Olympus Country Estate & Home Owners Association v Ercon Electrical & Earthling Contractors (Pty) Ltd and Another (A839/14) [2017] ZAGPPHC 790 (24 February 2017)

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[2017] ZAGPPHC 790
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Olympus Country Estate & Home Owners Association v Ercon Electrical & Earthling Contractors (Pty) Ltd and Another (A839/14) [2017] ZAGPPHC 790 (24 February 2017)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
CASE
NUMBER: A839/14
DATE:
24 February 2017
OLYMPUS
COUNTRY ESTATE & HOME OWNERS
ASSOCIATION
Appellant
V
ERCON
ELECTRICAL & EARTHING CONTRACTORS (PTY) LTD
First
Respondent
SERISO
505 (PTY)
LTD
Second

Respondent
JUDGMENT
MABUSE
J
:
[1]
This is an appeal against the whole of the judgment and order
of Raulinga J ("the court
a quo')
of 18 July 2014. The
appeal is opposed.
[2]
The appellant in this matter is the Home Owners Association of
the Olympus Country Home Owners Association with legal standing. It

can sue and be sued in its own right. The appellant was the first
defendant in the court
a quo
("Olympus"). The first
respondent is a company with limited liability duly registered as
such in terms of the company
laws of this country having its
principal place of business at the Remaining Extent 2, a Portion of
Portion 3, Plot 83 Acqilles
Road, Olympus, Pretoria. The first
respondent was the plaintiff in the court a quo. The second
respondent is also a company with
limited liability duly registered
as such in accordance with the company statutes of this country. It
has its principal place of
business at 444 Rodericks Street,
Lynnwood, Pretoria. The second respondent was the second defendant in
the court
a quo.
[3]
For purposes of convenience the parties herein will be
referred to by the names they chose to call themselves in the court
a
quo,
the appellant as Olympus, the first respondent as Ercon and
the second respondent as Seriso.
[4]
On or about July 2008, and at or near Pretoria, Erccm, duly
represented by one Francois van Wyk ("Van Wyk"), and
Olympus,
duly represented by Eric Daniels ("Daniels"),
concluded an oral agreement whose relevant express, alternatively
tacit,
further alternatively implied terms were as follows:
4.1 Olympus mandated and
instructed Ercon to rectify and repair electrical reticulation
network at Boardwalk Extension 3;
4.2 Olympus would pay
Ercon for the rectification and repairs referred to in paragraph 4.1
supra;
4.3 Ercon would be
entitled from time to time to submit invoices to Olympus for payment;
4.4 Olympus would be
obliged to pay Ercon the amounts referred to in the Ercon invoices
within 30 days after delivery of the invoices
to Olympus.
[5]
After the conclusion of the said agreement, Ercon complied
with its obligations arising from the said agreement in that it
completed
the required rectification and repair of the electrical
reticulation network at the aforementioned premises and delivered on
certain
days the invoices to Olympus.
[6]
Olympus was in breach of the said oral agreement inasmuch as
of the total amount, it only paid R187,692.15 on 28 August 2008.
Olympus
was therefore in default with the payment of the balance of
R831,839.79. Notwithstanding demand for payment of the said amount
Olympus failed to pay Ercon the said balance.
[7]
Ercon put up a conditional claim against Seriso as follows.
The second claim was conditional upon the court
a quo
finding
that Ercon was not legally entitled to claim payment from Olympus in
respect of the rectification and repair of the electrical

reticulation work as set out in paragraphs 5 and 6 of Ercon's
particulars of claim.
[8]
On or about 1 July 2008 in terms of the order by Phatudi J
under case number 31146/2008 Olympus was authorised to appoint an
accredited
installation electrician, alternatively an accredited
master installation electrician as stipulated in the electrical
installation
regulation to rectify and repair the electrical
reticulation network at Boardwalk Extension 3 in order to comply with
the electrical
reticulation network plan. In terms of the said court
order, Mr. Venter (Inspector of Electrical Safe Circuit) was
appointed as
an inspector of the works with the following rights:
8.1 the right to be
present on the site at all times;;
8.2 the right to oversee
the works;
8.3 the right to stop the
work at any time should proper compliance with this order not occur
and to report back to the court for
any further directions or relief;
8.4 Seriso was ordered to
pay all the costs pertaining to the rectification and repair of
electrical reticulation network at Boardwalk
Extension 3 as far as
the physical installation deviated from the plan as prepared by
Watson Mattheus Consulting and Electrical
Engineers (Ply) Ltd and did
not comply with the accepted standards as indicated by the inspector
in his reports, including the
costs of the inspector at a market
related fee, within 7 days of the receipt of an account, which
account would be hand­ delivered
at Seriso's address at 444
Rodericks Street, Lynnwood, Pretoria.
[9]
Ercon duly rectified and repaired the electrical reticulation network
at Boardwalk Extension 3 in order to comply with the electrical

