Buffalo City Metropolitan Municipality v THM Engineers EL CC and Others (CA344/2018) [2019] ZAECGHC 91 (20 September 2019)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION GRAHAMSTOWN)

Case No.: CA 344/2018

In the matter between:

BUFFALO CITY METROPOLITAN MUNICIPALITY

Appellant

and

THM ENGINEERS EL CC

First Respondent

EL GREGORY CC

Second Respondent

BRIGHT IDEAS CC Third Respondent

JUDGMENT

REVELAS l:

INTRODUCTION

1. This appeal with leave of the trial Court, concerns the interpretation of an engineering contract, associated legislation and the fiduciary duties of an engineer as agent to the employer.

2. During 2010, the three Respondents (close corporations) carried on separate businesses as civil engineers based in East London. An advertisement to tender for, inter alia, the Cliff Sanitation Backlog Eradication Project ("Cliff''), was placed in a local newspaper by Appellant. Cliff is situated in Ward 41, East London. The invitation to tender specified that the tenderer must be a joint venture, comprising of a civil engineering consultant, a contractor and a social facilitator. The three Respondents then formed a joint venture ("the joint venture") accordingly and submitted a tender for the project in question. On 22 July 2010 the acting general manager of Appellant's supply chain management, advised the joint venture that they had been awarded the Cliff contract in an amount of R2,455,643.11 including Value Added Tax (VAT).

3. Mr GJ du Plessis, a member of the First Respondent and a civil engineer, was the chairperson of the joint venture but also was employed by Appellant as consulting engineer. The Second Respondent was the contractor and the Third Respondent, the social facilitator. The latter was responsible for the recruitment and employment of the employees who would be working on the project. The employees were to be recruited from the local community.

4. Mr du Plessis gave evidence about a rather peculiar feature of the contract between Appellant and the joint venture. Mr du Plessis was the consulting engineer, Appellant's agent, the engineer in First Respondent and one of the partners of the joint venture all in one. He would therefore effectively have to make payment certificates to the joint venture of which he was party. This understandably appeared unusual to him and he put his concerns to one of Appellant's municipal managers, Mark Westerberg. He was assured that this would not present a problem and stated that as he (Mr du Plessis) had always acted with integrity and objectivity, he also personally did not foresee any problems, however unusual the situation was. This of course however inevitably placed him in a position of a conflict of interest in having to wear two hats and was undesirable as a matter of principle.

5. The project, which envisaged the installation of 306 single pit urine diversion toilets and five structures for disabled people, commenced on 6 September 2010 and was only partially completed in July 2011 and a revised completion date was 6 August 2011. (The original anticipated completion date set out in the progress programme was scheduled for 10 December 2010.)

6. During the course of the execution of the project, certain problems arose. The area designated for the construction work was in fact to be utilised for a different purpose. A need for an additional 56 toilets was also identified, but Appellant's budget did not allow for the extra number of toilets. A significant problem experienced was the unexpected additional depth of hard rock encountered during excavation, which obviously made excavation more difficult, together with concomitant delays and expenses. The original status quo report of September 2010 indicated expected soft material on site 300mm - 400mm thick ( 35m3 per pit) with hard excavation per pit of 1.65m3 a total of 513m3 In fact however the allowance for hard material in

the Bill of Quantities was only 200m3 It is important to set out that the additional claims for

excavating hard rock excavation which exceeded the Bill of Quantities were paid in full this being subject to Clause 36.3 above. It is also to be noted that items 1.1 and 1.4 of Variation Order no. 1 reflect this claim and were paid. Consequently on 1 March 2011 the joint venture submitted a Variation Order and later a Revised

Variation Order (both Variation Order no. 1), for the amount of R980,747.00 excluding Value Added Tax (VAT). It is to be noted that the original Variation Order no. 1 dealt with the hard rock issue (R828,250).

