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[1993] ZASCA 149
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LTA Construction Ltd. v Minister of Public Works and Land Affairs (180/92) [1993] ZASCA 149; 1994 (1) SA 153 (AD); (29 September 1993)
/CCC
CASE NO 180/92
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
LTA CONSTRUCTION
LIMITED
APPELLANT
and
MINISTER OF PUBLIC WORKS AND
LAND
AFFAIRS
RESPONDENT
CORAM
: HOEXTER, NESTADT, MILNE JJA et NICHOLAS,
KRIEGLER AJJA
DATE HEARD
: 31 AUGUST 1993
DATE DELIVERED
: 29 SEPTEMBER 1993
JUDGMENT NESTADT, JA
:
The appellant carries on business as a building contractor. On 31 August
1983 it submitted a
2
written tender to erect certain additional accommodation for the South
African Museum in Cape Town at the price of R15 736 933,00.
On 6 October 1983
the respondent accepted the tender. The work was to be completed by 5 July 1986,
ie over a period of 33 months.
On 14 November 1983 the site was handed over to
the appellant. During the course of building operations the respondent issued a
number
of variation orders requiring the appellant to carry out certain
additional work. This the appellant in due course did and there
is no dispute
that the respondent is, besides the contract price, obliged to pay the appellant
for such work. The variations, however,
caused the completion of the contract to
be delayed. This resulted, so the appellant alleged, in an increase in certain
of its costs
(called "time-related costs"). Alleging that it was entitled to be
remunerated for these increases as well and that they
3
total the sum of R371 945,32, it sued the respondent in the Cape
Provincial Division for payment of this amount. The trial came before
Cooper J
who dismissed the appellant's claim and in fact granted judgment for the
respondent. This appeal is against such decision.
It is brought with the leave
of the court a
quo
.
An issue preliminary to the merits of the dispute arises. There is before
us a petition by the appellant to condone its failure to
timeously lodge its
notice of appeal, a power of attorney and the record. They were respectively
lodged 21 days, close to three months,
and nine days late. The explanation for
these breaches of the relevant provisions of AD Rule 5 is profferred by the
appellant's attorney.
His affidavit calls for critical comment. The prospects of
success on appeal are usually an important factor in assessing whether
applications for condonation of this kind should
4
be granted (
Finbro Furnishers (Pty) Ltd vs Registrar of
Deeds, Bloemfontein, and Others
1985(4) SA 773(A) at
789
D). Yet nothing is said about the appellant's prospects
of success. For the most part no dates when the
attorney took the various steps which he describes are
given. Only vague expressions such as "thereafter",
"thereupon" and "subsequently" are used. Typical is the
explanation for the late filing of the power of
attorney, viz;
"I thereupon prepared the necessary draft Power of Attorney and took steps
to have the preparation of the record expedited. Unfortunately,
the original
Power of Attorney sent to me by the Petitioner was mislaid and I had to obtain a
replacement thereof subsequently which
caused a further delay. The replacement
was signed on facsimile machine paper and, as this is not acceptable to the
Registrar, again
had to be replaced."
There follows an
averment that the power of attorney was
signed "simultaneously with this Petition". What is
not disclosed is that it was only lodged 18 days later.
5
But above all there is the following criticism. Central to the attorney's
excuse for what happened is the allegation that he received
a copy of the order
granting leave to appeal "late". He does not, however, say exactly when he did
receive it or why, in any event,
he took no timeous steps to obtain it. Despite
an assertion that he had been told by counsel that "leave to appeal would be
granted"
it is apparent that he was all along aware that leave had been granted
and when this took place. In these circumstances, it is difficult
to understand
why the non-receipt of the order delayed the procedural steps which the attorney
obviously knew" had to be taken. The
notice of appeal and the power of attorney
could still have been lodged in time; and so too could the record (seeing that
the order
was apparently received well before the date by which the record had
to be lodged). The impression that
6
one gains is that the appellant's attorney was simply, though seriously,
neglectful of his duties. If this is an unfair conclusion,
it is due to his
failure to be more candid with the court. Certainly there is little warrant for
the assertion in the attorney's
affidavit that "every possible step to make (the
delay) as short as possible was taken once I became aware that a delay was
inevitable".
