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2024
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[2024] ZAFSHC 300
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Reder Construction (Pty) Ltd v Minister of Public Works and Infrastructure of the Republic of South Africa and Another (4215/2022) [2024] ZAFSHC 300 (17 September 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
Case
no.
4215/2022
In
the matter between:
REDER
CONSTRUCTION (PTY) LTD
[Registration
number:
2018/252595/07
]
and
THE
MINISTER OF PUBLIC WORKS AND
INFRASTRUCTURE
OF THE REPUBLIC OF
SOUTH
AFRICA
THE
TRUSTEES OF THE TIME BEING OF THE
INDEPENDENT
DEVELOPMENT TRUST
Plaintiff
First
Defendant
Second
Defendant
CORAM:
MANYE, AJ
HEARD
ON:
7 MAY 2024
DELIVERED
ON:
1
7
SEPTEMBER 2024
Manye
AJ
Introduction:
[1]
At the start of this trial the court was told by
both Plaintiff and Defendants that they have reached agreement to
submit heads
of argument ultimately addressing only 1 remaining issue
as the rest of the disputes had already been agreed to in the Draft
Order
handed in by agreement. No oral evidence was led and no
witnesses were called to testify.
[2]
The parties had resolved and agreed that the determination of the
remaining issue in relation
to claim 1 will depend upon the court’s
finding whether,
the declaration of the National State of
Disaster in terms of Section 27(1) of the Disaster Management Act,
No. 57 of 2002 (
the DMA
) and the implementation of the
nationwide lockdown from 26 March 2020 until 30 May 2020, created a
supervening impossibility for
the First Defendant to make payment of
the additional costs and time-related general items claimed by the
Plaintiff.
Background:
[3]
On or about the 3
rd
August 2017, pursuant to a tender
process initiated by the First Defendant’s Department for
procurement of necessary construction
services in respect of the
project titled
DEPARTMENT OF DEFENCE: BLOEMFONTEIN TEMPE: 44
PARACHUTE REGIMENT MAJOR REFURBISHMENT OF FACILITIES AND CIVIL
SERVICES
” (“
the project
”); ‘the
First Defendant accepted Plaintiff’s bid and made a written
offer of appointment to the Plaintiff
for and in respect of the
services as a contractor, to render the necessary works and services
of the project.’
[4]
On the 8
th
August 2017 the Plaintiff, in writing, accepted
the First Respondent’s offer and a written contract (“
the
contract
”) was concluded between the parties.
[5]
The contract so concluded was comprised of the following documents
which formed part of the terms
and conditions:
5.1
The offer of the appointment and the Plaintiff’s acceptance of
such offer;
5.2
The General Conditions of Contract for construction works, second
edition, 2010 (“
the GCC
”);
5.3
The contract data (“
contract data
”);
5.4
The pricing data, scope of work and site information.
[6]
The relevant express terms of the contract are the following:
6.1
The Plaintiff is appointed as the contractor for the rendering of
construction works and services (“
the works
”) at a
total construction amount of
R110 233 198.50 (VAT
inclusive)
;
6.2
The Plaintiff shall execute the works to such an extent that
practical completion of the whole of the
works shall be achieved
within thirty six (36) months calculated from the commencement date,
which period includes special non-working
days and year-end
breaks.
[1]
6.3
The Plaintiff may, in writing to the engineer, demand compliance
within a stated time by the Department
with the terms of the
contract, which terms shall be specified in such demand.
[2]
6.4
If the Plaintiff suffers delay to practical completion and/or incurs
additional costs from any failure
or delay on the part of the
Department, its agents, employees or other contractors not employed
by the Plaintiff in fulfilling
any necessary obligations in order to
enable the works to proceed in accordance with the contract, the
Plaintiff shall be entitled
to make a claim in accordance with Clause
10.1 of the GCC, for purposes of which the time limit of twenty eight
(28) days provided
in Clause 10.1.1.1 of the GCC shall commence to
run only from the time when compliance with the said terms has
actually taken place.
