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[2024] ZAKZPHC 111
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Dube Tradeport Corporation v SMEC South Africa Proprietary Limited (17213/2022P) [2024] ZAKZPHC 111 (26 November 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 17213/2022P
In
the matter between:
DUBE
TRADEPORT CORPORATION
PLAINTIFF
and
SMEC
SOUTH AFRICA PROPRIETARY LIMITED
DEFENDANT
ORDER
The
following order is granted:
1.
The defendant’s exception is dismissed with costs.
JUDGMENT
PIETERSEN
AJ:
[1]
This is an exception by the defendant
[1]
to the plaintiff’s particulars of claim. The defendant contends
that the plaintiff’s particulars of claim lack averments
necessary to sustain a cause of action.
[2]
The plaintiff issued summons against the defendant based on the
defendant’s
professional negligence, which caused the defendant
to be in breach of its obligations in terms of a contract and its
professional
mandate. The plaintiff claims that this caused it to
suffer damages. According to the plaintiff’s particulars of
claim, it
issued a bid for the appointment of a professional service
provider to undertake design and construction supervision for the
construction
of a double basement carpark and ground floor retail
space at Block D of Dube City, located in the Dube Trade Port at La
Mercy,
north of Durban. The plaintiff’s bid document contained
within it part C1, which constituted the agreement and contract data.
In terms of paragraph C1.2 of the contract data, the contract was
based on the Standard Professional Services Contract
[2]
(‘the standard terms’), published by the Construction
Industry Development Board. The plaintiff accepted the defendant’s
bid offer on 18 December 2013, whereupon the defendant was appointed
to undertake the professional services as set out in the defendant’s
bid document. Accordingly, upon acceptance of the defendant’s
bid, the bid became the contract between the parties (‘the
main
agreement’).
[3]
Pursuant to various developments at the time of and after the
conclusion of the main
agreement, no less than five addenda were
entered into by the parties. Construction commenced but eventually
came to a complete
stop during January 2018, when the main
construction contractor was liquidated, which in turn resulted in the
completion date of
the project being delayed. Certain disputes arose
between the plaintiff and the defendant regarding fee increases and
outstanding
payments. In settlement of the disputes, the parties
concluded a termination of services and settlement agreement (‘the
termination
agreement’), in terms of which they agreed to
terminate the main agreement on the date of signature of the last
party signing,
being 19 September 2018.
[4]
The plaintiff seeks to recover damages from the defendant under two
claims. In terms
of claim 1, the plaintiff seeks payment in the sum
of R1 147 752, which amount was paid to the defendant as a result of
the need
for the modification of the design and additional works. In
terms of claim 2, the plaintiff seeks payment in the sum of
R5 462 151.51,
which amount was paid to the construction
contractor for the costs of additional civil works. As to when these
claims arose, the
plaintiff pleads at paragraph 45 of its particulars
of claim as follows:
‘
45.
The claims were later determined to have arisen due to defendant’s
negligence as described
above. Accordingly, plaintiff suffered
damages in the total amount of R6 609 903.51 in settling the claims.’
[5]
The plaintiff further pleads that these claims fall under clause 2.4
of the termination
agreement, which reads as follow:
‘
Notwithstanding
the termination of the Main Agreement SMEC will remain liable for the
professional services, activities and designs
undertaken by them in
terms of the Main Agreement, read with the CIBD Standard Professional
Services Contract (July 2009) (Third
Edition of CIBD document 1014),
up to the date of closure for the construction break on 15 December
2017. Such liability of SMEC
shall however only be limited to an
event, omission or action which can be directly attributed to the
actions and/or omissions
of SMEC and which occurred before 15
December 2017 and persisted despite the best reasonable efforts of
Dube to prevent and/or
mitigate such risk and/or liability. SMEC’s
liability shall furthermore be subject to it being informed
immediately (in writing)
by Dube of any risk, liability and/or claim
(potential or otherwise) as well as any other limitation of liability
as recorded in
the Main Agreement.’
