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[1991] ZASCA 16
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Compagnie Interafricaine de Travaux v South African Transport Services and Others (680/89) [1991] ZASCA 16; 1991 (4) SA 217 (AD); [1991] 2 All SA 155 (A) (21 March 1991)
Case no 680/89
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
COMPAGNIE INTERAFRICAINE DE TRAVAUX
Appellant
and
SOUTH AFRICAN TRANSPORT SERVICES
First respondent
THE PRESIDENT OF THE SOUTH AFRICAN
INSTITUTION OF CIVIL
ENGINEERS
Second respondent
THE RESIDENT ENGINEER OF THE
SOUTH AFRICAN TRANSPORT
SERVÏCES
(CONSTRUCTION) BELVILLE
Third respondent
THE CHIEF CIVIL ENGINEER SOUTH
AFRICAN TRANSPORT SERVICES
Fourth respondent
CORAM
: CORBETT CJ, HEFER, VIVIER, MILNE, et EKSTEEN JJA.
DATES OF HEARING
: 18, 19 and 20 February 1991
DATE OF JUDGMENT
: 21 March 1991
JUDGMENT
1
CORBETT
CJ:
As this case demonstrates, tunnelling through
mountains can be an unpredictable operation. For
tunnelling is what this
case is all about. On 15 February
1980 first respondent, South African Transport Services
("SATS") called for tenders for the construction of a
railway tunnel some
13,33 km in length through the Hex
River mountains in the Cape Province,
together with certain
ancillary works. The proposed tunnel's eastern portal
was
to be in the vicinity of De Doorns and the western portal
near
Kleinstraat. The tunnel was to be at a general depth
of up to about 220 m
below ground surface. The extended
closing date for tenders was 16 May 1980.
On that day,
under cover of a letter dated 13 May 1980, a tender was
submitted by a company called Spie-Batignolles S.A.
Division, a division
of Spie-Batignolles, which has its
registered office in Paris ("Spie-Batignolles"). This
2
tender was accepted by SATS on 13 August 1980. Thereafter
Spie-Batignolles decided that it did not wish itself to carry out the contract
work. It accordingly caused the appellant, Compagnie Interafricaine De Travaux
("Comiat"), to be incorporated and it arranged for
the contract to be ceded to
Comiat. It is common causê that in all respects Comiat stepped into the
contractual shoes of Spie-Batignolles.
The tender provided for the conclusion by
the parties of a formal contract. This was entered into on 29 December 1980.
The formal contract is voluminous and comprises the completed tender form,
certain general conditions of contract ("the general conditions"
also referred
to as "the E5"), certain special conditions of contract and specifications ("the
special conditions"), a schedule of
prices and quantities, and drawings. The
contract requires the contractor to complete the works in accordance
3 with
the contract documents. The amount to be paid to the contractor for the due
performance of the contract work is a sum to be
ascertained from the quantities
of work carried out at the rates tendered by the contractor in the bills of
quantities and/or schedule
of prices. The amount of the tender, calculated in
accordance with the quantities and rates reflected in the tender, amounted to
R26 770 082, but the ultimate contract figure would obviously depend upon final
measurement and calculation, taking into account
the actual quantities of the
work performed, provisional work, price adjustment clauses, variations, etc. The
date of completion
is given as 12 August 1984. The contract provides for the
grant of an extension of time for completion and for the payment of a penalty
by
the contractor for failing to complete and hand over the works by the completion
date or, where applicable, the extended completion
date.
4 One of the
documents initially made available to tenderers was a geological report prepared
at the request of SATS by a consulting
geologist, Mr M J Mountain ("the Mountain
report"). Mr Mountain conducted extensive investigations (starting in May 1974)
into the
feasibility of various routes for the tunnel. He studied geological
maps and surveys, and surface conditions, tested subsurface conditions
by means
of 19 boreholes and conducted geotechnical tests upon rock cores. From these
investigations two alternative routes for the
tunnel were chosen. The report
contains descriptions of the general geology of the area, of the engineering
geology of the two alternative
routes and of the geomechanical classification of
the rock masses likely to be encountered in the process of tunnelling along
these
routes. The rock in different sections of the proposed tunnels, consisting
mainly of sandstone and shale, is classified geomechanically
into five
5
categories in accordance with a system devised by a Mr Z T Bieniawski. These are
(i) very good quality, (ii) good quality, (iii)
fair quality, (iv) poor quality
and (v) very poor quality. As regards route 1 (which was the route chosen in the
contract), Mountain
estimated from his investigations that 88% of it would be
through rock masses falling in classes (i) to (ii), i e very good to good,
7% in
classes (ii) to (iii), i e good to fair, 3% in class (iii), i e fair, and 2% in
classes (iii) to (iv), i e fair to poor. This
led Mountain to conclude that in
general the average rock mass of all structural regions lay within the range of
Bieniawski's class
(ii), viz good rock. The report nevertheless contains the
caveat
:-
"All information contained in this report is given with a view to providing
the maximum practical information for the benefit of all
involved in the
project. Variations from the predicted conditions may be encountered,
particularly in areas of geological contact
6
or fault zones, due to circumstances which could not reasonably have been
foreseen."
The Mountain report is
referred to in the special conditions (cl. 4.6) and it is there stated that the
report contains the interpretation
placed upon the information gained in the
investigation. Cl. 4.6 further informs tenderers that the drilling cores are
available
for inspection and that representative core samples can be made
available to tenderers for the purpose of further testing; and contains
the
warning:
"The interpretations given in no way absolve the Contractor from making his own
assessment as required under Clauses 2(a) and 2(b)
of the
(E.5)."
I shall later refer to clauses
2(a) and 2(b) of the general conditions.
Tenderers were required to inspect the site before
7 tendering and to this end site inspections were arranged for 5 and 27 March
1980, but tenderers were not permitted to sink additional
boreholes since this
would have delayed the project.
For most of its length the tunnel is designed to carry one railtrack, but
there is a section in the middle 1 447 metres in length
(known as "the loop")
where the tunnel is enlarged to double width in order to accommodate two
tracks.
The special conditions contain detailed provisions in regard to tunnelling.
These include a stipulation (in cl. 4.4) that each tenderer
is to submit with
his tender a comprehensive technical report describing his proposed tunnelling
methods, with particular reference
to such matters as the mode of attacking the
rock face, proposed tunnelling cycles, the number of complete sets of tunnelling
equipment
to be provided, the proposed primary support
8
systems to be used and the proposed average daily advance rate
to be achieved. In the case of the successful tenderer, his technical
report is
to be incorporated in the contract and he is bound to carry out the work in
accordance with the report. The special conditions
further provide that the
tunnelling methods used by the contractor are to be subject to the approval,
from the safe-working aspect,
of the Resident Engineer, Construction ("the
Engineer") and the competent authority under the Mines and Works Act 27 of 1956
and
the Explosives Act 26 of 1956 (and the regulations made under those Acts);
and that the contractor shall modify his methods in accordance
with their
requirements (cl. 4.11.2). Cl 4.4 of the special conditions further provides
that the contractor shall only be allowed
to change his tunnelling method in the
circumstances provided for in cl. 4.11.2 and with the written approval of the
Engineer. Both
cl. 4.4 and cl. 4.11.2 emphasize that additional costs
resulting
9 from changes in the tunnelling methods rendering them different
from those envisaged by the contractor at the time of tendering
must be borne by
the contractor and that no further claim, over and above the amount to be paid
for work performed as calculated
in terms of the relevant rates in the contract
documents, will be considered.
