REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
LIMPOPO DIVISION, POLOKWANE
CASE NO. 4924/2020
(1)
(2)
(3)
REPORTABLE : ¥ES/NO
OF INTEREST TO TH E JUDGES: YEe/NO
REVISED .
In the matter between:
PGN CIVILS (PTY) LTD
And
GREATER GIYANI MUNICIPALITY
Plaintiff
Defendant
Delivered: This judgment is handed down electronically by circulation to the
parties through their legal representatives' email addresses. The date for the
hand-down is deemed to be 23 September 2025.
JUDGMENT
2
Masilo AJ
Introduction
[1] The Plaintiff on 5th August 2020 issued Provisional Sentence Summons
against the Defendant in which it claimed the following: -
"Claim 1
(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VA T inclusive in the sum of R65 , 207. 77;
(b) Interest on the sum of R 65, 207,771 at the rate of 8. 75 per cent a
tempore morae from 26 December 2018 until date of payment;
(c) Cost of suit;
(d) Further and alternative relief
Claim 2
(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VAT inclusive in the sum of R1 , 121, 119.81
(b) Interest on the sum ofR1,121, 119.81 at the rate of8.75percenta
tempore morae from 30 September 2019 until date of payment;
(c) Cost of suit;
(d) Further and alternative relief"
3
[2] On 5 November 2020, the Defendant filed its Answering Affidavit to the
Provisional Sentence Summons. The Plaintiff filed its Replying Affidavit on
19 November 2020.
[3] The Provisional Sentence was heard by Phatudi J, on 21 January 2022,
where after the court refused Provisional Sentence and ordered the
Defendant to deliver its plea within 1 0days after the granting of the order.
[4] The Defendant filed its plea to Plaintiffs Provisional Sentence Summons ,
which was subsequently amended on 10 April 2025. The Plaintiff on 11 April
2025 filed its consequential Amended Replication.
Background
[5] The Greater Giyani Municipality issued Tender No . G/G/M 015/018/2017 for
the Bode Paving of Internal Streets, the date for collection of tender
documents was 28 April 2017 and the date for compulsory briefing session
was 2 May 2017, whilst the closing date was 26 May 2017 at 12h00.
[6] The Plaintiff is a construction company which on 24 May 2017 completed the
Bid Documents and submitted its tender for the consideration and
adjudication by the Greater Giyani Municipality.
[7] In a letter sign dated by the Acting Municipal Manager, on 6 July 2017 the
Greater Giyani Municipality issued a letter of appointment in favour of PGN
Civils (Pty) Ltd for the construction of Bode Paving of Internal Streets:
Tender No . G/G/M 015/018/2017, in the amount as follows:
Tender Amount:
Contingency
Sub-Total
R15 ,706, 142.91
R1 ,570,614.29
R17, 669,410.77
VAT
TOTAL
4
R2 ,473, 717.51
R20, 143,128.28
[7] On 14 July 2017 PGN Civils (Pty) Ltd accepted the offer for the construction
of Bode Paving of Internal Streets: Tender No. G/G/M 015/018/2017, in the
same letter provided its Project Team list. Also enclosed a Surety Bond, All
Risk Insurance, Letter of Good Standing, OHS Safety Plan and the CV of the
Project Team .
[8] The Tender Document on page T60 , MBD7 .1 in paragraph 2 thereof states
that - "The following documents shall be deemed to form and be read and
construed as part of this agreement: (I) Bidding Documents, (ii) General
Conditions of Contract; The same is found in T62, MBD7.2 , T64, MBD7 .3.
[9] Further the Tender Document on page C20 , in paragraph C1 .7.1 deals with
Contract Specific Data, it reads that - "The Conditions of Contract are the
General Conditions of Contract for Construction Works (2010) published by
the South African Institution of Civil Engineering (GCC).
[10] Furthermore, on page C23 , in item C1 .7.2 it is stated that "Variations to the
General Conditions of Contract 2010 apply to this contract. The headings in
these Special Conditions of Contract shall not be deemed to be part thereof
nor be taken into consideration in the interpretation or construction thereof or
of the Contract."
[11] In C26 , Clause 50 deals with Variations Exceeding 15 per cent. It provides
that-
"In the last paragraph, fifth line, replace "(if any)" with "(based on the
amount by which such additions or deductions shall be in excess of 30%
of the Tender Sum )"
5
Add the following sub-clause
"50. 1. 7 Variations exceeding 30% per cent
Where the decrease or increase in the quantity of work has not resulted
from a written variation order (or an additional agreement) in terms of
clause 39 but from the fact that the quantities are less or more than those
given in the bill of quantities, the tendered rates or sums shall still apply,
except in the case of a sub-item (or an item not subdivided into the sub
items) in the bill of quantities, which covers work the value of which during
the tender stage exceeds 7. 5% of the value of the tender sum , and where
the quantity of such sub-item or item, upon completion of the contract,
deviates by more than 30% from the quantity given in the bill of quantities
so that the scale of activities or the method of construction consequently
changes to such an extent that the tendered rate or sum no longer applies.
