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[1987] ZASCA 69
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Van Streepen & Germs (Pty) Ltd v Transvaal Provincial Administartion (71/87) [1987] ZASCA 69 (21 August 1987)
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION
1987-08- 21
VAN STREEPEN & GERMS (PROPRIETARY
LIMITED
appellant
and
THE TRANSVAAL PROVINCIAL
ADMINISTRATION
respondent
CORAM
: CORBETT, BOTHA, HEFER, GROSSKOPF et NESTADT JJA.
DATE OF
HEARING
: 15 MAY 1987
DATE OF JUDGMENT
: 21 August 1987
JUDGMENT CORBETT
JA:
Appellant, a building contractor, entered into a written contract with
respondent, the Transvaal Provin-
/ cial
2
cial Administration, for the erection of six
hostels at the Pretoria Teachers' Training College. The con-tract was signed on
24 August
1981. The contract price was R33 647 052. The whole works were to be
completed within a period of 36 months. Thereafter appellant
commenced work on
the contract. In the process of doing so it engaged additional staff, entered
into contracts with sub-contractors,
hired plant and equipment, pro-vided a
guarantee for the due performance of its obliga-tions under the contract, took
out all risks
insurance cover, set up a site establishment and started
building.
On 29 January 1982 respondent's architects wrote a letter to appellant
informing it that owing to a shortage of funds respondent was
compelled to
can-cel the contract with immediate effect. Appellant replied to this letter on
1 February 1982, stating that it disputed
the right of respondent to cancel the
con-
/ tract
3
tract on the grounds alleged and that it regarded the respondent's action as
a wrongful repudiation of the contract and a material
breach thereof. Appellant
stated further that in consequence thereof it had elected to cancel the contract
and claim all damages
sustained as a result of the breach.
In due course appellant instituted an action in the Transvaal Provincial
Division claiming damages from respondent for breach of contract
in an amount of
R5 889 868,89. As appears from para 7 of the appellant's particulars of claim,
this amount was made up as follows:
(a) Expenses incurred in the
execution of the contract and
not covered by
payments made
for work done R 733 663,39
(b)
Liability to
sub-contractors.. 1 343 807,50
(c)
Loss of
profit on balance
of contract
3 812
398,00
R5 889 868,89
The expenses referred to in (a) above related to the
/ site
4
site establishment, the cost of insurance and the guaran-tee, and the leasing
and erection of cranes and other equipment. According
to respondent's heads of
argument submitted to the Court, the total amount paid to appellant by
respondent for work done on the contract
prior to cancellation amounted to R3
654 800,29. This is more than the fi-gure stated by appellant in its particulars
of claim, but
this is evidently accounted for by payments made subsequent to
this pleading; and in any case nothing turns on this difference.
In its plea respondent referred to clause 3(6) of the Conditions of Contract,
which form part of the contract between the parties,
and pleaded,
inte
r
alia
, that in terms of this clause it was entitled unilaterally to cancel
the contract; that, in any event, in the case of any cancellation
of the
contract, this clause limited the appellant in its claim "for damages or
otherwise"
/ to
5
to "an amount not exceeding 5% of the scheduled prices on the nett value of
the work omitted beyond 20% of the contract amount", and
that the clause
precluded appellant from claiming all damages suffered by it as a result of a
wrongful repudiation of the contract
by respondent.
Here I should add that appellant's particulars of claim contained a lesser,
alternative claim based on the supposition that clause
3(6) applied and had the
effect of entitling respondent to cancel the contract unilaterally and of
limiting appellant's claim for
dama-ges. It is not necessary, however, to give
details of this claim.
After the close of pleadings and on the applica-tion of the appellant
(respondent apparently consenting) an order was granted in the
Transvaal
Provincial Division in terms of Rule 33(4) of the Uniform Rules of Court,
directing that the trial of certain issues on
the pleadings
/ be
6
be stayed until the remaining issues (referred to as
the "liability
issues") had been decided, The issues
stayed related to (i) the work done by
appellant under
the contract and the monetary value thereof; (ii)
whether
appellant had suffered the damages alleged in
its particulars of claim and, if so, the monetary value
thereof; and (iii)
the monetary value of 5% of the
scheduled prices on the nett value of work omitted
beyond the contract amount by reason of the cancellation
of the contract. In addition, the order amended prayers
(a) and (b) of plaintiff's particulars of claim ( (a)
being the claim for damages amounting to R5 889 868,89
and (b) being the lesser alternative claim referred to
above) -
".... as follows for the purposes of the decision of the liability
issues:
'(a) An Order declaring that the
Plaintiff is entitled to
payment of
damages if any as
/ claimed
7
claimed in paragraph 7 (without determination of the amount of such damages)
of its Particulars of Claim, whether or not such damages
exceed the amount
re-ferred to in paragraph 6 of Defendant's plea;
Alternatively to prayer (a)
(b) An Order declaring that the Plaintiff is entitled to
(i) Payment of the damages re-ferred to in paragraph 13 (b) of the Plaintiff's
Particulars of Claim; and
(ii) Payment for work done and expenses and liabilities incurred (without
determi-nation of the amount there-of) if any, referred
to in paragraph 14 of
the Plain-tiff's Particulars of Claim; and
(iii) Payment of interest at the rate of 11% per annum on the amount referred to
in (ii) above from 27/1/82 to date of payment.'
"
Although this
is not expressly stated, it is clear that
the amendment was to take the form
of a substitution of
/ the
8
the new prayers (a) and (b) "for the purposes of the de-cision
of the liability issues". In regard to the new prayer (a), I should
explain that
the amount referred to in para. 6 of defendant's (respondent's) plea is the
amount, as calculated by respondent, of
appellant's entitle-ment in terms of
clause 3(b), viz. Rl 199 690,00. (At the stage of argument before us respondent
had recalcu-lated
this entitlement in the sum of R1 163 142,07, but nothing
turns on this.) I should also explain that the new prayer (b) incorporates
appellant's alternative claim.
