SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy







IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, C APE TOWN

Case Number: 6550/2019

In the matter between:

MARK TAME N.O. First Plaintiff

ALBERTUS JOHANNESS NEL VAN NIEKERK N.O . Secon d Plaintiff

CHRISTOPHER ERIC HYLAND N.O. Third Plaintiff

JOHANNES PETRUS DU PLESSIS N.O. Fourth Plaintif f

and

TALA LIGHT WEIGHT CONS TRUCTION (PTY) LTD First Defendant
REGISTRATION NO.: 2016/472029/07

ARNOLD STEYNBERG Second Defendant

XBS ADMINISTRATION (PTY) LTD Third Defendant
(REGISTRATION NO.:2013/041309/07

CWR TRADING SOUTH AFRICA (PTY) LTD Fourth Defendant
REGISTRATION NO.:2013/188471/07

YVAN TORIANNINI Fifth Defendant
________________________________________________________ ________

JUDGMENT
________________________________________________________________
MAGARDIE AJ

Introduction

1. The plaintiffs in this action are the trustees of the Chapman ’s Bay
Development Trust (“the Trust”). By combined summons issued on 17 April
2019, the plaintiffs seek payment of restitutional damages from the
defendant s arising from alleged overpayments made by the Trust to the first
defendant. These payments were made by the Trust pursuant to two
Building Contract Turnkey Solution Agreements (“ the building contracts ” or
“the agreements” ) concluded between the Trust and the first defendant on
31 January 2018. The first def endant at the time was known as AFCO
Building Solutions (Pty) Ltd (“AFCO”).

2. The building contracts provided for the engagement of AFCO, as the
contractor , to construct two freestanding residential dwellings on land
owned by the Trust at erf 4[...] and erf 4[...]1 , Chapman ’s Bay, Cape Town .
The dwellings to be constructed would be within a new housing
development known as the Chapman’s Bay Estate. The contracted
amounts for the construction of the dwe llings were R3 274 419.00 (VAT
inclusive) for the dwelling on erf 4[...] and R 3 525 417.00 (VAT inclusive) for
the dwelling on erf 4[...]1 .

3. In addition to their claims for overpayments to AFCO, the plaintiffs seek
payment of construction delay penalties and an order for attorney and own
client costs as pr ovided for in the building contracts. A further claim was
initially brought by the plaintiffs against the second and fifth defendants in
their personal capacities as directors of AFCO . The cause of action so
pleaded by the plaintiffs was that the second an d fifth defendants had
conducted the affairs of AFCO recklessly by failing to execute the
contractually required works in a proper and workmanlike fashion.

4. The claims against the second and fifth defendants on the basis of reckless
trading were abandoned at the commencement of the trial. The plaintiffs
however persist with their claims for overpayment and penalties against the
second , third and fourth defenda nts on the basis of suretyship s concluded
by these defendants on 24 August 2018. The second defendant , third
defendant and fourth defendant’s liability in terms of the suretyship s is
limited to a maximum amount of R800.000.00.

5. The amounts claimed by the plaintiffs from AFCO are R728 159.66 in
respect of the dwelling constructed on erf 4[...] and R828 863.00 in respect
of the dwelling on erf 4[...]1 . These amount s are alleged to represent the
difference between what the Trust paid AFCO before the contracts were
cancelled in February 2019 and the value of the work executed by AFCO on
the partially built dwellings as determined by the plaintiffs’ quantity surveyor.
The plaintiffs subsequently performed remedial work on the dwellings,
howev er no claim for damages was sought by the plaintiffs in this regard.

6. The penalties claim relates to the contractually stipulated daily penalty
payable by AFCO should construction be in excess of 210 days. The
plaintiffs seek payment of a combined penalty in the amount of
R281 250.00 . This claim compris es of an amount of R86 250.00 with regard
to erf 4[...] and R195 000.00 in respect of erf 4[...]1 . It was conceded by
AFCO during the trial that it was liable for payment of contractual penalties .

The building contracts

7. The building contracts at issue were both concluded on 31 January 2018
between the first plaintiff, representing the Trust and Mr . Carel Visagie,
representing the first defendant.

8. The terms of the building contracts are largely identical except those
relating to the different erfs and the contract price for the completion of the
works . The terms of the building contracts, their conclusion and the validity
of the se terms is common ground . I outline below the key provisions of the
building contracts which assumed prominence in the course of the trial.

9. Clause 1.10 of the building contracts provides that the works shall comprise
the construction of the works described in the agreement, “…substantially in
accorda nce with the plans and specifications referred to in the schedule, the
schedule of PC Items and in terms of the provisions of this Agreement.”
Clause 2.1 records that the contractor undertook to construct the works on
the property “…in a proper and workman like manner, substantially in
accordance with the agreement.” Clause 5 provides that the construction of
the works was to be concluded in terms of architectural drawings and plans
approved by the local municipality , which were attached as schedules to the
agreements.

10. Clause 6.1 deals with payment milestones. In terms of clause 6.1.1, an
advance payment of 40% of the agreed contract price was to be paid by the
Trust to AFCO, of which 10% was payable on signature of the agreement .
The remaining 30% was payab le as soon as the building plans were
approved, whichever date was the earlier. Subsequent to the conclusion of
the building contracts, the Trust paid AFCO an amount of R 1 309 767.00 as
the advance payment in respect of the dwelling to be constructed on er f
4[...]. An amount of R1 410 167.00 was paid as the advance payment
relating to erf 4[...]1 .

11. The effect of clause 8.1 of the building contracts became a central point of
contention in the course of the trial and subsequent argument. This clause
provides for the agreed contract price in respect of the works to be paid to
AFCO as contractor “…as per the confirmation of the QS (quantity
surveyor) of the monthly progress achieved. The contractor shall submit the
payment to the QS before the 20th of each month. Payment by the
employer will be made into the contractors account and only after
confirmation of the progress that has been reached for the month by the QS
to the employer. The determination of the QS shall be final and binding on
the parties.”

12. Clause 11 of the building contracts deals with their termination. In terms of
clause 11.1, should AFCO as the contractor be in material default of any of
its obligations in terms of the agreement, the Trust was entitled to notify
AFCO thereof in writing and thereafter entitled to terminate the agreements
should such default continue for a further period of 14 days. In that even t,
the Trust would be entitled to employ others to complete the works. The
clause goes on to provide that “…the damages for such termination shall be
a debt due by the contractor to the employer as determined by the QS
whose decision shall be final and bin ding on the parties.”

13. Clause 15.1 states that “…the dimensions and sizes as shown on the
drawings will be strictly observed as far as practical and the contractor shall
be entitled to vary any measure by a maximum of 1% in his discretion.”

14. In terms of clause 15.4, the agreements constituted the entire contract
between the parties as it related to the construction of the works on the
property. The clause records that “…no prior representations, stipulations or
warranties not expressly recorded herein sha ll be binding unless reduced to
writing and signed by the parties.” Similarly, clause 15.5 states that “…no
agreement purporting to vary any terms and conditions have or shall be of
any force and effect, unless the said agreement is reduced to writing and
signed by the parties.”

