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[2016] ZAGPPHC 457
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Themba Consultants (Pty) Ltd v City of Tshwane (34336/2015) [2016] ZAGPPHC 457 (6 June 2016)
IN THE
HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
REP
U
BLIC
OF SOUTH AFRICA
Date of hearing: 28
April 2016 Case
number: 34336/2015
Date:
6/6/2016
Date:
13/6/2016
(1)
REPORTABLE: NO
(2) OF
INTEREST TO OTHER JUDGES:
NO
In the matter between:
THEMBA CONSULTANTS
(PTY)
LTD Applicant
and
CITY OF
TSHWANE Respondent
JUDGMENT
BRENNER AJ
1.
This application involves a money claim by the applicant, Themba
Consultants (Pty) Ltd ("Themba"), against the respondent,
the City of Tshwane Metropolitan Municipality ("the COT").
The claim is for engineering services rendered to renovate
roadworks
and pedestrian areas in the inner city of Tshwane, to facilitate
safer areas for vehicular and pedestrian movement, the
project being
called "Operation Reclaim". It is split into two amounts,
namely, R3 782 283,66, and R1 109 715,79, plus
mora interest and
costs.
2.
In determining whether Themba is entitled to an order for payment of
money in motion proceedings, I was enjoined to consider
whether the
relief sought was sustainable, in fact and in law, and whether the
COT had raised any material disputes of fact on
the claim preferred
against it.
3.
The main application was served on 20 May 2015. On 30 June 2015,
prior to the expiry of the dies for service of the answering
affidavit, the COT served a combined notice in terms of rule 35(12)
and 35(14) ("the discovery notice").
4.
Following service of a formal reply to the discovery notice, Themba
launched an application in terms of Rule 30A, for the discovery
notice to be struck out. This application was served on 20 July 2015,
and enrolled for hearing on the unopposed roll on 18 September
2015.
On this date, an appearance was made by the legal representative of
the COT, and the rule 30A application was postponed sine
die with
costs reserved. What was initially termed a "preliminary
answering affidavit" was served by the COT on 5 October
2015,
with the replying affidavit being served on 29 October 2015. The
answering affidavit was served after the expiry of the dies,
but I
have exercised my discretion to condone the late service of same.
5.
Both the main application and the interlocutory application were
enrolled for hearing before me on 28 April 2016. Shortly before
then,
on 18 April 2016, the COT brought an application for an order to
compel Themba to comply with the discovery notice, and to
grant the
COT leave to file a supplementary affidavit within 20 days of
compliance with such order, if granted.
6.
In addition, the COT brought an application to amend the title of the
affidavit served by it in answer to Themba's founding affidavit,
to
read "answering affidavit' instead of "preliminary
affidavit". No objection was preferred by Themba to the late
delivery of these documents.
7.
At inception of the hearing, the amendment was granted. This left the
issue of the efficacy of the COT's discovery notice, coupled
with
Themba's rule 30A application and the COT's counter-application.
8.
The discovery notice contains a preamble which mentions that Themba
had been appointed to render, and claimed payment for, professional
engineering management services, as contemplated in the Engineering
Profession Act 46 of 2000 ("the Engineering Act").
In the
result, the COT called for documents which it separated into five
categories covering Operation Reclaim Phase 1, such categories
being
for: the inception stage, the concept and viability stage, the design
development stage, the procurement stage and finally,
the contract
administration and inspection stage.
9.
These five stages are essentially the same as the five stages
mentioned in clauses 3.2.1 to 3.2.5 of the "Guidelines on
Scope
of Services and Tariff of Fees for Registered Professional Engineers"
as stipulated in Government Gazette no 34875 dated
20 December 2011,
which identifies the nature of typical documents which it recommends
to be prepared by a professional engineer
when contractually engaged.
These guidelines are referred to below as "the December 2011
guidelines", and are of material
importance to this case.
10.
It merits mention that a subsequent Government Gazette published
similar guidelines on 4 December 2013, under Gazette number
37102,
and that Themba relied on these guidelines in this case. For the
purpose of this judgment, however, it is the December 2011
guidelines
which apply to the facts in casu.
11.
Under every one of the five headings contained in the guidelines,
mention is made of typical "deliverables" which
it
describes as information or documents. So, for example, under the
inception stage, it states:
"Deliverables
will typically include
•
Agreed
services and scope of work
•
Signed
agreement
•
Report
on project, site and functional requirements
•
Schedule
of required surveys, tests, analyses, sites and other investigations
•
Schedule
of consents and approvals."
12.
Since the question of further discovery by Themba was at issue, I am
constrained to quote from paragraphs A to E of the COT's
discovery
notice, to demonstrate the manner in which the documents were
described:
"A
All documentation on the deliverables on the
Inception Stage
for
Operation Reclaim Phase 1, by the following:
1.
Normal Services (civil engineering)
2.
Urban Design/Architect
3.
Electrical Engineering
4.
Traffic engineering
"B
All documentation on the deliverables on the
Concept and Viability
Stage
for Operation Reclaim Phase 1, by the following:
1.
Normal Services (civil engineering)
2.
Urban Design/Architect
3.
Electrical Engineering
4.
Traffic engineering
"C
All documentation on the deliverables on the
Design
Development
for Operation Reclaim Phase 1, by the
following:
1.
Normal Services (civil engineering)
2.
Urban Design/Architect
3.
Electrical Engineering
4.
Traffic engineering
"D
All documentation on the deliverables on the
Procurement
for
Operation Reclaim Phase 1, by the following:
1.
Normal Services (civil engineering)
2.
Urban Design/Architect
3.
Electrical Engineering
4.
Traffic engineering
"E
All documentation on the deliverables on the
Contract
Administration and Inspection
for Operation Reclaim Phase 1, by
the following:
1.
Normal Services (civil engineering)
2.
Urban Design/Architect
.
3.
Electrical Engineering
4.
Traffic engineering"
13.
In its formal reply, Themba asserts that the discovery notice falls
foul of rule 35(12) on the basis, simpliciter, that no mention
is
made in the founding affidavit to the documents sought by the COT.
14.
It avers that the documents sought are not sufficiently identified,
with the result that the notice is vague and nonspecific.
Moreover,
in its view, all documents of relevance to any reasonably anticipated
issue are either annexed to the founding affidavit,
or form the
subject-matter of its Close Out Report. The Close Out Report is
attached to the application but the annexures are excluded
to obviate
prolixity. But it is an undisputed fact that the Close Out Report, in
its entirety, was duly delivered to the COT on
14 May 2015, in both
electronic format and hard copy. The entire Close Out Report was
contained in fourteen lever arch files.
15.
In argument before Court, the attorney for the COT conceded that the
COT's discovery notice in the terms framed was not enforceable.
He
accepted that the provisions of rule 35(12) were inapplicable, no
reference having been made by Themba in its founding affidavit
to the
documents sought. It was further conceded that the documents were
also not identified with sufficient specificity for the
purposes of
rule 35(14), and that no suggestion had been made by the COT that the
documents which were called for were not contained
in the Close Out
Report.
16.