In substance the purpose of this order in terms of Rule 33(4) was to
determine the issues as to (a) whether clause 3(6) entitled respondent
unilaterally to cancel the contract, and (b) whether in the circum-stances of
this case appellant's claim for damages was limited
by the provisions of clause
3(6). And it was
/ on
9
on these issues that the matter went to trial before FLEMMING
J. At the trial appellant adduced the evi-dence of two witnesses, Mr
C D C
Malherbe, an expert on economic conditions in the building industry, and Mr J F
van Streepen (Jnr), a director of appellant.
Respondent called no evidence. The trial Judge held, in effect, (1) that
respondent was not entitled unilate-rally to cancel the contract
and that its
purported can-cellation on 29 January 1982 amounted to an unlawful repudiation
of the contract, which repudiation appellant
accepted on 1 February 1982,
thereby cancelling the con-tract: and (2) that appellant's claim for damages for
breach of contract
was governed and limited by the provi-sions of clause 3(6) of
the Conditions of Contract. The full order made by the Court a
quo
reads:
"1. It is found and declared:
(a)
paragraph 5 of plaintiff's
decla-ration has been proved;
(b) plaintiff has resultantly become
/ entitled
10
entitled to payment from defendant of damages, no part of
which is excluded from the operation of clause 3(6) of the conditions of
contract, which damages will include the heads of damages pleaded in paragraph 7
of the declaration, in such amounts and insofar
as they constitute recoverable
damages at common law, but within the limits, basically 5%, as set out in clause
3(6).
2. The alternative declaratory order is refused.
3. All questions of costs are reserved, also in regard to any special qualifying
orders because of e.g. unwarranted steps in regard
to discovery or in regard to
particulars sought and fur-nished. Subject thereto, that the plaintiff is
nevertheless ordered
to make immediate payment of defen-dant's costs related to the hearing before
me, which costs will include the costs of two counsel."
This was
embodied in a formal order issued by the Registrar
of the Court.
/ An
11
An application to the trial Judge for leave to appeal was
dismissed with costs. On a petition to the Chief Justice, however, leave
to
appeal to this Court was granted and it was ordered that the costs of the
application for leave to appeal were to be costs in
the appeal. Subsequently
appellant filed a notice of ap-peal noting an appeal against the whole of the
judgment and order of the
Court a
quo
.
At the hearing before us respondent's counsel took the point in
limine
that the judgment of the Court a quo was not appealable. This point had not
previously been raised in opposition to either of the
applications for leave to
appeal. Appellant's counsel, on the other hand, contended that the matter was
appealable. I pro-ceed to
consider this issue.
/ In
12
In terms of sec. 20(1) of the Supreme Court Act 59 of 1959, as
amended ("the Act"), and subject to the necessary leave to appeal having
been
granted, this Court is empowered to hear an appeal from "a judgment or order" of
the court of a provincial or local division.
As has been explained in several
cases, "judgment" in this context relates to a decision given upon relief
claimed in an action,
while "order" refers to a decision given upon relief
claimed in an application on notice of motion or petition or on summons for
provisional sentence (see
Desai v Engar and Engar
1966 (4) SA 647
(A), at
p 653 A-B and the cases there cited). But not every decision made by the court
in the course of judi-cial proceedings constitutes
a judgment or order. Some may
amount merely to what is termed "a ruling", against which there is no appeal.The
distinct-
ion between a ruling on the one hand and a judgment
/ or
13
or order on the other hand was first drawn in this Court in
the leading case of
Dickinson and Another v Fisher's Executors
1914 AD
424
, at pp 427-8. This concerned an application in a provincial division to have
an ar-bitrator's award made a rule of court and a cross-motion
to have it set
aside. There was a dispute between the parties as to whether the Court should
have regard to the evidence led at the
arbitration. Argument was heard on this
issue and the Court decided that this evidence should not be considered and gave
its reasons
for this decision. Instead of proceeding with the application, the
applicant, against whom the decision had gone, applied for and
was granted leave
to appeal to the Appellate Division against the Court's decision concerning the
arbitration evidence, on the basis
that this amounted to an interlocutory order.
This Court held, however, that this decision was a mere ruling. INNES ACJ
explained
the distinction thus (at pp 427-8):
/ "But
14
"But every decision or ruling of a.court during
the progress of a suit does not amount to an order. That term implies that there
must
be a distinct application by one of the parties for definite relief. The
relief prayed for may be small, as in an application for
a discovery order, or
it may be of great importance, but the Court must be duly asked to grant some
definite and distinct relief,
be-fore its decision upon the matter can properly
be called an order. A trial Court is sometimes called upon to decide questions
which come up during the pro-gress of a case, but in regard to which its
decisions would clearly not be or-ders. A dispute may arise,
for instance, as to
the right to begin: the Court de-cides it, and the hearing proceeds. But that
decision, though it may be of consider-able
practical importance, is not an
order from which an appeal could under any circum-stance lie, apart from the
final decision on the
merits. So also in a case like the present. The parties
differed as to what portion of the evidence (which was all in Court) could
properly be refer-red to in support of the applicant's con-tention that the
award was bad. The Court gave its ruling on the point.
But that was not an order
in the legal sense; it decided no definite application for relief, for none had
been made; it was a mere
direction to the parties with regard to the lines upon
which their contention upon the merits should proceed."
/ In
14 (a)
In his concurring judgment SOLOMON JA stated (at p
429):
"The question is, whether that decision was an order. In my opinion it was not.