network in the presence of an inspector under the supervision of an
inspector and under circumstances where the inspector did not
stop
the works on the basis that proper compliance with the court order
did not occur. Having done so Ercon delivered, on the following

dates, invoices for the following amounts to Olympus in respect of
the works:
9.1 invoice 789 dated 22
July 2008 for the amount of R125,718.97, which included VAT;
9.2 invoice 800 dated 31
July 2008 for the amount of R324,717.86, which included VAT;
9.3 invoice 808 dated 20
August 2008 for the amount of R310,120.55 which included VAT; and
9.4 invoice 822 dated 9
September 2008 in the amount of R25B,974.53 which included VAT.
The
total of all the above mentioned four invoices was R1,019,531.91.
Ercon contends that in the premises and in terms of paragraph
3 of
the court order Olympus became liable to pay Ercon within 7 days of
the date as set out in the abovementioned paragraphs.
In its plea
Olympus denied the agreement as pleaded by Ercon and pleaded
furthermore that Ercon was appointed in terms of the court
order
under case number 31146/2008 and that according to the said agreement
it was agreed that the developer, Serlso, would be
liable for all the
costs pertaining to the works and that Ercon would issue invoices to
Seriso. Olympus then joined Seriso as a
third party by means of a
third party notice. In the said third party notice, it was alleged
that in terms of the court order referred
to above, Seriso was
obliged to pay for the rectification and repair of the electrical
works at the development and in the event
of the court
a quo
finding that Olympus was liable to Ercon, Seriso was obliged to
pay Olympus any amount that the latter was ordered to pay to Ercon.
[10]
Seriso pleaded to the third party notice. It denied all the material
allegations made in the third party notice. In the alternative
Seriso
pleaded that in the event of the court
a quo
finding that
Olympus duly appointed Ercon as contemplated in paragraph 1 of the
said Court order and that the amount claimed from
Olympus by Ercon
was in respect of the work undertaken by Ercon consequent to its
appointment In terms of the Court order then
in that event Seriso
denied that the work undertaken by Ercon fell within the scope and
ambit of the work contemplated in paragraph
3 of the court order,
namely, the rectification and repair of the electrical reticulation
network at Boardwalk Extension 3 as far
as the physical installation
deviated from the plan as prepared by Watson Mattheus Consulting
Electrical Engineer (Pty) Ltd and
furthermore the Court ordering
Olympus to pay any amount to Ercon in respect of the work undertaken
by Ercon consequent to Its
appointment in terms of the Court order
and pertaining to the work undertaken that it did not comply with the
accepted standards
as indicated in the report of one, Mr. GE Venter.
Seriso furthermore denied that the fees for Ercon were market
related. Seriso
pleaded furthermore, in the alternative, that in the
event of the court
a quo
ordering Olympus to pay any amount to
Ercon in respect of the work undertaken by Ercon, consequent to its
appointment in terms of
the said court order and pertaining to the
work undertaken by Ercon falling within the scope and ambit of the
work contemplated
in paragraph 3 of the said court order at a market
related fee then in such event Seriso denied that in terms of the
said court
order it was in any event obliged to pay the said amount
to Olympus.
[11]
Upon this Ercon thereafter made an application to join Seriso as the
second defendant. The application was successful. Ercon
then amended
its particulars of claim and, based on the terms of the
aforementioned court order, amended its particulars of claim
and
incorporated therein an alternative claim against Seriso. Seriso
settled Olympus's claim against it. A consent order between
Olympus
and Seriso was granted by Phatudi J, on 1 July 2008. Subsequent to
the settlement agreement between Olympus and Seriso,
the only
remaining issues to be decided then were:
11.1 firstly, whether an
oral agreement existed between Ercon and Olympus in terms of which
Olympus was liable to pay Ercon; and
11.2 secondly, in the
event of the court
a quo
finding that Olympus was liable to
pay Ercon, whether Seriso, as a third party, was obliged to make
payment to Olympus in the amount
which Olympus had to pay to Ercon.
[12]
Before dealing with the appeal, the appeal court had to deal firstly
with certain preliminary issues. The appellant had brought
two
substantive applications for condonation. The first of these two
applications related to the appellant's failure to comply
with the
time period prescribed by Rule 49(2)(6) and (7) of the Uniform Rules
of Court, in other words the appellant's failure
to file its notice
of appeal within the prescribed time, while the second application
related to the late filing of the record
of appeal. Although the
respondents had not filed any opposing papers, counsel for each
respondent had indicated in both their
practice notes and heads of
argument that they would oppose both applications for condonation.
Moreover they have conceded that
no prejudice arose from the delay in
filing the notice of appeal in time.
[13]
Mr. Van Zyl, counsel for the appellant, conceded that the notice of
appeal was delivered late. It was late by 8 days when it
was
delivered to the registrar and 9 days late when it was served on the
respondents. An affidavit by Mr. Van der Walt, the appellant's

