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[2017] ZAGPPHC 877
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Paparich Property Development CC and Others v Ekurhuleni Metropolitan Municipality (74017/13) [2017] ZAGPPHC 877 (25 April 2017)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 74017/13
25/4/2017
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
PAPARICH
PROPERTY DEVELOPMENT
CC
First
Plaintiff
NDUMO
GROUP PROJECTS
CC
Second
Plaintiff
KGELELE
CONSTRUCTION SERVICES
CC
Third
Plaintiff
and
EKURHULENI
METROPOLITAN
MUNICIPALITY
Defendant
JUDGMENT
OPPERMAN
J
INTRODUCTION
[1]
The first, second and third plaintiffs who had entered into a
consortium agreement (hereinafter collectively referred to as
"Paparich"),
were appointed by the defendant to
design, upgrade and construct storm water infrastructure under
contract number SP01/ 2008
("the contract").
Four
instructions to proceed with work
("IPW's")
were
issued by defendant in respect of the contract being:
1.1 IPW 1, dated August 2008 for an
estimated amount of R 4 500 000;
1.2 IPW2, dated March 2009 for an
estimated amount of R 15 500 000;
1.3 IPW3, dated November 2009 for an
estimated amount of R 4 150 000; and
1.4 IPW4, dated April 2010 for an
estimated amount of R 7 000 000.
[2]
Paparich completed the work in respect of IPW1, IPW2 and IPW3 and
were paid for this work. The subject matter of this trial
concerns
IPW4. Paparich contends that it executed and completed the works in
respect of IPW4 in the amount of R 7 857 258.69 (inclusive
of VAT)
and that a final payment certificate was issued by defendant on 28
June 2012 confirming that the work in respect of IPW4
had been
performed. Paparich accordingly contend that they are entitled to
payment together with interest thereon.
[3]
Despite defendant's having issued the payment certificate, it has
contested its liability to pay thereunder based on the wording
of
IPW4, which was accepted by Paparich on 10 May 2010. The relevant
part reads:
'You are requested to liaise with the
Programme Manager (Kgalaletso Consortium) and the Region regarding
the details of the scope
of work. The work should be practically
complete on or before 30 June 2010. Where the Scope of the work is
not descriptive, a list
of storrnwater systems should be finalised
for approval in writing by the General Manager: 2010 & Special
Projects before commencement
of work.
Furthermore, please note that if you
carry out any other work that has not been allocated as shown above,
the work will be done
entirely at your
own risk
and the
Municipality will not be entitled to reimburse you for the work
done.'
[4]
The defendant contends that IPW4 should be construed as follows:
4.1 The work should be practically
completed on or before 30 June 2010;
4.2 In the event of the work not being
practically completed on or before 30 June 2010, Paparich would not
be entitled to payment
for any work done after 30 June 2010, at all;
[5]
Paparich interprets IPW4 as follows:
4.1 The work should be practically
completed on or before 30 June 2010;
4.2 In the event of the work not being
practically completed on or before 30 June 2010, any work done after
30 June 2010 could attract
penalties as provided for in the contract
but Paparich would still be entitled to payment.
[6]
As will become clear hereunder, I do not fully accept either party's
interpretation of IPW4. In my view the portion that provides
if
Paparich carries out work that has not been allocated it does so at
its own risk, relates to the allocated scope of work and
not the
allocated period in which it was to be completed. The consequences of
late payment are separately regulated by the penalty
provisions of
the General Conditions of Contract
('GCC')
which is the
standard form contract adopted by the parties for these works.
Although I consider the issue of the payment certificate
pursuant to
the provisions of the GCC to be determinative of the issue between
the parties, I hereunder give consideration to the
cases as presented
in the trial.