The term "order" is a technical one, which is in
common use in courts of law and
which is well understood, though it may not be easy to give a precise
defi-nition of it. One thing,
however, is
clear, and that is that no order can be made except upon an application to the
Court for relief. Such an application usually takes
the form of a motion or
petition, and the decision of the Court upon such motion or petition is the
order, which is embodied by the
Registrar in a formal document. I do not say
that there can be no order of Court except upon a formal motion or petition, but
what
is essential is that there should be an appli-cation to the Court for some
relief."
The principles laid down in
Dickinson
's case (
supra
) have been applied consistently by this
Court, the most recent decision on the topic being
Klep Valves (Pty) Ltd v
Saunders Valve Co Ltd
1987 (2) SA 1
(A), at pp 40 H - 41 H, in which the
Court followed
Union Government (Minister of the Interior) and Registrar
of
/
Asiatics
15
Asiatics v Naidoo
1916 AD 50.
Naidoo
's case
concerned an application made on motion in which the Court, having expressed its
view on a question of law in favour of one
of the parties, nevertheless directed
that oral evi-dence be heard to resolve disputes on the affidavits. The party
against whom
the question of law had been decided (respondent in the Court a
quo
) applied for spe-cial leave to appeal direct to the Appellate
Division. In his judgment, refusing leave, INNES CJ pointed out that
the case
under consideration was the converse of
Dickinson
's case. There had been
an application for relief, but no decision upon it: the application had merely
been postponed for further
evidence. To date the judge a
quo
had merely
given a ruling on a point of law, which he might later revise (cf. also
Bell
v Bell
1908 TS 887
, at p 891). Only when he had given a decision on the law
and the facts and granted the
/ relief
16
relief prayed for would the matter be appealable at the suit
of the applicant for leave to appeal.
Another case in which a party endeavoured to appeal against a ruling on a
point of law was
Nxaba v Nxaba
1926 AD 392.
In that case an action had
been brought for an account. Before the trial the Court made an order by consent
directing that before
evidence was led a point of law be argued and decided on
the plead-ings as filed. Proceedings in the action were ordered to be stayed
pending decision of this point of law.
In due course argument took place and the Court gave its decision and awarded
"costs of this issue" to the successful party. The unsuccessful
party appealed
to this Court. This Court held that the decision of the Court a
quo
was
"a mere ruling on a preliminary point of law" and not a rule or order on the
relief asked for in the action. It therefore fell
within the principle
/ laid
17
laid down in
Dickinson
's case (
supra
). INNES CJ,
who
delivered the Court's judgment, stated (at p 394) -
"It is said that the law point might have been raised by way.of exception. But
even if that were so, that was not the course which
has been followed, and the
order has not been made in that form. The pleadings remained unaltered and the
relief asked in the declaration
still remains for adjudication. Order 12, Rule
59, provides for the decision of a question of law either by way of special case
or
in such manner as the Court might deem expedient. By consent of parties this
point was argued, not upon a special case submitted
in the ordinary way, but as
a mere legal propo-sition which it was advisable to settle before dealing with
the plaintiff's claim
for relief. No order concerning the matter in dispute
could be drawn up by the Registrar upon the Court's ru-ling, save an order
as to
the costs of the issue: and this is not an appeal on
costs."
This Court came to a similar
conclusion, following the
Dickinson
and
Nxaba
cases, in
Umfolozi Co-operative Sugar
Planters, Limited v South African Sugar Association
/ 1938
18
1938 AD 87.
In that case, an application for a
decla-
ratory order, the Court heard argument and gave its de-
cision on
certain preliminary points of law raised by
respondent before considering the
substance of the appli-
cation itself. A favourable decision on any one
of
these points would have disposed of the application;
but in each case
the Court's decision was unfavourable.
Respondent appealed against the
Court's decisions on
these points, seeking their reversal. It was held
that
these decisions were rulings against which no appeal lay.
In the course of his judgment STRATFORD JA remarked (at
p 90) —
"It is important to observe that there
is no rule of law or procedure which
made it incumbent upon the Court to
give this piecemeal consideration to the
application, nor was there any right
on
the part of
respondents to be heard except
upon the whole case after the conclusion
of the argument for the applicants.
The course adopted was special to
the
circumstances and it was obviously
con-
venient, since, if one of these three
/ contentions
19
contentions of the respondents were upheld,
a final order on the application
could
have been made "
The decision
of this Court in
Shacklock v Shackloc
k
1949 (1) SA 91
(A) appears to
herald a somewhat more flexible approach to questions of appealability. In that
case the plaintiff had brought an
action against her former husband claiming a
sum of money in terms of an agreement made an order of court at the time of
their divorce.
There were disputes between the parties as to the meaning and
effect of the agreement. The matter went to trial and at the conclusion
of the
evi-dence the parties, by agreement, submitted certain legal issues, four in
number, for decision by the Court, it being agreed
that once these issues had
been decided the accountants employed by the parties would settle the whole
account between the parties.
The trial Judge decided these issues. One party
appealed against the
/ Court's
20
Court's decision on three of these issues and the
other
cross-appealed against the Court's decision on the fourth.
The
noting of the cross-appeal was, however, without
prejudice to the right of
that party to contend that
the decision of the trial Court was not open to
appeal;
and an application was made to strike the appeal off
the roll.
Delivering the judgment of the Court, CENT-
LIVRES CJ distinguished the
Dickinson,
Nxaba
and
Umfolozi
cases. He held that in
casu
the parties, having closed
their cases, had asked the trial judge
to make a decla-
ration of rights. He added (at pp 97-8) —
"This was obviously a convenient course to adopt, for it saved unnecessary costs
which would have resulted from the Court being required
to go into a mass of
fi-gures in order to settle the accounts between the parties: once the rights of
the parties under the agreement
are determined, it should be a comparatively
simple matter for the accountants con-cerned to arrive at a correct
account.
