construction of bulk water
gravity mains and associated
infrastructure, reservoirs and other
appurtenant works ('the works'). It contends that while the works
were in progress, the municipality
terminated the contract
unlawfully, as a result of which it suffered damages in an amount
exceeding R15 million, which appears
to have been the contract price.
In addition it claims damages for the loss of certain equipment
allegedly left behind on the site
and which it was prevented from
removing.
The
issue separated for determination
[3]
The issues of quantum and liability were
previously separated by an order granted during the case flow
management of the action.
At the commencement of the trial, an order
was granted at the request of the parties, separating a further issue
in respect of
the question of liability, for determination before all
other issues. During argument on appeal a dispute arose as to what
was
separated for determination. This again demonstrates the
importance of the formulation of any agreement to separate issues
being
clear and specific as to not leave the parties and the court in
any doubt as to what had to be determined.
[4]
Mr Masenya for the contractor submitted
that the issue separated was that which he identified in his opening
address to the learned
trial judge. The record reflects that he said:
'What
is in dispute, M'Lady, is the termination of the service agreement
primarily in twofold. The first fold is that the service
agreement
between the parties was procedurally incorrect given the provisions
of clause 9.2 of the service agreement and the second
one is that the
termination was not lawful, in other words the defendant terminated
the service agreement unlawfully.
Now
the parties have agreed, M'Lady, to proceed just on one aspect, which
is the first one, being that whether the termination of
the service
agreement was procedurally correct given the provisions of the
service agreement, particularly clause 1.2
[1]
of the agreement.'
[5]
When regard is had to the relevant
provisions of the agreement quoted below, the above statement by Mr
Masenya would mean that the
issues separated for determination were
whether there was a decision by the engineer that the contractor had
defaulted in its obligations
in terms of the contract, whether the
engineer then certified to that effect, whether the contractor was
then on that basis placed
on terms to remedy that default, whether it
remedied that default, and if not whether the contract was then
cancelled. Whether
the contractor had indeed defaulted in its
obligations as determined and certified by the engineer would not be
an issue before
the court a quo, but would stand over for
determination at a later stage.
[2]
If the issue separated is confined to Mr Masenya's understanding as
set out above then much of the evidence adduced, such as the
contractor's explanation of problems it experienced and which
allegedly caused the delays, was probably irrelevant. Such evidence
would be irrelevant to the issue whether the engineer had issued a
certificate only after consultation with the parties or as otherwise
contemplated in terms of the contract. It would however be relevant
to a determination of the issue whether the engineer was correct
in
his decision that the contractor had defaulted, but that issue Mr
Masenya contended, remains an issue for determination on another
day.
The ambit of the evidence adduced and permitted does not however
provide a conclusive answer. By the very nature of litigation
evidence adduced and permitted often stray beyond what might in
retrospect have been strictly relevant, and it would be unfair
to
level any criticism in that regard.
[6]
Mr Goddard SC for the municipality
stated the following at the outset of the trial: '... by consent the
issue of liability is further
separated, so that the Court deals only
with the issues pleaded in paragraph 6.1 to 6.12 of the particulars 5
and 6 of the plea
and the replication.'
In his concluding argument before
judgment was reserved before the court a quo Mr Goddard however
stated:
'It
was not raised earlier and that is that page 125 of the pleadings,
paragraph 7 of the plea, the defendant says that in the alternative
if there was an un-procedural termination then the defendant claims
that there was a repudiation by the plaintiff. So that issue
would
still have to go to trial, even if there was an un-procedural
termination.'
During argument before us he
however contended that the issue whether the engineer was correct in
concluding that the contractor
was in default of his obligations,
apart from the procedural issues resulting in such a determination,
were indeed issues before
the trial court.
[7]
There is some support for Mr Goddard's
view to be found in how the trial was conducted and in the terms of
the order which was eventually
granted. The learned trial judge ex
facie her order determined that the termination of the contract was
lawful and in accordance
with the terms of the GCC agreement. During
the course of her judgment she referred inter alia to the contractor
having been 'unable
to perform its obligations in accordance with the
contract' which would be a consideration relevant to the issue
whether the engineer
was correct in deciding that the contractor had
defaulted in its obligations in terms of the agreement and issuing a
certificate
to that effect. Her finding that the termination was
lawful seems to extend to the contract and its cancellation as a
whole, rather
than being confined to only the legal technical enquiry
whether the procedure adopted was correct. In the latter event the
relief
should possibly, more appropriately, have been couched in the
form of a more specific declaratory order.
[8]
The above conflict and uncertainty
require that the issue separated be determined first. What that issue
was, or the issues were,
must be decided on the basis of the terms of
the court order which was granted when the separation was directed.
The record revealed
that after having been addressed by both counsel,
the learned trial judge said:
'Yes,
I make the order in terms of the draft order by consent'.
No draft order was included in the
appeal record prepared by the contractor. Mr Masenya annexed a draft
order to his heads of argument.
Upon specific enquiry Mr Goddard
confirmed that this document was indeed a copy of the draft order
granted by the trial judge.
Paragraph 3 thereof records:
'3.
THAT by consent, the issue of whether the termination of the service
agreement was in accordance with the terms of the agreement,
as
pleaded in paragraphs 6.1 to 6.1.12 of the particulars of claim,
paragraphs 5 and 6 of the plea and the plaintiffs reply is
to be
decided separately, in terms of Uniform Rule 33 (4) from any other
question and that all further proceedings are to be stayed
until such
question has been disposed of.'
As with any other court order, the
consent order must be interpreted in accordance with the accepted
principles of interpretation.
The
issue for determination as identified by the pleadings:
[9]
The particulars of claim are not a model
of clarity and contain allegations of fact intermingled with details
of evidence. It however
became common cause that the contract was
concluded and subsequently terminated by the municipality. It is also
common cause that
the terms and conditions of the contract included
those embodied in the General Conditions of Contract for Construction
Works (2010)
published by the South African Institute of Civil
Engineering (the 'GCC').
[10]
Paragraph 6.1 to 6.12 of the particulars
of claim read:
'6.1 Defendant breached and
unlawfully terminated Plaintiffs contract as detailed below:
6.1.1
Contrary to clause 9.2.1.3 of the
Conditions of Contract, copies of which are herewith attached and
marked
ANNEXURE APS 06,
Defendant
failed to give a proper Notice to Plaintiff
to
remedy
the default prior to
termination of the contract.
