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[2016] ZAGPPHC 1184
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Superway Construction (Pty) Ltd v City of Tshwane Metropolitan Municipality (46599/2015) [2016] ZAGPPHC 1184 (29 November 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO:
46699/2015
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In the matter between:
SUPERWAY
CONSTRUCTION (PTY)
LTD
APPLICANT
and
THE
CITY OF TSHWANE METROPOLITAN
MUNICIPALITY
RESPONDENT
JUDGMENT
MALI
J
[1] The applicant being a
company duly registered and incorporated as such in accordance with
the relevant laws of the Republic
of South Africa, seeks a
declaratory order confirming its entitlement to the extension of time
to the contract completion date
and an adjustment to contract value
consequent upon labour disruption.
[2]
The respondent is a municipality established as such in accordance
with
Section 2
of the
Local Government Municipal Systems Act 32 of
2000
.
[3]
It is common cause that on 13 September 2011 the parties concluded a
written contract ("the contract") wherein the
applicant had
to attend to certain detailed works, comprising of the upgrading of
Maunde Street between Quagga and Khoza Roads
in Pretoria.
[4]
The contract obligations were contained in the following documents:
[4.1] General Conditions
of Contract ("GCC”)
[4.2] Contract Data;
[4.3] Pricing Data;
[4.4] Scope of Work and
[4.5] Site Information.
[5]
Some of the clauses of the GCC are as follows:
[5.1] The employment of
conventional and labour intensive construction methods to complete
the work.
[5.2] The crucial clause
forming the subject matter of this application is clause 42 reading
"42 EXTENSION OF TIME FOR COMPLETION”
"42.1 Subject to
any requirement in the Scope of Work
as
to the completion of
any portion of the Permanent Works before completion of the whole,
the whole of the Works shall be completed
within the time stated in
the Contract Data calculated from the Commencement Date.
42.2 If circumstances
of any kind whatsoever which may occur be such as fairly to entitle
the Contractor to an extension of time
for the completion of the
Works or any portion thereof, the Engineer shall grant the
Contractor, on a claim in accordance with
Clause 48, such extension
of time as
is
appropriate. Such extension of time shall take
into account any special non-working days and all relevant
circumstances, including
concurrent delays or savings of time which
might apply in respect of such claim.
42.3
Without
limiting the generality of Clause 42.
2,
the circumstances
referred to in that Clause include:
42.3.1
The amount and
nature of additional work,
42.3.2
Abnormal
climatic conditions,
42.3.3
Any failure or
delay on the part of the Employer
or
his agents, employees or
other contractors (not being employed by the Contractor) in due
performance of any obligations
as
are reasonably necessary to
enable the Works to proceed,
42.3.4
Any provision
of these Conditions which allows for an extension of time, and
42.3.5
Any disruption
of labour which is entirely beyond the Contractors control."
[6]
It is not in dispute that from 2 October until 20 October 2012 in
respect of the Maunde Street Project the community members
embarked
on a protest relating to the labour rates. The said labour rates were
being paid to members of the community, who have
been employed by the
applicant. The local labour and/ or employees of the applicant joined
the protest action and embarked on a
strike action, resulting to the
applicant's inability to perform within the contract period during
the standing time.
[7]
On 3 October 2012 the applicant duly notified the respondent through
the Engineer of the strike action. The notification reads
as follows:
"Dear Sir/ Madam
[It] has been
discussed in previous meetings and we are now facing
a
problem
regarding the labour on the Maunde Street Project. The workers
started an illegal strike on Tuesday the 2nd October 2012.
The local
labour are insisting
on
being paid rates that are higher than
the agreed SPWP rates as allowed in the contract document, Clause
C.
3.3.33.
1.1.1.-1.2 When they started throwing rocks and
becoming more violent I was forced to call the police to escort my
people off site
safely. I then returned to the site today
to
negotiate with them but was told in
no
uncertain terms that
the strike will continue until the issue is resolved. I therefore
urge you to consider moving the planned meeting
of
09
October
2012 to an earlier date. As long
as
this strike continues we
are unable to do any work
as
it is impossible to guarantee the
safety of our people, and other resources.
With reference to the
above, and in accordance with Clause 48 of General Conditions
of
Contract for Construction Works (2004) (First Edition), we hereby
notify you of our intention to claim standing time until the issue
is
resolved,
as
contemplated in Clause 42, and specifically
42.3.5.
42.3.5 'Any disruption
of labour which is entirely beyond the contractor's control'.
