About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2019
>>
[2019] ZASCA 28
|
|
Sivubo Trading and Projects CC v Development Bank of Southern Africa (233/2018) [2019] ZASCA 28 (28 March 2019)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 233/2018
In
the matter between:
SIVUBO
TRADING AND PROJECTS
CC
APPELLANT
and
DEVELOPMENT
BANK OF SOUTHERN AFRICA
RESPONDENT
Neutral
citation:
Sivubo Trading v Development Bank
(233/2018)
[2019] ZASCA 28
(28 March 2019)
Coram:
Tshiqi, Majiedt and Schippers JJA and Carelse and Matojane AJJA
Heard:
21 February 2019
Delivered:
28 March 2019
Summary:
Acceptance of tender – suspensive condition not met –
no valid and binding contract between the parties.
ORDER
On
appeal from:
Gauteng Local Division, Johannesburg (Tsoka ADJP
sitting as court of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Tshiqi
JA (Majiedt and Schippers JJA and Carelse and Matojane AJJA
concurring):
[1]
The issue in this appeal is whether or not a binding agreement came
into existence between the appellant, Sivubo Trading and
Projects CC
(Sivubo), and the respondent, Development Bank of Southern Africa
Limited (DBSA).
[2]
By agreement between the parties and by order of the high court, the
issues raised in DBSA’s special plea, set out later,
were
adjudicated first and separately from the other issues in the case.
The following is a summary of the common cause facts presented
before
the court a quo in respect of the separated issues: On or about 17
January 2014 DBSA issued several separate written invitations
for
tenders for the construction of school buildings and related
infrastructure in the Eastern Cape Province, which included an
invitation to tender for the Gobidolo Junior Secondary School in
Mqanduli in the Eastern Cape Province (‘the invitation to
tender’). In response to the invitation to tender, Sivubo
submitted a tender offer (‘Sivubo's tender offer’)
to
DBSA on 7 February 2014. DBSA did not accept Sivubo's tender offer in
accordance with the Form of Offer and Acceptance specified
in section
C1.1 of the invitation to tender, but instead issued a letter dated 6
May 2014 (the Letter of Appointment), to Sivubo
which read:
‘
The Development Bank of South
Africa (DBSA) is pleased to inform you that your tender offer for . .
. has been conditionally accepted.
Sivubo Trading & Projects CC is
required to comply with and satisfactorily fulfil the following
conditions listed hereunder
by 16:00 hours on Friday, 16 May 2014.
All the following documentation is to be provided to the DBSA and the
Principal Agent .
. . .’
. . .
vii . . . a safety plan in line with
Construction Regulation clause 5.1 and [to] submit all necessary
documentation to the Department
of Labour with respect to
Notification of Construction Work in line with Construction
Regulation clause 3.
viii. Contract Works Insurance to the
value of the works plus 10%;
ix. Public liability Insurance to be
effected for the sum of R 10 000 000.00;
x. Fixed Construction Guarantee equal
in value to 7.5% of the contract sum. . .
Provided the above requirements have
been complied with, Sivubo Trading & Projects CC is to sign the
contract documents which
include the JBCC Series 2000 Principal
Building Agreement . . . The contract document will be prepared by Mr
Mxolisi Maome in conjunction
with the quantity surveyor. The date and
location for the signing of the contract will be communicated to you
once the submitted
documents have been checked.
. . . .’
[3]
The Letter of Appointment was accompanied by a document in an
uncompleted form that bore the heading: ‘confirmation by
contractor of receipt of letter of appointment and acceptance of the
appointment for the provision of construction services under
the
terms outlined above’, (the Acceptance Letter). Sivubo's sole
member, Mr Dominic Skumbuzo Dube (Mr Dube) signed the Acceptance
Letter and sent it back to DBSA. The parties are in agreement that as
the Letter of Appointment imposed requirements at variance
with the
tender, it constituted a counter-offer, which was accepted by Sivubo
in terms of the Acceptance Letter.
[4]
On 18 May 2014, Mr Dube sent a further e-mail to DBSA and to its
principal agent, R&G Consultants, accompanied by certain
documents, which were not all the documents required in terms of the
Letter of Appointment. DBSA provisionally handed over the
construction site to Sivubo on 22 May 2014 and on this occasion the
further documentation that DBSA required Sivubo to provide
in terms
of the Letter of Appointment was discussed. At a technical meeting
that took place on 5 June 2014 the documentation that
DBSA required
in terms of the Letter of Appointment was again raised and Sivubo
promised to submit certain specified documents
by 9 June 2014. On 23
June 2014 Sivubo provided all the documentation to DBSA and R&G
Consultants. On 25 June 2014 Sivubo sent
a letter to DBSA
acknowledging that it was behind schedule and outlining its
turnaround strategy. On 10 July 2014 DBSA sent a letter
of
‘termination of construction contract’ of Gobidolo Junior
Secondary School to Sivubo. It is common cause that this
letter was
subsequently followed by another termination letter dated 14 July
2014 from R&G Consultants.