THE
PLEADINGS AND ISSUES
[7]
Paparich argued that the defendant should be held to the case as
pleaded. It contended that the defendant's claim was confined
to the
content of paragraphs 2.2.1 and 2.2.2 of the pre-trial minute which
reads:
'2.2.1 In terms of the defendant's
plea, paragraph 14 thereof, the defendant's case (defence) is the
following:
2.2.2.1 That the plaintiffs failed to
comply with the IPW4;
2.2.2.2 That the work in terms of IPW4
should have been completed on/or before 30 June 2010;
2.2.2.3 That should the plaintiffs
carry out work that had not been allocated, that work would be done
entirely at plaintiffs risk
and that defendant would not be entitled
to reimburse the plaintiffs for the work done;
2.2.2.4 That on/or before 30 June
2010, the plaintiffs had not commenced with any work in terms of the
IPW4;
2.2.2.5 That defendant during the
first week of September 2010 became aware that plaintiffs proceeded
with the work in terms of
IPW4 after the indicated completion date
without the defendant's knowledge;
2.2.2 In terms of paragraph 16 of
defendant's plea, it also denied and (sic) in dispute that plaintiffs
executed and completed the
works in terms of IPW4, and that
plaintiffs had not commenced with any work in terms of IPW. Further
that on/or about (sic) the
course of the first week of September 2010
the defendant became aware that the plaintiffs proceeded with work in
terms of IPW after
the indicated completion date without the
defendant's knowledge.'
[8]
The defendant admitted that its defence/s were contained in the
aforegoing paragraphs of the pre-trial minute. The issues which
thus
fall for determination are:
8.1 The correct interpretation of
IPW4;
8.2 Whether Paparich complied with
IPW4 as property construed.
THE
CONTRACT
[9]
Tender SP1/2008 was accepted by Paparich on 4 March 2008. As per the
letter of appointment, the contract was to commence on
1 August 2008
to 30 June 2011. It is common cause between the parties that:
9.1. the contract was extended for 3
months to expire on 30 September 2011;
9.2. The GCC was applicable to the
contract - a copy was handed to the court;
9.3. the contract had not been
cancelled;
9.4. IPW4 was issued pursuant to such
contract and accepted by Paparich on 10 May 2010.
THE
EVIDENCE
Paparich's
evidence
[10]
Mr Paul De Fin
('Mr De Fin'),
an engineer by profession
testified that he had been so employed for a period of 15 years.
Paparich was, in terms of the contract
it had with the defendant,
required to form another consortium with consulting engineers, in
order to acquire the necessary technical
capacity. This they did with
Vela VKE Consulting Engineers Inc
('Vela VKE'),
which is where
Mr De Fin was employed during 2010.
[11]
'Engineer' is defined in clause 1.1.15 of the GCC and applied to the
facts of this case is, Vela VKE. Mr De Fin is the representative
of
Vela VKE. Vela VKE is, in terms of clause 1.1.15, appointed by the
defendant and thus, the representative of the defendant.
[12]
Mr De Fin explained that when an engineer gets appointed as the
principal engineer for an IPW, the general procedure would
be for the
engineer to meet with the project manager, who is the agent of the
client (commonly referred to in construction law
as the employer),
and the project manager would explain the brief to the engineer.
[13]
The engineer would do a desktop study to get a feel for the type of
work that needed to be performed and the engineer and the
project
manager would then agree on a design. It is only then that the
engineer would do a detailed design and submit that design
to the
project manager for approval. Once the detailed design has been
approved, the contractor, Paparich, could establish a site
and set up
camp.
[14]
Mr De Fin testified that he was appointed the principal engineer for
IPW4 which was being run out of the Pretoria office. IPW's
1, 2 and 3
had been run by their Johannesburg office by a different engineer. He
did a desk top study to get a feel for the type
of work that needed
to be performed and an agreement was reached with the project manager
as to the limit and scope of the work.
He submitted a detailed design
which was approved by the project manager on 8 June 2010. This was
the second design which had been
submitted. The first one was not
approved as it had provision for water to be discharged under a
railway line. Additional costs
were going to be required for this.
