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[2014] ZANCHC 12
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Belize/Freelance Construction Joint Venture v Member of the Executive Council For The Department of Roads and Public Works: Northern Cape Province (183/2013) [2014] ZANCHC 12 (24 October 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE HIGH COURT, KIMBELEY)
Case
No: 183/2013
HEARD
ON: 26/08/2014
DELIVERED:
24/10/2014
In the matter
between:
BELIZE/FREELANCE
CONSTRUCTION
JOINT
VENTURE
.......................................................................................
APPLICANT/PLAINTIFF
AND
MEMBER OF THE
EXECUTIVE COUNCIL
FOR THE
DEPARTMENT OF ROADS
AND PUBLIC WORKS:
NORTHERN CAPE
PROVINCE
.....................................................
RESPONDENT/
DEFENDANT
JUDGMENT
PAKATI
J
[1]
The plaintiff/applicant is Belize/ Freelance Construction Joint
Venture, a joint venture concluded between Belize Construction
(Pty)
Ltd, and Freelance Construction (Pty) LTD, a company duly
incorporated and registered, with its principal place of business
situated at 54 Fritz Stockenström Street, East End,
Bloemfontein. The defendant is the Member of the Executive Council
for
the Department of Roads and Public Works, Northern Cape Province
(“the MEC”).
[2]
The plaintiff and the defendant entered into a written contract in
terms of which the plaintiff constructed a Secure Care Centre
in De
Aar for the Department of Social Services. The amount tendered and
approved for the project was R22 847 880-00.
The plaintiff
asserts that it completed the work according to the specifications
and performed all its obligations in terms of
the contract. The
plaintiff maintain further that the defendant improperly withheld an
amount of R656 000-00 of the contract
price as a penalty
deduction. This accusation is denied by the defendant.
[3]
The plaintiff has, for the reasons set out in para 2 (above),
instituted action against the defendant on 01 February 2013 for
payment of R747 840-00 (R656 000-00 plus 14% VAT) with
interest at 15% per annum
a tempora
morae
to date of payment. According to
the plaintiff the defendant was not entitled to withhold any payment
due to it.
[4]
The defendant raised a special plea in terms of s 3 (2) (a) of the
Institution of Legal Proceedings Against Certain Organs of
State Act,
40 of 2002 (“the Act”), that the plaintiff did not give
timeous notice in writing of its intention to institute
legal
proceedings. It gave notice only on 07 June 2011 whereas it was
claimed that the debt became due and payable on 11 May 2010
more than
six months after its claim was due. This computation shows that the
notice happened. It is common cause that the plaintiff
has not
applied for condonation for its failure to serve such notice
timeously in compliance with the Act. It is further common
cause that
the MEC has not given consent in writing for the initiation of legal
proceedings without such notice. The defendant
submitted that I
should uphold the special plea and dismiss the plaintiff’s
claim with costs.
[5]
The plaintiff asserts that the cause of action is not for a ‘debt’
as contemplated in s 3 (1) of the Act, but for
the balance amount
outstanding in terms of the written contract. The plaintiff therefore
disputes its obligation to comply with
s (3) (2) (a) of the Act to
give notice within six months from the date on which the debt became
due. It submits that its
claim falls outside the definition of
‘debt’ and characterised it as compelling specific
performance and not claiming
for damages.
[6] In Clauses
4.5.7, 4.5.10, 4.5.11, 4.5.12 and 4.5.14 of the plaintiff’s
Particulars of Claim the plaintiff pleads:
“
4.5.7
The plaintiff is entitled to a revision of the date for practical
completion, and for which revision the principal agent shall
not
adjust the contract value, for delays inter alia caused by inclement
weather; inability to obtain materials and goods and default
by a
nominated subcontractor;
4.5.10
[T]he plaintiff shall, within 60 working days of the delay ceasing,
submit such claim to the principal agent, failing which
the plaintiff
shall forfeit such claim;
4.5.11
[T]he principal agent shall, in writing, within 20 working days after
receipt of a claim grant, reduce or refuse the working
days’
claim and determine the revised date for practical completion in
relation to work days granted;
4.5.12
[W]here the principal agent fails to act in terms of clause 29.7, the
claim shall be deemed to be refused;
4.5.13
[S]hould any disagreement arise between the plaintiff and the
defendant or its principal agent(s), as to any matter arising
out of
or concerning the agreement, either party may give notice to the
other to resolve such disagreement;
4.5.14
[W]here such disagreement is not resolved within 10 working days of
receipt of such notice it shall be deemed to be a dispute
which shall
be adjudicated by litigation.”