[5]
On 10 September 2014, Sivubo instituted action against DBSA for
alleged damages in the amount of R2 838 485.04. It alleged that
DBSA
repudiated a contract between the two parties through the letters
dated 10 July 2014 and 14 July 2014, which repudiation Sivubo
accepted and cancelled the contract. As a result of the repudiation,
so Sivubo contended, it lost profits it would have earned
but for the
repudiation. Sivubo subsequently filed an amended declaration and
alleged that it had been appointed in terms of the
JBCC Agreement. It
thus based its cause of action on the JBCC Agreement.
[6]
DBSA opposed the action, filed a plea and also raised a special plea
in terms of which it denied that any contract between it
and Sivubo
came into existence. It averred that the Letter of Appointment was a
conditional appointment which was subject to the
suspensive condition
that by 16h00 on Friday, 16 May 2014 (‘the deadline’),
Sivubo had to furnish DBSA and R&G
Consultants, with certain
documents. These comprised, amongst others, proof of contract works
insurance, proof of public liability
insurance and a construction
guarantee. Sivubo furnished these documents to DBSA only on 23 June
2014, after the deadline. As a
result the suspensive condition in the
Letter of Appointment was accordingly not met, and the conditional
appointment of Sivubo
as the successful tenderer therefore lapsed and
was of no force and effect. DBSA further pleaded that the contract
documents, including
the JBCC agreement referred to in the amended
declaration were never signed and that consequently no contract as
alleged in the
amended declaration or at all came into being. It
submitted that for these reasons the claim, premised on repudiation
of the contract
fell to be dismissed.
[7]
On 26 April 2017 the matter served before Molahlehi J, who, in terms
of Rule 33(4), ordered a separation of issues, referred
the special
plea to trial and postponed the other defences sine die. The trial
relating to the special plea served before Tsoka
ADJP on 24 May 2017.
No evidence was led at the trial and the matter was decided on the
basis of the pleadings and the common cause
facts presented before
the court. The court upheld the special plea with costs. This appeal
is against this order with leave of
the court a quo.
[8]
In this court, Sivubo sought to argue a case different from that
pleaded in the amended declaration. Instead of placing its
reliance
solely on the JBCC agreement, it submitted that the contract between
the parties comprised of the JBCC agreement, as modified
in terms of
the Special Conditions of Contract and the Contract Specific Data,
and as further modified in terms of the conditions
that DBSA had
specified in the Letter of Appointment. According to Sivubo, the
listed requirements in the Letter of Appointment
were not conditions
precedent, but were terms of the contract. Sivubo had an obligation,
by the deadline, to supply the various
documents required by DBSA.
The fact that Sivubo was unable to do so, so the submission went, did
not cause the agreement to lapse,
but rendered Sivubo in
mora.
Counsel for Sivubo also argued that the subsequent conduct of the
parties after Sivubo had signed the Acceptance Letter fortified
Sivubo’s submission that a contract had been concluded.
[9]
It is convenient to first consider whether Sivubo was ever appointed
in terms of the JBCC Agreement as alleged in the amended
declaration
and consequently whether there was a contract between the parties in
terms of the JBCC agreement. It is common cause
that the JBCC
agreement was never signed. Sivubo contends that para 3.5 of the JBCC
agreement specified that formal signatures
were not required in order
to render it valid
.
The problem with Sivubo’s reliance
on para 3.5 is the following: The JBCC agreement had to be read
together with the Special
Conditions of Contract (SCC) which, in
terms of Clause 1 of the SCC, formed an integral part of the JBCC
agreement. Clause 1 clearly
stated that the SCC ‘shall amplify,
modify or supersede, as the case may be, the JBCC 2005 to the extent
specified below,
and shall take precedence and shall govern’.
Clause 2 of the SCC reflected amendments to the JBCC agreement and
one of the
clauses to be amended was Clause 3.5 of the JBCC by
deletion. There could thus be no reliance on para 3.5 as it had been
deleted.
