Nucon Construction Thaba Nchu (Edms) v Scholtz NO (A2/2010) [2010] ZAFSHC 141 (8 November 2010)
- Citation
- [2010] ZAFSHC 141
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Free State High Court, Bloemfontein
- Panel
- Hancke, R, Mocumie, R, Matlapeng, WND R
- Case number
- A2/2010
More details
- Court
- Free State High Court, Bloemfontein
- Panel
- Hancke, R, Mocumie, R, Matlapeng, WND R
- Case number
- A2/2010
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The court found that the engineer's interim certificate, issued in accordance with the contract and supported by the Bill of Quantities, created a binding obligation on the respondent to pay the certified amount to the appellant. The absence of a written variation order did not invalidate the claim, as the Bill of Quantities and the engineer's certificate constituted sufficient written instruction for the additional work. The disputes raised by the respondent did not amount to genuine disputes of fact capable of defeating the appellant's claim. There was no evidence of fraud, collusion, or the engineer acting outside his mandate. Accordingly, the respondent was obliged to honour the interim certificate and make payment as certified.
Court disposition
Appeal upheld with costs. The order of the court a quo is set aside and replaced with an order in favour of the appellant as per prayers 1, 2, and 3 of the Notice of Motion.
Orders
- The appeal succeeds with costs.
- The order of the court a quo is set aside.
- An order is granted in favour of the applicant in terms of prayers 1, 2, and 3 of the Notice of Motion.
02
Material facts
Parties
Nucon Construction Thaba Nchu (Edms)
Appellant Counsel: Adv. Paul Zietsman SCAndrew George Scholtz N.O.
RespondentAmounts and remedies
- Certified Amount Due Under Engineer's Certificate: ZAR 222,205.61
03
Procedural history
Posture
Civil Appeal / Appeal From Dismissal of Application for Payment Under Subcontract
04
Questions and positions
Legal issues
- 01
Whether the engineer's certificate issued under the contract created a binding obligation for payment by the respondent to the appellant.
- 02
Whether the absence of a written variation order invalidated the claim for additional work certified by the engineer.
- 03
Whether the disputes raised by the respondent constituted genuine disputes of fact justifying dismissal of the application.
Party arguments
- Applicant
- The appellant argued that the engineer's interim certificate, issued in terms of clause 49 of the General Conditions of Contract for Construction Works (2004), certified the amount of R222,205.61 as due and payable for additional work performed. The appellant maintained that the Bill of Quantities attached to the reply constituted written instruction from the engineer, acting as agent for the respondent, for the execution of the additional work. The appellant further contended that the respondent was contractually obliged to pay the certified amount within 28 days of receipt, and that the absence of a formal variation order did not negate the binding nature of the engineer's certificate.
- Respondent
- The respondent contended that there was a dispute as to whether the certificate was interim or final, and whether it was issued in accordance with the contract. The respondent argued that, in the absence of a written variation order, the appellant was not entitled to payment for additional work not provided for in the Bill of Quantities, unless specifically authorised in writing by the client. The respondent also disputed whether the Bill of Quantities attached was the same as that referenced in the contract, and denied knowledge of any written instruction for the additional work, although he conceded that some additional work was performed.
05
Court’s reasoning
Legal principles
- 01
SMITH v MOUTON 1977 (3) SA 9 (W) at 13A-G
The employer is bound by the act of his agent in issuing a payment certificate, unless there is fraud, collusion, or the agent exceeded his mandate.
- 02
DAWNAYS LTD v F.G. MINTER LTD (1971) 2 ALL E.R. 1389 (C.A.) at 1393b
An interim certificate is to be regarded virtually as cash and must be honoured; payment must not be withheld except as specifically provided by contract.
- 03
SHELFAERIE PROPERTY HOLDINGS v MIDRAND SHOPPING CENTRE 1995 (3) SA 187 (A) at 193B-C
The employer is not entitled to dispute the validity of a final certificate vis-à-vis the contractor merely because he alleges negligence or wrongful exercise of discretion by the architect or engineer.