7. It was common cause that Appellant had made payment to the joint venture in respect of the moneys due in accordance with the original bid of R2,455,643.11 and that Respondents made payment to the joint venture in respect of some items specified in the final variation order number, save for items 1.3 and 1.4 thereof. The former was a claim for preliminary and general costs incurred as a result of certain extensions of time. The latter claim was for further increased costs, the result of increased site supervision, health and safety expenses and extra labour. Appellant disputed any liability for these and for any ancillary professional costs or any ancillary services rendered, as claimed by Respondents.

8. The parties could not resolve their dispute by way of mediation because Appellant did not respond to “any encouragement to mediate" as it was adamant that it was not liable for the amounts specified in items 1.3 and 1.4 of the Variation Order.

THE ACTION:

9. Respondents then, as "Plaintiff Joint Venture", instituted an action against Appellant claiming payment in the amount of Rl,157,924.56 made up as follows:

1. Balance on the variation order

R778,146.90

2. Costs of Mediation

R 8,500.00

3. Additional Legal costs

R 15,572.20

4. Additional Professional Services

R171,143.07

5. Interest on late payments

R184,539.39

6. Total

R1 157,924.56

Respondents also claimed interest on the aforesaid amount calculated at the legal rate from 17 May 2014 to date of payment.

10. The pleadings delineate the real issues between the parties.

11. The Particulars of Claim set out:

"6.2 During the course of the said works, the Plaintiff JV submitted a variation order, dated 1st of March 2011, by reason of encountering the need to excavate in intermediate and hard rock, with concomitant delays and expenses.

6.3 A copy of the variation order no. 1 is annexed hereto marked Annexure "POC3", totalling R980 747.00 "excluding Value Added Tax".

6.4 The certificate of practical completion of the works was issued on the 18th of July 2011, and the Plaintiff JV has submitted claims for payment.

7.1 The Defendant has made payment to the Plaintiff JV in respect of monies due, in accordance with the original accepted bid of R2 455 643.11.

7.2 The Defendant has failed to pay the full sum to the Plaintiff in respect of the aforementioned variation order, and ancillary professional costs incurred and for ancillary services rendered, in a total sum of R1 157 924.56, particulars whereof are made up as follows:

7.2.1 payments outstanding in respect of the variation order:

7.2.1.1 costs of works certified for payment and included in the variation order

R980 747.00

7.2.1.2 less part payment made by

Defendant

R298 160.00

7.2.1.3 costs of work still to be paid

R682 587.00

7.2.1.4 Plus Value Added Tax @

14%

R95 562.18

TOTAL VALUE OUTSTANDING IN RESPECT OF VARIATION

ORDER

R778 149.18

7.2.2 cost of a Mediator required in terms of the General Conditions of Contract of 2004 and appointed by the South African Institute of Civil Engineering

R8 500.00

7.2.3 legal costs incurred in respect of consultations, correspondence and the initiation of the mediation process paid to attorneys Gravett Schoeman van Rensburg & Moodley Incorporated

R15 595.20

7.2.4 additional costs incurred in respect of professional services rendered, over and above costs related to normal services, after practical completion

7.2.4.1 year 2011 R52 705.00 7.2.4.2 year 2012 R29 705.36 7.2.4.3 year 2013 R28 439.45 7.2.4.4 Year 2014 R29 275.69 TOTAL R150 125.50 PLUS: VAT R21 017.57 TOTAL ADDITIONAL PROFESSIONAL COSTS R171143.07 7.3

7.7

7.7.1 In regard to the variation order referred to in paragraph 7.2

supra, the Plaintiff plead :

7.7.1.1

no variation order, or signed order in writing, was required in terms of Clause 36.3 of the General Conditions of Contract 2004, where the increase was as a result of the quantities exceeding those stated in the Bill of Quantities

7.7.1.2 excavation of scheduled intermediate and hard rock was included in a variation order only because of anticipated overrun of quantities,

as measured by the Defendant, which would result in an increased in the contract price, in excess of the limit of 15%, and the amended limit of 20%, as per the amended Clause 13 of the agreement, and Clause SO of the General Conditions of Contract 2004 : no order in writing was required in accordance with Clause 36.3 of the General Conditions of Contract 2004, where the increase is a result of quantities only exceeding those stated in the Bill of Quantities;