Unless an appeal lies
before
this account is settled, wasted costs may be incurred by the accountants
in
/ the
21
the event of this Court ultimately holding that judgment of the trial court is
wrong.
In this case an order of Court
was issued by the Registrar of the trial Court which declared the rights of the
parties, and that part of the order ap-pealed against
had all the attributes of
a final order. See
Pretoria Garrison Institutes v Danish Variety Products
(Pty.) Ltd.
(1948 (1), S.A.L.R.
839)."
The learned Chief Justice
further held that an appeal lay against an order declaring rights (see pp
98-99).
In the
Pretoria Garrison Institutes
case, refer-red to above by
CENTLIVRES CJ, one of the issues was whether an order by a magistrate directing
a party to furnish certain
further particulars was appealable in terms of
sec.
83(b)
of the
Magistrates' Courts Act 32 of 1944
, which permitted an appeal
against "any rule or order.... having the effect of a final judgment". It was
held by the majority of
the Court that the magis-trate's order was not so
appealable. SCHREINER JA,
/ who
22
who delivered the majority judgment on this issue,
held
that in using in
sec. 83(b)
the words quoted the Legis-
lature must
be taken to have had in mind the distinction
between what are called simple
interlocutory orders and
other interlocutory orders, ie those having a final
and
definitive effect on the main action. (In passing,
the learned Judge
of Appeal pointed out that under some
forms of legislation simple interlocutory orders are
not wholly
unappealable: they may be appealed from with
leave.) Enunciating the test to be applied in deter-
mining whether an
order is a simple interlocutory order
or one having final and definitive effect, 5CHREINER
JA stated (at p 870) —
" a preparatory or procedural order
is a simple interlocutory order and there-fore not appealable unless it is
such as to 'dispose of any issue or any portion of the
issue in the main action
or suit' or, which amounts, I think, to the same thing, unless it 'irreparably
anticipates or precludes
some of the relief which would or might be given at the
hearing' ".
/ (See
23
(See also
South Cape Corporation (Pty) Ltd v Engineering
Management Services (Pty) Ltd
1977 (3) SA 534
(A), at pp 549 G - 551 A,
where the authorities on interlocutory orders and on the distinction between
simple interlocutory orders
and orders having a final and definitive effect on
the main action are reviewed.)
So far as I am aware, the correlation between this distinction and the
distinction between judgments and orders, which in terms of
sec. 20(1)
are
appealable, and rulings, which are not, has not hitherto been judicially
investigated. I do not propose to do so in any depth.
I shall confine myself to
a few observations on matters which appear to be relevant in the context of the
present case. An interlocutory
order which has final and defini-tive effect on
the main action must, in my view, be re-garded as an appealable judgment or
order.
This, I think, explains the reference by CENTLIVRES JA in the
/ passage
24
passage quoted above from his judgment in the case of
Shacklock v
Shacklock
to the
Pretoria Garrison Institutes
case. The position in
regard to a "simple interlocutory order", which term would comprehend all orders
pronounced by the Court upon
matters incidental to the main dispute, preparatory
to or during the progress of the litigation, other than those having a final
and
definitive effect on the main action (
South Cape Corporation
case,
supra
, at p 549 G) is not so clear. There is much to be said for the view
that some such orders would constitute judgments or orders which
under
sec.
20(1)
, read with sec. 20(2)(b), of the Act before the amendments introduced by
the Appeals Amendment Act 105 of 1982, would have been appealable
with leave;
others would constitute mere rulings, unappealable even with leave (see
Dickin-son
's case,
supra
). Of course, under the new appeal system
introduced by Act 105 of 1982, which requires
/ that
25
that in all appeals in civil proceedings under sec. 20 of the
Act (other than appeals in terms of certain parti-cular statutes, see
eg
Kruger v Le Roux
1987 (1) SA 866 (A);
sec. 76(3)
of the
Patents Act 57 of
1978
) leave to appeal be obtained, the importance of the distinction between
simple interlocutory orders and orders having a final and
definite effect has
been diminished, as far as appeals from a provincial or local division to this
Court are concerned.
At this point I would digress to mention briefly two points. The first is
that although a number of the cases referred to above were
decided in relation
to statutory provisions which were replaced by corres-ponding provisions in the
Act, they are nevertheless relevant
on the meaning of "judgment or order" in
sec. 20 of the Act (
Heyman v Yorkshire Insurance Co Ltd
1964 (1) SA 487
(A), at p 490 H). The second is that sec.
/ 21(1)
26
21(1) of the Act confers upon this Court an additional
jurisdiction to —
".... hear and determine an appeal from any decision of the court of a
provincial or local division".
The
"decision" here referred to is a decision of the
same nature as the
"judgment" or "order" referred to
in sec. 20(1) of the Act (see
Heyman v
Yorkshire Insurance
Co Ltd
,
supra
, at pp 492 C - 493 B;
Law Society, Transvaal
v Behrman
198l (4) SA 538
(A), at p 546
D-F).
The next case to which reference should be made is
Tropical (Commercial
and Industrial) Ltd. v Plywood Products Ltd
1956 (1) SA 339
(A). In that
case the appellant had been sued by the respondent for damages for breach of
contract. During the course of the trial
it was agreed between the parties that
in the event of plaintiff satisfying the Court that there had been a breach of
contract, the
Court should refer certain
/factual
27
factual issues relating to the quantum of damages to
be
tried before an arbitrator. The Court found that
the breach of contract had
been proved and, in accordance
with the agreement, the factual issues were
referred
to arbitration. The Court further ordered that the
matter should
stand down pending receipt of the arbitra-
tor's report. The Court then gave
leave to appeal and
cross-appeal against its order. With evident
reluctance
(see p 344 B and F) CENTLIVRES CJ, who delivered the
judgment of this Court, held that the order of the Court
a
quo
was not a "judgment or order" as defined in previous
decisions of this Court —
"(a)s the order made by the trial Judge 'decided no definite application for
relief' and was merely a direction as to the manner in
which the case should
proceed "
(see p 344 G).