I agreed with these concessions. Accordingly, the rule 30A
application was granted, striking out the discovery notice, and the
COT's application to compel discovery refused, and, in both
instances, with costs in favour of Themba. The consequence of these
concessions is that the COT was left with no basis for granting it
leave to supplement its answering affidavit, and it could not
level
any claims of prejudice against Themba for Themba's refusal to comply
with the COT's discovery notice. Moreover, the COT's
notice to amend
the answering affidavit to describe same as the answering affidavit
and not a preliminary affidavit made its position
plain. In the
result, the COT had to accept the inherent risk attached to the
contents of the answering affidavit as it stood.
17.1
turn to the merits of the main application. Themba's case, as
outlined in the founding affidavit, is as follows. Themba is
a
private company with three directors, all of whom are professional
engineers registered as such with the Engineering Council
of South
Africa. On B July 2011, the COT called for tenders for professional
civil engineering services to be provided to its Transport
and Roads
Development Panel, on an ad hoc basis. Themba submitted a tender.
18.On
2 April 2012, the COT issued its first letter of appointment to
Themba, in which its subject heading reads:
"CONTRACT
CB11712011: PROFESSIONAL CIVIL ENGINEERING SERVICES FOR VARIOUS
PROJECTS IN TSHWANE (AS AND WHEN REQUIRED): 3 YEAR
TERM: OPERATION
RECLAIM WITHIN THE INNER CITY OF TSHWANE"
19.
1 will briefly summarise the terms of this first letter of
appointment. The scope of services is stated to cover phase 1, which
is described as: status quo survey of existing infrastructure per
block, design principles and services enquiries. The letter goes
on
to say:
"A form of agreement (SAICE) must be issued
immediately to the CoT for signing."
I interpose to mention
that it is an undisputed fact that the SAICE form was never executed
by the parties. Nothing turns on this
fact, as it was not an issue
which called for adjudication. The official representatives of the
COT were designated as Deon Viljoen
("Viljoen"), as project
manager, and Nicholas Ngwetjana as engineer representative. (The
latter person was subsequently
substituted.)
20.
The appointment was subject to submission by Themba of an acceptable
programme of works, with the requirement that the project
would be
carried out in accordance with
"the Transport Division's and
the Council's policy, standards, financial by-laws, procedures and
directives".
Reporting of progress and expenditure was to
occur on a monthly basis, while co-ordinating and status review
meetings were to occur
regularly.
21.Under
the payments section, the letter confirms a fee estimate for the ad
hoc work required, in the sum of R50 000,00. The amount
included Vat
and 10% for contingencies, subject to the conditions of contract, the
discount offered and availability of funds.
There was a qualification
that the COT was not obliged to pay for services in excess of such
estimate without the prior written
instruction of the designated COT
officer.
22.
Invoices were to be accompanied by supporting documents reflecting
details of all expenses and costs. The following also appears
under
the "Payments" heading:
"
The fees will be calculated in accordance with
Government Gazette
34875, Notice 206 of 2011: Guideline Scope of Services and Tariff
of Fees for Persons Registered in terms of the Engineering Profession
Act, 2000 (Act No 46 of 2000)."
23.
Between April 2012 and December 2013, the COT issued seven letters of
appointment to Themba. One of such letters is a revision
of its
predecessor. (Themba asserts that eight letters were issued, but in
fact, the last two letters are both dated 6 December
2013, and are
identical.) The letters were issued on 2 April 2012, 13 April 2012,
29 June 2012, 18 July 2012, 28 August 2012, 20
November 2012 and 6
December 2013.
24.
Themba contends that the contract with the COT was partly oral and
partly written. It supplies the seven letters of appointment
as
evidence of the "partly written" portion of the contract.
But, while quoting in general those terms which were material
to the
contract, it omits to specify the precise terms of the "partly
oral" portion of the contract. The issues in casu
were such that
this omission was of no moment, which was fortunate for Themba.
25.
Themba avers that it performed all of its services in a threefold
capacity. It performed as a professional civil engineer, as
an
engineering management agent, and as a principal agent, and, through
such appointment, other subconsultants' services, all in
terms of the
alleged "partly oral partly written" contract. It avers
that the contract period was for three years, from
1 March 2012 to 28
February 2015. (The contract period was not in dispute).
26.
In asserting its claim to payment, Themba relies extensively on the
contents of its Close Out Report served on the COT on 14
May 2015.
Themba's opinion, the Close Out Report contains details which
substantiate the work done for the COT and motivate the
complexity of
the project, and the disjointed manner in which it developed. It
alleges that the Close Out Report also takes note
of the fact that,
in terms of overall scope, the work remains incomplete, but it
contains a brief for handover to any successor
who may be appointed
by the COT.
27.
Themba points out that it clarified the functions of the various
parties involved in the project in a "Report on Terms
of
Professional Appointment" dated 16 June 2014, which document was
incorporated in turn in another report of the same name,
dated 18
June 2014. This report was given to the COT.
28.
It appears that there was a fairly thorough disclosure by Themba of
the pre litigation correspondence which preceded the
application. The COT does not deny that all relevant correspondence
was provided by Themba. Indeed, no other correspondence is
attached
to the COT's answering affidavit. A consideration of pre-litigation
communications is a useful mechanism for determining
the genuineness
of any disputes subsequently raised in litigation.
29.
The correspondence shows that, during the course of the relationship,
issues with Themba's performance were indeed raised by
the COT. What
is significant, however, is that the first intimation of
dissatisfaction came two and one half years after inception,
and
about six months before the expiry of the contract. This occurred on
1 August 2014, when the COT wrote a letter to Themba which
takes the
form of a written warning. The author of the letter being Lorato
Kegakilwe-Piki, ("Kegakilwe-Piki"), executive
director:
Transport Infrastructure Design, Construction and Maintenance
division.
30.
The gist of the complaint related to unanticipated costs which had
been caused by delays in performance. Five contractors had
made
claims arising from delays. (The contractors in question were Prima!
Construction CC ("Prima!"), Mologadi Construction,
("Mologadi"), HBC Construction ("HBC"), Just
Right and Kufa Trading ("Kufa")). It was noted that
Primat
had submitted a total of seven claims arising from delays in the
contract, starting on 23 October 2013, and ending on 11
June 2014.
Themba had failed to draw these claims to the attention of the COT.
31.
Themba was accused of submitting its first variation orders in March
2014. These were returned to it for correction but the
orders were
never formally submitted. Themba had indicated in response that
variation orders were not required where the contract
was
"remeasurable", but the COT did not agree. Certain
documents which were required to sanction payment for extensions
of
time had been sent to Themba but not submitted. Repeated requests for
the relevant documents had been ignored by Themba.
32.
The COT's letter notes that an undertaking had been given by Themba
to
"complete the adjudication by B August 2014."
It
quotes from clauses 2.3(e) and (f) General Conditions of Contract of
2004 in averring that Themba had failed to settle the claims
submitted by the five contractors and had failed to grant extensions
of time to them. Moreover, Themba had breached its duty to
inform the
COT of the claims and of any resolution thereof. The letter ends with
a threat that, failing its improvement in performance,
the COT may
have to terminate the contract under clause 8.4.1(c) of the Standard
· Professional Services Contract guidelines.
33.
