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[2024] ZAMPMBHC 7
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Axton Matrix Construction (Pty) Ltd v Mbombela Local Municipality (1062/2022) [2024] ZAMPMBHC 7 (2 February 2024)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(MPUMALANGA DIVISION,
MBOMBELA)
CASE NO: 1062/2022
(1)
REPORTABLE:NO
(2)
OF INTEREST TO OTHER JUDGES:YES
(3)
REVISED: YES
DATE: 02/02/2024
SIGNATURE
In the matter between:
AXTON
MATRIX CONSTRUCTION (PTY) LTD
Plaintiff / Applicant
and
MBOMBELA
LOCAL MUNICIPALITY
Defendant / Respondent
This judgment was handed
down electronically by circulation to the parties and/or parties’
representatives by email. The date
and time for hand-down is deemed
to be 02 February 2024 at 10:00.
JUDGMENT
MASHILE J:
[1]
Central to this matter is whether or not the interim and final
payment certificates
No: 24 and 26 in the amounts of
R5 792 084.90
and
R2 291 298.06
respectively constitute liquid documents
capable of sustaining a claim founded on provisional sentence
summons. The amount claimed
by the Plaintiff (“Axton”) is
R5 256 715.79
, which is evidently, lower than the two amounts
appearing on the certificates added together. The reason for the
discrepancy is
that the total of the two has been reduced by an
amount of
R2 291 296.06
, which, it is common cause, the
Defendant (“the Municipality”) has already paid”).
[2]
The Municipality is opposing the claim and has raised three
preliminary points premised
on the following grounds:
2.1
The summons is defective;
2.2
The dispute should have been referred for arbitration. As such, the
Court
has no jurisdiction to entertain the matter; and
2.3
The matter was irregularly enrolled.
On the merits, the
Municipality is challenging the authority of the person who signed
the certificates.
FACTUAL MATRIX
[3]
Prior to considering the three preliminary points, it will be wise to
begin with a
terse description of the facts, which are largely common
cause. Doing so will give proper perspective and context in which
they
are raised. In June 2015 and on an unspecified date, the
Municipality appointed Axton to provide various construction services
in respect of the upgrade of Friedenheim Road and N4, as contemplated
in Clause 3 of the agreement.
[4]
Following the appointment, the Municipality and Axton entered into a
contract comprising
the agreement, contract data and General
Conditions of Contract of Construction Works, 2
nd
Edition, 2010, published by the South
African Institute of Civil Engineering (“the agreement”).
Axton, which was the
contractor, undertook to perform its duties in
line with the provisions of the agreement. Insofar as payment was
concerned, the
Engineer signed payment certificates in the amounts he
considered due and payable, as contemplated in Clause 3 of the
agreement.
[5]
After the delivery of the payment certificates, the Municipality
would, in the absence
of dissatisfaction, be obliged to make payment
of the amount so certified to Axton subject to the latter issuing an
invoice to
it. Should the Municipality fail to make payment
timeously, it would become liable to make payment of default interest
at the prime
overdraft rate. Where the Municipality was dissatisfied
with the certification, it would submit a notice of dissatisfaction
within
28 days failing which it would be precluded from pursuing its
complaint. Once this occurs, the dispute resolution mechanisms in
Clauses 10.3 to 10.7.14 would apply.
[6]
Clause 10.10.1 prescribes the following:
“
Nothing
herein contained shall deprive the Contractor of the right to
institute immediate court proceedings in respect of failure
by the
Employer to pay the amount of a payment certificate on its due date,
or to pay any amount of retention money on its due
date for payment.”
[7]
Mr Vellie Mapaila (“Mapaila”), the project manager of the
Municipality,
represented it during the currency of the agreement.
His authority to do so was confirmed by the Municipal Manager, Mr
Seanego
(“Seanego”), Messrs AECOM, the Engineer appointed
by the Municipality and Mr Oosthuizen (“Oosthuizen”),
previously of AECOM, appointed by the Municipality to close out the
project. Axton alleges that the need of the Municipality to
appoint
Oosthuizen and Mapaila came about as a result of the Municipality
failing to effect payment to AECOM. For that reason,
the Municipality
appointed Oosthuizen to finalise the approval of the project and all
that flowed therefrom.