In cases of flagrant breaches of the Rules, especially where there is no
acceptable explanation, the indulgence of condonation may
be refused whatever
the merits of the appeal are; and this applies even where the blame lies solely
with the attorney (
Tshivhase Royal Council and Another vs Tshivhase and
Another
1992(4) SA 852 (A) at 859 E - F). At the conclusion of the argument
in support of the application for condonation we gave consideration
to the
question
7
whether this was not such a case. We felt, however, that we should hear
argument on the merits. The delays were not inordinately long.
The respondent
did not oppose the application and was obviously not prejudiced. The petition
was promptly launched. The amount involved
in the appeal is substantial and the
subject-matter is of importance to the parties. It is clear that the appellant
was at all relevant
stages desirous of prosecuting the appeal.
As I have indicated, the appellant's claim concerns its time-related
costs. The term "time-related costs" does not appear in any of
the contractual
documents. It pertains, however, to certain items to be found in Bill No 1 of
the bills of quantities. Bill No 1
deals with "General Regulations and
Preliminary Works" (known as "preliminary and generals" or "P and Gs"). These
comprise items
of generalised expenditure relating to the project as a whole.
Certain, or
8
perhaps most of them are time-related, ie they are calculated on the
basis of and may be affected by the length of time taken to execute
the works. I
do not propose to describe them in any detail. They are particularised in the
summons. In general terms they are the
cost of employing an agent; effecting
insurance; enclosing the site; providing guarantees, plant, scaffolding,
latrines, sheds, water,
lighting, electricity and an office; removing rubbish;
controlling traffic; and minimising noise and dust. Each of these items is
priced in Bill No 1. They total the sum of R1 150 362,71. These are the
time-related costs for the original completion period of
33 months. The
appellant's case was that by reason of the delay in the completion of the
contract, the services referred to had to
be maintained for an extended period;
and that it was entitled, as part of the cost of the variations, to
9
the additional expenditure that this resulted in. The amount claimed
(R371 945,32) represents a pro rata increase of the total amount
calculated
according to the extra time (some 10 months) that it took to perform the
contract as varied.
By the time the matter came to trial, the
parties had agreed to remove the actual manner of calculation of the appellant's
claim and
the amount thereof as an issue which the court was required to decide.
Instead, COOPER J was asked to deal with the matter as a question
of principle.
In particular, the appellant in effect sought a declaratory order that the
variations having delayed the completion
of the contract, it was entitled to
additional remuneration in respect of the time-related items referred to
measured and valued
at the rates and prices contained in the schedule of
quantities. In the event of such an order
10
being granted, the issue of quantum would be referred
for enquiry and report to a named referee in terms of
sec 19 bis of the Supreme Court Act 59 of 1959. The
need to do so, however, never arose. Judgment for the
respondent was granted on the basis that the appellant
was
not entitled to the declaratory order in question.
The appellant relies on clause 3 (iii) of the
conditions of contract. It provides:
"Without invalidating the Contract, the Engineer shall have the right by
means of an Order in
Writing, by varying the Drawings, Specification and Bills of Quantities,
to increase or decrease the quantities of any item or items
or to omit any item
or items or to insert any additional item or items, provided the total Contract
amount be not thereby decreased
or increased in value more than 20 per cent.
Such variations shall be measured and valued at the rates and prices contained
in the
Schedule of Quantities and added to, or deducted from the Contract
amount..."
This clause, which appears under the heading
"Quantities of Work", gives the engineer the qualified
right to order variations. This he may do by (i)
11
increasing or decreasing the quantities of any item; or (ii) omitting any
item; or (iii) inserting any item. It also provides for
the measurement and
valuation of variations at the rates and prices contained in the schedule of
quantities.
Whilst it is clear that the variations which the appellant was required
to execute were ordered by the engineer in terms of clause
3(iii), their nature
is not specified in any detail. All we know (from the summons) is that they
relate to "certain additional work(s)"
in "Block C, Level 5" and "phase 2" and
to "certain additional work which resulted in increases in the scope of the
electrical and
fire service subcontracts". It does, however, appear that in each
case the works were delayed by the variation and that on the application
of the
appellant an extension of the completion date was granted. As I have indicated,
the
12
extensions came to a little over ten months. They were applied for and
granted in terms of clause 17 of the conditions of contract.
