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[2020] ZASCA 90
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Passenger Rail Agency of South Africa v Sbahle Fire Services CC (230/2019) [2020] ZASCA 90 (4 August 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
No: 230/2019
In
the matter between:
PASSENGER
RAIL AGENCY OF SOUTH
AFRICA APPELLANT
and
SBAHLE FIRE SERVICES
CC RESPONDENT
Neutral
citation:
Passenger Rail Agency of
South Africa v Sbahle Fire Services CC
(230/2019)
[2020] ZASCA 90
(4 August 2020)
Coram:
PETSE DP, MBHA, MOCUMIE and DLODLO JJA
and MABINDLA-BOQWANA AJA
Heard:
18 May 2020
Delivered:
This judgment was handed down
electronically by circulation to the parties’ legal
representatives by email, publication on
the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is
deemed to be have been at 10h00 on
4 August 2020.
Summary
:
Contract – interpretation of agreement entered into between the
appellant and the respondent in respect of which the respondent
rendered fire and safety consultancy services to the appellant for a
prescribed fee – whether the appellant breached the
contract –
whether the court a quo erred in dismissing the appellant’s
claim in reconvention.
ORDER
On
appeal from:
Gauteng Division of the
High Court, Pretoria (Raulinga J sitting as court of first instance):
1 The appeal in relation to the second
claim succeeds with costs, including costs consequent upon the
employment of two counsel.
2 The appeal in relation to the claim
in reconvention is dismissed.
3 The order of the court a quo is set
aside to the extent reflected below and substituted with the
following:
‘
The action
in respect of the second claim is dismissed with costs.’
JUDGMENT
Dlodlo
JA (Mbha JA concurring):
[1]
Sbahle Fire Services CC (Sbahle), instituted action against Passenger
Rail Agency of South Africa (PRASA) for payment of R1,
227 999.21 and
R9 095 968.47 in respect of fire and safety consultancy services
respectively, rendered to PRASA at the latter’s
Mabopane Bridge
Development Project (the project) over the period from June 2010 to
August 2013. On 15 October 2013, PRASA paid
to Sbahle an amount of R2
034 938.19 for fire consultancy services rendered over the period
June 2010 to November 2012. According
to Sbahle, the amount paid by
PRASA included the sum of R1, 227 999.21 which Sbahle had claimed for
fire consultancy services.
However, PRASA instituted a claim in
reconvention wherein it claimed the repayment of the R2 034 938.19 it
had paid to Sbahle.
[2]
In view of the fact that the aforementioned payment effectively
settled what Sbahle had claimed in claim 1, it did not proceed
with
that claim. It, however, persisted with claim 2. The latter claim is
in respect of Safety Consultancy fees. Sbahle relied
on the clause of
the agreement which it attached to the particulars of claim headed
‘fees’ read in conjunction with
a letter written to
Sbahle on behalf of PRASA dated 18 December 2018. The project for
fire and safety consultancy was intended
to commence on 2 January
2009 and was due for completion on 31 May 2010. At all relevant
times, it was common cause that the project
did not start on the
scheduled date but that it was extended beyond 31 May 2010 to at
least August 2013.
Background
facts
[3]
During 2008, PRASA embarked on the building of a bridge in a project
known as ‘Mabopane Bridge Redevelopment Project.’
The
necessary procurement processes were followed and on 18 December
2008, the Northern Gauteng Regional Tender Procurement Committee
of
PRASA appointed Sbahle as Fire and Safety Consultant for the project.
Letters of appointment setting out the terms and conditions
of the
contract were addressed to Sbahle. The total fee of the project in
respect of the fire consultancy services was fixed at
R796 185.72
excluding value added tax (VAT) whilst the fee for the safety
consultancy services was 5 per cent of the value
of the project cost
which was estimated at R134 million excluding VAT.
[4]
Both contracts in respect of fire and safety consultancy services
expressly provided that should the estimated project value
decrease,
the respective specified tariffs of the project costs should be
applied to the final value. Alternatively, should the
estimated
project value increase, the services will be free until the
completion of the project on 31 May 2010. As at 4 April 2011,
PRASA
had paid Sbahle a sum of R690 001.43 in respect of fire
consultancy services. In respect of safety consultancy at the
same
date PRASA had paid the sum of R4 664 854.66 to Sbahle. The
balance owed to Sbahle in respect of safety consultancy and
fire
consultancy services was R 1 232 607.84 and R 106 184.29
respectively.
[5]
The parties differ in the interpretation of the contract. In respect
of the safety consultancy services, PRASA contended that
the total
fee for the services rendered until the completion of project,
regardless of the time period, was fixed at 5 per cent
of the total
costs of the project. Accordingly, PRASA contended that it had paid
in full the total amount of fees due and payable
to Sbahle, regard
being had to the fact that the project was not complete and still
remained unfinished. PRASA’s contention
was that any further
extension of time with a view to complete the project, did not bring
about the change of contract price as
indicated in respect of both
the fire consultancy and the health and safety consultancy. In the of
light of the disagreement on
the interpretation of the contract
between the parties, PRASA’s submission before the Gauteng
Division of the High Court,
Pretoria (the high court), was that the
court ought to determine this issue before the merits of the matter
were dealt with.
[6]
The clause in the agreement which must be interpreted is entitled
‘fees’ and reads:
‘
The
client shall pay to the Consultant full remuneration for the
performance by the Consultant of the services in accordance with
this
agreement. The fee shall, be deemed to be inclusive payment for the
services and for all disbursement costs, expenses, overheads
or
profits of every kind incurred or to be earned by the Consultant in
connection therewith. If the Consultant is required by the
Client to
provide material additional services by reason of any alterations,
project extension or modifications to the project
as required by the
Client, then the Client shall pay to the Consultant additional amount
in respect of the fee, commensurate with
the additional services
performed by the Consultant. However, should the extent of extra work
or alterations that the same shall
have been necessitated in whole or
in part, by any negligent act, omission or default on the part of the
Consultant, the Client
will not pay to the Consultant additional
amount in respect to the fee.’
The
above clause must be read together with a letter from PRASA to Sbahle
dated 18 December 2008. It reads as follows:
‘
We,
Intersite Property Management Services (Pty) Ltd (“Intersite”),
acting on behalf of SA Rail Commuter Corporation
Limited (“SARCC”),
have pleasure in confirming your appointment as fire consultant, with
specific reference to your
proposal dated 09 December 2008 and
supplemented by the terms and conditions of this letter, the
appointment shall, in relation
to the above-mentioned project,
entail:
1.
The client will not entertain any extra fees claims unless he
introduces a substantial or material change to the scope of the
project.
2.
The fee shall be paid in accordance with the agreed fee as per
Annexure “A”
3.
Should any ambiguity exist between this letter, and previous
correspondence which has taken place in connection with your
appointment
as Fire Consultant for this Project, the terms and
conditions of this letter shall take precedence.’
