1
REPUBLIC OF SOUTH AFRICA
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IN THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO DIVISION, POLOKWANE)
(1)
(2)
(3)
REPO RTA BLE: YE S/NO CASE NUMBER: 3415/2021
OF INTEREST TO TH E JUD GES: YES/NO
RE VISED.
Signature:
Date
In the matter between:
LEBAKA CONSTRUCTION (PTY) LTD
AND
POLOKWANE LOCAL MUNICIPALITY
JUDGMENT
STRoH JA
PLAINTIFF
DEFENDANT
(1] The Plaintiff (Lebaka Construction (Pty) Ltd) instituted an action
against the Polokwane Local Municipality (hereinafter the Defendant)
claiming confirmation of the Agreement between the Plaintiff and
Defendant and payment in respect of retention funds in the amount of R
1 123 520,87 (One Million One Hundred and Twenty-Three Thousand
Five Hundred and Twenty Rand and Eighty Seven Cents) plus VAT. While
2
the Plaintiff was leading its first witness in the trial, the matter stood down.
The parties then agreed upon a written statement of facts in the form of a
special case for the court, for the adjudication of the court in terms of Rule
33(4) of the Uniform Rules of Court.
[2] The Stated Case in terms of Rule 33(4) of the Uniform Rules of Court
was compiled by the parties' legal representatives and reads as follows:
[1] It is common cause between the parties that:
[1.1] The parties entered into a written agreement (hereinafter the
'Agreement') in terms of which the Plaintiff was to construct a water
pipeline.
[1.2] The Agreement consists of the following:
[1.2.1] Service Level Agreement;
[1.2.2] The General Conditions of Contract (hereinafter the 'GCC');
[1.2.3] The tender document.
[1.3] In terms of Clause 9.2.2 of the GCC, the Defendant is entitled to
terminate the Agreement by written notice to the Plaintiff, subject to
compliance with Clause 9.2.2.7, if the Plaintiff.
[1.3.1] Has failed to proceed with the Works with due diligence; or
[1.3.2] Is not executing the Works in accordance with the Agreement
or neglected to carry out its obligations under the Agreement.
[1.4] In terms of Clause 9·.2.2.7, the Defendant may give the Plaintiff 14
days' notice to rectify the default and if the Plaintiff fails to rectify the
default within these 14 days, the Defendant may then without further
notice, notify the Plaintiff in writing of the termination of the Agreement
and expel the Plaintiff and order it to vacate the site within 24 hours.
[1.5] On 12 February 2018, the Engineer (acting as the agent of the
Defendant) delivered a letter to the Plaintiff (as per 'PLM1') attached to
the Defendant's Plea (referred to as 'the Breach Letter'). The Breach
Letter informed the Plaintiff of a number of breaches of the Agreement,
granting the Plaintiff 14 days to rectify these breaches.
[1.6] On 3 May 2018, the Defendant addressed a letter to the Plaintiff, (as
per "PLM2") attached to Defendant's Plea (the "Termination Letter") in
terms of which the Defendant terminated the Agreement and required the
3
Plaintiff to remove plant from the site, vacate the site and restore it and all
of the property to the Defendant within two working days after receipt of
the letter.
[1. 7] On 1 June 2018, the Plaintiff's attorney of record addressed a letter
to the Defendant (as per Index 4, Item 2 (Trial Bundle) annexed as "MT')
to the Particulars of Claim. The Plaintiff's attorney's letter to the Defendant
(M7) denied that the Defendant was in breach of the Agreement & further
alleged that the Breach Letter was ill-founded and that the Termination
Letter was baseless. As a result, the Plaintiff cancelled the Agreement in
accordance with Clause 9.3.1.1 of the GCC (as amended) based upon a
repudiation of the Agreement by the Defendant.
[2] It is the Plaintiff's case that:
[2.1] The Breach Letter was invalid due to fact that the letter was
done by the Engineer instead of the Defendant as provided for in
clause 9.2.2.7 of the GCC (as amended).
