Icon Construction (Pty) Limited v Msunduzi Municipality (10672/2018P) [2019] ZAKZPHC 72 (18 October 2019)

Icon Construction (Pty) Limited v Msunduzi Municipality (10672/2018P) [2019] ZAKZPHC 72 (18 October 2019)

The court found that the contract price of R12 246 791,00 was intended as the subtotal for the first year of a three-year contract, with subsequent years' quantities and values to be confirmed and escalated according to the contract documents. The wording of clause 6.7.1 and the schedule 'PER ADD 1' supported the applicant's interpretation. The payment certificates issued by the engineers were regular and proper on their face and, in the absence of evidence of fraud, collusion, or excess of authority, were binding on the respondent. The respondent failed to discharge the onus to prove that the contract sum was exhausted or that the certificates were invalid. The applicant was therefore...

Citation
[2019] ZAKZPHC 72
Parties
Applicant: Icon Construction (Pty) Limited; Respondent: Msunduzi Municipality
Court
Kwazulu-Natal High Court, Pietermaritzburg
Jurisdiction
South Africa
Judgment Date
18 October 2019
Case Number
10672/2018P
Procedural Posture
Civil Application / Final Judgment
Outcome
Application granted in favour of the applicant; respondent ordered to pay certified amounts, interest, and costs.
Judges
Vahed
Legal Topics
Construction Contracts, Interpretation of Contracts, Payment Certificates, Interest on Overdue Payments
Commercial and Corporate Civil Procedure Construction Contracts Interpretation of Contracts Payment Certificates Interest on Overdue Payments

Case Brief

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Parties

Icon Construction (Pty) Limited

Applicant

Msunduzi Municipality

Respondent

Procedural Posture

Civil Application / Final Judgment

Legal Issues

  1. 1 Whether the contract price of R12 246 791,00 was an annual figure for a three-year contract or a total cap for the entire contract period.
  2. 2 Whether the payment certificates issued by the engineers were valid and binding on the respondent.
  3. 3 Whether the respondent was obliged to pay the amounts certified in the payment certificates, together with interest.

Ratio Decidendi

The court found that the contract price of R12 246 791,00 was intended as the subtotal for the first year of a three-year contract, with subsequent years' quantities and values to be confirmed and escalated according to the contract documents. The wording of clause 6.7.1 and the schedule 'PER ADD 1' supported the applicant's interpretation. The payment certificates issued by the engineers were regular and proper on their face and, in the absence of evidence of fraud, collusion, or excess of authority, were binding on the respondent. The respondent failed to discharge the onus to prove that the contract sum was exhausted or that the certificates were invalid. The applicant was therefore...

Court Disposition

Application granted in favour of the applicant; respondent ordered to pay certified amounts, interest, and costs.

Orders

  • The respondent must pay to the applicant R874 686.50, R254 677.12, and R1 062 232.09.
  • The respondent must pay interest on R874 686.50 and R254 677.12 from 1 August 2017 to date of payment, and on R1 062 232.09 from 1 September 2017 to date of payment, at the rate of 10.25% per annum.