Themba addressed two replies to the warning, on 10 August 2014, and
again on 29 August 2014. A consideration of same reveals
that the
COT's concerns were traversed in terms, specific dates being given
concerning the submission of variation orders, cost
estimates and
daily progress summaries. Poor performance issues with contractors
HBC and Kufa were dealt with, and details of engineer's
rulings on
extension of time and standing time claims given.
34.In
the latter communication, Themba speaks of the claims for extensions
of time and standing time arising from three main factors,
namely,
the funeral procession in the Pretoria CBD for the late Nelson
Mandela, (who had passed away on 5 December 2013), abnormal
rainfall,
and services relocation.
35.
Further elaboration for the delays is given and quoted verbatim
below, since it is germane to the matter:
"Adjudication
of the Madiba Funeral claims had initially proved challenging, due to
the paucity of back-up information provided
by the contractors. It
was consequently delayed whilst such information was gathered. It was
further delayed due to the uncertainty
of the funding source, which
situation still persists.
Whilst
the extension of time applicable to Madiba's funeral remained
unchanged, the periods of time had continuously changed in
respect of
both the abnormal rainfall being experienced and the lengths of time
taken to relocate the water pipelines and the electricity
cables, the
latter of which, at the time of writing this letter, still remains
incomplete in respect of the Pretorius/Thabo Sehume
Street
intersection.
Notwithstanding
this, negotiations took place, over a period of time, between
ourselves and the various contractors, with a view to their
respective claims being submitted in a format that permitted
adjudication
in accordance with the GCC. The contractors consequently
submitted suitably prepared extension of time and standing time
claims
in respect of these issues."
36.
Without referring to Themba's reply of 10 August 2014, on 15 August
2014, the COT sent a terse email to Themba, this time from
engineering consultant Viljoen, stating:
"Can
you please give reason why CoT must not cancel your appointment as
PRINCIPAL AGENT OF THE CLIENT from 25 April 2014.
The
reasons must be based on the "typical deliverables" as
stayed (sic) in the Government Gazette and documented proof
must be
attach (sic).
Brake
(sic) this up per month starting 25 April 2014 ending 15 Aug 14. You
have seven calendar days to reply."
37.
Themba sent its reply to this demand, in the form of its detailed
23-page report, on 21 August 2014.
38.
This was followed by a written reply, some two months later, on 24
October 2014, from Viljoen. His email alleges that, "as
suspected',
Themba did not render any Principal Agent service
from 25 April 2014 ending 15 August 2014. The COT proceeded to
terminate Themba's
appointment as such as of 25 April 2014, and
instructed Themba to remove all fees from its payment certificates
after 25 April
2014. Regarding Themba's appointment as engineering
management consultant, it was invited to provide reasons why its fees
should
not be reduced to 15% of the gazetted fee. It was asked to
give its reasons, per category of eleven cited, (and these included
categories such as streetlights, traffic signals, dustbins and
various others). Themba was afforded seven days to motivate a
non-reduction
in fees.
39.
Themba's response to Viljoen was given on 3 November 2014. It
disputed that it had failed to render service as principal agent.
It
refused to accept what it termed the COT'S repudiation of its
appointment. It tendered performance until completion of the project,
while stating that it expected to be paid for its services.
40.
Regarding the suggested reduction in fees to 15% of the gazetted fee,
it noted that it was not competent to limit principal
consultant
services to discrete elements, such as the technical design for
pavement thickness. It stated that
"
... the Principal Consultant services are concerned with the
management and integration of a range of professional services
across
the entire scope of the project ...".
41.
Themba went on to mention that the COT had found Themba's services to
be acceptable throughout the duration of the project,
and had
approved its invoices and paid same on presentation. It alleged that
Viljoen, on behalf of the COT, had been fully involved
in
co-ordination meetings, the exchange of correspondence, and the
provision of documents by Themba. The project had been completed
to
stage 5 and Themba was proceeding with stage 6.
42.
On 6 November 2014, the COT, via Viljoen, addressed an array of
questions to Themba, pertaining primarily to its alleged
non-performance
of obligations. There was no formal reply from
Themba. There was also no subsequent correspondence insisting on a
reply. Themba
alleges in its founding affidavit that answers to the
questions had already been addressed and/or same were irrelevant.
43.
On 17 November 2014, Viljoen asks for information, which he records
had already been invoiced by Themba. He asks for this information
to
be loaded onto CDs in , by the following day. He states
that such information is "as stipulated in Government
Gazette no
34875 dated 20 December 2011 and Government Gazette no 34788 dated 2
December 2011." The information is the same
as the documents
identified in the COT's discovery notice, which followed the
guidelines. The demand for information is coupled
with an accusation
that Themba had failed to attend meetings, and with a threat that a
forensic audit would follow shortly.
44.
This missive was taken seriously by Themba, who asserted, in reply,
that the claims made by the COT were unsubstantiated, but
that Themba
had informed its professional indemnity insurers of a possible claim.
45.
On 18 November 2014, Themba's attorneys addressed a letter of demand
to the COT in terms of section 3 of the Institution of
Legal
Proceedings against Certain Organs of State Act ("the Legal
Proceedings Act"). Coupled with a repeat of the prior
tender by
Themba to continue to perform its obligations, payment of the sum of
R3 780 283,66 was claimed. On behalf of Themba,
they contend that as
at this date, the project was 98% complete with only one week to go
for completion. There was never any direct
reply to this demand.
46.
On 19 November 2014, Kegakilwe-Piki writes a letter to Themba to
declare that a dispute has arisen and inviting it to engage
in
negotiations to resolve
"the issue of non-performance on the
various aspects of your appointment."
The letter notes that,
although Themba had continuously insisted that it had performed well,
it had still not given substantial
evidence of this. He quotes from
clause 12.1.1 of the Standard Professional Services Guidelines:
"The
parties shall negotiate in good faith with
a
view to settling
any dispute or claim arising out of or relating to the contract and
may not initiate any further proceedings until
either party
has,
by written notice to the other, declared that such negotiations
have failed."
47.
Themba's attitude, as evidenced by its attorneys' reply of 26
November 2014, was that it had never refused to attend any meeting,
but that it would not attend a meeting whose sole purpose was to
discount its fees. Concerning the standard professional services
guidelines, it considered that these guidelines did not form part of
its contract with the COT. Nevertheless, it would agree to
meet
subject to prior agreement on an agenda, subject to its being
accompanied by its legal representatives and insurers, and subject
to
the attendance at the meeting of officials who were authorised by the
COT to negotiate and conclude any settlement of the matter.
48.
On 29 November 2014, the COT asserts that Themba had recorded on 1O
November 2014 that it intended to cease all site supervision
services
from 1 December 2014. Themba is informed that its site personnel had
to report to site to complete, inter alia, electrical
works and the
CCTV system. It is invited to engage in discussions to determine the
extent of the claims raised and to quantify
the amount available in
the budget allocated under the seventh letter of appointment. The
following statement is made:
"Your
reluctance to negotiate with us has had a bad impact on this
Department because we do not know if there are sufficient
funds
available to pay for construction monitoring for the month of
December 2014. Please be informed that all construction monitoring
from 1 December 2014 to the completion of the project will be at your
own financial risk. Had you engaged us earlier, we would
have made
contingency plans to mitigate such risks. May we remind you that you
still have a contract with us and any dispute does
not nullify our
original agreement and you still have not completed the works
according to your contractual obligations."