6.1.2
In this regard reference is made to
Defendant's letter of the
25
th
March 2013
which clearly fails to
give Plaintiff the necessary notice to remedy the default within 14
days
as required by clause 9.2.1.3
of the Conditions of Contract and accordingly Defendant breached
Plaintiffs contract, see a copy of
the letter attached herewith and
marked
ANNEXURE APS
07
6.1.3
It was a material term of the contract
that prior to Defendant terminating Plaintiffs contract, the
Engineer, namely Sakuma Engineers
must have certified the alleged
default in writing to both the Plaintiff and Defendant in terms of
clause 9.2.1.3 of the conditions
of contract.
In
this regard, Defendant's letter of the 25 March 2014, contrary to
clause 9.2.1.3 of the conditions of contract
also preceded
the
certificate by the Engineer/Sakuma Engineers as aforesaid and
accordingly Defendant breached the contract.
6.1.4
Defendant's letter of the 25 March 2013
is clearly misleading and without any truth and merit in that it
refers to the Defendant
concurring with the opinion of Sukuma
Engineering when in fact reference to paragraph 5.2 of the minutes of
the
site meeting held between the
parties on 5
th
March 2013,
clearly indicates that
it was not the opinion of Sukuma Engineers but that of the Defendant
in that the Defendant instructed Sukuma
Engineers to commence the
process of terminating Plaintiffs contract, see copies of the minutes
herewith attached and marked
ANNEXURE
APS 08.
6.1.5
Defendant has since demonstrated
unjustified and baseless desperation to terminate Plaintiffs contract
through a series of un-procedural
and unlawful termination letters
contrary to clause 9.2 of the Conditions of Contract as detailed
below as follows:
6.1.6
Defendant's letter of the 31st
July
2013
which threatened to tenminate
Plaintiffs contract in terms of clause 9.2 of the conditions of
contract on the basis of the opinion
by Sukuma Consulting, which
opinion Plaintiff never received and was not aware of, see a copy
thereof herewith attached and marked
ANNEXURE
APS 09
6.1.7
Defendant's letter of the
21st
August 2013
which failed to afford
Plaintiff an opportunity to remedy the default within 14 days, but
effectively and summarily ordered Plaintiff
to evacuate the
development site, see a copy thereof herewith attached and marked
ANNEXURE APS 10.
6.1.8
Defendant's letter of the
21st
August 2013
terminated Plaintiffs
contract in terms of clause 9.2.1.3.7, on the ground that Plaintiff
"furnished inaccurate
information in the returnable documents completed at
a
tender stage and forming part of the
contract"
6.1.9
Defendant withdrew its letter of the 21
August 2013 on the
29 October 2013,
but persisted in its conduct of
terminating Plaintiffs contract and effectively continuing to bar
Plaintiff from entering the site,
see Defendant's letter addressed to
Plaintiffs Attorneys of record Messers Masenya & Associates,
copies of which are herewith
attached and marked
ANNEXURE
APS 11.
6.1.10
Defendant's second letter of the 29
October 2013 addressed to Plaintiff, which letter (i) withdrew
Defendant's letter of the 21
August 2013, (ii) terminated Plaintiffs
contract in terms of GCC 2010 Clauses 9.2, sub clauses 9.2.1.3.3 and
9.2.1.3.5, see a copy
thereof herewith attached and marked
ANNEXURE
APS 12.
6.1.11
Defendant's letter of the 29 October
2013 addressed to Plaintiff referred to Defendant's letter of the 30
July and all its termination
letter and or its notice to Plaintiff
"lo
remedy the default within 14
days"
when in fact there was no
such letter and or notice.
In
this regard, see a copy of the letter from Plaintiffs attorneys of
record, Masenya & Associates to Defendant requiring a
copy of
Defendant's letter of the 30 July as well as a letter from the
Defendant confirming that no such letter existed, copies
of which are
herewith attached and marked
ANNEXURE APS 14
and
ANNEXURE
APS 15
respectively.
6.1.12
Thus, Defendant's termination of the
Plaintiffs contract in terms of Defendant's letters dated the 25
March 2013, 31'1 July 2013,
21'1 August 2013 and 29 October 2013 was
not only un-procedural and contrary to the relevant terms of the
Conditions of Contract
but was also unlawful.'
[11]
Nothing material to this appeal turns on
the contents of paragraph 5 of the plea. Paragraph 6 of the plea
reads:
'Without limiting the generality
of the foregoing denial, but merely in amplification thereof, the
defendant pleads:
(a)
That on or about 8 March 2013
alternatively 30 July 2013 the engineer certified that the plaintiff
had failed to commence, proceed
with or execute the works, as
contemplated in clause 9.2.1.3 of the Conditions of Contract, as
appears from a copy which is annexed,
marked Plea 1 alternatively
Plea 2;
(b)
On or about 30 or 31 July 2013
the defendant gave written notice to the plaintiff to remedy the
default, in accordance with clause
9.2 of the Conditions of Contract,
as appears from annexure "APS9" to the particulars of
claim;
(c)
On or about 29 October 2013 the
defendant terminated the contract in terms of clause 9.2, sub-clauses
9.2.1.3.3 and 9.2.1.3.5, as
appears from annexure "APS12"
to the particulars of claim.'
[12]
The relevant parts of the replication
read as follows:
'2. AD: PARAGRAPH
6
(A) THEREOF
2.1
The contents of this
paragraph are contradictory at best especially when considered with
reference to paragraph 6.1.1 of the particulars
of claim in that
Annexure Plea 1 alternatively Plea 2 attached thereto, refers to an
Opinion as (alleged) by SUKUMA CONSULTING
ENGINEERS in their (SUKUMA)
letter of the 8 MARCH 2013
but
not
a "Certificate" as required by Clause 9.2 of the Conditions
of Contract,
2.2
Plaintiff denies having
received the aforesaid letter of the 8 March 2013 at any material
stage before the 25 March 2013 when same
was faxed by Defendant.
Defendant
concedes receiving the aforesaid letter for the first time only on
the 25
th
March 2013 but even so, disputes that the
aforesaid letter constituted one in accordance with the terms of the
contract (Clause
9.2) and thus is improper and consequently
invalidates the notice period of 14 days provided for by Clause
9.2.1.3 of the conditions
of contract.