[2.2] The Termination Letter was consequently invalid and,
especially the third last paragraph thereof, requesting the Plaintiff to
vacate the site, constituted a repudiation of the Agreement.
[3] The Defendant holds the opposite view in respect of the
above-mentioned contentions by the Plaintiff.
[4] The Honorable Court is requested to adjudicate upon the following
questions of law:
[4.1] Whether the Breach Letter issued by the Engineer instead of the
Defendant, being the Employer, was valid and in compliance with clause
9.2.2. 7 of the GCC (as amended)
[4.2] Whether the Termination Letter was invalid and amounted to
repudiation of the Agreement.
Evidence before the Court
[3] The Plaintiff, pursuant to a successful tender, entered into an
agreement with the Defendant for the construction of the Sebayeng
Dikgale Bulk Water Project.
The Agreement between the parties consisted of the following documents:
4
3.1 Service Level Agreement;1
3.2 General Conditions of Contract for Construction Work (Second
Edition-2010) (referred to as the 'GCC ');2
3.3 Tender document.3
[4] The Tender document consists of a clause named 'Additional Special
Conditions or Amendments to the General Conditions.'4
Clause 9.2 of the GCC was substituted in the Tender document with a
new Clause 9.2, with the Heading: '3.1.13 Termination by Employer (CL
9.2)'5
[5] On 12 February 2018, the Engineer (MSW) informed the Plaintiff that
the Plaintiff is in breach of certain conditions of the contract and had to
rectify the breach within 14 (fourteen) days of the date of this letter.6
[6] On #le 3 May 2018, the Defendant's attorney wrote a Termination letter
to the Plaintiff informing the Plaintiff that the Agreement between the
Plaintiff and Defendant is cancelled due to one of the conditions to be non
performance as scheduled.7 Certain paragraphs in the Termination Letter
is of importance and will be discussed later in this judgment.
[7] On 3 May 2018, the Plaintiff wrote the Defendant a letter whereby it
cancelled the Agreement between them on the basis of repudiation. 8
Certain paragraphs in this letter is of importance and will be discussed
later in this judgment.
[8] The Plaintiff relied on Rule 33(4) of the Uniform Rules. According to
Rule 33(4) of the Uniform Rules, when one looks at the interpretation of
1 Trial Bundle Index 1, Page 18-22
2 Pleadings Bundle lndex1, Page 23-93
3 Pleadings Bundle Index 1-3, Page 94 - 274
4 Pleadings Bundle Index 2 Page 172-178
5 Pleadings Bundle Index 2 Page 176
6 Pleading Bundle Index 4 Page 318 - 319
7 Pleadings Bundle Index 4 Page 316 -317
8 Pleadings Bundle Index 4 Page 311-315
5
contractual provisions; the plain, ordinary and grammatical meaning of the
words in question is relevant. This court was referred to numerous case
law and specifically to the Endumeni case9 which the Plaintiff argued-"the
Court must look at the surrounding circumstances to create the document
in question. To this end the Court must consider the initial terms of the
GCC and the specific amendments thereto."
[9] In paragraph 14 of the Plaintiff's Heads of Argument in the stated
case, the Plaintiff relied on the principles of breach of contracts and
cancellation of contracts that:
"14. A party wishing to rely on the cancellation of a contract because of a
breach must allege and prove:
14.1 a breach of the contract;
14.2 an accrued right to cancel because of a material breach,10 or that
the contract contains a cancellation clause (/ex commissoria) and its
provisions (such as prior notice) have been complied with;11
14.3 a clear and unequivocal notice of rescission conveyed to the other
party (unless the contract dispenses with notice)"12
The Plaintiff clearly argued by relying on case law (cited in the Plaintiff's
Heads of Argument) that the notice for a breach of contract must comply
'literally' with the agreement (contract). The Plaintiff emphasized "It is
clear, I think, that they do not hold the notices invalid because of any
possibility of prejudice to the person notified, but solely because a literal
compliance with the agreement is required in cases of forfeiture." Having
regard to the procedure for breach of agreement, the Plaintiff argued
"strict compliance with the procedure for breach must be complied with,
failing which the notice will be found to be invalid."