49.
Themba's answer to this is articulated in its founding affidavit.
Based on progress achieved with phase 1a, it had assumed that
site
monitoring would not be required beyond November 2014, but because
the COT had failed to reach a decision on tying in works,
site
monitoring became necessary, so Themba provided site monitoring by
two staff members. When Themba had quoted on site monitoring
in the
context of tying in, the COT had asked that this be omitted from the
quotation. Themba had provided the COT with regular
forecasts on
request. All monthly invoices included a detailed analysis of the
current claim and total projected costs.
50.
The COT, on 22 January 2015, proposed dates and times, and an agenda,
for meetings covering four days, on four consecutive dates.
A
counterproposal was made shortly after this by Themba for a meeting
to occur for one day, commencing in the early morning. Two
dates were
proposed. The COT was asked to provide further clarity and detail on
its agenda. There was no reply to this invitation.
51.
On 23 January 2015, the COT raised a query regarding certain fees
raised in the invoices received from Themba, and asked it
to resubmit
same or to permit the COT to "remove unnecessary attachments".
In an email of the same date, written by Hosana
Ndhlovu, engineering
consultant: infrastructure, the COT reiterates that the revised
contract amounts remain in dispute, and that
no approval was given to
Themba to increase the contract amount.
52.Themba
tried to clarify matters on 29 January 2015. It stated its
understanding of the COT's reference to "attachment"
as
meaning the detailed claim form on which its invoice was based. It
maintained that it had informed the COT, in a meeting on
23 September
2014, attended by Messrs Retief and Viljoen, that the estimate in the
seventh appointment letter would be exceeded,
whereupon Viljoen had
said he had made sufficient provision for this and had instructed
Themba to continue to estimate and report
on the fee. Themba had done
so, on a monthly basis. Themba says the following about the increased
contract price:
"We
have not increased the "contract amount"
as
appears
to be suggested. The estimate
has
increased
as
an automatic consequence of the value of the project
works
increasing,
as
allowed for and
as
calculated in accordance with Letter of Appointment no
7."
53.In
the view of Themba, the COT came up with more excuses to avoid
payment, and this appeared from its email of 6 February 2015.
It was
willing to pay for invoices which covered construction monitoring or
site supervision, but queried two invoices. It disputed
that Themba
had reached 95,7% of the project. It demanded that fees be charged at
the actual construction cost, with a potential
saving of about R3 000
000,00 on the charges of Primat and HBC. Professional fees could not
be based on what it termed "Ps
and G's", meaning
"Preliminary and General items". The fees for work done as
principal agent and engineering manager
still had to be resolved by
negotiation. Regarding electrical engineering services, the COT had
not constructed electrical works
to the value of RB 688 584,72,
electrical works having been part of civil construction works for
which R2 000 000,00 was already
paid. Electrical fees had to be
recalculated. Since the Close Out Report had not been received, the
claims for urban design and
contract and admin could not be
justified. The principle of claiming interest on certain invoices was
also challenged.
54.
A detailed reply was forthcoming on 10 February 2015. The COT was
referred to clauses in the Government Gazette applicable to
the
calculation of fees: Clause 1 subsection 1, which provides that the
percentage fees are based on the "cost of works",
and
clause 2.3 (vii) which defines cost of works as
"cost
of works" means the total final amount (or
a
fair
estimate thereof), exclusive of value added tax, certified or which
would normally be certifiable, for payment to contractors
(irrespective of who actually carries out the work) in respect of the
works designed, specified or administered by the consulting
engineer
before deduction of liquidated
damages
or penalties,
including
-
...a
pro rata portion of all costs related to the contractor's general
obligations and overhead (preliminary and general) items
applicable
to the works; (irrespective of who actually carries out the works)
and...."
55.
The above sections are identical to the equivalent sections in the
December 2011 Gazette.
56.
Themba asserted that its claim indicated that stage 5 was 96%
complete and stage 6 was 50% complete. Concerning construction
cost,
it was incorrect to state that current claims should be based on
actual cost. The Government Gazette provided that the cost
of works
could be based on the total final amount or a fair estimate thereof.
Interim claims could only be based on estimates with
only the final
claim being based on the final cost of works.
57.Themba
goes on to state that, should it be demonstrated that the COT had
suffered loss as a result of failure to discharge its
contractual
obligations, this would be subject to a professional indemnity claim.
The letter concludes, in summary:
"For
the record, for the last three years, since inception of this
project:
•
The
calculation of our
fees has
been based on the Government
Gazette
•
Our
services
have been provided in accordance with the guidelines
of the Government Gazette
•
Calculations
of fees have been based on the
"cost
of the works"
as
defined in the Government Gazette
•
The
cost
of the works"
so
calculated has always
included the value of "Preliminary and General"
items
•
Fees
have been calculated on the interim estimates of the "cost of
the works" and not, obviously, on the actual final
value
•
The
fee for electrical consulting has always been based on the value of
the electrical "cost of the works"".
58.
The answer to this letter, by email from the COT on 11 February 2015,
confirmed
that there was no dispute that the fees were based on the Government
Gazette, and suggested that all of these points should
be discussed
during negotiations.
59.
The debate on the quantification of fees and completion of the works
culminated finally in an email dated 16 February 2015,
from Themba to
the COT. This constituted a reply to correspondence from the COT sent
on 26 January 2015, and 2, 11 and 12 February
2015. In summary, the
issues were as follows.
60.The
first complaint pertained to the snag list. The COT alleged that it
had asked Themba to correct the snag list and that it
had wasted
three weeks in attending to this, despite repeated requests. Themba
replied that snag lists were issued on 11 December
2014 and 21
January 2015. Reports from the various subcontractors, who were
liable for dealing with snags, were given on 2 February
2015. It
attached the latest status report to its email of 11 February
2015.Themba noted that the subcontractors had shown a level
of
reticence in continuing with their work after the COT had suspended
phase 1B of the works. Primat and Mologadi had indicated
that they
would deal with snags when the step removal was authorised by the
COT, but had to wait for the variation order to be
issued for this.
61.
In its letter of 2 February 2015, the COT complained that during the
past three weeks Themba had provided only one person to
monitor the
site and to inspect the correction of defects, but the defects had
still not been remedied, leading the COT to consider
the reduction of
fees for such services as this person had not done much in correcting
defects. Themba's answer to this was that
the COT had, on 8 January
2015, told it to continue with site monitoring on a part time basis,
for a category D person, for the
removal of the step and finishing
the works. Themba had duly engaged a category D person, who had been
on site since inception.
Themba had complained that the engagement of
only one site person was counter productive. It mentioned that its
site personnel
had endured abuse at the hands of COT personnel. It
confirmed that snag lists would be issued soon.
62.
On 3 February 2015, Themba's attorneys addressed a further demand to
the COT in terms of section 3 of the Legal Proceedings
Act, demanding
payment of the further amount of R1 109 715,79 for services rendered
in December 2014 and January 2015, with Themba
estimating an
additional liability of R492 000,00 for work done in February 2015,
with an allowance for interest of R43 000,00.