Sub-paragraph (ii)
thereof provides that if the works be delayed by inter alia "any omissions,
additions, substitutions or variations
of the Works, or of any item of work,
labour or material", the contractor shall have the right to apply to extend the
(33 month)
date of completion of the contract. Subparagraph (iii) empowers the
Director-General: Community Development in his discretion and
by "order in
writing" to grant an extension for a period to be determined by him.
Against this background, I turn to the appellant's argument. In summary,
it was the following: (i) on a proper construction of clause
3(iii) the
reference to "Schedule of Quantities" includes the items contained in Bill No 1;
(ii)
13
accordingly, in valuing the variations and whatever their nature, regard
should have been had (on the basis of the prices of the time-related
items) to
the additional period during which they had to be provided; (iii) this should in
any event have been done seeing that the
extensions of time in themselves
constituted a variation of Bill No 1 and therefore of the time-related
items.
Now there can be no quarrel with the initial submission ((i) above) that
"Schedule of Quantities" includes Bill No 1. The phrase "Schedule
of Quantities"
is stated in clause l(ix) of the conditions of contract to mean the priced bills
of quantities. And in its turn "Bills
of Quantities" is defined as "the document
attached to this Contract in which are entered the quantities of work, labour,
materials,
and articles required for the execution of this Contract".
Such
14
document consists of five bills one of which is Bill No 1.
It does not, however, follow that the
second
proposition ((ii) above) is sound. In my
opinion it is not. The
appellant's reasoning amounts to
this: the variations need not have
been of any item of
Bill No 1; so long as there was a variation
(which
resulted in a delay in completion of the works),
the
appellant was entitled to have its time-related
costs
increased. The language of clause 3(iii) does not
allow
of such a wide interpretation. One must examine
what
in terms of clause 3(iii) is to be measured and
valued.
It is "(s)uch variations". Plainly this is a
reference
back to those variations which the engineer has
the
right to order (and has ordered). Those variations
and
those alone fall to be measured and valued.
Unless
therefore a time-related item was varied pursuant to
a
15
variation order, there is nothing that can be valued. The premise on
which the argument under consideration is based presupposes that
the
time-related items were not so varied. True, they were (despite many of them
having a fixed cost element) probably affected by
the variations. As I have
said, the appellant contends that because of the resultant delay, the period for
which such items had to
be provided was, at additional cost to itself, extended.
But that does not suffice. Clause 3(iii) deals with the valuation of variations.
It cannot be used to compensate the contractor for additional costs and expenses
incurred as an indirect result of a variation but
which do not affect the value
of the works. In the 10th edition of Hudson's Building and Engineering Contracts
555 what may be taken
to be a contrary view is expressed. But it is a
generalised statement unrelated to the exact wording
16
of any particular contract. As such it does not support the
argument.
This brings me to the proposition that there was indeed a
variation of the time-related items (3)(iii) above). The submission here
was
that the extensions of time granted in terms of clause 17(iii) in themselves
amounted to a variation of Bill No 1. This was because
item 17 thereof, like the
conditions of contract, specifies the time for completion as being 33 months.
Accordingly, so it was said,
there had been a variation for the purposes of
clause 3(iii) of Bill No 1. I am unable to agree. There are a number of reasons
for
saying this. They are:
(i) To begin with, there would still not have been any variation of any
of the time-related items themselves. Nor was there any variation
of even the
completion date of the contract. An extension of time granted under clause
17(iii)
17
does not amount to a variation of the contract within the meaning of
clause 3(iii). It is in the nature of an indulgence or concession
to the
contractor. And an order in writing by the Director-General in terms of clause
17(iii) cannot be equated with an order in
writing by the engineer in terms of
clause 3(iii). The respective definitions of "Director-General" and "Engineer"
show that they
are not necessarily the same person. (ii) A more basic
consideration is that on a linguistic analysis of clause 3(iii), the word
"variations" as there used is not capable of including variations of
time-related items at all. The variations relate to "quantities".
It was argued
by Mr
Hodes
, for the appellant, that this concept includes time. I
disagree. This is a forced, unwarranted meaning of
18
"quantities". As used in clause 3(iii), the word refers to the physical
components of the works. It is variations of this kind that
are "measured". This
is a word that primarily signifies the determination of "the spatial magnitude
or quantity (of something)" (OED
sv "measure"). Moreover, the valuation of the
variations takes place at the "rates and prices" contained in the schedule of
quantities.
The time-related items, however, do not have a rate; only a price.