[1 O] The Plaintiff finally relied on the legal principle of repudiation in its
argument, referred to Datacolor International (Pty) Ltd v lntamarket
9 Natal Joint Municipal Pension Fund v Endumeni Muni 2012(4) SA 593 (SCA)
Para [18]
10 Singh v McCarthy Retail t/a McIntosh Motors [2002] 4 A ll SA 487(A),2000 (4) 795 (SCA)
11 Kragga Kamma Estates CC v Flanagan [1995] 1 A ll SA 486 (A), 1995 (2) SA 367 (A)
12 Datacolor International (Pty) Ltd v lntamarket (Pty) Ltd [2001] 1 All SA 581 (A), 2001 (2) SA
284 (SCA) par 29
6
(Pty)Ltc/13 and Starways Trading 21 CC v Pearl Island Trading 714
(Pty) Ltd.14
[11] The Defendant relied on Rule 33(4) of the Uniform Rules of Court:
"the agreement between the parties consists inter-alia on the GCC which
was amended by contract data contained in part C of the tender
document, which also forms part of the Agreement."
[12] It is common cause between both parties that Clause 9.2 of the
GCC was deleted and substituted with a new Clause 9.2 (as set out in
Clause 3.1.13 of the contract data in part C of the Tender document.15
[13] The Defendant further argued (by relying on Rule 33(4) of the
Uniform Rules) that the essence of the dispute between the parties is
the status of the letter addressed by the Engineer to the Plaintiff on #le
12 February 2018, of which a copy was attached to the Defendants Plea
as 'PLM 1' ('the Breach Letter').
[14] The Defendant's argument is that the Breach Letter was written in
terms of Clause 3.1.13 of the Tender document which replaced Clause
9.2 of the GCC . The Breach Letter was based on Clauses 9.2.2.3 and
9.2.2.5 of Clause 3.1.13. ('Termination by Employer (CL 9.2)'):
According to Clause 9.2.2, 'If the contractor' 'Has failed to proceed with
the Works with due diligence' (Clause 9.2.2.3) or 'Is not executing the
Works in accordance with the Contract, or is neglecting to carry out his
obligations under the Contract' (Clause 9.2.2.5).
[15] It is further common cause that the Plaintiff contends that the
Engineer was not authorized to issue the Breach Letter as per Clause
9.2.2 as amended, however if the Plaintiff failed to proceeds with the
Works with due diligence or is not executing the Works in accordance
with the Agreement, the Employer may give the Contractor 14 days'
notice to rectify the default.
13 Datacolor International (Pty) Ltd v liltamarket (Pty)Ltd [2001] 1 All SA 581 (A), 2001 (2) SA 284
(SCA)
14 Starways Trading 21 CC v Pearl Island Trading 714 (Piy) Ltd [2017] 4 All SA 568 (WCC)
15 Pleadings Bundle Index 1 Page 91-92
7
[16) Clause 6 of the Defendant's Heads of Argument states that: "The
Engineer was the agent of the Employer having a wide mandate to
administer the Agreement:
6.1 Clause 1.2.3 of the GCC provides that the common or statute law
shall determine whether any person acting or purporting to act on behalf
of the Employer, Engineer or Contractor is duly authorized so to act.
6.2 In terms of clause 3.1.1 of the GCC the function of the Engineer is to
administer the Contract as agent of the Employer, in accordance with the
provisions of the Contract".
[17) According to the Defendant "although clause 9.2.2 explicitly
authorizes the Employer to give 14 days' notice to the Contractor to
rectify defaults there is no indication that the Engineer is prohibited from
issuing such notice. Being the agent of the Employer acts performed by
the Engineer in the administration of the Agreement which may have
been strictly unauthorized may be ratified by the Employer."