The
pleadings
[7]
In claim 1, Sbahle averred that on 18 December 2008 at Midrand,
alternatively Pretoria, it concluded an agreement with PRASA
in terms
whereof it was appointed as the Fire Consultant in respect of the
project. In concluding the agreement, Sbahle was represented
by Mr
David Khuzwayo (Mr Khuzwayo) and PRASA represented by Intersite
Property Management Services (Intersite). Intersite was in
turn duly
represented by Mr Pheko Moatshe (Mr Moatshe).
[8]
The agreement concerning claim 2 is alleged to have been concluded in
December 2008. The express terms of the agreement that
are relevant
for purposes hereof and which Sbahle was contractually bound to
perform entailed the following:
‘
(a)
Compilation of a safety plan; (b) Assist in hazard identification and
risk assessments; (c) Compilation and facilitation of
a risk profile;
(d) SHE specification; (e) Relating to guidelines within the
disciplines of safety; (f) Site visits to assess and
gather
information for the compilation of audit reports; (g) Health and
Safety Committee recommendations reviewing; (h) Quarterly
site audits
but not limited; (j) On-the-job health and safety awareness, etc; (k)
To assist in compliance with the basic legal
requirements including;
(l) Continual reporting to ensure consistency between client and
appointed contractors; (m) Health and
Safety inspections; (n) Health
and Safety Committee meetings; (o) To ensure a safe/health work
environment; (p) Performing baseline
health and safety audit to
determine a degree of conformance within requirements of occupations
health and safety; (q) Providing
detailed written reports
highlighting deviations found and suggestions for improvement/
rectification; (r) Providing assistance
with any part of the safety
and health program.’
Up
to 31 May 2010, Sbahle was entitled to a fee of R5 897 462.50
excluding VAT. The additional terms were that fees would be deemed
to
be inclusive payment for services and for all disbursements, costs,
expenses, overheads or profits of every kind incurred or
to be earned
by Sbahle in connection therewith. Importantly, the agreement
provided that if Sbahle was required by PRASA to provide
material
additional services by reason of any alterations, project extension
or modifications to the project as required by PRASA,
the latter
would pay to Sbahle an additional amount in respect of the fees,
commensurate with the additional services performed.
[9]
However, should the extent of the extra work or alterations have been
necessitated or come about as a result of default on the
part of
Sbahle, PRASA would not be liable to Sbahle for any additional amount
in respect of the fees. It is averred that up to
31 May 2010, Sbahle
was entitled to a total contract amount of R5 897 462.50
excluding VAT, over a period of 17 months payable
in monthly tranches
of R395 476.89 inclusive of VAT. Sbahle’s contention was that
PRASA breached the terms of the agreement
by neglecting and/or
failing to pay it for services rendered over the period June 2010 to
May 2012. Sbahle had issued invoices
for this period, but as at May
2012 the total amount of R9 095 968.47 was outstanding and
remained due and payable.
[10]
In its amended plea, PRASA admitted that the project had not been
completed but it denied that Sbahle was still rendering services
to
it. PRASA pleaded that it did not, at any stage, request nor require
Sbahle to provide any services or material additional services
by
reason of any alteration, project extension or any modifications
thereof. It was specifically denied by PRASA that Sbahle was
rendering the same services as it rendered before 31 May 2010. PRASA
pleaded that Sbahle was entitled to and did render the same
services
after 31 May 2010 in accordance with the extended period up to 28
February 2012. According to the plea, the parties retained
contractual prices which remained the same after the extended period.
[11]
Pleading to the claim in reconvention, Sbahle stated that the payment
was made in respect of the work done and services duly
rendered by it
to PRASA at the latter’s instance and request. In effect,
Sbahle pleaded that there was a legal obligation
on PRASA to effect
the payment and it was not made ‘in bona fide but mistaken
belief’.
Evidence
[12]
The only evidence on record is that led by Sbahle. It called Mr
Khuzwayo, who testified that Sbahle is a close corporation
that
renders services of safety and specifications and assists clients in
sales and services of portable fire protection designs
and design
layouts in fire protections. Mr Khuzwayo’s testimony is that
the nature of business Sbahle provides involves fire
protection
designing, installation, servicing as well as sales of all types of
firefighting equipment. Mr Khuzwayo explained how
Sbahle was
appointed as consultant in relation to the project. He stated that
Sbahle designed the protection system for the project.
It was Mr
Khuzwayo’s evidence that Sbahle had an obligation to obtain the
certificate of occupancy when the building was
finished and the
project was complete. It was Sbahle’s responsibility to appoint
a fire contractor, whose job was to install
the fire protection
system which Sbahle designed for the bridge. Mr Khuzwayo testified
that Sbahle was employed to serve as an
agent for the client in terms
of health and safety. Sbahle had to make sure that the main
contractor Siyavuna, adhered to all safety
rules in the project.
Siyavuna was appointed by PRASA to conduct the building work and
Sbahle was appointed to supervise the main
contractor’s safety
consultant who was on site on a full-time basis in terms of safety.
[13]
Mr Khuzwayo’s evidence was that Sbahle was responsible for
devising safety and health specifications. It had to conduct
a
baseline assessment for PRASA, as the client. Sbahle also had to
conduct a monthly audit and compile monthly reports in relation
to
safety. Nkambule and Associates was appointed as the project manager,
represented by one Mr Ishmael Musiwa.
[14]
Mr Khuzwayo testified that the project was scheduled to start in
January 2009 and should have been completed on 31 May 2010.
However,
the project did not commence as scheduled. He stated that when
Siyavuna, the main contractor, moved on site, numerous
challenges
faced the project, including the community wanting to dictate their
own rates to the main contractor. Another cause
of delay, according
to Mr Khuzwayo was what he called the land issue on the western side
where the bridge was supposed to land.
The owner of that portion of
land did not want the bridge on his property. As a result the
architect had to change his designs.
According to Mr Khuzwayo’s
testimony, this dispute impacted greatly on the project in that the
architect had to take out
a number of stalls meant to be on the
Mabopane side and come up with a new concept altogether on the
Mabopane side. According to
Mr Khuzwayo, the client also caused
further delay when PRASA introduced new developments in the project.
For example, PRASA requested
a derailment wall to be built.
[15]
Mr Khuzwayo testified that PRASA also wanted 265 extra stalls to be
built on the eastern side as none were going to be built
on the
western side. Mr Khuzwayo testified further that there was a sudden
realisation on the part of PRASA that there was a need
to build its
offices underneath the bridge. All this work, according to Mr
Khuzwayo, was never catered for in the initial project
and the main
contractor had to complete it. Sbahle’s work was to assist the
main contractor in terms of safety and that it
had to be present
wherever the main contractor was, to ensure there was safety.