06
Ratio, limits and disposition
Ratio decidendi
The court found that the engineer's interim certificate, issued in accordance with the contract and supported by the Bill of Quantities, created a binding obligation on the respondent to pay the certified amount to the appellant. The absence of a written variation order did not invalidate the claim, as the Bill of Quantities and the engineer's certificate constituted sufficient written instruction for the additional work. The disputes raised by the respondent did not amount to genuine disputes of fact capable of defeating the appellant's claim. There was no evidence of fraud, collusion, or the engineer acting outside his mandate. Accordingly, the respondent was obliged to honour the interim certificate and make payment as certified.
Obiter and limits
- The completion status of the additional work was irrelevant to the interim payment claim, as only interim payment was at issue.
- The engineer, as agent of the employer, did not provide any evidence contradicting the appellant's version, and the respondent's denial was inconsistent with the documentary evidence.
Court disposition
Appeal upheld with costs. The order of the court a quo is set aside and replaced with an order in favour of the appellant as per prayers 1, 2, and 3 of the Notice of Motion.
- The appeal succeeds with costs.
- The order of the court a quo is set aside.
- An order is granted in favour of the applicant in terms of prayers 1, 2, and 3 of the Notice of Motion.
Source and reliance status
Free State High Court, Bloemfontein
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Free State High Court, Bloemfontein
Judgment
VRYSTAATSE HOË HOF, BLOEMFONTEIN
REPUBLIEK VAN SUID-AFRIKA
Appélnommer : A2/2010
In die appél van:-
NUCON CONSTRUCTION THABA NCHU (EDMS) .................Appellant
en
MNR ANDREW GEORGE SCHOLTZ N.O. ..........................Respondent
CORAM: HANCKE, R et MOCUMIE, R et MATLAPENG, WND R
AANGEHOOR OP: 8 NOVEMBER 2010
_____________
UITSPRAAK DEUR: HANCKE, R
GELEWER OP: 8 NOVEMBER 2010
[1] Hierdie is ‘n appèl gerig teen ‘n uitspraak van Molemela, R wat die appellant (applikant in die hof a quo) se aansoek van die hand gewys het met koste, nadat sy verlof verleen het om na die volbank van hierdie afdeling te appelleer.
[2] Appellant het ‘n aansoek onder saaknommer 1757/2009 uitgereik teen die respondent vir die betaling van ‘n bedrag van R222 205,61 tesame met rente en koste van die aansoek, welke aansoek voortspruit uit ‘n subkontrakteurskontrak, in terme waarvan die applikant sekere werk vir die respondent moes verrig te Kimberley, welke projek vir eksterne dienste was ten aansien van “Barkley Road Shopping Complex”.
[3] Dit is belangrik om daarop te let dat die appellant se skuldoorsaak gebaseer is op ‘n ingenieursertifikaat, uitgereik op 14 Februarie 2008 in terme waarvan hy gesertifiseer het dat die bedrag verskuldig deur die respondent aan die applikant R222 205,61 beloop.
[4] Dit is gemene saak tussen die partye dat die applikant aangestel was as die subkontrakteur ten aansien van eksterne werk ten aansien van die gemelde projek, dat die kontrak wat tussen die partye sou geld en wat die aangeleentheid sou beheer, die spesiale voorwaardes van die kontrak was, gelees met die algemene kontraksvoorwaardes soos vervat in die “General Conditions of Contract for Construction Works (2004) (First Edition)”; dat die sertifikaat ter betaling deur die ingenieur uitgereik is in terme van klousule 49 van die algemene kontraksvoorwaardes. Verder is dit belangrik dat die ingenieur die agent was van die respondent.1 Dit is gemene saak dat die sertifikaat wat uitgereik is as interim betaling sertifikaat vir addisionele werk was wat deur die ingenieur aan die appellant opgedra is en dat die respondent verplig was tot betaling van die appellant, as kontrakteur, van die gemelde bedrag gesertifiseer in die sertifikaat ooreenkomstig klousule 49.4 van die algemene kontrakvoorwaardes, en wel binne 28 dae na ontvangs daarvan deur die werkgewer. Verder het die appellant ‘n belastingfaktuur uitgereik op dieselfde datum as die datum van die sertifikaat, synde 14 Februarie 2008, aan die respondent vir betaling van die bedrag gesertifiseer, dit wil sê R222 205,61.
