IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
Case No: 22632/2022
(1} REPORTABLE: ~u
(2} OF INTEREST TO OTHER JUDGES: t"3
(3) REVISED: ) 6
--J, .. -16 MAY 2025
--···--··-· DATE
In the matter between:
HOUSING DEVELOPMENT AGENCY
and
KHAVHAKONE CONSTRUCTION GROUP (PTY) LTD
(Registration No.2014/178409/07)
In re:
KHAVHAKONE CONSTRUCTION GROUP (PTY) LTD
(Registration No.2014/178409/07)
and
HOUSING DEVELOPMENT AGENCY Applicant
Respondent
Plaintiff
First Defendant
THE MINISTER OF HUMAN SETTLEMENTS N.O.
(In her official capacity as the responsible Minister for the
Department of Human Settlements) 2
Second Defendant
This judgment is prepared and authored by the Judge whose name is reflected as
such and is handed down electronically by circulation to the parties I their legal
representatives by email and by uploading it to the electronic file of this matter on
CaseLines . The date for handing down is deemed to be 16 May 2025.
JUDGMENT
RETIEF J
[1] The applicant applies for leave to appeal to the Full Bench of this Division.
This must be a typographical error and should read to the Full Court of this Division,
alternatively to the Supreme Court of Appeal [SCA] against the whole of the
judgment and order delivered on the 5 December 2024 in which the applicant was
ordered to pay the respondent an amount of R 1,246,811.53 in respect of two interim
payment certificates IPC25 and IPC26 arising from a Service Level Agreement
[agreement].
[2] The nub of the applicant's leave to appeal and argument centred around a
perceived error the Court acted under when adjudicating the dispute before it. This
error was the disregard of one of the applicant's pleaded defences, in its amended
plea at paragraph 52.2. Paragraph 52.2 alleged that the interim certificates IPC25
and IPC26 were invalid for the fact that their valuation was based contrary to the
contract. The trigger of the Court's error it argued was apparent in paragraph 3 of
the judgment in which the Court found, as referred to in the respondent 's replication ,
that it did not have to deal with the applicant's defence as raised at paragraph 52 of
its amended plea, in that, the same would be dealt with by the Arbitrator in an interim
award (ostensibly still to be awarded at that time). This error it argued appeared to
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permeate into the remainder of the reasoning . The applicant misunderstands the
Court's reasoning as at the time, the Arbitrator 's interim award had been furnished.
[3] In short, the applicant's defence at paragraph 52.2 of arose from the fact that
the contract it referred to was a lump sum contract and not a measurable contract
and thus the dissatisfactions raised by it with regard to IPC25 and IPC26
inadvertently implicated the correct manner of the valuation of the IPCs' because
some line items had already exceeded 100% of their allocated value, a feature that
is a contravention of a lump sum contract strategy. This the nub of invalidity based
on valuation to ward off paying the respondent.
[4] The Arbitrator 's interim award was handed down in January 2024, a date
after the respondent' filed its replication and after the applicant filed its amended
plea. Both parties did not amend their pleadings in so far as they deemed fit. The
pre warning that an interim arbitration award for consideration , as raised as a point
in limine, would become available had materialised . By agreement the interim award
formed part of the Trial bundle. The parties too, as per the directive, agreed on the
triable issues in a joint minute. Be that as it may, notwithstanding the pleadings the
Court was actually aware of the common cause facts recorded by the Arbitrator in
the interim award that pertained to the contract whilst having regard to paragraph
52.2 of the applicant's amended plea namely, that:
"X. THE BILL OF QUANTITIES
50. By the end of the hearing, it was common cause that:
50. 1 The second contract (the contract before the Court at
the time -own emphasis) was a lump sum contract,
and the issue of the bill of quantities for the valuing
interim payment certificates (including IPC25 and
IPC26) did not alter the second contract from a lump
sum to a measurable contract;
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50. 2 The level of precision required for the final account was
greater than the precision of the interim payment
certificates, which could be adjusted, if necessary , in
the next interim payment certificate;
50. 3 The amount due to the claimant (the respondent -own
emphasis) when the contract was terminated was the
portion of the lump sum;
50.4
50.5
[5] Furthermore, at the hearing before the Arbitrator , the parties also agreed that
the portion of the lump sum due to the respondent as a recorded at 50.3 above,
would be calculated on a particular basis. The discrepancy of value in the interim
certificates would have an impact when the final account was to be rendered. The
final account required a level of precision . The level of precision required for the final
account was greater than the precision of the interim payment certificates, which
could be adjusted, if necessary , in the next interim payment certificate. The
termination date being the date of determination. The arbitrator therefore did not
make a validity determination of the interim certificates. The Court at paragraph 3
merely emphasised that, in the event the Court found that the agreement was
lawfully terminated, the prospect of further adjustments after February 2022, if
necessary, to recoup inaccuracies, as agreed, with the next interim payment
appeared uncertain . Therefore, at paragraph 3 the Court warned, "Of significance
the first defendant (the applicant-own emphasis) was aware of the possible
consequence of a lumpsum SLA when Cato dealt with the prospect and
consequences in his witness statement in October 2023. The first defendant's failure
to do the precision work (as at final account stager-own emphasis) before and now
after notice to terminate the SLA has been received has consequences." This was
stated absent the final account. The respondent 's claim related to the payment of
interim payment certificates ; no final account was before the Court.
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[6] The Court put necessary weight to the common cause facts and agreements
between the parties, as invited when it considered the pleaded case before it. The
narrow issue before the Court was whether the respondent was entitled to the
payment of the interim certificates IPC25 and IPC26, absent a final account and
whether it was entitled to terminate the SLA on the evidence presented. The
applicant does not raise issue with the Court's finding of the termination of the
agreement , nor does it raise any other ground of error or misdirection of fact or law
relating to the identified triable issues or reasoning thereof.
[7] Reconsidering the reasoned judgment and the argument this Court is of the
opinion that the appeal as raised and argued would not have a reasonable prospect
of success and as such, the applicant has failed to meet the threshold of section 17
of the Superior Courts Act, 10 of 2013. The application must fail.
[8] The following order:
1. The application for leave to appeal is dismissed with costs, taxed on
scale B.
Appearances:
For the Applicant : Adv M Phalane LA.RE~
Judge of the High Court
Gauteng Division
Cell: 060 402 1560
phalane@thulamelachambers.co .za
Instructed by attorneys:
For the Respondent
Instructed by attorneys:
Date of hearing:
Date of judgment: Madiba Motsai Masitenyane & Githiri Attorneys
Mr M Sibiya
Email: majaha@mmmgattorneys.co.za
Adv B Stevens
Cell: 076 584 5095
Email: brookstevens@lawcircle.co .za
Clyde & Co Inc
Mr J van der Wath
Email: johan@constructionlaw.co .za
12 May 2025
16 May 2025 6