Mr Khuzwayo was specifically asked
how the fact that the project was
not complete by 31 May 2010 would have impacted on services rendered
by Sbahle. His answer was
that Sbahle’s services were ongoing
and as long as the main contractor was on site, Sbahle was always
required to be there
on behalf of PRASA as the client. Mr Khuzwayo
testified that Sbahle’s services started in January 2009 and
went on until
November 2012. The latter date is when the main
contractor left the Mabopane site.
[16]
It was Mr Khuzwayo’s evidence that the sum of R6 591
281.64 mentioned as fees for safety consultation for a period
of 19
months represented fees for the additional work or services which
Sbahle rendered to the project. According to Mr Khuzwayo,
this was
broken down for PRASA so that it would understand what Sbahle was
claiming. Mr Khuzwayo was asked how he calculated the
abovementioned
amount. His explanation was that Sbahle was employed to be in the
project for 17 months and it had to agree on a
lump sum of R5.8
million. He explained that, however, from June 2010 to January 2012,
the amount for fire consultancy for the period
of 19 months amounted
to R889 854.54. The latter amount, according to Mr Khuzwayo,
represented time that Sbahle spent on rendering
services without
being paid for additional services rendered.
[17]
Mr Khuzwayo testified that when the time specified in respect of the
contract expired, he raised the issue with the PRASA project
manager
stating ‘my time is about to be finished, what are we doing?
Are we packing and going or what?’ But PRASA’s
project
manager replied, ‘nobody is leaving here. Go back to your
contract. That contract does allow for extension’.
Mr Khuzwayo
told the high court that he was referred to the alleged relevant
clause in the contract. He emphasised that the claim
was based on
extra work done from June 2010 until November 2012. When he was asked
specifically to define extra work, Mr Khuzwayo
said it had to be
borne in mind that the scope changed. The change of the scope did not
reduce the work but in fact it meant extra
work because the design
had to change as a consequence of the variations introduced to the
original design of the building. PRASA
was the one that wanted extra
stalls to be built and that, according to Mr Khuzwayo was not
provided for in the original design.
Also, the bridge was supposed to
land at a certain place on the eastern side, the Mabopane side.
[18]
Mr Khuzwayo was asked to produce the original design and instruction
from PRASA stating that Sbahle should redesign the works.
In
response, he stated the following:
‘
We
all did our design as per that architectural concept. As we were busy
with those designs then the client said I have got a problem
with the
land issue. [The architect was requested to reduce the bridge]. Now
that had an impact on all of us who had already started
designing as
per architect’s sizes. Now you have got to come up with the new
design which is going to fit the new specification
or the new
architectural concept. That is extra because you have already been
given the drawings with all the dimensions and all
of a sudden that
changes. When that changes it impacts on your design. Then the client
. . . when the client instructed the architect
to change the width of
the bridge that was affecting us as well. Because we all had to wait
for the architect to come up with the
new design.’
[19]
Mr Khuzwayo testified that it was his view that PRASA anticipated
that the project may not be finished on the proposed date
and time
and that is the reason why they inserted a clause in the contract
which states that ‘if the consultant is required
by the client
to provide material additional services by reason of any alterations,
project extension or modifications to the project
as required by the
client, then the client shall pay to the consultant additional amount
in respect of the fee, commensurate with
the additional services
performed by the consultant’. That clause refers to extra
payment to Sbahle only if it was required
by PRASA to continue.
In
Mr Khuzwayo’s view, Sbahle was required or instructed by PRASA
to continue in the project. In clarification, the court
asked Mr
Khuzwayo whether Sbahle was not instructed by PRASA to continue in
the project. If that was so, that would have naturally
affected the
amount, as an extra payment ought to have been made for the work that
was to be conducted as a result of the extension
by PRASA and the
necessity to change the design. Mr Khuzwayo confirmed what was put to
him. On being asked by the counsel representing
PRASA why must he be
paid extra money - outside the contract, Mr Khuzwayo answered as
follows:
‘
Remember
our type of work especially the safety one depends on the main
contractor, the existence of the main contractor on site
allowed us
to be there. We do not build the wall. We audit the health and safety
inspections for the main contractor at all times.
We do risk
assessment on site as the main contractor is continuing to work on
site.’
The
high court
[20]
The high court found that it was clear from the wording of the
agreement that the parties agreed that PRASA would pay to Sbahle
amounts in respect of the fee commensurate with additional services
performed. The high court relied on
Sassoon
Confirming and
Acceptance
Co (Pty) Ltd v Barclays National Bank Ltd
1974
(1) SA 641
(A) at 646G in concluding that the language used in the
agreement, its purpose, scope, background and the context is such
that
it confirms the nature of the transaction between the parties as
it appears from the entire contract. The high court found that
Sbahle
rendered the same services as it had done up to and including 31 May
2010 and up to at least 28 February 2012. It found
that the further
services were an extension of services contracted for and Sbahle was
integrally involved with the project. As
far as the amount claimed by
PRASA in the claim in reconvention is concerned, the high court found
that PRASA made payment to Sbahle
pursuant to the latter’s
invoice for the said amount in respect of Fire Consultancy Services.
The high court found Mr Khuzwayo
to be a credible witness and
therefore found in his favour. The appeal, against the high court’s
judgment, is with the leave
of this court.
Discussion
[21]
It is convenient to begin with the claim in reconvention instituted
by PRASA. PRASA requires that the amount of R2 034
938.19 paid
back to it on the basis that it paid the same to Sbahle in error. It
is common cause that Sbahle had issued an invoice
for this amount in
respect of the fire consultancy services it rendered in the project
in terms of its contractual obligations.
According to Mr Khuzwayo,
the invoice relating to this sum of money was issued at the request
of PRASA. His evidence in this regard
was not at all contested. It is
undisputed that prior to the institution of the claim in
reconvention, PRASA never demanded that
this amount be paid back to
it, nor did it ever contend that payment was made in error.
Importantly, PRASA led no evidence in this
regard.
[22]
The high court found correctly that PRASA could not succeed with its
claim in reconvention. The claim in reconvention was therefore
rightly dismissed. The undisputed fact that Sbahle was paid on a
contractual basis, as it contended, further required that at the
very
least, the official of PRASA who made the payment, should have
explained why the payment was made. PRASA’s failure to
call a
witness in this regard therefore justified negative inference. See in
the latter regard
Gleneagles Farm Dairy
v Schoombee
1949 (1) SA 830
(A)
;
SOS Kinderdorf International v Effie Lentin Architects
1993
(2) SA 481
(NM) at 489G-J. In order to succeed with a claim for the
repayment of money paid
sine causa,
the party claiming payment carries the onus of proving the
requirements of the applicable enrichment claim ie the
condictio
indebiti
. See in this regard
Willis
Faber Enthoven (Pty) Ltd v Receiver of Revenue and Another
[1991] ZASCA 163
;
1992 (4) SA 202
(A) at 224;
Senwes Ltd
and Others v Jan van Heerden and Sons CC and Others
[2007] 3 ALL SA 24
(SCA). In addition, it must be shown that payment
was made in the bona fide and reasonable belief that it was owed. See
in this
regard
ABSA Bank Ltd v Leech
and Others
2001 (4) SA 132
(SCA).