The Letter of Appointment on the other hand stated
unequivocally that Sivubo Trading & Projects CC was required to
sign the
contract documents which included the JBCC Agreement,
provided the stipulated requirements had been complied with. It
follows that,
in the absence of para 3.5 or any other clause to the
contrary, the clear language of the Letter of Appointment prevailed,
and
the JBCC agreement had to be signed. As this did not happen,
there can be no reliance on it by Sivubo as a basis for the existence
of a contract.
[10]
This then takes me to whether the listed requirements contained in
the Letter of Appointment imposed a suspensive condition
which had to
be met by Sivubo before a formal contract could be finalised, or
whether they were merely terms of the agreement between
the parties
as alleged by Sivubo.
[11]
A suspensive condition is a condition suspending the operation of all
or some of the obligations flowing from the contract,
pending the
occurrence or non-occurrence of a future uncertain event. (See
Design
and Planning Service v Kruger
1974 (1) SA 689
(T) 695C-D;
Thiart
v Kraukamp
1967 (3) SA 219
(T) 225A-C;
Diggers Development
(Pty) Ltd v City of Matlosana
[2011] ZASCA 247
;
[2012] 1 ALL SA
428
(SCA) para 23). The approach to interpretation of a document is
settled. It is the process of attributing meaning to the words used
in a document, having regard to the context provided and having
regard to the purpose of the provision and the background to the
preparation and production of the document. (See
Natal Joint
Municipal Pension Fund V Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) 593 (SCA) paras 17-26;
Novartis v Maphil
[2015] ZASCA
111
;
2016 (1) SA 518
(SCA) paras 24-31) It is also well established
that the mere use of the word ‘condition’ does not always
translate
into the condition in question being a suspensive
condition. (See
Webb v Davis N O & others
[1998] ZASCA 10
;
1998 (2) SA 975
(SCA) 982C-D;
Southern Era Resources Ltd v Farndell N O
[2009]
ZASA 150;
2010 (4) SA 200
(SCA) para 11).
[12]
In
Command Protection Services (Gauteng) (Pty) Ltd t/a Maxi
Security v SA Post Office Ltd
[2012] ZASCA 160
;
[2013] 1 All SA
266
;
2013 (2) SA 133
(SCA) the South African Post Office Limited
(Post Office) caused an advertisement to be placed in national
newspapers inviting
tenders for the guarding of post offices in six
specified regions of the country. Details of the services required
were stipulated
in a document called the Post Office Request for
Proposal, which could be obtained from the Post Office. Command
Protection Services
(Command) submitted tender documents
corresponding to the terms of the Request for Proposal document, to
provide guarding services
in all six regions as advertised. These
documents were annexed to Command’s particulars of claim as
PC2. (This court found
it convenient to refer to these documents in
this fashion). Subsequently, Command received a letter of appointment
from the Post
Office dated 28 July 2003, which the court conveniently
referred to as PC3. It read:
‘
LETTER OF APPOINTMENT
It is with pleasure that we inform you
that the Tender Board has awarded the above tender proposal to [you].
As a result you are
appointed as the supplier of the above-mentioned
service as per our tender proposal.
This appointment is subject to the
following:
·
BEE improvement; and
·
The successful finalisation and signing of a formal contract.
A draft contract will be forwarded to
you within (7) seven working days for your comment and to the effect
mutually agreed on amendments
and finalisation into a formal
contract. You are kindly advised to acknowledge receipt of this
letter of appointment and provide
this office with the contact
information of the person(s) responsible for the finalisation of the
contract process.
Yours sincerely
[Signed on behalf of the appellant]
Accepted and signed on behalf of the
respondent]’
[13]
In describing the nature of the dispute between the parties this
court made the following observations in para 12:
‘
The dispute thus arising is not
novel. It frequently happens, particularly in complicated
transactions, that the parties reach agreement
by tender (or offer)
and acceptance while there are clearly some outstanding issues that
require further negotiation and agreement.
Our case law recognises
that in these situations there are two possibilities. The first is
that the agreement reached by the acceptance
of the offer lacked
animus contrahendi
because it was conditional upon consensus
being reached, after further negotiation, on the outstanding issues.
In that event the
law will recognise no contractual relationship, the
offer and acceptance notwithstanding, unless and until the
outstanding issues
have been settled by agreement. The second
possibility is that the parties intended that the acceptance of the
offer would give
rise to a binding contract and that the outstanding
issues would merely be left for later negotiation. If in this event
the parties
should fail to reach agreement on the outstanding issues,
the original contract would prevail.’ (References omitted.)