[18) The aspect of ratification was discussed in length in the Defendant's
Heads of Argument. Paragraph 11-13 of the Defendant's Heads of
Argument is of importance which states:
"11. The Termination Letter of 3 May 2018 is a clear ratification by the
Employer's accounting officer of the Breach Letter.
11.1 The opening paragraph refers to the Breach Letter.
11.2 The last sentence of the first paragraph on page 2 of the
Termination Letter states that the Plaintiff failed to remedy causes of
complaint set out in the Breach Letter.
11.3 The Breach Letter is again referred to in the second paragraph on
page 2 of the letter where it is stated [and despite being put in terms
within a reasonable period as evidenced by the contents of the
letter of 12 February 2018 and your subsequent failure to remedy
the defects).
12. The Plaintiff, in paragraph 5 of its response of the Termination Letter,
dealt at length with each default stipulated in the bulleted paragraphs on
8
page 1 of the Breach Letter. This was done in an effort to show that the
Plaintiff was not in default of any of its obligations in terms of the
Agreement. Of importance is the fact that it is recorded in paragraph 5
that a number of actions were taken by the Plaintiff subsequent to and in
response to the Breach Letter. In paragraph 6 of the letter it is stated
"The above sets at naught any merit applicable to the MSW notice
dated 12 February 2018 and ... " This indicates that the Plaintiff
regarded the Breach Letter as a proper notice in terms of Clause 9.2.2.7.
13. The Employer as principal was fully entitled to ratify the Breach
Letter which he duly did by way of the Termination Letter. Consequently,
the contention that the Breach Letter is invalid is without any merit."
[19] Finally, the Defendant discussed the legal principle of repudiation in
its argument. The Defendant in response referred to two well-known
cases namely, Nash v Golden Dumps (Pty) Ltc/16 and Datacolor
International (Pty) Ltd v lntamarket (Pty) Ltd.17
[20] The Defendants closing argument stated that:
"The Defendant acted within its rights in terms of the Agreement to afford
the Plaintiff 14 days to rectify its defaults as set out in the Breach Letter.
Although this letter was technically not in accordance with clause 9.2.2
the Employer by way of the Termination Letter unequivocally ratified the
Engineer's actions. The termination of the Agreement was therefore
done on lawful grounds and could not reasonably have created the
perception that the Defendant intended no longer to be bound by the
Agreement.
The stated facts in this matter disclose that information regarding the
Plaintiff's state of mind regarding the Breach Letter and Termination
Letter. It is therefore doubted whether a final determination can be made
at this stage as to the Plaintiff's perception regarding the aforesaid
letter."
[21] Rule 33(4) of the Uniform Rules of Court reads as follows:
16 Nash V Golden Dumps (Pty) Ltd 1985(3) SA 1 (A)
17 Datacolor International (Pty) Ltd v lntamarket (Pty)Ltd [2001) 1 All SA 581 (A), 2001 (2) SA 284
(SCA)
9
"If, in any pending action, it appears to the court mero motu that there is
a question of law or fact which may conveniently de decided either
before any evidence is led or separately from any other question, the
court may make an order directing the disposal of such question in such
manner as it may deem fit and may order directing the disposal of such
question in, such manner as it deem fit and may order that all further
proceedings be stayed until such question has been disposed of, and
the court shall on application of any party make such order unless it
appears that the question cannot be decided separately."
In King v King18 MT Steyn AJ as he then was , held:
[C] "Can an action which has actually commenced however be
described as a 'pending action' within meaning of Rule 33(4) - When it
comes to the interpretation of a Rule of Court it is well to bear in mind
that the Rules constitute the procedural machinery of the Courts of
justice and that they are intended to expedite the business of such
courts. See Hudson v Hudson 1927 A .D 259 at p.267
[E] In Webster, Seventh New Collegiate Dictionary (1963) the word
"pending" is said to mean "not yet decided".