In such case the Engineer, should he deem it to be in the interest of the
Employer or should the Contractor enter a claim, shall, considering the
extent by which the deviation in respect of the quantity of the sub-item or
item concerned exceeds 30% determined a sum which will be equitable in
the circumstances, and shall certify that such sum shall be deducted from
or added to the sums owing to the Contractor."
[12] The Tender document in C29 , para C2 .1 clause 6 to 8 thereof reads that-
"6. The works executed are measured for payment in accordance with
the methods described in the contract documents under various
payment items, notwithstanding any custom to the contrary ....
7. The amount of work or the quantities of material stated in the bill
of quantities shall not be considered as restricting or extending
the amount of work to be done or quantity of material to be
supplied by the contractor.
6
B. The statement of quantities of material or the amount of work in
the bill of quantities shall not be regarded as authorization for
the contractor to order material to execute work. The contractor
shall obtain the engineer's detailed instructions for all work
before ordering any material or executing work or making
arrangements in this regard."
[13] The Letter of Appointment in paragraph 5 set out the following:
Date of Commencement : 18 August 2017
Time for completion : 12 months
Contract completion : 17 February 2018
One must indicate that the time computation from 18 August 2017 to 17
February 2018 is 6months instead of the recorded 12months.
[14] The Bode Paving, intersected with SANRAL R578 and R81 , which warranted
that the Greater Giyani Municipality must procure the prior written approval
of SANRAL. The Greater Giyani Municipality and SANRAL concluded a
written agreement on 13 March 2018.
[15] Pursuant to the Greater Giyani Municipality and SANRAL agreement on 7
June 2018 the Engineer issued written instructions, with G2 Gravel Material
on the SANRAL TIE in intersections.
[16] On 14 September 2018, Consulting Project Management (Pty) Ltd, the
Engineer signed the Final Completion Certificate and this marked the
commencement of the defects liability period, in terms of which only 50% of
the retention monies was payable to the Plaintiff.
7
[17] On 26 November 2018 the Engineer signed and issued a Final Payment
Certificate No. 7. Pursuant to the Final Payment Certificate, on 14 December
2018 the Plaintiff prepared its Tax Invoice.
[18] On 11 January 2019 the period permitted for the dissatisfaction/objection in
terms of GCC 10.2, elapsed. On 24 January 2019 the Plaintiff issued a letter
for the payment of Polokwane Surfacing in terms of the Deed of Cession,
which read
"RE: TENDER NO . G/G/M015/018/2017 CONSTRUCTION OF BODE
PAVING OF INTERNAL STREETS
The above matter refers;
This serves as a confirmation that payment for work done by Po/okwane
Surfacing can be made by utilizing our retention money that was held.
We trust that you will find the above in order."
[19] On 6 March 2019 the Greater Giyani Municipality' PMU Manager wrote a
letter addressed to their Agent SIDA Consulting and Project Management,
which stated the following -
"SUBJECT: G/G/M015/018/2017 CONSTRUCT/ON OF BODE PAVING
OF INTERNAL STREETS
Good day Mr. B Ncube
Greater Giyani Municipality's Project Management Unit (PMU) office
acknowledge receipt of contract payment certificate No . 7 amounting to
two Million Eight Hundred and Fifty-Five Thousand and Eighty Three
Rands (R2, 855, 283. 00) Inclusive of VAT.
Unfortunately, the above submitted claim has been based on the following:
8
• The additional scope of work which the contractor executed was not
approved by the municipality prior execution. The municipality learnt
about such works subsequent to execution by the contractor .
•
Further to the above, Greater Giyani Municipality acknowledge receipt
works executed by Polokwane Surfacing specifically G2 Aggregate
Material and Medium Grade Asphalt 30mm.
Greater Giyani Municipality cannot process payment on the above
mentioned claim until all outstanding issues related to the above project
are properly addressed to the satisfaction of the municipality.
Kind regards"
[20] On 21 June 2019 Greater Giyani Municipality wrote a letter to Polokwane
Surfacing, requesting the latter to revise its invoice to be in line with the
amount of R2 ,504,990.55. further that the outstanding variance of R111,
605.07 shall be paid in the next 2019/2020 Financial Year.
[21] On 14 August 2019 Greater Giyani Municipality wrote a letter to Polokwane
Surfacing, requesting the latter to revise its invoice to be in line with the
amount of R2 ,504,990.55.