7.7.1.3 the Plaintiff pleads that the excavation of intermediate and hard rock was always included in the original scope of works, as part of the specification and scheduled works;

7.7.1.4 the Plaintiff pleads further that it continued with the excavation of intermediate and hard rock with the approval of the Engineer and the consent of the Defendant;

7.7.1.5 by reason of the terms of the General Conditions of Contract 2004 no subsequent written consent (for work executed in terms of the contract) was ever required, and, where no amendments or deviations have been entered into the schedule of deviations forming part of the form of offer and acceptance ("POC2"), no consent for any such amendment is relevant or required;

7.7.1.6 a copy of the General Conditions of Contract 2004 is annexed hereto marked Annexure "POC7"","

12. The immediately apparent issue is the claim at 7.2.1.3 that 11costs of work still to be paid" (R682,587.00) and the claim that Variation Order no. 1 required in fact no written order at all in terms of Clause 36.3 of the Contract.

13. The Plea sets out Appellant's defence as follows:

"8.1 The defendant admits that Annexure "POC3" is a copy of a document purporting to be "Variation Order No. 1 ".

8.2 The defendant pleads that it has paid to the plaintiffs all items claimed by it in Variation Order No 1, save for items 1.3 and 1.4.

8.3 The defendant denies that item 1.3 is reflected in the Bill of Quantities (section 12 of the bid documents) and that the amount claimed is the result of the quantities exceeding those stated in the Bill of Quantities, as required by clause 36. 3 of the GCC.

8.4 The defendant accordingly denies being liable to the plaintiff in respect of item 1.3.

8.5 The plaintiff relies for its claim in respect of item 1.4 on delays experienced in the completion of the works. Delays of this kind must be dealt with in terms of clause 39 and 42 as read with clause 48 of the GCC. The plaintiff has failed to follow the procedural steps required by those clauses and, in the absence of it having done so, it is not entitled to pursue its claim in respect of item 1.4.

8.6 The defendant accordingly denies being liable to the plaintiff in respect of item 1.4."

14. In its replication Respondents persist in reference to Clause 36.3 as being inapplicable to 1.3 of Variation Order no. 1 and that the "costs'' in item 1.3 constitute an extension of time in terms of Clauses 39, 42 and 48. It alleges that Clause 48.2 was complied with in a submission of claim on 2 March 2011 and that the procedural steps were followed.

15. It is to be noted that neither waiver nor estoppel are pleaded in replication by Respondents.

16. The Court a quo found for Respondents in respect of 1, 2, 3 and 9 above. Interest was ordered to be calculated from the date of issue of summons to date of payment costs, including the costs of preparation of Appellant's special plea of prescription (not pursued) were also awarded against Appellant. Appellant had conceded during the trial that it was indeed liable to pay for the mediation costs as claimed (R8,500.00) and that was no longer an issue.

17. The contract between the parties was comprised of several documents, the most relevant being The General Conditions of Contract for Construction Works (2004) (1st Edition) ("the GCC"). The most important clauses in the GCC for purposes of this appeal are Clauses 36, 42 and 48:

"36.

VARIATIONS

36.1 If, at any time before the issue of the Certificate of Completion, the Engineer shall require any variation of the form quality or quantity of the Works or any part thereof that may in his opinion be necessary or for any reason appropriate, he shall have power to order the Contractor to do any of the following:

36.1.1 Increase or decrease the quantity of any work included in the Contract,

36.1.2 Omit any such work,

36.1.3 Change the character or quality of any such work,

36.1.4 Change the levels, lines, position and dimensions of any part of the Works,

36.1.5 Execute additional work of any kind necessary for the completion of the Works, and

36.1.6 Change the specified or approved sequence or method of construction.

No variation shall in any way vitiate or invalidate the Contract, but the value (if any) of all such variations shall be taken into account in ascertaining the amount of the Contract Price.

