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[2017] ZAFSHC 75
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Set-Mak Civil & Gololosegang Basadi Civil JV v Masilonyana Local Municipality (834/2017) [2017] ZAFSHC 75 (8 June 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 834/2017
In
the matter between:-
SET-MAK
CIVIL & GOLOLOSEGANG
BASADI
CIVIL
JV
APPLICANT
and
MASILONYANA
LOCAL MUNICIPALITY
RESPONDENT
CORAM:
MHLAMBI, J
HEARD
ON:
18 MAY 2017
DELIVERED
ON:
8 June 2017
MHLAMBI,
J
[1]
This is an application in terms of which the applicant seeks an order
on the following terms:
1.1 Declaring that the
respondent is indebted to the applicant in the amount of R
1 252 851.10 together with interest
on the said amount at
the prescribed rate for arrears (10.25% per annum) in accordance with
section 1 of the Prescribed Rate of
Interest Act No 55 of 1975;
1.2 The respondent be
ordered to pay the amount of R 1 252 581.10 together with
interest at the aforesaid rate (10.25%
per annum) to the applicant;
1.3 That respondent be
ordered to pay costs of this application.
[2]
The application is opposed.
[3]
Pursuant to a tender process, the applicant was awarded a contract,
contract No: M/FS/0575/5/07/08, for the eradication of 1261
buckets
in the Winburg/Makeleketla area for the contract price of R
6 211 187.69 as per the letter dated 25 February
2014 from
Babereki Consulting Engineering CC, the project manager appointed by
the respondent. Makhaotse Narasimulu and Associates
(Pty) LTD are the
appointed engineers to whom the applicant had to deliver monthly
payment certificates indicating amounts due
and the engineers in turn
had to certify amounts they considered due to the applicant.
[4]
Upon the issuing of a practical completion certificate by the
engineer, the applicant would attend to the “
Snags”
or defects
within 14(fourteen) days,
whereupon 50% of the retention monies would be released. The defects
liability period was six calendar
months for structural works, three
calendar months for gravel roads and twelve calendar months for civil
works. Upon expiry of
the defects liability period, the applicant
would be entitled to payment of the remaining retention monies.
[5]
On 19 May 2014, the engineer issued a practical completion
certificate indicating that the project had been inspected and was
deemed practically completed in conformity with the provisions of the
contract and had satisfactorily passed any final tests except
for the
outstanding terms listed as snag list and any defects not yet
discovered. The snag list items were anticipated to be completed
before 2 June 2014. The completion certificate would, in terms of the
contract, be issued upon the satisfactory completion of the
snag list
items and any defects not yet discovered.
[6]
On 7 July 2015 the engineer addressed a letter to the Respondent’s
director of infrastructure which reads as follows:
“
Dear
Sir
MIG
FS/0575/S/07S08 BUCKET ERADICATION PROFECT IN MAKELEKETLA- WINBURG;-
FINAL INSPECTION AND REALESE OF 50% RETENTION AND SURETY
On
the 19
th
of May 2014 a site visit was conducted for the above mentioned
project along with the Masilonyana Municipality and the Contractor
in
order to issue out a practical completion certificate to Se-Mak
Civils & Gololoseng JV for completion of the scope of works
allocated. The Contractor was given till the 2
nd
of June 2014 to complete the snag that was issued.
However,
in this regard the Contractor hereby requests that the 50% of
retention and surety be released. Furthermore, in accordance
to GCC
2010 as the project has come to a completion and the completion
certificate be issued subsequent the final site inspection.
The
following should be taken into consideration;
1.
The performance
guarantee (if any), shall be returned within 14 days to the
guarantor,
2.
The defect
liability period shall commence subsequent final site visit and
approval of the snag provided/issued,
3.
The withheld
retention money along with surety money guarantee shall be reduced to
half in terms of
Clause
6.10.5
, which
will amount to
R
815, 744.63 14% VAT INCL.
We
have also attached a request letter from the Contractor along with
the issued practical completion certificate.
We
trust the above information is in order and remain.”
The
contractor’s letter of request was a confirmation of the
completion of the snag list which was compiled during the practical
completion site visit and a request for the release of the retention
and all outstanding monies flowing from the contract. Also
sought was
an indication when the final completion inspection would be conducted
so that the outstanding payment could be finalised.
[7]
On 6 September 2016, the applicant addressed a letter to the
Respondent’s municipal manager advising that the total amount
owing inclusive of the retention and the surety money was R
1 252 581.10. A letter of demand dated 15 September 2016
was addressed to the respondent by the applicant’s attorney in
which they demanded:
a) immediate
arrangements be made for the final site hand over;
b) a final
compliance certificate be issued;
c) payment of the
retention and the surety money in the sum of R 1 036 000.71;
d) Payment of the
contract monies due to the applicant in the sum of R 216 580.37
for work done.