[15]
Way-leave applications then needed to be approved. These are advices
which are issued to service providers such as Telkom,
Eskom, Vodacom,
essentially anyone who may have an interest in the road reserves who
might have infrastructure such as cabling
or piping running in the
road reserve, an area designated for such purposes along the route of
a road. The process of approving
way-leaves takes an average of 2 to
3 weeks for everybody to respond.
[16]
Mr De Fin opined that due to the inevitable delays that would be
occasioned by having to issue the way-leave applications,
which could
only be done on or after 8 June 2010, and the delay inherent in the
delivery of special pipes, which pipes had been
authorised and
approved of, and the scope of the contract, the project could not
realistically be finished by 30 June 2010. He
testified that it was
very seldom that a contractor could spend R 7 000 000 in 3 weeks,
even a highly qualified contractor.
[17]
The work on the approximately 800 meters of pipes with manholes,
commenced with his knowledge. However, when about 60% of the
work had
been done, and on 10 September 2010 Mr De Fin instructed Paparich to
stop all work and to backfill and close all the excavations,
pipe
trenches, open manholes, junction boxes and exposed services. He
testified that the reason the work had been stopped was because
Paparich had been advised that the work forming the subject matter of
IPW4, was a "mayoral budget project" and that the
funds now
had to be sourced from the next financial year. At a meeting on 8
September 2010 defendant's representatives told Paparich
to wait.
Their intention was to finalise the project.
[18]
He explained that on 27 September 2010 he received a communication
from Mr Nico Nel
("Mr Nel")
employed by the
defendant, confirming that Paparich was the appointed contractor and
that they were still responsible for the safety
of the site. Mr De
Fin also explained that Kgalaletso consortium were the appointed
project managers during May 2010, that their
contract was terminated
or came to an end June/July 2010 but that they had also stayed on for
about 2 months thereafter and that
the new project managers, Monde
Skade, were only appointed on or about 4 February 2011.
[19]
On 18th of July 2011 Mr De Fin communicated with Paparich and advised
them that the contract with the defendant had been extended
by 3
months to 30 September 2011.
[20]
He testified that the contract ran from 1 August 2008 until 30 June
2011 but had been extended for 3 months to 30 September
2011. Work
forming the subject matter of IPW4 was completed in November 2011 and
on the 28 June 2012 he, on behalf of the defendant
issued the final
payment certificate which provided:
"
Final Payment Certificate 30'
In terms of Clause 49.1 of the General
Conditions of Contract (GCC) 2004, we hereby certify that the amounts
claimed for works done
as set out in the attached invoice (Paparich
Invoice nr 30), is a true reflection of the works completed. The
total amount payable
is therefore R?,857,258.69 (Seven Million Eight
Hundred and Fifty Seven Thousand and Two Hundred and Fifty Eight
South African
Rand and Sixty Nine cents including VAT."
[21]
The reconciliation of the account reflected that R 265 566.49 was
invoiced on 30 June 2010 and paid. This amount was for the
designs,
which had been completed by 8 June 2010. He stated that Vela VKE had
inspected all the works, that it had been done properly
and in
accordance with the specifications. Mr De Fin concluded that IPW4
meant that any works done, not approved of by the project
manager,
such as excavating or laying of pipes which did not correlate to the
design, would be done at the risk of the contractor.
I shall refer
below to other features of Mr De Fin's evidence when dealing with the
interpretation of IPW4 and his role in resolving
ambiguities.
[22]
Mr Irvin Ndumo ("Mr Ndumo"), testified that he understood
clause IPW4 to mean that if the work was not allocated
in terms of
IPW4, the contractor would not be paid for such work. He also
explained that the building site had been established
even bfore the
drawings had been approved. The local ward council was approached and
had given permission for the site to be set
up.
