About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2015
>>
[2015] ZAFSHC 5
|
|
Johnny Bravo Construction CC v Khato Consulting Engineers CC (2315/2014) [2015] ZAFSHC 5 (5 February 2015)
IN
THE HIGH COURT, BLOEMFONTEIN
FREE
STATE DIVISION, BLOEMFONTEIN
Appeal
No.: 2315/2014
In
the matter between:
JOHNNY
BRAVO CONSTRUCTION CC
…...............................................................
Applicant
and
KHATO
CONSULTING ENGINEERS CC
…..........................................................
Respondent
CORAM:
LEKALE, J
JUDGEMENT:
LEKALE, J
HEARD
ON:
27 NOVEMBER 2014 and 11
DECEMBER 2014
DELIVERED
ON:
5 FEBRUARY 2015
INTRODUCTION
AND BACKGROUND
[1]
This is an opposed motion for enforcement of interim payment
certificate issued in favour of the applicant by the respondent’s
representative engineer on 5 September 2013 in respect of
construction work carried out in Qwaqwa on a project awarded to the
respondent by the Maluti-A-Phofung Local Municipality.
[2]
Following its appointment on the relevant project, which entails the
provision of water services for network extensions and
erf
connections for rural areas in Qwaqwa, on the 7
th
October 2011 the respondent appointed the applicant to provide plant
and labour for the implementation of the project in question
in terms
of the General Conditions of Contract for Construction Works 1
st
ed of 2004 (the GCC) thereby effectively placing the respondent in
the position of the employer
viz-a-viz
the applicant.
[3]
In terms of clause 49 of the GCC the applicant is entitled to
interim payments payable after submission by it of monthly
statements
and the issue of payment or progress certificates signed by the
engineer. The respondent, as the employer, is entitled
to retain ten
per cent of certified amounts to the maximum of ten per cent of the
agreed contract value at any given time. Certified
amounts are
payable within 28 days of receipt by the respondent,
qua
the employer
vis-à-vis
the
applicant, of the payment certificate.
[4]
The GCC, further, provides for a defects liability period of one year
and renders half of the retention money deducted due and
payable to
the applicant upon the issue of a certificate of practical completion
by the respondent. The balance of the retained
funds becomes payable
upon the issue of a certificate of final completion
viz.
within 14 days after the expiry of the defects liability period.
Failure by the respondent to effect payment on due date attracts
interest at a prime overdraft rate certified by the applicant’s
bankers.
[5]
On the 1
st
February 2013 the respondent declared, in writing, that the stage of
practical completion had been reached, thereby signifying
that the
applicant was entitled to 50 per cent of all retention funds. The
applicant continued to perform and to render statements
and on 5
th
September 2013 the respondent, as the engineer, issued payment
certificate number 20 for payment of R1 161 690.76 to the
applicant. The parties, however, got involved in a dispute about
payment on the relevant certificate. On 19
th
February 2014 the respondent paid R72 414.41 on the certificate in
question. The respondent, however, refuses to effect further
payment
on the certificate and contends that the quality of the work rendered
was not up to standard.
[6]
The applicant eventually launched the instant application
which the respondent
in limine
opposes on the ground that the dispute between the parties falls to
be adjudicated by way of arbitration of clause 58.7 of the
GCC. The
respondent, further, opposes the motion on the ground that the
payment certificate on which the claim is based is tainted
by fraud.
[7]
On 27 November 2014 and after presentation of oral arguments on the
preliminary point the parties were, effectively,
ad
idem
that the dispute is properly
before the court in terms of clause 58.5 of the GCC. The point raised
was,
thus
,
bad on the facts and fell to be dismissed with costs.
DISPUTE
[8]
The parties are essentially in dispute over whether or not the
progress certificate is valid with the respondent contending
that
same is the product of fraud on the part of the applicant and the
engineer’s representative.
[9]
At the outset of the hearing on 27
th
November 2014 Mr Grobler, for the applicant, requested that the issue
of the validity and veracity of the certificate be referred
for oral
evidence in the event of the court finding that the respondent
genuinely disputes the validity of such a certificate on
the grounds
of fraud.
CONTENTIONS
BY THE PARTIES
[10]
Mr Van Aswegen, for the respondent, submits that it is clear from the
papers that the quality of the works performed by the
applicant is so
poor that the most plausible inference to draw therefrom is that the
engineer’s representative, who was pivotal
to the issue of the
relevant payment certificate, colluded with the applicant to the
detriment of the respondent.
