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[2025] ZANCHC 47
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Base Major Construction (Pty) Ltd v Department of Roads and Public Works, Northern Cape Province and Another (1496/2019) [2025] ZANCHC 47 (25 April 2025)
IN THE HIGH COURT OF
SOUTH AFRICA
NORTHERN CAPE
DIVISION, KIMBERLEY
Case No: 1496/2019
Reportable:
YES / NO
Circulate to
Judges:
YES / NO
Circulate to
Magistrates:
YES / NO
Circulate to Regional
Magistrates: YES / NO
In
the matter between:
BASE
MAJOR CONSTRUCTION (PTY) LTD
Applicant
and
THE
DEPARTMENT OF ROADS AND PUBLIC
WORKS,
NORTHERN CAPE PROVINCE
First Respondent
THE
MEC:
DEPARTMENT OF ROADS AND
PUBLIC
WORKS, NORTHERN CAPE PROVINCE
Second Respondent
Heard
on: 25/10/2024
Delivered
on: 25/04/2025
Summary:
Failure to perform in terms of contract. Contract terminated but
subsequently
re-instated in terms of an Addendum. Respondents
terminating contract relying on the Addendum. Application seeking
declarator.
Interpretation of the contract incorporating the Addendum
in issue.
ORDER
In the result the
following order is made:
The application is
dismissed with costs which costs shall include counsel fees on Scale
C of Rule 69(7).
JUDGMENT
MAMOSEBO
ADJP
[1]
The relief that the applicant, Base Major Construction (Pty) Ltd, is
seeking is a
declarator in the following terms:
1.
On the 21
st
of May 2019, the respondent was precluded from lawfully terminating
the Compendium JBCC Principal Building Agreement, (Compendium
Agreement) concluded between the applicant and the respondent in
light of its failure to pay the amount certified as payable to
the
applicant in terms of the Interim Payment Certificate No 22;
2.
On the 21
st
of May 2019, the respondent, in terminating the Compendium Agreement,
as concluded between the applicant and the respondent, repudiated
the
written agreement;
3.
The applicant in accepting the said
repudiation, has lawfully terminated the Compendium Agreement, as
concluded between the applicant
and the respondent;
4.
The respondent is precluded from levying
penalties against the applicant, in respect of those periods that the
respondent was in
material breach of its obligations, as they arose
in terms of the Compendium Agreement, in so far as it had not
effected payment
to the applicant of amounts that were due and
payable;
5.
The respondent is to instruct its Principal
Agent to issue a further Interim Payment Certificate, in terms of
sub-clause 38.5.7
of the Compendium Agreement, which Interim Payment
Certificate is to provide for the reversal of all penalty amounts
levied against
the applicant, in respect of those periods where the
respondent had breached its obligations, as they arose in terms of
the Compendium
Agreement; and
6.
Costs of the application.
[2]
An issue arose pertaining to the filing of the supplementary heads of
argument by
the applicant which was opposed, which requires prior
attention. This application was heard in the opposed motion court.
The applicant
filed its written heads on 30 May 2024 and the
respondents on 23 October 2024.
The matter
was argued on 25 October 2025 and judgment in the matter
was reserved.
[3]
Erasmus Superior Court Practice 2nd ed Vol 3, M1 – 2 [Service
20, 2023] NC Practice
Directive Clause 3(4) provides:
In respect of each
opposed application heads of argument shall be filed with the
registrar and served on the opposing party –
(a)
before 12:00 on the Monday preceding the trial date on behalf of the
applicant;
(b)
before 12:00 on the Wednesday preceding the trial date on behalf of
the respondent.
Provided that in respect
of long or complicated applications the heads of argument shall be
filed and served at least eight and
six court days respectively
before the trial date.
In amplification, The
Code of Conduct for All Legal Practitioners, Candidate Legal
Practitioners and Juristic Entities stipulates
that:
“
61.11
After a hearing when judgment is awaited, a legal practitioner shall
not place before or try to send to a judicial officer
any further
material of whatever nature, except by agreement among
representatives of all parties; provided that, if consent is
unreasonably withheld, the placing of further material may, in an
appropriate case, be the subject matter of an application to
re-open
the hearing to receive it or, if the further material consists only
of references to authorities which might offer
assistance to
deciding a question, a legal practitioner may address a request in
writing to the judge’s registrar or equivalent
court official
to approach the judicial officer with an invitation to receive the
references.”