attorney was used in support of both applications. With regard to the
late filing of a notice of appeal, he testified that it was
basically
a mistake by a clerk in his office that the notice of appeal was
filed late. According to his testimony, the notice of
appeal was
received in time. Because of his commitment somewhere he handed it to
a clerk in his office to go and file. His mistake
was that he did not
warn the clerk that there was a deadline before which a notice of
appeal had to be filed. The clerk dragged
his feet and the deadline
came and passed.
[14]
It only dawned upon him that the notice of appeal had not been
delivered in time when he received a letter from Ercon's attorneys
on
4 November 2014. In the said letter the said attorneys expressed a
view that the appellants were not proceeding with the appeal.
Van der
Walt then conducted an investigation into the matter and discovered
that through the fault of the relevant clerk, the notice
of appeal
had not been delivered. He quickly made arrangements that it should
be delivered. It was for the aforesaid reason that
the notice of
appeal was delivered late as Indicated above.
[15]
With regard to the late filing of the record of appeal Mr. Van Zyl
stated that the delay was due to the process of having to
obtain a
copy of the transcript from the transcribers. In his affidavit in
support of the application for condonation for the late
filing of the
record of appeal, Van der Walt explained the steps that the
appellant's attorneys took to obtain a transcript. Such
steps
included, among others, emails to Digital Audio Transcriptions
("Digital"), one of the entities contracted to do

transcription of Court records, commencing on 22 October 2014 and
continuing on 31 October 2014, 7 November 2014, 17 November 2014,
26
November 2014, 28 November 2014, 8 December 2014, 16 January 2015 and
28 January 2015. The appellant's attorney, after a dogged
attempt to
obtain a quotation from the service providers, finally received one
from i-Africa, another transcription service provider,
on 11 February
2015. The amount in the quotation was paid on 18 January 2015. In one
of the letters that the appellant's attorneys
wrote to Digital they
threatened that if Digital was unable to render service they would
enlist the services of another service
provider. While the
appellant's attorneys were struggling to obtain a copy of the
transcript, they kept the respondents' attorneys
abreast of
developments. Eventually the appellant's attorneys only received a
copy of the transcript on 4 March 2015 and sent it
for binding on 6
March 2015. They were only able to file a bound record on 11 June
2015 and to deliver it to both respondents.
[16]
The appellant's attorneys explained that they could only apply for a
date of hearing of the appeal after obtaining a copy of
the
transcript. They pointed out in the same affidavit by Van der Walt
that the practice of the registrar of this Court with regards
to the
allocation of appeal dates in terms of Rule 49(6) is that no appeal
dates are allocated to parties unless such parties are
able to file
appeal records pronto. This is despite the provisions of Rule
49(7)(a) which makes provisions for the acceptance of
an application
for a date for hearing of an appeal without the necessity of having
to file copies of the transcript.
[17]
In the end Mr. Van Zyl submitted that despite the appellant's
failures to file its notice of appeal and a transcript of the