[23]
He testified that material could not have been ordered before the
approval of the final drawings, which happened on 8 June
2010. He
also explained that there was a delay in obtaining the way leaves.
The pipes were of a specific size (1500 x 75d) as per
the approved
drawings and it took time to order these pipes.
[24]
After the drawings had been approved, Paparich ordered the first
batch of pipes and started to expose the surface of the ground
by
hand so as to ensure not to damage existing services as the way leave
applications had not all been finalised. A number of problems
were
encountered such as the fact that they hit rock and had to appoint a
blasting company after consulting with the defendant
and then
receiving the defendant's approval in this regard. There was an
unexpected existing sewer pipe which had not been factored
into the
approved drawings such that the drawings had to be revised. There was
also a problem with a leakage in the trenches. The
75d pipes provided
for in the drawings were out of stock and approval was sought and
refused for an alternative sized pipe.
[25]
He had contacted Mr Mogorosi (representative of the Project Manager)
on about 10 June 2010 who had instructed Paparich to proceed.
The
Project Manager, so he testified, was a representative of the
defendant. The work in respect of IPW3 and IPW4 were running
together.
[26]
On 18 July 2011 Mr De Fin wrote to Paparich and told them the
contract with the defendant had been extended for 3 months. He
also
told Mr Ndumo that he had the name and number of a contact person to
resolve the IPW4 payment issues.
[27]
In a procedure report dated 17 August 2011, Mr Ndumo placed the
defendant on terms. He wrote:
'The consortium have been waiting for
the Municipal management to issue an instruction to continue with the
completion of IPW4.
We are humbly, requesting the Council response
within 14 days working days. If there is no
response, we will
COMPLETE THE REMAINING PORTION OF IPW4 and submit our fees claim.'
(emphasis as per original text)
[28]
No response to this was received. On 16 November 2011 Paparich's
attorneys wrote to the defendant recording that prior to the
request
to stop work on site, Paparich had completed a substantial amount of
work, that they had indulged them by waiting to the
next financial
year for them to sort out the financial difficulties but that they
were now holding them to the contract.
The
Defendant's evidence
[29]
Mr Nel, an engineer employed by the defendant since 1976, testified
that the defendant was not liable to pay the IPW4 as it
had expired
on 30 June 2010. He said that all work is linked to the availability
of funds and to the budget itself. He compared
IPW4 to IPW1, IPW2 and
IPW3. He said that IPW's 1, 2 and 3 did not have completion dates and
were thus linked to the contract (being
30 June 2011) whereas IPW4
had a practical completion date which was 30 June 2010.
[30]
He said that he had been unaware that work had been done after 30
June 2010. On 8 September 2010 he had received a call from
a local
councillor enquiring about the nature of the work being done. He had
then convened a meeting with Mr De Fin and Paparich
and they were
requested to backfill the trenches.
[31]
He explained that he had never attended site meetings and in
particular that he had never inspected any works executed by
Paparich. He conceded that if it were established that IPW4 did not
expire on 30 June 2010, then the defendant was liable to pay.
He
conceded further that IPW4 had never been cancelled and that the risk
clause contained in IPW4 was standard. Such risk clause
only applied
to work not allocated and to work which fell outside the scope of
work as defined in such IPW. Mr Nel explained that
the project
manager was responsible for the administration of the entire contract
which included site meetings, information, liaison,
payment
certificates and the like.
[32]
The back filling had been completed by 4 February 2011 and Mr
Strydom, the regional director was the only party who could stop
the
project.
[33]
Mr Vermeulen
('Mr Vermeulen'),
a civil technician who had
started working at the defendant during 1991, testified that his
understanding of IPW4 was the same as
Mr Nel's. He agreed that the
risk clause referred to in IPW4 only pertained to work which fell
outside the scope of the work ie
work which had not been allocated in
terms thereof. He knew that the work could not be completed before 30
June 2010. He denied
that the defendant had instructed Mr De Fin to
write a letter to Paparich on 10 September 2010 in which they were
instructed to
stop all further work.
