David Emerkwuru Civil and Building Construction CC v MEC Department of Public Works (Provincial Government) North West Province (1746/2011) [2012] ZANWHC 52 (24 May 2012)

NORTH WEST HIGH COURT, MAFIKENG

CASE NO. 1746/2011

In the matter between:

DAVID EMERKWURU CIVIL & BUILDING

CONSTRUCTION CC ..................................................................................PLAINTIFF

and

MEC FOR DEPARTMENT OF PUBLIC WORKS (PROVINCIAL

GOVERNMENT)

NORTH WEST PROVINCE .............................................DEFENDANT

________________

JUDGMENT

GUTTA J.

A.

INTRODUCTION

[1] This is an application for summary judgment in terms of which the plaintiff seeks the following:

1.1 Payment of R2 514 684.79;

1.2. Interest on the above at the rate of 15.5% from 18 November 2010 to final payment;

1.3 Costs on an attorney and client scale.

B.

FACTS

[2] The defendant, on 13 August 2007, appointed the plaintiff as a building contractor for the construction of the Hebron Clinic.

[3] The initial contract price was R7 229 145.84.

[4] Due to the geological condition of the building site, further bulk earthwork had to be undertaken by the plaintiff.

[5] The plaintiff submitted an account for this additional work in the amount of R2 514 684.79.

C.

POINTS IN LIMINE

[6] The defendant raised two points in limine, namely:

6.1. Non-compliance with Section 3 of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002. This ground was correctly so abandoned by the defendant’s counsel at the hearing.

6.2. Lack of jurisdiction – This ground will be dealt with hereinbelow.

Lack of Jurisdiction

[7] Mr Manyage, counsel for the defendant, referred the Court to Clause 40 of the building agreement concluded between the parties. He contended that the dispute was referred to mediation in terms of Clause 40.7 and as the mediation did not culminate in a settlement,

the next step for the plaintiff was to refer the matter to adjudication in terms of the JBCC rules and that the adjudicator’s

decision will be final and binding. He submitted that this Court accordingly has no jurisdiction.

[8] Mr Maree, for the plaintiff, submitted that the parties could refer the matter for mediation or arbitration and if mediation failed, the common law would apply and either party could approach Court.

[9] Clause 40.6 states clearly that the provisions of Clauses 40.2 to 40.5 shall not be construed as a waiver of the parties’

entitlement to resolve the dispute by mediation at any time. Further, neither Clause 40.1 nor 40.4 are couched in peremptory terms and the plaintiff had a choice to give notice to resolve a disagreement and refer the matter to adjudication and then arbitration or to refer the matter to mediation. The parties elected to refer the matter to mediation.

[10] The referral to mediation did not result in any settlement. The parties were not obliged, in terms of the said agreement, to refer the matter for further adjudication or arbitration.

[11] The fact that the plaintiff referred the matter to mediation in terms of the building contract did not exclude or prohibit the plaintiff from seeking recourse against the defendant in the courts.

[12] I am of the view that this Court has jurisdiction to hear the matter and accordingly dismiss the defendant’s point in limine.

D.

LIQUIDATED AMOUNT

[13] The defendant raised the defence that the plaintiff’s claim is not for a liquidated amount in money.

[14] Before this Court delves into the merits, it is necessary to determine whether the plaintiff’s claim is for a liquidated

amount in money.

[15] Mr Manyage contended that the plaintiff’s claim is not a liquidated amount in money in that it is neither based on an

obligation to pay an agreed sum of money nor is it expressed in such a way that the ascertainment of the defendant’s alleged

indebtedness is simply a matter of mere calculation in that this Court cannot determine as to how the amount of R2 514 684.79

was arrived at.

[16] Mr Manyage referred the Court to the case of Fatti’s Engineering Co. Ltd v Vendick Spares 1962 (1) SA 736 (T) at 738E–F, where Boshoff J held that:

“A debt must be liquid in the sense that it is based on a liquid document or is admitted or its money value has been ascertained, or in the sense that it is capable of prompt ascertainment. The decision as to whether a debt is capable of speedy ascertainment is a matter left to a particular judge in each particular case.”