proceedings in time, neither of the respondents has suffered any
prejudice.
[18]
Mr. Stoop, counsel for the respondent, complained strenuously about
numerous breaches of the rules of this Court by the appellant
over a
considerable length of time. In an effort to hilight the
lackadaisical way in which the appellant had treated the appeal,
he
referred to three other applications for condonation the appellant
had had to launch before the current ones. He pointed out
to the
Court that even at the stage of the appeal, the appellant had not
filed the entire record of the appeal and that certain
parts on the
basis of which the claim against the second respondent were founded
were not before the court. He concluded by submitting
that even if
the appellant's appeal on the merits is strong, the application for
condonation should be refused.
[19]
Mr. Oosthuizen, counsel for Seriso argued that the notice of appeal
filed by the appellant did not comply with the appeal court
rules
brought about by the Superior Court Act 10 of 2013. Rule 49(4) of the
new rules provides categorically that every notice
of appeal shall
state the respects In which variation of the judgment or order is
sought. This, the appellant has not complied
with. The second point
he raised was in respect of the record. He argued strenuously that
the record was incomplete in material
respects. He complained that
although the issue of the incomplete record was among the issues
raised in his heads of argument,
the appellant has failed to address
the problem. Mr. Oosthuizen did not ask the court to refuse the
application for condonation.
[20]
We are satisfied that the application for condonation for the late
filing of the transcript complies with the requirements
set out in
Unitrans Fuel and Chemical (Ply) Ltd and Dove-Co Carriers CC
2010(5) SA 340 GSG at page 349
wherein at paragraph 31 the Full
Court stated as follows:
"In
future applicants for condonation in matters such as the present will
have to show their attempts at compelling the transcribers
to provide
the record, including, but not limited to the bringing of an
application to Court to compel compliance, as part of the
explanation
for the delay and to show that they are not at fault.
"
[21]
The power of the Court to grant the applications for condonation have
been set out in numerous cases and in particular in a
decision of
Shaik and Others vs Pillay and Others ALL SA 465
and
A
Hardrodt (SA) (Ply) Ltd v Behardien and others (2002) 23 ILJ 1229
(LAC) at 1231-3.
The power of the Court to grant condonation
ordinarily is a discretionary one. That discretion is unfettered. The
Court will consider
all the circumstances of each case. See in this
regard
Liquidators Myburgh, Krone & Co Ltd v Standard Bank of
SA Ltd and another 1924 AD p. 231
where the Court stated:
''ln
the words of Cotton LJ quoted in that case an
application must show “something which entitles him to ask for
the indulgence
of the Court. What amounts to sufficient cause in each
case; what constitutes a ground for the exercise of indulgence must
depend
upon the circumstances. The cause of the delay and the excuse
for it, though necessarily factors to be considered, are not
decisive.
The merits of the appeal may in some cases be very
important.' but they have not been relied upon here by either side,
and I do
not propose therefore to consider them."
[22]
In Shaik and Others v Pillay and Others supra the Court stated at
paragraph 5:
"Generally,
however, the Court will consider among the facts usually relevant the
degrees of lateness, the explanation therefor,
the passwords of
success on appeal on the merits and the importance of the case. These
facts are interrelated
" See in this regard
Melane v
Sanlam Insurance Co Ltd
1962 (4) SA 531
(a),
see also
Federated
Employers Fire & General Insurance Co Ltd and another v McKenzie
1969 (3) SA 360
(A) at 362G
. Finally the onus is on the appellant
to satisfy the Court that condonation should be granted. In this
regard see
Meintjies v HD Combrinck (Edms) Bpk
1961 (1) SA 262
(A)
at 263H-264A
and
Glazer v
Glazer
NO
1963 (4) SA 694
(A) at 702H
.
[23]
Furthermore we are unanimous in our view that the appellant's
attorneys have furnished a reasonable explanation for the late
filing
of the notice of appeal and the record of appeal. Moreover we have
considered that no prejudice arose from the delay in
filing both the
notice of appeal and a copy of the transcript.
THE
MERITS OF THE APPEAL
[24]
It is not in dispute that during July 2008 Olympus and Ercon entered
into an oral agreement in terms of which Ercon, repaired
the
electrical reticulation network at Boardwalk Extension 3. It is also
not in dispute that between Ercon and Olympus, that Ercon
did the
work in a professional manner and in accordance with the applicable
technical requirements. The amount that Ercon claimed
from Olympus,
and as evidenced by the invoices that Ercon had delivered to Olympus,
was not in dispute. The battlefield between
Olympus, the first
defendant, and Ercon, the plaintiff, revolved around the question of
who was responsible for payment of Ercon's
account. By relying on the
oral agreement of July 2008, Ercon, contended that Olympus was liable
for the payment of its account.
In clause 4.2 of the particulars of
claim Ercon had pleaded that Olympus should pay it for the
rectification and repairs. On the
other hand, Olympus had insisted
that Seriso, was liable for the payment of Ercon's account. In
dealing with this aspect the court
a quo
stated as follows in
its judgment:
"36.
It is Daniel's evidence that the first defendant tried to assist the
plaintiff to obtain payment from Seriso. There is
no such agreement
between the plaintiff and the first defendant. On the contrary, the
argument was that the first defendant would
pay the plaintiff. This
is clear from the meeting between Van Wyk and Daniel on 1 July 2008.
One must also be aware of the fact
that Van der Walt wrote a letter
of demand dated 29 July 2008 on Daniel's instructions and not on
behalf of the plaintiff. It was
confirned by Daniel under oath that
application under case number 52360/2008 was an initiative of the
first defendanfs claim for
payment by Seriso of the amount of
R894,326.24. It was the first defendant who funded all legal costs.
37.
If regard is had to the discussion between Van Wyk and Daniel and
the court order, it is clear that the plaintiff executed the work
in
terms of the agreement it concluded with Olympus and the scope of
works included a deviation from the terms of the court order.
Venter
confirmed that the plaintiff did work that fell outside the ambit of
the court order.
The
Contractors Payment Certificate Summary makes it clear that the
plaintiff had to·supply and install new kiosk to Article
21
spec''. Venter made concession that some of the work fell outside the
Court Order.
38.
My reading of the Court Order is that the plaintiff had no
business dealing with Seriso and was not a party to the Court Order.
The Court Order has to do with Olympus and Seriso.
40.
In the circumstances judgment is granted against Olympus:
(a)
Payment of
R481,839.79;
(b) interest on
R831,839.79 at 15.5% per annum temporae until24 July 2012;
(c)
interest on
R481,839,76 .. at 15.5% per annum from 25 July 2012 to date of
payment,·
(d)
costs of
suit
Accordingly
the issue that this Court has to decide in this appeal is whether or
not the court
a quo
was correct in the aforegoing finding.
[25]
The findings of the court a quo must be seen against the following
background. On 1 July 2008, one Mr. Eric Daniel ("Daniel"),

then the chairperson of Olympus, visited the offices of Ercon. He
introduced himself to a certain Mr. Francois van Wyk ("Van