2.3
In the result, Plaintiff
replies that it is baseless in the circumstances for Defendant to
begin alleging that Annexure Plea 1 alternatively
Plea 2 constituted
a Certificate by an Engineer as contemplated by Clause 9.2.1.3 of the
Conditions of the Contract or even an
Opinion as alleged and or
pleaded,
Thus
Plaintiff re-iterates its stand as amplified in the particulars of
claim that Plaintiff never received neither an Opinion and
or a
Certificate by the SUKUMA CONSULTING ENGINEERS on the 8 March 2013
alternatively on the 30 July 2013 as pleaded.
3.
AD PARAGRAPH 6 (B) THEREOF
3.1
Defendant appears to be in doubt as
to when in fact the Notice to terminate the contract (if any, for a
simple reason that same
is disputed) was given to the Plaintiff, when
in fact the date when the Notice was given is a material allegation
and same should
be properly pleaded by Defendant, but even worse,
Defendant does not provide the delivery date of the aforesaid letter,
3.2
The letter (Plea 1 or Plea 2) dated
the 30 July 2013 referred to herein is from SUKUMA CONSULTING
ENGINEERS and not from the Defendant
and Defendant could not have
given Plaintiff a Notice to terminate on the basis of the aforesaid
letter,
3.3
Equally, Plaintiff replies that
Defendant's letter of the 31" July 2013 cannot constitute a
Notice of Termination as contemplated
by Clause 9.2.1.3, in that
3.1)
it is not based on the Certificate
of the Engineer as required by Clause 9.2,
3.2)
it completely ignores the provisions
of Clause 3.1.2 of the Conditions of the Contract which
must
precede
the process in terms of
Clause 9.2, the contents of such discussions in terms of clause 3.1.2
were recorded in the Minutes of the
site meeting held on the 27
February 2013, copies of which of which are herewith attached and
marked
ANNEXURE APS 022,
which
minutes are vital for consideration before one proceeds in terms of
Clause 9.2,
3.3)
ignores the changes of the relevant
time periods relating to the working scope when considering issues of
performance in terms of
the contract even as occasioned by:
(i)
subsequent changes in scope of work
necessitated and occasioned by Defendant,
(ii)
subsequent changes as necessitated
and occasioned by the Engineer (SUKUMA) when re-surveying the
Contract Site and consequently
re-setting out same,
(iii)
as a result of which Plaintiff was
required to adjust his contract program schedule including cash flow
contract schedules as was
agreed in the latter minutes referred to as
ANNEXURE APS 022. Copies of the resultant revised contract program
schedule and contract
cash flow schedule are herewith attached and
marked
ANNEXURES APS 023
and
APS 024
respectively.'
[13]
The terms of particularly paragraph
'3.3)' of the replication on a superficial reading might appear to
introduce as issues the correctness
of the decision and certificate
by the engineer that the contractor was behind in schedule. Paragraph
'3.3)' raises questions such
as a subsequent change in the scope of
work, as a result of which it is claimed the contractor was required
to adjust the contract
programme schedule, including cash flow
schedules, which presumably would entail delays. The issue of delay
was also canvassed
during the evidence and it was never disputed that
the contractor was behind in performance. Reading the provisions of
paragraph
'3.3)' in its entirety it seems that these allegations are
made specific to the notice of termination being defective.
[14]
On a proper interpretation of the
relevant parts of the particulars of claim, the plea and the
replication, the issue separated
for determination by the draft order
was indeed confined to the procedural correctness of the engineer's
decision, the engineer's
certification and the cancellation which
followed thereon. That the issue separated was this more restricted
issue also appears
from enquiries directed during the stage when the
application for leave to appeal was argued. Although the learned
judge said:
'But
is it not for one to get to the issue whether there was termination,
you need to deal with the issues leading to the termination.
What
happened before the termination. It is not in isolation'. She later
stated that, '... I have not found as a fact that they
did not
perform ... So the issue of whether they performed or not, is that
not the issue that needs still to be dealt with in another
Court ...
' She concluded that, '... in my understanding the whole of the
judgement and in fact some of the things that you raised
in the leave
to appeal is an issue for interpretation', which it could only be if
the issue separated was restricted to the issue
of procedural
compliance. Whether the contractor was indeed behind in performing in
accordance with the schedule of performance
was for subsequent
determination. That is the basis on which this appeal shall be
approached. It will then also follow, with respect,
that the order
granted by the learned trial judge after having heard the evidence,
should be more restricted and specific. That
will be addressed after
considering the merits of this appeal.
The
terms of the agreement relevant to this appeal
[15]
To determine whether the defendant
terminated the contract lawfully, it is necessary to have regard to
the provisions of the GCC
relevant to the issues separated for
determination. These include the following:
(a)
'3. ENGINEER
3.1
Functions of the Engineer:
3.1.1
The function of the Engineer is to
administer the Contract as agent of the Employer, in accordance with
the provisions of the Contract.
3.1.2
Whenever the Engineer intends, in terms
of the Contract, to exercise any discretion or make or issue any
ruling, contract interpretation
or price determination, he shall
first consult with the Contractor and the Employer in an attempt to
reach agreement. Failing agreement,
the Engineer shall act
impartially and make a decision in accordance with the Contract,
taking into account all relevant facts
and circumstances.'
It is common cause that the
appointed engineer was Sukuma, represented in the main by Mr Maher.
(b)
'5.6 Programme
5.6.1
The Contractor shall deliver to the
Engineer as part of the documentation required before commencement
with Works execution in accordance
with Clause 5.3.1, an initial
programme of carrying out the Works in order to meet the Due
Completion Date. Whenever the approved
programme no longer reflects
that actual progress will meet the Due Completion Date, the
Contractor shall deliver to the Engineer
an adjusted programme.
5.6.2
The initial programme and all subsequent
adjusted programmes shall show and, when relevant, describe in
statements, the entire scope
of the work to be performed including
but not limited to:
5.6.2.1
The Commencement Date, commencement of
the Works, Due Completion Date, and the planned completion date,
5.6.2.2
The sequence, timing and resources for
carrying out the Works,
5.6.2.3
The
dates for Site accesses and possessions, approvals, instructions,
inspections, tests and all information required to execute
the Works,
5.6.2.4
The events influencing the execution of
the Works,
5.6.2.5
Other
programming information set out in the Scope of Work,
5.6.2.6
A
detailed cash flow forecast, and
5.6.7 On adjusted
programmes, the actual progress achieved for the various parts of the
Works and the amounts paid.'
(c)
'9.2 Termination by Employer
9.2.1 If:
9.2.1.1 ... 9.2.1.2...
9.2.1.3
After giving effect to Clause 3.1.2, the Engineer certifies,
in
writing, to the Employer and to the Contractor, with specific
reference to this Clause, that the Contractor: 9.2.1.3.1...