[G]The words "pending action" are not used in any special or restricted
sense in the sub-rule and in my opinion, they must be accorded their
ordinary meaning. I am, therefore, of the opinion that the words "any
pending action" as used in the sub-rule mean any action in which the
issues between the parties have not yet been finally decided or disposed
of.
The present action before this court is therefore a pending action within
the meaning of Rule 33(4).
In Minister of Agriculture v Tongaat Group 19 Miller J held: "Court not
likely to grant application which is brought by a litigant who has raised a
point which, if said, would eliminate a certain claim and this save much
evidence at trial, if it appears to the Court that there is no or very little
substance in such point.
18 1971 (2) SA 630 (0) 634 para [CJ, [E], [G]
19 1976 (2) SA 357 (D) at 3640
10
Obviously, if there is no substance in the point, it would be a sheer waste
of time and cost to have a separate hearing".
[22] Rule 18(4) of the Uniform Rules of Court reads as follows: "Every
pleading shall contain a clear and concise statement of the material facts
upon which the pleader relies for his claim, defence or answer to any
pleading, as the case may be, with sufficient particularity to enable the
opposite party to reply thereto."
[23] In Erasmus: Superior Court Practice 2nd, vol 2, The discussion of
the words "every pleading shall contain a clear and concise
statement." According to Erasmus "This sub-rule requires that the
material fact relied upon must be set out both clearly and concisely in
the pleadings concerned. A pleading should not include excerpts from
and references to other documents."20
[24] When having regard to the words, "of material facts"21 the writer
states: "The necessity to plead material facts does not have its origin in
the rules of court. It is fundamental to the judicial process that the facts
have to be established.
The court, on the established facts, applies the rules of law and draws
conclusions as regards the rights and obligations of the parties.
A summons, that propounds the Plaintiff's own conclusions and opinions
instead of the material facts, is defective. 22 "
[25] When having regard to the words, "Facts and not evidence must
be pleaded23 and the subrule makes it clear that material facts
should be pleaded" the writer states, The distinction between facta
probanda (the facts that had to be proved) and facta probantia (the
facts that would prove those facts) should be kept in mind.'24
20 Hough v Gubb 1980 (1) SA 699 © 702 A-E
21 ???
22 Buchner v Johannesburg Consolidated Investments Co Ltd 1995(1) SA 215 (T) at 2161
23 James v Hamilton & Haw (1886) 5 EDC 222, Moaki v Redatt 7 Colmon (Africa) Ltd 1968 (3) SA
98 (AO at 102 A
24 Nasionale Aartappel Kooperasie Bpk v Price Waterhouse Coopers Ing 2001 (2) SA 790 (T) at
797 G-1
11
[26] When having regard to the words, "Upon which pleader relies for
his claim" the writer states, 'The pleader first duty is to allege the facts
upon which he relies, his second duty is to set out conclusions of law
which he claims, follow from the pleaded facts. Facts and conclusion of
law, must however be separated.'25
[27] When having regard to the words, "With sufficient particularity to
enable the opposite party to reply thereto" the writer states, 'There is
no exhaustive test to determine whether a pleading contains sufficient
particularity for the purposes of this sub-rule but it is essentially an issue
of fact: a pleading contain sufficient particularity if it identifies and defines
the issues in such a way that it enables the opposite party to know what
they are. '26
The degree of particularity will depend upon the circumstances of each
case. Thus, for example, greater particularity will be required where
claims are based upon the provisions of a detailed and complex
contract, in which numerous claims confer the right to additional
payment in different circumstances.27
In such cases a pleader may be required to identify explicitly those
clauses of the contract on which the cause of action is built. 28 If the
plaintiff in such a case chooses to base his cause of action on some
common-law ground (breach of contract, enrichment or delict), this
should be made clear in his particulars. It is important to note that the
Defendant in his pleadings never pleaded ratification and even if he did
would not have made a difference in the outcome.