Wyk"), a director of Ercon in that capacity and asked if Ercon
would be in a position to rectify certain electrical reticulation
at
Boardwalk Extension 3. On the very same day, Van Wyk inspected the
property and on inspection found substantial defects in the

electrical reticulation network. He came to a finding that Ercon
would be able to do the rectification and repair work but that
it
would not be possible to provide Olympus with a quotation since the
total cost depended on the actual quantities that would
have to be
measured as they progressed. Nonetheless Van Wyk gave an indication
that the costs might be in the region of R500,000.00.
On the other
hand Daniel answered that the costs may be substantially higher.
Daniel, acting in his aforementioned capacity, then
instructed Ercon
to commence with the repairs. At this stage Van Wyk was not aware of
the existence of Seriso or of its sole director.
Ercon's standard
practice was, with regard to new customers, to demand a payment
guarantee. Because Olympus was in possession of
an order of Court
that had been granted on 1 July 2008, and
on
Van Wyk's version Daniel had indicated that Olympus would pay Ercon
for the work Ercon had to do, Van Wyk did not request a payment

guarantee. Instead he insisted that Olympus should provide Ercon with
a letter of intent to confirm Ercon's appointment. Following
the
agreement that Olympus should provide Ercon with a letter of intent
to confirm Ercon's appointment, on 15 June 2008 Ercon's
attorneys,
Loubser Van der Walt Inc, notified Ercon as follows:
"RE
OLYMPUS ESTATE HOMEOWNERS ASSOC/ATION I SER/SO 505 (PTY) LTD ADSL
OLYMPUS COUNTRY ESTATE SUPPLY PROJECT
We
refer to the above matter and attach hereto for your kind attention
the court order obtained on 1 July 2008 under case number
31146/2008
before the honourable Mr. Justice Phatudi.
We
herewith confirm that Ercon Electrical represented by Francois van
Wyk is herewith appointed as an accredited installation electrician

or an accredited master installation electric/an as stipulated in the
Electrical Installation Regulations to
rectify and to repair the
electrical reticulation network at Boardwalk Extension 3 in order to
comply with the electrical reticulation
network plan as stipulated In
the court order attached hereto.
We
trust you find the above in order and If there is any queries kindly
contact the writer hereof."
[26]
On the strength of the aforementioned letter Ercon then commenced
with the repairs and rectification of electrical reticulation