[23]
As a general requirement for the
condictio
indebiti
, the error that gave rise to
the payment must not have been an inexcusable error. In order to make
a determination, regard must
be had to the particular circumstances
wherein the payment occurred. The court is called upon to exercise a
value judgment. It
is of course inappropriate to refine the test of
whether judicial exculpation is justified. The authorities state that
a mistake
should have been neither ‘heedless nor farfetched’,
that it should not have been based on ‘gross ignorance’
and that it should have been neither ‘slack nor studied’.
See in this regard
Bowman, De Wet and Du
Plessis NNO and Others v Fidelity Bank Ltd
1997 (2) SA 35
(SCA);
Yarona Healthcare
Network (Pty) Ltd v Medshield Medical Scheme
[2017] ZASCA 116
;
2018 (1) SA 513
(SCA). It is of importance to
stress that the error must be reasonable, meaning that it must be
excusable in the circumstances
of the case. See,
Willis
Faber Enthoven (Pty) Ltd v Receiver of Revenue supra; Affirmative
Portfolios CC v Transnet Ltd t/a Metrorail
[2008] ZASCA 127
[2008] ZASCA 127
; ;
2009 (1) SA 196
(SCA) paras 23 to 29. There
was no evidence from PRASA whatsoever before the court explaining why
the payment was allegedly made
in error nor why it was a reasonable
mistake.
[24]
I am of the view that the evidence of Mr
Khuzwayo was not at all intended to aid interpretation in this
matter. Apart from testifying
in order to prove claim 2 of Sbahle,
the evidence also provided the relevant background and context of the
agreement and the working
relationship between Sbahle and PRASA in
the project.
[25]
An argument was advanced on behalf of PRASA that each agreement set
out a contractual price agreed upon between the parties.
The prices
were set out in the respective agreements. The submission continued
thus:
‘
In
terms thereof the parties agreed that for fire consultancy services
the respondent would be paid a sum of R796 185.72 exclusive
of
vat. For health and safety services the respondent would be paid an
amount of equivalent to 5% of the project value (this turned
out to
be the sum of R5 897 462.50 exclusive of vat) for the whole
project.’
According
to PRASA the abovementioned amounts were fixed and in the event of
the project increasing in value, the services were
to be free and in
the event of a decrease in value the amount payable would be
calculated on the decreased value. Effectively,
PRASA’s
argument means there would never be an increase to the amounts agreed
to. The other submission put forth by PRASA
which must be dealt with
in this judgment is the following:
‘
Our
submission is that the extension of time in the construction industry
does not amount to a change in the scope of work, let
alone material
additional services . . . there were no written instructions to the
respondents to incur any costs in regard to
the project.’
PRASA’s
contention is that there was an aborted attempt to reach an agreement
made on 24 January 2012 when Sbahle suggested
that for the period
June 2010 to January 2012, it was owed R6 591 281.64 for
health and safety consultancy and R889 854.55
for the fire
consultancy inclusive of VAT. PRASA stated that it rejected the
proposal on the basis that these amounts were exorbitantly
high.
However, PRASA made a counter offer in an amount of R1,5 million in
settlement of Sbahle’s claim for R6,5 million in
respect of
safety consultancy, which Sbahle rejected. PRASA submits that Sbahle
failed to establish or to prove its case.
[26]
The context in which the contract was concluded, the wording of the
contract and, to the extent necessary, the contra proferentem
rule,
ought to be considered in the process of interpretation. It is
commonplace that the context includes the subsequent conduct
of the
parties which would indicate how they understood their contract. See
in this regard
Unica Iron and
Steel (Pty) Ltd v Mirchandani
[2015] ZASCA 150
;
2016 (2) SA 307
(SCA) para 21. It is trite that in
order to arrive at the common intention of the parties, the contract
must be interpreted as
a whole. See
Swart
en
'n
Ander v Cape Fabrix (Pty) Ltd
1979 (1)
SA 195
(A) at 202C;
Bothma–Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[2013] ZASCA 176
;
2014 (2) SA 494
(SCA) para 12.
[27]
It is not wrong to have regard to the background and context in the
interpretation of an agreement. It also does not equate
to making a
contract for parties. Taking cognisance of the background and context
entails that the document must be read in context
and regard must be
had to the purpose and the relevant provisions thereof in order to
ascertain the intention of the parties. See
in this regards
Endumeni
Municipality supra
at 603F-604D;
Ekhurhuleni Metropolitan Municipality v
Germiston Municipality Retirement Fund
[2009] ZASCA 154
;
2010 (2) SA 498
(SCA);
North
East Finance (Pty) Ltd v Standard Bank of South Africa Ltd
[2013] ZASCA 76
;
2013 (5) SA 1
(SCA);
The
City of Tshwane Metropolitan Municipality v Blair Atholl Homeowners
Association
[2018] ZASCA 176
;
[2019] 1
All SA 291
(SCA). The reason why the court seeks the common intention
of the parties from the wording of the contract is because that
wording
as agreed between them remains mutual to them. If the words
speak with sufficient clarity it must be taken as expressing the
parties’
common intention. See
Total
South Africa (Pty) Ltd v Bekker NO
[1991] ZASCA 183
;
1992
(1) SA 617
(A) at 624 G-625B.
[28]
In
Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) at 603F-604D, this court
stated the following regarding the interpretation of contract,
document, legislation or some statutory
instrument (para 18):
‘
The
present state of the law can be expressed as follows. Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
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 . . . 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 productivity of the
document.’
The
interpretation process is always an objective exercise. Furthermore
an approach leading to an ‘insensible or unbusinesslike
result’
or a result undermining the apparent purpose of the document, must be
avoided
[29]
The second agreement upon which claim 2 is founded, is contained in
the particulars of claim and the amended plea. The terms
of the
second agreement relevant for the purpose of this judgment are the
following:
‘
2.5
The said consultant will also be required to assist the contractor
and the client in drawing up a comprehensive construction
site plan.
This plan shall be reported at all the site meetings and at any other
time when required by the client.
3.
The client will not entertain any extra fees claims unless he
introduces a substantial or material change to the scope of the
project.
.
. .
The
fee shall, be deemed to be inclusive payment for the services and for
all disbursements, costs, expenses, overheads or profits
of every
kind incurred or to be earned by the consultants in connection
therewith. If the consultant is required by the client
to provide
material additional services by reason of any alterations, project
extension or modifications to the project as required
by the client,
then the client shall pay to the consultant additional amounts in
respect of the fee, commensurate with the additional
services
performed by the consultant.’