[8]
It would appear as if this communication,
inter alia,
elicited
a response as Mr Elias Kaise, the respondent manager of legal
services forwarded an e-mail to the applicant’s attorney
which
reads as follows:
“
Good
day Sir
We
refer to the matter above and our telephonic conversation yesterday,
dated the 10 of October 2016.
Kindly
take note that the Municipality, with specific regard to the client’s
claim and the much appreciated explanation through
the documents you
attached on 5 of October 2016, writer hereof was enlightened and
managed to advice the Municipality on the true
facts with regard to
liability.
Kindly
take note further subsequent to the advice it was then agreed that
the technical advisor, Mr Janvos, together with the consultants,
upon
realising the alluded to facts, were tasked to do a maintenance budge
which would address the deficit caused by miscalculation
of the
project implementation to such a point that there was a drying up of
funds to complete the project, you will understand
that due to this
misfortune the Municipality, through MIG, ended up paying the
retention fee to complete the project.
Kindly
not furthermore that the estimated time or period to complete the
application process for funding in order to settle your
clients
outstanding claim, being the full and final settlement, is
approximately a month. The Municipality suggest that give or
take
six(6) weeks will be sufficient to finalise this matter, including
MIG approving the fund and then favouring the Municipality
with proof
of payment to your trust account. The Municipality request your
indulgence in the matter and shall keep you posted with
any
development to the finalisation of this matter.
We
trust you find above in order.
Best
regards
Mr
Kaise.”
It
is on the basis of this acknowledged indebtedness, that the applicant
filed this application.
[9]
The applicant resists this application and raised four preliminary
points under the headings of the court’s lack of jurisdiction,
no cause of action, non-joinder and that the declaration order sought
was against the principle of legality. I shall revert to
the
preliminary points later. On the merits the respondent questioned the
validity of the practical completion certificate, suggesting
that it
was a rehash of the applicant’s letter dated 1 July 2015 which
was attached to the engineer’s letter to the
respondent’s
director of infrastructure dated 7 July 2015. Besides, the
applicant’s contract with the respondent was
terminated on 29
August 2014. The applicant was therefore not entitled to the
retention amount in the amount of R 1 252 581.10.
[10]
In paragraph 22 of the answering affidavit, the respondent stated
that
“
the
applicant did not complete the project and is only entitled to
payment up to the date on which his contract was terminated and
that
will be ascertained once the progress report has been presented to
the Respondent.”
It was argued further
on behalf of the respondent that a practical completion certificate
did not declare the project completed.
The only certificate that
declared the project completed was the completion certificate which
was not yet issued in favour of the
applicant.
[11]
Paragraph 37, 38 and the conclusion in paragraph 4.1 of the
respondent’s heads of argument read as follows:
“
37.Since
the Applicant’s contract was terminated and a new contract
(sic) was appointed to complete the remaining part
of the project,
the Respondent submit that the Applicant is not entitled to the
retention amount of R 1 252 581.10.
38.
The respondent is not disputing that there is retention money due to
the Applicant under the tender contract, but the Respondent
disputes
that such money amounts to R 1 252 581.10. As already
stated in the Respondent’s answering affidavit,
the Respondent
is still waiting for the progress report from the company that
concluded the tender project in order to enable it
to calculate the
exact amount due to the Applicant, which amount will be less than the
claimed amount of R 1 252 581.10.
4.1
We submit with respect that the relief sought by the Applicant is
unprecedented and will prejudice the Respondent in that the
Applicant
will be unjustly enriched with the money that is not due to him.
[12]
In oral argument, it was conceded that the respondent was indebted to
the applicant under the contract in a certain amount
still to be
determined on receipt of the progress report which was exclusive of
the retention money. However, the respondent insisted
that the
application was pre-mature as, in terms of the contract, the final
competition certificate had not been issued. It was
furthermore
conceded that the preliminary points of non-joinder, lack of
jurisdiction and arbitration were being abandoned. The
approach to so
abandon the preliminary points raised was correct, as a perusal of
the answering affidavit and the respondent’s
heads of argument
including the oral argument, indicate clearly that the contract, the
acknowledgement of indebtedness and the
court’s jurisdiction,
even though not pertinently admitted, were not in dispute. In fact,
in substantiation of the preliminary
and other points raised, the
respondent relied on the very contract that the applicant used as
background material for its cause
of action. The preliminary points
were but an obfuscation of the real issue.
[13]
The practical completion certification was issued on 19 May 2014. The
letter of the termination of the contract by Babereki
Consulting
Engineers is dated 29 August 2014. The letter advising of the
completion of the project and the request for the issuing
of the
completion certificate by the project engineer is dated 7 July 2015.