36.2 No such variation shall be made by the Contractor without an order in writing (herein referred to as a "Variation Order") by the Engineer;

36.2.1 If for any reason the Engineer shall consider it desirable to give such order orally, the Contractor shall comply with such order and any confirmation in writing of such oral order given by the Engineer, whether before or after the carrying out of the order, shall be deemed to be a Variation Order within the meaning of this Clause, or

36.2.2 If the Contractor, as soon as possible, but within 14 days after receiving such oral order or a written order which he contends to be a Variation Order, confirms it in writing to the Engineer as being a Variat ion Order and such confirmation is not contradicted in writing by the Engineer to the Contractor within 14 days of receipt thereof, it shall be deemed to be a Variation Order within the meaning of the Clause.

36.3 No increase or decrease in the quantity of any work scheduled, where such increased or decreased is not the result of a Variation Order given under this Clause but is the result of the quantities exceeding or being less than those stated in the Bill of Quantities, shall be deemed to be a variation to which this Clause applies and no order in writing shall be required therefor.

36.4

42. EXTENSION OF TIME FOR COMPLETION

42.1 Subject to any requirement in the Scope of Work as to the completion of any portion of the Permanent Works before completion of the whole, the whole of the Works shall be completed within the time stated in the Contract Data calculated from the Commencement Date.

42.2 If circumstances of any kind whatsoever which may occur be such as fairly to entitle the Contractor to an extension of time for the completion of the Works or any portion thereof, the Engineer shall grant the Contractor, on a claim in accordance with Clause 48, such extension of time as is appropriate. Such extension of time shall take into account any special non-working days and all relevant circumstances, including concurrent delays or savings of time which might apply in respect of such claim.

(My emphasis)

42.3 Without limiting the generality of Clause 42.2, the circumstances referred to in that Clause include:

42.3.1 The amount and nature of additional work,

42.3.2 Abnormal climatic conditions,

42.3.3 Any failure or delay on the part of the Employer or his agents, employees or other contractors (not being employed by the Contractor) in the due performance of any obligations as are reasonably necessary to enable the Works to proceed,

42.3.4 Any provision of these Conditions which allows for an extension of time, and

42.3.5 Any disruption of labour which is entirely beyond the Contractor's control.

42.4 If an extension of time is granted, the Contractor, shall be paid such additional time-related General Items as are appropriate having regard to any other compensation which may already have been granted in respect of the circumstances concerned."

18. Definition of "General Items":

""General Items" means items contained in the Bill of Quantities which relate to general obligations, site services and facilities or which cover elements of the cost of the work which are not considered as proportional to the quantities of the Permanent Works."

19. Clause 48 is as follows:

"48. CLAIMS PROCEDURE

48.1 The following provisions shall apply to any claim by the Contractor in terms of the Contract for an extension of time in terms of Clause 42 for the completion of the Permanent Works, or (in terms of any Clause making reference to Clause 48) for additional payment or compensation:

48.1.1 The Contractor shall, within 28 days after the circumstance, event, act or omission giving rise to such a claim had arisen or occurred, deliver to the Engineer a written claim, referring to this Clause and setting out:

48.1.1.1 The particulars of the circumstance, event, act or omission giving rise to the claim concerned,

48.1.1.2 The provisions of the Contract on which he relies in making the claim,

48.1.1.3 The length of the extension of time, if any, claimed and the basis of calculation thereof, and

48.1.1.4 The amount of money, if any, claimed and the basis of calculation thereof.

48.1.2 If, by reason of the nature and circumstances of the claim, the Contractor cannot reasonably comply with all or any of the provisions of Clause 48.1.1 within the said period of 28 days he shall:

48.1.2.1 Within the said period notify the Engineer in writing of his intention to make the claim and comply with such of the requirements of Clause

48.1.1 as he reasonably can,

48.1.2.2 Deliver to the Engineer in writing such additional information as the Engineer shall, in writing, reasonably require, and

48.1.2.3 Comply as soon as is practicable with such of the requirements of Clause 48.1.1 as have not been complied with.

48.1.3 If the events or circumstances relating to the claim are of an ongoing nature, the Contractor shall, each month, deliver to the Engineer in writing updated particulars required in terms of Clauses 48.1.1 and 48.1.2 and submit his final claim within 28 days after the end of the events or circumstances.