The
‘Consultant’ is Sbahle and the ‘Client’
refers to PRASA. Sbahle’s claim 2 of R9 095 968.47 together
with interest and costs places reliance on allegations set out
earlier in this judgment. The project was not completed on the
anticipated contractual completion date, 31 May 2010. It was still
not complete as at date of summons, but Sbahle was still rendering
services to PRASA. It cannot be denied that the extension of the
project was not necessitated in whole or in part by a negligent
act,
omission or default on the part of Sbahle. The agreement provides
expressly that if Sbahle is required by PRASA to provide
material
additional services, inter alia, by reason of alterations, project
extension or modifications of the project, then PRASA
shall pay
Sbahle additional amounts in respect of the fee commensurate with
additional services performed by Sbahle. It remains
undisputed that
Sbahle rendered the same services up to and including 31 May 2010 and
as from June 2010 to at least August 2013.
[30]
The truth is that up to 31 May 2010, Sbahle became entitled to a
total contract fee of R5 897 462.50 excluding VAT over
a period
of 17 months at a monthly rate of R346 909.56 exclusive of VAT.
Sbahle was not paid as per the contract. Consequently,
it contended
that PRASA’s conduct in neglecting or failing to pay for its
services rendered over the period June 2010 to
February 2012,
amounted to a breach of the terms of the agreement between them. This
contention cannot be faulted. PRASA’s
denial that Sbahle was
rendering a service to it, is beyond my comprehension. According to
PRASA’s plea, Sbahle only rendered
such services beyond 31 May
2010 by virtue of an extended period up to 28 February 2012. What is
surprising is that PRASA appears
to adopt the attitude that Sbahle
was required to render a service free of charge for a period of
approximately 19 months.
[31]
In addition, it must be borne in mind that Sbahle did not simply
continue on its own to render services beyond 31 May 2010.
According
to Mr Khuzwayo’s undisputed testimony, the issue was raised
with PRASA’s manager. Mr Khuzwayo approached
the manager and
asked him pertinently as follows:
‘
My
time is about to be finished what are we doing? Are we packing and
going or what?’
It
is common cause that PRASA’s manager said ‘nobody is
leaving here. Go back to your contract, read your contract’.
When Mr Khuzwayo responded and said ‘. . . it is telling me
that my time is going to be over on 31 May 2010’, the manager
referred Mr Khuzwayo to the relevant clause saying ‘that
contract does allow for an extension’. It is Mr Khuzwayo’s
undisputed evidence as summarised above that he then enquired about
the extra work. Mr Khuzwayo was told by Mr Sindane (the project
manager for PRASA at the time) that the contract covers everything
and Mr Sindane reportedly read the very same clause to Mr Khuzwayo.
[32]
It is not without significance that PRASA called no witnesses and
presented no version in opposition to the version presented
by Mr
Khuzwayo. Strangely, no further evidence was led and no version was
put to Mr Khuzwayo in respect of PRASA’s pleaded
version that
the parties agreed to extend the contractual period from 31 May 2010
to August 2013 subject to the original contract
price remaining the
same. In my view, based on common cause facts, the pleadings and Mr
Khuzwayo’s uncontested evidence,
Sbahle was entitled to be
remunerated for the services rendered after 31 May 2010 as expressly
provided for in the first and second
agreements. Undoubtedly,
additional services were required by PRASA and they were rendered by
Sbahle for a substantially extended
period of time.
[33]
In my view, the ordinary grammatical meaning of the contract
provision relevant to the matter at hand is clear and unambiguous.
The aforementioned is underpinned by the context in which the words
are used. The truth is that Sbahle rendered time-based services.
Such
services were required to be rendered by Sbahle as long as the
project was ongoing. The agreements provided a mechanism in
terms
whereof Sbahle would be remunerated if the project was extended for a
substantial period of time. Indeed ‘material
additional
services’ must be interpreted within the aforementioned
context. It is not conceivable that PRASA would expect
Sbahle to
render services free of charge from June 2010 to at least August
2013. That is a period of approximately 2 years.
J
aga
v Dönges NO & another, Bhana v Dönges NO &
another
1950
(4) SA 653
(A)
at
602H and
Sassoon
Confirming and Acceptance Co
supra
at 646C are authorities for the proposition that context relates to
context within the contract as well as the wider context relating
to
background evidence. Mr Khuzwayo testified to all the necessary
background evidence.
[34]
I have set out above the clause dealing with fees. Of importance is
the portion that reads:
‘
If
the consultant is required by the client to provide material
additional services by reason of any alterations, project extension
or modifications to the project as required by the client, then the
client shall pay the consultant additional amount in respect
of the
fee, commensurate with the additional services performed by the
consultant.’
[35]
Mr Khuzwayo’s undisputed evidence is that PRASA changed the
scope of the project in the manner fully set out in the evidence
summarised above. There were additional stalls and PRASA offices etc
that had to be built; there were additional ticket offices
to be
built as well. Any interpretation that says all this did not amount
to additional services brought about by reason of alterations,
project extension or modifications to the project required by PRASA,
would militate against the reality. Significantly, PRASA does
not
deny that it required all these additional alterations, project
extensions or modifications. The truth is that all of the above
certainly necessitated extra services to be rendered by Sbahle. It
also caused or contributed largely to the project not being
completed
by 31 May 2010 as originally scheduled. It is clear that the extent
of the extra work or alterations was not at all necessitated
‘in
whole or in part’ by any negligent act, omission or default on
the part of Sbahle. The fact is that if this was
as a result of
Sbahle’s fault, negligence or omission, then clearly in terms
of this clause PRASA would be absolved from
paying Sbahle additional
amount in respect of the fees. At the risk of repetition, the words
used in the second agreement are clear
and from them the intention of
the parties is ascertainable. I am unable to agree with PRASA’s
contention that whereas the
project was intended to be completed by
31 May 2010 any further extension of time with a view to complete it,
did not bring about
the change of the contract price in respect of
the health and safety consultancy. This fails to take account of all
additional
additions, alterations or modifications to the project
brought about by PRASA. The change in the fee structure is provided
for
in the agreement as set out above. This cannot be ignored.
[36]
The question of fees owed to Sbahle did not simply arise when summons
was issued and served on PRASA. The parties were aware
about the
additional fees due to Sbahle. On 24 January 2012, Sbahle wrote to
PRASA and set out fees owed to it. I quote hereunder
the last portion
of that
letter:
‘
Fees
owed from June 2010 to January 2012 = R6591 281.64 for consultation
period 19 months, from June 2010 to January 2012 = R889 854.55
for fire consultation period 19 months. The above calculated fees are
for the extra work done after the expiring date for the contract
(May
2010) and they exclude 7% increase for the project extension of time.
All fees are vat exclusive. We trust that the above
is in order and
should there be any need for clarification, please contact myself.’