[22] On 6 November 2019 Greater Giyani Municipality wrote a letter to
Polokwane Surfacing, confirming Greater Giyani Municipality has committed
to pay Polokwane Surfacing the available amount of R2 ,059,674.28 VAT
inclusive on the project which happened to be the retention of the main
contractor PGN Civils.
9
[23] On 20 November 2019 Greater Giyani Municipality wrote a letter to
Polokwane Surfacing, confirming that it has paid all the monies to PGN Civils
for the work done at Bode paving of internal streets excluding retention.
Summary of the Evidence
Plaintiff
[24] The Plaintiff called only one witness Mr. Mnisi, who is the general manager
of the Plaintiff. He testified that he was involved in the overseeing of the
project. He testified that the Plaintiff had an agreement with Polokwane
surfacing which resulted in the Defendant also co-signing the Cession
Agreement.
[25] His evidence-in-chief can be summarized as follows: -
25.1 During the construction, the plaintiff had an arrangement with Surfacing
which resulted in a conclusion of cession agreements in terms of which
the proceeds of the contract were ceded to Surfacing.
25.2 The defendant had to make payments to Surfacing out of payment
certificate 7.
25.3 Payment certificate 7 was issued on 26 November 2018. It included
50% of the retention which was due at the time. It was transmitted to the
defendant under letter dated 26 November 2018.
25.4 A list of cessions concluded with Surfacing and their values was
provided in the payment certificate.
25.5 The engineer certified that an amount of R65 207.77 was to be paid to
the plaintiff. Mr. Mnisi explained this amount as the balance that was to
be paid to the plaintiff after paying Surfacing using 50% of the retention
10
that was due. The money to be paid to Surfacing was for the G2
material which had been ordered from Surfacing.
25.6 In a letter dated 24 January 2019, the plaintiff confirmed that the
defendant could use its retention money that was held at the time to pay
Surfacing. Payment certificate 7 was for the final progress payment and
50% of the retention. An additional work was done in respect of an
agreement that was entered into between the defendant and South
African National Roads Agency SOC Limited (SANRAL).
25.7 The work that was done in terms of the agreement between the
defendant and SANRAL (the SANRAL Agreement) was not a variation
that required the approval of the defendant as the value of that work
was below the threshold of 30% .
25.8 The plaintiff was appointed to execute specific work which was paving
of Bode internal streets and joining two roads, SANRAL roads R81 and
R578 . During the tender stage, the plaintiff priced for joining the streets
using 80 mm interlocking bricks and asphalt.
25.9 The engineer was supposed to get approval to connect from SANRAL.
It was at that stage when SAN RAL rejected the road connection
designs and specified G2. SANRAL wanted G2 material to be used.
25.10 The additional quantities did not exceed the 30% threshold to require
a variation order.
25.11 The road connection was not a new scope of work. It was included
the BOQ except for the G2 material. The dispute was about the
quantities. The engineer issued a site instruction that the plaintiff
must use the G2 material. Regarding the completion certificate Mr.
Mnisi stated that this certificate was issued on 25 September 2019
after the expiry of the defects liability period of 12 months. The
remaining 50% retention then became due for release.
11
25.12 Mr. Mnisi admitted that payment certificate 7 was not transmitted to
the defendant on 26 November 2018 which is the date on which it
was signed and the cover letter.
25.13 He also admitted that in terms of the letter of appointment, the
agreement was for the construction of paving of Bode internal streets
for a specific amount of R20 143 128,28 and no variation work were
to be executed without the express approval of the Municipal
Manager in writing. Secondly, the plaintiff was not entitled, under any
circumstances, to execute any variation work outside the awarded
amount. Thirdly, should the plaintiff proceed with variation work
without the approval, the defendant shall not be liable for the work
done and payment therefor.
25.14 Mr Mnisi further testified that the plaintiff did not need an approval for
what it did because the work included connections to the existing
roads R578 and R81 at Bode Village. The only deviation from the
contract was only in respect of the material that was used. He
explained that the plaintiff used G2 material instead of G5 material
and denied that the change in the material from G5 to G2 was a
change in scope of work.
25.15 It was put to Mr. Mnisi that the use of G2 material was the variation
as contemplated in clause 6.3.1.3 of the GCC. 14 In terms of that
clause: If the engineer requires any variation of the form , quality or
quantity of works or any part thereof, he shall have power to order the
contractor to, inter alia, change the character or quality of any such
wo rk. In terms of this clause, the change in character or quality of the
work requires a variation order.
25.16 It was further put to Mr. Mnisi that in terms of clause 6.3.2 of the GCC
no such variation shall be made by the contractor without a written
order by the engineer in which it is stated to be a "variation order".
The handwritten note referred to as a site instruction does not comply
12
with clause 6.32 of the GCC. Regarding the nature of the agreement,
Mr. Mnisi stated that the contract in place was not a fixed price
contract and that it was a re-measurement contract.