There was never any
direct reply to this letter.
63.
On 11 February 2015, the COT had called for a certificate of
practical completion and a progress report on the snag lists. It
asked if the snag list would be completed by the end of February
2015.
64.
In its answer, Themba referred the COT to the General Conditions of
Contract, and in particular, clause 51.1, which provided
that the
contractor was entitled to receive a certificate of practical
completion when the works had reached a stage which allowed
their use
for their intended purpose without danger or undue convenience. The
issue of the certificate had been delayed by a variation
in the
contract, caused by the COT's instruction to remove the steps in
Pretorius and Thabo Sehume Streets. At a meeting on 3 February
2015,
the relevant contractors had expressed concern about non-payment for
work done for the Mandela funeral, but had agreed to
proceed with the
work on the steps subject to the issue of variation orders authorised
by the COT. The variation orders were signed
by the engineer and
contractors on the day of the meeting and handed to COT officials.
The variation order for Primal was received
by it on 12 February
2015, and the order for Mologadi had still not been received.
65.
On 12 February 2015, the COT had demanded a detailed programme from
Primal for the correction of the steps, an intervention
plan to
complete the snag lists, a cost estimate, and HBC's variation order
signed by Themba and the contractor.
66.
Themba recorded that the variation order for Primal was received from
the COT on 12 February 2015. On 5 February 2015, the COT
had been
given a timeline for completion of the variation. The final estimates
of expenditure had been submitted for all contractors
on 4 February
2015, with revised costing for Mologadi given on 11 February 2015.
Themba pointed out that the order for Mologadi
was delayed as the COT
queried milling rates because the milling rates quoted by it were
much higher than those quoted by Primat.
Themba replied that
Mologadi's rates were higher due to it milling out a higher volume,
but Themba had negotiated a lesser rate.
A mistake had been made by
Themba for quoting a higher rate on the order. The COT was asked to
confirm its agreement on the above
to facilitate the issue of two
revised variation orders. HBC's variation orders would be submitted
to the COT on 16 February 2015.
Primat's work would be completed by
27 February 2015, but no estimated date of completion by Mologadi
could be given owing to the
absence of a signed order. It was likely
that HBC's work would be completed by 27 February 2015 subject to the
road markings and
sign off on the electrical work by a representative
of the electricity department.
67.
There was no further correspondence of relevance after this, and this
is not disputed by the COT.
68.
The statement of account attached to the founding affidavit reveals
that payments were made in September and October 2014 for
a balance
brought forward on 30 September 2014, of R2 448 569,60. Hereafter,
two further payments were made, on 31 October 2014
for R337 003,38
for an invoice dated 30 September 2014, and R474 692,39 on 9 March
2015, for invoices raised on 30 November 2014
and 12 January 2015
respectively. The rationale behind the payments which were made by
the COT is not explained in the answering
affidavit.
69.
Arising from the amendment granted at the hearing, I may consider the
answering affidavit as final, and not preliminary, as
was initially
indicated by the COT.
70.
The papers run into 911 pages in toto. The answering affidavit of the
COT consists of a total of 26 pages.
71.
1 refer to the averments in this affidavit which pertain to the
discovery notice served on Themba, the COT having conceded the
incompetence of same. No effort is made in the COT's answering
affidavit to refer to the paragraphs in the founding affidavit which
mention documents not annexed thereto, as required by rule 35(12).
Nor is any attempt made to describe the documents with any further
particularity, other than to assert, in vague terms, that they are
"of a technical nature", and that they arise from
the
provisions of regulation 3 of the guidelines. Nor does the COT draw
the necessary nexus between the documents sought and the
reasonably
anticipated issues, as contemplated by rule 35(14).
72.
The deponent to the answering affidavit is Viljoen, who describes
himself as an engineering consultant at the transport infrastructure
construction project management department, and who states that the
affidavit is deposed to
"in opposition to the main
application."
73.
For convenience, I have summarised the disputes raised in answer to
the claims, in unison with the reply advanced in Themba's
replying
affidavit.
74.
In limine, the COT avers that the application is premature owing to
noncompliance with clause 12 of the General Conditions of
Contract,
which requires that there should be negotiation before recourse to
litigation.
75.The
COT asserts that the dispute relates primarily to two issues, namely,
liability to pay, and determination of the amount payable.
The COT
professes to have no knowledge of the correct amount claimed because
of Themba's unwillingness to meet with it, and it
therefore denies
liability to pay any of the amounts claimed and asks for the
application to be dismissed.
76.
Themba replies that it was more than willing to meet to avoid
litigation, and that the COT knows full well how much it owes
and how
the amount is calculated.
77.
Viljoen relies on the statute and the guidelines, (which he
incorrectly refers to as "regulations"), which govern
the
engineering profession, as being applicable to the agreement between
the parties. The statute being the
Engineering Profession Act and
the
December 2011 guidelines. Themba's reply is that
"the
contract and the various letters of appointment speak for themselves
and to the extent that there
is
any governing legislation, the
respondent
is
invited to refer to same."
78.
In the view of the COT, the only letter of appointment of relevance
to the dispute is the one dated 6 December 2013. This is
the seventh
and last letter. The COT notes the essential terms of the contract
evidenced by this letter as being as follows. Themba
was appointed to
render professional civil engineering services for Operation Reclaim
phase 1. The services were to be rendered
in accordance with the
guidelines, and mention is made of the six stages to completion, as
contemplated by the guidelines. The
letter itself reads:
"SCOPE
OF CONSULTING ENGINEERING SERVICES
The
professional civil engineering services required for the project in
accordance with the Guidelines Scope of Services and Tariff
of Feed
for persons Registered in terms of the
Engineering Profession Act,
(Act
46 of 2000) are as follow (this scope can be reduced if the
Executive Director: Infrastructure Design, Construction and
Maintenance
feel it is necessary):"
79.Viljoen
says that the appointment was for normal service, engineering
management service and as principal agent, with provision
for the
appointment of subconsultants in the form of an electrical engineer,
a heritage impact assessment practitioner, an urban
designer and a
traffic engineer.
80.The
estimated fee was RB 290 400,00 including 10% for contingencies,
excluding Vat, and subject to conditions of contract, the
discount
offered, and availability of funds. The estimate was based on the
project value of R33 871 155,00.
81.
In its replying affidavit, Themba avers that all letters of
appointment are relevant and that the COT appears to challenge only
certain services, the value of which amounts to R2 215 579,84, but
does not challenge services for civil engineering, structural
engineering, ground penetrating radar, construction monitoring,
archaeology and travelling and printing disbursements, with an
overall value of R2 978 337,70.
82.
The COT asserts that the Engineering Act dictates that payment is
dependant on fulfilment by Themba with the obligations imposed
by
regulations 3.2 and 3.3 of the guidelines. Themba asserts, on the
other hand, that the Gazette serves only as guidance about
services
to be performed. It quotes from the preamble to section 3 of the
December 2013 Gazette. (The preamble will be dealt with
below.)
83.