The
letter was signed on behalf of Sbahle by David Khuzwayo. I mention
that at that stage PRASA accepted that there had been extension
of
the project and that extra work was done even after the expiry of the
contemplated date of completion of the project. PRASA
did not dispute
or deny that it changed the scope of the project by introducing
alterations, additions and modifications to the
project. PRASA
accepted that it owed money to Sbahle. The dispute was only about how
much exactly was owing. This comes out clearly
from PRASA’s
response to Sbahle’s letter dated 24 January 2012. PRASA,
instead of contending as it now does that no
fees were due and owing
to Sbahle, accepted it owed Sbahle, but was merely concerned about
the amount. Consequently, it made a
counter offer to rather pay
Sbahle an amount of R1.5 Million as a settlement instead of what was
claimed. PRASA’s letter
dated 28 March 2012. Paragraph 2
thereof reads as follows:
‘
After
studying the request for proposal fee review, in line with the
numerous extension of time granted to the contractor as a result
of
circumstances beyond the contractor’s control, I hereby
recommend that the professional team be compensated as follows:
1.
Project
Management Services R2.5Million
2.
POS.
Mahiatsi Tumelo R2.7Million
3.
Structural
and Civil Engineers: MEC (including re design work) R1.5Million.
4.
Electrical
Engineers R1.2Million
.
. .
Health
and Safety Consultants:
Sbahle
fee is exorbitantly high and not market related –1.5 Million is
proposed instead of the R6.5Million being claimed
.
It is evident that the professional team is currently discouraged
since the period of the project extended beyond their anticipated
completion dates and that they have depleted the resources for this
project. We confirm that no more extensions of fees will be
entertained and that all will be held responsible for performance.’
(My emphasis.)
[37]
The stance adopted by PRASA at the hearing of this matter before the
high court and on appeal is new. This new stance now says
in effect
‘yes there was an extension of completion time, yes there was
additional work necessitated by alterations, modifications
and
additional extra stalls to be built, new and additional offices to be
built and additional ticket offices to built etc but
Sbahle will not
or is not entitled to be paid any sum of money apart from what was
paid up to and including 31 May 2010’.
In other words, despite
an extension of the time period within which the project was
scheduled to be finalised and despite what
necessitated the
extension, there shall be no payment to Sbahle. I ask rhetorically,
why? The contract is clear on this. Sbahle
must be compensated with
an amount in respect of fees commensurate with the additional
services performed. Any argument to the
effect that Sbahle must have
been instructed in writing has no substance at all. Apart from the
fact that this was never even pleaded,
it was not even raised in
argument nor even referred to in the judgment of the high court. In
my view, it is advanced for no reason
other than as a last-ditch
attempt to deprive Sbahle of what has been proved to be due to it.
[38]
I have mentioned above that by accepting the version presented by Mr
Khuzwayo, the high court effectively found him to be a
credible
witness whose evidence could be relied upon. PRASA
omitted to present any evidence in rebuttal. It is trite
that an
appeal court must be reluctant to disturb findings of character by a
trial Judge, who was steeped in the atmosphere of
a trial and had the
advantage of seeing and hearing the witness. Such findings are only
overturned if there is a clear misdirection
or the trial court’s
findings are clearly erroneous. See
R v Dhlumayo and Another
1948
(2) SA 677
(A) at 705-706;
S v Francis
1991 (1) SACR 198
(A)
at 204C-E. The above approach has consistently been followed by this
Court and the Constitutional Court. In
S T v CT
[2018] ZASCA
73
;
2018 (5) SA 479
(SCA) para 26, this Court stated the following:
‘
In
Makate
v Vodacom (Pty) Ltd
the Constitutional Court, in reaffirming the trite principles
outlined in
Dhlumayo
,
quoted the following dictum of Lord Wright in
Powell
& Wife v Streatham Nursing Home:
“
Not
to have seen the witnesses puts appellate judges in a permanent
position of disadvantage as against the trial judges, and unless
it
can be shown that he has failed to use or has palpably misused his
advantage, the higher court ought not to take the responsibility
of
reversing conclusions so arrived at, merely on the result of their
own comparisons and criticisms of the witnesses and of their
own view
of the probabilities of the case”.’ (Citation omitted.)
I
have no reason to disturb the findings of the high court. In the
circumstances, the appeal falls to be dismissed.
[39]
For the aforesaid reasons, I would have dismissed the appeal with
costs, including costs occasioned by the employment of two
counsel.
____________________
DV DLODLO
JUDGE OF APPEAL
Mabindla-Boqwana AJA (Petse DP and
Mocumie JA concurring):
Introduction
[40]
I have read the judgment of my brother Dlodlo JA. For the reasons set
out below, I find myself unable to agree with his decision
in regard
to the outcome of this appeal. In my view, the appeal in respect of
Sbahle’s second claim should succeed with costs.
However, I
agree that the appeal in regard to the claim in reconvention must
fail. Such a claim was correctly dismissed by the
court a quo.
[41]
The issue which arises for determination in the appeal before us is
whether PRASA breached the contract it entered into with
Sbahle in
respect of the safety consultancy services and
is
consequently liable for the
amount claimed by Sbahle.
[42]
To answer this question one must look at the terms of the agreement,
and, in particular, whether those terms were satisfied
for the
purposes of the claim. Sbahle contends that by virtue of the project
not having been completed on 31 May 2010 and extended
to May 2012
(although in evidence Mr Khuzwayo alleged that the claim was up to
November 2012 when the main contractor left the
site), it was
entitled to payment in respect of the additional months as it
continued to render the same services to PRASA for
such additional
months. It based its claim on the clause in the contract which stated
that if PRASA required it to provide additional
material services,
PRASA would be liable to pay additional amounts proportionate to the
additional services performed.
[43]
For its part, PRASA contended that not only were additional services
not required, they were not performed as borne out by
the pleadings
and Mr Khuzwayo’s evidence, and that the agreed extension of
time (up to 28 February 2012) was merely given
in order to enable
Sbahle and the main contractor to complete their work for which they
were fully paid (something not to be confused
with increasing the
scope of work) in accordance with the terms of the parties’
contract.
[44]
Accordingly, it is necessary at the outset to put matters in proper
perspective by reiterating two aspects that bear on what
is central
to this appeal. First, the fate of this appeal hinges on the
interpretation of the agreement upon which Sbahle relies
for its
claim. Thus, it is trite that its interpretation, as is the case with
any document, is a matter for the court and not a
witness who
testifies in regard to the content of the document. Secondly, the
fact that PRASA called no witnesses is not relevant
insofar as the
interpretation of the parties’ contract is concerned whose
terms were after all common cause between the parties.
[45]
The issue will be better understood against the brief facts which I
find necessary to highlight, in view of the variances on
certain
aspects between Dlodlo JA and myself. Save to that limited extent, I
agree with the background and evidence as expounded
by Dlodlo JA in
his judgment. I accordingly will not repeat same.