[6]
Clause 2.6 of the termination agreement further provides as follows:
‘
In addition to the
provisions of clause 2.4 above, it is recorded that Dube’s
right to institute a claim against SMEC and/or
the SMEC Consortium in
respect of the alleged anchor failure which occurred at the inception
of the Project will survive this settlement,
but it is recorded that
SMEC and the members of the SMEC Consortium do not hereby concede
that they were at fault and specifically
record that they are not
responsible in any manner whatsoever for the alleged anchor failures.
SMEC and the members of the SMEC
Consortium shall be entitled to
raise any defence to any future claim which Dube may elect to
institute against them, as they would
have but for the conclusion of
this agreement.’
[7]
Therefore, in terms of clause 2.4 of the termination agreement, the
defendant’s
liability shall be subject to any other limitation
of liability as recorded in the main agreement. The main agreement
includes
the standard terms and it provides at clause 13.4 as
follows:
‘
Duration of
Liability
Notwithstanding the terms
of the Prescription Act No 66 of 1969 (as amended) or any other
applicable statute of limitation neither
the employer nor the Service
Provider shall be held liable for any loss or damage resulting from
any occurrence unless a claim
is formally made within the period
stated in the Contract Data or, where no such period is stated,
within a period of three years
from the date of termination or
completion of the Contract.’
[8]
The contract data does not stipulate a time period, as contemplated
in clause 13.4.
The plaintiff therefore had to ‘formally make’
its claims within a period of three years from the date of
termination
of the contract, being 19 September 2018.
[9]
It is important to note that clause 2.4 of the termination agreement
makes the defendant’s
liability subject to:
(a)
It (the defendant) being informed immediately in writing by the
plaintiff of any risk, liability
and/or claim (potential or
otherwise); and
(b)
Any other limitation of liability as recorded in the contract.
This
means, with reference to clause 13.4 of the main agreement, that a
formal claim must be made within three years of the termination
of
the main agreement.
[10]
The basis of the defendant’s exception is that the plaintiff’s
claim is time-barred
from three years after 19 September 2018 and the
claim was only formally made on 11 December 2022, when the summons
was served.
By then, so the defendant argued, the plaintiff’s
claim had been extinguished through the effluxion of time.
[11]
Mr Maritz, who appeared for the defendant, submitted that the
plaintiff’s cause of action
in respect of claim 1 arose during
the beginning of 2017 when the payment that forms the subject matter
of claim 1 was made to
the defendant. The defendant further submitted
that the plaintiff failed to institute an action within a three-year
period from
the beginning of 2017, or even within a three-year period
after the parties entered into the termination agreement.
[12]
The defendant also submitted that the plaintiff failed to bring its
claim, based on a contract,
within the four corners of the agreement.
The defendant submitted that the plaintiff failed to deal with the
limitation of liability
issue in its particulars of claim and the
plaintiff’s particulars of claim therefore lack the averments
necessary to sustain
a cause of action.
[13]
Mr Dickson SC, who appeared for the plaintiff, submitted that the
words ‘a claim is formally
made’, on their ordinary
meaning, mean a claim set out in writing. As a result, so Mr Dickson
argued, the plaintiff’s
letter of demand addressed to the
defendant on 17 January 2020, which demand was referred to in
paragraph 51 of the plaintiff’s
particulars of claim, meets the
requirements of section 2.4 of the termination agreement.
[14]
The issue that arises from the two different interpretations of the
contract is thus when the
time-bar period or prescription period
commenced. As indicated above, the plaintiff pleads at paragraph 45
of its particulars of
claim that its claims against the defendant
were determined to have arisen later on an unspecified date. The
plaintiff further
submitted that a formal claim is not necessarily a
summons. If it had been the parties’ intention to attach that
meaning
to the words ‘a claim is formally made’, it would
have been simple enough to say so in the agreement. Instead, so Mr
Dickson argued, the words ‘a claim is formally made’
denote a claim which is set out formally in writing.
[15]
The plaintiff further submitted that its claims were in any event
formally made within the three-year
period, as it was made upon a
determination which took place at a later date. It was thus submitted
that prescription only runs
from this later, unspecified
date.
[16]
A further possible interpretation of the termination agreement
submitted by Mr Dickson is that
clause 2.4 of the termination
agreement refers to ‘any other limitation of liability as
recorded in the main agreement’.