9.2.1.3.2...
9.2.1.3.3
Has failed to proceed with the Works in accordance with the approved
programme
or in the absence of an approved programme, in the
Engineer's opinion, 9.2.1.3.4...
9.2.1.3.5
Is not executing the Works in accordance with the Contract, or is
neglecting
to carry out his obligations under the Contract,
9.2.1.3.6...
9.2.1.3.7
Has furnished inaccurate information in the returnable documents
completed
at tender stage and forming part of the Contract,
then
the Employer may, after giving fourteen (14) days written notice to
the Contractor, (with specific reference to this Clause)
to remedy
the default, terminate the Contract and order the Contractor to
vacate the Site and hand it over to the Employer. The
Employer rnay
then enter the Site and the Works and expel the Contractor therefrom
without thereby affecting the rights and powers
conferred on the
Employer or the Engineer by the Contract...'
(d)
'10. CLAIMS AND DISPUTES
10.1
Contractor's claim
10.1.1
The
following provisions shall apply to any claim by the Contractor for
an extension of time for the Practical Completion of the
Permanent
Works in terms of Clause 5.12, or in terms of any Clause that refers
to Clause 10.1 additional payment or compensation:
10.1.1.1
The Contractor shall, within 28 days
after the circumstance, event, act or omission giving rise to such a
claim has arisen or occurred,
deliver to the Engineer a written
claim, referring to this Clause and setting out:
10.1.1.1.1
The particulars of the circumstance,
event, act or omission giving rise to the claim concerned,
10.1.1.1.2
The provisions of the Contract on which
he bases the claim,
10.1.1.1.3
The length of the extension of time, if
any, claimed and the basis of calculation thereof, and
10.1.1.1.4
The amount of money claimed and the
basis of calculation thereof.
10.1.1.2
If, by reason of the nature and
circumstances of the claim, the Contractor cannot reasonably comply
with all or any of the provisions
of Clause 10.1.1.1 within the said
period of 28 days, he shall:
10.1.1.2.1
Within the said period of 28 days notify
the Engineer, in writing, of his intention to make the claim ...
10.1.4
If, in respect of any claim to which
this Clause refers, the Contractor fails to comply with the 28 day
period notice period in
Clause 10.1.1, as read with Clause 10.1.2, or
does not deliver his final claim within 28 days after the end of the
events or circumstances,
the Due Completion Date shall not be
extended, the Contractor shall not be entitled to additional payment,
and the Employer shall
be discharged of all liability in connection
with the claim.
10.1.5
Unless otherwise provided in the
Contract, the Engineer shall, within 28 days after the Contractor has
delivered his claim in terms
of Clause 10.1.1 as read with Clause
10.1.2, give effect to Clause 3.1.2 and deliver to the Contractor and
the Employer his written
and adequately reasoned ruling on the claim
(referring specifically to this Clause). The amount thereof, if any,
allowed by the
Engineer shall be included to the credit of the
Contractor in the next payment certificate;
Provided
that:
10.1.5.1
The said period of 28 days may be
extended if so agreed between the Contractor and the Engineer, and
10.1.5.2
Any amount that has been established to
the satisfaction of the Engineer, before his ruling on the whole
claim, shall be included
to the credit of the Contractor in the next
payment certificate.'
The evidence
[16]
The evidence at times strayed beyond
what is covered by the above pleadings. For the sake of completeness
a brief summary of the
material evidence is produced below, before
addressing the specific issue which was separated for determination.
[17]
Mr Jabulani Coshiwe is the 'owner and
project director' of the contractor. He was the only witness for the
contractor. The engineer,
Mr Maher, was the only witness called by
the municipality. There is little conflict in the factual content of
their evidence, save
for the contractor's allegation that it was
locked out of the site post 31 July 2013, an aspect I shall return to
later. In what
follows below I shall refer mainly to the evidence of
Mr Coshiwe, accompanied by some brief comments.
[18]
Mr Coshiwe testified that after
receiving the letter awarding the tender on 16 October 2012, the site
was handed over to the contractor
on 9 November 2012 for site
establishment, which took 'round about 30 days'. That period is
factored in when determining the period
of duration of the contract,
and hence would not justify a delay in performance. He further stated
that when receiving the letter
of appointment, the contractor was
required to submit the programme based on the start date of 9
November 2012. Civil contractors
take an end of year break from
'round about' 12 December 2012, which resulted in the site being
closed from 12 December 2012 until
the contractor returned onto site
after the holiday on 14 January 2013. When the plaintiff did its
calculations as to the duration
of the contract it was required to
have factored in the December holiday period as well.
[19]
The first site meeting was on 30 January
2013. The project was a 'labour intensive project', which
required the plaintiff to
utilise local labour procured through a CLO
(community liaising officer) identified by the municipality in
conjunction with the
engineer. Mr Coshiwe complained that the
contractor did not receive the required number of labourers in time
to meet the performance
dates provided for in respect of the project
because no CLO was initially appointed. The contractor projected
requiring 25 workers
whereas there were just under 10 when it
returned to site on 14 January 2013. He also complained that the
contractor could not
do anything until they had their first meeting
with all parties involved, being the meeting of 30 January 2013. Mr
Coshiwe complained
further that even at that stage the sourcing of
the labour had not been completed. At the first site meeting it was
minuted/reference
was made to the problems with labour.
[20]
In the minutes of progress meeting
number 1, on 27 February 2013, the plaintiff contractor reported
certain challenges. On 6 March
2013 it was recorded in the minutes of
the second site meeting that the personnel on site included the
contract manager, the site
agent for skilled labour, 22 unskilled
labourers and the CLO. The engineer highlighted that the contractor
was not performing.
It was recorded in respect of the 'Program' that
the 'Revised Scope of works details have been forwarded to (the
contractor) for
them to be able to compile an accurate programme' and
that the 'Construction Program was received at the last meeting'. A
revised
programme in an electronic format including resources was
required together with the revised cash flows following the progress
meeting on 27 February 2013. The revised programme was still to be
compiled and to be submitted to the engineers for approval by
11
March 2013. It was also recorded that the contractor had 'been
instructed to base the excavation for the program on machine
excavation and all other remaining labour-intensive activities will
remain as labour intensive (bedding, backfilling, etc.), as
discussed
and resolved by the Caps ISO and “TDM Social Facilitation.”
The
contractor reported that they were monitoring the achievement of
tasks by labour in order to compile the resource component
for the
programme.