[7]
Clause 29.7 alluded to in para 4.5 12 (above) provide that:
“
29.7
The
principal agent
shall, in writing, within twenty (20)
working
days
after receipt of a claim in
terms of 29.6 Grant, reduce or refuse the working days claimed.”
[8]
The plaintiff maintains that 16 delayed claims were lodged with the
principal agent. However, the principal agent failed to
take a
decision or to convey it within the allocated period of 20 working
days as set out above (para 4.5.11). After having given
notice in
terms of clause 40.1 of the contract to resolve the disagreement,
which remained unresolved after 10 days, the plaintiff
declared a
dispute in terms of clause 40 of the contract.
[9] Clause 40.1 of
the contract stipulates that:
“
40.1
Should any disagreement arise between the
employer
or his
principal
agent
or
agents
and the
contractor
as
to any matter arising out of or concerning this
agreement
either party may give notice to the other to resolve such
disagreement.”
[10] Adv Williams,
for the plaintiff, insisted that the defendant is under an obligation
to make payment in terms of the contract.
Specific performance is the
recourse to take in a claim sounding in money. He contended that the
defendant could not justify the
refusal to pay. The plaintiff in its
argument relied on the case of
NICOR IT CONSULTING (PTY) LTD v
NORTHWEST HOUSING CORPORATION
2010 (3) SA 90
(NWM)
where it was
held in paras 29 and 30:
“
[29]
When a right is adversely affected by legislation and particularly
when such right is one contained in the Constitution, the
offending
provision must be interpreted restrictively. If in interpreting the
definition of ‘debt’ para (b) qualifies
the whole of para
(a), then the notice contemplated in s 3 of the Act would only have
to be given when the claim is one for damages.
If on the other hand
para (b) qualified only (i) and (ii) of para (a), then any action
would be subject to the provisions of s
3 of the Act.
[30]
On a careful reading of the definition of ‘debt’
contained in the Act, it is clear that para (b) qualifies para
(a) as
a whole. This in my view is the ‘ordinary and natural meaning’
of the words as they are set out in the definition
of ‘debt’
in the Act. Nothing that the defendant has raised has persuaded me
otherwise. This ‘ordinary and natural’
meaning has been
considered within the context and purpose of the Act and I find that
it does not offend against the purpose of
the Act. More
significantly, this ‘ordinary and natural’ meaning makes
fewer inroads into the rights of access to courts
and equality
enshrined in the Bill of Rights in the Constitution. As such, this
ordinary and natural meaning is to be preferred
above the wider
interpretation of the definition of ‘debt’ contended for
by the defendant. Accordingly, I find that
para (b) of the definition
of ‘debt’ in the Act qualifies para (a) of such
definition, and consequently a ‘debt’
for the purposes of
the Act is confined to a claim for damages, however such claim
arose.”
The
plaintiff also referred to the case of
THABANI
ZULU & CO (PTY) LTD v MINISTER OF WATER AFFAIRS AND ANOTHER
2012
(4) SA 91
(KZN)
where the principle in
Nicor’s case was applied.
[11]
Adv Danzfuss SC, on behalf of the MEC, conceded that it is possible
for the plaintiff to claim payment of money by way of specific
performance. However, the fact that the plaintiff added clauses 7.4
and 7.5 in its Particulars of Claim, which clauses are normally
inserted in a claim for breach of contract, is indicative of the fact
that it is a claim for damages. Counsel contended that the
plaintiff
ignores the refusal by the principal agent to pay the amount which
was given rise by the breach of the contract. Clauses
7.4 and 7.5
state:
“
7.4
[T]he penalties have been applied and deducted without consideration
to the provisions of the contract and the delayed claims;
7.5
[H]ad the principal agent complied with its obligations in terms of
the agreement, the principal agent would have granted the
delays and
working days claimed, from which the plaintiff would not have been
liable for any penalties.”