Yours Sincerely"
[8]
Pursuant to the above and further exchanges of correspondence between
the Engineer contractually appointed by the respondent
and the
applicant; on 30 November 2012 the Engineer rejected the applicant's
claim. The basis of rejection was that the Employer
(Respondent) did
not delay or interrupt the works. The Engineer further confirmed that
the strike was a result of the Contractor
not remunerating the
labourers according to the minimum wage rates as promulgated.
[9]
Finally the matter was taken for adjudication. There are two issues
which served before the Adjudicator (Claim 1): extension
of time and
costs due to delays caused by the protest and strike action. (Claim
2): extension of time for increased scope of works}.
[10]
The adjudicator dismissed the applicant's claim for extension of
time. According to the adjudicator the clauses of the contract
were
unambiguous that the whole of the Works, without exceptions, was to
be construed by conventional methods; therefore the workers
had to be
remunerated as such. The local labour force was paid a wage of
R100.00 per day which equates to R12.50 per hour for eight
(8) hours.
[11]
The decision by the Adjudicator at page 160 of the paginated pages
paragraph 2.1.28 - 2.1.29 reads as follows:
“
The contractor
confirmed at the hearing that it was paying the local labour at less
than the minimum wage rate for conventional
work. Having regard to
the fact that the strike was settled at
a
wage
rate equivalent to R17.00 per hour, which was less than the
prescribed minimum wage for conventional work at the time of R20.50
per hour, the strike would have been averted had the Contractor
complied with the Contract.”
ISSUE
[12]
The matter turns on the interpretation of clause 42 of the Contract,
in particular clause 42.3.5 (see
supra)
dealing with the
disruption of labour. The ensuing question is whether the adjudicator
was correct to dismiss the applicant's claim
of extension of time
because the applicant could have avoided or averted the strike
action, had it complied with the contractual
rates for payment of the
local labour.
LAW
[13]
In
TRANSNET
LTD
TIA
NATIONAL PORTS AUTHORITY v OWNER OF MV SNOW CRYSTAL
[1]
Scott JA stated:
"[28]
...
As a
general rule impossibility of performance brought about by vis major
or casus fortuitus will excuse performance of
a
contract.
But it will not always do
so.
In each
case it is necessary to 'look to the nature of the contract, the
relation of the parties, the circumstances of the
case,
and the
nature of the impossibility invoked by the defendant, to
see
whether
the general rule ought, in the particular circumstances of the
case,
to
be
applied'.
[2]
The rule will not
avail
a
defendant
if the impossibility is self-created;
[3]
nor will it avail the
defendant if the impossibility is due to his or her fault.
[4]
Save possibly in
circumstances where a plaintiff
seeks
specific
performance, the onus of proving the impossibility will lie upon the
defendant.
[5]
[14]
In
KING
SABATA DALINDYEBO MUNICIPALITY
v
LANDMARK
MTHATHA (PTY)
LTD
&
ANOTHER
[6]
("KSD")
the following is stated at page 18:
"[28] ...That has
become unnecessary in view of the finding that
the
impossibility
was self-created. It follows that the general rule that impossibility
of
performance brought about by vis major or casus fortuitous
will excuse performance of
a
contract does not avail the
Municipality in this case. The appeal against the finding of the
court below relating to the defence
of supervening impossibility must
accordingly fail."
[15]
In
NATAL
JOINT MUNICIPAL PENSION FUND
v
ENDUMENI
MUNICIPALITY
[7]
(“Endumeni”)
at paragraphs [18]-[19], it was held that, in interpreting a
contract, the court must have regard to the
language of the clause as
well as the purpose for which it was agreed. The SCA further stated:
"[26] In between
these two extremes, in most cases the court is faced with two or
more
possible
meanings that are to
a
greater
or lesser degree available on the language used.
[8]
Here it is usually
said that the language is ambiguous although the only ambiguity lies
in selecting the proper meaning (on which
views
may
legitimately
differ). In resolving the problem the apparent
purpose
(own
emphasis) of the provision and the context in which it occurs will be
important guides to the correct interpretation An interpretation
will
not be given that leads to impractical, unbusinesslike or oppressive
consequences or that will stultify the broader operation
of the
legislation or contract under consideration."
ANALYSIS
[16]
There is no quarrel as to the purpose of clause 42.2 of the GCC that
it was to grant extension of time to the applicant in
the event that
the delay was caused by something beyond the control of the
applicant. The question is whether the strike was beyond
the
applicant's control as submitted by the applicant.