network. As it continued with the rectification repairs of the
electrical reticulation network it uncovered certain defects in
the
network and attempted to repair them without the benefit of the plan
referred to in paragraph 3 of the Court Order. On 22 July
2008 Ercon
forwarded Its first invoice to Olympus. This invoice, which was
invoice number 789 of the same date, was for an amount
of
R125,718.97. This invoice showed that Olympus was the client. Daniel
then requested Van Wyk to change the invoice to effect
Seriso as the
client. Van Wyk acted accordingly and forwarded the amended invoice
to Olympus attorneys. As the work continued Ercon
forwarded its
invoices to Olympus's attorneys. Instead of obtaining payment from
Ercon and settling Ercon's invoices, Olympus's
attorneys demanded
payment from Seriso. This is clear from the following correspondence:
26.1 a letter from
Olympus's attorneys to Seriso's attorneys dated 29 July 2008;
26.2 a letter from
Olympus's attorneys to Seriso's attorneys dated 4 August 2008;
26.3 a letter from
Olympus's attorneys to Seriso's attorneys dated 18 August 2008;
a letter from Olympus's
attorneys to Seriso's attorneys dated 20 August 2008;
26.4 It is clear that in
these letters that Olympus's attorneys threatened Seriso with
litigation if Ercon's outstanding invoices
were not paid;
26.5 a letter from
Olympus's attorneys to Seriso's attorneys dated 1O September 2008;
and
26.6 a letter from
Olympus's attorneys to Seriso's attorneys dated 1 October 2008.
[27]
Seriso failed to pay Olympus. That resulted in Olympus issuing a writ
of execution against Seriso. This writ of execution was
issued on the
strength of an affidavit by one Jan Adriaan van der Walt ("Van
der Walt"), a practising attorney and a
director at Loubser van
der Walt Incorporated. The thrust of the said affidavit was that
Seriso was responsible for the payment
of the repairs that had been
done and for the amount that was owing by Olympus. Subsequently
Seriso thereafter applied, on an urgent
basis, for an order setting
aside the relevant warrant of execution. Olympus's attorneys then
wrote a letter on 1 October 2008
to Seriso's attorneys. The said
letter read, among others, as follows:
"Ons
wys
u daarop dat alle gelde, in terme van die hofbevel, nie
verskuldig is aan 'n derde party nie, maar moet alle fakture, soos
gelewer
aan u klient direk betaal word aan Loubser van der Walt
lngelyf se trust rekening soos duidelik blyk op iedere en elke skrywe
versend
aan u kantore en u klient waarby die fakture en sertifikate
aangeheg is.
Ons
bevestig verder dat die kontrakteurs tans weier om op site te wees en
dreig die kontrakteurs tans met 'n dagvaarding teen ons
klient vir
betaling, welke u kantore deeglik bewus van is dat ons klient oor
geen bona fide verweer oor beskik nie.
[28]
Olympus then caused inspector Venter to apply to this court on an
urgent basis, under case number 31146/2008, for an order
in terms
whereof Seriso would be compelled to provide it with the approved
electrical reticulation plans and secondly to compel
Seriso to pay
it, among others, an amount of R894,326.24. Olympus then indemnified
the said Venter in respect of the costs of that
application.
[29]
The question now is considering the first claim that Ercon instituted
against Seriso, was it a term of the contract between
the parties
that Ercon would be paid for its electrical work done in Boardwalk
Extension 3 by Olympus or considering the second
claim which Ercon
had instituted in the alternative against Seriso, whether the said
plaintiff would be paid for its electrical
work done in Boardwalk
Extension 3 by Seriso? Thirdly, if Olympus was ordered to pay
directly to Ercon any amount under its contract
with Ercon in respect
of the material and labour claimed by Ercon in respect of electrical
work done in Boardwalk Extension 3,
whether in the context of the
claim between Seriso and Olympus, Olympus can claim such payment from
Seriso under a previous court
order as payment in respect of
electrical work falling within the scope and ambit of that court
order? In brief the basic issue
will be what did Olympus and Ercon
agree upon as far as payment was concerned? If they agreed that
Olympus should make payment
to Ercon to what extent can that payment
be recovered by Olympus against Seriso as payment for work that falls
within the scope
and ambit of electrical work contemplated by a
previous Court Order?
[30]
The issues involved in the first claim against Olympus do not in any
way involve Seriso. If the court finds for the applicant
on this
Issue In the sense of finding that Ercon and Olympus had contracted
on the basis that Olympus would not be liable to pay
Ercon, then that
will be the end of the whole matter except for the issue regarding
costs in the action against Seriso and in that
event Seriso may seek
costs against Olympus, alternatively against Ercon. If the court
finds against Olympus on the previous issue,
in the sense of finding
that Ercon and Olympus contracted on the basis that Olympus would be
liable to pay Ercon then the question
arising in the third party
proceedings is to what extent, If any, a previous Court indemnifies
Olympus or to put it differently,
to what extent the four conditions
of liability on the part of Seriso under that previous court order
have been met.
[31]
It is of paramount importance to point out the differences in the
causes of actions between the action that Ercon had instituted

against Olympus and the action that Ercon had instituted against
Seriso. The cause of action in the first claim was based on a

contract. Olympus and Ercon had in fact agreed that Ercon would be
paid by Olympus for all general and all electrical work in Boardwalk