The pleadings

Breach of the agreements

15. The essence of the plaintiffs ’ claim s against the defendants, as they emerg e
from the pleadings, is that AFCO breached the agreements by failing to
construct the residential dwellings on the two erven in a proper and
workmanlike manner and substantially in accordance with the building
contracts. The pleaded case by the plaintiffs in this re gard is that:

15.1 AFCO’s construction of the works was not concluded in terms of
the architectural drawings and the plans approved by the local
municipality .

15.2 damp proof membranes that were installed to prevent moisture
penetration from the surface bed into the walls were either
punctured or incorrectly laid .

15.3 internal door openings were too low and incorrectly set out and as a
result, there was not enough space for the doorframe, door, door
finish and the screed .

15.4 the vertical brickwork and retaining fill were not fitted with a damp
proof membrane and many of the window openings were not
square .

15.5 the general quality of the electrical installation was of a very poor
standard and had to be replaced. In this respect, it is alleged that
the electrical installation chase into the slabs of the houses was not
to industry standards and compromised the slabs.

16. AFCO in its plea denied the allegations of breach of the building contracts.
By virtue of a report from third party engineer, J3 Engineering, which was
annexed to its Plea, AFCO pleaded that J3 Engineering had assessed the
quality of the work performed by AFCO and confirmed that it was in line with
industry standards.

17. According to th is engineer’s report, no irregularities had been found with the
DPC installation. As to the waterproofing of the vertical brickwork, the
engineer ’s report concluded that an application of torch on waterproofing
would be adequate to ensure that the structure was waterproof. J 3
Engineering also recorded in its report that its view was that no potential
cracking would occur in respect of the mortar joint thickness and that the
structural integrity of the dwellings had not been compromised by irregular
mortar jointing. AFCO however did not rely on the J3 Engineering report at
the trial.

Penalties

18. Clause 8.2 of the building contracts provid es that the time for practical
completion of the works was 210 days from the commencement date as
provided for in the agreement. In terms of clause 10, the penalties payable
by the contractor for late completion of the works to practical completion
and thereafter, were a n amount of R2 500.00 per day.

19. The plaintiffs in their particulars of claim initially sought payment of an
amount of R122 500.00 representing penalties for 49 days in respect of erf
4[...]. This amount was determined after deducting from the number of days
the plaintiffs spent on site, the contract allowance of 210 days and agreed
rain delays . In respect of erf 4[...]1 , an amount of R217 500.00 w as initially
claimed as delay penalties for 87 days.

20. AFCO, in its plea, denied that the penalties so claimed were due to delays
for which AFCO could be faulted. AFCO alleged inter -alia that the plaintiff s
were responsible for these delays and that obstructive and unprofessional
conduct by the plaintiffs had unduly prevented AFCO from completing its
work.

21. AFCO accordingly denied that it was liable for the penalties claimed a nd
pleaded in the a lternative that it was not liable for such penalties to the
extent alleged by the Plaintiff.

22. Matters however took a different turn at the trial . It was at th at stage
accepted by counsel for AFCO that in respect of the construction on both
erven, AFCO was liable to p ay contractual penalties to the plaintiffs, subject
to the quantification thereof.

23. The evidence of the plaintiffs ’ witness, Mr. Matthew Elsworth, a former
project manager for the construction project, was later led in this regard . Mr.
Elsworth was not cr oss-examined by the defendants’ counsel and his
evidence st ood uncontested. Mr. Elsworth testified that the penalties in
respect of erf 4[...] amounted to R86 250.00 and R195 000.00 in respect of
erf 4[...]1 . The defendants submit that these penalty amounts , albeit
undisputed at the trial and amounting to a total of R281 250.00 , are lower
than the amount of R340 000.00 initially claimed by the plaintiffs . The
defendants submit that while the plaintiffs claim for penalties should be
granted, no order o f costs should made in respect of the penalties claim, as
AFCO has been substantially vindicated in its plea to the penalty claims. I
shall deal later with th ese submissions.

Cancellation of the agreements

24. On 20 and 21 September 2018 the Trust directed correspondence to AFCO
in terms of clause 11.1 of the agreements, notifying AFCO that it was in
breach of the agreements and demanding that the breaches be rectified
with 14 days.

25. In his email correspondence sent on 20 September 2018, Mr . Elsworth
recorded that the areas which required rectification by AFCO related inter -
alia to the replacement of damp proof membranes, internal door openings
which were too low, vertical brickwork, window openings which were not
square . In addition, his email stated that the electrical fix had chased into
the slab, was not industry standard and could compromise the slab.

26. The Trust alleges in its particulars of claim that AFCO failed to rectify its
breaches of the agreements. AFCO in tu rn pleads that it was not required to
remedy any issues as the work had been done in accordance with industry
standard.

27. On 25 February 2019 the Trust’s attorneys directed a letter to AFCO
informing it that both building contracts were cancelled and that A FCO was
required to cease work immediately and vacate the construction site by 8
March 2019. The letter recorded inter -alia that the Trust was in the process
of liquidating its damages as a result of the cancellation and would advise
AFCO in this regard as soon as the amount had been finalized.

28. AFCO does not deny that the Trust was entitled to cancel the building
contracts on 25 February 2019.

Damages

29. The damages allegedly suffered by the Trust and its entitlement to
repayment of alleged overpayments ma de to AFCO , is a significant area of
contestation between the parties. In its particulars of claim, the plaintiffs
plead that as at the date of cancellation of the agreements, the Trust had
paid AFCO an amount of R2 099 200.00 in relation to erf 4[...] and a n
amount of R 2 452.685.00 in relation to erf 4[...]1 . It was not disputed by
AFCO that it had been paid these amounts .


30. The plaintiffs then plead that in relation to erf 4[...] “…the completed works
were certified by the Quantity Surveyor in terms of the agreement as
R1 371 050.34. As a result, the Plaintiff suffered damages in the amount of
R728 159.66 which is the amount ov erpaid to the First Defendant.”
Similarly, and in respect of erf 4[...]1 , the plaintiffs plead that “…the
completed works were certified by the Quantity Surveyor in terms of the
agreement as R1 623 821.96. As a result, the Plaintiff suffered damages in
the am ount of R828 863.00, which is the amount overpaid to the First
Defendant.”

31. At paragraph 24A of its amended particulars of claim, the plaintiffs plead
that “…it would be equitable and in the interests of justice that it be excused
from restoring to the Fi rst Defendant that which it received in terms of both
agreements.”

32. AFCO in its plea denies the plaintiffs ’ allegations regarding the damages
they allege were suffered by the Trust as a result of AFCO’s breach of the
agreements. AFCO plead ed that the plai ntiffs had failed to provide evidence
of the valuation by the quantity surveyor referred to in its particulars of claim
or further evidence supporting its alleged damages.