Such an excavated tunnel requires internal support. The special conditions
make provision for two types of such support - temporary
support and permanent
support. Cl. 4.12.1 stipulates that the contractor shall be at all times
responsible for the safety and stability
of the tunnel excavation and that he
shall, subject to the Engineer's approval, take whatever of certain specified
measures or combinátions
thereof he considers adequate by way of
temporary support to prevent cave-ins, ground or rock falls or other failures.
The measures
specified in cl. 4.12.1 are rock bolts, structural steel supports,
wire
10 netting or welded mesh fabric and shotcrete, a form of pneumatically
applied concrete. The contractor is obliged to maintain the
temporary support
until the permanent lining is in place. It is further stipulated that temporary
support shall be provided by the
contractor at his own cost, the rates tendered
for tunnel excavation being deemed to include full compensation for the supply,
installation
and maintenance of temporary support and all direct and
consequential costs involved in providing the same.
Cl 4.12.2 states that permanent tunnel support shall consist of a concrete or
shotcrete lining, as specified. The lining is to be
reinforced where specified
and where directed by the Engineer. The contractor may be required by the
Engineer to incorporate temporary
support systems as part of the permanent
support. Where this is done such temporary support will be measured and paid for
in accordance
with the contract terms and rates of payment.
11
In the section dealing with tunnelling in the schedule of
prices and quantities figures for quantities, rates or prices per cubic
metre
and total amounts are given for (i) excavation in shale, (ii) excavation in
Quartzitic sandstone and (iii) excavation in mixed
zones. In addition there is a
price for "extra-over" items (i), (ii) and (iii) for excavation in "fault
zones". This extra-over rate
is for a provisional item relating to an additional
payment over and above the rates for (i), (ii) and (iii) where fault zones are
encountered. In terms of cl. 4.14.15 of the special conditions this item only
applies in "highly incompetent rock" where certain
further requisites, which I
need not detail, are present. Apart from fault zones, no distinction is drawn in
the rates between different
qualities (as opposed to kinds) of rock mass. A
contractor, when tendering, would, therefore, have to take cognizance of his
estimation
of the quality of rock to be
12
encountered and fix his prices accordingly.
In the technical report submitted by Spie-Batignolles together with its
tender (in terms of cl. 4.4 of the special conditions) it
is stated,
inter
alia
, that the tenderer plans to excavate the tunnel from both portals
simultaneously and that an average excavation rate on each heading
of 350 metres
per month is predicted for the concrete lined tunnel and 300 metres per month
for the shotcrete lined tunnel. In its
covering letter forwarding the tender
Spie-Batignolles wrote that -
"The appreciation of rock conditions based on the Geological Report and observed
core samples indicates excellent tunnelling conditions,
with good to very good
rock, very little temporary support required and no problems with care of ground
water. In particular we have
assumed that the installation of temporary support
will not interfere with the tunnelling
cycles."
13
The general conditions of contract further contain fairly
standard clauses giving the Engineer overall superintendence of the contract
works (cl. 22); providing for the ordering of alterations, extras, additions to
or omissions from the contract by the Engineer (cl.
35); prescribing how
remuneration for such extras, etc is to be determined (cl. 50); regulating the
payment of what is due to the
contractor by means of measurement certificates
(cls 56 and 57); and providing for the arbitration of disputes (cl. 69). Clause
2(a)
and 2(b) of the general conditions, which have previously been referred to
and are of critical importance in this case, read as follows:
"2(a) The Contractor shall be held to have inspected and examined the site of
the works and its surroundings and to have satisfied
himself before submitting
his tender as to the nature of the ground and sub-soil, the form and
14
nature of the site, the nature of the work, the quantities and
the materials necessary for the completion of the works, the means
of access to
the site, the accommodation and camping sites he may require and, in general, to
have obtained all requisite information
as to the risks, contingencies and other
circumstances including local climatic conditions which may influence or affect
his tender.
(b) The Contractor shall be held to have satisfied himself before tendering
as to the correctness and sufficiency of his tender, and
of the rates and prices
stated in the bills of quantities and/or schedule of prices. These rates and
prices shall be held to cover
all his obligations under the contract and
everything necessary for the proper completion and maintenance of the works. No
claim
by the Contractor
15
will be considered on account of the materials, methods of
construction and/or site conditions being different from those assumed
by him in
tendering for the contract, except in the case of adverse sub-surface conditions
which in the opinion of the engineer could
not reasonably have been
foreseen."
Work on the excavation for the eastern approach cut was commenced in
September 1980 and on the tunnel excavation in January 1981.
Comiat avers that
during the next ensuing year it came to realise that the quality of the rock
through which the tunnel and the eastern
cut had to be excavated was worse than
that which had or could reasonably have been foreseen or assessed at tender
stage from the
data or conclusions in the Mountain report or from any other
practical form of assessment; that this had resulted in the materials,
methods
of construction and/or site conditions
16
being different from those assumed by Spie-Batignolles at the
time of tendering; and that this had caused additional costs to Comiat
and had
substantially delayed the progress of the work. On 31 March 1982 Comiat
submitted to the Engineer a claim ("the 1982 claim")
for additional remuneration
and an application for extension of the time for the completion of the contract.
This claim is clearly
based upon the last sentence of cl. 2(b) of the general
conditions, quoted above.
The Engineer's reaction to this claim is contained in a letter to Comiat
dated 26 August 1982. In it the claim is rejected, basically
on two grounds. The
first ground is that the rock conditions encountered were entirely foreseeable;
and the second that the slow
progress of the work was due to inefficiency on the
part of the contractors. With reference to the quality of the rock encountered
the Engineer stated:
17
"In the tunnel headings completed to date, the rock can be classified generally
as Class III. An average stand-up time of one week
applies to this class. I am
in agreement in general that the actual geomechanics class is approximately one
to one and a half classes
lower than that given in the Geological Report. This
conclusion was reached by our Geotechnical Consultant before the start of any
excavation work on site solely on the basis of the information available in the
tender."
The "Geotechnical Consultant"
referred to in the last sentence of this quotation was a firm called Steffen
Robertson and Kirsten,
which on about 25 November 1980 furnished a report to
SATS on the geotechnical conditions which might be encountered in the
construction
of the tunnel. It is claimed that this report presents a less
favourable picture than the Mountain report.
Thereafter, on 15 September 1982, in terms of
18
cl. 69(a) of the general conditions, which provides for the
reference of disputes between the contractor and the Engineer to the Chief
Civil
Engineer ("CCE"), Comiat's 1982 claim was submitted to the CCE. The decision of
the CCE was conveyed to Comiat in a letter
dated 27 September 1982, in which he
overruled the Engineer. He noted that the Engineer had conceded that so far as
the work had
progressed the actual geomechanical classification had proved to be
approximately one to one-and-a-half classes lower than that predicted
in the
Mountain report; and ruled that the position was governed by cls. 2(b) and 50 of
the general conditions. He further indicated
that he would instruct the Engineer
to issue variation orders as a basis for providing recompense to Comiat. The
parties were unable
to agree rates for this additional work and eventually in
January 1983 the Engineer himself fixed new rates (expressed to be
"provisional")
and also granted a
19
"provisional" extension of time of 16 months for completion of
the contract. In due course variation orders with an unescalated value
of some
R5 434 000 were issued and this amount was paid out. Comiat was dissatisfied
with the Engineer's decision and the dispute
was again referred to the CCE. The
latter upheld the Engineer and Comiat requested arbitration in terms of cl. 69
of the general
. conditions. The arbitration procedure was set in motion and in
August 1985 Comiat submitted its statement of claim to the arbitrator.