[34]
On 15 October 2010 Mr Vermeulen received a progress report from Mr De
Fin in which Mr de Fin had recorded that Paparich had
removed all
excess material from site and that they were in a position where they
had to import material to close and backfill
the excavations. Mr De
Fin suggested that the defendant allow Paparich to obtain quotes for
a subcontractor to complete the back
filling and for Paparich to
claim it back from the contract when the works proceeded in 2011. On
1 November 2010 Mr De Fin advised
Mr Vermeulen that Paparich had
appointed subcontractors to complete the back filling.
[35]
On 18 October 2010 Mr De Fin advised Mr Vermeulen that he wanted to
discuss the design of IPW4 works with Mr Tom van Zyl. Mr
Vermeulen
couldn't explain why this would be necessary if the project wasn't
going to continue.
[36]
Ms B S Mabisela, a chartered accountant and the divisional head
within the financial group at the defendant, explained that
she had
no personal knowledge regarding the matter. She was called to testify
about the general procedure which was followed when
payment was made
and how payments accrued.
INTERPRETATION OF IPW4
[37]
In
Adventure
Golf
Properties
CC
v Redefine
Properties Ltd
&
Another
(6836/20130 [2014]ZAGPJHC 314
(2 Sept 2014), the relevant principles of interpretation as they have
evolved since
Natal Joint Municipal Pension Fund v Endumeni
Municipality
2012 (4) SA 593
(SCA) were summarised as follows:
'.....In
Bothma Batho (supra),
the
Supreme Court of Appeal confirmed in para [12) (with reference to the
summary in paragraph [18] of
Endumeni (supra)),
that the
approach to interpretation summarised in
Coopers
&
Lybrand
v Bryant,
[1995] ZASCA 64
;
1995 (3) SA 761
(A)
"is no longer consistent
with the approach to interpretation now adopted by South African
courts in relation to contracts
...". The "
new
"
approach, which has been followed in a number of subsequent cases,
may be summarised as follows:
15.1 Interpretation is an exercise in
ascertaining the
"objective" "meaning of the
language of the provision itself"
- it is not aimed at
determining the intention of the parties, whether common or
otherwise, which is an
"unrelated"
concept, that has
"no bearing on the analysis"
and is
"irrelevant'.
15.2
"Interpretation is
a
matter of law and not of fact and
...
is
a
matter
for the court and not for witnesses".
15.3 The meaning of a provision is
determined with reference to its language and in the light of its
factual context, which includes
what has previously been referred to
as "background circumstances" and
"surrounding
circumstances".
Since interpretation is
"one unitary
exercise",
the process requires the court
"from the
outset'
to consider the language and context of the provision
together,
"whether or not there is any possible ambiguity'.
15.4 The factual context is
ascertained by reading the provision having regard to:
15.4.1. the document as a whole; and
15.4.2. the circumstances attendant
upon its coming into existence.
15.5 Consideration must be given to
the following four aspects:
15.5.1.
"the language used in the light of the ordinary rules of
grammar and syntax",
although it must be recognised that
words seldom have a single meaning;
15.5.2
"the context in which the provision appears"
(including
the provisions of the
"document as
a
whole");
15.5.3
"the apparent purpose to which [the provision] is directed";
and 15.5.4.
"the material known to those responsible for
its production".
15.5.5.
The
"inevitable point of departure"
is the language
of the provision and where
15.6.
"more than one meaning
is possible each possibility [i.e. each possible meaning] must be
weighed in the light of all these
factors".
Where the court
"is faced with two or more possible meanings that are to
a
greater or lesser
degree available on the language used
...
the apparent purpose of the
provision and the context in
which it occurs will be important guides to the correct
interpretation".
15.7. It is, however, inappropriate to
"do violence to the language
...
by placing upon it
a
meaning of which it is not reasonably capable"
and the
language should not be
"unduly strained'.