33. It was on this basis then that the battle lines were drawn. The key disputed
issue s emerging from the pleadings were AFCO’s alleged breach of the
building contracts a nd the plaintiffs’ entitlement to restitution or rest itutionary
damages for the alleged overpayments.

The evidence

34. The plaintiffs led the evidence of four witnesses.

35. The plaintiffs’ witnesses were Mr. Simon Humpreys, a professional quantity
surveyor, Mr. Mark Tame, the first plaintiff and a trustee of the Trust, Mr .
Rory Cole, a professional land surveyor and Mr . Matthew Elsworth , the
project manager engaged on the construction project. I have earlier set out
the uncontested evidence of Mr. Elsworth regarding the quantum of the
contractual penalties.

36. The defendant s for their part elected not to call any witnesses . The
defendants closed their case after the evidence of the Trust’s witnesses had
concluded.

Mr Simon Humphreys

37. Mr. Humphreys is a professional quantity surveyor. His expertise and
professional qualifications were not disputed .

38. Mr. Humphreys was employed by the Trust on an hourly basis for a limited
scope of work appointment as the quantity surveyor on the erf 4[...] and erf
4[...]1 construction project . Following the cancellation of the building
contracts and during March 2019, the plaintiffs instructed Mr. Humphreys to
inspect the construction work on erf 4[...] and erf 4[...]1 and to calculate the
value of the construction work on the two erven as at that date and prepare
a valuation statement.

39. Mr. Humphreys prepared a final v aluation statement in relation to erf 4[...]
as at 27 March 2019, which was introduced into evidence . The erf 4[...]
valuation statement records that the value of the “…completed work (incl.
VAT), excluding unfixed materials”, amounted to the sum of R1 371 040.34
and that the percentage work complete was 41.87%.

40. Mr. Humphreys also prepared a valuation statement in relation to erf 4[...]1
as at 6 March 2019. This statement that the value of the completed work at
the time including VAT and excluding unfixed materials was R1 623 821.96.
The percentage work complete d by AFCO is recorded as being 46.06%.

41. Both reports were prepared by Mr. Humphreys based on his observations
and calculations during March 2019. Mr. Humphrey s explained in detail the
methodology in terms of which his valuation statement s were prepared and
the manner in which he arrived at his calculations. According to the
valuation statements and Mr. Humphrey’s oral evidence , the amount he
determined as “value of works executed ” was comprised of two
components. The first component was the value of the contractor’s work for
items such as earthworks, masonry, waterproofing, plastering, plumbing
and electrical work. The second component was PC (prime co sts) and
specialist trades such as water and electrical connection and engineering
costs . The total of these two amounts together with VAT resulted in the
amount he determined as the “value of completed work” and set out in the
valuation statements.

42. Mr. Humphreys testified that certain payment certificates, which were also
introduced into e vidence, “…basically says what the client owes the
contractor” and is the “contractual certificate for payment.” His evidence
was that on a monthly basis, he would meet with AFCO staff regarding their
applications for payment and go through same. He would then prepare a
valuation and would issue it to the plaintiffs.

43. The cross examination of Mr. Humphreys commenced with a focus on a
“recovery statement” which he had prepared and which he explained was
an adjustment on the certified amount. The document re cords that the
recovery statement was “…issued in terms of 33.0 of the JBCC Principal
Building Agreement.”

44. When questioned on this by this by the defendants’ counsel, Mr.
Humphreys confirmed that the J oint Building Contracts Committee (“J BCC ”)
Principal Agreement was not applicable in this case. He explained that the
JBCC was referred to in the recovery statement he had issued, because it
was “…a convenient form of documentation.” Mr. Humphreys conceded that
in the present case, it was the terms of the building contracts that were
applicable, not th ose that are contained in a JBCC contract . When referred
to clause 8.1 of the building contracts, he confirmed that he was the
quantity surveyor or “QS” referred to in this clause.

45. Mr. Hum phreys was specific ally referred to the provision of clause 8.1 of the
building contracts, which states inter-alia “…the determination of the QS
shall be final and binding on the parties.” It was put to Mr. Humphreys that
the effect of this part of clause 8.1 of the building contract, was that there
was no scope for a recovery by the plaintiffs. He conceded that it was in the
JBCC scenario that a recovery would form part of the certification of works
by the quantity surveyor. Insofar as the building contracts were concerned,
he emphasized that he was not party to the preparation of the contracts and
had only been employed to do the valuations.

46. On being questioned further regarding clause 8.1, Mr. Humphreys accepted
that the clause provided for his determination as the quantity surveyor, to be
final and binding on the parties in respect of payments to the contractor . He
accepted that he was the j udge of payments to be made to the contractor,
what progress had been made by the contractor and that he had previously
prepared the certificates for payment to AFCO. Mr. Humphreys did not
however concede the correctness of the submission put to him by the
defendants’ counsel, that the effect of clause 8.1 was that there was no
room for an overpayment because his determination was final and binding
on the parties.

47. Mr. Humphreys was then referred to clause 11.1 of the building contracts,
which deals with th e termination of the agreements. The clause states inter -
alia that “…the damages of such termination shall be a debt due by the
contractor to the employer as determined by the QS whose decision shall
be final and binding on the parties.” He confirmed that he had not engaged
in a damages determination exercise as contemplated by this clause, that
he was not involved in determining damages or penalty and that clause
11.1 of the agreement had not been implemented or invoked. Mr.
Humphreys was questioned furthe r regarding the drafting of the building
contracts themselves. He stated that he did not know anything about how
the contracts were prepared or distributed.

48. A further line of the cross -examination of Mr. Humphreys related to the
amounts and calculations in the valuation statements which he had
prepared. He confirmed under cross -examination that his calculations
included an item of future work which at that stage had not been done yet.
He however stated that this was for a minor amount. It was put to Mr.
Humphreys by the defendants’ counsel that his calculations were not limited
to overpayment and also referred to future aspects to be installed in the
building. The response of Mr. Humphr eys was, “…within reason.” He
explained however that this was part of striving to be fair and that it was
common practice to err “…a little bit on the contractor’s side when he says
that he will have finished”. This, he said, had been the case with AFCO on a
number of the interim valuations.

Mr Mark Tame

49. Mr. Tame is the first plaintiff and a trustee of the Trust. He began by
explaining his involvement in the construction project, which was a joint
venture aimed at develop ing the Chapman’s Bay properties f or onward sale
to residential buyers. Mr. Tame’s role in the project and joint venture was to
take responsibility for the financial, marketing and sales aspects as well as
leading the project in relation to civils and engagement of contractors .

50. With regar d to the building contracts at issue, Mr. Tame testified that the
contracts had been handed to the Trust by AFCO and that after consulting
the Trust’s attorney, various changes had been made to the contracts by
mutual agreement. He could not however recall the exact changes which
had been made.