[8]
It is common cause that the payment certificates that concern this
matter are firstly,
Interim Payment Certificate No: 24 of 31 October
2019. In terms of that certificate, Mapaila certified the entitlement
of Axton
to payment of the amount of
R5 792 084.90
. Following
that certificate, Axton invoiced the Municipality and the
Municipality made a payment requisition in respect of the
certified
amount. The Municipality then proceeded to make payment of the amount
of
R2 826 667.18
. Secondly, the Final Payment Certificate No:
26, of 14 December 2022 in terms of which Oosthuizen certified the
entitlement of
Axton to payment of the sum of
R2 291 298.06
.
In consequence of the certification, Axton invoiced the Municipality.
ISSUES
[9]
The main issue that I have distilled from the above facts is whether
or not the payment
certificates on which the provisional sentence
claim is founded is liquid as contemplated in Uniform Rule of Court
8. Prior to
determining the liquidity of the documents upon which the
provisional sentence claim is premised, there are three preliminary
points
that the Municipality has raised. Those oughts to be
considered before the merits of the case.
LEGAL FRAMEWORK
[10]
Rule 8 deals with provisional sentence proceedings and it stipulates:
“
(1)
Where
by
law
any
person
may
be
summoned
to
answer
a
claim
made
for provisional sentence,
proceedings shall be instituted by way of a summons as near as
may be in the accordance with Form
3 of the First Schedule, calling
upon such person to pay the amount claimed or, failing such payment,
to appear personally or by
counsel or by an attorney who, under
section 4 (2) of the Right of Appearance in Courts Act,
1995
(Act
No.
62
of
1995),
has
the
right
of
appearance
in
the
Supreme
Court
upon
a
day
named
in
such summons, not being less than 10
days after the service upon him or her of such summons, to
admit or deny his or her liability.
(2)
Such summons shall be issued by the
registrar and the provisions of sub-rules (3) and (4) of rule 17
shall mutatis mutandis apply.
(3)
Copies of all documents upon which
the claim is founded shall be annexed to the summons and served with
it.”
[11]
It is trite that for provisional sentence claim to be successful, it
must be predicated on a
liquid document. An agreement will be liquid
for purposes of obtaining provisional sentence i
f,
on construction, it demonstrates an unconditional undertaking to pay.
The construction of the agreement must not depend on extrinsic
evidence to determine the conditionality of the terms.
Rich
and others v Lagerwey
[1]
,
which was following on the footsteps of
Inglestone
v Pereira
[2]
,
where Ramsbottom J stated the following:
“
I
think that where a document properly construed, shows an
unconditional undertaking to pay money it evidences an existing debt,
is liquid, and will found an action for provisional sentence
even though the causa debiti should show that the
consideration for the undertaking is a promise by the other party
which has yet to be performed; non-performance by the other party
would be a matter for defence, but would not affect the liquidity of
the document."
[12]
Similarly, in the case of
Fraser
& Chalmers South Africa (Pty) Ltd v Tuckers Land Development
Corporation
[3]
provisional
sentence was refused almost under circumstances and facts that are to
a large extent ‘on all fours’ with
the current. The Court
held as follows:
“
If
this engineer's certificate is regarded by itself, as I have
c
said, I find nothing
in it to suggest that the amount certified as payable is in fact
payable by the defendant. That being so, the
mere allegation in the
summons that the person who signed the document did so as agent for
the defendant cannot take the matter
any further. The document
ex
facie
its provisions
does not reflect an acknowledgment of indebtedness
d
on the part of the
defendant and accordingly it does not qualify as a liquid document
sufficient to support an action for provisional
sentence. That being
so, the allegations now sought to be introduced into the summons
would not confer any right on the plaintiff
to claim provisional
sentence and, accordingly, in my opinion, the application for
amendment should be refused.”