25.17 Mr. Mnisi was referred the Tender Documents, Pricing Instructions,
clause 3. 17 This clause provides that the quantities in the BOQ are
proximate quantities. This clause does not assist the plaintiff as it
does not apply to a fixed price contract. It only applies to re
measurement contract and the contract between the parties in this
case was a fixed price contract.
25.18 With regards to the defendant's objection letter, Mr. Mnisi testified
that the letter registered the defendant's objection against the
additional work. He characterized the additional work as "an increase
or decrease in quantities". He further agreed that the objection
related to the use of a contingency fee without the approval of the
defendant.
25.19 The question put to him that the plaintiff was not entitled to use
contingency without the approval of the defendant. He simply said
this was a matter between the defendant and the engineer.
25.20 That it was the term of the agreement that contingency fee was under
the sole control of the defendant. Mr. Mmusi admitted this as correct.
Therefore, the plaintiff should not have used it without the approval of
the defendant.
25.21 Mr. Mmusi responded to the statement that the plaintiff exceeded the
contract price without approval of the defendant by merely saying the
quantities exceeded the contract value. Mr. Mmusi further testified
about the letter written by the plaintiff dated 24 January 2018
confirming that its retention should be used to settle moneys owing to
Surfacing. H e stated that this letter referred to the first 50% of the
retention that was due at the time of issuing payment certificate 7.
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Defendant
[26] The Defendant called only one witness Mr. Norman Thembani Mahani was
called as a witness, and he testified that he is the Deputy Director: Project
Management Unit (PMU). He testified that -
26.1 He joined that defendant on 2 January 2019 as the Project Manager. At
that time the project in question had reached a practical completion
stage. His only involvement in this project as the overseer of all
projects, which was post certificate of practical completion ..
26.2 During January 2019, a payment certificate which is being impugned
(objected to) was brought to his attention. He advised that an objection
letter be written to indicate the defendant's dissatisfaction with the claim,
which objection letter was written and delivered to the engineer.
26.3 In the letter of objection, the defendant stated that the contract amount
was exceeded without its approval. In addition, it was stated that the
contingencies were used without the approval of the defendant.
26.4 Mr. Mahani proceeded to testify that he also had to deal with a payment
that was due to Surfacing. The plaintiff was approached and it
confirmed that the defendant should use its retention to pay Surfacing.
26.5 At that time only 50% of the retention was due and payable and the total
amount of the cessions due and payable was R2 616 658.92. The first
50% of the retention was not enough to settle the whole amount owing
to Surfacing.
26.6 Even though the defendant had the letter from the plaintiff, it had to wait
for the defects liability period to expire before we could make payment.
The payment to Surfacing was made in December 2019 after the total
value of the retention was due and payable.
26.7 The proof of payment shows that an amount of R2 059 674.28 was paid
on 24 December 2019 in accordance with the negotiations between
Surfacing and the defendant.
14
26.8 It needs to be stated that this payment was made in full and final
settlement of what was owing to Surfacing.
26.9 Mr. Mahani testified that the amount of R2 616 658.92 which was owed
to Surfacing correlated with amounts appearing in the deeds of cession.
26.10 He reiterated that the objection to payment certificate 7 was that the
contract amount had been exceeded without approval. Extra work
was done without the defendant's approval.
26.11 The SANRAL agreement work was included but the quantities were
exceeded without the approval of the defendant.
26.12 Regarding payment to Surfacing, Mr. Mahani reiterated that when the
plaintiffs letter confirming that the defendant could use the retention
to pay Surfacing was received, no payment was made as there were
not enough funds to cover the amount of the cessions. At that time,
only 50% of the retention was due and it was not enough to cover the
amount of R2 616 658.92 owing to Surfacing. The defendant waited
for defects liability period to expire and made payment in December
using 100% of the retention.
26.13 Mr. Mahani stated that the letter from the plaintiff did not distinguish
between the due and undue retention. In response to this Court's
question, Mr. Mahani testified that the reason the defendant had to
wait and not make payment immediately after receipt of the plaintiff's
letter of 24 January 2019 was because the 50% of the retention that
was available to be paid to Surfacing was not enough to settle the
debt in full. The defendant waited for the other 50% to be available
before making the payment using 100% of the retention. He indicated
that the defendant had the certificate in January 2019 and that the
objection letter should have been delivered within 28 days.
26.14 He was directed to calculate 28 days from 24 January 2019 to 6
March 2019 .He stated that weekends and holidays were not
counted. Mr. Mahani did the calculation and testified that on 6 March
15
2019, the letter of objection was within 28 working days. Mr. Mahani
further explained the nature of the agreement in question and stated
that it is not a re-measurement contract. The variation work had to be
approved by the defendant in accordance with the contract. He
confirmed that the SANRAL agreement work was done but it was not
approved.