[12]
The crucial question that arises is whether this claim is for
specific performance or one for damages. S 1 of the Act defines
a
debt as follows:
“ ‘
Debt’
means any debt arising from any cause of action –
(a)
Which arises from delictual,
contractual or any other liability, including a cause of action which
relates to or arises from any
–
(i)
Act performed under or in terms of
any law; or
(ii)
Omission to do anything which should
have been done under or in terms of any law; and
(b)
For which an organ of state is
liable for payment of damages, whether such debt became due before or
after the fixed date.”
[13] S 3 (1) and (2)
(a) of the Act provide as follows:
“
3.
Notice of intended legal
proceedings to be given to organ of state.
---
(1) No legal
proceedings for the recovery of a debt may be instituted against an
organ of state unless –
(a)
The creditor has given the organ of state in question notice in
writing of his or her or its intention to institute the legal
proceedings in question; or
(b)
The organ of state in question has
consented in writing to the institution of that legal proceedings-
(i)
Without such notice; or
(ii)
Upon receipt of a notice which does
not comply with all the requirements set out in subsection (2).
(2)
A notice must –
(a) Within six
months from the date on which the debt became due, be served on the
organ of state in accordance with section 4 (1);
and
(b) Briefly set
out –
(i) The facts
giving rise to the debt; and
(ii) Such
particulars of such debt as are within the knowledge of the
creditor.”
[14]
Innes CJ in
FARMERS’ CO-OP (REG)
v BERRY
1912 AD 343
at 350 stated:
“
Prima
facie every party to a binding agreement who is ready to carry out
his own obligation under it has a right to demand from
the other
party, so far as it is possible, a performance in terms of the
contract.”
See
also
RAS AND OTHERS v SIMPSON
1904 TS
254
at 256 where the learned Judge
enunciated:
“
But
if specific performance had been asked for and decreed, and had not
been carried out, it would have been competent for the plaintiffs
in
another action to have asked, in lieu of that decreed, for
cancellation of the contract and damages. And if they could obtain
that relief by means of a second action, I can see no reason in law
why they should not ask alternatively for it in this action.”
[15]
In my view the cases
supra
support the contention of the defendant that the plaintiff’s
claim is a claim for damages. The plaintiff declared a dispute
with
regards to the penalties levied in Certificate 21 and the specified
amount payable to it. This negates the refusal to grant
the delays.
There is no clause in the contract which requires that when the
plaintiff declares a dispute it is entitled to payment
only if the
principal agent refuses to grant the delays. The plaintiff’s
claim is therefore not what he is entitled to in
terms of the
contract.
[16]
In my view the plaintiff’s claim is for damages and not
specific
performance. The plaintiff was
obliged to give notice within the prescribed six months from the date
on which the debt became due
in terms of s
3 (2) (a) of the Act. It is common cause that the defendant did not
consent in writing that legal proceedings
be instituted without the
required notice as alluded to earlier. The special plea must
therefore be upheld with costs.
[17]
The defendant sought the following
relief under the special plea:
“
Therefore
the defendant pleads that [the] plaintiff’s claim be dismissed
with costs.”
In
the circumstances I grant the following order:
1.
The special plea raised by the
defendant, the Member of the Executive Council for the Department of
Roads and Public Works: Northern
Cape, is upheld.
2.
The plaintiff’s claim is
dismissed.
3.
The plaintiff, Belize/Freelance
Construction Joint Venture, is ordered to pay costs on party and
party scale.
_____________
BM PAKATI
JUDGE
On Behalf of the
Plaintiff: ADV WILLIAMS
Instructed by:CJ
DE JAGER ATTORNEYS
On Behalf of the
Defendant: ADV DANZFUSS (SC)
Instructed by:
HAARHOFFS INC