[46]
On 18 December 2018, PRASA entered into two separate written
agreements with Sbahle. In respect of the first agreement, Sbahle
would provide fire consultancy services for the Mabopane Bridge
Redevelopment project (the project). The total fee for this agreement
was R796 185.72. This agreement formed the basis of claim 1 in the
particulars of claim which Sbahle no longer persisted with,
as it was
found to have been fully compensated as part of the payment in the
amount of R2 034 938.19 made by PRASA to it on 15
October 2013. A
letter embodying the terms of the first agreement was attached to the
particulars of claim.
[47]
As to the second agreement, which is the subject of this appeal,
Sbahle was appointed as safety consultants in respect of the
same
project. This agreement formed the basis of claim 2 wherein an amount
of R9 095 968.47 was claimed. Interestingly, Sbahle
did not annex the
full agreement in this respect to its particulars of claim. The
complete copy of the second agreement with terms
material to the
determination of this claim, only emerged as an annexure to the plea
and counterclaim. The total fee for this agreement
would be 5 percent
of the project which equated to R5 897 462.50. The terms contained in
the complete copy of the agreement are
crucial as it shall become
clearer shortly. Both agreements were effective from 2 January 2009
to 31 May 2010. The averments in
relation to both agreements in the
particulars of claim are almost identical. As mentioned by my
colleague, Sbahle obtained judgment
in the court a quo in its favour
in relation to claim 2.
Analysis
[48]
The principles applicable to interpreting an agreement are trite. I
will therefore not repeat them save to mention that, the
point of
departure is the language in the document read in context and taking
into account the purpose of the provision and the
background to the
preparation and production of the document.
[1]
In addition,
the clauses in the agreement must not be read in isolation; the
agreement must be taken as a whole.
[49]
The material terms and conditions (in the second agreement) central
to the dispute between the parties were that:
‘…
3.
The Client will not entertain any extra fee claims unless he
introduces
a
substantial or material change to the scope of
the Project
.
4.
The fee shall be paid in accordance with the agreed fee as per
Annexure “A”
…
8.
The client will not be liable
for any costs incurred
by
yourselves through whatsoever cause except where the Client has
specifically instructed you in writing to incur same
. All fee
claims applicable for the undertaking of this work are to be
addressed with Intersite Property Management Services (Pty)
Ltd.
…
FEES
The
Client shall pay to the Consultant as full remuneration for the
performance by the Consultant of the Services in accordance
with this
Agreement.
The
Fee shall, be deemed to be
inclusive payment for the Services and
for all
disbursements
,
costs
,
expenses
,
overheads or profits of every kind incurred or to be earned by the
Consultant in connection therewith.
If
the Consultant is
required
b
y
the Client to provide material additional Services by reason of any
alterations, project extension or modifications to the Project
as
required by the Client, then the Client shall pay to the Consultant
additional amount in respect of the Fee,
commensurate
with the additional services performed by the Consultant
.
However,
should the extent of extra work or alterations that the same shall
have been necessitated in whole or in part, by any negligent
act,
omission or default on the part of the Consultant, the Client will
not pay to the consultant additional amount in respect
to the fee
The
total fee for Consultant’s services on the above project is
based on Annexure ‘A’.
ANNEXURE
A
Service
: Safety Consultant
Total
Fee (excl. VAT)
:
5% of the Project
Costs.
Effective date is 2
nd
January 2009 until
Contractual
Completion date: 31 May 2010.
Should
the estimated project value decrease the tariff of 5% of the project
costs will be applied on final value and should the
estimated project
value increase the services will be free until the completion of the
project, 31 May 2010.
The
fees initially will be fixed based on the costs of works as agreed to
by the client in terms of the aforementioned principle.’
(Emphasis added.)
[50]
In order for a breach of contract to have been established, Sbahle
would have had to show: (i) that PRASA
introduced
a substantial or material change to the scope of the project in terms
of clause 3; (ii) that PRASA
had
instructed it in writing to incur such costs
claimed as required in clause 8; and (iii) that PRASA
required
it to provide material additional services
as per the fees section of the contract and that the fee claimed
was
commensurate
with the material
additional services. (Emphasis added.) The terms of the agreement are
clear and unambiguous. Such terms or requirements
must be assessed as
against the pleadings and the evidence
.
[51]
It is common cause that Sbahle only pleaded that it rendered the
‘
same services as it rendered up
to and including 31 May 2010
.’
It did not plead: (a) that it was required to perform material
additional services by PRASA (b) the nature and scope
of those
services, (c) that it performed those additional services, and (d)
that the additional amount claimed is commensurate
with the services
performed, ie material additional services.
[52]
The only relevant evidence led by Mr Khuzwayo was that the project
encountered a number of problems which caused a delay. These
included
demands made by the community who wanted to dictate their own terms
to the main contractor; the land owner who did not
want the bridge to
land on his property; requests made by PRASA for further
developments, namely, construction of a derailment
wall, extra stalls
on the western side of the bridge as well as offices to be built
underneath the bridge. Because of these changes,
so went Mr
Khuzwayo’s evidence, the architect had to change the design of
the project
,
which
also meant the rest of the project team (including Sbahle) had to
come up with a new design to fit the new architectural concept.
[53]
The first problem that arises from Mr Khuzwayo’s testimony is
that the alleged additional work he recounted related only
to the
work that had to be performed by the main contractor, he failed to
specify the material additional services that Sbahle
was required to
perform. All he could say was that Sbahle had to be with, monitor and
supervise the main contractor to ensure that
it complied with health
and safety standards at all times during the project. Mr Khuzwayo was
asked by PRASA’s counsel during
the trial to produce the
original design, the letter with instructions from PRASA to redesign
and the changed design, so as to
ascertain the nature and the extent
of change in scope of the original work. He failed to do so.
[54]
The redesign would, in any event, obviously have been done prior to
31 May 2010. Sbahle’s claim is for work done beyond
that
period. It is also not clear whether such redesign pertained to the
fire consultancy or safety consultancy services.
[55]
The second problem is that Mr Khuzwayo was not able to point to any
specific instruction given in writing to incur additional
costs as
required in clause 8 of the second agreement. This is an important
pre-condition for PRASA’s liability. All
Mr Khuzwayo
could say was that when the time for the project was about to expire,
he raised the issue with PRASA’s manager
in the following
terms: ‘My time is about to be finished. What are we doing? Are
we packing and going or what?’ The
manager said in response:
‘Nobody is leaving here. Go back to your contract. Read your
contract’ According to Mr Khuzwayo
he then said to the manager:
‘I know. It is telling me that my time is going to be over on
31 May 2010.’ The manager
then replied: ‘That contract
does allow for an extension.’
[56]
Beyond this conversation it is clear that no written instruction was
given to Sbahle to incur costs as required in clause 8.