[3]
6.5
If the Plaintiff considers itself entitled to an extension of time
for circumstances of any kind whatsoever
which may occur that will,
in fact, delay practical completion of the works, the Plaintiff shall
claim in accordance with Clause
10.1 of the GCC such extension of
time as is appropriate. Such extension of time shall take into
account any special non-working
days and/or relevant circumstances,
including concurrent delays or savings of time which might apply in
respect of such claim.
[4]
[7]
Without limiting the generality of Clause 5.12.1 the circumstances
referred to in Clause 5.12.1
of the GCC includes:
7.1.1 The
amount and nature of additional works;
7.1.2
Abnormal climatic conditions;
7.1.3 Any
provisions of the conditions which allow for an extension of time;
and
7.1.4 Any
disruption which is entirely beyond the Plaintiff’s control.
[5]
[8]
If an extension of time is granted, the Plaintiff shall be paid such
additional time related to
general items, including for special
non-working days, if applicable, as are appropriate regarding any
other compensation which
may already have been granted in respect of
the circumstances concerned.
[6]
[9]
If the Plaintiff fails to complete the works, to the extent which
entitles it to receive a certificate
of practical completion in terms
of Clause 5.14.2(c), by the due completion date, the Plaintiff shall
be liable to the Department
for the sums stated in the contract data
as a penalty for every day that elapses between the due completion
date and the actual
date of practical completion, including special
non-working days.
[7]
[10]
In terms of the Contract Data, Clause 3.13, the engineer’s
authority to act and execute the functions
and duties in respect of
amongst others, the granting of an extension of time claim and/or a
ruling on claims associated with claims
for the extension of time
were expressly excluded. However, in respect of a ruling given
by the engineer, and although the
parties may have delivered a
dispute notice, the ruling shall be in full force and carry into
effect unless and until otherwise
agreed by both parties, or in terms
of an adjudication decision, an arbitration award or Court
Judgment.
[8]
[11]
I consider the above to mean that the GCC therefore allows the
Plaintiff to submit a claim for extension
of the date for practical
completion when circumstances beyond the control of the Plaintiff was
a delay in completion of the works
in accordance with the initial
agreed contract period.
[12]
Clause 9 of the GCC provides for termination of contract if a state
of emergency is declared by the Government,
or if riot, commotion,
politically motivated sabotage, acts of terrorism or disorder occur,
and if any such event beyond the control
of the contractor shall
materially affect the execution of works, or the supply of labour or
materials, or physically interfere
with the access to the site or
constitute a material risk to persons or property associated with the
contract, the contractor shall,
unless and until the contract is
terminated in terms of this clause, endeavour to complete the
execution of the works to the best
of his ability; provided that:
12.1
Either the employer or the contractor shall, if such state of affairs
continue for a period of at least twenty
(20) consecutive days or for
two (2) or more periods aggregated not less than forty (40) working
days in any period of six (6)
months, be entitled to terminate the
contract by written notice to the other party and, upon such notice
being given, the contractor
shall (save as to the rights of the
parties under this clause) terminate forthwith but without prejudice
to the rights of either
party in respect of any antecedent breach
thereof; or
12.2 If
the employer shall undertake, in writing, to bear any resultant
additional costs involved in continuing
the works, the contractor
shall not exercise his right to terminate the contract.
[9]
[13]
It is important at this stage to state that neither of the parties
invoked the provisions of Clause 9 of
the GCC relating to termination
of the contract between the parties.
[14]
It is my considered view that where neither party terminated the
contract and the execution of the works
was delayed, the Plaintiff
remains entitled to payment of increased costs associated by such
circumstances that caused the delay
in execution and completion of
the works.
[15]
Plaintiff and the First Defendant approached the Court on the
7
th
May 2024 with a draft order settling the dispute
between the parties wherein it was agreed that the draft order be
made an order
of Court.