[14]
The court in para 21 dealt with the contents of PC 3 (the Appointment
Letter) and made the following observations:
‘
The second stipulation under
“subject to’’ requires the “successful
finalisation. . . of a formal contract’’.
“Finalisation”
envisages a process, which in the context can only signify further
negotiation, while the reference
to “successful” suggests
an awareness that the process might not be successful. In the
context, “successful”
can only mean resulting in a formal
contract. Conversely stated, the requirement can only mean that
unless and until the further
negotiations that were contemplated
resulted in a formal agreement, there would be no contractual
relationship between the parties.
This inference, I believe, is
underscored by the last two sentences of PC3. The penultimate
sentence envisages that a draft agreement
would be prepared by the
respondent; that the draft would be forwarded to the appellant; that
the appellant would then have the
opportunity to suggest amendments
to the draft; and that, if agreement could be reached on the
amendment proposed, this would lead
to the finalisation of a formal
agreement. In the last sentence the appellant is asked to nominate
its representatives during the
finalisation process. As I see it this
means, in short, that as yet there was no binding contract. The
contract would only come
into existence upon the successful
finalisation of the contract process, after inter-action between
representatives of the parties.’
[15]
The court then concluded as follows in para 25:
‘
The conclusion I arrive at is
therefore that PC3 did not constitute an unconditional acceptance of
the tender contained in PC2;
but that it was intended by the
respondent and accepted by the appellant as a counter-offer. The
agreement that came into existence
when the appellant accepted this
counter-offer was an agreement to negotiate. Whether that agreement
would be enforceable in the
light of decisions such as
Southernport
Developments (Pty) Ltd v Transnet Ltd
2005
(2) SA 202
(SCA)
and
Everfresh Market
Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
2012
(1) SA 256
(CC),
is one we do not have to consider. That is not the agreement that the
appellant relied upon. The agreement the appellant
relied upon is one
that, in my view, never came into existence.’
[16]
The attempt by Sivubo to distinguish between this matter and
Command
is a matter of emphasising form over substance. As appears from
the statement of common cause facts, the Letter of Appointment in
this matter had the following fundamental features: it stated that
(a) Sivubo’s tender offer was accepted conditionally;
(b)
Sivubo was required to comply satisfactorily with a long list of
conditions by a certain date and time; (c) a contract document
which
included the JBCC Agreement would only be prepared and signed at a
later date provided the specified documents had been furnished.
A
further pertinent aspect is that consequent to the Letter of
Appointment and the Acceptance of the Offer, R&G Consultants
continued to demand the further outstanding documents such as a
construction guarantee, an original tax clearance certificate,
contract works insurance and public liability insurance, a detailed
quality plan, and a health and safety plan. The common feature
of
these documents is that they are dictated by several pieces of
legislation. If the contention by Sivubo is correct, it would
mean
that they were appointed as a preferred bidder even before DBSA had
satisfied itself whether it was legally competent to do
so. This is
improbable. Furthermore, these documents by their very nature are
essential in large construction contracts such as
the present
instance. It is inconceivable that a large financier such as DBSA
would have been content to proceed without them having
been in place.
[17]
The more probable inference is that when DBSA sent the Letter of
Appointment, it envisaged entering into further negotiations
with
Sivubo in order to satisfy itself whether Sivubo qualified as its
preferred bidder. This finding is consistent with the clear
language
of the Letter of Appointment which says that the contract and the
JBCC Agreement will be signed ‘
provided the above
requirements have been complied with . . .’ . . .
and that
the date and location for the signing of the contract will be
communicated . . . once the submitted documents have been checked.
As
the requisite documents had not been submitted on the stipulated
date, the suspensive condition was not met and no contract ever
came
into existence. There is thus no basis to find that the listed
requirements were terms of a contract.
[18]
It therefore follows that the failure to furnish the documents which
were required by the DBSA in the Letter of Appointment,
within the
date and time stipulated therein, resulted in a failure to fulfil the
suspensive condition. Consequently the contract
alleged by Sivubo
never came into existence.
[19]
For those reasons the appeal fails.
[20]
I make the following order:
The
appeal is dismissed with costs.
_________________
Z
L L Tshiqi Judge of Appeal
APPEARANCES
For
the Appellant: F G Barrie SC
Instructed
by: Mbana Inc., Johannesburg McIntyre Van der Post Attorney,
Bloemfontein
For
the Respondent: Y Alli
Instructed
by: Norton Rose Fulbright Attorneys, Johannesburg
Matsepes
Inc., Bloemfontein