[5] Die hof a quo het die aansoek van die hand gewys met koste, welke bevinding daarop gebaseer was dat die volgende wesenlike feitegeskille bestaan het:
5.1 Eerstens, dat daar ‘n dispuut was of die sertifikaat ‘n interim of finale sertifikaat was;
5.2 Tweedens, aangesien daar nie ‘n wysigingsopdrag was nie, daar ‘n dispuut was of die sertifikaat wat uitgereik is, geskied het in terme van die ooreenkoms tussen die partye al dan nie.
5.3 Derdens, is bevind dat klousule S1(d) van die spesiale kontraksvoorwaardes nie die appellant geregtig maak op betaling vir addisionele werke waarvoor nie voorsiening gemaak is in die “Bill of Quantities” nie, tensy skriftelike magtiging by wyse van wysigingsopdrag vanaf die kliënt verkry is nie. Hiermee saam dat klousule S1(z) gelees met die “Bill of Quantities”, wat by die repliek aangeheg is, nie dieselfde “Bill of Quantities” is soos bedoel in klousule S1(d) van die spesiale kontraksvoorwaardes nie.
[6] Dit blyk egter dat die “Bill of Quantities”, wat aangeheg is by die repliek, aanduidend daarvan is dat dit ‘n skriftelike opdrag aan die appellant verteenwoordig vanaf die ingenieur vir die volvoering van die addisionele werke. Dit word verder bevestig deur die inhoud van die sertifikaat wat deur die ingenieur uitgereik is. Verder is die betalingsertifikaat wat uitgereik is klaarblyklik ‘n interim betalingsertifikaat en nie ‘n finale betalingsertifikaat nie. Dit blyk verder duidelik uit die stukke dat die appellant skriftelik vir betaling versoek het by wyse van die uitreiking van ‘n belastingfaktuur aan die respondent.
[7] Ten opsigte van die vraag of die addisionele werk voltooi is, is dit tans nie ter sake nie, aangesien hier slegs ‘n “interim payment” ter sprake was. Dit is verder gemene saak tussen die partye dat daar ook nie sprake was van ‘n “variation order” nie.
Wat betref skriftelike kennisgewing soos bedoel in S1(z) is dit belangrik om daarop te let dat die respondent self meld dat die sertifikaat verwys na addisionele werk wat verrig moes word.2
[8] Ten opsigte van die bevinding dat daar nie ‘n wysigingsopdrag was nie, verklaar die respondent die volgende:
“Sover my kennis strek is daar geen geskrewe wysigingsopdrag uitgereik vir hierdie werk nie. Ek ontken egter nie dat addisionele werk verrig moes word en gedeeltelik wel gedoen is nie.”
[9] Daar is geen twyfel dat die “Bill of Quantities” inderdaad skriftelike kennisgewing aan die appellant daarstel vir die verrigting van addisionele werk deur die ingenieur. Verder is die sertifikaat wat uitgereik is deur die ingenieurs ooreenkomstig klousule 1(z) van die ooreenkoms betrekking het op “Additional work”. Dit is ook klaarblyklik die houding van die ingenieur synde die respondent se agent, wie die interim betalingsertifikaat uitgereik het. Die respondent bevestig dat daar addisionele werk gedoen moes word, maar beweer dat sover sy kennis strek, daar geen gewysigde opdrag was nie, welke bewering strydig is met die inhoud van die sertifikaat van die ingenieur, synde die respondent se agent. Dit is belangrik om daarop te let dat die betrokke ingenieur geen verklaring afgelê het, namens die respondent, ter stawing van die respondent se weergawe in die huidige saak nie.
[10] Wat die regsposisie betref, word dit volledig mee gehandel in SMITH v MOUTON 1977 (3) SA 9 (W) te p. 13 A – G:
“2. The employer should be bound by the act of his agent in issuing a certificate. The position is the same as if the employer himself had signed an acknowledgment of debt. The exceptions are those that apply generally in the law of agency. For example, the employer will not be bound if there has been fraud or the architect has acted in collusion with the contractor to the detriment of the employer..... The employer will also not be bound if the agent has exceeded his mandate..... In Rudland's case3 the engineer issued certificates that were not drawn up in accordance with the terms of the written contract between the parties, but in terms of an oral variation made by the engineer, which he was not authorised to make. The relevant certificates were therefore held to be invalid.