The main agreement refers to a
limitation of claims and not a limitation of liability. If clause 13
of the main agreement is considered,
only clauses 13.1, 13.3, and
13.5 limit liability, whereas clause 13.4 only acts to time-bar
claims. As such, so the plaintiff
concluded, clause 13.4 does not act
as a ‘limitation of liability’ as contemplated in clause
2.4.
[17]
The onus of showing that a pleading is excipiable rests on the
excipient.
[3]
In
Odendaal
v Van Oudtshoorn
,
[4]
De Kock J remarked that there seems to be a tendency by the courts to
try to uphold the validity of pleadings, if at all possible.
In
Nel
and others NNO v McArthur and others
,
[5]
Basson J also remarked ‘that a charitable test is used on
exception, especially in deciding whether a cause of action is
established. The pleader is also entitled to a benevolent
interpretation. The pleadings must be read as a whole, no paragraph
can be read in isolation’. An excipient who alleges that a
pleading lacks the averments necessary to sustain an action or
defence must show that the pleading excepted to ‘is (not may
be) bad in law’.
[6]
An
excipient should, therefore, ‘make out a very clear, strong
case before he should be allowed to succeed’.
[7]
[18]
The Supreme Court of Appeal in
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
[8]
also held that ‘[e]xceptions should be dealt with sensibly’.
The court went on to hold that exceptions
[9]
‘
provide
a useful mechanism to weed out cases without legal merit.
An over-technical approach destroys their utility. To borrow
the
imagery employed by Miller J, the response to an exception should be
like a sword that “cuts through the tissue of which
the
exception is compounded and exposes its vulnerability”.
’
(Footnote omitted.)
[19]
The Appellate Division, as it then was, in
Barclays
National Bank Ltd v Thompson
[10]
stated as follows regarding the function of an exception, when based
on the ground that necessary averments are lacking, and the
circumstances under which such an exception can be taken:
[11]
‘
It seems clear
that the function of a well-founded exception that a plea, or part
thereof, does not disclose a defence to the plaintiff’s
cause
of action is to dispose of the case in whole or in part. It is for
this reason that exception cannot be taken to part of
a plea unless
it is self-contained, amounts to a separate defence, and can
therefore be struck out without affecting the remainder
of the plea…’
[20]
It further held that:
[12]
‘
It has also been
said that the main purpose of an exception that a declaration does
not disclose a cause of action is to avoid the
leading of unnecessary
evidence at the trial
:
Dharumpal Transport (Pty) Ltd v Dharumpal
.
[13]
Save for exceptional cases, such as those where a defendant admits
the plaintiff’s allegations but pleads that as a matter
of law
the plaintiff is not entitled to the relief claimed by him… an
exception to a plea should consequently also not be
allowed unless,
if upheld, it would obviate the leading of “unnecessary”
evidence.’
[21]
In an exception of this nature, the primary consideration is whether
the plaintiff’s particulars
of claim disclose a cause of
action. In
McKenzie
v Farmers’ Co-Operative Meat Industries Ltd
[14]
the Appellate Division held that the plaintiff’s pleading must
set out
‘
every [material]
fact which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to the
judgment of the
court. It does not comprise every piece of evidence which is
necessary to prove each fact, but every fact which
is necessary to be
proved.’
[22]
It has further been held that a pleading is only excipiable if ‘no
possible evidence led
on the pleadings can disclose a cause of
action’.
[15]
The
excipient has the duty to show that upon every interpretation which
the pleading can reasonably bear, no cause of action or
defence is
disclosed.
[16]
[23]
Courts are reluctant to decide, on exception, questions concerning
the interpretation of a contract
where its meaning is uncertain.
[17]
When the exception is based upon an interpretation of a contract, it
is necessary for the excipient to demonstrate that the contract
is
unambiguous to the extent that evidence is not admissible for its
interpretation and that the meaning for which the excipient
contends
is the correct meaning.
[18]
‘The possibility that evidence of surrounding circumstances may
clarify any ambiguity in the contract must not be fanciful
or
remote.’
[19]
The
possibility that such evidence may exist ‘must be examined with
care’.