[16]
In terms of the agreement, the First Defendant consented to the
Judgment being granted in favour of the Plaintiff
in respect of
claims 2 to 9 and that the crisp issue recorded in paragraph 1.3 of
the draft order, in respect of claim 1 be determined
by the Court,
namely that the declaration of the National State of Disaster in
terms of Section 27(1) of the Disaster Management
Act no. 57 of 2002
(“
the DMA
”) and the implementation of the
nationwide lockdown from 26 March 2020 until 30 May 2020, created a
supervening impossibility
for the First Defendant to make payment of
the additional costs and time-related general items claimed by the
Plaintiff.
[17]
For the purpose of the determination of claim 1, the Plaintiff and
the First Defendant also agreed that the
aforesaid issue shall be
determined based upon:
[18]
The provisions of the contract, namely the General Conditions of
Contract for Construction Works, Second
Edition, 2010 (“
the
GCC
”) and the Contract Data; and
[19]
The facts pleaded in paragraph 9 to 33.6 of the Plaintiff’s
particulars of claim and the facts contained
and recorded in
annexures “POC 5” to “POC 9” to the
particulars of claim, which facts are to be regarded
as common cause
and undisputed.
[20]
It must be emphasized that it is therefore not in dispute that, in
the absence of alleged supervening impossibility,
the First Defendant
is liable for payment of the amounts claimed in terms of claim 1
pursuant to the extension of the date of practical
completion granted
to the First Defendant.
[21]
Notwithstanding the above in paragraph 20, consequently the only
issue between the parties is whether the
declaration of the National
State of Disaster and the implementation of the lockdown for the
period of 26 March 2020 until 30 May
2020 created a supervening
impossibility for the First Defendant to make payment of the
additional costs and time-related general
items in terms of the
contract.
[22]
On 15 March 2020 during the execution of the works the National
Disaster was declared in terms of
Section 27(1)
of the
Disaster
Management Act
[10
]
and in
terms of the regulations published on 25 March 2020 and on 16 April
2020, a national lockdown, restricting movement of persons
and goods
from 26 March 2020 until 30 April 2020 (“
the
lockdown
”)
was implemented.
[23]
It is natural that the lockdown caused a delay in the execution of
the works by the Plaintiff as contemplated
in the contract and the
GCC.
[24]
It is not in dispute that the Plaintiff submitted a claim for the
extension of the date of practical completion
of the works, claiming
an extension of forty-nine (49) calendar days and the payment of
additional costs and additional time related
to general items
consequent upon the extension of the date for practical completion in
the amount of
R975 714.42 (including VAT)
.
[25]
It is further not in dispute that the First Defendant approved the
Plaintiff’s claim for extension
of the date of practical
completion but
did not award or pay the additional costs and
additional time-related general items claimed
.
[26]
It is further not in dispute that on 8 April 2020, the Plaintiff
notified the engineer in writing of its
intention to claim in terms
of Clause 5.12.3 of the GCC for the extension of date for practical
completion of the works and the
payment of additional costs for the
delay to the implementation of the works caused as a result of the
national lockdown.
[11]
[27]
It is further not in dispute that on 3 June 2020 the Plaintiff
further submitted its written claim for the
extension of the date for
practical completion of the works which culminated in forty-nine (49)
calendar days until 17
th
November 2020 for the payment of
additional costs in the said amount.
[28]
The First Defendant pleaded to the provisions of Clause 9.1.2 of the
GCC which provides that if a state of
emergency is declared by the
Government to which it is pleaded but a state of disaster is
tantamount to and if any such event beyond
the control of the
contractor shall materially affect the extension of works, the
contractor shall, unless and until the contract
is terminated in
terms of this clause, endeavour to complete the execution of the
works to the best of their ability.
[12]
[29]
The First Defendants further pleaded that if the state of affairs
continues for a period of at least twenty
(20) consecutive days or
for two (2) or more periods aggregating to less than forty (40)
working days in any period of six (6)
months, the contractor shall be
entitled to cancel the contract upon notice to the other party, which
shall terminate forthwith
upon notice being received and without
prejudice to the rights of either party in respect of any antecedent
breach thereof.
