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[2012] ZAFSHC 196
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Axton Matrix Construction CC v Metsimaholo Local Municipality (2778/2011) [2012] ZAFSHC 196 (24 October 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 2778/2011
In the matter between:
AXTON MATRIX
CONSTRUCTION CC
........................................
Applicant
and
METSIMAHOLO LOCAL
MUNICIPALITY
................................
Respondent
MONDE CONSULTING
ENGINEERS &
PROJECT MANAGERS CC
and AQUA
CONSULTING
ENGINEERS & PROJECT
MANAGERS
(acting as a joint
venture under the name of
MONDE – AQUA
CONSULTING ENGINEERS
AND PROJECT
MANAGERS)
HEARD ON:
31 AUGUST 2012
_______________________________________________________
REASONS FOR
JUDGMENT:
LEKALE, J
_______________________________________________________
DELIVERED ON:
24 OCTOBER 2012
_______________________________________________________
INTRODUCTION
AND BACKGROUND
[1] On the 28 June 2012 I
ruled against the respondent (applicant in the application for leave
to appeal) in a motion for payment
of money on the basis of a
certificate of interim payment and contract termination. I, further,
dismissed the respondent’s
counter motion with costs.
[2] The respondent felt
aggrieved by the whole judgment and lodged an application for leave
to appeal to the full bench against
the same on the grounds dealt
with below.
[3] On the 31 August 2012
I dismissed the application with costs and the respondent had since
requested reasons therefor.
[4] Following hereunder
are the reasons for the decision as requested.
[5] For the sake of
convenience and ease of reference the parties are referred to as in
the impugned judgment.
DISPUTE
[6] The issue to be
determined is whether or not there is a reasonable possibility that
another court would come to a different
conclusion on the facts.
CONTENTIONS AND
ANALYSIS
[7] The respondent
contends that the court erred in not concluding that the employer in
its shoes will also not be bound to a certificate
of payment when the
agent has exceeded his mandate in certifying amounts not provided for
in the tender/contract and including
retention monies to be paid out
whilst not then due.
[8] The aforegoing
contention, with respect, loses sight of the fact that it was found
that the engineer, as the respondent’s
agent, did not exceed
its mandate because an approval for variation in respect of
additional expenditure was granted by the respondent
on the 1 April
2009 subject to the condition that expenditure should not exceed the
project allocation of R22 276 000,00. Even
if, in law, the fact that
an agent has exceeded his mandate in certifying amounts to be paid
out allows the employer to escape
liability on the certificate, an
escape route is not available to the respondent on the facts of the
present matter.
[9] It is, further,
contended for the respondent that the court erred in not finding that
an interim certificate differs from a
final certificate in respect of
the finality thereof and the basis upon which it may be attacked.
[10] In the present
matter what fell to be decided was whether or not the interim
certificate concerned constituted a cause of action
for purposes of
saddling the respondent with liability for payment. The conclusion,
based on case law, was that such a certificate
is the equivalent of
cash and that it amounts to an acknowledgment of debt signed by the
respondent. It constitutes a separate
and self-supporting cause of
action which can be challenged only on limited grounds.
[11] The respondent
contends, further, that the court erred in not concluding that the
respondent, as the employer, was able to
attack the validity of the
certification by the engineer and the correctness of the same.
[12] In the instant
matter there existed no grounds for assailing the interim certificate
involved although the court acknowledged
that the same could, in law,
be attacked on limited grounds such as fraud. I, further, recognised
that such a certificate is not
open to attack because it is based on
erroneous reports of the agent or his negligence.
[13] The respondent,
furthermore, contends that the court erred in not concluding that
cross claims can be entertained in respect
of an interim certificate
in so far as the contract between the parties specifically made
provision for the same.
[14] In the present
matter it was not necessary for the court to make a specific finding
in the relevant regard and the respondent’s
counter claim was
dismissed simply because it was not proved on a balance of
probabilities. The claim, further, enjoyed no reasonable
prospects of
success to warrant referral to trial as correctly submitted for the
applicant. The respondent effectively desired
an opportunity to proof
its damages. In the opposing affidavit, delivered for the respondent,
the latter’s claim is said
to relate to the new contract
concluded with another contractor for completion of deficiencies in
respect of some 583 connections
which the applicant allegedly failed
to make. In an annexure to third party notice the respondent,
however, claims indemnification
of or contribution to applicant’s
claim against the third party as well as debatement of all accounts
and documents in respect
of the relevant certificate.
[15] The respondent,
further, contends that the court erred in not concluding that a
certificate of payment can be cancelled by
an architect with
agreement between the parties and that the relevant certificate was
illiquid because the applicant conceded that
it was wrong.