In the view of Themba, the typical deliverables identified in section
3.2 are merely guidelines and not minimum obligations
imposed on the
engineer. They serve as guidance as to the scope of work required to
achieve a successfully complete project, and
are neither prescriptive
nor comprehensive in scope. With the works done to prepare for the
Madiba funeral, the guidelines were
not followed due to tight
deadlines. Emails, discussions and site instructions took the place
of formal reports.
84.
It notes that the whole project was fragmented, with its scope,
programme and approvals and budget being constantly varied by
Viljoen
whose
"chaotic management"
required the process to
remain
"fluid and accommodating of the constant changes in
scope,
funding and programme."
It mentions that until
Viljoen realised he had erred in failing to provide adequately for
increasing costs, he expressed no concerns
about the project and had,
by email on 12 September 2012, commended Themba on its work, stating:
"Thanks for hard work to date."
It avers that it was
only when his error in budgeting became apparent that he questioned
the services provided and tried to renegotiate
fees.
85.
Viljoen alleges that the deliverables per the guidelines are spelt
out in the final appointment letter, and these covered stages
1 to 6,
stage 6 being the close out. Themba completed only 80% of stage 5,
and did not attempt to perform any service for stage
6, and failed to
sign the completion certificates. Themba denies these allegations. It
alleges that stage 5 was completed in full,
that the COT had taken
possession of the works and that the facilities were being used by
members of the public. It attaches photographs
of Pretorius Street,
Thabo Sehume Street, and Madiba Street. A consideration hereof
reveals that there are no incomplete roadworks,
or any other works,
on these streets. Themba assesses the work for stage 6 as being 95%
complete, as is demonstrated by the Close
Out Report. The reason why
final certificates of completion were issued to the COT but not
signed by Themba was because the work
was 95% complete by the date of
termination of its appointment on 28 February 2015.
86.
The COT avers that Themba was obliged to submit interim invoices on a
monthly basis and, on every invoice, deliver the deliverables.
While
it was performing stage 5, it was already claiming money for stage 6.
Themba replies that invoices were submitted generally
on a monthly
basis, and these included the degree of completeness, in a format
prescribed by the COT. Stages 5 and 6 ran concurrently,
it being
normal for sections of a large project to be at different stages, in
parallel with one another. Taking note of the imminent
cessation of
the contract, Themba started work on the Close Out Report while
concluding construction. Themba alleges that Viljoen
has not read the
Close Out Report. If he had, he would have realised that the call for
further documents was unwarranted. He would
have realised that Themba
performed services for stage 6.
87.
The COT claims that the primary fee was wrongly calculated because
stage 6 was not completed, and therefore the actual cost
of the works
could not be established. According to the December 2011 Gazette, the
primary fee was based on the actual cost and
did not include claims
for standing time and suspension of works. The COT concedes that it
had paid money for standing time and
suspension of works when the
water pipeline was relocated. Themba refers to the definition of
"cost of the works" in
the guidelines, the definition being
the same in both Gazettes. The cost is defined as meaning
"the
total final amount (or
a
fair estimate thereof), exclusive of
Vat, certified or which would, normally, be
certifiable for
payment to contractors . ...".
88.
The COT elaborates on the two phases of Operation Reclaim, identified
as phases 1A and 1B. The need to split the project was
attributable
to the discovery of underground services which had to be relocated so
that road and pedestrian walkways could be built.
The split meant a
four lane roadway for phase 1A and one lane for phase 1B.
89.
Themba had failed to inform the COT that the project was not ready
for implementation, and thus "there was unavailability
of funds
to see the project through." Themba had been paid R4 357 567,00
for the financial year to 2014 and R2 859 882,00
for the year to
2015, for site supervision. Phase 1A had been completed and therefore
the final fee had to be based on the final
project cost. Themba avers
that delays in implementation were attributable to Viljoen's failure
to manage the involvement of the
COT's services departments and that
he was to blame for any lack of availability of funds.
90.The
COT asserts that the production of deliverables for stages 1 to 6
would include those for an urban designer, whose duties
are specified
in the
Architectural Profession Act, 44 of 2000
. Approved design
plans had not been provided by Themba, despite numerous requests. In
the result, the COT was unable to determine
whether Themba was
entitled to fees for architectural services, and it did not even know
whether Themba had engaged anyone to perform
this work.
91.
Viljoen specifies documents which are deliverables but which were not
provided by Themba. They include engineering management
services
approvals for stages 2, 3, and 5, approved heritage impact assessment
reports, approved urban designs and approved electrical
layout
designs. As principal agent. Themba had also failed to deliver, for
stage 3, the detail design and documents programme,
for stage 4,
contract documents, for stage 5, approved construction programme.
progress reports. For stage 6, no work was done
due to Themba
allegedly abandoning the project after the tender period had expired.
92.
Viljoen emphasises that a great deal of the disputes would disappear
upon mere production of the deliverables for every stage,
as
prescribed in the guidelines and repeated in the appointment letter
of December 2013.
93.
To all of the above issues relating to delivery of deliverables in
accordance with the guidelines, Themba avers that Viljoen
had
"intimate engagements with the architects and with all the
other consultants"
and that the roles of the consultants are
spelt out in the Close Out Report.
94.
Viljoen asserts finally that the quality of services rendered is
directly connected to the right to claim payment. and that
Themba
rendered its services
"very poorly' .
and says that it
was
"grossly negligent .
He relies on two issues in this
regard.
95.
The first complaint relates to the engineering management services
rendered by Themba. Themba was obliged to co-ordinate the
electrical
engineer and his duties. The design of street lights, pedestrian
lights and poles at heights relative to adjacent buildings
should
have been included in design drawings, which should have been issued
on or before 2 September 2013. The poles were due to
be installed in
November 2013. The buildings were surveyed to obtain accurate
measurement of streetlights and poles. The streetlights
and
pedestrian poles which were initially delivered in September/October
2014 did not match the required size. Themba replies that
the COT
provided the survey, but its quality and accuracy were poor. Because
of this, as installation started, clashes were identified
and these
were resolved by the electrical consultant and the principal
consultants with no further implications to the project.
96.
The second complaint relates to the services rendered as principal
agent. On 15 August 2014, Themba was asked to give reasons
why its
services as principal agent should not be cancelled from 25 April
2014. One of the grounds for this invitation was because,
after five
months of claiming standing time, not one of the three civil
contractors started work with the approved construction
in April
2014. A report was submitted which allegedly proved that Themba had
not provided service as a principal agent. This failure
was directly
related to the claim for payment of fees. Themba's answer to this is
that its report proved that its services as principal
agent were
quite adequate. If Themba had failed to supply this service, the
contract would have come to a halt.
97.
This concludes the evidence advanced in the affidavits filed of
record.
98.
In determining whether the disputes raised in this matter are such
that judgment may not be granted on motion, certain principles
should
be adopted. Cognisance has been taken of the Plascon Evans rule as
explained by Corbett in
Plascon -Evans Paints (Tvl) Ltd v van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
SCA:
"It
is correct that, where in proceedings on notice of motion, disputes
of fact have arisen on the affidavits,
a
final order, whether
it be an interdict or
some
other form of relief, may be
granted if those facts averred in the applicant's affidavits which
have been admitted by the respondent,
together with the facts alleged
by the respondent, justify such an order. The power of the court to
give such final relief on the
papers before it is, however, not
confined to such
a
situation. In certain instances the denial
by the respondent of
a
fact alleged by the applicant may not
be such
as
to raise
a
real, genuine or bona fide
dispute of fact.