Issues to be determined
[27] The crisp issue to be determined is whether the Defendant is liable to pay
the Plaintiff the amount claimed in respect of payment certificate No. 7 and
the balance of the retention monies?
[28] In order to answer this question, a number of ancillary questions arise,
namely-
28.1 Whether, the Defendant's objection of 5 March 2019 to payment certificate
No. 7 is ousted by the 28days clause in the contract?
28.2 Whether there was variation of the contract? If yes, Whether the work and the
contract price were varied by the Plaintiff in accordance with the contract.
Whether, the Plaintiff used the contingency fee without the approval of the
Defendant?
28.3 Whether the Plaintiff in its letter dated 24 January authorized the Defendant to
pay the cessionary with the remaining 50% of the retention monies?
28.4 Whether the Defendant paid all the amounts that were due to the Plaintiff in
terms of the contract?
Application of the law
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[29) It is trite that pleadings in action proceedings in the High Court serve an
important purpose, of defining the issues between the parties and directing
the court what it is called upon to adjudicate.
[30] The SCA as per Mhlanhla JA in Minister of Safety and Security v Slabbert
[201 OJ 2 All SA 47 4 (SCA) at para 11 writing for the majority posited that -
"{11] The purpose of the pleadings is to define the issues for the other
party and the court. A party has a duty to allege in the pleadings the
material facts upon which it relies. It is impermissible for a plaintiff to
plead a particular case and seek to establish a different case at the
trial. It is equally not permissible for the trial court to have recourse to
issues falling outside the pleadings when deciding a case.
[31] This principle was restated with approval in Molusi & others v Voges N O &
others 2016 (3) SA 370 (CC) para 28 where Nkabinde J observed that:
'The purpose of pleadings is to define the issues for the other party and
the Court. And it is for the Court to adjudicate upon the disputes and
those disputes alone. Of course, there are instances where the court
may , of its own accord (mero motu), raise a question of law that
emerges fully from the evidence and is necessary for the decision of the
case as long as its consideration on appeal involves no unfairness to
the other party against whom it is directed.
[32) Mhlanhla JA in Minister of Safety and Security v S/abbert [201 OJ 2 All SA
474 (SCA) at para 11
"{12] There are, however, circumstances in which a party may be allowed
to rely on an issue which was not covered by the pleadings. This
17
occurs where the issue in question has been canvassed fully by both
sides at the trial. In South British Insurance Co Ltd v Unicom
Shipping Lines (Pty) Ltd, 1976 (1) SA 708 (A) at 714G this court said:
'However, the absence of such an averment in the pleadings
would not necessarily be fatal if the point was fully canvassed in
evidence. This means fully canvassed by both sides in the
sense that the Court was expected to pronounce upon it as an
issue'.
[33] The learned Harms DP buttressed the principle in the concurring judgement
that -
"[22] A court is not bound by pleadings if a particular issue was fully
canvassed during the trial. But there is not the slightest suggestion
that the matter was so canvassed. As a matter of fact, neither the
plaintiff's friend nor his wife testified on his behalf in respect of his
state of intoxication at the police office. One can only assume, in
the absence of any other explanation, that they would not have
supported him. In other words, the police had at the end of the
plaintiff's case not the slightest inkling that they had to defend the
continued detention after the arrival of the plaintiff's wife at the
police station. The defendant was entitled at that stage, at the very
least, to know that it had to establish that the legality of the
continued detention was an issue. Cases by ambush are not
countenanced."
[34] In 'stepping outside of the pleadings', courts deny respective parties 'the
right to know the case they had to meet and the right to a fair opportunity to
meet that case' (Rodaro at para 61).
18
[35] In the matter of Spearhead Property Holdings v ED Motors (Pty) Ltd, 201 O
(2) SA (SCA) the Supreme Court of Appeal at para 15A-16A stated that:
'It is equally trite that since pleadings are made for the court and not the
court for the pleadings, it is the duty of the court to determine the real
issues between the parties, and provided no possible prejudice can be
caused to either, to decide the case on those real issues.
[36] What is trite and apparent is that the pleading should state every fact which it
would be necessary for the pleader to prove in order to support his right to
obtain judgment of the court. However, failure to plead every fact is not a
bar, to canvassing at trial such evidence, to the extent that it would not be
prejudicial to the other party.
[37] The Plaintiff complained bitterly that the Defendant has pleaded a different
case on the issue of the use of the contingency fee which was included in
the contract price.
[38] The Plaintiff was afforded an opportunity during cross to respond to this
issue about the unauthorized use of contingency fee. The Plaintiff is
therefore not prejudiced by the evidence regarding the contingency fee, as it
is in the contract, it is in the objection letter and he was afforded an
opportunity to directly address this aspect.
