Case Law[2025] ZAWCHC 63South Africa
Tame N.O and Others v Tala Light Weight Construction (Pty) Ltd and Others (6550/2019) [2025] ZAWCHC 63 (24 February 2025)
High Court of South Africa (Western Cape Division)
24 February 2025
Judgment
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# South Africa: Western Cape High Court, Cape Town
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## Tame N.O and Others v Tala Light Weight Construction (Pty) Ltd and Others (6550/2019) [2025] ZAWCHC 63 (24 February 2025)
Tame N.O and Others v Tala Light Weight Construction (Pty) Ltd and Others (6550/2019) [2025] ZAWCHC 63 (24 February 2025)
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sino date 24 February 2025
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IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
Case
Number: 6550/2019
In
the matter between:
MARK
TAME N.O.
First
Plaintiff
ALBERTUS
JOHANNESS NEL VAN NIEKERK N.O
.
Second
Plaintiff
CHRISTOPHER
ERIC HYLAND N.O.
Third
Plaintiff
JOHANNES
PETRUS DU PLESSIS N.O.
Fourth
Plaintiff
and
TALA
LIGHT WEIGHT CONSTRUCTION (PTY) LTD
REGISTRATION
NO.: 2016/472029/07
First
Defendant
ARNOLD
STEYNBERG
Second
Defendant
XBS
ADMINISTRATION (PTY) LTD
(REGISTRATION
NO.:2013/041309/07
Third
Defendant
CWR
TRADING SOUTH AFRICA (PTY) LTD
REGISTRATION
NO.:2013/188471/07
Fourth
Defendant
YVAN
TORIANNINI
Fifth
Defendant
JUDGMENT
MAGARDIE
AJ
Introduction
1.
The plaintiffs in this action are the trustees of
the Chapman’s Bay Development Trust (“the Trust”).
By combined
summons issued on 17 April 2019, the plaintiffs seek
payment of restitutional damages from the defendants arising from
alleged
overpayments made by the Trust to the first defendant. These
payments were made by the Trust pursuant to two Building Contract
Turnkey Solution Agreements (“the building contracts” or
“the agreements”) concluded between the Trust and
the
first defendant on 31 January 2018. The first defendant at the time
was known as AFCO Building Solutions (Pty) Ltd (“AFCO”).
2.
The building contracts provided for the engagement
of AFCO, as the contractor, to construct two freestanding residential
dwellings
on land owned by the Trust at erf 4[...] and erf 4[...]1,
Chapman’s Bay, Cape Town. The dwellings to be constructed would
be within a new housing development known as the Chapman’s Bay
Estate. The contracted amounts for the construction of the
dwellings
were R3 274 419.00 (VAT inclusive) for the dwelling on erf
4[...] and R3 525 417.00 (VAT inclusive)
for the dwelling
on erf 4[...]1.
3.
In addition to their claims for overpayments to
AFCO, the plaintiffs seek payment of construction delay penalties and
an order for
attorney and own client costs as provided for in the
building contracts. A further claim was initially brought by the
plaintiffs
against the second and fifth defendants in their personal
capacities as directors of AFCO. The cause of action so pleaded by
the
plaintiffs was that the second and fifth defendants had conducted
the affairs of AFCO recklessly by failing to execute the
contractually
required works in a proper and workmanlike fashion.
4.
The claims against the second and fifth defendants
on the basis of reckless trading were abandoned at the commencement
of the trial.
The plaintiffs however persist with their claims for
overpayment and penalties against the second, third and fourth
defendants
on the basis of suretyships concluded by these defendants
on 24 August 2018. The second defendant, third defendant and fourth
defendant’s
liability in terms of the suretyships is limited to
a maximum amount of R800.000.00.
5.
The amounts claimed by the plaintiffs from AFCO
are R728 159.66 in respect of the dwelling constructed on erf
4[...] and R828 863.00
in respect of the dwelling on erf
4[...]1. These amounts are alleged to represent the difference
between what the Trust paid AFCO
before the contracts were cancelled
in February 2019 and the value of the work executed by AFCO on the
partially built dwellings
as determined by the plaintiffs’
quantity surveyor. The plaintiffs subsequently performed remedial
work on the dwellings,
however no claim for damages was sought by the
plaintiffs in this regard.