This
dealt comprehensively with the additional remuneration which Comiat claimed by
reason of it having encountered unforeseen and
reasonably unforeseeable adverse
subsurface conditions both in the tunnel and in the eastern approach cut, and
was quantified as
at 30 June 1985 in an amount of some R65 million.
In the meanwhile, by August 1984 the excavation of the tunnel was complete
save for some 1 150 metres in the
20
in the loop section. While excavating this final length
of
tunnel over the period August 1984 to May 1987 some of the
worst rock
conditions in the whole tunnel were encountered.
These are referred to as
"the loop fault". This situation
called for a new method of excavation,
altered procedures
and the acquisition of new plant and equipment. There
were
requests by Comiat for extensions of time for completion and
for
variation orders to compensate the contractor for
additional expenses
incurred by him. The Engineer
initially reacted favourably, but subsequently
on the
instructions of the CCE he informed Comiat on 24 April 1986
that
the work in the loop section constituted excavation in
"fault zones", in terms of cl. 4.14.15 of the special
conditions, the
quantities for which were shown as
provisional, and that consequently in
terms of cl. 50 of the
general conditions the rates therefor were not subject
to
variation. The variation orders sought were accordingly
21
refused. Shortly thereafter the previous variation orders
compensating Comiat for additional costs and allowing additional time were
in
effect cancelled and Comiat was notified that the resultant overpayment was to
be recovered from monthly payment certificates.
In April 1987 SATS gave notice that it proposed to amend its defence to the
Comiat's claim for additional remuneration, as submitted
to the arbitrator in
August 1985. For reasons which need not be canvassed Comiat then decided that it
would be speedier and more
effective if it were to abandon the arbitration
proceedings and submit to the Engineer a new comprehensive claim with a view to
that
becoming the basis of a new arbitration. This it did, the new claim being
made under cover of a letter dated 30 September 1987 ("the
1987 claim").
The 1987 claim is a voluminous document running to some 238 pages. Separate
claims (main and in the
22
alternative) are made in respect of the tunnel and the eastern
cut. The claims are described in detail and there are numerous supporting
schedules. I shall later refer to the 1987 claim in more detail. At this stage I
would merely point out that both in regard to the
tunnel and the eastern cut the
main claim is for what is termed "reasonable remuneration" in terms of cl. 2(b)
of the general conditions;
and that there are alternative claims in terms of cl.
2(b) which are to be costed in terms of cl. 50. Cl. 50 (which will be quoted
later) prescribes how alterations, extras, additions and omissions ordered in
terms of cl. 35 shall be priced.
The 1987 claim led to a bulky and protracted correspondence between Comiat,
on the one hand, and the Engineer and the CCE, on the
other hand. In addition,
two meetings between Comiat representatives and the Engineer (accompanied by his
deputy) were held on 19
April and 10 May
23
1988, in order to attempt to resolve differences between the
parties. In essence the attitude of the Engineer and of the CCE was that
Comiat's 1987 claim could not be considered
(a) as regards the main claim, because a claim for
reasonable remuneration
was not "contractually
based" since the contract made no provision
for
remuneration on this basis; and
(b) as regards the alternative claims involving cl.
50, because Comiat had
failed, in its formulation
of the claim, to state what assumptions,
or
allowances, were made by it when arriving at the
unit prices for
tunnelling quoted in its tender.
It would also seem
that the Engineer and the CCE did not accept that any adverse subsurface
conditions not reasonably foreseeable
had been encountered in the excavation of
the tunnel.
24
The CCE's final ruling on the claim was given on 13 June 1988. On 29
June Comiat wrote to SATS requesting that there be submitted
to arbitration the
issue as to whether, in the event of it being found that there were adverse
subsurface conditions which could
not reasonably have been foreseen resulting in
materials, methods of construction or site conditions being different from those
assumed
at the time of tender, Comiat was entitled to be paid a reasonable
remuneration in respect thereof, or whether it was limited in
quantifying its
claim by the provisions of cl. 50. SATS referred this request to the State
Attorney. On 22 July the State Attorney
wrote to Comiat stating that inasmuch as
the Engineer had refused to consider the claim, there was no arbitrable dispute
to go to
arbitrátion in terms of cl. 69. SATS accordingly declined to go
to arbitration. Thereafter Comiat attempted to have an arbitrator
appointed by
the authority named in cl.69, viz
25
the President of the South African Institution of Civil
Engineers, but this was strongly opposed by SATS. In the end, in September
1988,
Comiat abandoned this further attempt to go to arbitration. Shortly thereafter,
on 15 October 1988, work on the tunnel was
completed.
Comiat then decided upon litigation and in December 1988 it instituted motion
proceedings in the Witwatersrand Local Division citing
as respondents, SATS
(first respondent), the President of the South African Institution of Civil
Engineers (second respondent), the
Engineer (third respondent) and the CCE
(fourth respondent) and claiming the following relief (prayer 2 was abandoned
and need not
be set out):
"1. Declaring that, on the assumption that materials, methods of construction
and/or site conditions were different from those assumed
by the applicant in
tendering for the contract between the
26
applicant and the first respondent (being contract number CTNW 758), and that
there were, alternatively this was due to, adverse sub-surface
conditions which,
in the opinion of the third respondent OR the fourth respondent OR any
arbitrator(s) who might be appointed in
terms of clause 69 of the General
Conditions of Contract, could not reasonably have been foreseen;
(a) applicant is entitled to reasonable remuneration in respect of a claim in
terms of clause 2(b) of the General Conditions of Contract,
and in particular in
respect of applicant's Main Tunnel Claim (as defined hereinbelow) and
appli-cant's Main Eastern Cut Claim (as
defined hereinbelow); and/or
(b) third respondent was not entitled to refuse to make a ruling on ap-plicant's
Main Tunnel Claim but that he should have either
admitted or rejected it;
and/or
27
(c) third respondent was not and is not entitled to refuse to make a ruling on
applicant's Main Eastern Cut Claim but that he should
either admit or reject
it;
2
3. Declaring that in the event that the applicant's claims as defined
hereinafter gave rise to a dispute or difference between them
as contemplated by
clause 69(a) of the General Conditions of Contract the third respondent was not
and is not entitled in order to
admit or reject the claims to demand that the
applicant furnish any information to him over and above that submitted with the
applicant's
claims and he is directed to consider and decide the whole of the
claim referred to him by the applicant as opposed to a decision
on any one issue
or aspect of the claim; his decision on the whole of the claim to be conveyed to
the applicant within a period of
two months from the date of this
order;
28
4. Directing the third respondent (without precluding applicant from pursuing
its Main Tunnel Claim) to make a ruling on applicant's
First and Second
Alterntive Tunnel Claims (as defined hereinbelow) and applicant's First, Second,
Third, Fourth and Fifth Alternative
Eastern Cut Claims (as defined hereinbelow)
by either admitting or rejecting them;
5. Declaring that in the event of any matter referred to in the preceding
paragraphs being referred in writing to the fourth respondent
in terms of clause
69(a) of the General Conditions of Contract the fourth respondent is not
entitled to demand that the applicant
is obliged to furnish any information to
him over and above that submitted with the applicant's claims in order to settle
the matter
and advise his decision in writing and he is directed to consider and
decide the whole of the claim referred to him by the applicant
as opposed to a
decision on any one issue or aspect of the claim; his
29
decision on the whole of the claim to be conveyed to the
applicant within a period of two months from the date of his order."