[17] He submitted that the decision in Fatti’s Engineering Co. Ltd v Vendick Spares supra was premised on the view that necessary factors for the ascertainment of the sum due were actually in existence: current reasonable

remuneration for the work done and the current market price for the materials supplied were known and from this information, the sum due could be readily ascertained.

[18] Furthermore, he submitted that the amount claimed by the plaintiff is not a matter of mere calculation as it involves an enquiry as to the nature and extent of the services rendered as well as the reasonableness of the fees charged by the plaintiff in respect of the bulk earthworks.

[19] In addition to the above, he contented that there is no indication that the final account as claimed was issued by the principal agent as required by Clause 34.1 of the building agreement and neither is the final certificate issued by the principal agent as prescribed by Clause 34.5 of the said building contract concluded between the parties.

[20] The defendant alleged that the plaintiff failed to furnish the defendant with a payment certificate signed by the following people:

20.1 the contractor;

20.2 the quantity surveyor;

20.3 the principal agent;

20.4 the architect; and

20.5 the project manager.

[21] Mr Manyage also denied that the mediator and arbitrator accepted that the valuation of the final account in relation to the bulk earthworks was the amount of R2 514 684.97 and submitted that:

21.1 no arbitration in respect of the disputed amount ever took place;

21.2. the mediator only made certain recommendations but did not specify the amount for which the defendant was allegedly liable to pay the plaintiff.

[22] Mr Maree submitted that the amount claimed is ascertainable and can be easily calculated. He relied on guidelines to calculate the quantum on page 20 of the principal building agreement.

[23] The Court brought it to Mr Maree’s attention that page 20 was not attached to the papers before Court. Mr Maree undertook to make same available but has to date failed to provide the Court with the relevant pages.

Analysis

[24] Under Rule 32(1), the plaintiff may apply for summary judgment on a:

24.1 liquid document;

24.2 liquidated amount in money;

24.3 for delivery of specific movable property; or

24.4 for ejectment.

[25] In Botha v W Swanson & Company (Pty) Ltd 1968 (2) PH F85 (CPD), Corbett J put the test as follows:

“A claim cannot be regarded as one for ‘a liquidated amount in money’ unless it is based on an obligation to pay an agreed sum of money or is so expressed that the ascertainment of the amount is a mere matter of calculation.”

[26] In Tredoux v Kellerman 2010 (1) SA 160 (CPD) at 166E–F, the Court held that:

“A liquidated amount in money is an amount which is either agreed upon or which is capable of ‘speedy and prompt ascertainment’

or put differently, where ascertainment of the amount in issue is mere matter of calculation. In my view the Plaintiff’ claim

does not fall into this category: they involve an enquiry into the nature and extent of the professional services rendered, the

reasonableness of the fees charged, and so on. These are not mere matters of calculation; they are matters of taxation, which fall

within the compass of duties of the taxing master. It is that official, and not the court, who must determine the reasonableness of the professional fees charged by the legal practitioners.”

[27] There was a conflict of opinion in our Courts whether a claim founded on quantum meruit should be treated as a liquidated amount of money. There appears, however, to be more consensus that claims for an amount for work and labour done and material supplied should be treated as a liquidated amount of money. See S Dreyer & Sons Transport v General Services 1976 (4) SA 922 (C).

[28] However, the Court when exercising its discretion in determining whether work done and material supplied is a liquidated amount,

starts on the premise that factors necessary for the ascertainment of the sums due were actually in existence, other current reasonable

remuneration for the work done and the current market price for the material were known and from this the sum can readily be ascertained.

[29] The Court must not look only at the summons in deciding whether a claim is for a liquidated amount of money but the opposing affidavit must be taken into account. See Neves Building & Decorators v De La Cour 1985 (1) SA 540 (C) at 543C–544F; Tredoux v Kellerman supra at 166G.

[30] If, from the defence disclosed, it appears to the Court that proof of the claim may be protracted and difficult rather than prompt, this is a factor which may be taken into account in deciding whether or not a claim is liquidated. See Neves Building & Decorators v De La Cour supra at 544G; Tredoux v Kellerman supra at 166G–167A.

[31] The plaintiff in his particulars of claim alleged that:

“10. The valuation of the final account for the bulk earthworks amounted to R2 514 684.79 which amount was accepted by the arbitrator and mediator appointed to mediate the extra costs. A copy of the report is attached Marked “B”.