[30]
Subsequent to the publication of Regulations on 26 March 2020 in
accordance with
Section 27(2)
of the
Disaster Management Act.
Regulation
11(b) of the Regulations provide that:
“
During the
lockdown, all businesses and other entities shall cease operations,
except for any business or entity involved in the
manufacturing,
supply or provision of essential goods or services, save where the
operations are provided from outside of the Republic
or can be
provided remotely by a person from their normal place of residence.
”
[31]
It would appear that the First Defendants relies on above regulation
in that it provided or imposed restriction
of movement and confined
its personnel to their places of residence unless they were
performing an essential service or obtaining
an essential services or
goods or services or collecting a social grant or seeking medical
attention.
[32]
The Plaintiff submitted in his Heads of Argument that supervening
impossibility arises when, following the
valid conclusion of a
contract, fulfilling an obligation derived from it becomes
objectively and permanently impossible through
no fault of either
party. Plaintiff further submits that, common example of such
impossibility includes impossibilities triggered
by
major
or
casus
fortuitous
or unforeseeable events due to some change in law or an act of state.
In such event, the obligation under the said contract are
generally
extinguished and contracts comes to an end.
[13]
[33]
The Supreme Court of Appeal in
MV
Snow Crystal Transnet Ltd v Owner of MV Snow Crystal
[14]
the doctrine of impossibility was contextualized in the following:
“
This brings me
to the appellant’s defence of supervening impossibility of
performance. As a general rule impossibility of
performance brought
about by this major or casus fortuitous will excuse performance of a
contract but it will not always do so.
In each case it is
necessary to look at the nature of the contract, the relationship of
the parties, the circumstances of the case,
and the nature of the
impossibility invoked by the defendant, to see whether the general
rule ought, in the particular circumstances
of the case, be applied.
The rule will not
avail a Defendant if the impossibility is self-created; nor will it
avail the Defendant if the impossibility is
due to his/her fault.
Save possibly in circumstances where a Plaintiff seeks specific
performance, the onus of proving the
impossibility will lie upon the
Defendant.
”
[34]
In
Post
Office Retirement Fund v South African Post Office SOC Ltd,
[15]
the
SCA
stated with authority that the Defendant relying on the defence of
supervening impossibility, must meet the following requirements:
“
In order to
establish impossibility of performance, whether initial or
supervening, four (4) requirements must be met by the party
relying
on this defence. They have been set out by Bradfield as
follows:
first
, the impossibility must be
absolute as opposed to probable.
The mere likelihood
that performance will prove impossible is not sufficient to destroy
the contract.
Second
, the impossibility must
be absolute as opposed to relative. If a promise to do something
which, in general, can be done,
but which I cannot do, I am
liable on the contract
.
Third,
the impossibility must not be the fault of either party. A party who
has caused the impossibility cannot take advantage of it and
so will
be liable on the contract
. Fourth
, the principle
must give way to the contrary common intention of the parties. This
intention may be expressed as when, for example,
a seller expressly
represents or guarantees that the goods sold exist.
”
[35]
The First Defendant in paragraph 5.1 of its Heads of argument submit
that regulations so promulgated under
the
Disaster Management Act in
response to curbing the spread of COVID-19 extinguished the
Defendant’s obligation to make payment of the additional
time-related
general items claimed by the Plaintiff.
[36]
I do not agree with the Defendants’ contention above that the
declaration of regulations relating to
State of Disaster to curb the
spread of Covid-19 extinguished its obligation to pay but opted not
to terminate the contract and
performance of the works as provided
for in clause 9 of the GCC.
[37]
In view of the above I find that the Declaration of Regulations under
the Disaster Management
Act 57 of 2002 (“
the DMA
”)
did not create supervening
impossibility
for Defendant to
effect payment as claimed by the Plaintiff. Clearly the lock-down
prima facie
proved hindrance to perform certain tasks but did
not create permanent impossibility.