Thus, while
context may no longer be sacrificed at the altar of language, a
cautionary note should be sounded against overcorrecting
by giving
context an exaggerated importance in order to distort and strain the
language used in a document. The document should
be given a meaning
of which it is reasonably capable. The language adopted must be
respected and some measure of fidelity must
be shown towards it.
15.8 Although extrinsic evidence of a
provision's context, purpose and material known to those responsible
for its production is
admissible, "one
must
use
it
as
conseNatively
as
possible''.
The reason for this
admonishment is clearly to avoid unnecessarily taking up court time
and parties' costs in pursuit of extrinsic
evidence in cases where a
clear answer is provided by the intrinsic evidence such as the
document as a whole, the provision's immediate
context or its
apparent purpose.
15.9 Finally, a sensible meaning
should be preferred to one
"that leads to insensible or
unbusinesslike results",
or one that undermines the apparent
purpose.' (footnotes omitted).
[38]
The intention of the parties, common or otherwise, is irrelevant when
interpreting a provision/document unless it is expressed
in the
document or the circumstances are such that it stands to be
rectified. See
Endumeni
(supra) paras [20] - [24].
Although Mr Nel and Mr Vermeulen share the same view about the
interpretation of IPW4 (the aspect relating
to the consequences of
non-compliance with the completion date of 30 June 2010), such
expressed view may, arguably, be inadmissible
for purposes of
construing the document, by virtue of the application of the parol
evidence rule. See
Padayachee v Adhu Investments CC and Others
[2016] 2 ALL SA 555
(GJ).
[39]
However, Mr De Fin's view on the topic is highly relevant and
potentially decisive. This is so by virtue of the operation of
the
consensus between the parties as expressed in their agreement. Clause
3.1 of the GCC provides:
'If an ambiguity or discrepancy
between the documents is found, the Engineer shall issue any
necessary clarification or instruction'.
[40]
Mr De Fin's "clarification (or instruction)" appears from
his conduct and correspondence: It is clear that he knew
that
Paparich had worked after 30 June 2010. When asked to contextualise
the mail he had written on 10 September 2010 in which
he had
instructed Paparich to stop work he testified:
'....the contractor started working.
We were hit by delays. They continued. Hit by delays. We were then in
a position where these
huge pipes and pipe excavations were standing
open to the community.....Now there had been discussions on getting
the contractor
to move quickly, to install the pipes. He was saying I
need payment, so what happened was we had a meeting with EMM
[defendant]
on the 8
th
......on the 8
th
we
discussed this project in detail and we agreed that the finances were
not available in this financial year and they were going
to find the
finances from another budget............we were told by the EMM....we
should hold out and wait.....so what we agreed
was to make the site
safe because the contractor was standing'.
[41]
Mr De Fin was at pains to explain that he had no authority to
instruct the contractor to stop work other than under three
circumstances - when there was a health and safety issue, a quality
issue and a design issue. He gave an instruction to stop work
as
there was a safety issue.
[42]
In respect of the 'own risk' clause, Mr De Fin testified:
'....any
works that are not approved by the project manager',
the
contractor would be doing at it's own risk.
'....If you excavate or lay pipes
or buy pipes which do not correlate
to
the approved design,
drawings then you run the risk of those works not being paid for.'
[43]
Mr De Fin on 5 April 2011 and in a mail to the defendant draws
attention to the IPW4 project and records
'......he has not been compensated
nor has to date has (sic) received any communication from the EMM on
the monies owing or way
forward for the project. Again the contractor
has been waiting in good faith for this
to be
resolved.'
[44]
On 29 April 2011 Mr De Fin called for a meeting with one Tom of the
defendant to discuss the revisions to the designs in respect
of IPW4
to accommodate the bulk sewer line.