[17]
According to the applicant's notice of 3 October 2012 the applicant
stated that the local labour force are insisting on being
paid rates
that are higher that the agreed rates, and that the strike was
illegal.
[18]
From the adjudicator's report it appears that the issue of payment of
incorrect wage rate was as a result of misinterpretation
of the
contract between the parties. At paragraph 2.1.27 of the
adjudicator's report the following is stated:
"From
the aforegoing I conclude that, notwithstanding the cover page of the
tender Document and the extensive provisions in
the contract document
relating to the use of labour intensive methods on this contract,
which
may
have mislead the reader as it apparently mislead
both the Employer and the Contractor, the contract de facto provides
that the whole
of the Works without exception, was to be construed by
conventional methods".
[19]
At page 159 of the paginated bundle in the adjudicator's report the
following is stated:
"2.
1.21
Notwithstanding the content of the front cover page to the tender bid
("EXPANDED PUBLIC WORKS PROGRAMME CONTRIBUTING TO A
NATION AT WORK")
OWN INSERTION the provisions of the
contract which regulate the use of local labour intensive
construction work are set out in the
following:
2.1.21.1 Clause C3.1.1
which states;
The employer's
objective are to deliver public infrastructure using labour intensive
methods. The works in this contract are to
be executed by using both
conventional construction and labour intensive construction methods
according to the Special Public Works
programme (SPWP).
Works earmarked for
Labour Intensive construction methods will be numbered with
a
prefix "LI' in the bill of quantities to distinguish
them from conventional construction
works.
Such
work shall be constructed using local workers who are temporarily
employed in terms of the project specifications. (Emphasis
added).
2.1.21.2.1
Clause
C3.1.2 which states, inter alia;
Conventional and
labour intensive construction methods (L/C) will be employed to
complete the work,
with the Engineer ruling on the method
to be used
(Emphasis added).
2.
1.23
The
parties confirmed that no items in the Price Schedule were numbered
with the prefix LI. (Appendix A - question 3.3) and it was
not
suggested that the Engineer had instructed that labour intensive
methods were to be used on any works.
2.1.24 On the
contrary, the Employer/Engineer, in answer to question 4.1 (Appendix
A) replied, inter alia,
The Contract is clear
that work earmarked for the Maunde Street contract to be executed on
a labour intensive construction method
is numbered with
a
prefix
"LI” in the Price Schedule, to distinguish them from
conventional construction works. The "LI" numbered
items
shall be constructed accordingly. The Contractor has failed to adhere
to this requirement in its submission
as
it refers in its
submission to EPWP related works, which is not applicable to this
Contract.
Annexure
21
The Employer confirms
that no particular item was labelled
as
"LI” in the
price schedule, hence conventional construction methods are
applicable to the entire works.
The Contractor has
disregarded this clear directive
2.1.25 To the extent
that the contract could be considered to be ambiguous in regard to
what work, if any,
was
to be constructed using labour
intensive methods clause
3.
1 of the Genersl Conditions of
Contract provides that;
If an ambiguity or
discrepancy between the documents is found the Engineer shall issue
any necessary clarification or instruction.
2.1.28 The Contractor
confirmed at the hearing that it was paying the labour at less than
the minimum wage rate for conventional
work.
2.1.29 Having regard
to the fact that the strike was settled at
a
wage rate
equivalent to R17-00 per hour, which was less than the prescribed
minimum wage for conventional work at the time
of
R20.50 per
hour, the strike would have been averted had the Contractor complied
with the Contract."
[20]
It was submitted on behalf of the applicant that the amount of rates
to be paid to local labour was not clear from the contract
until the
determination was made by the adjudicator. The applicant could not
have known that it was paying the correct or incorrect
rates. The
applicant does not dispute that the strike terminated when it paid
the local labour R17.00 per hour, a rate lower than
R18.00 per hour
allegedly agreed upon between the parties.
[21]
It was further submitted on behalf of the applicant that the strike
was unprotected and was in the circumstances an unlawful
and/or
illegal strike, therefore an action beyond its control. It was argued
that the applicant was not in a position to control
unlawful conduct
and that the workers would have approached the applicant to request
an increase.
[22]
I cannot agree with the above. It is evident in reading together of
all documents consisting the terms of contract that there
was a
stipulated contractual amount which the applicant omitted to pay the
local labour. It was not for the workers to beg the
applicant for
what was rightfully theirs; a regulated wage rate as at the time.