51. After providing this context to the construction project and the conclusion of
the contracts, Mr. Tame’s evidence then focused on the contractual clauses
and what he maintained were the breaches thereof by AFCO. He testified
that AFCO had not complied with clause 1.10 of the building contracts,
which defines the works which were the subject of the agreements and
which work had to be completed “…substantially in accordance with the
plans and specifications”, attach ed as schedules to the agreements.

52. When asked to expand on this, Mr. Tame said that it was in the first place
unusual in his experience as a developer for the Trust to have to pay
upfront such a large deposit , such as the 40% advance payment required
by clause 6.1.1. of the agreement . The Trust however had accepted this
and paid t he amount as it was considered necessary to advance the project
and the advance payment was specifically made for the purpose of
purchasing building materials.

53. Mr. Tame’s evidence then moved on to what he maintained were a series of
breaches of the agreements by AFCO. He testified that AFCO’s non-
compliance with the agreements began right at the outset of construction ,
when AFCO cleared the wrong site in the developm ent area. He stated that
this caused problems as the site was situated in an ecologically sensitive
area. His evidence was that this was but one of a number of problems
which the Trust had experienced with AFCO throughout the project .

54. The problems referred to by Mr. Tame in his evidence included construction
delays, problems with the quality of materials provided by AFCO and
problems with their sub -contractors, who he stated in one instance , had not
been paid by AFCO . Mr. Tame testified that “…overall, it was not a great
experience.”

55. According to Mr. Tame, the Trust had complied fully with all of its
obligations in terms of the agreements, while AFCO had not. The attention
of Mr. Tame was drawn specifically to clause 5.1 of the building contracts,
which provides in part that the employer (the Trust), shall not give
instructions to the contractors ’ workmen or sub -contractors or interfere with
or vary an instruction given by the contractor or sub -contractor. He
confirmed that the Trust had complied with th is requirement and that while
project meetings were held between AFCO, the Trust and its project team,
there was no micro -management of AFCO by the Trust. He stated that the
project meetings were generally amicable and aimed at resolving issues.

56. On being led further regarding the contractual breaches by AFCO, Mr.
Tame testified that in respect of erf 4[...]1 , the height levels as constructed
by AFCO were incorrect and that the problem was even worse with erf 4[...].
In respect of erf 4[...], he said that the height levels were so out that the
Trust had to change the entire roof structure.

57. The height level exceedances had according to Mr. Tame , been brought to
the Trust’s attention by neighboring homeowners in the residential
development. He testified that the Trust had to undertak e remedial work
after termination of the building contracts with AFCO. With regard to the erf
4[...] dwelling , this involved a redesign of the roof, which required
submission and approval by the Home Owners Association. In addition,
plumbing and electrical work had to be taken over by other contractors.

58. Mr. Tame was referred to the position which pertained after the cancellation
of the agreements on 25 February 2019 and after AFCO had left the site.
He was asked how far the houses w ere from completion at that stage . He
answered they were “…substantially from completion” and that as far as he
could recall , the roofs for the houses were not on at that stage.

59. As to the approximate cost to the Trust of the remedial work which had to
be undertaken on the houses, he testified that it was a substantial amount
and that on both houses, the Trust “…had ended up paying about R5
million. ” He did however record that to be fair, there had been additions by
the Trust to the erf 4[...] property.

60. Regarding the damages sought by the Trust, Mr. Tame testified that on his
understanding, the Trust was seeking payment of “…the difference between
what was paid and what was put in.” H is evidence was that the defendants
had been compensated for the work th at they had done. According to Mr.
Tame, it would not make financial sense for the properties to be demolished
and payment demanded from the defendants for the full amount paid by the
Trust.

61. An extensive aspect of the cross -examination of Mr. Tame dealt with the
correspondence directed by Mr. Elsworth to the Trust on 20 September
2018 setting out the details of defective work performed by AFCO. It will be
recalled that in this correspondence, AFCO was put on terms to rectify
within 14 days a number of are as of what the Trust maintains was defective
and poor workmanship. This included replacement of damp proof
membranes, internal door openings which were too low, vertical brickwork,
window openings which were not square and the electrical fix which had
chased into the slab, was not industry standard and could compromise the
slab.

62. In the said correspondence, Mr. Elsworth in addition stated “ …this approach
to the product [by AFCO] has created a build that is severely behind
schedule, will produce a fin ished house that is unsaleable in the market and
will ultimately have issues manifest in its lifetime because of poor
waterproofing and brickwork.”

63. Mr. Tame was cross -examined on the various areas of poor workmanship
recorded in the 20 September 2018 cor respondence. He conceded that with
regard to the replacement of the damp proof waterproofing, AFCO
employees had remedied and corrected this defect. He conceded that “by
and large”, the waterproofing and door problems listed by Mr. Elsworth, had
been recti fied by AFCO. The same applied to the vertical brickwork
problems which he accepted had been rectified by AFCO.

64. With regard to the electrical fix , which Mr. Elsworth had stated was not
industry standard and of a generally “appalling quality…and needs to b e
completely redone”, Mr. Tame re -iterated in cross -examination that this
aspect had not been rectified by AFCO and had to be remedied later by the
Trust , at its own cost. He stated that while it was true that “…the walls
wouldn’t fall over” , the overall q uality of the workmanship by AFCO was
poor.

65. A further aspect of the cross -examination related to what defendants ’
counsel put to Mr. Tame as being the approach in construction disputes,
which was that where there is a query regarding poor workmanship, the
problem would be fixed by the owner and the costs then claimed from the
builder. The position was not, as counsel put it, for the owner to claim back
what the builder had been paid. Mr. Tame conceded that in respect of the
remedial work for the electrical fix, the Trust had remedied this problem but
had not sought to claim these costs from the defendants.

66. Mr. Tame was questioned as to why the Trust had decided not to sue the
defendants for damages for the costs it had incurred in performing remedial
work on the houses constructed by AFCO. He responded by stating that the
Trust did not want to go down the li ne of claiming damages as this would
end up involving expert witnesses, being a “…he said, she said” and that
this would “…waste the courts time.” He stated that while the Trust had
decided not to claim damages from AFCO for the remedial work it had to
pay for to complete the build , it had embarked on the present case, which
“…was about remedying a wrong.”

67. With regard to the provisions of the building contracts relating to the final
determinations by the quantity surveyor, Mr. Tame stated under cross -
examination that these clauses had been specifically included to prevent
back and forth disputes regarding payment claims by AFCO. He conceded
that in respect of the remedial work performed, the costs and details thereof
were not before the Court, the Trust h ad not claimed these as damages
from the defendants and that what the Trust was claiming was an
overpayment .

Mr Rory Cole

68. The plaintiff’s next witness was Mr. Rory Cole. Mr. Cole is a professional
land surveyor. His expertise and qualifications were not disputed.