[45]
On 18 July 2011 he communicated with Paparich advising them that the
contract had been extended to 30 September 2011 and providing
the
name and number of a person who might be able to resolve the
"payments etc" in respect of IPW 4.
[46]
From the aforegoing it is clear that Mr De Fin, being the defendant's
appointed engineer, considered IPW4 to create obligations
for the
defendant beyond 30 June 2010 provided Paparich performed work which
fell within the parameters of the work approved in
the designs. His
conduct is clear and is to be construed as a
'clarification or
instruction'
as defined in clause 3.1 of the GCC.
[47]
If I am wrong in this approach, another route leads to the same
result: The parties were
ad idem
that the completion date was
30 June 2010. The only question is what the consequences are for late
performance.
[49]
Paparich argues that the consequences are provided for in clause 43,
which deals with penalties for delays. It provides:
"43.
PENALTY FOR DELAY
43.1 If the Contractor shall, by the
Due Completion Date, fail to complete the Works to the extent which
entitles him to receive
a Certificate of Practical Completion in
terms of Clause 43.2, the Contractor shall be liable to the Employer
for the sum stated
in the Contract Data as a penalty for every day
which shall elapse between the Due Completion Date and the actual
date of Practical
Completion.
The imposition of such penalty shall
not relieve the Contractor from his obligation to complete the Works
or from any of his obligations
and liabilities under the Contract."
[50]
The defendant effectively argues that such penalty clause has been
deleted from the contract as a failure by Paparich to perform
by 30
June 2010 does not merely entitle the defendant to raise a penalty,
but it entitles defendant to withhold payment completely
despite
complete or partial performance after such date.
[51]
The way-leaves were only completed on 26 June 2010. Mr Vermeulen
conceded that the defendant knew of this. Both Mr Nel and
Mr
Vermeulen conceded that the defendant knew that the designs had only
been approved of on 8 June 2010 and that on 8 June 2010,
Paparich
would not have been able to complete the works forming the subject
matter of IPW4 by 30 June 2010. The special pipes that
had been
approved of on 8 June 2010 would take 4 - 6 weeks to be delivered.
This fact alone would take the project way beyond 30
June 2010. The
conclusion is inevitable - everybody understood that IPW4 would be
performed after the cut-off date of 30 June 2010.
This however, has
limited value in interpreting the objective meaning of IPW4 which
should be done separate from the subjective
intentions of the
parties.
[52]
The defendant argues that IPW4 was linked to a so-called Mayoral
Budget. During cross-examination it was put to Mr Nel, why
the money
was available on 30 June 2010 but not on 1 July 2010. The response
was that it reverts back into the National coffers.
The defendant
argued that it is a creature of statute and that it is governed by
the provisions of the Municipal Finance Management
Act 56 of 2003
('MFMA'). The monies had been made available. The IPW4 was properly
authorised but the monies were only available
until 30 June 2010. On
the 26th of April 2010 when IPW4 was issued, the expenditure was
properly authorised and approved by the
relevant structures within
the defendant. Mr De Fin was unaware of the fact that it was a
mayoral budget allocation. He testified
that he only became aware of
this at the meeting on 8 September 2010. The defendant paid for the
designs which were completed by
8 June 2010. The question is, why if
the project had not reached practical completion stage, did the
defendant pay for the designs?
Why was Paparich asked to backfill and
not told to remove their pipes and to restore the site to its
pre-existing condition? Why
would Paparich incur costs in employing
sub-contractors to do the backfilling if the contract was not going
to continue? These
are but some of the considerations relevant to a
contextual interpretation.
[53]
The GCC spells out specific consequences for a failure to perform
timeously. The defendant did not argue that the contract
was
cancelled or terminated at 30 June 2010. It is clear that the
contract was simply suspended, an indulgence granted by Paparich
to
the defendant. That being so, there is no basis to suggest that the
penalty provision does not have application and that Paparich
is not
entitled to payment for work performed after 30 June 2010.