Furthermore the Sectorial Determination 2: Civil
Engineering Sector,
published in the Government Gazette No: 35658 of 4 September 2012
clearly demonstrates that the applicant paid
less than what is
legally prescribed.
[23]
As alluded in Endumeni
supra,
in interpreting a contract, the
court must have regard to the language of the clause as well as the
purpose for which it was agreed.
In the present matter the language
of the contract makes it clear that the workers were engaged in
labour intensive construction
work. In this regard see Clause C3.1.1
in paragraph 19
supra.
[24]
Despite the applicant's argument that it was not clear about the
payment provisions, it was the responsibility of the applicant
to
ensure that the correct wage rates were paid. The contract provided
for the consultation of an Engineer in the case of ambiguity.
There
is nothing placed before the court that the applicant sought clarity
from the Engineer.
[25]
As alluded above the applicant knew as early as on the first day of
the strike that it was about disputed wage rates. In my
view it was
an opportunity for the applicant to seek clarity from the Engineer,
instead the applicant issued notification within
a period of a day of
the strike to claim for the standing time.
[26]
The important issue is whether the workers were correctly paid by the
applicant; now it is known that the answer is in the
negative. Even
if both parties were under the impression that they were correct in
their interpretation, as to how and why they
missed the correct
interpretation is irrelevant. The mystery that both parties didn't
set the correct wage rates; and that the
workers managed to find out
the correct wage rates and then embarked on a strike is more than
telling. The conclusion is that it
was possible to discern the
applicable rates from the contract and other documents pertaining to
the agreement between the parties.
[27]
It is undisputed that the applicant was paying the correct wage rates
in other sites to the workers who were undertaking the
same
responsibilities. This makes it clear that there was nothing
mysterious about how the employees found out about the correct
rates.
Obviously the applicant knew the correct wage rates to pay. The
applicant's counter argument to the above is that the issue
of what
is happening in another site is irrelevant. It is probable true that
if the employees in all the sites were uniformly paid
correct wage
rates the strike would have been averted or if the strike occurred
whilst the uniform payments were in place there
would be some benefit
of doubt towards the interpretation of the contract.
[28]
The applicant's submission that the local labour force embarked on a
strike because they were influenced by the community members
who
started the civil unrest is misplaced. It is common cause that the
reason for the strike by the local labour force, whom was
under the
applicant's control was due to underpayment of wages. I am inclined
to follow the KSD reasoning in paragraph 14
supra.
I cannot
help but to find that the impossibility to perform was self created
on the part of the applicant.
[29]
Having regard to the above it has been overwhelmingly proven that the
strike was within the control of the applicant and it
could therefore
have averted the strike by paying the correct wage rates from the
onset. In the event I find that the Adjudicator
was correct in
dismissing the applicant's claim for the extension of time.
[30]
In the result the following order is made;
[30.1] The application is
dismissed with costs.
-----------------------------------
N.P
MALI
JUDGE
OF THE HIGH COURT
Counsel
for the Applicant: Adv. Daniels
Instructed
by: FRESE MOLL & PARTNERS
Counsel
for the Respondent: Adv. Motepe
Instructed
by: KUNENE RAMAPALA BOTHA ATIORNEYS
Date
of hearing: 27 July 2016
Date
of Judgment: 29 November 2016
[1]
2008 (4) SA 111 (SCA)
[2]
Per Stratford J in
Herman
v Shapiro
&
Co
1926 TPD 367
at 373 quoted with approval in
Nuclear
Fuels Corporation of SA (Pty) Ltd v Orda AG
1996
(4) SA 1190
(SCA) at 12060-E.
[3]
South
African
Forestry
Co
Ltd
v York Timbers Ltd
2005
(3) SA 323
(SCA) paras 23-25).
[4]
MacDuff
&
Co
Ltd
(In Liquidation) v Johannesburg Consolidated Investment
Co
Ltd
1924
AD 573
at 601.
[5]
Tamarillo
(Pty) Ltd v B N Aitken (Pty) Ltd
1982(1)
SA 398 (A) at 4428-443F.
[6]
(136/11) 2013 ZA SCA 91
[7]
2012 (4) SA 593
SCA
[8]
That they must be available on the language used is clear. S
v
Zuma and others
[1995] ZACC 1
;
1995
(2) SA 642
(CC) paras 17 and 18. As Kentridge AJ pointed out any
other approach is divination rather than interpretation.