[38]
In light of the above I make the following order:
1.
In respect of claim 1
:
The defendant is liable
to pay the defendant in an amount of
R975 714.42
including
VAT.
2.
Payment of interest on the amount of
R975 714.42
calculated as
follows:
2.1
at 7% per year from 11 November 2020 until 17 November 2021;
2.2
at 7.25% per year from 18 November 2021 until 27 January 2022;
2.3
at 7.5% per year from 28 January 2022 until 23 March 2022;
2.4
at 7.75% per year from 24 March 2022 until 18 May 2022;
2.5
at 8.25% per year from 19 May 2022 until 20 July 2022;
2.6
at 9% per year from 21 July 2022 until date of payment.
2.7
Cost of suit on scale B
In respect of claims 2
to 9:
(By Agreement between the parties the
Draft Order
is made an order of Court as follows:
Judgment is granted
against the First Defendant in favour of the Plaintiff as follows:
Claim 2
:
3.
Payment of the amount of
R757 660.39
.
4.
Payment of interest on the amount of
R757 660.39
calculated
as follows:
4.1
at 7% per year from 11 November 2020 until 17 November 2021;
4.2
at 7.25% per year from 18 November 2021 until 27 January 2022;
4.3
at 7.5% per year from 28 January 2022 until 23 March 2022;
4.4
at 7.75% per year from 24 March 2022 until 18 May 2022;
4.5
at 8.25% per year from 19 May 2022 until 20 July 2022;
4.6
at 9% per year from 21 July 2022 until date of payment.
4.7
Cost of suit (Scale B).
Claim 3:
5.
Payment of the amount of
R17 636.42
.
6.
Payment of interest on the amount
R17 636.42
calculated
as follows:
6.1
at 7% per year from 7 January 2021 until 17 November 2021;
6.2
at 7.25% per year from 18 November 2021 until 27 January 2022;
6.3
at 7.5% per year from 28 January 2022 until 23 March 2022;
6.4
at 7.75% per year from 24 March 2022 until 18 May 2022;
6.5
at 8.25% per year from 19 May 2022 until 20 July 2022;
6.6
at 9% per year from 21 July 2022 until date of payment.
6.7
Cost of suit (Scale B).
Claim 4:
7.
Payment of an amount of
R91 878.67
.
8.
Payment of interest on the amount of
R91 878.67
calculated
as follows:
8.1
at 7% per year from 3 July 2021 until 17 November 2021;
8.2
at 7.25% per year from 18 November 2021 until 27 January 2022;
8.3
7.5% per year from 28 January 2022 until 23 March 2022;
8.4
at 7.75% per year from 24 March 2022 until 18 May 2022;
8.5
at 8.25% per year from 19 May 2022 until 20 July 2022;
8.6
at 9% per year from 21 July 2022 to date of payment.
8.7
Cost of suit. (Scale B)
Claim 5:
9.
Payment of an amount of
R42 981.17.
10.
Payment of interest on the amount of
R42 981.17
calculated as follows:
10.1 at
7% per year from 3 July 2021 until 17 November 2021;
10.2 at
7.25% per year from 18 November 2021 until 27 January 2022;
10.3 at
7.5% per year from 28 January 2022 until 23 March 2022;
10.4 at
7.75% per year from 24 March 2022 until 18 May 2022;
10.5 at
8.25% per year from 19 May 2022 until 20 July 2022;
10.6 at
9% per year from 21 July 2022 to date of payment.
10.7
Cost of suit. (Scale B)
Claim 6:
11.
Payment of an amount of
R44 978.09
.
12.
Payment of interest on the amount of
R44 978.09
calculated as follows:
12.1 at
7% per year from 3 July 2021 until 17 November 2021;
12.2 at
7.25% per year from 18 November 2021 until 27 January 2022;
12.3 at
7.5% per year from 28 January 2022 until 23 March 2022;
12.4 at
7.75% per year from 24 March 2022 until 18 May 2022;
12.5 at
8.25% per year from 19 May 2022 until 20 July 2022;
12.6 at
9% per year from 21 July 2022 to date of payment.