I quote prayers 3, 4 and 5 in their amended form. There were, in addition,
certain alternative prayers, but it is not necessary to
refer to them.
In Comiat's founding and other affidavits, to-gether with the annexures
thereto, the whole story as I have hitherto recounted it is
set forth. The
application was opposed by first, third and fourth respondents, who filed a mass
of affidavits and documents, canvassing
many issues. It is not necessary to
refer to the answering affidavits in any detail. In general they put in issue
the legal contentions
put forward by Comiat; they deny that Comiat in fact
encountered adverse subsurface conditions which were not reasonably foreseeable;
they allege that Comiat under-tendered in the first place and that its claims
are an
30
attempt to recoup the cost and conseguences of such
under-
tendering and other inefficiencies; and they aver that
Comiat's
failure and refusal to give its actual tender
assumptions precluded its 1987
claim being considered by the
Engineer, the CCE and an arbitrator. Second
respondent
took no part in the proceedings.
The application was heard by Mynhardt J, who dismissed the application with
costs, including the costs of three counsel, and awarded
such costs on the scale
as between attorney and client. Comiat comes on appeal to this Court with leave
of the Judge a
quo
.
I proceed now to consider whether, contrary to the finding of the Court a
quo
, Comiat was entitled to all, or any, of the relief claimed in its
notice of motion. I commence with the declaratory order sought
in prayer 1. This
prayer raises the interpretation of cl. 2(b) of the general conditions and in
particular the issue as to whether
31 the last sentence of clause 2(b) gives
rise to a claim for reasonable remuneration, essentially a question of law. The
prayer asks
the court to assume, for the purpose of deciding this legal issue,
that certain facts exist, viz that in the case of the contract
under
consideration materials, methods of construction and/or site conditions were
different from those assumed by Comiat in tendering
for the contract and that
there were (or alternatively this was due to) adverse subsurface conditions
which in the opinion of the
Engineer (or the CCE or an arbitrator appointed
under clause 69) could not reasonably have been foreseen. The question then is
whether,
postulating those facts, Comiat would be entitled to a reasonable
remuneration, as set forth in its main tunnel and eastern cut claims.
In their heads of argument the respondents raised certain preliminary
objections to the relief claimed in prayer 1. These objections
were not argued
before us, but
32
at the same time they were not abandoned. It is thus necessary
to deal with them.
In the first place, it was contended that a court cannot be asked to make a
declaratory order on the basis of assumptions of fact
and in this connection
reference was made to certain authorities which establish that the court will
not exercise its power to make
a declaratory order in order to answer abstract,
academic or hypothetical questions. In my opinion, that principle has no
application
here. As I have shown, there is a real and pertinent dispute between
the parties as to whether or not Comiat is entitled to reasonable
remuneration
where the facts assumed by prayer 1 are present, i e where a cl.2(b) type of
situation occurs. Indeed, the Engineer's
view on this legal issue has caused him
to refuse to consider Comiat's main claim and the CCE's concurrence with this
viewpoint has
caused a deadlock, preventing settlement of
33
the issue by arbitration. In the circumstances, it seems to me
that not only is the Court empowered to make the desired declaration
- which
will decide the legal issue one way or the other - but also that it is eminently
desirable that it should do so. I might
add that though the facts assumed are in
dispute there is in Comiat's evidence
prima facie
substantiation of these
assumptions. On the facts, too, the case is therefore neither abstract nor
academic nor hypothetical.
Secondly, the respondents raise the objection that in terms of cl. 69 any
dispute between the Engineer and Comiat "in connection with
the contract", which
would include a dispute as to a claim based on cl. 2(b), must be decided first
by the CCE and, thereafter, at
Comiat's election, by an arbitrator; and that a
court will not usurp an arbitrator's functions in whole or in part. I find it
strange
that this argument should come from the respondents
34
seeing that they have done everything in their
power to
prevent the dispute going to arbitration and have made it
clear
that, in their view, the Engineer has taken no
arbitrable decision. There is
no substance whatever in
this point. The manifest purpose of the
present
application is to enable arbitration to get under way.
The third objection is that there is a dispute of fact as to the basis upon
which Comiat seeks relief and this was well known to Comiat
when it launched
these proceedings. As far as I can make out, this so-called dispute of fact
relates to evidence relevant to whether
or not cl. 2(b) contains an implied term
providing for reasonable remuneration. This is a question of legal
interpretation, not of
fact. There is, in my view, no relevant dispute of fact
which prevents this question being decided by the Court.
I turn now to cl. 2(b) and for convenience I re-
35
quote the last sentence thereof:
"No claim by the Contractor will be considered on account of the materials,
methods of construction and/or site conditions being
different from those
assumed by him in tendering for the contract, except in the case of adverse
sub-surface conditions which in
the opinion of the engineer could not reasonably
have been foreseen."
This is the
sentence (for convenience I shall call it "the last sentence") upon which
Comiat's claim is founded. It must be read in
the light of,
inter alia
,
what precedes it in cl. 2(b) and also in cl. 2(a). The latter sub-clause places
the onus upon the contractor before submitting his
tender to inspect the site of
the works, to acquaint himself with the nature of the site, the nature of the
work, the quantities
and materials necessary for the completion of the works,
etc, and to obtain all requisite information as to risks, contingencies
and so
on. The first two sentences of
36
cl. 2(b) oblige the contractor to satisfy himself as to
the
correctness and sufficiency of his tender and of his rates
and prices and
stipulate that these rates and prices are to
cover all his obligations under
the contract and all that is
necessary for the completion and maintenance of
the works.
Then, in the last sentence, the same idea is
conveyed
negatively in that. the contractor is denied the right to
make a
claim on account of the fact that materials, methods
of construction and/or
site conditions turn out to be
different from those assumed by him in
tendering for the
contract. This denial is, however, made subject to a
single exception, viz where there are adverse subsurface
conditions which
in the opinion of the Engineer could not
reasonably have been foreseen.
The last sentence is very cryptically worded. In a contract running to
several hundred pages it seems unfortunate that when it came
to a matter which
in this
37 particular contract was obviously of prime importance to the
parties so much should have been left unsaid. (Cf the far more specific
and
comprehensive clause in the standard form of general conditions of contract in
McKenzie,
The Law of Building and Engineering Contracts and Arbitration
,
4th ed at p 233.) Certain of these omissions can readily and indisputably be
supplied by way of interpretation; others are more
controversial. Thus there
seems to be no doubt that the last sentence means that where the exception
applies, i e where there are
adverse subsurface conditions and the Engineer is
of the opinion that they could not reasonably have been foreseen, the contractor
is given a right to a claim on account of the materials, etc being different
from those assumed by him when tendering. It seems to
me, however, that such a
claim will lie only where the adverse subsurface conditions
result
in the
materials, etc being different from those originally assumed (that is,
38
there must be a causal connection); and only where the
difference in materials, etc gives risé to expense or loss
for which the contractor is not otherwise remunerated or
compensated under
the contract. Any other interpretation
would be contrary to the manifest
intention of the
contracting parties. And, I would add, the claim
is
obviously for financial remuneration.