69. Mr. Cole was instructed by the plaintiffs to take as built measurements of
the construction work carried out by AFCO on erf 4[...] and erf 4[...]1 . He
prepared a report dated 4 February 2019, which was introduced into
evidence.

70. Mr. Cole testified that the as-built height o f the dwelling constructed by
AFCO on erf 4[...], exceed ed at three points the design final floor level
(“FFL”) height in the agreed architectural drawings .

71. The as-built heights taken on the first floor living room dif fered by +0.59 m
(590 millimetres) in relation to design FFL height , the as -built heights taken
on the garage differed by +0.43 m (430 millimetres and the as -built heights
taken on the top of the wall differed by +0.35 m (350 millimetres) in relation
to desi gn FFL height.

72. With regard to the as -built height of the house on erf 4[...]1 , Mr. Cole found
that at five points , the as -built height exceeded the specified design FFL
height. These differences in as -built height versus design FFL height,
related to the first-floor bedroom (+0.8m) (800 millimetres) , the first floor
living room (+0.18m) (180 millimetres) and the garage (+0.06m) (60
millimetres).

73. In relation to design apex height, the living room timber truss apex differed
from specification by +0.04m (400 millimetres) and the bedroom timber
truss apex by +0.58m (480 millimetres) . Mr. Cole testified that the extent to
which the as-built heights of constructed dwellings exceeded the design
FFL heights , was not in line with the architectural drawings which th e
parties had agreed to.

74. The cross -examination of Mr. Cole focused on the extent to which his
findings on the various exceedances of design FFL height , fell within the 1%
variation or tolerance range provided for by clause 15.1 of the building
contracts. It will be recalled that c lause 15.1 states that “…the dimensions
and sizes shown in the drawings will be strictly observed as far as is
practical and the contractor shall be entitled to vary any measure by a
maximum of 1% in his discretion.” It was apparent at the outset of the cross -
examination, when counsel for the defendant, referr ing to his own
calculations of the 1% variation or tolerance allowed by clause 15.1, that
Mr. Cole was unaware of the details of this clause. He stated in this regard
that “…yeah, but I don’t know what the tolerance is, so I’m not sure if its 1%.
I can’t comment on that.”

75. It was put to Mr. Cole that all three of the heights in respect of the house
constructed on erf 4[...] fell within the 1% tolerance / variation range
provided for by clause 15.1 of the contract. Mr. Cole conceded that this was
the case and accepted that if the tolerance was 1%, erf 4[...] would have no
problem regarding heights. In respect of the house constructed on erf
4[...]1 , it was put to Mr. Cole that fo ur of the five heights in relation to this
property, fell within the 1% tolerance provided for by clause 15.1. Mr. Cole
accepted this to be so.

76. In respect of his findings regarding the +0.8m (800 millimetres ) design FFL
versus as -built surveyed height exceedance for the first -floor bedroom of
the erf 4[...]1 house, it was put to Mr. Cole that th is was a mere 16cm over
the 1% tolerance or variation range provided for by clause 15.1. Mr. Cole’s
response was that in his view, “…this was quite a lot over. ”

Evaluation

Requisites for restitution

77. It was authoritatively stated by Innes CJ over a century ago in Victoria Falls
and Transvaal Power Co Ltd v Consolidated Langlaagte Mines1 that the
purpose of and the fundamental rule in the award of damages for breach of
contract, is to place the innocent party in the position he or she would have
occupied had the co ntract been properly performed, so far as that can be
done, by the payment of money and without causing undue hardship to the
defaulting party.

78. The party who has complied with his obligations in terms of the agreement
but who is a victim of a breach the reof by the other party, is thus entitled to
be placed in the position he would have occupied had there been no
breach. The application of th e rule thus entails a comparison between the
financial situation the injured party would hypothetically have occupi ed had
the agreement been fulfilled and that party’s actual financial situation
subsequent to the breach.2


1 Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines 1915 AD 1 at 22.
2 Culverwell v Brown 1990 (1) SA 7 (A) at 25 .
79. A party who however seeks restitution, thereby exercises not a claim for
contractual damages per se, but a distinct contractual remed y. In Kudu
Granite Operations (Pty) Ltd v Caterna Ltd3, Navsa, JA and Heher AJA (as
he then was), said the following:

“There is a material difference between suing on a contract for
damages following upon cancellation for breach by the other party
(as in Baker v. Probert 1985(3) SA 429 (A), a judgment relied on by
the Court a quo) and having to concede that a contract in which the
claim had its foundation, which has not been breached by either
party, is of no force and effect. The first -mentioned scenario gives
rise to a distinct contractual remedy : Baker at 439A, and restitution
may provide a proper measure or substitute for the innocent party’s
damages .”

80. This principle was subsequently approved by the SCA in National Sorghum
Breweries (Pty) Limited t/a Vivo A frica Breweries v International Liquor
Distributors (Pty) Limited4, where Olivier JA noted that a claim for restitution
in the form of repayment of the purchase price previously paid by the
claimant, was a distinct contractual remedy.

81. The Court held that the required elements for a cause of action seeking
restitution in this form , were the following:

“…the necessary allegations were the conclusion of the contract,
the breach thereof, the payment of the purchase price, and the
cancellation of the cont ract.”


3 Kudu Granite Operations (Pty) Ltd v. Caterna Ltd 2003 (5) SA 193 (SCA) at 202 E -F.
4 National Sorghum Breweries (Pty) Limited t/a Vivo Africa Breweries v International Liquor
Distributors (Pty) Limited (2001 (2) SA 232 (SCA at para 4.
82. In what follows, I evaluate whether t he plaintiffs have established the
requirements for restitution of the amounts which they claim from AFCO.

Conclusion of the contracts

83. It is common cause and established on the evidence that the building
contracts at issue were concluded between the parties. The validity of the
contracts and their terms is common ground. The payments made by the
Trust to AFCO are also not disputed.

Breac h of the contracts

84. Clause 2.1 of the building contracts sets out the standard required for the
construction of the two dwellings on erf 4[...] and erf 4[...]1 . This clause
makes it clear that AFCO was contractually obliged to construct the houses
“…in a proper and workmanlike manner, substantially in accordance with
the agreement.” Clause 1.10 in addition required AFCO to construct the
houses “…substantially in accordance with the plans and specifications
referred to in the schedule [to the agreement].”

85. As stated earlier, Mr. Cole’s report and his oral evidence was that the as-
built height of the house on erf 4[...] exceeded the design final floor level
(“FFL”) height at three points. In respect of the as-built measurements for
height of the house on erf 4[...]1 , he found that at five points the as -built
height exceeded the design FFL height.

86. Mr. Cole had testified that the extent to which the design heights had been
exceeded in the constructed dwellings, was not in line with the agreed
architectural drawings . Mr. Cole however conceded that all three of the
heights in respect of the house constructed on erf 4[...] fell within the 1%
variation range provided for by clause 15.1 of the agreements . He also
conceded that four of the five height exceedances in relation to dwelling on
erf 4[...]1 , fell within the 1% variation range.