Reference has already been made to
Heyman's
case (
supra
). That also
related to a preliminary decision
/ on
28
on a point of law. It was an action f or payment of a sum of
money alleged to be owing in terms of a deed of suretyship. One of the
defendants pleaded, in the alternative, that the deed was invalid. By agreement
between the parties, the validity of the deed was
deter-mined by the Court as a
separate issue before trial of the action on the other issues. In terms of the
agree-ment it was also
agreed that if the Court's decision on validity went
against the defendant raising this de-fence, she would be entitled to appeal
against it. This is in fact what happened; and the defendant ap-pealed. This
Court, however, refused to entertain the appeal on the
ground that the decision
of the Court a
quo
was a ruling and not a judgment or order. In
delivering the Court's judgment, STEYN CJ pointed out that the relief claimed in
the
action was the payment of a sum of money, alternative relief and costs;
and
/ that
29
that the ruling given by the Court a
quo
on the issue
in question did not decide whether or not any such relief was to be grahted in
any form. It was argued by counsel that
if the plea on the issue of validity had
been held to be well-founded, the plaintiff could have appealed against the
judgment as
being, in effect, a successful exception to the declaration and that
the decision holding the plea not to be well-founded was similarly
appealable as
being in effect a successful exception to the plea. The Court rejected this
argu-ment and in this regard made reference
to the remarks of INNES CJ in
Nxaba
's case (
supra
), which have been cited above.
It is clear from the line of cases to which I have thus far referred that the
main reason for this Court having given what CENTLIVRES
CJ described as a
"restricted meaning" to the words "judgment or order"
/ has
30
has been a reluctance to allow the piecemeal decision
of
cases, ie numerous subsidiary appeals during the course
of a single legal
proceeding, with all the expense and
the inconvenience attached thereto. (See/remarks of INNES
ACJ in
Dickinson
's case,
supra
, at p 428.) This
is
undoubtedly a very cogent consideration, particularly
where the
decision in question relates, for instance,
to a procedural matter or to the
admissibility of evidence
and it may in the end not have a decisive effect upon
the outcome of the
case. Where, however, the decision
relates to a question of law or fact, which if decided
in a particular way would be decisive of the case as
a whole or of a substantial portion of the relief claimed,
then a somewhat different position arises, and indeed
in that event the advantages of expense and convenience
may favour a final determination of the question on ap-
peal, even though the proceedings in the court a
quo
/ may
31
may not have been concluded. The advantages of having such a
question of law or fact determined by the court
of first instance as a
separate, preliminary issue are
the recognized by the provisions of Rule 33(4) (see/remarks
of HOLMES JA in
Botha v A A Mutual Insurance Association
Ltd and Another
1968 (4) SA 485
(A) at p 489 A-E);
and under the present system of appeal, which requires
leave to appeal in all cases falling under secs. 20 and
21 of the Act, there is much to be said for the applica-
tion of a more flexible approach (of which there was
some evidence in
Shacklock's
case,
supra
) to the
question of the appealability of such decisions taken
by the court of first instance.
To conclude this review of the decisions of this Court on the question of
appealability, I must make brief reference to certain cases
decided since
Heyman
's case (
supra
). In my view, theý also evidence a
more
/ flexible
32
flexible and relaxed approach. Thus, in
Botha v A A Mutual
Insurance Association Ltd and Another
,
supra
, which concerned an
action for damages arising from a motor accident, the parties had agreed that
the trial Court determine first
the issue of liability, apart from the question
of damages. This the Court did, holding in favour of the defendant and entering
a
judgment for it with costs. The plaintiff appealed to this Court and it was
held that the decision of the trial Court was appealable.
It was pointed out
that this was the converse of the situation in
Heyman
's case; but the
Court cautioned that had the plaintiff succeeded on the issue of liability the
decision would have been in the nature
of a ruling and not appealable, as in
Heyman
's case.
In
Labuschagne v Labuschagne; Labuschagne v Minister van Justisie
1967
(2) SA 575
(A) the pro-
/ cess
33
cess of relaxation was taken a step further. In that
case
the defendant in an action for damages raised by
way of a special plea the
defence that the action was
barred by a special statutory limitation. The
case
was set down for trial on the issues raised by the special
plea only.
The trial Judge, having heard evidence and
argument, dismissed the special
plea with costs. On
an appeal to this Court against the dismissal of the
special plea, it was held at p 583 F (the question of appealability
having been raised) that the decision of the trial Judge
which was "'n finale en onherstelbare afhandeling van
'n selfstandige en afdoende verweer wat eerste verweerder
geopper het as grondslag vir die regshulp wat hy in die
spesiale pleit aangevra het", constituted a judgment
or order in terms of sec. 20(1) of the Act and was there-
fore appealable. Similar decisions were reached in
regard to unsuccessful special pleas of prescription,
/ separately
34
separately adjudicated, in
Smit v Oosthuizen
1979 (3)
SA 1079
(A) and
Constantia Insurance Co Ltd v Nohamba
1986 (3) SA 27
(A).