[39] In order to determine whether the Defendant is liable or not, the following
questions arise-Was there a variation or not of the scope of work? If No,
what was the cause for the increase in the contract amount?
19
[40] The increase in the contract amount was as a result of the change in the
type of material, from G5 to G2 . This change in material was as a result of
the contract concluded between the Defendant and SANRAL, wherein
SANRAL specifically issued a change the engineering design of the join on
R81 and R578. The SIDA Engineer appointed by the Defendant issued a
written instruction to the Plaintiff to procure and use G2 material. The Plaintiff
explained that the pricing of the two materials is different, with the G2
material being more expensive.
[41] To the extent that the BODE paving joinery on R81 and R578 were subject
to SANRAL agreement with the Defendant, the engineering designs could
not have been final. The same would hold and apply to the pricing of the
BODE paving project, as the engineering design was yet to be approved
after agreement between the Defendant and SANRAL.
[42] This then leads me to the contention that the contract between the
Defendant and the Plaintiff was a fixed price contract. I find it, difficult to can
fathom how the contract price could be fixed if BODE paving joinery on R81
and R578 were subject to SANRAL agreement with the Defendant, the
engineering designs were not final.
[43] The Defendant's Engineer in terms of clause 6.10 of the GCC was to re
measure the material and to issue payment certificates, on which the Plaintiff
was to issue an invoice.
[44] In terms of clause 6.10.4 of the GCC contract, SIDA Engineer the appointed
Project Engineer was enjoined after signing off every payment certificate to
deliver, within seven (7) days of the approval of the payment certificate to the
Defendant. Thus, it is incongruent for the Defendant to claim not to have
received the payment certificate with seven (days) from the date of payment
20
certificate no. 7, and not to bring the court into its confidence of its contention
that they did not receive the payment certificate within 7days from their own
appointed engineer.
[45] This quaugmire is aggravated by the fact that the Defendant has failed to
place before court any evidence on which the court can conclude that the
certificate was not delivered within 7days. Instead, the Defendant wants to
shift the responsibility to the Plaintiff, and claims that Plaintiff did not show
when the certificate was delivered. To buttress the fact that it was not with
7days, the Defendant points to the fact that the invoice is dated 14
December 2018, which is outside of the 7days. The Defendant could not
bring the court into its confidence and point to exactly when it received the
payment certificate from the Engineer or when it received the invoice for the
payment certificate no. 7 from whence the 28days can be reckoned.
[46] The date of delivery of the payment certificate to the Defendant by the
Engineer is relevant, to the extent that it is the peg point from which the
28days is to be reckoned. Clause 10.2.2 and 10.2.3 sets a 28days period
within which to lodge a dissatisfaction notice with the Engineer, who must
then also within 28days make a determination.
[4 7] The Defendant has not been able to state when it actually received the
payment certificate. Neither, was the Defendant able to place any document
to show when the payment certificate was delivered and received by it. In the
absence of any evidence to the contrary as to when the Engineer's payment
certificate was delivered, then only available inference to be drawn is that it
was delivered with 7 days in terms of Clause 6.10.4.
[48] The invoice which is merely a computation of the payment certificate is dated
14 December 2018. The fact that the invoice is dated 14 December 2018
21
does not in any way absolve the Engineer from the duty to submit a payment
certificate which the Defendant requires in terms of the contract to effect
payment to the Plaintiff.
[49) The Plaintiff attached the invoice which is based on the payment certificate is
dated 14 December 2018. A more liberal interpretation to the date from
which the 28days dissatisfaction period may be reckoned, since none of the
parties was able to place before court a definite date on which the payment
certificate was delivered to the Defendant. The Defendant also testified that
the computation of the 28days must be exclusive of holidays and weekends,
only calculating week days.
[50) The Defendant has testified that if the 28 days w ithin which to object is
reckoned from 24 January 2019, renders the dissatisfaction notice to be
within 28days. The liberal computation starting by excluding the first day
being the 24 January 2019, leads one to the 28th dissatisfaction notice day
being on 5 March 2019. This is simply means that by whatever liberal
mechanism , is invoked to reckon the 28 days' notice period, the Defendant's
notice served on the Engineer on 6 March 2019, the notice is outside of the
permissible 28days dissatisfaction period.
[51) Therefore, the Defendant's dissatisfaction notice served on 6 March 2019
was out of time and the provision of clause 10.3.1.5 and the Engineer may
not consider the objection and Defendant is bound to accept as the
Defendant has no further right to dispute the matter.