[28] In my endeavour to resolve the impasse between the parties I should
be guided by the principles laid down in Napier v Barkhuizen,29 where
the sentiments of Cameron JA were echoed by Ngcobo J in the
25 Prinsloo v Woolbrokes Federation Ltd 1955 (2) SA 298 (N) at 299 E
26 Nasionale Aartappel Kooperasie Bpk v Price Waterhouse Coopers Ing 2001 (2) SA 790 (T) at
798 F-&99J
27 lmprofed (Ply) Ltd v Nasional Transport Commissioner 1993 (3) SA 94 (A) at 107E
28 lmprofed (Pty) Ltd v Nasional Transport Commissioner 1993 (3) SA 94 (A) at 107G, Nasionale
Aartappel Kooperasie Bpk v Price Waterhouse Coopers Ing 2001 (2) SA 790 (T) at 803-5
29 Napier v Barkhuizen 2006 (4) SA 1 (SCA) at para 13
12
Constitutional Court in Barkhuizen v Napier,30 who had the following to
propound: 'the Constitution requires us to employ its values to achieve a
balance that strikes down the unacceptable excesses of 'freedom of
contract', while seeking to permit individuals the dignity and autonomy of
regulating their own lives. This is not to envisage an implausible
contractual nirvana. It is to respect the complexity of the value system the
Constitution creates. It is also to recognize that intruding on an apparently
voluntary concluded arrangements are a step that judges should
countenance with care, particularly when it requires them to impose their
individual conceptions of fairness and justice on parties individual
arrangements."
[29) In Mohabed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel
Interests (Pty) Ltd31 the Supreme Court of Appeal reaffirmed the principle
of the privity and sanctity of contracts and stated the following:
'[23) The privity and sanctity of contract entails that contractual
obligations must be honoured when the parties have entered into the
contractual agreement freely and voluntarily. The notion of the privity and
sanctity of contracts goes hand in hand with the freedom to contract,
taking into considerations the requirements of a valid contract, freedom
to contract denotes that parties are free to enter into contracts and
decide on the terms of the contract.'
[30) The Court32 continued and quoted with approval a passage in Wells
v South African Alumenite Company 33 wherein the Court stated as
follows:
'If there is one thing which, more than another, public policy requires, it is
that men of full age and competent understanding shall have the utmost
liberty of contracting, and that their contracts, when entered into freely
and voluntarily, shall be held sacred and enforced by the courts of
justice.'
30 Barkhuizen v Napier 2007 (5) SA 323 (CC0 at paras 7, 70 -71
31 Mohabed's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd 9183/17)
[2017) ZASCA 176 (1 December 2017)
32 Mohabed 's Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd 9183/17)
[2017) ZASCA 176 (1 December 2017)
33 Wells v South African Alumenite Company 1927 AD 69 at 73
13
[31] Not long ago the Constitutional Court in Beadica 231 and Others v
Trustees for the Time Being of Oregon Trust and Others34 also had
an opportunity to emphasize the principle of pacta sunt servanda and
stated the following:
"[84] Moreover, contractual relations are the bedrock of economic
activity, and our economic development is dependent, to a large extent,
on the willingness of parties to enter into contractual relationships. If
parties are confident that contracts that they enter into will be upheld,
then they will be incentivized to contract with other parties for their
mutual gain. Without this confidence, the very motivation for social
coordination is diminished. It is indeed crucial to economic development
that individuals should be able to trust that all contracting parties will be
bound by obligations willingly assumed .
[85] The fulfilment of many of the rights promises made by our
Constitution depend on sound and continued economic development of
our country. Certainty in contractual relations foster a fertile environment
for the advancement of constitutional rights. The protection of the sanctity
of contracts is thus essential to the achievement of the constitutional
vision of our society. Indeed, our constitutional project will be imperilled if
courts denude the principle of pacta sunt servanda."
