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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

(1)    REPORTABLE: NO

(2)    OF INTEREST TO OTHER JUDGES: NO

(3)    REVISED: NO

CASE NO: 42031/2020

 

In the matter between:

UDUMO TRADING 26 (PTY) LTD                                                            APPLICANT

and

LSO CONSULTING ENGINEERS (PTY) LTD                                         FIRST RESPONDENT

 

M CIVILS (PTY) LTD                                                                                SECOND RESPONDENT

THE THABAZIMBI LOCAL MUNICIPALITY                                        THIRD RESPONDENT

 

DEPARTMENT: WATER AND SANITATION                                          FOURTH RESPONDENT

 

KOMESHEN MOODLEY                                                                          FIFTH RESPONDENT

  

JUDGMENT

Van der Schyff J

 

Introduction

 

[1]           The applicant approached the court on an urgent basis seeking the following interim interdictory relief:

             i.        That the order serves as an interim order with immediate effect pending the finalisation of the adjudication and / or arbitration proceedings to be instituted within 30 days of the granting of the order, for the determination of the relevant parties’ rights;

            ii.        That the first respondent be prohibited from enforcing the termination of its contract with the applicant dated 7 August 2020;

            iii.        That the first respondent be prohibited from entering the applicant’s site in respect of the development of water resources for Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, Northam and water demand management and to expel the applicants therefrom;

            iv.        That the first respondent be prohibited from completing the works for which the applicant was contracted regarding the development of water resources for Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, Northam and water demand management;

              v.        That the first respondent be prohibited from employing a contractor other than the applicant to complete the works or any part thereof in re development of water resources for Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, Northam and water demand management;

            vi.        In the event that the applicant has already employed a new contractor, whether or not the second respondent or any other contractor, the first respondent be prohibited from entering into a contractual relationship with such a contractor, alternatively that the enforcement of such a contract be suspended, alternatively set aside;

           vii.        That the first respondent be prohibited from compelling the applicant from leaving the applicant’s site for any reason in respect of development of water resources for Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, Northam and water demand management;

        viii.        That the applicant’s possession of its site(s) pertaining to the contract in re development of water resources for Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, Northam and water demand management be restored and that the applicant may remove all locks;

            ix.        That the first respondent pays the costs of the application together with the opposing respondents jointly and severally.

 

[2]              I am of the view that the matter is sufficiently urgent to be dealt with in terms of Rule 6(12).

 

Factual Background

 

[3]            The first respondent was appointed as a turn-key contractor for the provision of water resources for the Thabazimbi, Regorogile, Leeuwpoort / Raphuthi, Rooiberg, and Northam area. The applicant, a building contractor, is the subcontractor of the first respondent. The fifth respondent is the first respondent’s agent.

 

[4]            It was agreed that the work would be done in terms of a contract for a fixed price per IPW and over a period of 180 days, but in phases as instructed by the first respondent. The price payable for each phase was to be determined in accordance with rates contained in the Bills of Quantity forming part of the contract. No work was to be done unless specific instructions were issued by the first respondent.

 

[5]             The agreement between the applicant and first respondent is subject to the General Conditions of Contract for Construction Work, Third Edition (2015) (“GCC”).

 

[6]              Four instructions were issued to the applicant. The first three are not in dispute.

 

Timeline

 

[7]          It is common cause that the dispute between the parties relates to IPW 4 which was issued by the first respondent on 7 July 2020. On 16 July 2020 the applicant wrote to the first respondent. In this letter it states that it cannot accept the instruction to proceed with IPW4 unless the first respondent, inter alia, agrees to revise the costs associated with Phase 2B (for which IPW 4 was issued) to R 26 619 673.20. In view of what the applicant coined “contract ambiguity” the applicant was of the view that IPW 4 would require it to perform work outside the scope of the period it tendered for and that it was, as a result entitled to adjust the tender price with approximately R8 million.

 

[8]          On 22 July 2020 the fifth respondent informed the applicant that the contract should be viewed holistically, that IPW 4 falls within the contract scope of work and within the construction period. The contractor was instructed to proceed with construction as per the issued IPWs and informed that should it fail to proceed with the works, failure to proceed would be considered a breach of contract.  On the same date the applicant was also placed on terms for not delivering documentation in accordance with the provision of the contract.

 

[9]          On 23 July 2020 the applicant replied to the first respondent and, inter alia, stated that it urgently awaits the re-assessment of its notice in terms of clause 6.3.2.1 failing which it would have to issue a dispute notice.