12.7
Cost of suit. (Scale B)
Claim 7:
13.
Payment of an amount of
R30 230.09
.
14.
Payment of interest on the amount of
R30 320.09
calculated as follows:
14.1 at
7% per year from 3 July 2021 until 17 November 2021;
14.2 at
7.25% per year from 18 November 2021 until 27 January 2022;
14.3 at
7.5% per year from 28 January 2022 until 23 March 2022;
14.4 at
7.75% per year from 24 March 2022 until 18 May 2022;
14.5 at
8.25% per year from 19 May 2022 until 20 July 2022;
14.6 at
9% per year from 21 July 2022 to date of payment.
14.7
Cost of suit. (Scale B)
Claim 8:
15.
Payment of an amount of
R10 665.74
.
16.
Payment of interest on the amount of R10 665.74 calculated as
follows:
16.1 at
7% per year from 3 July 2021 until 17 November 2021;
16.2 at
7.25% per year from 18 November 2021 until 27 January 2022;
16.3 at
7.5% per year from 28 January 2022 until 23 March 2022;
16.4
at7.75% per year from 24 March 2022 until 18 May 2022;
16.5 at
8.25% per year from 19 May 2022 until 20 July 2022;
16.6 at
9% per year from 21 July 2022 to date of payment.
16.7
Cost of suit. (Scale B)
Claim 9:
17.
Payment of an amount of
R35 443.84.
18.
Payment of interest on the amount of
R35 443.84
calculated as follows:
18.1 at
7% per year from 3 July 2021 until 17 November 2021;
18.2 at
7.25% per year from 18 November 2021 until 27 January 2022;
18.3 at
7.5% per year from 28 January 2022 until 23 March 2022;
18.4 at
7.75% per year from 24 March 2022 until 18 May 2022;
18.5 at
8.25% per year from 19 May 2022 until 20 July 2022;
18.6 at
9% per year from 21 July 2022 to date of payment.
18.7
Cost of suit.
19.
The costs of Plaintiff’s counsel, in respect of claims 2 to 9,
shall be taxed and allowed on taxation
at the rate of
R2 300.00
plus VAT per hour
and
R23 000.00 plus VAT per day
,
thus falling within
Scale B
as envisaged in Rule 69 of the
Uniform Rules of Court.
T.L.
MANYE, AJ
APPEARANCES
For
the Plaintiff
:
Advocate
CD Pienaar
Instructed
by:
J A M
Volschenk
Phatsoane
Henney Inc.
35
Markgraaff Street
Westdene
Bloemfontein
For
the Defendants
:
Advocate
K Nhlapho-Merabe
Instructed
by:
C G
Sibiya
State
Attorney
11
th
floor
Fedsure
building
49
Charlotte Maxeke Street
Bloemfotein
[1]
GCC,
Clause 5.14.1; Contract data, Clause 1.1.1.14 and 5.14.7.
[2]
GCC,
Clause 5.10.1.
[3]
GCC,
Clause 5.10.1.
[4]
GCC,
Clause 5.12.1.
[5]
GCC,
Clause 5.12.2.
[6]
GCC,
Clause 5.12.3.
[7]
GCC,
Clause 5.13.1; Data, Clause 5.13.1.
[8]
General
Conditions of Contract for Construction Works, 2
nd
Edition, 2010.
[9]
GCC,
Clause 9.1.2 to 9.1.2.2.
[10]
Act 57
of 2002 (“
the
DMA
”).
[11]
Particulars
of claim para 22.
[12]
Index
and paginated papers, p. 285, para 14.2.
[13]
Free
Stone Property v Remake Consultants
2021 (6) SA 470
at para 11.
[14]
[2008] ZASCA 27
;
2008
(4) SA 111
(SCA) at para 28.
[15]
JDR 001
(8) SCA at para 80.