[11]
On behalf of the applicant, Mr Grobler contends that there exists no
proof of fraud on the part of the applicant and that the
real issue
concerns alleged unsatisfactory work which, in terms of the contract
between the parties, can be rectified during the
defects liability
period without refusing to effect payment in terms of the certificate
in question.
[12]
It is, further, submitted for the applicant that the delay on the
part of the respondent to raise the issue further militates
against
the genuineness of the dispute. The respondent, on its part, retorts
that it only became aware of the poor quality of the
works concerned
after complaints were lodged with the counsellors by the community
which the project is intended to benefit.
APPLICABLE
PRINCIPLES
[13]
The parties are correctly in agreement that an interim payment
certificate, just like a final progress certificate, embodies
an
obligation on the part of the employer to pay the amount certified
and gives rise to a new and distinct cause of action subject
to the
terms of the contract. It is regarded as the equivalent of cash. (See
Joob Joob Investments (Pty) Ltd v
Stocks Mavundla Zek Joint Venture
2009 (5) SA 1
(SCA) at 10)
[14]
It is, further, correct, as Mr Van Aswegen reminds the court, that
where a progress certificate is issued fraudulently same
is of no
force and effect (See
Smith v Mouton
1977 (3) SA 9
(W).
[15]
A real, genuine and bona fide dispute can exist only where the party
purporting to raise the same seriously and unambiguously
deals with
the same in its papers. (See
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA)).
[16]
In exercising its discretion to refer a matter for oral evidence, the
court is largely guided by the prospects of
viva
voce
evidence tipping the balance in
favour of the applicant. If on the papers the probabilities are
evenly balanced, the court would
be more inclined to allow the
hearing of oral evidence than if the balance were against the
applicant. (See
Kalil v Decotex (Pty)
Ltd and Another
1988
(1) SA 943
(A) at 379H-I).
[17]
As a general rule an application to refer a matter to evidence must
be made at the outset and not after argument on the merits.
The rule
is, however, not inflexible. (See
Klep
Valves (Pty) Ltd v Saunders Valve Co Ltd
1987 (2) SA 1
AD at 24I-25D).
[18]
In terms of the respondent-friendly test applicable to application
proceedings, where there exist material disputes of fact
the
respondent’s version can only be rejected if it is far-fetched
or untenable. (See
Plascon Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
AD).
APPLICATION
OF PRINCIPLES AND FINDINGS
[19]
It is clear from the papers that the respondent seriously and
unambiguously deals with the disputed validity of the payment
certificate insofar as it
inter alia
refers to photographs allegedly depicting the alleged poor works
which are allegedly so out of line with accepted standards and
regulations that they allegedly lead to the inference that there was
collusion between the applicant and the engineer’s
representative as the most probable one.
[20]
Ex facie the papers the probabilities are, in my view, evenly
balanced insofar as the payment certificate is prima facie
enforceable
while there, further, exists a possibility that same was
fraudulently issued.
[21]
As correctly pointed out for the applicant, a request for referral to
oral evidence was made at the outset and before arguments
on merits
could be heard. In my judgment there exist prospects of oral evidence
tilting the scales in favour of the applicant.
ORDER
[22]
The preliminary point is dismissed with costs.
[23]
The application is postponed to 30 March 2015 for certification, as
ready for hearing of viva voce evidence, by the pre-trial
judge.
[24]
The issue to be determined at such a hearing is whether or not
payment certificate number 20 is valid and enforceable regard
being
had to the respondent’s contentions that same is tainted with
fraud.
[25]
For the purposes of such a hearing the respondent shall deliver sworn
statements of witnesses it wishes to call, inclusive
of any
supplementary affidavits, within 10 days calculated from the date
hereof.
[26]
On its part the applicant shall deliver sworn statements of witnesses
it wishes to call, inclusive of any supplementary affidavits,
within
10 days calculated from the date on which the respondent shall have
delivered statements or was supposed to deliver statements.
[27]
Within 10 days after the delivery of statements or supplementary
affidavits by the applicant, the parties shall make discovery
under
oath in terms of the provisions of Rule 35 of Uniform Rules of Court
and the provisions of Rule 35 (6) with regard to inspection
and
production of discovered documents or items shall apply.
[28]
The costs shall be costs in the application.
_________________
L.
J. LEKALE, J
On
behalf of the applicant: Adv. S. Grobler
Instructed
by:
Peyper
Attorneys
BLOEMFONTEIN
On
behalf of the respondent: Adv. W. A. van Aswegen
Instructed
by:
Lovius
Block
BLOEMFONTEIN