[21]
Under progress it was reported in the
same minute that:
'Due to lack of progress on site
the (municipality) has instructed the Engineers to put (the
contractor) on terms and that the (municipality)
will terminate the
project should no progress or some intent to make progress be visible
in 2 weeks' time.'
It was minuted that the notice
according to the GCC would be forwarded to the contractor the next
day. It was further recorded that
the contractor was behind programme
on the bedding, laying and backfilling of pipelines according to the
original programme. The
contractor was also behind on both the
pipeline and reservoir components in terms of progress.
[22]
On 8 March 2013 the engineers in a
letter to the contractor recorded that the engineer was concerned
that 'with 14 weeks (23%) of
the contract period having lapsed, the
total value of work certified was only R480,532,10 or 3.6% of the
total contract value'.
In addition there was a lack of materials on
site which would cause further delays. With reference to clauses
9.2.1.3.2, 9.2.1.3.3
and 9.2.1.3.5 of the GCC the engineers expressed
the opinion that the contractor was not executing the works in
accordance with
the contract in that little progress had been made to
implement the works and that there did not appear to be sufficient
resources
on site to meet intermediate requirements. It pointed out
that if this was not suitably addressed within 14 days, the
municipality
'may elect to cancel the contract'. Mr Coshiwe denied
receiving this letter.
[23]
Following the meeting of 6 May 2013, and
the above letter of 8 May 2013, a letter was addressed by the
municipality to the contractor
on 25 March 2013. Mr Coshiwe admitted
receiving this letter. It recorded inter alia:
'We
concur with the opinion of Sukuma Consulting Engineers as stated in
their correspondence of 8 March 2013 that you have neglected
to carry
out your obligations in terms of your contract. Therefore, in terms
of the provisions of clause 9.2 of GCC 2010, please
be advised that
the uThukela District Municipality is exercising its right to
terminate the abovementioned contract effective from
14 days of the
date of this communication.'
[24]
Mr Coshiwe responded to this fax in
writing on 4 April 2013 complaining inter alia that it had not
received funds from financial
institutions due to not having a signed
contract as yet, that it had problems of paying wages for the week
ended 22 March 2013,
that it had problems with material supplied as
cessions were required prior to delivery on site and that there was
some misunderstanding,
and that as regards progress, an additional
team with excavator was added to the three teams they had on site to
catch up with
time delays. He concluded by stating that the
contractor 'will send a revised programme and cash flow to show how
we are going
to catch up with the days we have lost'. Whether such a
programme and cash flow were in fact sent, was not clarified in the
evidence.
Mr Coshiwe commented in regard to the letter of 25 March
2013 that he was aware that there was a lack of progress. He conceded
that the contractor was behind on the project.
[25]
In a letter from the engineers to the
contractor dated 11 April 2013 it was noted that the contractor was
making efforts to commence
with scheduled activities, but that 'as
discussed telephonically we will meet on Monday 10h00 at the offices
of the client to discuss
cash flows and materials deliveries, where
after a final recommendation will be made regarding the continuation
of the contract.'
It was not disputed that this letter dated 11 April
2013 was received by the contractor.
[26]
Mr Coshiwe said he interpreted this
Jetter as conveying that 'everything was fine' and that they were
'working as normal'. 'Everything'
could hardly be fine in the light
of the contents of the paragraph referring to a final recommendation
as to the continuation of
the contract still having to be made. The
third paragraph of this letter also confirmed that the engineer, Mr
Maher, was speaking
to Mr Coshiwe telephonically and hence was
consulting with the contractor from time to time.
[27]
The contract was signed on 15 April
2013. The signed contract was then taken to the funders of the
contractor to provide funding.
Eventually funding was received 'round
about July.'
[28]
Mr Coshiwe confirmed receiving the
engineers letter dated 25 April 2013, that there had been a meeting
at the municipality's offices
on 15 April 2013 as alluded to in that
Jetter, and that he in addition had various other meetings with Mr
Maher. This Jetter also
recorded that,
'[on]
the recommendation of the Engineer it was agreed that as the
contractor was indicating intent to remedy the default, that
he would
be granted a one month probation period during which the progress of
the Contractor was to be monitored closely to ensure
that set targets
were achieved'
The
Jetter concluded that '[the] situation was to be reviewed by 15 May
2013'.
[29]
Certainly by 29 April 2013 according to
the report from the LSO, the contractor accepted that it was in
arrears with the programme
but was 'confident that they would still
complete the project on time, they had a turnaround strategy.' In a
further report of
the LSO it was recorded that some labourers
complained that they had not been paid by the contractor. The
contractor however disputed
that any amounts were owing. In the words
of Mr Coshiwe, 'the only thing that we were battling with in the
beginning up until we
got the signed contract, it was the material,
the steel, but the plastic pipes we had them on site, they were
delivered.'
[30]
In the fifth site meeting held on 3 July
2013 it was recorded that the contractor needed to seriously review
its programme as it
was then at 7.9% of the scope of work, whereas
the time into the project was 50%, hence that there was 'a MAJOR
amount of catching
up to do'. The contractor needed 'to look at the
scope and realistically program the activities with the required
management, their
teams and the associated labour requirements to
achieve their program'. It was furthermore recorded that the
contractor needed
'to also review the reservoir component and not
just concentrate on the pipeline component in their programming.' Mr
Coshiwe conceded
that no dispute or objection was minuted to these
recordals that the contractor was behind. The obligation to catch up,
to submit
a revised programme, to revise the cash flows, etcetera
were all obligations of the contractor. The contractor failed to
comply
with these obligations timeously.
[31]
In regard to payment certificate number
five dated 15 July 2013, Mr Coshiwe stated that he could not recall
having requested payment
in advance. He conceded however that at that
stage the contractor was 'behind programme'. He conceded that Mr
Maher was talking
to him about the contractor being behind in the
programme and that they had various meetings, telephone discussions
and consultations,
as he was also discussing it with the
municipality. Mr Maher's uncontested evidence was that there were
extensive consultations
throughout the period of these meetings and
discussions and he confirmed that the contractor acknowledged that
the programme was
behind. In his opinion the contractor had
consistently failed to implement the works in accordance with the
programme. The programmes
were simply never met on time for whatever
problems there may have been on site. Programmes were never achieved.
Milestone expenditure
targets were never achieved. The very fact that
7% or 8% of the work was only completed after half the project
duration was in
Mr Maher's opinion clear evidence that the contractor
was not meeting his obligations.