The role of the Engineer in regard to such a claim needs examination. Clearly
he must, in the first place, decide whether in his opinion
adverse subsurface
conditions encountered by the contractor are such as could not reasonably have
been foreseen. If he is of this
opinion, then one of the requirements for a
claim is satisfied. It seems to me, however, that before a claim can be
entertained,
he would also have to form the opinion that these adverse
subsurface conditions caused differences in materials, etc and that this
in turn
caused the contractor
39
additional loss or expense not otherwise recoverable under
the contract. If the Engineer decided against the
contractor on any one or
more of these issues, then the
contractor would have recourse under clause 69
firstly to
the CCE and then, if he were dissatisfied with the decision
of the CCE, to
arbitration.
The next question to be considered is how such a claim, when it arises, is to
be quantified. Comiat's contention is broadly that there
is no express
contractual provision determining the quantification of the claim and that in
the circumstances the law implies a reasonable
remuneration. In this regard
Comiat's counsel referred to various authorities, South African and foreign.
Respondents' counsel, on
the other hand, submitted (and this submission was
accepted by the Court a
quo
) that a claim arising under cl. 2(b) had to
follow the procedures prescribed by cls. 35 and 50, that is, it had to be
the
40
subject of an order issued under cl. 35 (I shall call this
a
"variation order") and be quantified in terms of cl. 50.
These two clauses
must now be considered more closely.
They read:
"35. The Engineer may order alterations, extras, additions to or omissions
from the contract, and the Contractor shall carry out or
give effect to such
orders on receipt of written notice from the Engineer, and in accordance with
such plans as may from time to
time be issued by the Engineer.
50. Where the quantities in the bills of quantities and/or schedule of prices
are shown as provisional, any increase or decrease in
the quantities arising
solely from an increase or decrease in the quantities shown in the bills of
quantities and/or schedule of
prices, and not arising from an order to carry out
alterations, extras, additions and omissions shall be measured and paid for
41
at the rates quoted in the bills of quantities and/or schedule of prices.
Where alterations, extras, additions and omissions, in terms of clause 35,
are similar in character and carried out under conditions
similar to work which
has been specified in the contract documents or drawings and for which the
Contractor has tender rates in the
items scheduled in the schedule of prices,
such rates shall apply to the alterations, extras, additions and omissions where
the final
measured quantity of any item does not differ from the estimated
quantity in the schedule of prices by more than twenty (20) per
cent.
Where the difference is more than twenty (20) per cent, the Contractor may
approach the Engineer and the Engineer may approach the
Contractor with a
request for an adjustment in the
42
scheduled rates. The Engineer shall decide cm the amount of the
adjustment, if any, and to what part of the final measured quantities
such
adjustment shall apply. Such adjustments shall be effected by means of a
variation order.
Where alterations, extras, additions or omissions are not of a character
similar to the work for which rates were tendered, or are
not executed under
conditions similar to those specified in the contract documents or drawings, or
are such that the application
of the scheduled rates would produce a result
inequitable to either party, the alteration, extra, addition or omission shall
be treated
as a variation from the contract. The rates for the work involved are
to be agreed upon by the Contractor and the Engineer. Any change
in rates shall
be effected by the issue of a variation order. In the determination of the rates
for the work covered by the variation
order, the rates quoted in the bills of
quantities
43
and/or schedule of prices for work of an associated nature shall form the
basis of such determination. Where the bills of quantities
and/or schedule of
prices do not include rates for associated work, a fair valuation shall be made
and agreed upon by the Engineer
and the Contractor.
Where the Engineer and the Contractor cannot reach agreement, the Engineer
shall issue a variation order at the rate he considers
equitable to both
parties.
Should the Contractor be dissatisfied with such a decision he may declare a
dispute and the matter shall then be disposed of as set
out in clause 69."
The first sentence of cl. 50 deals with provisional quantities and is not
pertinent here. The remainder of cl. 50 provides for three
different
situations:
(a) where (i) alterations, extras, etc ordered
in
44
terms of cl. 35 are similar in character and are carried out under similar
conditions to work specified in the contract and (ii)
the final measured
quantity does not differ from the estimated quantity by more than 20 per
cent;
(b) where the circumstances are as in (i) above, but the difference under (ii)
is more than 20 per cent; and
(c) where the alterations, extras etc are
not
of a character similar to
the work for which the rates were tendered or are not executed under conditions
similar to those specified
in the contract.
It is
clear to me that, although cl. 35 is expressly referred to only in regard to (a)
above, (b) and (c) also relate exclusively
to the case of alterations, extras,
etc ordered in terms of cl. 35. Consequently cl. 50 does not have general
application: it deals
specifically with the
45
guantification of remuneration for variations ordered under
cl. 35. I think that the respondents recognized this. Hence the contention
that
a claim under cl. 2(b) has to be the subject of a variation order under cl.
35.
In my opinion, it is only by resorting to procrustean methods of
interpretation that cl. 35 can be made to accommodate a claim under
cl.
2(b).
At the outset it may be questioned whether the situation which arises when
the contractor under the contract in question finds that
in terms of cl. 2(b)
the subsurface conditions are sufficiently adverse for it to be said that they
could not reasonably have been
foreseen, is capable of being dealt with under a
clause which empowers the Engineer to order "alterations, extras, additions to
or
omissions from the contract". In this context "the contract" must mean the
work to be executed under the contract. Where a cl. 2(b)
situation arises the
contract
46
work would not seem to be altered or added to, nor would an
extra appear to be involved. The same tunnel has to be excavated and built
in
accordance with the same design and specifications: it is only that from the
contractor's point of view the execution of this
work is made more difficult,
more time-consuming and consequently more costly.
This is illustrated by Comiat's claim in the present case. Broadly speaking
and without at this stage going into detail, the 1987
claim is based on the
averment that the adverse subsurface conditions delayed the completion of the
contract, necessitated the installation
of additional temporary support in the
form of steel arches, rock bolts, wire mesh and shotcrete (which in turn
interfered to a significant
extent with the tunnelling cycle), and resulted,
because of excessive overbreak, in additional quantities of concrete being
required.
But for clause 2(b) the contractor, it would seem, would have to
47
bear these losses and additional expenses. It is difficult to
see how these losses and expenses could be accommodated in an order
by the
Engineer altering or adding to the contract work or providing for extras.
A variation order under cl. 35 involving extras Or additional work would
normally be issued before the contractor undertook such work.
In fact the order
constitutes his authority to do such extra work; and in the absence of such
authority he would not be entitled
to depart in this way from the contract. In
the case of a cl. 2(b) situation, the contractor would almost invariably not
appreciate
that the adverse subsurface conditions encountered by him were in
excess of what was reasonably foreseeable until a substantial portion
of the
tunnel had been excavated. His claim would then to some extent relate to work
already done; and the final quantification of
his claim would probably have to
wait until the completion of
48
the contract. This fits ill the framework of cl. 35. And one
asks how would the Engineer's order define the extras or additional.work?