Counsel for
Sbahle submitted that clause 8 refers to ‘
costs
’
as opposed to ‘
fees
’
and the pre-condition relating to written instructions only pertained
to ‘
disbursements
’
or ‘
expenses
’
incurred by Sbahle and not fees. This argument is contradicted by
what is contained in the unnumbered second paragraph under
the
heading ‘FEES’. In this paragraph it is clearly stated
that ‘[t]he Fee shall, be deemed to be inclusive [of]
payment
for the Services and for all
disbursements,
costs, expenses
, overheads or profits
of every kind incurred or to be earned by the Consultant in
connection therewith.’ (Emphasis added.)
[57]
Sbahle regrettably cannot get past the requirements in clause 8 of
the agreement. Clearly, in terms of this clause it should
have
procured written instructions before incurring any costs for
‘additional services’. Instructively, the conversation
with the manager does not refer to change in scope of work or
provision of material additional services. All it refers to is the
extension which the manager stated was ‘allowed’ by the
contract, which seems to be consistent with what is alleged
in the
particulars of claim that during the extended period Sbahle rendered
the ‘same services as it rendered up to and including
31 May
2010’
.
[58]
I note my colleague’s reference to Mr Khuzwayo’s evidence
in relation to ‘extra work’ that needed to
be performed.
The issue, however, is whether Sbahle was instructed in writing by
PRASA to render additional ‘material’
services, and if so
whether the amount claimed is commensurate with such additional work,
as mentioned above. Mr Khuzwayo’s
evidence did not satisfy
these requirements. It is also telling that he could not produce the
new designs he supposedly prepared
along with the other requested
documents.
[59]
An intriguing point, overlooked by the court a quo, is that the
additional services performed had to be ‘material’.
It
was, accordingly, not sufficient for Mr Khuzwayo to merely mention
that Sbahle performed ‘extra work’. In my view,
over and
above specifying the additional work that Sbahle was required and
instructed to perform in writing (which he failed to
do), Mr Khuzwayo
had to demonstrate that such work was ‘material’. Had
this critical fact been established, Sbahle
would, in addition, bear
the onus to demonstrate that the amount claimed was commensurate with
the additional services rendered.
On a conspectus of the evidence,
Sbahle came nowhere near to establishing any one of these crucial
facts. Sbahle’s failure
to do so must ineluctably lead to the
conclusion that the case against PRASA was not proved.
[60]
Sbahle referred to an internal memorandum of PRASA dated 12 March
2012, which recommended that an amount of R1,5 million be
paid to
Sbahle instead of the R6,5 million it claimed. Apart from the fact
that the memorandum is an internal document, it does
not record any
agreement nor can it be equated to an acknowledgement of an agreement
or written instructions for Sbahle to incur
costs for additional
services. It simply recommends compensation to be paid to the
professional team (including Sbahle) for the
extension of time. It
does not refer to compensation for material change in scope of work
or additional services. On a fair reading
thereof, the memorandum
amounts to no more than PRASA’s attempt to resolve a dispute
that had arisen between the parties
amicably.
[61]
A brief comment to illustrate the difference between the two
scenarios will suffice. It seems to me that the second
agreement countenanced a situation where the client would introduce
substantial or material change to the scope of the project within
the
duration of the agreement. The extension of the scope of the
agreement may not necessarily result in the extension of time.
Time
may also be extended for the same services to be rendered within an
extended period. Mr Khuzwayo seemed to conflate the two
scenarios.
Delays in themselves do not necessarily amount to additional work.
[62]
The contract in this case stated that the client would be liable for
an additional amount when it introduced ‘substantial’
change in scope of work. Furthermore, payment of any additional
amount incurred would have had to be measured with the additional
work done to determine if it was commensurate with such work. It
seems to me, the agreement made a special provision for payment
of
fees in relation to additional services. This is because in respect
of the total fee of the project the agreement expressly
provides that
such will be based on Annexure ‘A’. In contrast, when it
came to additional work, such work had to be
costed to determine
whether it was commensurate with the additional services performed by
Sbahle. It is clear therefore that a
special fee dispensation was
envisaged in respect of additional work.
[63]
Notably, the project commenced some seven months later than it was
scheduled. Mr Khuzwayo confirmed that it was 53 percent
complete when
Sbahle left the site. Notwithstanding that, the full contractual
amount was paid. The formula employed in Annexure
‘A’ was
based on the contract being completed on the specific date of 31 May
2010. The unsuccessful attempt to negotiate
a further fee in relation
to the safety consultancy services is, in my view, indicative of the
fact that any amount above the fees
agreed to in the contract would
have had to be a subject of negotiations. It was not covered by the
agreement as it stood.
[64]
In sum, the contract is clear that PRASA would only be liable for an
extra fee if, it introduced significant or material changes
to the
scope of work, instructed Sbahle in writing to incur costs for such
additional work and payment of the additional amount
would be
commensurate with the work done. Not only was compliance with these
pre-conditions not pleaded, no evidence was led in
this regard. To
underscore this point, it bears emphasising that the basis of PRASA’s
case is not new, its defence has always
been founded on the fact that
PRASA at no stage instructed or required Sbahle in writing to
undertake material additional services.
This issue and the relevant
clauses were pertinently raised by PRASA’s counsel in the
course of Mr Khuzwayo’s cross-examination.
[65]
Sbahle, therefore, failed to discharge its onus. The court a quo
erred in finding that it did. For those reasons, I am of the
view
that to this extent the appeal should succeed. So far as costs are
concerned, I am satisfied that PRASA is entitled to its
costs as it
has achieved substantial success on appeal.
[66]
It remains to address one final issue. Counsel for Sbahle submitted
that it would be iniquitous for Sbahle to perform work
for many
months to PRASA’s benefit without being paid for its services.
The finding in this judgment does not suggest that
Sbahle should not
be compensated for its
services,
if any.
It may be that it has a
remedy, but such remedy does not lie under the second agreement it
relied upon in its action. It possibly
can have a competent claim on
a different cause of action. However, for present purposes Sbahle
based its claim on contract, consequently,
the facts pleaded and the
evidence led had to be construed in light of the parameters of the
said contract.
[67] For the
aforegoing reasons, the following order is made:
1 The appeal in
relation to the second claim succeeds with costs, including costs
consequent upon the employment of two counsel.
2 The appeal in
relation to the claim in reconvention is dismissed.
3 The order of
the court a quo is set aside to the extent reflected below and
substituted with the following:
‘
The
action in respect of the second claim is dismissed with costs.’
_________________________
N P MABINDLA-BOQWANA
ACTING JUDGE OF
APPEAL
APPEARANCES:
For
appellant:
M Gwala SC (with him M Machete)
Instructed
by:
Ngeno and Mteto Incorporated, Pretoria
Kramer Weihman &
Joubert Attorneys, Bloemfontein
For
Respondent:
C
da Silva SC (with him D Prinsloo)
Instructed
by:
Ndumiso Voyi Incorporated, Port Elizabeth
Webbers
Attorneys, Bloemfontein
[1]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA)
para 18.