"
99.
Where an allegation or denial is far-fetched or clearly untenable,
the Court is justified in rejecting same merely on the papers.
See
Associated South African Bakeries (Pty) Ltd & Vereiniate
Backereien en Andere
1982 (3) SA 893
A at 923G.
100.
I refer to Erasmus Superior Court Practice, Service 40, at 81-43, in
which, in referring to, inter alia,
Moosa v Knox
1949 (3) SA
327
N at 331
,
it is stated:
"If
the respondent's affidavit in reply to the applicant's affidavit
fails to admit or deny, confess and avoid, allegations
in the
applicant's affidavit, the court will, for the purposes of the
application, accept the applicant's allegations
as
correct."
101.
I will address the disputes raised in the answering affidavit, ad
seriatim, and under appropriate categories. The dispute relating
to
Themba's failure to comply with the discovery notice was no longer a
live one, so it has been excluded from analysis.
102.
Properly distilled, they amount to the following:
a.
Themba should have employed the dispute resolution procedure provided
for in clause 12 of the General Conditions of Contract,
it failed to
do so, and therefore the application is premature;
b.
the guidelines in "Guidelines on Scope of Services and Tariff of
Fees for Registered Professional Engineers", as stipulated
in
Government Gazette no 34875 dated 20 December 2011, applied at all
times to the contract between the parties, in the sense that
they
were peremptory, with the result that any omission to strictly adhere
to same by producing "the deliverables" amounted
to a
breach of contract by Themba;
c.
Themba breached the contract by delaying same through its failure to
inform the COT in advance of commencement that the project
was not
ready for implementation, when it should have established that
underground services had to be relocated before the works
commenced,
and thus there was an unavailability of funds to see it through;
d.
Themba's performance under the contract was "poor" and
"grossly negligent".
103.
As a starting point, some general observations are warranted.
104.
The founding affidavit of Themba traversed, in comprehensive detail,
the sequence of events which culminated in the pending
application.
Themba's professionalism and transparency was more than adequately
borne out by its detailed, direct and satisfactory
replies to all
issues raised in correspondence with the COT. I was given no cause to
treat the evidence advanced by Themba with
any measure of
circumspection. It was within the province of the COT to contest the
satisfactoriness of these replies, but it inexplicably
failed to do
so. I may therefore infer that these issues were addressed to the
satisfaction of the COT.
105.
The answering affidavit failed to traverse, in terms, and ad
seriatim, the numerous material allegations made in the founding
affidavit. There is not even a general denial of allegations made by
Themba which the COT fails to specifically address. This would
have
had no probative value, in any event, since the COT was in a position
to address all allegations, Viljoen having been intimately
involved
in the project from the outset to its conclusion. There are no
confirmatory or supporting affidavits from any other officials
at the
COT. There is no independent expert's report to corroborate any of
the assertions made concerning the conduct of Themba
in the
performance of the contract, and the consequences thereof. No
"forensic audit'
appears to have been conducted, despite
the threat by Viljoen to do so. There are no annexures to the
affidavit other than an unsigned
copy of the application to compel
discovery.
106.
The COT did not omit to address Themba's detailed allegations because
they were irrelevant or immaterial. The facts in casu
were of such a
nature that the COT must have had knowledge of them, and would have
been able to answer them directly, and without
difficulty, and this
inference is irresistible. The COT did not suggest otherwise.
107.
The COT failed to traverse all material averments in the founding
affidavit, in an answering affidavit which on its own version
was
final. It did so at its own peril, and with the risk of adverse
inferences being drawn against it.
108.
I am entitled to accept as admitted fact all allegations raised by
Themba which were not specifically disputed by the COT in
its
answering affidavit. I am entitled to accept, by necessary inference,
that, to the extent to which the COT did not persist,
in its
answering affidavit, in any of the complaints raised in the
correspondence preceding the application, such complaints were
resolved to its satisfaction, and do not qualify as disputes in this
application.
109.
It is an undisputed fact that the first intimation of any issue with
Themba's services arose when the contract had progressed
for two and
one half years and only had another six months to go before expiry of
the mandate. All invoices were paid by the COT
for work performed
until circa August 2014. Before then, I can safely infer that the COT
was satisfied with Themba's services,
with the format of its
invoices, and with the methodology applied in its calculations of
amounts owed.
110.
It is an undisputed fact that Themba calculated its charges in
accordance with the guidelines. Again, the COT accepts this
in its
email to Themba of 11 February 2015.
111.
From the correspondence, it emerges that the first main issue related
to unanticipated and unbudgeted claims made by Themba
for standing
time as a result of delays in performance by Themba and its
subcontractors. Themba fully and satisfactorily explained
the cause
for the delays in the correspondence which the COT failed to
challenge. It was not to blame for the delays.
112.
The COT has not brought any counter-application for an order for a
reduction in the amount claimed, nor has it made any attempt
to
quantify the amount which, on its version, should have been payable
to Themba but for the alleged breaches made by it. The COT
does not
allege that the work was so glaringly incomplete or poorly done that
it had to engage another engineer to complete and/or
remedy same, at
additional cost, which cost could have formed the subject-matter of a
counter-application against Themba. It raises
no dispute about the
functionality of the works as delivered by Themba, albeit that same
were not entirely complete at expiry of
the contract. It never
cancelled the contract during its three year period, despite the
threat to do so.
113.
There is no allegation that any official at the COT had read and
properly considered the Close Out Report, a critically material
document which, in hard copy, filled fourteen lever arch files. By
the simple expedient of doing so, the COT would have been enlightened
about the true extent, if any, to which Themba may have failed to
deliver "the deliverables", a complaint raised with
platitudinous monotony throughout the COT's answering affidavit.
114.
The COT was embarrassingly unspecific in providing the detail to
substantiate its complaint that "deliverables' under
the
guidelines were not delivered, and, equally importantly, about the
practical consequences on the project of the failure to
do so.
115.
The COT ignored the two letters of demand for payment of monies owed,
and gave no explanation, satisfactory or otherwise, for
its failure
to address same. While I do not construe silence as acquiescence, I
may take note of the absence of an explanation
as a factor in my
overall analysis of the veracity and genuineness of the disputes in
casu.
116.
I may take note of the fact that, on the papers before me, in the
three month period between the last letter of 16 February
2015,
and 20 May 2015, being the date of service of the application, the
COT did not address any further complaints to Themba,
but chose
instead to remain supine.
117.
The COT raises the point in limine that Themba failed to employ the
dispute resolution procedures prior to resorting to litigation.
It
relies on clause 12 of the General Conditions of Contract. It
concedes that it has no knowledge of the correct amount claimed
and
denies that it is liable to pay any of the amounts claimed, because
of Themba's unwillingness to meet with it.
118.
Themba denies that it refused to negotiate with the COT. This
allegation is corroborated by the plethora of correspondence
on the
issue. It also makes no sense for the COT to profess a lack of
knowledge about how the amounts are motivated, when a perusal
of this
application and the Close Out Report in its entirety would have
assisted in addressing the issue. The point is patently
unsustainable.