87. Mr. Cole’s survey had found a +0.8m (800 millimetres) as-built surveyed
height versus design FFL height exceedance in respect of the first -floor
bedroom of the dwelling constr ucted on erf 4[...]1 . He disputed and did not
accept the submission by the defendants this was merely a 16cm
exceedance of the 1% contractual tolerance range. His response, as stated
earlier, was that this was “… quite a lot over.”

88. Mr. Cole was a credible witness, his expertise was not disputed and I
accept the veracity of his evidence. His evidence regarding the as -built
height exceedance for bedroom 1 of the dwellings constructed by AFCO on
erf 4[...]1 , was not disputed. Nor is there any dispute that this measurement
exceeded the maximum 1% tolerance or variation range permitted by
clause 15.1 of the building contracts.

89. The plaintiffs have in my view established that in this respect , there was a
material breach by AFCO of its obligations under clause 1.10, clause 2.1
and clause 15.1 of the building contracts.

90. Turning then to the evidence of Mr. Tame, he testified in detail that the
quality of the work performed by AFCO on both houses was not proper and
workmanlike and was in b reach of clause 2.1 of the building contracts.

91. Mr. Tame’s evidence in my view corroborates the evidence of Mr. Cole in a
number of respects. His evidence further confirms that the height levels for
both houses w ere incorrectly constructed by AFCO and not in accordance
with the agreed architectural drawings and specifications. There was no
significant challenge to Mr. Tame’s evidence that in respect of the dwelling
constructed by AFCO on erf 4[...], the height levels were so out that the
Trust had to change the entire roof structure. Nor was his evidence disputed
insofar as it related to the remedial work which the Trust had to perform on
the house built on erf 4[...], which involved a redesign of the roof that
required approval of the Home Owners Association.

92. It was submitted by the defendants that Mr. Tame had testified that
“substantial completion of the two houses had been achieved by AFCO.”
That is not my reading of Mr. Tame’s evidence. As stated earlier, the
plaintiffs’ counsel specifically asked Mr. Tam e to comment on the position
which pertained after the cancellation of the agreements on 25 February
2019 and after AFCO had left the site. Mr. Tame was asked how far the
houses were from completion at that stage . He answered that the houses
were “…substantially from completion ”, not that they were substantially
completed, as submitted by the defendants.

93. Mr. Tame’s evidence in this regard is also consistent with the evidence and
valuation statements prepared by Mr. Humphreys , which record that as at
March 2019, the percentage work comp leted by AFCO on the erf 4[...]
dwelling was only 41.87% and in respect of erf 4[...]1 , the percentage of
work completed was 46.06%. These figures were not disputed by the
defendants.

94. Mr. Tame was closely questioned about the email correspondence directed
by Mr. Elsworth to AFCO on 20 September 2018, which put AFCO to terms
to remedy poor workmanship relating to the damp proof membranes,
internal door openings , vertical brickwork, window openings which were not
square and the electrical fix which had chased into the slab . As the
plaintiffs ’ counsel submitted, Mr. Tame conceded acknowledged and
conceded that the damp proof membranes and internal door openings had
subsequently been repaired by AFCO.

95. Mr. Tame however made it clear that with regard w ith regard to the
electrical fix, which Mr. Elsworth had described as not being industry
standard and of a “generally appalling quality ”, that this aspect had not been
rectified by AFCO at all and remained a problem , which the Trust had to
subsequently repair at its cost. He consistently maintained under cross -
examination that while it was so that the walls of the houses “would not fall
over”, the work done on the houses by AFCO was not workmanlike or
professional.

96. Mr. Tame conceded that aspects of the defective workmanship were later
repaired by AFCO after they were put on terms . In my judgment however,
the fact that certain admitted defects were later repaired by AFCO ,would
not have made the appearance of these defects any less burdensome for
the Trust . The Trust had alread y paid AFCO a substantial deposit and was
compelled to place AFCO on terms to repair a number of serious building
defects . A professional builder who constructs door openings that cannot fit
a door and window openings which are not square, can hardly be sa id to
have performed his work in a workmanlike manner. I therefore do not
consider Mr. Tame’s concession to redound to the benefit of AFCO. The
plaintiff’s palpable sense of frustration with the conduct of AFCO in the
construction process was readily appar ent from Mr. Tame’s evidence and
the correspondence directed to AFCO by Mr. Elsworth.

97. Having denied in terms in its Plea that it breached any of the provisions of
the building contracts as they related to the obligation to perform quality and
proper workmanship in its construction of the dwellings, one would have
expected evidence from AFCO at the trial in support of these denial s. It was
not to be so. The defendant s closed their case without calling any
witnesses, let alone evidence from J3 Engineering, on the basis of whose
report it was pleaded by AFCO that it performed quality work in line with
industry standards.

98. I agree with the submissions by the plaintiffs’ counsel that Mr. Tame was a
credible, honest witness. The is no reason not to accept his evidence
relating to AFCO’s breaches committed during the building of the dwellings
on both erven. I consider the plain tiffs to have established that AFCO
materially breached its obligations under clause 1.10 and clause 2.1 in its
construction of the works required by clause 1.10 of the building contracts.

Cancellation of the contracts

99. There is no dispute between the par ties that the building contracts were
cancelled by the Trust . The defendants accept that the Trust was entitled to
cancel the building contracts on 25 February 20 19.

Restitution of payments made to AFCO

100. The main dispute between the parties is whether the Trust is entitled to
restitution or restitutionary damages in the form of payment of the difference
between the amounts which the Trust paid to AFCO and the value of the
completed works as determined by Mr. Humphreys.

101. Three main arguments were advanced by the defendants in support of their
contentions that the plaintiffs were not so entitled and that failure of the
plaintiffs ’ claims for the alleged overpayments was inevitable. Firstly, it was
contended that the plainti ffs’ claims amounted to a re -valuation or revisiting
of the work performed by AFCO and that this was not permitted by the
contracts. The Trust had therefore not proved, so it was argued, that the
completed works had been “certified by the quantity surveyor in terms of the
agreement” as alleged at paragraphs 23 and 24 of the particulars of claim.

102. Secondly, the defendants argued that the Trust had elected not to hold
AFCO liable for payment of damages as provided for in clause 11.1 of the
building contracts and that consequently, the specifics of the defective work
and the cancelation of the contracts were of no moment. Thirdly, it was
submitted that even if the Trust and the QS were entitled on some basis to
revalue the work done, the valuation statements p repared by Mr.
Humphreys lacked integrity and could not be relied on as they included
future rectification expenses and materials on and off site.