Extension 3 against payment. With regard to the second claim which
was indeed a claim against Seriso, the cause of action was a
previous
Court Order. That previous court order contemplated the liability of
Seriso for specific electrical repair work in Boardwalk
Extension 3
once a number of conditions had been met. In other words Olympus was
held to be contractually liable to Ercon for the
electrical work done
by Ercon.
[32]
By relying on the authority of
Rane Investments Trusts vs
Commissioner, South African
Revenue Services
2003 (6) SA 332
(SCA) 346
D where Lewis J stated that:
"There
is ample authority for the proposition that in seeking to establish
the parties' intentions, when a third person is
questioning the
meaning of the conduct, regard may be had to the parties' conduct in
executing their obligations."
Mr. Stoop submitted that the
subsequent conduct of the parties supported Ercon's version of the
terms of agreement between them
and furthermore demonstrates that
Olympus's version was clearly inherently improbable. Support for this
submission can be found
in the following circumstances. Olympus's
conduct in claiming payment from Seriso could only be explained or
understood in the
context of the contracting party who knew fully
well that it was liable to pay the account of the contractor who did
the work;
Olympus was, throughout represented by a legal
representative. If Daniel had informed Olympus's attorneys that it
was expressly
agreed that Ercon would not be entitled to claim
payment from Olympus but that Ercon had to claim payment directly
from Seriso,
there would have been no doubt in the attorney's mind
that, firstly, Olympus was not entitled to payment of the monies
owing by
Seriso, and secondly, that Seriso did not owe
Olympus
any monies in respect of the repair work done by Ercon. If Olympus
and Ercon had agreed that Ercon must look towards Seriso
for payment,
there was, in our view, no reason whatsoever why Olympus would have
incurred substantial legal costs that it did just
to obtain payment
of Ercon's account by Seriso. If Daniel's word was anything to go by
and that it had been agreed between Olympus
and Ercon that Ercon
would be responsible to claim payment directly from Seriso, there
would not have been any reason at all for
Olympus to involve
attorneys for the sole purpose of enforcing payment from Seriso. It
is highly unlikely that Olympus's attorneys
would have insisted that
the debt owing by Seriso was a debt owed to Olympus if Ercon and
Olympus had agreed to the terms that
were directly the opposite;
furthermore, advised Olympus to attach assets belonging to Serlso to
enforce a debt that was due to
Ercon; and deposed to an affidavit
stating that Olympus was entitled to payment if that would have
exposed him to a charge of perjury.
(33)
If Ercon and Seriso had agreed that Olympus would not be liable
towards Ercon it was simply unthinkable that Olympus's attorneys

would not in a letter of appointment have stated that Olympus
disputed that it was liable towards Ercon for the payment of Ercon's

costs; Olympus's attorneys would not have disclosed this defence;
Olympus's attorneys would have emphasised in the letter dated
1
October 2008 that Olympus had no defence to Ercon's claim for
payment. At the same time Daniel would not have disclosed this

defence in the affidavit filed in opposition to Seriso's application
to set aside the writ of attachment. Finally, Ercon would
have agreed
to perform work clearly not covered by the court order.
(34)
Paragraph 1 of the court order of 1 July 2008 dealt with the power of
the appellant to appoint Seriso and the purpose of such
appointment.
It states in paragraph 1 that:
"1.
The applicant will appoint an accredited installation electrician or
an accredited master installation electrician as stipulated
in the
electrical installation regulation to rectify and repair the
electrical reticulation network at Boardwalk Extension 3 In
order to
comply with the electrical reticulation network plan.
"
Paragraph
2 thereof deals with the appointment of Mr. Venter of Electrical Safe
Circuit as an Inspector of works and stipulates
his rights as
follows:
"2.
Mr. Venter of Electrical Safe Circuit, is appointed as an inspector
of the works, with the following rights:
2.1
the right to be present on the site at all times;
2.2
the right to oversee the works;
2.3
the right to stop the works at any time should proper compliance with
this court order not occur and to report back to court
for any
further directions or relief."
Finally,
paragraph 3 of the said order deals with the circumstances under
which Seriso would be liable and it provides as follows:
"3.
The respondent is ordered to pay all costs pertaining to the
rectification and repair, all electrical reticulation network
at
Boardwalk Extension 3, as far as the physical installation deviates
from the plan as prepared by Watson Mattheus Consulting
Electrical
Engineers (Pty) Ltd and does not comply with the accepted standard as
indicated by Mr. Venter in his report, including
the costs of the
inspector, Mr. Venter, at a market related fee, within 7 days of
receipt of an accounts which accounts will be
hand-delivered at the
respondent's business address at 444 Rodericks Street, Lynnwood,
Pretoria."
Paragraph
3 of this order is, in our view, relevant. It qualifies the potential
liability of Seriso in the following four important
respects. To put
it otherwise the following four conditions that must be present
before Seriso could be held liable for any payment
under the court
order. In the first place the costs must refer to a rectification and
repair of the electrical reticulation network
at Boardwalk Extension
3; secondly, the liability would only arise insofar as existing
physical installation on 1 July 2008 deviated
from the electrical
network plan as prepared by Watson Mattheus Consulting Electrical
Engineers (Pty) Ltd. The network was a set
of plans identified and
submitted into evidence as exhibits 'E1', 'E2' and 'E3'; thirdly,
that liability only arose insofar as
the existing physical
installation on 1 July 2008 did not comply with the accepted
standards as indicated by Mr. Venter in his
report; fourthly and
finally, the costs so claimed must be a market related fee. It was
submitted by Mr. Oorshuizen that Olympus
failed to satisfy all the
four conditions.
[35]
The explanation given by Daniel that Olympus tried out of sheer
desperation to assist Ercon in order to enable Ercon to obtain

payment from Serlso could, in our view, not be maintained. There is
no denying the fact that Olympus's attorneys, who were acting
at all
material times on instructions of Daniel, were clearly under the
impression that Olympus was liable for the payment of Ercon's

account. That being the case such a liability could only have
emanated from the oral agreement concluded between Ercon and Olympus.