[52) This clause puts to bed the complaint about the use of contingency fee, in
the claim. One must however, substantively deal with the issue in the
following manner, the budget for the BODE paving project resides with the
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Defendant. The funds are in the Defendant's account. Neither the Plaintiff or
the Engineer has access to the contingency fee budget.
[53] When the Payment certificate were issued, every time they would reflect the
amount for the certificate, as well as the total amount payment to date
inclusive of the payment certificate. Therefore, the Defendant was fully
aware and cannot claim not to be aware that the contingency fee was being
employed at any stage, by it to effect payment for the work done. For the
Defendant to come on 6 March 2019, to complain of the use of the
contingency fee, without its prior approval if rather disingenuous.
[54] The Defendant also in the objection complained that there was a variation of
the scope of work, without its prior written approval. The most important
aspect of the Defendant's testimony is that the Defendant acknowledged that
the work was done by Polokwane Surfacing using G2 and Asphalt material.
The Defendant indicated that to date of testifying, the issue regarding the
work done and the change in scope by introduction of revised design by
SANRAL engineer on the joins to R81 and R578 has not been addressed.
[55] The Plaintiff testified that the change in scope did not exceed 30%, which
thus did not require the Engineer to seek the Defendant's written prior
approval. The Plaintiff testified that the change in scope was more from GS
material to G2 and Asphalt only impact on the contract by about 15% of the
contract value. Further, that it was the Engineer's responsibility and not the
Plaintiff's responsibility to procure approval for any variation of the contract.
[56] The contract for BODE paving adjoining R81 and R578 was subject to the
approval of designs by SANRAL 's engineers. The most important fact is that
the change in scope of work was due to an agreement between the
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Defendant and SANRAL. Further, that the change in scope was the use of
G2 material, when the initial material quoted was GS material.
[57] The engineer, acting on Defendant's instructions, and giving effect to the
terms of the agreement between the Defendant and SANRAL , issued the
Plaintiff a written site instruction to change the material to G2 and Asphalt on
the joins of the R81 and R578 .
[58] Therefore, it is clear that the Engineer's instruction was in terms of the
contract, and was within the 30% . Further, the Defendant cannot claim not to
have been aware of the change in scope giving rise to a variation of the
contract value, as this was brought about by its contract with SANRAL , which
changed the initial engineering designs, with which the Plaintiff and other
bidders used to cost their tendered price. This change cannot be attributed to
the Plaintiff or SIDA engineer. Equally, it is disingenuous for the Defendant to
impute impropriety to the Plaintiff and SIDA Engineer.
[59] The Defendant's dissatisfaction and objection if any ought to have been
submitted to the Engineer within 28days. This the Defendant failed to do,
despite the fact that the Engineer in terms of clause 6.10.4, ought to have
delivered the signed payment certificate to it. Further, the 28days notice
period was still not met despite affording the Defendant a more liberal
interpretation and reckoning of the 28days notice period in terms of clause
10.3.1.5.
[60] The Defendant is therefore liable to pay the Plaintiff for the work done on the
BODE paving project, as approved by the SIDA Engineer, in terms of
payment certificate No . 7.
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[61] The Plaintiff in claim 2 of the Particulars of Claim, seeks payment of a sum of
R1 ,121,119.81 which is the remaining 50% balance of the retention monies.
This is in respect of the 10% amounts withheld in respect of each payment
certificate issued by the Project engineer. McKenzie, the Law of Building and
Engineering Contracts and Arbitration 6th Edition, posits that "In effect,
retention money is money set aside as security for the due completion of the
work and to enable a fund to be available to rectify defects which have not
been rectified by the contractor." Further, that "the ownership of the retention
money remains vested in the employer."
[62] The time for the paying over retention money to the contractor depend on the
terms of the contract. The General Conditions of Contract, 2010 provide that
one half of this retention money becomes due when the certificate of
completion is issued and the other half when the engineer certifies payment
thereof within 14days of the expiration of the defects liability period.
[63] The defects liability period in respect of the BODE paving project was end of
September 2019. The court in Rabbich v Sommerset East Municipality 13
EDC 107 at 115-116, found that generally a contractor is not entitled to any
of the retention money until he has completed the contract.
[64] In Cambrian Colliers Co v Jenkins & Sons 23 NLR 431 it was found that
where the contract has been lawfully determined by the contractor he is
entitled to all money retained up to the time of such determination.
[65] The Defendant claims that the Plaintiff on 24 January 2019 issued it with a
letter in which it authorized it to use the remaining 50% of the retention
monies. McKenzie, the Law of Building and Engineering Contracts and
Arbitration 6th Edition, recognized a contractor may however cede the rights
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to the money owed to him or which might become owing to him, out of the
retention money.
[66] The Plaintiff contends that from the reading of the letter, what is apparent is
that it could only ask the Defendant to utilize the 50% which was available at
the time and could not instruct or authorize the Defendant to use to other
50% as the defects liability period was only due to end in September 2019.