It is common cause that, vis-á-vis the contractor, the Engineer has an
unfettered discretion or power to issue a variation
order. This seems to me to
constitute an insuperable difficulty in trying to fit a cl. 2(b) claim into the
conf ines of cl. 35. For,
as I read cl. 2 (b) it gives the contractor an
unconditional right to claim additional remuneration where the requisites which
I
have previously spelt out are satisfied: and a right which depends upon the
exercise by someone else of an unfettered discretion,
if it be a right, is
certainly not an unconditional right. The contrary view, viz that cl. 35
applies, would mean that even where
a cl. 2(b) situation has developed, the
Engineer can, in the exercise of his discretion, refuse to issue a variation
order. Since
the
49
contractor is nevertheless bound to complete the contract,
this would lead to such manifest ineguity that it can safely be inferred
that
this was not the contractual intent.
Respondent's counsel sought to meet those difficulties by submitting that
when a cl. 2(b) situation arises the Engineer may elect
to terminate the
contract, thus obviating the need to issue a variation order. This submission
found favour with the Court a_
quo
. With respect, I am of the view that
it is not well-founded. One must start from the premise that at common law and
in the absence
of a contractual provision to the contrary, a building contractor
is entitled to carry out the whole of the contract work as originally
specified
and without variation (see
Van Streepen & Germs (Pty) Ltd v Transvaal
Provincial Administration
1987 (4) SA 569
(A), at 589 C-D and the
authorities cited). It would follow that the employer or other person acting on
his behalf would not
50
normally be entitled summarily and without due cause to
terminate the contract. A contrary contractual intent would have to be expressly
stated or appear clearly by implication. There is no such express provision in
the contract in question and I find no convincing
basis for implying one. Indeed
it requires little imagination to see that such a termination would normally
produce very inequitable
results from the contractor's point of view. I would
add that I leave out of account, because they have no application here, the
contingencies of impossibility of performance or contractual frustration.
Consequently, for these reasons, I am of the opinion that there is an
inherent incompatibility between the f inal sentence of cl.
2 (b) and cl. 35 and
that this demonstrates convincingly that the provisions of the latter clause
relating to the issue of a variation
order do not apply to a claim under cl.
2(b). It follows that the
51
machinery for the guantification of the remuneration for work
done in terms of variation orders provided by cl. 50 can also have no
application to a claim under cl. 2(b).
Cl. 2(b) is by no means the only provision in the contract whereby the
contractor is given a claim to additional remuneration
dehors
the
procedure of a variation order under cl. 35 and a quantification under cl. 50.
In this connection brief reference may be made,
by way of example, to cl. 48 of
the general conditions providing for the grant by the Engineer of extra time and
extra payment for
delays and extra expense caused to the contractor by various
failures or delays on the part of SATS; sundry provisions in the special
conditions for the payment of additional compensation in certain prescribed
circumstances for excessive overbreak (cl. 4.11.7.1,
read with 4.14.6.4 and
4.15.6); for rock or ground falls beyond a distance of one metre beyond the pay
line (cl. 4.11.9); for dealing
52
with excess water (cl. 4.11.13); for the drilling of
additional exploratory holes as ordered by the Engineer (cl. 4.11.14.iii) and
for temporary support incorporated in the permanent support as ordered by the
Engineer (cl. 4.12.2).
Postulating that, as I have held, cls. 35 and 50 do not apply to a claim
under cl. 2(b), the question is: how is such a claim to be
quantified? In the
case of
Chamotte (Pty) Ltd v Carl Coetzee (Pty) Ltd
1973 (1) SA 644
(A),
which related to a contract for the mining of clay lying underneath an
overburden of soil and sandstone, Jansen JA stated (at
649 B-E):
"Clause 4 (read with clause 5) of the contract clearly envisages that an
increase of the ratio of overburden to clay will entail
additional work on the
part of the 'contractor' for which he will be compensated by an increase 'in the
f ixed prices of the clay'.
The contract, however, does not provide for the
extent of the increase should
53
the parties fail to arrive at "a negotiated increase". There is certainly
authority for the view that where there is an agreement
to do work for
remuneration and the latter is not specified (expressly or tacitly), the law
itself provides that it should be reasonable
(cf. Wessels,
Law of
Contract
, 2nd ed., para. 3498;
De Zwaan v Nourse
,
supra
;
Middleton v Carr
,
supra
;
Angath v Muckunlal's Estate
,
1954
(4) SA 283
(N) at 284 A-H), but in the present case it is unnecessary to rely on
such a rule or to consider its general validity or its application
to the
contract. Applying well recognised tests (cf.
Mullin (Pty) Ltd v Benade
Ltd
1952 (1) SA 211
(AD) at pp 214C-215A;
SA Mutual Society v Cape Town
Chamber of Commerce
,
1962 (1) SA 598
(AD) ), it seems, in any event clear
enough that the contract implies that if the parties do not agree on the
increase in remuneration,
the plaintiff will in any case be entitled to a
reasonable remuneration for the additional
work."
(see also
Inkin v Borehole
Drillers
1949 (2) SA 366
(A) ).
54
In the present case there is no provision that the parties are
to negotiate the amount of the additional remuneration to be paid in
respect of
a claim under cl. 2(b), nor is another basis indicated as to how the amount is
to be determined. In my opinion, in such
circumstances the law implies a right
to receive reasonable remuneration.
Respondent's counsel pointed to the various spe-cial conditions of the
contract dealing with such matters as support, overbreak, rock
or ground falls,
cave-ins, etc and submitted that these special conditions allocate in detail the
financial responsibility or risk
in regard to such matters as between the
parties; and that where the risk is upon SATS the special conditions provide for
the payment
of compensation to the contractor. On this basis it was argued (at
least so I understood the argument) that there was no room for
an implied term
in cl. 2(b) for the payment of reasonable remuneration. Counsel argued further
that
55
this was illustrated by Comiat's 1987 claim, the components of
which were covered by provisions for remuneration in the special conditions.
In
this connection counsel referred to a provision in the contract to the effect
that in the event of there being any "discrepancy
or difference" between the
general conditions and the special conditions, the latter should prevail.
These arguments cannot succeed. I am not persuaded that the various special
conditions referred to cover all the loss and expenditure
likely to be incurred
by a contractor in a cl. 2(b) situation or indeed the loss and
expenditúre upon which Comiat's 1987
claim is founded. I do not propose
to go into this in any great detail. Nor do I intend to assess to what extent,
if at all, the
1987 claim would be covered by provisions for payment to be found
in the special conditions, for it is neither necessary nor appropriate
for this
Court to evaluate the claim. I
56
shall merely cite two examples to show that at least certain
aspects of Comiat's claim under cl. 2(b) - and the same would apply to
any other
contractor in Comiat's position -are not covered by a special condition.
The first of these relates to temporary support. As I have already indicated,
in terms of the special conditions temporary support
for the tunnel must be
provided by the contractor at his own cost, his rates for tunnelling being
deemed to include full compensation
therefor (cl 4.12.1) save in the case of
temporary support incorporated in the permanent support (cl. 4.12.2). The part
of the 1987
claim relating to temporary support shows in detail and compares the
kinds and quantities of temporary support which, so Comiat alleges,
were
foreseeable by the contractor at the time of tendering and those which actually
had to be used in the construction of the tunnel.
The differences, as the
following schedule shows, are striking:
See original judgement
table.
57
Assuming that Comiat has a valid cl. 2(b) claim for the additional materials
required for temporary support, it is clear to me, from
the provisions of cl.