48.2 If, in respect of any claim, the Contractor did not comply with the provisions of Clause 48.1 because he was not and could not reasonably have been aware of the implications of the facts or circumstances concerned, the period of 28 days referred to in Clause 48.1 shall commence to run from the date when he should reasonably have become so aware.

48.3 In order that the extent and validity of claims in terms of this Clause may be properly assessed when they are submitted, the following provisions shall apply:

48.3.1 All facts and circumstances relating to the claims shall be investigated as and when they occur or arise. For this purpose the Contractor shall deliver to the Engineer records, in a form approved by the Engineer, of all the facts and circumstances which the Contractor considers relevant and wishes to rely upon in support of his claims, including details of all Construction Equipment, labour and materials relevant to each claim. Such records shall be delivered

promptly after the occurrence of the event giving rise to the claim concerned.

48.3.2 The Engineer may record such facts and circumstances, additional to those recorded by the Contractor, as he considers relevant and the Contractor shall, for this purpose, supply the Engineer with all the information which he may require.

48.3.3 The Engineer and the Contractor shall, at the time of making the record in terms of Clauses 48.3.1 and 48.3.2, set out in writing, signed by each of them and delivered to the other of them, their respective agreement or disagreement as to the correctness of the matters recorded.

48.3.4 Each record on an agreed fact in terms of Clause 48.3.3 shall in any dispute be conclusive evidence of the fact concerned.

48.3.5 For the purpose of this Clause, information arising from a technical investigation or analysis undertaken after the events giving rise to the claim have occurred shall not be regarded as facts or circumstances required to be recorded in terms of this Clause.

48.3.6 The Employer, the Engineer and the Contractor shall not in any proceedings in accordance with Clause 58 be entitled to give or lead evidence of or rely on any fact or circumstance not recorded in terms of this Clause unless the other party to the dispute is not prejudiced by such non-recordings of the facts.

48.4 If. in respect of any claim to which this Clause refers. the Contractor fails to comply with the 28 day notice period in Clause 48.1. as read with Clause 48.2. the Due Date of Completion shall not be extended. the Contractor shall not be entitled to additional payment. and the Employer shall be discharged of all liability in connection with the claim.

48.5 Unless otherwise provided in the Contract, the Engineer shall, within 28 days after the Contractor has delivered his claim in terms of Clause 48.1 as read with Clause 48.2, give effect to Clause 2.2 and deliver to the Contractor and the Employer his written ruling on the claim (referring specifically to this Clause), and the amount, if any, thereof allowed by the Engineer shall be included to the credit of the Contractor in the next payment certificate,

Provided that:

48.5.1 The said period of 28 days may be extended if so agreed between the Contractor and the Engineer, and

48.5.2 If, before the Engineer's ruling on the whole claim, any amount thereof shall have been established to his satisfaction, that amount shall be included to the credit of the Contractor in the next payment certificate."

THE ARGUMENTS

20. The main argument for Appellant was that the Court a quo ought to have found that Respondents failed to meet the requirements of Clause 48. Appellant argued that the court a quo erred in not considering that Clause 48.3 envisages a mandatory process of contestation between the contractor, on the one hand, and the employer represented by the engineer on the other aimed at assessing the extent and validity of the contractor's extension of time claims. {The "claim" pleaded in replication most certainly did not comply in any way with Clause 42 and 48.)

21. It was emphasised that the mandatory processes of Clause 48.3 are designed for the protection of the Employer {Appellant). Appellant contended (in my view correctly) that Clauses 48.3.1, 48.3.2 and 48.3.3 were flouted in that no record with agreed and disputed fact signed by the contractor and engineer on behalf of the employer was written. That constituted a material non-compliance in that the purpose of those clauses were defeated. {The "claim" pleaded in replication most certainly did not comply in any way with Clause 42 and 48.)