[4]
The respondents submit that the applicant did not attempt to reach an
agreement to
file additional heads but merely placed the heads before
court. Not only does the supplementary heads contain case law, but it
also makes various submissions in an attempt to further the
applicant’s case which was not previously dealt with.
[5]
The applicant’s original heads, filed on 30 May 2024, comprise
75 pages and
220 paragraphs. The respondents’ original heads
consist of 12 pages and 48 paragraphs. Substantive argument does not
lie
in the size of the heads but on how well articulated the issues
are captured. The applicant’s heads are quite copious and
ought
to have been confined to the crux of the issues. It is plain that the
respondents’ heads accord with the practice directive
of this
Division and were filed on the Wednesday preceding the hearing date
on Friday 25 October 2025.
[6]
The remarks by Buys J in
Kriel
v Terblanche NO en Andere
[1]
are
apposite:
‘
The
purpose of heads of argument is to identify the dispute and to set
out the argument to be delivered so as to assist the Court
and the
opponent in the preparation of the case and during argument in Court.
The Court will always try to assist legal representatives
by granting
time for further argument where necessary. Where the dispute is
identified, however, the practice which allows the
applicant's legal
representative first to listen to the argument of the respondent's
legal representative before he replies thereto
is objectionable.’
[7]
I am of the view that the applicant is attempting to supplement its
case in the supplementary
heads having had sight of the respondents’
argument, which approach is objectionable and stray from the
principle enunciated
in
Kham
and Others v Electoral Commission and Another
[2]
where
Wallis AJ said:
‘
In
application proceedings the affidavits represent both the pleadings
and the evidence.’
If the applicant’s
founding affidavit is deficient it cannot be augmented by heads of
argument. The applicant has neither
dealt with the issues raised by
the respondents during argument nor the salient issues in its
affidavit. Of importance is its failure
to deal with the Addendum
even in the impugned supplementary heads. There is therefore no
reason to accept these supplementary
heads.
[8]
The respondents raised several defences some, for example
non-compliance with the
State Liability Act, 20 of 1957
; whether
arbitration or litigation is the correct forum; compliance with the
Institution of Legal Proceedings against Certain Organs
of State Act
40 of 2002, in their written heads but they were not argued,
correctly so. The main issue for determination therefore
revolves
around the interpretation of the contract, incorporating the
Addendum.
[9]
The duration of the project was meant to be 14 months. The applicant
was awarded a
R161,421,288.75 tender to construct student
accommodation under Bid No DRPW 02/2016 Kimberley: Construction of
New Nursing College
– Phase 1 (Student Accommodation) after a
successful bid. In a letter dated 10 November 2016 under signature of
the Head
of the Department, (HOD) Mr Kholekile Nogwili, the bidder
was informed that the contract period will commence on the date
following
the day on which the bidder was notified of its
appointment. The bidder was also made aware of the stipulation in the
contract
relating to the penalty in the amount of R15,000.00 per day
for each day the contract was delayed.
[10]
Mr Stephen J Lu, Chairman/Director of the applicant, directed a
letter of acceptance to the first
respondent on 18 November 2016 in
which he wrote:
‘
This
letter serves as an acceptance for the abovementioned project with
the tender amount of R161,421,286.75. We acknowledge receipt
of the
appointment letter and agree to complete the work with the tendered
amount and time.’
It is common cause
between the parties that the Compendium Agreement was concluded on 16
November 2016. The applicant commenced
with the construction of the
works on 03 February 2017. The applicant submitted claims for interim
payments which were considered
by the Principal Agent to determine
what the applicant would be entitled to.
[11]
The Principal Agent furnished the applicant with the General
Conditions of Contract (GCC) on
25 May 2017 (the Principal Building
Agreement). In para 24 of its founding affidavit, the applicant
states that an addendum was
concluded on 07 November 2017 without
mentioning the circumstances which had led to the conclusion thereof.
The respondents’
response lies at para 16 of the answering
affidavit accusing the applicant of non-performance of its
obligations and the termination
of the contract.