[32] In SA Sentrale Ko-op Graanmaatskappy v Shifren en Andere 35 the
Court dealt with policy considerations such as the need to avoid disputes,
evidential difficulties often associated with oral agreements, the need for
certainty and clarity in a commercial environment, and the infringement of
the right to contractual freedom.
[33] The principle of Pacta Sunt Servanda entails that parties are bound
to the agreements they conclude. This principle is fundamental to our law.
[34] In its most common sense, the Pacta Sunt Servanda principle
refers to private contracts and prescribes that the provisions of a contract
are binding in law between the parties to the contract. If a party neglect
his or her obligations that party acts unlawful.
The first Question of law to be determined is:
34 Beadica 231 and Others v Trustees for the Time Being of Oregon Trust and Others CCT
109/19 [2020 ] ZACC 13
35 1964 (4) SA 760 (A)
14
"Whether the Breach Letter issued by the Engineer instead of the
Defendant being the Employer, was valid and in compliance with
Clause 9.2.2. 7 of the GCC (as amended).
[35] The question that needs to be answered is:
Did the Engineer (MSW) have the authority, to give the notice of breach
of contract (the Breach Letter) to the Plaintiff in terms of Clause 9.2 as
amended by "Additional special conditions or amendments to the general
conditions of contract." In the amended GCC the word 'Engineer' is
replaced with 'Employer' to give notice in terms of Paragraph 9.2.2.7.
Paragraph 9.2.2.7 of the amended GCC reads as follows; "then the
Employer may give the Contractor 14 days notice to rectify the default,
and if the Contractor fails to rectify the default in said 14 days, then,
without further notice, notify the Contractor in writing of the termination of
the Contract. .. "
[36] To further answer this question as to whether the Engineer MSW had
the authority to give notice of breach of contract (the Breach Letter) to the
Plaintiff in terms of Clause 9.2 as amended, it is necessary to have regard
to the empowering instrument, being Clause 3 of the GCC. Proper reading
of this clause does not suggest any power or authority given to the
Engineer in this regard. To the contrary, Clause 3.1.1 of the GCC states,
"The function of the Engineer is to administer the Contract as agent of the
Employer, in accordance with the provisions of the Contract."
I readily share and endorse the same views expressed by the learned
Judges which accord with common sense and commercial practicalities.
Indeed, if the above-mentioned case law held a different view, the
consequence would defeat the very object of reducing the contract to
writing.
[37] Regardless of the reasons for writing the Breach Letter to the Plaintiff,
MSW acted ultra vires. MSW equally acted beyond its powers as agent of
the Defendant (Employer).
[38] The second Question of law to be determined is the following:
"Whether the Termination Letter was invalid and amounted to
repudiation of the Agreement?"
15
[39] In Kragga Kamma Estates CC v Flanagan,36 Judge Nestadt JA held
"There is a /ex commissoria entitling the seller, in the event of the
purchaser breaching any of its obligations, forthwith to cancel the
agreement."
[40] In Datacolor International (Pty) Ltd v lntamarket (Pty) Ltd37 Judge
Nienaber JA held "Repudiation has sometimes been said to consist of two
parts: The act of repudiation by the guilty party, evincing a deliberate and
unequivocal intention no longer to be bound by the agreement, and the
act of his adversary, 'accepting' and thus completing the breach."
[Par 16] "Whether the plaintiff by its letters of termination repudiated the
agreement: "Where one party to a contract, without lawful grounds,
indicates to the other party in words or by conduct a deliberate and
unequivocal intention no longer to be bound by the contract, he is said to
'repudiate' the contract. Where that happens, the other party to the
contract may elect to accept the repudiation and rescind the contract. If
he does so, the contract come to an end upon communication of his
acceptance of repudiation and rescission to the party who has
repudiated."38 At the same time this Court has repeatedly stated that the
test for repudiation is not subjective but objective (Ponisammy and
Another v Versailes Estates (Pty) Ltd 1973 (1) SA 372 (A) at 387A_C.