With the aforegoing in mind, I turn now to the facts of the present case. The
appellant's main claim, as originally formulated, was
for damages in the sum of
R5 889 868,89. One of the defences raised by respondent in its plea was that by
reason of clause 3(6) of
the Conditions of Contract appellant was in law
restricted in the quantum of damages claimable to an amount to be calculated in
accordance
with the formula laid down in clause 3(6); and, as I have mentioned,
it appears from respondent's argument before this Court that
in its view the
damages so calculated amounted to Rl 163 142,07, ie less than one-fifth of the
damages claimed. This defence was
singled out for separate adjudication in terms
of Rule 33(4) and indeed the plead-
/ ings
35
ings were amended to include ah appropriately worded
declaratory order, which squarely raised the issue of the applicability of
clause
3(6). The Court a
quo
up-held the defence based on clause 3(6) and
made a decla-ratory order embodying its decision and an order which obliged
appellant
to pay the costs of the hearing relating to the trial of this
issue.
In all the circumstances I am of the opinion
that
the decision of the Court a
quo
, as embodied in
its order, constituted a "judgment" in terms of sec.
20(1) of the Act and was therefore appealable. This
decision was of a final nature: it could not have been
corrected, altered or set aside by the trial Judge at
a later stage of the trial. Moreover, it was definitive
of the rights of the parties and had the effect, in the
Court below, of disposing of portion (and a very substan-
tial portion) of the relief claimed by appellant in the
/ main
36
main action, viz. the damages claimed in excess of the formula
laid down by clause 3(6). It is true that the decision did not dispose
of a
separate or distinct claim for relief, but merely placed a limitation as to
quantum on the main claim. I do not think, however,
that that makes any
difference. And, in accordance with the prin-ciples stated above, I hold that on
these grounds the judgment of
the Court a
quo
is a judgment and not a
mere ruling.
In argument counsel for appellant laid stress on the amendment of the
pleadings and the fact that the Court a
quo
had made a declaratory order
and an order for costs, which had been embodied in a formal order issued by the
Registrar (cf. the remarks
of SOLOMON JA in
Dickinson
's case, quoted
above). It would appear that this amendment was for a limited and temporary
purpose and that had the matter proceeded
before the trial Judge the original
prayers would have been rein-
/ stated
37
stated or new prayers claiming damages substituted, depending
on how the decision concerning clause 3(6) went. In view of this I would
prefer
to rest my deci-sion on the grounds outlined in the previous paragraph
(above).
It is true that, so far as I am aware, there is no direct precedent for the
decision which I have reached in this case on the point
in
limine
.
Nevertheless, I believe that it is in accordance with the principles enunciated
in
Dickinson
's case (
supra
) and elaborated in subsequent decisions
of this Court. To the extent that the decision may have the effect of enlarging
the meaning
of "judgment or order", I am of the view that this is not only
consistent with principle, but is also supported by considerations
of practical
convenience. The decision of the Court a
quo
on the applicability of
clause 3(6) is obviously of fundamental importance
/ in
38
in this case. If it is correct, then it seems to me that it
might well put an end to the litigation between the parties. There should
not be
much dispute as to the effect in monetary terms of applying clause 3(6); or as
to appellant having suffered damages at least
to that extent. Finality on this
issue at this stage seems, therefore, to be eminently desirable. The alternative
that appellant
be compelled to continue with the trial in the Court below to
final judgment before being entitled to appeal could cause inconvenience
and
unnecessary expense. For instance, at such a resumed trial respondent might
tender or pay into court the a-mount due in terms
of clause 3(6) or the
appellant might be precluded on grounds of relevance from leading his evidence
on damages in full. If in the
end this Court decided on appeal that the decision
of the Court a
quo
on clause 3(6) was incorrect, the matter would then
have
/ to
39
to be referred back to the Court a
quo
for the issue of
damages to be properly canvassed: in the result a cumbersome process.
For these reasons I hold that the appeal in this matter is properly before
the Court and that the respondent's point in
limine
and the application,
which accompanied it, that the appeal be struck off the roll, should be
dismissed with costs.
I come now to the merits of the appeal.
Clause 3(6)
of the Conditions of Contract is to be
found in a clause headed "Quantities of Works". It must
be read in conjunction with sub-clauses (1) and (3) of
clause 3. I quote these sub-clauses in full.
"(1) The Contractor shall receive payment only for the Works actually
exe-cuted and accepted.
(3) The Department shall have the right by means of variation orders to
require the Contractor to perform addi-
/ tional
40
tional work at the existing contract rates and prices up to a limit of 20% of
the original contract price, cal-culated as a mathematical
percentage of the
said price, and the Department shall also have the right by means of variation
orders to increase or decrease the
quantities of any item or items or to omit
any item or items up to the said limit of 20%. Any variation effected in terms
hereof
shall be measured and va-lued at the rates and prices contained in the
schedule of quantities and shall be added to or deducted from
the contract
price; provided that the Contractor shall not be obliged to perform any
additional work under a variation order which
is indivisible in its nature and
which is likely when measured and priced as afore-said to exceed the said limit
of 20% un-less and
until he has agreed with the Department on the rate of
remuneration to be paid for work which exceeds the said limit.
(6) Unless by special agreement en-tered into between the Architect and the
Contractor and subject to the production of satisfactory
evidence regarding any
damages sustained by the Contractor, an amount not exceeding 5 per cent of the
Schedule prices shall be paid
on the net value of the work omitted beyond 20
per
/ cent
41
cent of the Contract amount, caused either by reductions or by variations, or by
cancellation of the Contract."
The
issue is whether on the facts of the present case
appellant's claim for
damages for breach of contract
is governed by clause 3(6), with the result
that the
damages to which it is entitled may not exceed an
amount
calculated in accordance with the formula laid down in
clause 3(6).
And, as I have indicated, the effect
of the application of clause 3(6) would
be to reduce
appellant's claim by about 80%.
Before proceeding I would just point out that there appears to be a lacuna in
the opening words of sub-clause (6); and counsel were
agreed that this would be
remedied by reading into the sub-clause, after the word "Unless", the words
"otherwise agreed", or words
of similar import.