[12]
The respondents’ ‘without prejudice’ termination
letter signed by the HOD,
annexed as “KN1” addressed to
the Managing Director, Mr Stephen Lu, dated 27 September 2017, reads:
‘
On
21
st
June 2017 we caused a formal notice to be addressed to you in terms
of clause 36.2 advising that you are in breach of your obligations
as
set out in clause 15.3 and of our intention to cancel the contract
should you not remedy such breach within a period of ten
(10) working
days. Despite such notice and the Department having given you more
than enough opportunity to correct the situation,
you have failed to
remedy your breach and in the circumstances this letter serves as
formal notice of the immediate cancellation
of the contract in
accordance with the provisions of clause 36.3.
Your attention is drawn
to the further provisions of clause 36.5 and the application of
inter
alia
the following:
1.
The execution of the works shall cease and,
subject to the provisions of item 2 below, you are required to
immediately vacate the
works and the site and relinquish possession
thereof to us; and
2.
Within a reasonable time of being
instructed to do so by the Principal Agent you are to remove your
temporary buildings, plant,
machinery and surplus materials and goods
failing which they will be removed and sold.
The cancellation of the
contract is without prejudice to our rights, as the employer, to:
1.
Employ others to safeguard the works and to
appoint another contractor to complete all outstanding work and to
rectify defects;
and
2.
Recover from you whatever damages that we
have suffered in consequence of such cancellation and the completion
of all outstanding
work by another contractor.
3.
Report your non-performance with the
possibility of having you listed in the National Treasury Register of
Defaulting Contractors.
In the meanwhile we shall
instruct the Principal Agent to prepare a report on the status of
that portion of the works completed
by you followed by the issue of
the final account, both of which will be delivered to you in
accordance with the requirements of
clauses 36.5.2 and 36.5.3.’
[13]
The applicant made representations and committed to achieve the
milestones as set out in the
addendum without any further delays.
That is how the Addendum came about. The respondents reinstated the
contract on the terms
as provided for in the Addendum to the JBCC
Contract Agreement to this effect:
‘
Whereas
the Employer and the Contractor intend to further amend the JBCC
Contract Agreement [entered] into in November 2016 (hereinafter
referred to as “the Contract Agreement”);
And
whereas
the parties desire to amend the
Agreement further by:
NOW THEREFORE IT IS
HEREWITH AGREED TO THE AGREEMENT AS FOLLOWS:
1.
Stricter supervision of the Contractor;
that the interim milestones are introduced by giving the employer the
option to terminate
the contract if any of the milestones are not
achieved,
·
13 December 2017 – Precast slabs
installed on cluster A and C;
·
30 January 2018 - Precast slabs introduced
on cluster B and D;
·
20 April 2018 – Cluster A ready for
beneficial occupation.
2.
No further delays and immediate
implementation of works programme as submitted on 20/10/2017;
3.
A 10% cash guarantee based on the original
contract amount is implemented to replace the current 5% guarantee
and the 5% retention
of contract sum on the payment certificates.
4.
That under the current circumstances that
no additional P&G [Preliminary and General Amounts] for the
period from April to July
2018 and that the remaining P&G would
be certified prorate up to the date of practical completion. However,
the Department
and BMC agree that should circumstances change that
normal EOT be submitted, be considered by the Employer and either
granted or
refused as per the Revised Contract.
5.
The contractor confirm that no applications
for the revision of the date for practical completion will be
submitted in terms of
the 14 notifications said to date and that all
other claims that may have arisen from the previous period [are]
extinguished.
6.
The contractor confirms that CPAP is still
not applicable to this contract as per original contract.
7.
The contractor to confirm that to his
availability the necessary resources, skills and subcontractors to
implement the project and
that he will replace the whole management
team that work on the project to date.
8.
The parties agree that the Contractor will
complete the contract by 22 June 2018 as per the Contractor’s
Revised Programme.
This Addendum is herewith
attached to and will form part of the Agreement concluded and signed
in November 2016, all other terms
of the Original Agreement remain as
agreed to;
To the extent that any
terms or conditions contained in this addendum may contradict or
conflict with any terms of the attached
Agreement, it is expressly
understood and agreed by the parties that the terms of this Addendum
shall take precedence and supersede
the Agreement.