 

[10]         On 29 July 2020 the fifth respondent replied and inter alia restated that the issuing of IPW4 was done in accordance with the contract and does not constitute a variation order. The applicant was again informed that it will be in breach if it fails to proceed with IPW 4.

 

[11]         On 7 August 2020 the first respondent terminated the contract with the applicant.

 

[12]          On 19 August 2020 the applicant’s attorney of record informed that the applicant does not accept the termination and on 20 August 2020 the applicant sent a dissatisfaction claim to the first respondent.

 

Relevant facts

 

[13]        The applicant’s letter dated 16 July 2020 provides crucial information and the background against which this application is to be considered. From the letter of 16 July 2020 is gleaned that:

               i.        The applicant requested a 7day grace period to review IPW4 issued in relation to the Phase 2B Construction Works;

             ii.        The applicant notified the Employer’s Agent of what it perceived to be an ambiguity in the contract. The contract that was originally signed on 28 November 2019 with a commencement date of 7 January 2020. In terms of clause 1.1.1.14 the time for achieving Practical Completion is stipulated as 180 days. In the result, the completion date is calculated as 5 July 2020. Due to delays brought about by Covid-19 the end date of the contract is calculated as 12 August 2020;

           iii.        The tender was thus subject to a defined scope of work, value and a sequenced program to achieve completion within the contract period of 180 days;

            iv.        IPW4 suggests that the applicant perform work outside the original contract period.

             v.        The 180-day period allowed for Practical Completion is in direct contradiction to the Scope of Works –

“C3. Scope of Works (Value of Works) – the Construction for each project will be split into three phases over three financial years as follows:

·         Phase 1 – 2018/2019 financial year

·         Phase 2A – 2019/2020 financial year

·         Phase 2B – 2020/2021 financial year

            vi.        With this ambiguity present in the contract, the applicant opined that IPW4 cannot be accepted as the instruction falls outside the original tender methodology and construction period without any default on the applicant’s side;

           vii.        “All Time Related and Fixed Preliminary and General Items were costed against the original contract duration of 180days and not linked to progress of work as applied to date, these items are to be rectified and paid within the next Interim Payment Certificate (IPC).

         viii.        It is Ultimate Dynamics’ opinion that the latest appointment of Phase 2 B falls outside the original contract period. Therefore it is construed as a variation to the contract …”

 

[14]           It is evident, that was it not for the inclusion of a 180 day-period for Practical Completion in the contract, the current dispute would probably not have arisen. The first respondent submits that the contract does not provide for phased Practical Completion, and if interpreted as a whole, taking into consideration the Scope of Works that extend over a period of three financial years with Phase 2B indicated to be finalised in the 2020/2021 financial year, IPW 4 does not constitute a variation of the agreement and the applicant is bound to the initial costing submitted.

 

[15]           The Employer’s Agent, on 22 July 2020 sent a certification in terms of clause 9.2.1.3 of the contract to the applicant. In terms of this certification letter the applicant was placed on terms (i) failing to submit documentation, or submitting unacceptable documentation, (ii) failing to commence with Works, (iii) failing to proceed with Works, and (iv) not carrying out Works in accordance with the contract. The applicant was provided 14 days to remedy the defaults. On 7 August 2020 the first respondent terminated the contract.

 

Evaluation

 

[16]           The applicant contends that the first respondent was not entitled to terminate the contract because the Employer’s Agent failed to consult with the parties in accordance with the prescripts of clause 3.2.2 of the GCC. The first respondent avers that there was substantial compliance, and additionally avers that although the termination letter refers to the certification letter, that the applicant repudiated the agreement. The applicant in turn avers that the first respondent repudiated the agreement.

 

[17]           I am not called upon to finally decide the dispute between the parties. The applicant seeks interim relief because it states that it commenced with adjudication or arbitration proceedings provided for in terms of the contract.

 

[18]           It is trite, and has succinctly been set out in Reckitt & Colman SA (Pty) Ltd v SC Johnson & Son (Pty) Ltd 1995 (1) SA 725 (T) at 729I-730G that an applicant who seeks interim relief must establish:

 

              i.        A clear right or, if not clear, that it has a prima facie right;

             ii.        That there is a well-grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief … is eventually granted;

            iii.        That the balance of convenience favours the grant of an interim interdict; and

            iv.        That the applicant has no other satisfactory remedy.