22. More importantly, Appellant argued that the Court a quo erred in not taking into account the fact that the engineer did not give a ruling pursuant to the contestation process contemplated by Clause 48.

23. Respondents contend that by implication, the parties abandoned the elaborate prescripts of Clause 48 because it was impossible to comply with. It was submitted that because the contractor and the consulting engineer was one entity, Mr du Plessis would be obliged to submit claims to himself and be the judge in his own cause. (This was in any event not pleaded in any way at all either in the Particulars of Claim or Replication.)

24. Respondents submitted further, that because Appellant had directed that the contractor submit a revised variation order, the prescripts of Clause 48 were waived. (Neither waiver nor Estoppel was pleaded by Plaintiff.)

25. Respondents relied on Mr du Plessis' testimony that he as engineer, exercised his discretion to grant an unlimited extension of time as foreseen in the introductory paragraph of Clause 48. It is common cause that when the problems with the hard rock emerged, the joint venture was instructed to submit a variation order and a revised variation order. This aspect was also strongly relied on but not pleaded.

DISCUSSION

26. Respondents' entitlement to succeed in respect of either their standing time claim or the additional legal costs claim turns on an interpretation of the relevant clauses of the GCC. It is apparent from Variation Order no. 1 (1 March 2011) that both Clause 1.3 and 1.4 relate not to the increase in hard rock and work occasioned directly thereby which was paid, but to the extension of time claims. This was common cause. This brings into operation Clause 42 and 48, requiring a claim in terms of Clause 42 in

accordance with Clause 48 as appears hereafter.

27. The principles applicable to interpreting the relevant provisions in a contract have now been settled by the Supreme Court of Appeal[1] • The judgment in Natal .Joint Municipal Pension Fund v Endumeni Municipality[2] encapsulated the present approach to the interpretation of legislation and documents:

"Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. A sensible meaning is to be preferred to one that leads to insensible or unbusiness like results or undermines the apparent purpose of the document."

(Emphasis added)

28. For purposes of this appeal, Mr Rorke, for Appellant correctly summarised the aforesaid by referring to the three elements of the unitary process of interpretation. These are:

28.1. Consideration must be given to the language used in the light of the ordinary rules of grammar and syntax, but there is no slavish adherence to the language;

28.2. This is so because in considering the language used, regard must be had to the apparent purpose of the provision under consideration; and

28.3. Regard must also be had to the context of the provision in question.

29. The contract in question is rather unusual. It is a building contract concluded by Appellant, as employer, and by Respondents, as contractor. Respondents, however, were a joint venture. One of the members of the joint venture contract, is the first respondent. No engineer was formally appointed but according to all the evidence, the first respondent acted as engineer on the project. This placed the first respondent in a difficult position. It was both contractor (as part of the joint venture, and duty bound to advance the joint venture's interests, as contractor) and as engineer it was charged with the fiduciary obligation to act only in the interests of the employer, Appellant.

30. In the present situation, the engineer is the employer's agent. I was referred to the work of P A Ramsden, McKenzie's Law of Building and Engineering Contracts and Arbitration. There it was stated that “(t)he engineer's contractual duty is to the

•

employer and not to the contractor"[3] The fiduciary duty owed by an agent to his principal was examined, albeit in a slightly different context, in Phillips v Fieldstone Africa (Pty) Ltd and Another[4] The fiduciary is required to act with the utmost good faith towards his principal and to act only in the interests of his principal. The first respondent therefore was obliged throughout to represent the interests of Appellant and always to act in Appellant's best interest, - and not that of the contractor.

31. The extension in time claims arose from the issues mentioned in the variation order which the joint venture was advised to submit when the question of additional toilets arose. Items 1.3 and 1.4 of the variation order deal with extensions in time which as I have said ought to have been dealt with in terms of Clause 48 of the GCC. Ms Nandi Sakube, who was in charge of the day to day administration of the contracts at the joint venture advised the joint venture that "Ayanda said we must submit a request for an extension of time for project duration, and a Variation Order for the additional number of pits". Mr Ayanda Skwebu was one of Appellant's officials who liaised with the joint venture about several aspects of the work done on the project. I am unconvinced that the parties believed that a variation order would cover the claims for extensions of time. The distinction between the two procedures was understood by all parties.