3. The employer is not entitled to dispute the validity of a final certificate vis-à-vis the contractor merely because he alleges that the certificate was given negligently or that the architect exercised his discretion wrongly. This principle would include cases where the architect has issued final certificates for work which the employer considers to be defective or which are based on faulty measurements or faulty calculations..... Subject to what is said below, the same principle would appear to apply in the case of an interim or progress certificate.
4. In the absence of any of the factors referred to in para. 2, the employer is bound to pay the sum certified. This is why in the cases an architect's certificate has been said to create a debt due and has been said to be regarded as the equivalent of cash.”4
Gemelde beslissing word bevestig en goedgekeur op appèl in MOUTON v SMITH 1977 (3) SA 1 (A) veral te 8 G. Sien ook SHELFAERIE PROPERTY HOLDINGS v MIDRAND SHOPPING CENTRE, 1995 (3) 187 (A) te 193 B – C.
[11] In die huidige saak is daar nie sprake van bedrog, of samespanning tussen die ingenieur en die appellant of dat die ingenieur ongemagtig opgetree het nie. Die enigste oorblywende vraag is of die sertifikaat uitgereik is ingevolge die ooreenkoms tussen die partye. Dit is van belang om daarop te let dat dit gemene saak is tussen die partye dat daar inderdaad ‘n kontrak was ingevolge waarvan die respondent opdrag gegee is om as subkontrakteur op te tree ten aansien van sekere werke te “Barkley Road Shopping Complex”. Dit is ook gemene saak dat daar addisionele werk verrig moes word deur die applikant vir die respondent ten aansien van hierdie projek. Verder staan dit vas dat die ingenieur ‘n “Bill of Quantities” uitgereik het vir daardie addisionele werk wat deur die appellant verrig moes word. Gevolglik is die afleiding onafwendbaar dat die betrokke sertifikaat uitgereik is ooreenkomstig die ooreenkoms tussen die partye.
[12] Dit volg dus uit die voorgaande dat die hof a quo fouteer het om die appellant se aansoek van die hand te wys op grond daarvan dat daar sogenaamde feitedispute sou bestaan het.
[13] Bygevolg slaag die appèl met koste. Die hof a quo se bevel word vervang met die volgende:
“’n Bevel word ten gunste van die applikant verleen ingevolge bedes 1, 2 en 3 van die Kennisgewing van Mosie.”
____
S.P.B. HANCKE, R
Ek stem saam.
___
B.C. MOCUMIE, R
______
D.I. MATLAPENG, WND R
Namens die appellant: Adv. Paul Zietsman SC
In opdrag van:
Rossouws Prokureurs
BLOEMFONTEIN
(NUC9/0001-T2 (JHC/AB)
/sp
1Klousule 2 handel met “engineer and engineers representative” en lui klousule 2.1 soos volg: “The function of the engineer is to administer the contract as agent of the employer in accordance with the provisions of the contract.”
2Die respondent verklaar in hierdie verband soos volg: “Dit moet ook uitgewys word dat die betalingsertifikaat aangeheg tot die stukke duidelik verwys na addisionele werk en is dit inderdaad werk wat addisioneel tot die aanvanklike kontrak gedoen moes word.”
3RUDLAND AND SON v GWELO MUNICIPALITY, 1933 S.R. 119 te pp. 130 - 133.
4“An interim certificate is to be regarded virtually as cash, like a bill of exchange. It must be honoured. Payment must not be withheld on account of cross claims, whether good or bad – except so far as a contract specifically provides. Otherwise any main contractor could always get out of payment” (i.e. to a subcontractor) “by making all sorts of unfounded cross claims.” (DAWNAYS LTD v F.G. MINTER LTD (1971) 2 ALL E.R. 1389 (C.A.) te 1393 b).
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