[32]
The engineer's interactions with both
were described as extensive consultations in meetings and discussions
with regards to the
problem of a lack of progress. The contractor was
given considerable leeway and encouraged to catch up, but there was
never any
dispute that the progress was not in accordance with the
contract. The engineer accordingly was of the opinion and determined
that
the contractor had failed to proceed with the works in
accordance with the approved programme, or alternatively in the
engineer's
opinion.
[33]
In a letter dated 30 July 2013 addressed
by the engineer to the municipality, and sent separately by email to
the contractor at
5:22 PM on that day, the engineer recorded:
'With
reference to GCC2010 Clause 9.2.1.3 it is our opinion that the
Contractor has consistently failed to implement the works in
accordance with the programme, and as such is neglecting to carry out
his obligations under the Contract.'
[34]
On 31 July 2013 a letter was addressed
by the municipality to the contractor, referring inter alia to
previous correspondence, but
also the above mentioned letter dated 30
July 2013 (wrongly identified for reasons which were explained, as
'Letter dated 23 July
2013 from Sukuma'), recording that the
municipality concurred 'with the opinion of Sukuma Consulting
Engineers as stated in their
correspondence of 8 March 2013 and
23(30) July 2013 that [the contractor had] neglected to carry out
[its] obligations in terms
of [the] contract'. The letter concludes:
'Therefore,
in terms of the provisions of Clause 9.2 of GCC 2010, please be
advised that if you are unable to implement measures
to remedy the
situation, then the uThukela District Municipality will exercise the
right to terminate the above-mentioned contract
effective from 14
days of the date of this communication.'
[35]
The contractor contends that after 31
July 2013 it was locked out of the site by the municipality and
engineer, that its offices
were locked, it was not allowed to be on
site, and its people were not allowed to work on site. It was however
accepted by Mr Coshiwe
that he had received the letter from the
municipality dated 31 July 2013, and that this letter did not request
the contractor to
leave the site but simply recorded that the
municipality concurred with the opinion of the engineer that the
contractor had neglected
to carry out its obligations in terms of the
contract and required remedial measures to be implemented to remedy
the situation.
[36]
Progress payment certificate number 6 is
dated 15 August 2013. It would suggest that on 15 August 2013 the
engineer still viewed
the contract as being very much alive. Mr Maher
testified that the last site diary entry signed by the contractor's
agent and the
engineer's representative on site was 21 August 2013
and that there was still work taking place up to that date.
[37]
On 21 August 2013, which is more than 14
days after the demand of 31 July 2013, the municipality addressed a
letter to the contractor
referring to their letter of 30 July 2013
(it should be the municipality's letter dated 31 July 2013) and other
previous correspondence
and recorded that:
'The
rate of progress and resources on site have not been increased
sufficiently since our previous notice to give any indication
that
the Works will be completed on the due date. At present 58% of the
contract period has lapsed whilst the work completed amounts
to
approximately 8,5%. Despite assurances and attempts to remedy since
our first notification on 25 March 2013 the situation has
steadily
deteriorated.
We
regrettably advise that we consider that we have no further option
than to terminate your contract, and in terms of GCC2010 Clause
9.2.1.3.7 we order you to vacate the site and hand it over to our
representative.'
[38]
This letter giving notice of terminating
the contract and requiring the contractor to vacate the site
erroneously stated that this
was pursuant to clause 9.2.1.3.7. It was
followed by a letter from the contractor's attorneys dated 17 October
2013 which recorded
that they had noted that the municipality had
terminated the contractor's contract and directed the contractor
vacate the site.
It demanded that the municipality 'reinstate our
client's rights in terms of the contract issued by your
municipality... '
[39]
In subsequent correspondence by the
municipality to the contractor's attorneys dated 29 October 2013 the
erroneous reference to
GCC 2010 clause 9.2.1.3.7 was referred to. The
letter states:
'With
reference to our letter dated 21 August 2013 addressed to Abajabuli
Projects, The
uThukela District Municipality
confirms that the reference to GCC 2010 Clause 9.2.1.3.7 was
administratively incorrect, and hereby
withdraws the letter.'
[40]
Consistent with that letter the
municipality in a further letter to the contractor on the same date
advised that:
'1.
We hereby withdraw our letter dated 21 August 2013, owing to an
administrative error.
2. We confirm that following our
letter dated 30 July the rate of progress and resources on site were
not increased sufficiently
to give any indication that the work
should be completed on the due date, and as at 21 August 58% of the
contract period had elapsed
whilst the work completed amounted to
approximately 8.5%. Despite assurances and attempts to remedy since
our first notification
on 25 March 2013 the situation steadily
deteriorated.
We advise therefore that following
our notification of 30 July wherein you were afforded 14 days to
remedy the situation as per
the requirements of GCC 2010 Clause 9.2,
your continued failure to carry out obligations in terms of the
contract leaves us no
further option other than to terminate your
contract in terms of GCC 201O Clauses 9.2, sub clauses 9.2.1.3.3 and
9.2.1.3.5. '
[41]
Mr Coshiwe conceded that it was the
contractor's obligation to provide the programme that says how the
work should be carried out,
to the engineer. That obligation would
also extend to any subsequent adjusted programme, as required by
clause 5.6 of the GCC.
He also conceded that clause 10 of the GCC
contained a procedure for claims and disputes and a procedure
allowing the contractor
if it feels that something unfair was
happening in the contract, to raise a dispute in accordance with that
mechanism. This procedure
inter-alia requires that the dispute be
raised by way of a notice within 28 days of any problem arising. He
conceded that no such
written notice (written claim) was ever given
but sought to place reliance on references to delays that were
minuted at site and
similar meetings. That is however not the
procedure which clause 10 prescribes.
[42]
None of the payment certificates was
disputed in accordance with the procedures prescribed by GCC.
[43]
There was no evidence that the
contractor ever objected to being put on terms.
[44]
The contractor's remedy if it was
justifiably behind in the performance of the contract was not to
advance possible reasons and
excuses for being behind. If the
contractor had a legitimate reason for being behind schedule in the
programme so that 'the approved
programme no longer reflects that
actual progress will meet the Due Completion Date', then the
obligation was on it to comply with
the provisions of clause
5.6.1
of the GCC and to 'deliver to the Engineer an adjusted programme'.
The evidence did not disclose that this was ever done.