32. The interpretation of the clauses under discussion presents no difficulty in context. In terms of the GCC, an engineer plays a vital and pivotal role in any extension of time claim advanced by a contractor. In circumstances such as the present, therefore, where the first respondent wore two hats - as both engineer and as a member of the contractor - it was incumbent upon the first respondent to ensure that the procedures in the GCC, relevant to extension of time claims (Clause 48) were strictly adhered to. In the present matter there was no such adherence. The position of Mr Du Plessis was somewhat schizophrenic as Mr Rorke described and therefore, in order to protect the employer (Appellant) the prescripts of Clause 48 were required to have been followed. The fact that the engineer has to apply for the extension claims at the behest of the contractor, was not a bar to compliance with Clause

33. Mere notification of the extension of time claims is insufficient and in finding that the Variation Order was sufficient, the court a quo erred. The contestation process sought in Clause 48 is of the utmost importance because it allows for the employer to scrutinise the claims in its own interests and ultimately the interests of the ratepayers of East London. There was most certainly no compliance with Clause 48 in any acceptable way. Waiver thereof or estoppel were not pleaded in any way. Clause 48.4 is unequivocal that a failure to comply with Clause 48.1 and 48.2 prevents any time extension relevant and absent compliance no additional payment can be claimed and the employer is discharged of ..all liability in connection with the claim". Accordingly, the joint venture is not entitled to payment of its extension of time claims.

THE CLAIM FOR ADDITIONAL LEGAL COSTS

33. Clause 58.2.9 states that each party shall bear its own costs arising from mediation "irrespective of the mediator's opinion." The court a quo held that the aforesaid clause is only operative in the event of there being an opinion of some kind. The language of the clause does not permit such an interpretation. Mediation is process undertaken by consent, even though the purpose of the clause in question is to encourage parties to resolve their disputes by means of mediation without the spectre of an adverse cost order. That purpose would be defeated if one party is permitted an adverse cost order against the party who did not participate in the mediation by choice. In the circumstances, the joint venture was not entitled to these costs.

COSTS

34. Appellant produced a voluminous record of which only half was relevant for purposes of this appeal. Mr Rorke properly conceded that Appellant would not be entitled to the costs associated with perusal of certain volumes as specified in the order below.

35. Further as Appellant conceded a small portion of the claim during trial and as the Special Plea was bad, Respondents should have their costs on the Magistrate's Court scale only.

36. In the circumstances, the following order is made:

1. The appeal is upheld with costs on appeal save for the costs incurred for the perusal of Volumes 4 (pages 373 - 404), 11 (pages 118 - 203) and Volumes 16 - 24.

2. The order of the Court a quo is substituted with the following: "2.1 The Defendant is to pay the plaintiffs:

2.2.1 In their capacity as the Joint Venture, the amount of R8500.00 in respect of the claim for the Joint Venture's mediation costs.

2.2.2 Interest payable on the aforesaid amount, calculated at the legal rate from date of summons to date of payment.

2.2.3 Cost of suit on the Magistrates' Court scale, including the costs of preparation of the special plea of prescription.".

E REVELAS

Judge of the High Court

LOWE J

I agree.

MJ LOWE

JAJI J

NP JAJI

Appearances:

For the Appellant: Adv SH Cole

Instructed by: Wesley Pretorius & Associates Inc, East London

c/o Netteltons Attorneys, Grahamstown

For the Respondents: Adv S C Rorke SC

Instructed by: Don

Maree Attorneys, East London

Date heard: 16 April 2019

Date delivered: 20 September 2019

[1] See: Bothma-Batho Transport (Edms) Bpk v Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA)

[2] 2012 (4) SA 593 (SCA) at paragraph 18

[3] 7th Edition, page 161, paragraph 10. 2

[4] 2004 (3) SA 465 (SCA) at paragraph [30]