There is thus no contractual basis in clause 3(iii) for valuing
the alleged
variation of the time-related items. Such valuation is therefore rendered
problematic. And its quantification would not
be in accordance with what clause
3(iii) enjoins.
19
(iii) There is nothing in any of the other clauses of the conditions of
contract that supports the appellant's interpretation of clause
3(iii). Clause
3(v) regulates the valuation of variations for which there are no rates or
prices in the schedule of quantities. Such
variations (which I shall assume
could include time-related items) have to be adjusted by "mutual consent" (on
certain prescribed
bases). But this is not inconsistent with the exclusion of
such items from the ambit of clause 3(iii). This clause presupposes that
there
is already provision for remuneration for time-related items, ie those specified
in Bill No 1. Clause 3(v) provides (on the
assumption made) for payment for
other time-related items, ie items not so specified.
20
Similarly, clause 4 does not assist the appellant. Its
effect. is that where variations are carried out on the basis of daywork, the
contractor will be entitled to be paid for a restricted class of time-related
items, namely "supervision...and the use of all plant,
tools, machinery and
scaffolding". But it does not follow that clause 3 (iii) is for this reason to
be given an unjustifiably wide
meaning to also include payment for time-related
items. The method of paying by daywork is normally used when the work is of its
nature not capable of assessment on an ordinary pricing basis (Hudson op cit
571). So clause 4 deals with a special situation. Furthermore,
it is wrong to
assume that when payment for variations is regulated by clause
21
3(iii), the contractor will not be
compensated
for an increase in his time-related costs.
(iv) Such compensation may be due in terms of
clause 49 of Bill No 1. It reads:
"In the event of a variation in the Contract amount caused by additions
or omissions... the total for 'General Regulations and Preliminary
Works' in the
Contract amount will be increased or decreased in the direct ratio of such
additions or omissions to the Contract amount."
The "additions or omissions" of this clause
are the equivalent of the "variations" of clause 3(iii). The effect of
clause 49 is therefore that where there has been a variation
in terms of clause
3(iii) which results in the contract amount being altered, the total reflected
in Bill No 1, including the time-related
items, falls to be increased or
decreased in accordance with the stated
22
ratio. I agree with Mr
van Schalkwyk
who appeared for - the
respondent that it is a rough and ready measure which recognises the difficulty
of calculating increases of
time-related costs on a quantitative basis (as
clause 3(iii) envisages). Clause 49 will, of course, not always afford a remedy
to
the contractor whose time-related costs have increased in consequence of a
variation. It may be that this occurs and yet the contract
amount remains the
same. Here no adjustment to the total of Bill No 1 takes place. On the other
hand where there has been an increase
in the contract amount, clause 49 will
operate to entitle the contractor to an increase of his time-related costs
(irrespective of
whether a delay resulted).
23
Clause 3(iii) must be interpreted with this in mind. The fact that claims
of the kind now advanced are governed by clause 49 reinforces
the conclusion
that clause 3(iii) does not apply to time-related items. The appellant's
time-related costs were in fact adjusted
in terms of clause 49 and payment was
made pursuant to such adjustment. The appellant's contention is that this
notwithstanding,
variations involving extensions of time must be priced in
accordance with clause 3(iii) as well. This would mean that the appellant
is
paid twice for its increased time-related items; once in terms of clause 3(iii)
and once in terms of clause 49. This is untenable.
The parties could not have
contemplated such a result. Nor does the
24
language of their contract, properly construed, leave any room for such a
result. In his full reasons for judgment. Cooper J refers
to other factors in
support of his rejection of the appellant's claims. I do not propose to deal
with them. I am satisfied that the
learned judge's conclusion was correct. This
being so, the appellant has no prospects of success on appeal and the
application for
condonation must be refused. Seeing that the merits of the
appeal were debated, costs will be ordered in accordance with decisions
such as
Reinecke en 'n Ander vs Nel en 'n Ander
1984(1) SA 820(A) at 836 F and
Louw vs W P Kooperasie Bpk
1991(3) SA 593(A) at 605B.
The following order is made: (1) The application for condonation is
dismissed with costs.
25
(2) The appellant is also to pay the respondent's costs of appeal.
(3) In both cases the costs incurred in the employment of two counsel are
allowed.
NESTADT, JA
HOEXTER, JA )
MILNE, JA ) CONCUR
NICHOLAS,
AJA )
KRIEGLER, AJA )