[20]
[24]
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[21]
the Supreme Court of Appeal held as follows regarding interpretation:
‘
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration
must be given
to the language used in the light of the ordinary rules of
grammar and syntax; the context in which the provision
appears; the
apparent purpose to which it is directed and the material known to
those responsible for its production. Where more
than one meaning is
possible each possibility must be weighed in the light of all these
factors. The process is objective, not
subjective. A sensible meaning
is to be preferred to one that leads to insensible or unbusinesslike
results or undermines
the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard
as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute or statutory
instrument is
to cross the divide between interpretation and
legislation; in a contractual context it is to make a contract for
the parties
other than the one they in fact made. The “inevitable
point of departure is the language of the provision itself”,
read in context and having regard to the purpose of the provision and
the background to the preparation and production of the
document.
’ (Footnote omitted.)
[25]
More recently, Unterhalter AJA also held the following in
Capitec
Bank
Holdings Ltd and another
v Coral
Lagoon
Investments
194 (Pty) Ltd and others
:
[22]
‘…
the words
and concepts used in a contract and their relationship to the
external world are not self-defining… the meaning
of a
contested term of a contract (or provision in a statute) is properly
understood not simply by selecting standard definitions
of particular
words, often taken from dictionaries, but also by understanding the
words and sentences that comprise the contested
term as they fit into
the larger structure of the agreement, its context and purpose.
Meaning is ultimately the most compelling
and coherent account the
interpreter can provide, making use of these sources of
interpretation. It is not a partial selection
of interpretational
materials directed at a predetermined result.’
[26]
It is possible that evidence may be admissible to contextualise the
document since ‘context
is everything’.
[23]
The contextual setting for interpretation might include the
subsequent conduct of the parties, indicating how they understood
their agreement. Recourse to such evidence is permissible where the
evidence indicates a common understanding of the terms of the
agreement and does not alter the meaning of the words used, provided
such evidence is used as conservatively as possible.
[24]
[27]
In the circumstances, considering the contrast in meaning attached to
the main agreement and
the termination agreement by both the
plaintiff and the defendant, I am unable, in exception proceedings,
to decide the question
of the correct interpretation of the contract.
The defendant has failed to discharge the onus to demonstrate in the
circumstances
that the contract is unambiguous and that evidence will
not be admissible in the process of interpretation. In addition, it
is
not possible to decide in exception proceedings that the meaning
attached to the contract by the defendant is the correct meaning.
[28]
The possibility that evidence of surrounding circumstances and
context may be admissible and
clarify any ambiguity in the contract
is not fanciful or remote. It remains that, at this stage, the
possibility that such admissible
evidence may exist cannot be
excluded. The correct interpretation of the agreements between the
parties can therefore not be decided
at the exception stage and I
decline to make any findings in this regard.
[29]
It is further clear that prescription lies at the heart of the
defendant’s exception. Gorven
JA remarked in
Jugwanth
v Mobile Telephone Networks (Pty) Ltd
[25]
that ‘[i]n trial proceedings, prescription is conventionally
raised by way of a special plea to which there might be a
replication’.
The court rejected the argument that, because an
exception is a pleading, the delivery of an exception is an effective
way of invoking
prescription under
section 17(2)
of the
Prescription
Act 68 of 1969
. The court further held that where a defendant raises
the issue of prescription by means of an exception, the court will
have to
consider whether the particulars of claim lack averments
which are necessary to sustain a cause of action.
[26]
The answer in most cases is likely to be that the particulars of
claim are not excipiable, as the plaintiff is not required to
aver
that his or her claim has not become prescribed.
[27]
As a result, an exception based on prescription will fail if it does
not appear from the particulars of claim whether or not the
claim has
become prescribed.
[28]
[30]
In the circumstances, I am unpersuaded that the plaintiff’s
particulars of claim do not
disclose a cause of action, upon every
interpretation which it can reasonably bear. The exception must
therefore fail.
[31]
It is a well-known principle that the award of costs is in the
court’s discretion, which
discretion needs to be exercised
judicially upon consideration of the facts in each case and a court
is required to ‘make
such order as to costs as would be fair
and just between the parties’.