The resolution of the above-stated issue
/
depends
42
depends upon the proper meaning to be attached to the words "cancellation of
the contract" appearing at the end of clause 3(6). Respondent
contends that
these words cover only a cancellation of the contract by reason of the wrongful
repudiation or material breach of contract
by the Department. Appellant, on the
other hand, contends that they cover only a consensual cancellation and, in
par-ticular, do
not apply where the cancellation arises by rea-son of the
wrongful repudiation or breach of the contract by the Department. In the
law of
contract "cancellation" is a well-known term which covers both cancellation by
agreement between the parties (or consensual
cancella-tion, to use the phrase
adópted by counsel in argument) and cancellation by one party on the
ground that the other
party has wrongfully repudiated or breached a material
term of the contract (see Christie
The Law of
/
Contract
43
Contract in South Africa
pp 431, 520 and the cases there cited; Prof.
Louise Tager in (1976) 93 SALJ at pp 430-1). These two forms of cancellation
denote
very differ-ent juristic concepts. The first-mentioned form, consen-sual
cancellation, is a contract whereby another contract is
terminated. The
second-mentioned form, cancellation on repudiation or breach, involves the
unilateral exer-cise by one party of the
right to rescind the contract, this
right having accrued to him by reason of the other party's repudiation or
material breach. This
form of cancellation is often termed "rescission".
As appears from my statement of the parties' contentions, it is common cause
that the words "cancella-tion of the contract" cannot
be given a full and
unre-stricted meaning. They clearly do not apply to a rescission of the contract
by reason of the repudiation
or breach thereof by the contractor. To hold
otherwise
/ would
44
would lead to the absurd position of a defaulting con-tractor
becoming entitled to damages. Once it is clear that the words cannot
be given
their full meaning, then the question arises as to the extent to which their
meaning is to be restricted. To this question
the words themselves provide no
ready answer; and it is therefore necessary to look at the context.
At common law and in the absence of a contractual provision to the contrary,
a building contractor is entitled to carry out the whole
of the contract work as
originally specified and without variation (
Hudson's Building and
Engineering Contracts 10
th ed. by I N Duncan Wallace, at p 339, cited with
approval by McEWAN J in
Hydro Holdings (Edms) Bpk v Minister of Public Works
and Another
1977 (2) SA 778
(T), at p 783 C-D; Halsbury 4th Ed, vol 4, para
1174;
Emden's Building Contracts and Practice
8th Ed
/ by
45
by Bickford Smith and Freeth, vol 1, p 134; LAWSA, vol 2,
paras 33 and 34). In view, however, of the complexity of any major building
or
construction project and the possibility of encountering unexpectedcontingencies
during the work, a contract such as the one presently
under consideration
usually contains a clause empowering the employer to order 'variations', which
term includes additional work,
altered or substituted work for that described in
the contract and the omission of contract work. It is recognized that an
unbridled
power to order variations could cause great hardship to the
contractor. Thus is has been held in England that a variation clause
will not
permit the employer to change completely the character of the works as
originally contemplated (
Halsbury
, op cit, para 1174;
Emden
, p
147). In the circumstances it has become customary in major building contracts
to expressly limit the
/ power
46
power of the employer to order variations. Clause 3(3) of the
Conditions of Contract in
casu
is such a provision; and it is interesting
to note that a provision in this form was used in this country as far back as
1923 - see
Kelly and Hingle's Trustees v Union Government (Minister of Public
Works)
1928 TPD 272
, at p 276. Since then the 20% limit (or some similar
limit) seems to have become a more or less standard term in such contracts (see
eg
Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration
1974
(3) 5A 506 (A), at pp 513 B-C, 519; the
Hydro Holdings
at 783 A case,
supra
/;
Grinaker Construction (Tvl) (Pty)
Ltd
v Transvaal Provincial Administration
1982 (1) SA 78
(A),
at p 90 G;
Melmoth Town Board v Marius Mostert
(Pty) Ltd
1983 (1) SA 700
(D), at p 703 G-H;
Minister of Public
Works v W J M Construction Co (Pty) Ltd
1983
(3) SA 58 (A), at p 64 G-H).
/ Turning
47
Turning to clause 3(3) of the Conditions of Contract, this
sub-clause gives the Department the right to,
inter alia
, omit any item
or items up to a limit of 20% of the original contract price. Bearing in mind
the common law background, as sketched
above, it is clear to me that the
Department does not have the right to order omissions in excess of 20%; and that
if it should purport
to do so the contractor would be within his rights if he
refused to be bound by the order. And in this connection it is relevant
to note
that the proviso to clause 3(3) expressly states that the con-tractor is not
obliged to do additional work which exceeds
the 20% limit. If the contractor
refuses to be bound by an order for the omission of work in ex-cess of the 20%
limit and the Department
is adamant, then it seems to me there are various
choices open to the contractor. He could rescind the contract on the
/ ground
48.
ground that the Department's insistence upon its order of
omission amounted to a material breach of the contract and claim damages.
Alternatively, he could possibly (I express no final opinion on this) claim the
right to spe-cifically perform the contract, disregarding
the unlawful omission
(see
Ranch International Pipelines (Transvaal (Pty) Ltd v LMG Construction
(City) (Pty) Ltd
1984 (3) SA 861
(W) ). And, as a third option, he could
come to an accommodation with the Department and agree to the omission of the
work. In that
event and in the absence of a special arrangement for
compensation, as contemplated by the opening words of clause 3(6) - as
interpreted
above -the compensatory formula laid down by clause 3(6) would come
into operation. Cf. the remarks of Rumpff CJ in the
McAlpine
case,
supra
, at p 519 F-H. Such an accom-modation could be achieved either by
an express agreement or tacitly by the contractor proceeding with
the work
without objection after an omission exceeding 20% had been ordered.