[67] As a result the Plaintiff contends that it is incongruent for the Defendant to
claim that it was authorized to use monies by the Plaintiff which did not
belong to the Plaintiff at the time. Therefore, any contention that the
Defendant use the remaining 50% to settle the ceded amount to Polokwane
Surfacing would be incorrect.
[68] The claim by the Defendant that it utilized the remaining 50% retention
monies, as a result of the letter of authorization of 24 January 2019 cannot
be correct, this is because if during the defects liability period, it was found
that there were defects that warranted to be corrected, the 50% was
reserved and ring fenced specifically for that purpose.
[69] The money did not belong to the Plaintiff, for it to can authorize its use. As
correctly posted by McKenzie, the Law of Building and Engineering
Contracts and Arbitration 6th Edition, and The General Conditions of
Contract, 2010 ownership of the remaining 50% was with the Defendant,
until the defects liability period was completed.
[70] The Plaintiff only became entitled to the retention money when the defects
liability period was completed in September 2019 . Therefore, the letter of 24
January 2019 can only be interpreted to have authorized the payment of the
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50% retention money that was available at that time as authorized and
approved by payment certificate no.7.
[71] Therefore, the Defendant is liable for the payment of the sum of
R 1, 121, 119.81 which is the remaining 50% balance of the retention monies.
[72] In the circumstances I deem it appropriate to award the plaintiff an amount of
R 1,186,327.58 in respect of payment certificate No . 7 and remaining 50% of
the retention monies, which amount is made up as follows:
1. Claim 1
(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VAT inclusive in the sum of R65 ,207.77;
(b) Interest on the sum of R65 , 207,771 at the rate of 8.75 per cent a
tempore morae from 26 December 2018 until date of payment;
2. Claim 2
(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VAT inclusive in the sum of R 1,121, 119.81;
(b)lnterest on the sum of R1 ,121, 119.81 at the rate of 8.75 per cent a
tempore morae from 30 September 2019 until date of payment;
TOTAL: 1,186,327.58
[73] The only remaining question is the issue of costs. The Plaintiff has asked
that it should be awarded costs of suit. Without belaboring the point, the law
on the question of costs is trite and settled. The Defendant conceded that as
at the date of hearing, the issue of the variation of the costs of the material
resultantly contract price the agreement between SANRAL and the
Defendant, together with the change in design, has not yet been addressed
by the Defendant.
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[74] This means that the issue of the budget and contract price being exhausted
and there being no monies to pay the claim, due to exhaustion in the
projected budget for the BODE paving contract, is incorrect.
[75] Instead, had the Defendant put its effort and endeavors as it did in opposing
the claim, it would have realized that the change was due to its contract and
the change in engineering designs. Further, that the change was less than
30% to warrant the requirement that the Defendant's written approval of the
variation must be procured.
[76] The opposition of the claim was clearly abortive, as the Defendant failed to
conduct an internal due diligence of the project to can have realized that
even its objection letter of 6 March 2019 was out of time. Further, that the
claim of the use of the contingency fee by the Plaintiff was misplaced as it
was the Defendant and its Engineer who had control of the funds and the
Engineer certified the payments with full knowledge of the implication.
[77] The appropriate order in the circumstances of this case is that the costs must
follow the suit. The Defendant is therefore liable to pay the costs of the
action on scale B.
ORDER
[78] In the circumstances I make the following order:
1. Claim 1
(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VAT inclusive in the sum of R65,207.77;
(b) Interest on the sum of R65 , 207,771 at the rate of 8.75 per cent a
tempore morae from 26 December 2018 until date of payment;
2. Claim 2
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(a) The Defendant is ordered is ordered to pay the Plaintiff retention
monies VA T inclusive in the sum of R1, 121, 119.81 ;
(b) Interest on the sum of R1 , 121, 119.81 at the rate of 8.75 per cent a
tempore morae from 30 September 2019 until date of payment;
(c) The Defendant to pay the Plaintiffs costs of suit on scale B.
AC ING JUDGE OF THE HIGH COURT
LIMPOPO DIVISION
APPEARANCES:
Plaintiffs counsel:
Adv. Sasson
Instructed by:
Thomas & Swanepoel Inc. Attorneys
c/o Sune DuPlesis Attorneys
Defendant's counsel:
Adv . Ferguson with Adv. Dlamini
Instructed by:
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Nobela Attorneys
c/o F.R Chauke Attorneys
Emails : marlene@suneduplessisattorneys.co.za
info@nobelaattorneys.co.za
louis@tslegal.co.za
maryka@tslegal.co.za
Date Heard: 14 April 2025, postponed to 23-26 June 2025
Date of Judgement: 23 September 2025