119.
Under the issue concerning the guidelines and the status of same vis
a vis the duties of Themba, the COT has made several complaints.
Summarised, they are that
a.
payment was dependant on fulfilment by Themba of every requirement
outlined in
section 3
of the guidelines, and this did not occur;
b.
Themba breached the December 2013 letter of appointment by failing to
complete the contract, and thereby, not delivering the
deliverables
required by the guidelines and specified in the letter;
c.
Themba's interim invoices did not conform with the guidelines because
they were not accompanied by the deliverables as required
by the
guidelines;
d.
Themba omitted to produce several deliverables which left the COT in
the dark as to the identities of all parties engaged by
it; proper
delivery would have helped the COT to assess the veracity of its
claims.
e.
Themba breached the guidelines by calculating its primary fee on an
estimated cost as opposed to an actual cost, and the guidelines
did
not include claims for standing time and suspension of works;
120.
Every letter of appointment mentions the guidelines both in respect
of fees and in respect of scope of work. Fees are mentioned
as
follows, under the "payments" heading:
"
The fees will be calculated in accordance with Government Gazette
34875, Notice 206 of 2011: Guideline Scope of Services
and Tariff of
Fees for Persons Registered in terms of the Engineering Profession
Act, 2000 (Act No 46 of 2000).
121.
Scope of work is mentioned under the heading "Scope of
consulting engineering services:
"The
professional civil engineering services required for the project in
accordance with the Guidelines Scope of Services and
Tariff of Fees
for persons registered in terms of the
Engineering Profession Act,
(Act
no 46 of 2000) are as follow . .."
122.
The Oxford English Dictionary defines
"guideline"
as
"a
general rule, principle or piece of advice."
123.
I quote from the preamble to
section 3
of the December 2011 Gazette
no 34875, which is worded similarly to its counterpart in the
December 2013 Gazette:
3.
GUIDELINE SCOPE OF SERVICES
The
following guideline scope of services are provided to indicate which
services would normally be provided and for which the guideline's
tariffs would typically represent reasonable compensation. In
agreeing the scope of services and the scope of work to be carried
out, the client and consulting engineer should review the scope of
services and list the applicable normal and additional services
and
agree the related compensation."
124.
The use of the expressions
"normally"
and
"typically"
in the preamble is consistent with the
meaning of
"guideline"
as a general rule, but
immediately distinguishable from the meaning that the guidelines must
"always" be applied. The
use of the expression
"applicable"
contemplates that every contract would have an element of
adaptability which may apply certain guidelines and exclude others
depending
on its nature. The language in the preamble is not
peremptory. There is no use of the expressions "must' and
"shall''.
125.
The fact that the letters of appointment specifically stated that the
scope of work and fees would be
"in accordance with"
the
guidelines does not elevate the guidelines to a status other than
that expressed in its own terminology.
126.
If the COT intended that there should be strict adherence to every
requirement in the guidelines, with no exception, it was
incumbent on
it to state so in the letter of appointment, in clear and unequivocal
terms. This was not the case here. This being
the case, the COT's
interpretation of the guidelines as hard and fast rules from which no
departure may be entertained at all is
flawed and incorrect. All
issues raised by the COT on the strength of its interpretation of the
guidelines as peremptory and admitting
of no departure, must be
considered as legally untenable.
127.
In addition, even if one assumed that the guidelines were peremptory,
on the facts before me, the COT has failed to prove that
the
deliverables were not delivered by Themba. In this regard, one can
only wonder what was contained in fourteen lever arch files
of papers
if they did not include the deliverables.
128.
The COT has failed to prove that any such failure, if it occurred,
materially impacted on the functionality of the works, thereby
going
to the root of the contract.
129.
The issue pertaining to the calculation of the final fee hinges on an
interpretation of "cost of works". Clause 1
subsection 1 of
the guidelines provides that the percentage fees are based on the
"cost of works", and clause 2.3 (vi)
defines cost of works
as
"cost
of works" means the total final amount (or a fair estimate
thereof), exclusive of value added tax, certified or
which would
normally be certifiable, for payment to contractors (irrespective of
who actually carries out the work) in respect
of the works designed,
specified or administered by the consulting engineer before deduction
of liquidated damages or penalties,
including -
.
..a
pro rata portion of all costs related to the contractor's general
obligations and overhead (preliminary and general) items applicable
to the works; (irrespective of who actually carries out the works)
and.... "
130.
Plainly, Themba was entitled, on a proper construction of this
definition, to calculate its claims based on a fair estimate
of the
value of the works. This point must fail.
131.
The complaint about Themba's being at fault for delays in the
contract is unduly scanty in its factual substantiation. In its
letter of 29 August 2014, Themba addressed the causes for the delays
as three-fold, namely: the interruption of works caused by
the Madiba
funeral in the streets which were part of the works, abnormal
rainfall, and the need to relocate water pipelines and
electricity
cables. Themba consistently maintained that it was the COT which had
failed to establish, in advance of the contract,
that its underground
infrastructure would obstruct the works. None of these allegations
was ever seriously disputed. This much
is also corroborated by the
correspondence.
132.
The complaints pertaining to poor workmanship are also lacking in
substance. The issue about Themba being responsible for the
incorrect
lengths of the streetlights and pedestrian poles rings hollow in the
face of its assertion that the survey required to
measure their
lengths was done by the COT, and incorrectly so, and because the
problem was resolved. The COT produces no evidence
to prove that it
incurred extra cost to remedy the problem, and this is consistent
with Themba's allegation that it was fixed.
The averment that Themba
did not render services as a principal agent is unsubstantiated. It
was not seriously disputed in the
pre-litigation correspondence after
Themba had given its detailed report to the COT to motivate its
services qua principal agent.
133.
Based on the evidence which is either undisputed or not the subject
of a real, genuine or bona fide dispute, I am satisfied
that Themba
has proved its claims against the COT, on a balance of probabilities.
Themba is entitled to payment of interest from
the dates of its
respective letters of demand, and no dispute was raised about this.
There is no reason why costs should not be
granted to Themba as the
successful party in an application which was preceded by prior
written demands.
134.
The following order is granted:
a.
upholding the applicant's application in terms of
rule 30A
dated 20
July 2015 and striking out the respondent's discovery notice dated 30
June 2015, with costs against the respondent;
b.
dismissing the respondent's counter-application dated 18 April 2016,
for an order to compel compliance with the above discovery
notice,
and ancillary relief, with costs against the respondent;
c.
directing the respondent to effect payment to the applicant of the
sum of R3 782 283,66 plus interest thereon at the rate of
9% per
annum from 19 November 2014 to date of final payment;
d.
directing the respondent to effect payment to the applicant of the
sum of R1 109 715,79 plus interest thereon at the rate of
9% per
annum from 4 February 2015 to date of final payment;
e.
directing the respondent to pay the applicant's costs of suit in the
main application.
_____________
T BRENNER
ACTING JUDGE OF THE
HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
6 June 2016
Appearances
Counsel for
Applicant:
Adv
M Novitz
Instructed
by:
Attorneys
Nochumsohn and Teper
For the Respondent:
Attorney
R Morobane
Instructed
by:
Attorneys
Dyason Inc