[29]
There are no peculiar features to this exception and the general rule
that the successful party is entitled to its costs shall
apply.
[32]
I make the following order:
1.
The exception is dismissed with costs.
PIETERSEN
AJ
Date
of hearing:
22 February 2024
Date
of Judgment:
26 November 2024
APPEARANCES
Plaintiff/Respondent:
Mr AJ Dickson SC
Instructed
by:
PKX Attorneys
Suite 36
3
on Cascades Crescent
Montrose
Pietermaritzburg
Tel: 033 347 5354
E-mail:
joanne@pkx.co.za
martin@pkx.co.za
(Ref: M Potgieter)
Defendant/Excipient:
Mr SG Maritz
Instructed
by:
Weavind and Weavind Inc
E-mail:
justus@weavind.co.za
rosanne@weavind.co.za
(Ref: J van
Heerden/S14369)
c/o Stowell and Co
295 Pietermaritz Street
Pietermaritzburg
E-mail:
sarahw@stowell.co.za
(Ref: S Myhill)
[1]
The
parties are referred to as in the action.
[2]
Standard Professional Services Contract (July 2009) (third edition
of CIDB document 1014).
[3]
City
of Cape Town v National Meat Suppliers Ltd
1938
CPD 59
at 63.
[4]
Odendaal
v Van Oudtshoorn
1968
(3) SA 433
(T) at 436D-E.
[5]
Nel and
others NNO v McArthur and others
2003
(4) SA 142
(T) at 149F-G.
[6]
Vermeulen
v Goose Valley Investments (Pty) Ltd
2001
(3) SA 986
(SCA) para 7.
[7]
Colonial
Industries Ltd v Provincial Insurance Co Ltd
1920
CPD 627
at 630.
[8]
Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards
Authority SA
2006
(1) SA 461
(SCA) para 3.
[9]
Ibid.
[10]
Barclays
National Bank Ltd v Thompson
1989
(1) SA 547
(A).
[11]
Ibid
at 553F-G.
[12]
Ibid
at 553H-I
[13]
Dharumpal
Transport (Pty) Ltd v Dharumpal
1956
(1) SA 700
(A) at 706E.
[14]
McKenzie
v Farmers’ Co-Operative Meat Industries Ltd
1922
AD 16
at 23, quoting with approval from
Cooke
v Gill
LR 8 CP 107.
[15]
McKelvey
v Cowan NO
1980
(4) SA 525
(Z) at 526D-E.
[16]
Lewis
v Oneanate (Pty) Ltd and another
[1992] ZASCA 174
;
1992
(4) SA 811
(A) at 817F-G.
[17]
Sun
Packaging (Pty) Ltd v Vreulink
[1996] ZASCA 73
;
1996
(4) SA 176
(A) (
Sun
Packaging
)
at 186J-187A.
[18]
Sacks v
Venter
1954 (2) SA 427
(W) at 429D-E; see also
Standard
Building Society v Cartoulis
1939
AD 510
at 516.
[19]
Michael
v Caroline’s Frozen Yoghurt Parlour (Pty) Ltd
1999
(1) SA 624
(W) at 632G-H.
[20]
Sun
Packaging
at
184F-G.
[21]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[22]
Capitec
Bank Holdings Ltd and another v Coral Lagoon Investments 194 (Pty)
Ltd and others
[2021]
ZASCA 99
;
2022 (1) SA 100
(SCA) (
Capitec
Bank
)
para 50.
[23]
University
of Johannesburg v Auckland Park Theological Seminary and another
[2021]
ZACC 13
;
2021 (6) SA 1
(CC) para 68.
[24]
Capitec
Bank
para
51.
[25]
Jugwanth
v Mobile Telephone Networks (Pty) Ltd
[2021]
ZASCA 114
;
[2021] 4 All SA 346
(SCA) para 12.
[26]
Ibid.
[27]
Ibid para 10; see also
Habib
and another v Ethekwini Municipality
2020
(1) SA 580
(KZD) (
Habib
)
para 16.
[28]
Habib
para
24.
[29]
Fripp
v Gibbon and Co
1913
AD 354
at 363.