[Para 19] "Since the test is objective and the matter is to be approached
from the vantage point of the innocent party (in this case the defendant) it
follows that the evidence of Hill, the author of the letters RW8 and RW9,
as to what the plaintiff had in mind when he drafted them would have been
irrelevant. By the same token the evidence of the defendant's witnesses
Wachsberger and Mayer, as to what they understood by, and how they
reacted to, the letters were irrelevant. But such evidence, although
relevant, would not be conclusive, since the approach is that a court,
faced with the enquiry of whether a part's conduct amounted to a
repudiation, must superimpose its own assessment of what the
innocent part's reaction to the quilty part's action should reasonable
have been."
[41] It is settled law that repudiation of a contract occurs where one party
to a contract, without lawful grounds, indicates to the other party, whether
36 (2) SA 367 (A) page 370 para F
37 [2001] 1 All SA 581 (A), 2001 (2) SA 284 (SCA) page 287 para 1
38 Corbett JA in Nash v Golden Dumps (Pty) Ltd 1985(3) SA 1 (A) at 22D-F).
16
by words or conduct, a deliberate and unequivocal intention to no longer
be bound by the contract. 39 Of which the innocent party will then be
entitled to either:
(i) reject the repudiation and claim specific performance; or
(ii) accept the repudiation, cancel the contract and claim damages . If he
or she elects to accept the repudiation, the contract comes to an end upon
the communication of the acceptance of the repudiation to the party who
has repudiated. Only then does a claim for damages arise.
[42) The Defendant's (Employer's) Termination letter dated 3 May 2018,
on the second page at paragraph 3 reads as follows:
"In light of the aforementioned, you are notified that Polokwane
Municipality hereby terminates the whole agreement and as a result, you
are required to remove or cause to be removed plant from site, vacate the
site, and restore it and all other property of Polokwane Municipality in your
possession for the purpose of the agreement to Polokwane Municipality
within two (2) working days after receipt hereof."
[43) I am in agreement with the Plaintiff that the attempted termination by
the Defendant constituted a repudiation of the agreement, which entitled
the Plaintiff to terminate the Agreement.
[44) One of the Defendant's contentions is that the Engineer acted as an
agent for the Defendant by writing, the Breach Letter.
I disagree with this, as is evident from my reasoning in paragraph 37 of
this judgment.
Costs
[45) Both parties contended that the cost should follow the event and, I
also do not find any departure from the general rule.
[46) In the circumstances the following order is made :
1. That the Plaintiff's Claim One (1) and Two (2) against the Defendant
succeeds.
Claim 1
1. Confirmation of the cancellation of the agreement.
39 Nash v Golden Dumps (Pfy) Ltd [1985] 2 All SA 161 (A); 1985 (3) SA 1 (A) at 22D-F
17
2. That the Defendant be and is hereby ordered to pay cost of the
suit.
Claim 2
3. That the Defendant is ordered to make payment in respect of the
retention funds in the amount of R 1 123 520.87 (One Million One
Hundred and Twenty-Three Rand and Five Hundred and Twenty
Rand and Eighty Seven Cents) plus VAT.
4. Interest on the aforementioned amount a tempore morae.
5. That the Defendant be and is hereby ordered to pay cost of the
suit.
ACTING JUDGE OF THE HIGH COURT
Appearances:
For the Plaintiff: Adv AA Sasson
Instructed by: Thomas & Swanepoel Inc, Tzaneen c/o Kampherbeek &
Pogrund Attorneys, Polokwane
For the Defendant: Adv JAL Pretorius
Instructed by: Mohale Incorporated, Polokwane
Dates Heard: 4-5 November 2024
Date Reserved: 5 November 2024
Date Delivered: 4 December 2024