6.
The penalties claim relates to the contractually
stipulated daily penalty payable by AFCO should construction be in
excess of 210
days. The plaintiffs seek payment of a combined penalty
in the amount of R281 250.00. This claim comprises of an amount
of
R86 250.00 with regard to erf 4[...] and R195 000.00 in
respect of erf 4[...]1. It was conceded by AFCO during the trial
that
it was liable for payment of contractual penalties.
The
building contracts
7.
The building contracts at issue were both
concluded on 31 January 2018 between the first plaintiff,
representing the Trust and Mr.
Carel Visagie, representing the first
defendant.
8.
The terms of the building contracts are largely
identical except those relating to the different erfs and the
contract price for
the completion of the works. The terms of the
building contracts, their conclusion and the validity of these terms
is common ground.
I outline below the key provisions of the building
contracts which assumed prominence in the course of the trial.
9.
Clause 1.10 of the building contracts provides
that the works shall comprise the construction of the works described
in the agreement,
“…substantially in accordance with the
plans and specifications referred to in the schedule, the schedule of
PC Items
and in terms of the provisions of this Agreement.”
Clause 2.1 records that the contractor undertook to construct the
works
on the property “…in a proper and workmanlike
manner, substantially in accordance with the agreement.” Clause
5 provides that the construction of the works was to be concluded in
terms of architectural drawings and plans approved by the
local
municipality, which were attached as schedules to the agreements.
10.
Clause 6.1 deals with payment milestones. In terms
of clause 6.1.1, an advance payment of 40% of the agreed contract
price was to
be paid by the Trust to AFCO, of which 10% was payable
on signature of the agreement. The remaining 30% was payable as soon
as
the building plans were approved, whichever date was the earlier.
Subsequent to the conclusion of the building contracts, the Trust
paid AFCO an amount of R1 309 767.00 as the advance payment
in respect of the dwelling to be constructed on erf 4[...].
An amount
of R1 410 167.00 was paid as the advance payment relating
to erf 4[...]1.
11.
The effect of clause 8.1 of the building contracts
became a central point of contention in the course of the trial and
subsequent
argument. This clause provides for the agreed contract
price in respect of the works to be paid to AFCO as contractor “…as
per the confirmation of the QS (quantity surveyor) of the monthly
progress achieved. The contractor shall submit the payment to
the QS
before the 20th of each month. Payment by the employer will be made
into the contractors account and only after confirmation
of the
progress that has been reached for the month by the QS to the
employer. The determination of the QS shall be final and binding
on
the parties.”
12.
Clause 11 of the building contracts deals with
their termination. In terms of clause 11.1, should AFCO as the
contractor be in material
default of any of its obligations in terms
of the agreement, the Trust was entitled to notify AFCO thereof in
writing and thereafter
entitled to terminate the agreements should
such default continue for a further period of 14 days. In that event,
the Trust would
be entitled to employ others to complete the works.
The clause goes on to provide that “…the damages for
such termination
shall be a debt due by the contractor to the
employer as determined by the QS whose decision shall be final and
binding on the
parties.”
13.
Clause 15.1 states that “…the
dimensions and sizes as shown on the drawings will be strictly
observed as far as practical
and the contractor shall be entitled to
vary any measure by a maximum of 1% in his discretion.”
14.
In terms of clause 15.4, the agreements
constituted the entire contract between the parties as it related to
the construction of
the works on the property. The clause records
that “…no prior representations, stipulations or
warranties not expressly
recorded herein shall be binding unless
reduced to writing and signed by the parties.” Similarly,
clause 15.5 states that
“…no agreement purporting to
vary any terms and conditions have or shall be of any force and
effect, unless the said
agreement is reduced to writing and signed by
the parties.”
The
pleadings
Breach
of the agreements
15.
The essence of the plaintiffs’ claims
against the defendants, as they emerge from the pleadings, is that
AFCO breached the
agreements by failing to construct the residential
dwellings on the two erven in a proper and workmanlike manner and
substantially
in accordance with the building contracts. The pleaded
case by the plaintiffs in this regard is that:
15.1
AFCO’s construction of the works was not
concluded in terms of the architectural drawings and the plans
approved by the local
municipality.