[13]
To the extent that a document ought to be construed in a manner that
ascribes meaning to the
words used in it. One must endeavour to give
context when
reading the provisions
concerned as a whole and the circumstances attendant upon its coming
into existence. In this regard, it could
be instructive to refer to
the case of
Endumeni
Municipality case
supra
where the following was stated at para 18:
“
Whatever
the nature of the document, consideration must be given to the
language used in the light of the ordinary rules of grammar
and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to
those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light of
all these
factors. The process is objective not subjective. A sensible meaning
is to be preferred to one that leads to insensible
or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation
to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute
or statutory
instrument is to cross the divide between interpretation and
legislation. In a contractual context it is to make a
contract for
the parties other than the one they in fact made. The “inevitable
point of departure is the language of the
provision itself”,
read in context and having regard to the purpose of the provision and
the background to the preparation
and production of the document.”
[14]
The question that needs to be asked is, are the payment certificates
in themselves sufficient
as acknowledgment of debt by the
Municipality without placing any reliance on extrinsic evidence? If
the answer is in the negative,
the documents are not liquid and
provisional sentence should be refused. A perusal of the payment
certificates reveal that they
are a certification of amounts due for
certain work done but they are not an indication that the amounts
stated therein are due,
owing and payable by the Municipality to
Axton. The conclusion that the amount is due and payable to Axton can
only be reached
by reference to, as the Municipality contends, the
contract, letters exchanged between the parties, minutes of meetings
and guarantees.
[15]
The language used in the payment certificates is plain. It is
apparent from the certificates
that Axton has complied with the terms
of the contract insofar as it has executed the work. The fact of the
execution of such work
has been certified by Mapaila and Oosthuizen.
However, on production of the certificates, it cannot be concluded,
without reference
to the instruments mentioned in the preceding
paragraph, that the Municipality has acknowledge its indebtedness to
Axton.
[16]
To the extent that Axton may argue that the Municipality has
acknowledged its indebtedness by
making part payment based on one of
the certificates, I need to state that the act of payment by the
Municipality does not redefine
what is legally regarded as liquid –
a document ought to exhibit an unconditional undertaking to pay and
its enforcement
must not be dependent on extrinsic evidence. See, the
Fraser
case
supra.
[17]
The payments certificates were intended as verification that Axton
has complied with the terms
of the contract. They would allow Axton
to claim what is due based on the contract. It was never meant to be
an acknowledgment
of debt by the Municipality. I must emphasise that
Axton remains at liberty to pursue payment of the amount owed by
action and
not provisional sentence summons.
[18]
The certification by the project manager and engineer occurs against
the background of a building
industry where production of inferior
work is not uncommon. The idea of certification therefore becomes
some guarantee that the
work done is of good quality on which the
employer, the Municipality in this context, can rely before payment.
Again, this has
nothing to do with the liquidity of the certificates.
[19]
The three cases that I have mentioned above dealing with liquidity of
documents state that the
document on its own, without reference to
any other document, must be sufficient to constitute an
acknowledgment of debt. The payment
certificates do not qualify to be
regarded as an unequivocal undertaking to pay money due by the
Municipality to Axton. Thus, the
issue of authority becomes
immaterial if Axton fails to persuade this Court that the document is
liquid. In the circumstances,
I do not see a need to discuss the
other points raised by the Municipality because Axton has failed to
convince this Court at the
very basic level of the liquidity of the
document.
[20]
In the result, the claim fails and I make the following order:
1.
Provisional sentence is refused with costs;
2.
The
Defendant is directed to serve and file its plea within 20 days of
date of this order.
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA DIVISION,
MBOMBELA
APPEARANCES:
Counsel
for the Plaintiff:
Adv
DS Hodge
Instructed
by:
Orelowitz
Inc
C/O
Du Toit, Smuts & Partners
Counsel
for the Defendant:
Adv
TS Ngwenya
Instructed
by:
Thobela
Thobela Attorneys
Date
of Judgment:
02
February 2024
[1]
1974
(4) SA 748 (A)
[2]
1939
W.L.D. 55
[3]
1977
(2) SA 465
(W)