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[2016] ZAKZPHC 37
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Msweli Electrical Contractors Mandini CC v Eskom Holdings Soc Limited (4485/2015) [2016] ZAKZPHC 37 (29 April 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL,
PIETERMARITZBURG
Case No: 4485/2015
DATE: 29 APRIL 2016
In the matter between:
Msweli Electrical Contractors
Mandini
CC
...........................................................................
Applicant
And
Eskom Holdings Soc
Limited
................................................................................................
Respondent
Judgment
Lopes J
[1] The applicant is an approved
contractor registered on the respondent’s panel of contractors.
In 2013 the applicant and
the respondent concluded an agreement in
terms of which the applicant was to perform work upon an
electrification household project
where the respondent was the
principal contractor.
[2] The applicant alleges that it was
to provide all the supervision, labour, plant, equipment, material
and transport for the completion
of the project. It did so. A
mechanism for payment was adopted by the parties, and although it was
not strictly in accordance
with the written agreement, it was
followed by the parties. This process involved the applicant
rendering invoices, and the respondent’s
site consultants, ZD
Project Management, would effectively verify the invoices and issue a
payment certificate. If any amendments
were to be made the applicant
would provide an amended invoice which would then be paid by the
respondent. This process was followed
for five payments. The
payments for each of the amounts claimed were paid by the respondent
pursuant to a payment certificate
issued by its site consultants.
[3] When the applicant issued an
invoice for the sixth payment in the sum of R4 202 961,31, payment
was not forthcoming, despite
the site consultant’s payment
certificate number 6 having been issued on the 8th May 2014 in the
amount sought by the applicant.
Despite repeated requests and the
passage of a considerable period of time, the respondent has failed
to make payments in terms
of payment certificate number 6. The
applicant in this application seeks a money judgment in a lesser sum,
because an amount of
R2 245 148,20 was apparently paid on the 1st
March 2016.
[4] The defences of non-payment raised
by the respondent are vague and imprecise to say the least. An
allegation is made that during
the course of an audit conducted
during October 2013 ‘certain anomalies’ in the previous
payments made to the applicant
were discovered. Apparently the most
significant of these ‘anomalies’ was that there may have
been an over-claim by
the applicant for work having to be done in
‘hard rock’ which would have entailed extra time and
cost, and for which
the applicant levied an extra charge. No
quantification of the alleged over-payment made to the applicant is
set out by the respondent
in its papers. It states only that
approximately 80 per cent of the hard rock claim should have been
paid. That said, it has
done absolutely nothing in the interim to
claim the amount back from the applicant, or to tender to pay to the
applicant the amount
of payment certificate number 6 less the 20 per
cent hard rock allocation over-payment allegedly made to the
applicant.
[5] Mr Nicholson, who appeared for the
respondent, submitted that the only defence raised by the respondent
was that the disputed
over-payments to the applicant should be
referred to trial. He conceded that the so-called ‘anomalies’
referred to
in the respondent’s answering affidavit are not
properly articulated. He also submitted that although the method of
payment
had not strictly been followed as per the written agreement,
this had only been raised by the respondent for the first time in the
papers. It was suggested that when this was raised with the accounts
office, the respondent did not do anything to remedy the
situation,
but simply refused to pay. There has also been no insistence by the
respondent that any alternative method be followed.
[6] Having considered the explanations
for non-payment put up by the respondent, I am of the view that they
fall within the category
set out in Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(AD) at 634 I –
namely that ‘… the denial by respondent of a fact
alleged by the applicant may not be such as
to raise real, genuine or
bona fide dispute of fact …’.
[7] The respondent has not begun to
articulate the basis upon which it claimed it was entitled to
withhold payment from the applicant.
Nor has the respondent in any
way sought to quantify the amount of any over-payment which had been
made to the applicant. The
respondent’s failure to do, so
coupled with the fact that it has done nothing about quantifying that
amount in the interim
year since the application was launched, leads
to the inevitable conclusion that it has no lawfully acceptable
excuse for not paying
the amount claimed by the applicant.
[8] With regard to costs, Ms Franke,
who appears for the applicant, submits that the applicant is entitled
to a punitive order of
costs because of the conduct of the respondent
in failing to make payment timeously, and thereafter opposing the
application without
any proper basis for so doing. Mr Nicholson
submitted that the respondent was compelled to pay the interest which
was compounded
weekly, which was a form of penalty imposed on the
respondent and which would compensate the applicant for the late
payment of
the debt. As Ms Franke pointed out however, the
imposition of the interest was part of the contractual agreement
between the parties.
[9] In my view the delay on the part of
the respondent in making proper payment of what was due to the
applicant is not in any way
justified or excused on the papers.
Recalcitrant contractors can and do often drive sub-contracting
companies into insolvency
because of the non-payment of amounts which
are due to them. This has the domino effect of causing employees to
lose their jobs
and damaging the economy generally. I agree that an
award of costs on an attorney and client basis is warranted.
[10] In all the circumstances I make an
order in the following terms :
(a) The respondent is directed to pay
to the applicant the amount of R1 957 813,19 within 30 days of the
grant of this order;
(b) The respondent is directed to pay
interest :
(i) on the amount of R4 202 961,31 at
the rate of 0,5% per week compounded weekly, from the 31st May 2014
up to and including the
29th February 2016;
(ii) on the amount of R1 957 813,19 at
the rate of 0,5% per week compounded weekly from the 1st March 2016
to date of payment.
(c) The respondent is directed to pay
the applicant’s costs calculated on the scale as between
attorney and client.
Date of hearing : 21st April 2016
Date of judgment : 29th April 2016
Counsel for the Applicant : S Franke
(instructed by Jasat and Jasat
Attorneys)
Counsel for the Respondent : W A J
Nicholson
(instructed by Hughes-Madondo Inc)