4.12.1 and 2, that remuneration therefor is not provided for by the special
conditions. On the other hand,
I am satisfied that in such a case the contractor
is not precluded by the provisions of cl. 4.12.1 from including remuneration for
the provision of such additional temporary support in his cl. 2(b) claim. There
is no discrepancy or difference here between cl.
2(b), a general condition, and
cl. 4.12.1, a special condition. Cl. 4.12.1 caters for the usual
58
position (which is mirrored in cl. 2(a) and the first two
sentences of cl. 2(b) ) and the last sentence of clause 2(b) provides for
and is
limited to an exceptional situation.
The other aspect of Comiat's claim to which I wish to refer is delay. It is
stated in the claim that in the standard sections of the
tunnel (i e those
outside the loop) advances equivalent to 350 metres per month were achieved in
certain of the relatively short
lengths of good rock requiring little or no
support, whereas advances of less than 50 metres per month were achieved in poor
rock
requiring heavy support. The overall average monthly progress in the
standard sections was 171 metres, which was half the rate assumed
at the time of
tender. In the loop section the almost 1 km of poor or very poor rock had a
drastic effect on progress, with rates
as low as below 40 metres per month and
average rates of approximately 50
59
metres being achieved, as compared with an average monthly
rate of 180 metres assumed at the time of tender. The proportion of poor
rock
and the unexpected variability of rock conditions prevented Comiat from
developing what is termed "a good tunnelling rhythm".
The claim calculates, with
reference to much supporting information, the extent of the delay by comparing
the actual rate of progress
with the rate of progress that would have been
achieved had the reasonably foreseeable subsurface conditions in fact been
encountered.
This produces a figure of 44,5 months' delay due to adverse
subsurface conditions during tunnelling and a figure of 4,5 months' delay
in
regard to the problems relating to the eastern cut, 49 months in all. And upon
this basis a fairly complex calculation is made
to assess the additional expense
incurred by Comiat by reason of having to operate the contract for this extra
period of 49 months.
This additional expense does not appear to be
60 compensated in terms of any of the special conditions or other terms of
the contract. It is true that in normal circumstances the
contractor would be
obliged to shoulder the burden of any delay in the completion of the work, but
cl. 2(b) caters for an exceptional
situation.
In this connection respondents' counsel made reference to the decision of
this Court in
Grinaker Construction (Tvl) (Pty) Ltd v Transvaal Provincial
Administration
1982 (1) SA 78
(A) and in particular what is stated at p 97 B
- 98 E of the judgment. I need not consider this judgment in any detail. The
case
is wholly distinguishable on the ground that the contract there considered
does not appear to have contained any provision similar
to cl. 2(b): at any rate
no such provision was in issue.
My conclusion that a contractor who establishes a cl. 2(b) situation is
entitled to reasonable remuneration
61
in respect of his claim means that Comiat was,
prima
facie
, and subject to a minor alteration (to be mentioned later), entitled
to an order in terms of prayer l(a) of its notice of motion.
In argument respondents' counsel launched an attack upon Comiat's averment
that the adverse subsurface conditions encountered by it
were not reasonably
foreseeable. Having regard to the assumptions predicated by prayer 1, this
attack seems to have little, if any,
relevance. Possibly if it appeared
demonstrably from the papers that Comiat's averment in this regard was without
foundation, this
factor might have substantiated respondent's contention
(already referred to) that prayer 1 sought a declaration concerning an academic
or hypothetical question; or at any rate it might have provided grounds for the
Court, in the exercise of its discretion, refusing
to make a declaratory order.
As I have already indicated,
62
however, I do not think that Comiat's averment is without
foundation; on the contrary Comiat appears to me on its own papers to have
made
out a
prima facie
case in this regard. I proceed now to elaborate upon
this to some extent.
It is clear that in compiling its tender Spie-Batignolles based its
assumptions as to the types and classes of rock which it was likely
to encounter
in excavating the tunnel upon the predictions contained in the Mountain report.
The difference between these predictions
and the conditions actually encountered
is demonstrated by the following table, compiled from the figures given in the
Mountain report
and figures as to actual conditions contained in the 1987
claim:
See original judgement table.
63
The differences between the geomechanical classes of rock predicted in the
Mountain report and those alleged to have been encountered
are so substantial
that if the Mountain predictions represent approximately what was reasonably
foreseeable, the actual conditions
were clearly not reasonably foreseeable. On
the available evidence I am of the
prima facie
view that Spie-Batignolles
was entitled to use the Mountain predictions as the basis for calculating its
tender. The Mountain report,
together with the core samples, were virtually the
only sources of scientific
64
information available to Spie-Batignolles at the time of
tender and it did not have the opportunity to make an independent investigation
of its own. It has not been shown on the papers that Spie-Batignolles ought to
have appreciated that the conclusions drawn by Mountain
were fundamentally
flawed. It may be that in evaluating the Mountain report Spie-Batignolles should
have made some allowance for
the predictions being overly optimistic and thus
built a safety margin into its tender (I make no finding in this regard), but it
seems to me to be unlikely that any such allowance would have come anywhere near
to bridging the gap between the Mountain predictions
and actuality.
A consideration of some significance is the fact that in 1982 the CCE
conceded that at that stage the geomechanical classification
of the rock
encountered had proved to be one to one-and-a-half classes lower than that
65
predicted in the Mountain report and that the position was
governed by clause 2(b), i e that this difference was not reasonably
foreseeable.
I should perhaps add that different persons occupied the office of
the CCE in 1982 and in 1987/88 when the 1987 claim was considered.
In an attempt to show that Spie-Batignolles itself did not accept the
Mountain predictions at the time of tender, respondents' counsel
referred to
certain calculations used in the compilation of the tender (referred to as the
"MMP"). These calculations, it is true,
would seem to postulate somewhat less
favourable geomechanical classifications than the Mountain report. Nevertheless,
appellant's
counsel convinced me that this difference is probably due to errors
of. interpretation and calculation and that otherwise the MMP
faithfully
followed and adopted the Mountain report classifications.
Respondent's counsel also relied upon a memorandum
66
and draft letter dated 18 December 1980 (annexure CTdT 6) sent
by Comiat's site agent, J C David, to Comiat's office in Johannesburg
which,
respondents contend, shows that before excavation commenced Comiat anticipated
encountering substantial guantities of poor
rock. Having considered CTdT 6 in
the light of the explanatïon given on affidavit by David I am not persuaded
on the papers
that the inferences which respondents seek to draw from this
document are justified.
As to the wording of the assumption in prayer 1 it seems to me that, in view
of the finding that cl. 2(b) postulates a causal connection
between the adverse
subsurface conditions and the materials, etc being different from those assumed
at the time of tender, the
words " there were, alternatively " should be
omitted.
I turn now to consider the remaining prayers in
67
Comiat's notice of motion. It is convenient to consider
together prayers l(b) and (c), 3, 4 and 5. Essentially the refusal of the
Engineer (backed by the CCE) to entertain and make a ruling on Comiat's 1987
claim was based upon the contentions -
(a) that the claims for reasónable remuneration, both as to the main
tunnel and as to the eastern cut, were not "contractually
based"; and
(b) that Comiat had failed in the formulation of its claims to provide
information as to its assumptions when arriving at the unit
prices quoted in its
tender.