[16] The fact of the
matter in the proceedings was that the relevant certificate was never
cancelled by the engineer in order to
correct any mistakes of fact or
value. The undertaking by the applicant to adjust the relevant
certificate apparently took place
in negotiations between the parties
and was never carried through. Only the engineer could correct or
adjust the certificate. The
negligence of the engineer does not, in
law, provide a basis for cancellation or withdrawal of the
certificate by the employer.
Neither do erroneous reports by the
agent entitle the employer to cancel or withdraw the same.
[17] It is, further,
contended for the respondent that the court erred in effectively
concluding that the certificate issued constituted
conclusive
evidence of the indebtedness of the respondent to the applicant.
[18] The nature of the
certificate as amounting to an acknowledgement of debt signed by the
respondent, as the employer, is such
that, in the absence of any
evidence assailing the certificate, it becomes conclusive proof of
indebtedness.
[19] The respondent
contends that the court erred in finding that approval for variation
in respect of additional expenditure was
granted by the respondent on
the 1
st
April 2009 whilst the applicant, in its founding
affidavit, relied upon a contract price of R8 447 899,75 without
relying on any
approved variations.
[20] I am satisfied from
all the evidence before the court that approval for the relevant
variation was granted by the respondent.
The relevant information
came to light in the replying affidavit when the applicant countered
the respondent’s contention
that the agent exceeded its mandate
because the contract was not varied. Proof of approval by the
respondent was furnished and
the latter did not deny the same and
only feels that it was not disclosed and relied upon in the founding
affidavit. There was
further no application for the striking out of
the relevant piece of evidence, and no likelihood of unfairness or
prejudice on
the part of the respondent exists because the parties
effectively joined issue.
[21] The respondent
contends, further, that the court erred in not finding that the
applicant failed to show on what basis the contract
was not a “fixed
sum” contract. In this regard I can only respectfully refer to
paragraph [20] above with regard to
the variation.
[22] The respondent,
further, contends that the court erred in not concluding that the
letter granting approval for house connections
does not conclusively
show that the contract was varied. In this regard I respectfully
refer to paragraph [20] above.
[23] The respondent,
furthermore, contends that the certificate includes retention money
which had to be kept by the respondent
pending the expiry of the
defects liability period.
[24] The issue was,
however, sufficiently dealt with in the judgment in so far as the
relevant General Conditions of Contract were
found to allow pay-out
of the retention monies on cancellation of contract as a result of
failure by the respondent to pay in accordance
with payment
certificates.
[25] It is, further,
contended for the respondent that the court erred in not concluding
that the materials on site became the property
of the applicant and
the respondent was, thus, not liable to pay for the same.
[26] The principle that
the errors attributable to the engineer, short of fraud, are of no
effect on the binding nature of the payment
certificate is relevant
here.
[27] The respondent,
further, contends that the court erred in not referring the
application and counter application for trial whereas
the respondent
sought such an order and was supported, in this regard, by the third
party.
[28] I can only point
out, with respect, that the third party had already delivered an
opposing affidavit,
inter alia
, raising a preliminary point of
prematurity against the respondent’s application. I am, thus,
satisfied that the third party’s
take on the matter was
properly before the court. I am, further, satisfied that the
interests of expedition and fairness were not
in favour of continued
delay in finalising the matter.
[29] The respondent,
further, feels that the court erred in concluding that set-off could
not take place and that no overpayment
was apparent
ex facie
the respondent’s papers. I can only reiterate, with respect,
that for set off to take place it was necessary for the respondent
to
proof its claim. None of the respondent’s claims were
established on a balance of probabilities.
[30] The test is whether
or not the respondent has reasonable prospects of success on appeal.
As the Supreme Court of Appeal noted
in
SMITH v S
[2011] ZASCA 15
;
2012 (1) SACR 567
(SCA) at 570b-c)
“
[7] what
the test of reasonable prospects of success postulates is a
dispassionate decision, based on the facts and the law, that
a court
of appeal could reasonably arrive at a conclusion different to that
of the trial court. In order to succeed, therefore,
the appellant
must convince this court on proper grounds that he has prospects of
success on appeal and that those prospects are
not remote but have a
realistic chance of succeeding. More is required to be established
than that there is a mere possibility
of success, that the case is
arguable on appeal or that the case cannot be categorised as
hopeless. There must, in other words,
be a sound, rational basis for
the conclusion that there are prospects of success on appeal.”
[31] I am not persuaded
that such a question can be answered in the affirmative in this
matter.
ORDER
[32] Application for
leave to appeal is, therefore, dismissed with costs.
______________
L. J. LEKALE, J
On behalf of applicant:
Adv. C.D. Pienaar
Instructed by:
Lovius Block Attorneys
BLOEMFONTEIN
On behalf of respondent:
Adv. P.R. Cronjé
Instructed by:
Mphafi Khang Inc
BLOEMFONTEIN
On behalf of third party:
Ms V. Kock
Instructed by:
Matsepes Inc
BLOEMFONTEIN
/eb