The probabilities are overwhelming that Daniel must have instructed
the attorneys of Olympus after an agreement had been concluded
that
Olympus would be liable to pay Ercon's account. One merely has to
have regard to the defendant's subsequent conduct after
the
conclusion of an agreement. That conduct made it clear that Olympus
knew that it was obliged to pay Ercon's account. It was
submitted by
Mr. Stoop that this conclusion was fortified by the fact that nowhere
in the correspondence between the parties or
in the affidavits filed
of Olympus was any mention made of an agreement in terms of which the
defendant was not liable towards
Ercon and that Ercon had to claim
directly from Seriso. This defence was, for the first time, raised in
Olympus's plea. On the
other hand Ercon's version of the terms of the
agreement enjoys the support of the correspondence and documentation
that originated
from Olympus's attorneys. In particular Olympus's
attorney's letters dated 20 August 2004 and 1 October 2008 are of
crucial importance
inasmuch as they confirm Ercon's version that it
was never agreed that Ercon would only be entitled to claim payment
from Seriso.
[36]
It is highly unlikely that Olympus only facilitated payment of
Ercon's account. Olympus's attorneys could only have done so
on the
strength of an agreement concluded between Olympus and Ercon or In
terms of an agreement between Ercon and Olympus's attorneys.
It was
never Olympus's case that such an agreement existed, nor was there
any evidence given of the existence of such an agreement.
This view
would contradict Daniel's concession that Olympus's attorney did not
act on behalf of Ercon when they wrote the letter
of demand dated 29
July 2008. Finally on this point, nowhere in the correspondence
between the parties or in the affidavits filed
on behalf of Olympus
was there any mention made of such an agreement. At any rate this
crucial point was conceded by Daniel.
[37]
On the probabilities Ercon would not have agreed to do work of the
magnitude envisaged by Van Wyk when he inspected the premises
for an
entity completely unknown to it without insisting of some form of
guarantee. Furthermore Ercon would not have agreed to
do work under
circumstances where it had no previous business dealings with Seriso.
Ercon did not possess Seriso's physical address,
nor did it have any
details of its directors and could not therefore assess Seriso's
credit worthiness. In addition Ercon did not
obtain any benefits in
terms of the Court Order. Ercon could not rely on the terms thereof
to obtain payment from either Olympus
or Seriso.
[38]
When one further looks at the probabilities it is highly unlikely
that Ercon would have commenced with the execution of the
works if it
did not have the plans and if the parties had agreed that Ercon would
only be entitled to payment for work done in
accordance with the
approved plans. The parties would not have consulted on the basis
that Ercon was obliged to rectify and to
repair and that Ercon would
then assume the risk that it would not be entitled to payment from
Seriso for work which was done outside
the scope of the approved
plans. The probabilities existed that the reason Ercon executed the
contract in absence of the plans
was because Ercon did the work on
the instructions of Olympus and under circumstances where Olympus had
agreed to pay Ercon for
all the costs in respect of the repair and
rectification work. According to Olympus, Ercon agreed to repair and
rectify the entire
electrical reticulation network but to restrict
its claim for payment only in respect of work contemplated in
paragraph 3 of the
Court Order. This, in our view, is highly
improbable. It was pointed out by Mr. Stoop that Olympus was faced
with an emergency
situation as residents had no electricity and the
repairs had to be done very urgently.
[39]
We are unanimous, in our view, that the court
a
quo
correctly
found that the reason why the first defendant's attorneys were under
the impression that Olympus was liable towards Ercon
for payment was
because Daniel must have instructed them that Olympus had undertaken
to pay Ercon's account. The order appealed
against was correctly
made. There is therefore no merit in the appeal.
In
the premises, we make the following order:
(1) The application for
condonation for the late filing of the notice of appeal is granted
and the appeal is accordingly reinstated.
(2) the application for
the late filing of a transcript of the appeal record is hereby
granted.
(3) the appeal is
dismissed with costs which costs shall include the costs of the
applications for condonation as set out in paragraphs
1 and 2 of the
order.
SE
JUDGE OF THE HIGH COURT
I
agree
JUDGE OF THE HIGH COURT
I
agree, and it is so ordered
_______________________________
C.P. RABIE JUDGE OF THE
HIGH COURT
,
Appearances
:
Counsel
for the appellant: Adv. MMW van Zyl (SC)
Instructed
by: Loubser van der Walt Inc. Counsel for the first respondent: Adv.
BC Stoop (SC) Instructed by: Pennel/s Attorneys
Counsel for the
second respondent' Adv. MM Oosthuizen (SC) Instructed by: Snyman de
Jager Inc.
Date
Heard: 25 May2016
Date
of Judgment: 24 February 2017