[54]
Mr De Fin, Mr Ndumo, Mr Nel and Mr Vermeulen all agreed that the 'Own
Risk' reference in IPW4 only applied to work, which hadn't
been
approved ie additional work, falling outside the ambit of IPW4 and
not allocated in terms thereof. I agree with this construction.
Such
a construction can be reconciled with the provisions of the GCC and
does not lead to an un-business-like result. Although
a different
interpretation was pleaded, it was not persisted with in argument.
[55]
I thus find that IPW4 provides that the works should've been
completed by 30 June 2010 and that non-compliance with that
requirement
would lead to the potential of a penalty being raised but
would not on it's own, lead to an inability to recover any funds for
work performed after such cut-off date.
COMPLIANCE
WITH THE CONTRACT
[56]
In terms of clause 49.10 of the GCC the Engineer (Vela VKE -
represented by Mr De Fin) shall:
"49.10 Within 14 days after date
of final approval as stated in the Final Approval Certificate, the
Contractor shall deliver
to the Engineer a final statement claiming
final settlement of all moneys due to him (save in respect of matters
in dispute, in
terms of Clause 58, and not yet resolved). The
Engineer shall within 14 days issue to the Employer and the
Contractor a Final Payment
Certificate, the amount of which shall be
paid to the Contractor within 28 days of the date of such
certificate, after which no
further payments shall be due to the
Contractor (save in respect of matters in dispute, in terms of Clause
58, and not yet resolved)."
[57]
The final payment certificate refers to clause 49.1 of the GCC. As it
purports to be a final payment certificate it is clearly
referring to
clause 49.10 as 49.1 deals with interim payments. This was not an
issue in the trial.
[58]
The final payment certificate has been quoted in full above at
paragraph [20]. [59] Mr Ndumo testified that the work was executed.
Mr De Fin (the Defendant's representative) testified that Vela VKE
had inspected the work, that the work had been done properly
and that
it had been done in accordance with the specifications. [60] The
issues defined at the pre-trial did not include a challenge
to the
final payment certificate and the defendant should be held to the
issues as defined in the pre-trial minute, see
MEG v Kruizenga,
2010 (4) SA 122
(SCA). During the trial there was an attempt to
challenge the documents underpinning the certificate. This attack was
launched
on documents discovered late and to which Paparich objected.
Be that as it may, it did not disturb the conclusion to be reached
from the evidence of Mr De Fin and Mr Ndumo being that the work was
performed.
[60]
The
onus
thus rests on the defendant to show that the work was
not performed or show some other lawful basis for refusing to pay in
the face
of the final payment certificate. Both Mr Nel and Mr
Vermeulen testified that they did not inspect the works nor did they
attend
site meetings. No evidence was presented on behalf of the
defendant to counter the content or effect of the final payment
certificate.
PERFORMANCE
AFTER TERMINATION OF THE CONTRACT
[62]
A feature neither pleaded nor argued, is that some of the work was
performed after 30 September 2011 ie after the termination
of the
contract. The issuing of the final approval certificate by the
defendant's representative, Mr De Fin, in respect of work
done after
30 September 2011, includes a tacit extension of time for completion
as envisaged in terms of the contract in terms
of, amongst others,
clause 42.
ORDER
[63]
I accordingly grant the following order: The defendant is ordered to
pay the plaintiffs:
1. the sum of R7 857 258.69;
2. interest at the rate of 9% per
annum a tempera morae;
3. costs of suit, to include the costs
of two counsel.
____________________
I
OPPERMAN
Judge
of the High Court
Gauteng
Division, Pretoria
Heard:
30 January 2017
Judgment
delivered: 25/4/17
Appearances
For
Plaintiffs: Adv Van Den Berg and Adv L Badenhorst
Instructed
by: Tyron I. Pather Inc
For
Respondent: Adv MC Makgato
Instructed
by: Prince Mudau & Associates