103. Clause 8.1 of the building contract is key to the first main contention
advanced by the defendants . That contention being that the Trust’s claims
amount to a re -evaluation of the work performed, which is not permitted by
the contracts and clause 8.1 in particular. Clause 8.1 in its entirety states:

“The CONTRACT PRICE shall be paid by the CO NTRACTOR as
per the confirmation of the QS of the monthly progress achieved.
The CONTRACTOR shall submit the payment to the QS before the
20th of each month. Payment by the EMPLOYER will be made on
the last day of the month into the CONTRACTOR’S account an d
only after confirmation of the progress that has been reached for
the month by the QS to the employer. The determination of the QS
shall be final and binding on the parties.”

104. The purpose of clause 8.1 is in my view to establish and regulate a
contractu al mechanism for payment of the agreed contract price by the
Trust to AFCO. That mechanism requires payment to the contractor to be
made on the basis of and expressly subject to “confirmation” by the QS
“…of the monthly progress achieved.” The clause then goes on to
determine the dates by which payments claimed by the contractor are to be
submitted and when such payments are to be effected by the employer.
The latter is again subject to the QS confirming to the employer the
progress that has been achieved b y the contractor for the month to which
the payment relates.

105. Finally, the clause provides that the determination by the QS shall final and
binding on the parties. This “determination” by the QS , can only be
reasonably interpreted to relate to the confirm ation of the work done by the
contractor . That confirmation is a necessary pre -condition for payment to
the contractor . The clause in essence provides for a mechanism to avoid
payment disputes during the contract period by requiring the assent and
confirma tion of the QS regarding monthly progress before payment can be
made to the contactor. The QS is in addition vested by clause 8.1 with the
power to confirm monthly progress by the contractor and his determination
in this regard is final and binding on the parties.

106. I consider the interpretation of clause 8.1 set out above to be sensible and
business -like and consistent with the intentions of the parties. Although the
evidence of Mr. Tame is not necessarily admissible regarding the meaning
of clause 8.1, it is noteworthy he confirmed that the clause was specifically
inserted in the agreement in order to avoid disputes and “back and forth”
regarding payments to the contractor.

107. Clause 8.1 of the building cont racts in my view neither expressly nor
impliedly preclude the Trust from seeking restitution as a contractual
remedy for breach of the provisions of the contract.

108. Nor does clause 8.1 in terms preclude the quantity surveyor from
determining, after the can cellation of the building contracts, the value of the
work which had been performed by the contractor. Clause 8.1 serves a
different and distinct purpose . It is a dispute avoidance mechanism which
places the function of making final and binding determinati ons regarding
payment claims by the contractor during the lifespan of the contracts , in the
hands of the quantity surveyor.

109. The defendants’ contention that clause 8.1 bars the restitutionary relief
claimed in the action, rests on the premise that the “ce rtification” of the
completed works referred to by the Trust in paragraphs 23 and 24 of the
particulars of claim, amounts to an impermissible “re -valuation” of the work
previously done by AFCO . The proposition and premise on which it is based
is unpersuasi ve. The effect of clause 8.1 of was to render , during the course
of the contract, determinations by the quantity surveyor authorizing
payments to AFCO , final and binding . This however does not in my
judgement mean that Mr. Humphreys was subsequently and after the
contracts had already been cancelled, precluded by clause 8.1 or the
building contracts from making a determination as to the quantum of the
completed works on site as at March 2019.

110. In making such a determination, I do not agree that Mr. H umphrey s’
evidence impermissibly revisits or re -evaluates the work previously
performed by AFCO, as the defendants sought to argue. The argument
overlooks the purpose for which the evidence was tendered. Mr.
Humphreys was tasked by the plaintiffs to quanti fy and determine the
monetary value of the completed works a s at March 2019. He did so in his
valuation statements . He gave undisputed evidence explaining the
methodology and calculations underlying his determinations. I n particular, it
was not disputed th at the monetary value of the completed works on both
erven as at March 2019 was that determined by Mr. Humphreys in his
valuation statements and n o evidence to the contrary was led by the
defendants.

111. Mr. Humphreys was extensively cross -examined on whether his valuation
statements were consistent with clause 8.1 of the building contracts. He did
not concede that the clause precluded him from determining the value of
the works executed by AFCO. The valuation statements themselves are a n
undisputed written re cordal of the basis on which he had quantified the
value of the works and the specific components of that valuation .

112. The defendants ’ contention s that Mr. Hump hrey’s valuations of the
completed work done by AFCO are precluded by the terms of the building
contracts , are in m y view without merit .

113. The second argument advanced by the defendants was that the
restitutionary relief sought was not competent or established because the
Trust had elected not to hold AFCO liable for payment of damages as
provided for in clause 11.1 of the building contracts . Th is contention
misconstrues the nature of the restitutionary remedy, whi ch as stated
earlier, our C ourts have held to be an independent contractual remedy.

114. The plaintiffs were not required to expressly label their main cause of action
as one for restitution or restitutionary damages. All that they were required
to do was ple ad the elements of their cause of action for restitution , being
the agreements, payment to AFCO, breach of the agreements by AFCO
and cancellation by the plaintiffs. Where upon cancellation of a contract, a
plaintiff seeks recovery of his own performance by claiming repayment of
money, the nature of his cause of action is that of a distinct contractual
remedy, not an enrichment action.5

115. It is so that the Trust may have an additional remedy in law for damages
sustained due to the defendants ’ breach of contract, including damages in
respect of the remedial work subsequently performed by the Trust. Th e
existence of such a remedy does not non -suit the Trust from seeking

5 Probert v Baker 1983 (3) SA 229 (D) at 233. The judgment was referred to by the SCA with
approval in Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA) at 202 E.
restitution of the difference between the amounts it paid to AFCO for work
done and the actual value of the completed work which was executed by
AFCO. More so in circumstances where the quantified value of the
completed work, has on the undisputed evidence of Mr. Humphreys been
determined to be of a significantly less er value than the amount which the
Trust paid AFCO for that very work . The notional availability of an
alternative remedy to the Trust for it to sue for its full damages as a result of
the conduct of AFCO, is in my view not mutually exclusive of its right to
seek restitution as an independent contractual remedy and substitute for its
damages.

116. The defendants third argument was that the valuation statements prepared
by Mr. Humphreys lacked integrity and could not be relied on as they
included future rectification e xpenses and materials on and off site. The
criticism is in my view, overstated. The focus during cross -examination of
Mr. Humphrey on a relatively minor amount of R3 139.50 included in his
recovery statement document as being “work executed by others”, doe s not
in my judgment detract from the veracity of his evidence as a whole or his
valuation methodology which, as stated earlier, was not materially disputed
by the defendants. The defendants disputed the Trust’s entitlement to
restitution not Mr. Humphrey’ s calculations of the value of the completed
works executed by AFCO.

117. I am not persuaded that the evidence of Mr. Humphreys and valuation
statements recording the value of the completed works executed by , falls to
be rejected on the basis contended by the defendants.

118. The various grounds on which the defendants contend that the plaintiffs
have not established their claim to restitution ary damages, are in my view
individually and cumulatively without merit.