11. The Plaintiff provided a final account to the Defendant on 18 November 2010, as per the mediator recommendations.”

[32] It is common cause that the matter was not referred to arbitration but only for mediation. The recommendation of the mediator is that the contractor is entitled to further compensation on the earthworks.

[33] The amount of compensation to be paid had at that stage not been calculated. In so far as the calculation of the amount is concerned, the mediator recommended the following:

“. . . . .

2. The quantity surveyor to urgently prepare a draft final account including revised final bills quantities (BoQ) that would incorporate

all the variation items. The civil / structural engineer should avail relevant information relating particularly to earthworks on the entire site to facilitate the assessment of accurate quantities for earthworks. The contractor should be given the opportunity to view and comment on the revised BoQ, as the contractor is entitled to further compensation on the earthworks.”

[34] What the plaintiff presented to Court is not a draft final account, including revised bill of quantities prepared by the quantity

surveyor in accordance with the mediator’s recommendations. Also, there is no proof that a civil/structural engineer made

relevant information available to facilitate the assessment of quantities for earthworks as recommended.

[35] In the covering letter of the final account attached to the plaintiff’s particulars of claim, the plaintiff stated:

“As per the meeting last week, David Emekwuru Building cc prepared a final account on the bulk earthworks at the above clinic. As per the discussions, the whole site was divided into three portions of excavations and back filling with new imported fill materials. These engineering drawings only came after site hand over, when the soil problem appeared with groundwater visible. Attached to follow photographs.

A full and comprehensive exercise was compiled to determine the extra over cost of R1 711 419.82 as an addition to payment

certificate # 19.

The full and final account payment for all works rendered at Hebron Day Clinic amounts to R2 514 684.79 (VAT Incl).”

[36] What can be gleaned from the aforesaid letter is the following:

36.1. the extra cost arising from the additional earthworks was R1 711 419.82 and not R2 514 684.79 (VAT Incl.);

36.2. the final account was prepared by the plaintiff and not by the principal agent.

[37] When determining whether the amount is capable of speedy and prompt ascertainment, the mediator’s comments in his report under the heading interim valuation is noted, namely:

“Apart from the infrequencies of interim valuations and certifications, the valuations reflected changes in the scope of the work and materials on site, even though the exact quantities and resultant value of additional items or changed scope are contested. The quantity surveyor is expected to calculate fair valuation for work done and is not obliged to accept the contractor’s assessment. . . .”

(Own emphasis)

[38] Hence, the above explains the mediator’s recommendation that a quantity surveyor prepare a final draft, including revised final bills quantities and that a civil structural engineer avail information on earthworks to facilitate the assessment of accurate

earthworks.

[39] The final account submitted by the plaintiff is neither a final account as provided in the building contract nor in terms of the mediator’s recommendation, which recommendation the plaintiff relies upon in its particulars of claim. The factors necessary for the ascertainment of the sum due are not known and can accordingly not be readily ascertained. See Blakes Maphange Inc v Outsurance Insurance Co. Ltd 2010 (4) SA 232 (SCA) at 240D–241C.

[40] I am accordingly of the view that the plaintiff’s claim is not capable of speed and prompt ascertainment. In the circumstances, the plaintiff could not rely on a liquidated amount in money to obtain summary judgment.

[41] In the circumstances, it is not necessary for me to consider the merits of the application.

D.

ORDER

[42] Accordingly, I make the following order:

a) The application for summary judgment is dismissed.

b) The applicant is ordered to pay the costs.

_____

N. GUTTA

JUDGE OF THE

HIGH COURT

APPEARANCES

DATE OF HEARING : 10 MAY 2012

DATE OF JUDGMENT : 24 MAY 2012

COUNSEL FOR PLAINTIFF : ADV G. MAREE

COUNSEL FOR DEFENDANT : ADV T.K. MANYAGE

ATTORNEYS FOR PLAINTIFF : MAREE & MAREE ATTORNEYS

(Instructed by KRISHNEE PILLAY ATTORNEYS)

ATTORNEYS FOR DEFENDANT : THE STATE ATTORNEY