Discussion
[45]
Although the plea referred to the
letters of 8 March 2013, alternatively 30 July 2013, as constituting
the engineer's certificate,
it seems to me that Mr Maher is correct
when stating that one should have regard to the letter of 30 July
2013, with the one of
8 March 2013 simply setting the background, in
determining the issue whether the procedural requirements of clause
3.1.2 and 9.2.1.3.3
were complied with. This judgment shall likewise
proceed on that basis. In passing it should however be stated that Mr
Coshiwe
contended that he had not received the letter of 8 March 2013
and that he only received the letter dated 25 March 2013. In view
of
it only having background relevance
[3]
I do not intend dealing with that denial of receipt in great detail
save to state that his denial should, on the probabilities,
be
rejected. The letter of 8 March 2013 had been emailed to a number of
recipients including Mr Coshiwe on 8 March 2013. The email
notification featured as a document in the trial bundle. When
confronted with the email caption Mr Coshiwe could only muster, 'well
I see this, but I did not receive the letter.' In cross examination
he conceded that the address to which the covering email had
been
sent was his and that he would have received it in the form as
addressed, that is with the engineer's letter of 8 March 2013
attached. His version then became that he 'did not see this email and
... the attachment of that letter that was sent on to us,'
but
receipt thereof was no longer denied.
[46]
Mr Masenya contends that the engineer
did not consult with the contractor and the municipality as required
by clause 3.1.2. The
evidence is however replete with references to
the engineer consulting with and inviting and entertaining the
contentions of both
contractor and employer. Material correspondence
was copied to the parties, if not addressed directly to them. The
uncontested
evidence was that the engineer consulted extensively. The
extent of the consultations relating to the determination which
resulted
in the certificate recorded in the letter of 30 July 2013
appears from the contents of that letter. There is furthermore
nothing
in the GCC to suggest that any consultative process cannot
also be followed through discussions at site meetings and the like
and
that the consultation process is confined to one on one meetings
by the engineer with the contractor and municipality, as Mr Masenya
contended.
[47]
It might also be difficult for an
agreement as contemplated by clause 3.1.2 to result from
consultations where the contractor's
default consists of the
contractor being behind in the performance schedule, as opposed to
matters concerning, for example, 'contract
interpretation or price
determination' referred to in the first part of clause
3.1.2.
Assuming however that it is a default which is somehow capable of
being the subject of an agreement, then it seems that the
contractor's silence and acquiescence in not actively disputing that
it was behind, and in not invoking the provisions of clause
10, might
have resulted in an implied agreement that it had defaulted in its
obligations in terms of the contract. The contractor
is either behind
having regard to the provisions of the programme, or it is not.
Nowhere in the evidence was it contended by Mr
Coshiwe that the
contractor was not behind. At best he sought to explain why the
contractor was behind schedule. This was not an
issue for negotiation
and agreement. But even if it was, the contractor and the
municipality were probably impliedly in agreement,
as required by
clause 3.1.2 that the contractor was behind schedule and in default
of its obligations. Whether there was such an
implied agreement was
however not pertinently raised in the evidence.
[48]
However, even if 'agreement' was not
possible or not achieved, then clause 3.1.2 enjoins the engineer,
'failing agreement' to 'act
impartially and make a decision in
accordance with the contract'. This was what the engineer did in the
letter of 30 July 2013
which was emailed to the contractor and
received and which was sent to the municipality. The letter recorded
that 'it is [the engineer's]
opinion that the Contractor has
consistently failed to implement the works in accordance with the
programme ... ' There is nothing
in the evidence to suggest that in
reaching that decision the engineer did not act impartially.
[49]
There was a suggestion in respect of the
letter of 8 March 2013, which is only of background relevance, that
the engineer had not
acted impartially because the minute of the
second site meeting on 6 March 2013 recorded that '... the Client has
instructed the
Engineer to put Abajabuli on terms ...'. This, it was
argued, suggests that the engineer had acted at the behest of the
municipality
and not independently in issuing the letter of 8 March
2013. The wording recorded in the minute alone does not however
establish
that the engineer could and did not thereafter arrive at an
impartial decision that the contractor was behind schedule in
performance.
The mere complaint by the municipality that the
contractor was behind schedule and insisting that (even wrongly
perhaps instructing)
that the contractor be put on terms does not
mean that the engineer has not acted impartially in investigating
whether the contractor
was behind in the programme and should be
placed on terms, this particularly where the evidence adduced is
consistent only with
the notion on the probabilities that the
contractor was indeed in default of its obligations also in early
March 2013.
[50]
But in any event, the engineer's letter
of 30 July 2013 was not preceded by any similar 'instruction'. Indeed
the fact that the
engineer reached an opinion which is seemingly
consistent with the objective facts, at the level of probability
point to his decision
being rational and impartial. In the letter
dated 30 July 2013 by the engineer to the contractor, which the
latter conceded it
received, the engineer certified that the
contractor was in breach of clause 9.2.1.3.
[51]
Mr Masenya next submitted that if the
engineer had decided that the contractor was behind in the programme,
that he should have
advised the contractor separately before later
and separately certifying in writing pursuant to clause 9.2.1.3.3,
and referring
to the clause specifically, that the contractor 'has
failed to proceed with the Works in accordance with the approved
programme
or in the absence of an approved programme, in the
Engineer's opinion.' I can find no provision in the GCC, or in law,
or with
respect in logic, why the engineer cannot convey his decision
pursuant to clause 3.1.2 as part of his certification pursuant to
clause 9.2.1.3.3. The certification contained in the letter of 30
July 2013 is simply the outward manifestation and expression
of the
engineer's decision reached pursuant to the provisions of clause
3.1.2. There is no reason why the decision and certification
cannot
be contained in a single communication.
[52]
In conclusion, the learned trial judge
correctly concluded with reference to inter alia
Hulett
&
Sons
Ltd v Resident Magistrate, Lower Tugela
[4]
and
Oldfield
v The Master
[5]
that the letter from the engineer
dated 30 July 2013 was a certificate as contemplated in clause
9.2.1.3.3. I and communicated the
engineer's decision in terms of
clause 3.1.2 that the contractor was behind in the performance of the
programme. Pursuant thereto,
the municipality was entitled to demand
that the default be remedied and to terminate the contract if this
was not done. The correct
procedures according to the terms of the
GCC were followed.