Equity of restitution

119. The general principle of reciprocity applies to the restitutionary remedy and
requires that when a contract is cancelled and restitution claimed, the
innocent party must also make or tender to make restitution of whatever he
has received.6 The principle i s not absolute and the failure to tender such
restitution is not necessarily fatal to the innocent party’s claim. As Nienaber
JA stated in Extel Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd7

“the rule that a rescinding party must tender resti tution is not an
inflexible one; it applies only where such restitution remains
physically possible. When, through no fault of the party rescinding
restoration is no longer physically possible, he is not precluded by
that fact alone from resiling from the contract .”

120. The general rule that a party claiming restitution is required to tender
restoration of what it received pursuant to the contract, may be departed
from in an appropriate case, taking into account equitable considerations.
Trollip JA put it thus in Feinstein v Niggi8

“The object of the rule is that the parties ought to be restored to
the respective positions they were in at the time they contracted. It
is founded on equitable considerations.

Hence, generally a court will not set aside a contract and grant
consequential relief for fraudulent misrepresentation unless the
representee is able and willing to restore completely everything that
he has received under the contract. The reason is that otherwise,

6 Marks Ltd v Laughton 1920 AD 12 21.
7 Extel Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd (271/96, 272/96) [1998] ZASCA 67;
1999 (2) SA 719 (SCA); [1998] 4 All SA 465 (A) (17 September 1998) .
8 Feinstein v Niggi 1981 (2) SA 684 (A) 700G – 701A.
although the representor has been fr audulent, the representee
would nevertheless be unjustly enriched by recovering what he had
parted with and keeping or not restoring what he had in turn
received, and the representor would correspondingly be unjustly
impoverished to the latter extent.

(see Actionable Misrepresentation (supra at para 294 and note 5
thereto); Marks Ltd v Laughton 1920 AD 12 at 21; Harper v
Webster 1956 (2) SA 495 (FC) at 502B - D; Van Heerden en
Andere v Sentrale Kunsmis Korporasie (Edms) Bpk 1973 (1) SA 17
(A) at 31G - 32A). But since the rule is founded on equity it has
been departed from in a number of varying circumstances where
considerations of equity and justice have necessitated such
departure (see Harper's case where the cases are collected and
especially at 500B, 502E). ”

121. The plaintiffs submitted that it would be equitable and that justifiable that the
Trust be excused from restoring to AFCO what the Trust had received from
in respect of the construction of the dwellings on the two erven. The
plaintiffs submitted that Mr. Tame’s evidence was that it wo uld not be
commercial sensible or feasible for the properties to be demolished in order
to put the parties back in the position that they would have been in prior to
the conclusion of the agreements.

122. It was furthermore submitted that there was a nother factor justifying the
Trust being excused on equitable grounds from restoring what it had
received from AFCO. This was that AFCO had already been paid for the
work that it had performed and that both the amounts paid to AFCO and Mr.
Humphreys evidence regarding the value of the work performed by AFCO ,
were unchallenged. The Trust in any event does not seek restitution of the
full amount paid to AFCO. The Trust submits that it seeks restitution in the
form of payment of the balance of the moneys paid to AFCO, that being the
difference between what was paid to AFCO for the construction of the two
dwellings and the actual value of the partially built dwellings so constructed.

123. The defendants did not seek to ch allenge Mr. Tame’s evidence that
demolishing the properties in order to restor e what the Trust had received
from AFCO, would not make practical or commercial sense. The dwellings
on the property were already partially built to roof height at the time of
cancellation of the contracts on 25 February 2019. It is difficult to see how
restoration of the constituent building materials purchased by AFCO for
aspects such as masonry, plastering, plumbing, waterproofing and electrical
work and utilized to construct t wo partially built houses , would at his stage
be practical , let alone physically possible.

124. Mr. Tame’s evidence was that both properties had subsequently been sold
to third parties following the remedial work performed by the Trust to
complete the build. On this basis as well, restoration by the Trust to AFCO
would be physically impossible. The defendants did not seek to argue the
contrary.

125. I am consequently of the view that the plaintiffs have established that there
are just and equitable grounds to excuse the plaintiffs from restoring what
the Trust had received from AFCO, prior to the cancellation of the two
building contracts on 28 February 2019.

Conclusion

126. The plaintiffs have in my view established their entitlement to restitutionary
damages for payment of the difference between the amounts the Trust paid
to AFCO for construction of the dwellings and the value of the completed
work executed by AFCO. The plaintiffs’ claims succeed for the reasons set
out above.

127. With regard to costs, the plaintiffs sought costs on the attorney and own
client scale as provided for in clause 12 of the building contracts. The
defendants did not suggest that costs would not be payable on the b asis of
the scale agreed in clause 12 of the contracts, in the event of the plaintiffs ’
claims succeeding.

128. I am not persuaded by the defendants’ submissions that no order as to
costs ought to be made in respect of the plaintiffs ’ penalties claim. The
defendants ’ plea actively resisted the penalties claim inter-alia on the basis
that the plaintiffs had “forced numerous delays at own behest” and that the
plaintiffs had acted in an obstructive and unprofessional manner and
delayed AFCO from commencing with it s work. None of these allegations
were pursued by the plaintiffs at the trial or put to the plaintiffs ’ witnesses.
The submission that the defendants had only disputed the quantum or
extent of the penalties and had in fact never disputed their liability fo r the
penalties, is untenable and not borne out by the pleadings .

129. The plaintiffs claim against the fifth defendant however stand s on a different
footing. The plaintiffs claim against the second and fifth defendant in their
personal capacity on the basis of reckless trading, was only abandoned at
the start of the trial on 2 9 April 2024. I agree with the submissions by the
defendants ’ counsel that no claim against the fifth defendant survived the
abandonment . The fifth defendant is accordingly entitled to his costs.

Order

130. I make the following order:

130.1 The first defendant is ordered to pay the plaintiffs:

130.1.1 the amount of R728 159.66.

130.1.2 the amount of R828 863.00.

130.1.3 the amount of R281.250.00 .

130.1.4 interest on the aforesaid amounts a tempore morae .

130.2 The second, third and fourth defendants, jointly and severally, the
one paying the other to be absolved, are ordered to pay the
plaintiffs:

130.2.1 the amount of R800 000.00.

130.2.2 interest on the aforesaid amounts a tempore morae .

130.3 The first, second, third and fourth defendants are ordered pay the
plaintiffs costs on scale as between attorney and own client.

130.4 The plaintiffs claim against the fifth defendant is dismissed with
costs, including the costs of counsel on scale C.


---------------------------
S G MAGARDIE
Acting Judge of the High Court
Western Cape Division


Appearances:

For the plaintiffs: Adv P Torrington

Instructed by : Dykes Van Heerden (Cape Inc)

For the defendants: Adv F Arnoldi SC

Instructed by : Bennecke Thom Incorporated

Date of hearing: 29 April 2024, 30 April 2024 and 27 May 2024

Date of judgment: 24 February 2025