 

[19]           An applicant’s prima facie right is only one of the factors to be taken into account when deciding whether to grant interim relief. With the information currently before me, and without the benefit of hearing viva voce evidence, I must, however, state that I am not convinced that the applicant’s identification of ‘contract ambiguity’ as a basis from which a variation of costs can be negotiated, holds water. The first respondent is correct in its assertion that a contract is contextually interpreted. In addition, the questions arise as to why the applicant did not bring this point up for discussion when it first realised that it would not be possible to complete the work within the 180 days provided for (a fact that should have been evident), and why the applicant did not commence with IPW4 while utilising the dispute resolution mechanisms provided for in the contract.

 

[20]           In the event that the interim relief is not granted, it is inevitable that the applicant will not be in a position to participate in completing the Works. The question is, whether this inevitable consequence, will cause the applicant irreparable harm. I am of the view that it will not. The applicant has not made out a case that, if the question as to the first respondent’s right to terminate the contract is in future answered in its favour, it will not be adequately compensated by an award for damages.

 

[21]           When considering whether the balance of convenience favours the granting of an interim interdict, I am of the view that this must be determined not only taking into consideration the effect that the granting of the interim relief will have on the applicant and the first respondent, but also how the third respondent, and subsequently the constituents of the third respondent, the ultimate benefactors of the project, might be affected.

 

[22]           Homes J, as he then was, stated in Olympic Passenger Service (Pty) Ltd v Ramlagan 1957 (2) SA 382 (D) at 383 C-D:

 

“It thus appears that where the applicant's right is clear, and the other requisites are present, no difficulty presents itself about granting an interdict. At the other end of the scale, where his prospects of ultimate success are nil, obviously the Court will refuse an interdict. Between those two extremes fall the intermediate cases in which, on the papers as a whole, the applicants' prospects of ultimate success may range all the way from strong to weak. The expression 'prima facie established though open to some doubt' seems to me a brilliantly apt classification of these cases. In such cases, upon proof of a well-grounded apprehension of irreparable harm, and there being no adequate ordinary remedy, the Court may grant an interdict - it has a discretion, to be exercised judicially upon a consideration of all the facts. Usually this will resolve itself into a nice consideration of the prospects of success and the balance of convenience - the stronger the prospects of success, the less need for such balance to favour the applicant: the weaker the prospects of success, the greater the need for the balance of convenience to favour him. I need hardly add that by balance of convenience is meant the prejudice to the applicant if the interdict be refused, weighed against the prejudice to the respondent if it be granted.”

 

[23]           In determining the balance of convenience I take into consideration the affidavit filed on behalf of the third respondent wherein it is stated that the timeous completion of the project is of the utmost importance for the communities who stands to benefit from the project.  The project under discussion is financed in terms of a Government grant and any delay in spending the grant money within the time period provided for, will result in the money being returned to the Treasury. The Municipality does not have the funds to complete the project. If the project is to come to a standstill, or even be delayed, for the parties to flesh out their disputes, the project will not be completed in time and will become yet another failed infrastructure project which will deprive the communities of Thabazimbi District of the necessary infrastructure to optimise the provision of water to the community. In the public interest, I have to balance the communities right to optimally functioning water services against the applicant’s right to claim specific performance in terms of a contract where the applicant has an ancillary claim for damages should it eventually be determined that the contract was unlawfully terminated.

 

[24]           As stated above, the applicant has the option of instituting a claim for damages against the first respondent. The contract concluded between the parties provides for alternative dispute mechanisms which the applicant could have initiated at any time when it became apparent that a contentious dispute is developing, while commencing with the work as set out in IPW4.

 

[25]           The applicant did not succeed in meeting all four elements underpinning the granting of interim relief.

 

Order

In the result, the following order is granted:

1.    The matter is urgent and condonation is granted for non-compliance with the Rules of Court;

2.    The application is dismissed with costs.

E van der Schyff

Judge of the High Court, Gauteng, Pretoria

 

 

Counsel for the applicants:                                Adv J H Sullivan

Instructed by:                                                    Oosthuizen, Le Roux & Jansen Van Rensburg

Counsel for the respondent:                              Adv P Ellis SC

Instructed by:                                                    BPG Attorneys

Date of the hearing:                                          8 September 2020

Delivered:                                                         15 September 2020

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