[53]
The contractor failed to remedy its
default within 14 days as required by the demand dated 1 July 2013
sent to the contractor. It
was not disputed that this demand was
received. That demand was required in terms of the concluding portion
of clause
9.2.1.3
to be a notice 'with specific reference to this Clause' that is the
provisions of clause 9.2.1.3 involved. The demand referred
to the
opinion of the engineers of 8 March 2013 and 23 (it should be 30)
July 2013, which referred to clause 9.2.3.1 and both contained
the
narrative that the default to be remedied comprised 'that the
Contractor has consistently failed to implement the Works in
accordance with the programme'.
[54]
The contractor did not dispute that it
did not remedy its default. Instead it suggested that it was unable
to remedy its default
because it was allegedly locked out of the site
by the municipality and/or engineer. That version can safely be
dismissed. The
evidence of the alleged lock out did not fall within
Mr Coshiwe's personal knowledge but was conceded to be from what he
had been
told by others who were not called as witnesses. Mr Coshiwe
conceded that he was not there, that he could not remember the date
of the alleged lock out, and that he was entirely dependent on what
had been communicated to him by colleagues. At the level of
admissibility and reliability, this evidence amounted to inadmissible
hearsay evidence, as it was tendered as proof of the contents
thereof. Accordingly there is no evidence of any lock out. Mr Maher's
denial of any such lock out is to be preferred. Any notion
that the
contractor had been locked out is in conflict with the contents of
progress payment certificate number 6 dated 15 August
2013 which was
issued as if the contract was still valid on 15 August 2013 and with
the engineer still viewing the contract as
being very much alive on
that day. Mr Maher testified that the last site diary entry signed by
the contractor's agent and the engineer's
representative on site was
21 August 2013 and that there was still work taking place up to that
date. Mr Coshiwe was unable to
dispute that evidence as he was simply
not present on the site, but in Johannesburg.
The
suggestion that there was a lock out which prevented the contractor
from remedying its default was rightly rejected.
[55]
When the default was not remedied, the
municipality became entitled in terms of clause 9.2.1.3 to 'terminate
the Contract and order
the Contractor to vacate the Site and hand it
over to the Employer'. The GCC did not prescribe any specific
requirements for the
termination of the contract, such as a reference
to the particular sub-clause involved. The election to cancel,
consistent with
the principles of the common law, simply had to be
communicated to the contractor.
[56]
The municipality cancelled the contract
in its letter of 21 August 2013. That letter was received by the
contractor as it gave rise
to the letter from the contractor's
attorney dated 17 October 2013. The letter referred to the wrong
clause in the GCC, whether
as a result of a typographical error or
otherwise. This letter giving notice of terminating the contract and
requiring the contractor
to vacate the site erroneously stated that
this was pursuant to clause 9.2.1.3.7. That provision could not
conceivably in the light
of the preceding correspondence have
applied.
[57]
As indicate above, the cancellation
notice was not required to refer to the specific clause to achieve a
valid cancellation. All
that was required was that the municipality's
election to cancel the agreement had to be communicated to and have
reached the contractor,
which it did. But the contractor could in any
event have been left in no doubt as to the basis on which the
contract was cancelled.
The narrative of the cancellation notice of
21 August recorded that:
'The
rate of progress and resources on site have not been increased
sufficiently since our previous notice to give any indication
that
the Works will be completed on due date. At present 58% of the
contract period has lapsed whilst the work completed amounts
to
approximately 8,5%. Despite assurances and attempts to remedy since
out first notification on 25 March 2013 the situation has
steadily
deteriorated.'
This
narrative is in direct conflict with the contents of clause 9.2.1.3.7
erroneously referred to in the cancellation notice. The
objective
legal fact is that the municipality had become entitled to cancel the
contract and that it cancelled the agreement.
[58]
When it was brought to the attention of
the municipality thereafter that it had referred to the wrong clause
in the cancellation
notice, this was corrected by withdrawing that
letter and immediately replacing it with another letter on the same
day, 29 October
2013, referring to the correct clause. I do not
believe that a replacement notice was strictly necessary. The fact
that the first
notice was cancelled and immediately substituted with
another did not affect the municipality's accrued right to cancel the
contract,
and the validity of the actual act of cancellation.
The
conclusion of the court a quo
[59]
I am not persuaded that it has been
shown that the learned trial judge was incorrect in concluding as
part of her determination
that the termination of the contract was
procedurally correct, particularly insofar as clause 3.1.2 was
concerned. As the issue
separated for determination appears to have
been confined to the latter, the terms of her order are with respect
too wide and need
to be modified. This appeal was however pursued by
the contractor on the basis that the termination was procedurally
incorrect.
The contractor has failed in that argument. Accordingly,
the appeal must fail
with costs.
Costs
[60]
As regards costs, the municipality was
substantially successful and there is no reason why the costs of the
appeal should not follow
the result thereof.
Order
[61]
The following order is granted:
1
Paragraph
(a) of the order of the court a quo is amended to read as follows:
'(a) It is declared that the termination by the defendant
of the
service agreement between it and the plaintiff was procedurally in
accordance with the terms of clauses 3.1.2 and 9.2.1.3.3
of the
General Conditions of Contract for Construction Works (2010)
published by the South African Institute of Civil Engineering.
'
2
The
appeal is otherwise dismissed with costs.
KOEN J
APPEARANCES
APPELLANT'S
COUNSEL:
MR K.P. MASENYA
INSTRUCTED
BY:
MASENYA ATTORNEYS
C/OVIV GREEN ATTORNEYS
Tel: 033 342 2766
RESPONDENT'S
COUNSEL: MR G GODDARD
SC
INSTRUCTED
BY:
SHEPSTONE AND WYLIE
Ref V. Nkosi/thuk3974.3
Tel: 031 5757000
[1]
The reference should have been to clause 3.1.2.
[2]
I would have thought that separating such a narrow issue for
determination might not satisfy the requirement of 'convenience'
in
Rule 33(4), but that is however not an issue in this appeal.
[3]
In Mr Coshiwe's reply of 4 April 2013 responding to the letter of 25
March 2013 from the municipality, he sought to explain some
of the
causes for the contractor being behind. The letter recorded the
first problem as being one of getting funds due to the
contractor
not having provided a signed contract. That was however the problem
of the contractor which had accepted the tender.
If the absence of a
signed contract impeded the performance of the contract by the
contractor then the contractor should have
raised such a dispute in
terms of clause 10. Apart from this alleged lack of funds there was
also a lack of materials and only
thereafter labour. The labour was
however not raised as a problem as the letter recorded that the
contractor would use an excavator
and catch up.
[4]
1912 AD 760
at 766.
[5]
1971 (3) SA 445
(N) at 449.