In view of my finding that cl. 2(b) is
subject to the implied term that the claim referred to therein is for a
reasonable remuneration,
ground (a) above for the Engineer's refusal was
obviously ill-founded. As to ground (b), I have carefully studied the relevant
evidence
- the 1987
68
claim itself, the correspondence between Comiat and the
Engineer (and/or the CCE) in regard to the claim and the transcripts of the
meetings held on 19 April and 10 May 1988 - and I incline to the view that the
Engineer was given sufficient information to deal
with the 1987 claim. It is not
necessary or appropriate, however, for me to pronounce finally on this point or
to discuss and evaluate
this evidence for I am f irmly of the view that whatever
the position the Engineer was obliged to give a decision. If he considered
that
the claim was insufficiently substantiated or that Comiat had failed to produce
relevant information, then it was his duty to
reject the claim. His decision to
reject the claim wóuld then have been subject to reference, in terms of
cl. 69 of the general
conditions, to the CCE and if Comiat was dissastisfied
with the decision of the CCE then it could take the matter to arbitration.
The
Engineer's refusal in this case to give any form of decision
69
and the attitude of the respondents that his refusal to make a
decision is itself not an arbitrable issue means that the whole matter
is left
in limbo. Comiat contends that it has supplied all the information it is obliged
and able to produce: the respondents contend
that Comiat can and must supply
more information. It is a deadlock that must be resolved. In the circumstances
the attitude adopted
by the Engineer is clearly contrary to the contractual
intent.
In essence the respondents' submission is that the Engineer's attitude was
justified since a claim that is not properly substantiated
is not a "claim"
within the meaning of that word in cl. 2(b). In the circumstances of this case
this appears to me to be semantic
argument and one without real substance. On
that basis whenever the Engineer considered (rightly or wrongly) that a claim
was insufficiently
substantiated or documented he could refuse to entertain it
and thus f rustrate any resolution of the
70 dispute in terms of cl. 69. In
my view, that is not the effect of the contract.
For these reasons I hold that the Engineer was obliged to give a decision on
Comiat's 1987 claim. He had the choice of either accepting
or rejecting the
claim; and a decision to reject would, in my opinion, have constituted a
"dispute or difference" between the Engineer
and Comiat within the meaning of
cl. 69.
It follows from the aforegoing that Comiat was entitled to an order in terms
of prayers l(b) and l(c). I have difficulty in understanding
the meaning and
purpose of the following words appearing at the beginning of prayer 3:
"....in the event that the applicants' claims
as defined hereinafter gave rise to a dispute
or difference between them as
contemplated by
clause 69(a) of the General Conditions of
Contract, the
third respondent "
71 The submission of
Comiat's claims to the Engineer could not itself give rise to a dispute or
difference in terms of cl. 69(a):
before such a dispute or difference could
arise the Engineer would have had to have rejected the claim. These words do
not, however,
appear to affect the essence of the prayer which appears to be an
order that the Engineer is not entitled to demand further information
from
Comiat in order to take a decision to admit or reject the claim. As I have
indicated, Comiat is entitled to such an order. The
words quoted are, therefore,
for the most part superfluous and may be omitted from the order.
Furthermore, the prayer speaks of the "applicant's claims as defined
hereinafter". The definition referred to includes not only the
main claims based
upon reasonable remuneration but also various alternative claims advanced on
other bases. These alternative claims
are now no longer relevant. The prayer
should consequently be amended to
72
cater for this. For the same reasons prayer 4 should be
omitted.
As I have indicated, the trial Judge awarded attorney and client costs
against Comiat. The ground for doing so was, according to the
judgment, Comiat's
conduct in making unjustifiable accusations of improper conduct on the part of
the respondents and in imputing
improper motives to them, both in the papers
before the Court and in the heads of argument filed. In this Court respondents'
counsel
asked that in the event of the appeal succeeding a punitive costs order
should for the same reasons be made against Comiat. I do
not feel that any such
order is called for. I would point out that though some of the language used by
and on behalf of Comiat was,
in this regard, intemperate and possibly
unjustified, Comiat was not the sole offender. Respondents equally attacked the
integrity
and
bona fides
of Comiat and its executives and officials by
suggesting
inter
73
alia
that the whole claim under cl. 2(b) was fraudulent
in the sense that it had no foundation whatever and was advanced as a device to
rescue Comiat from the consequences of under-tendering.
Comiat asks for the costs of three counsel on appeal. Respondents, who were
represented by four counsel, did not specifically object
to this in the event of
the appeal succeeding. The costs of three counsel was awarded to respondents in
the Court below. The appeal
record, which runs to 24 volumes, is a lengthy one
and the case raised a large number of difficult and complex issues of law and
fact. Having regard to the relevant criteria, as conveniently collected and
stated in
Fisheries Development Corporation of SA Ltd v Jorgenson and
Another; Fisheries Development Corporation of SA Ltd v A W J Investments
(Pty)
Ltd and Others
1980 (4) SA 156
(W), at p 172, I think that this is an
appropriate case for allowing the costs of three
74
counsel.
The following order is made:
(A) The appeal is
allowed with costs, such costs
to include the costs of three counsel.
(B) The order of the Court a
guo
is altered to
read:
"An order is made -
1. declaring that, on the assumption that materials, methods of construction
and/or site conditions were different from those assumed
by the applicant in
tendering for the contract between the applicant and the first respondent (being
contract number CTNW 758), and
that this was due to adverse sub-surface
conditions which, in the opinion
of
75
the third respondent OR the
fourth respondent OR any arbitrator(s) who might be appointed in terms of clause
69 of the general conditions
of contract, could not reasonably have been
foreseen;
(a) applicant is entitled to reasonable remuneration in respect of a claim in
terms of clause 2(b) of the general conditions of contract,
and in particular in
respect of applicant's main tunnel claim (as defined in its notice of motion)
and applicant's main eastern cut
claim
(b) third respondent was not entitled to refuse to make a ruling on applicant's
main tunnel claim but that he should have either
admitted or rejected it;
(c) third respondent was not and is not entitled to refuse to make a ruling on
applicant's main eastern cut claim but that he should
either admit or
reject
76
it;
2. declaring that the third respondent was not and is not entitled, in order to
admit or reject the claims referred to l(a) above,
to demand that the applicant
furnish any information to him over and above that submitted with the
applicant's claims; and directing
third respondent to consider and decide the
whole of the claim referred to him by the applicant, as opposed to a decision on
any
one issue or aspect of the claim, his decision on the whole of the claim to
be conveyed to the applicant within a period of two months
from the date of this
order;
3. declaring that, in the event of a claim referred to in the preceding
paragraphs of this order being referred in writing to the
77 fourth respondent in terms of cl. 69(a) of the general conditions of
contract, the fourth respondent is not entitled to demand
that the applicant is
obliged to furnish any information to him over and above that submitted with the
applicant's claims in order
to settle the dispute and advise his decision in
writing; and directing fourth respondent to consider and decide the whole of the
claim referred to him by the applicant, as opposed to a decision on any one
issue or aspect of the claim, his decision on the whole
of the claim to be
conveyed to the applicant within a period of two months from the date of
reference to fourth respondent; and
4. ordering first, third and
fourth respondents
78
to pay the costs of the application (which are to
include the costs of three counsel) jointly and severally, the one paying the
others
to be absolved."
M M CORBETT
HEFER JA)
VIVIER JA)
CONCUR
MILNE JA)
EKSTEEN JA)