Should the above
terms/conditions be acceptable to the contractor that you submit your
answer to this office by end of business
on Monday 30 October 2017.’
Mr Stephen Lu accepted
the terms and conditions of the Addendum by letter dated 03 November
2017.
[14]
The revised completion date was 22 June 2018. The agreed sum was
payable monthly after the issuance
of an interim payment certificate.
There is disagreement between the parties. On the applicant’s
version, it achieved its
obligations in terms of the contract. The
respondents maintain that had that been the case there would not have
been a need for
the initial cancellation of the contract due to
non-performance in the latter part of 2017 but subsequently
reinstated on the terms
specified in the Addendum.
[15]
The respondents confirm it made several interim payments for the
period March 2017 to March 2018
in terms of the agreement. However,
it accuses the applicant of continually missing the set milestone
dates of the completion of
the works. According to the respondents,
progress was poor despite the applicant having been served with
numerous formal notices
for its breach of obligations in terms of
clause 15.3. It was continuously reminded to proceed with the works
with due skill, diligence,
regularity and expedition to bring the
works to completion. These notices and reminders notwithstanding, the
applicant defaulted.
[16]
The parties are not
ad idem
pertaining to some of the interim
payment certificates. These accusations are not material for the
resolution of the dispute as
they relate primarily to accounting and
computation issues. The respondents are adamant that from 22 June
2018 the applicant was
in material breach of its contract and cannot
blame the late payments for its non-completion of the works. It would
have been entitled
to claim interest due to the late payments as
provided for in the contract, it contends.
[17]
The applicant maintains that payment of R835,801.96 was made to it on
28 June 2019. Clause 31.9
of the contract stipulates that the
employer shall pay the contractor the amount certified within
twenty-one (21) calendar days
of the date of issue of the payment
certificate. Payment shall be subject to the contractor giving the
employer a tax invoice for
the amount due. The respondents deny that
it is an incorrect amount, and it is on an unsigned certificate. The
respondents further
denied paying that amount on 28 June 2019 which
date follows the date after which the contract was cancelled by the
respondents.
[18]
The applicant, relying on clause 36.6 of the contract, contends that
the employer’s right
to cancel the contract in terms of this
clause should not be exercised should the employer be in material
breach of the contract.
According to the applicant, the failure by
the employer to pay or paying the interim certificates late
constitutes a material breach
of the contract and ought to non-suit
the respondents for cancellation of the contract. The applicant
further contends that because
of the material breaches of the
contract the respondents were not entitled to levy any penalties.
[19]
The respondents deny having been in material breach of its
obligations at any stage during the
currency of the contract
maintaining that payments were made within 21 calendar days and where
there were late payments, default
interest was reflected in the
subsequent interim payment certificate by the principal agent.
[20]
What the applicant downplays or deliberately omitted to mention to
this Court was that the project
was more than 200% over the original
contract period. That represents an overrun of more than 11 months on
the revised date for
practical completion and only 50% complete as of
30 April 2019. Undeniably, this was a material breach of the contract
as the applicant
was required contractually to execute the project
with diligence and the necessary skills. The work was unworkmanlike,
sloppy and
unprofessional. Of significance is that the applicant has
not denied that it was in material breach of its obligations as at
the
date of termination. The respondents applied a set-off method
relying on clauses 31 and 33 of the contract to address the debts
due
and owing to either party. The respondents maintain that it was not
precluded from levying the penalty amounts in respect of
the
applicant’s failure to complete the works by 22 June 2018. The
respondents did not cancel the contract invoking clause
38 of the
contract, therefore, it does assist the applicant to invoke it.
[21]
Mr Snellenburg SC, for the respondents, submitted that the
reinstatement of the contract through
the Addendum was essentially
based on the fact that the applicant had failed to perform in terms
of the agreement by failing to
achieve the set milestones and
remained in breach of its performance. Having been 200% out of time
with the project, the parties
had agreed that the Addendum shall take
precedence.
[22]
The pivotal issue is whether the conclusion of the Addendum
supersedes or enjoyed preference
over the main contract. The
applicant accepted the Addendum and agreed to be bound by it.