The respondent does not attack the validity of this
letter and the
authority of the engineer to write such a letter especially in the
light of the alleged termination of the contract.
One would have
expected that the true position would have been communicated to the
engineer either by the respondent or the project
manager. The
engineer’s continued services should have come into question as
these should have lapsed with the termination
of the contract in
regard to the project. On the contrary, paragraph 2 of the said
letter confirmed the completion of the project
in accordance with the
contract as the snag list had been attended to. The defects liability
period expired on 7 July 2016.
[14]
Paragraph 11.1 and 11.2 of the founding affidavit read follows:
“
11.1
I appended hereto as annexure “
FA6”,
a copy of a
demand dated
16
September 2016
addressed
by Applicant’s attorney to the Respondent wherein the
outstanding amount owing to the Applicant
(R
1 252 581.10)
is
demanded.
11.2
I state that on
11
October 2016
my
attorney,
Etienne
Blignaut,
conducted a telephonic discussion with one
Elias
Kaise
in the
office of the municipal manager and he confirmed the Respondent’s
indebtedness to the Applicant in the aforesaid sum
and requested an
extension for payment, in substantiation whereof I append hereto as
annexure “
FA7”
,
a copy of a letter date
11
October 2016
addressed
by
Bilgnaut
to
Respondent; as annexure “ FA 8”, a copy of an e-mail from
Kaise to Blignault; and as annexure “
FA9”,
a confirmatory affidavit by
Bilgnaut.
”
The
respondent’s response in paragraph 24 of the answering
affidavit reads as follows:
“
Save
to acknowledge a letter of demand, the Respondent denies that it is
indebted to the Applicant in the amount of R 1 252 581.10”.
[15]
In the respondent’s heads of argument and more in particular
paragraph 31, it was stated that on a proper perusal of
annexure
“
FA9
”
,
the attorney’s confirmatory affidavit, nowhere was it stated
that the respondent was indebted to the applicant in the amount
of R
1 252 581.10. This argument is disingenuous. The letter of
demand dated 15 September 2016 makes mention of the amount
of R
1 252 581.10 due and payable, which was confirmed and an
extension of payment was requested. The contents of the
legal
services manager’s letter, save for the denial to pay, are not
challenged. The only inference to be made is that the
“
funding
in order to settle your client’s outstanding claim being the
full and final settlement”
, referred to
the amount claimed in the letter of demand and as fully set out in
the letter to the Municipal Manager dated 6 September
2016 and
attached, marked annexure
“
FA
5”
to the founding affidavit.
[16]
The denials by the respondent of the facts alleged by the applicant
do not raise real, genuine or bona fide disputes of facts.
They are
so far-fetched and clearly untenable that the court is justified in
rejecting them merely on the papers:
Plascon-
Evans Paints LTD v Van Riebeeck Paints (Pty) LTD
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
.
It is clear that the facts in this case, although not formally
admitted, cannot be denied and must be regarded as admitted. I
was
referred to
Fakie NO. v CCLL Systems (Pty)
Ltd 2006 (4)SA 326 at paragraph 55, an
extract of which reads as follows:
“
55.
Yet motion proceedings are quicker and cheaper than trial proceedings
and, in the interests of justice, courts have been at
pains not to
permit unvirtuous respondents to shelter behind patently implausible
affidavit versions or bald denials. More than
60 years ago, this
Court determined that a Judge should not allow a respondent to raise
'fictitious' disputes of fact to delay
the hearing of the matter or
to deny the applicant its order. There had to be 'a bona fide dispute
of fact on a material matter'.
This means that an uncreditworthy
denial, or a palpably implausible version, can be rejected out of
hand, without recourse to oral
evidence. In Plascon-Evans Paints Ltd
v Van Riebeeck Paints (Pty) Ltd, this Court extended the ambit of
uncreditworthy denials.
They now encompassed not merely those that
fail to raise a real, genuine or bona fide dispute of fact but also
allegations or denials
that are so far-fetched or clearly untenable
that the court is justified in rejecting them merely on the papers.”
I agree that the paragraphs are
applicable to the circumstances
in casu.
[17]
In the circumstances, I find that applicant has made out a proper
case for the relief sought and it should therefore succeed
in its
claim. The applicant seeks a punitive costs order as against the
respondent. Having regard to the facts of these case, such
a request
does not seem misplaced.
[18]
I therefore make the following order:
ORDER:
1.
Prayers 1.1 and 1.2 of the notice of
motion are granted.
2.
The respondent is to pay the costs of the
application on a scale as between attorney and client.
_
_____________
J.J.
MHLAMBI, J
On
behalf of appellant: Adv.
Louw
Instructed
by:
Bilgnaunt
Attorneys
Bloemfontein
On
behalf of Respondent: Adv. Khokho
Instructed
by:
Rampai
Attorneys
Bloemfontein