/ It
49
It follows from the aforegoing that where the omission of work
in excess of 20% of the contract amount results from reduction or variation,
the
provisions of clause 3(6) would come into operation in the event of the
contractor exercising the third option open to him, viz.
an accommodation with
the Department along the lines described above. This is essentially a consensual
situa-tion; and to my mind
this provides a strong argument in favour of holding
that the other cause for the omis-sion of work, mentioned in clause 3(6), viz.
cancellation of the contract, also refers to a consensual situation.
There are other considerations which lead me to the same conclusion. It was
common cause on the pleadings that at the time the contract
was entered into it
was known to the parties,
inter alia
-
/ (a) that
50
(a) that the contract works were large and
costly and that the carrying out of the contract required large expenditure by
appellant, es-pecially in regard to plant and equipment;
(b) that appellant might incur costs in respect of insurance;
(c) that appellant might commit itself contractually to sub-contractors;
(d) that appellant would in the course of the per-formance of the contract,
recover major portions of its expenditure not as the
same were incur-red, but
substantially after the same were incurred and over a period exceeding the whole
of the period of performance
of the contract; and
(e) that any
profit made from the performance of
/ the
51
the contract would be received over the latter part of the contract or after
completion of the contract.
In the light of these
factors, there seems to me to be substance in the submission made on appellant's
behalf that it was within the
contemplation of the parties that a wrongful
cancellation of the contract by the Department in its early stages would be
likely to
cause the appellant loss substantially in excess of the scale of
compensation laid down in clause 3(6). This tends to render it improbable
that
the parties intended clause 3(6) to apply to cases of wrongful cancellation of
the contract by the Department and to displace
the appellant's common law rights
to damages. In this respect clause 3(6) is analogous to an exemp-tion clause and
for that reason
as well it should also be narrowly construed (see
Christie
,
op
.
cit
., at pp 194-6). Moreover, had the parties
intended
52
so to constrict the contractor's common law rights, it seems
unlikely that this would have been done so ca-sually and obliquely, by
tacking a
few words onto a sub-clause conferring certain rights. The Conditions of
Contract were drawn by respondent and, if my inter-pretation
of clause 3(6) does
less than justice to what respondent intended, it has only itself to blame for
not making its intention clear.
For these reasons I have come to the conclu-sion that appellant's submission
that clause 3(6) applies only to consensual cancellations
of the contract is
cor-rect; and that, accordingly, the sub-clause does not apply in the present
case. This conclusion renders unnecessary
a consideration of the other arguments
raised by appellant's counsel, viz. that clause 3(6) conferred upon appellant
rights additional
to its com-
mon law rights and, in the alternative, that certain
/ of
53
of the damages claimed by appellant fell outside the ambit of clause
3(6).
In regard to the costs of appeal, it was argued
on
respondent's behalf that if the appeal succeeded on
the merits appellant
should not be allowed costs relating
to substantial portions of the record,
which, so it was
said, were not necessary for a proper adjudication of
the appeal. In this connection appellant placed before
us, with respondent's consent, an affidavit deposed to
by appellant's attorney, Mr Kruger, in regard to the pre-
paration of the record. From this affidavit it appears
that shortly after leave to appeal had been granted by
the Court a
quo
Mr Kruger communicated with the attorney
representing the respondent and requested an urgent meet-
ing in order that the content of the appeal record could
be settled by agreement. After taking instructions on
this proposal, respondent's attorney advised Mr Kruger
/ telephonically
54
telephonically that his instructions were not to attend the proposed meeting;
that all initiative in regard to the preparation of
the record would have to
come from appellant; and that on receipt of a "detailed and fully motivated"
written proposal from the appellant,
he would take counsel's opinion thereon and
would thereafter take instructions from his client. Mr Kruger then decided that
the
modus operandi
suggested was unduly time-consuming and that in view
of the urgency of preparing the record, he would proceed with the preparation
of
the record without any omissions. There is also on record a letter from
respondent's attorney agreeing with the correctness of
this recital of the
facts. Appellant was not entitled to omit any part of the record of the
proceedings unless the respondent had
consented thereto or this Court under Rule
13 had excused the appellant therefrom (see
Omega Africa. Plastics (Pty) Ltd
v Swisstool Manufacturing Co
/
(Pty) Ltd
55
(Pty) Ltd
1978 (4) SA 675
(A), at p 681 B-C). In view of all the
circumstances, and in particular the attitude adopted by respondent's attorney,
I do not think
that any special order is warranted in regard to portions of the
record which admittedly could well have been omitted for the purposes
of this
appeal.
The following order is made:
(1) The application in
limine
is dismissed with costs, including the
costs of two counsel.
(2) The appeal is allowed with costs, including the costs of two counsel, and
the order of the Court a q
uo
is altered in the following
respects:
(a) Para l(b) is deleted and there is
sub-
stituted the following:
"that the plaintiff's right to claim the damages alleged in para 7 of its
particulars of claim is not limited by the provisions of
clause 3(6) of the
Conditions of Contract".
/ (b) The
56
(b) The second sentence of para 3 is deleted and the following
substituted:
"Subject thereto, the defendant is ordered to make immediate payment of
plaintiff's costs relating to the hearing before FLEMMING
J, such costs to
include the costs of two counsel".
(3) The order of the Court a
quo
, dated 6
September
1985, in regard to the costs of the application
to it for leave to appeal is set aside and the
respondent is ordered to pay such costs, including
the costs of two counsel.
M M CORBETT. BOTHA
JA)
HEFER JA) GROSSKOPF JA) CONCUR.
NESTADT JA)