[23]
In
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[3]
Wallis
JA enunciated this interpretation as the correct approach to
interpreting documents in general and contracts in particular:
‘
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.’
[24]
Over and above taking into consideration the objective words used by
the parties in the Addendum,
I have had regard to the contract as a
whole and the circumstances in which both the contract and the
Addendum came into being.
It was agued on behalf of the respondents
that the purpose of the Addendum being concluded was because the
applicant had failed
to reach its milestones and to adhere to the
principal agent’s instructions. The conduct of the parties is
relevant and admissible
when interpreting a document. The applicant
agreed to stricter supervision and that its management team was to be
replaced. The
provision, which the applicant agreed to, was that the
respondents could terminate the contract should the milestones not be
reached.
It is further expressly stated in the Addendum that its
terms shall take precedence and supersede the original agreement. The
respondents
cannot be faulted for terminating the contract after the
applicant’s failure to rectify its breach of contract under the
terms of the Addendum. This was a second bite at the cherry that the
applicant could have enjoyed wisely. See also
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
[4]
;
Comwezi
Security Services (Pty) Ltd v Cape Empowerment Trust Ltd
[5]
[25]
The main gripe of the applicant relates to some late payments,
specifically interim payment certificates
11 and 22. Even if I were
to accept that the interim payment certificate number 22 was not paid
timeously the applicant would be
precluded from relying on clause
36.6 because it has agreed to give the Addendum precedence over the
contract in the event of a
conflict in their texts. This, therefore,
allows the respondents to terminate the contract based on the
applicant’s non-compliance
with the terms of the Addendum.
[26]
What further makes the applicant’s hurdle insurmountable is its
option to have this matter
adjudicated in motion proceedings instead
of going to trial. The applicant has also not requested to
cross-examine certain witnesses
either. Harms DP made these
instructive remarks in
National
Director of Public Prosecutions v Zuma
[6]
pertaining
to motion proceedings:
‘
Motion
proceedings, unless concerned with interim relief, are all about the
resolution of legal issues based on common cause facts.
Unless the
circumstances are special they cannot be used to resolve factual
issues because they are not designed to determine probabilities.
It
is well established under the
Plascon-Evans
[7]
rule that where in motion proceedings disputes of fact arise on the
affidavits, a final order can be granted only if the facts
averred in
the applicant's …affidavits, which have been admitted by the
respondent …, together with the facts alleged
by the latter,
justify such order. It may be different if the respondent's version
consists of bald or uncreditworthy denials,
raises fictitious
disputes of fact, is palpably implausible, far-fetched or so clearly
untenable that the court is justified in
rejecting them merely on the
papers.’
[27]
I am not persuaded that the applicant’s submissions in the
above regard have substance.
The applicant is silent in its founding
papers why the contract was terminated the first-time round. It
further does not deal with
the allegations regarding its failure to
adhere to the terms of the Addendum at all other than to apportion
blame to the respondents
based entirely on the purported late
payments. The applicant is a Grade 9 CIDB level, which understandably
is not an entry level
contractor. Had it adhered to the initial terms
of the main contract as agreed to, the project would have reached
completion within
14 months as initially contemplated and there would
not have been a need for the Addendum with different terms. The
public purse
must be protected under these circumstances. There is no
reason why costs should not follow the result.
[28]
In the result the following order is made:
The application is
dismissed with costs which costs shall include counsel fees on Scale
C of Rule 69(7).
MC MAMOSEBO
ACTING DEPUTY JUDGE
PRESIDENT
HIGH COURT, NORTHERN
CAPE DIVISION
For the applicant
Adv. AJ Glendinning
Instructed by:
E Taylor Attorneys
c/o
Haarhoffs Inc
For the respondents:
Adv. N Snellenburg SC
Instructed by:
Peyper Attorneys
c/o
Duncan & Rothman Attorneys
[1]
2002
(6) SA 132
(NC) (Paragraph 52 at 149C/D - F/G.) quoted from the
headnote
[2]
2016
(2) SA 338
(CC) para 46
[3]
2012
(4) SA 593
(SCA) para 18
[4]
2014
(2) SA 494
(SCA) paras 10 - 12
[5]
[2012]
ZASCA 125
para 15
[6]
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 26
[7]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) 634
-5