15.2
damp proof membranes that were installed to
prevent moisture penetration from the surface bed into the walls were
either punctured
or incorrectly laid.
15.3
internal door openings were too low and
incorrectly set out and as a result, there was not enough space for
the doorframe, door,
door finish and the screed.
15.4
the vertical brickwork and retaining fill were not
fitted with a damp proof membrane and many of the window openings
were not square.
15.5
the general quality of the electrical installation
was of a very poor standard and had to be replaced. In this respect,
it is alleged
that the electrical installation chase into the slabs
of the houses was not to industry standards and compromised the
slabs.
16.
AFCO in its plea denied the allegations of breach
of the building contracts. By virtue of a report from third party
engineer, J3
Engineering, which was annexed to its Plea, AFCO pleaded
that J3 Engineering had assessed the quality of the work performed by
AFCO and confirmed that it was in line with industry standards.
17.
According to this engineer’s report, no
irregularities had been found with the DPC installation. As to the
waterproofing of
the vertical brickwork, the engineer’s report
concluded that an application of torch on waterproofing would be
adequate to
ensure that the structure was waterproof. J3 Engineering
also recorded in its report that its view was that no potential
cracking
would occur in respect of the mortar joint thickness and
that the structural integrity of the dwellings had not been
compromised
by irregular mortar jointing. AFCO however did not rely
on the J3 Engineering report at the trial.
Penalties
18.
Clause 8.2 of the building contracts provides that
the time for practical completion of the works was 210 days from the
commencement
date as provided for in the agreement. In terms of
clause 10, the penalties payable by the contractor for late
completion of the
works to practical completion and thereafter, were
an amount of R2 500.00 per day.
19.
The plaintiffs in their particulars of claim
initially sought payment of an amount of R122 500.00
representing penalties for
49 days in respect of erf 4[...]. This
amount was determined after deducting from the number of days the
plaintiffs spent on site,
the contract allowance of 210 days and
agreed rain delays. In respect of erf 4[...]1, an amount of
R217 500.00 was initially
claimed as delay penalties for 87
days.
20.
AFCO, in its plea, denied that the penalties so
claimed were due to delays for which AFCO could be faulted. AFCO
alleged inter-alia
that the plaintiffs were responsible for these
delays and that obstructive and unprofessional conduct by the
plaintiffs had unduly
prevented AFCO from completing its work.
21.
AFCO accordingly denied that it was liable for the
penalties claimed and pleaded in the alternative that it was not
liable for such
penalties to the extent alleged by the Plaintiff.
22.
Matters however took a different turn at the
trial. It was at that stage accepted by counsel for AFCO that in
respect of the construction
on both erven, AFCO was liable to pay
contractual penalties to the plaintiffs, subject to the
quantification thereof.
23.
The evidence of the plaintiffs’ witness, Mr.
Matthew Elsworth, a former project manager for the construction
project, was
later led in this regard. Mr. Elsworth was not
cross-examined by the defendants’ counsel and his evidence
stood uncontested.
Mr. Elsworth testified that the penalties in
respect of erf 4[...] amounted to R86 250.00 and R195 000.00
in respect
of erf 4[...]1. The defendants submit that these penalty
amounts, albeit undisputed at the trial and amounting to a total of
R281 250.00,
are lower than the amount of R340 000.00
initially claimed by the plaintiffs. The defendants submit that while
the plaintiffs
claim for penalties should be granted, no order of
costs should made in respect of the penalties claim, as AFCO has been
substantially
vindicated in its plea to the penalty claims. I shall
deal later with these submissions.
Cancellation
of the agreements
24.
On 20 and 21 September 2018 the Trust directed
correspondence to AFCO in terms of clause 11.1 of the agreements,
notifying AFCO
that it was in breach of the agreements and demanding
that the breaches be rectified with 14 days.
25.
In his email correspondence sent on 20 September
2018, Mr. Elsworth recorded that the areas which required
rectification by AFCO
related inter-alia to the replacement of damp
proof membranes, internal door openings which were too low, vertical
brickwork, window
openings which were not square. In addition, his
email stated that the electrical fix had chased into the slab, was
not industry
standard and could compromise the slab.
26.
The Trust alleges in its particulars of claim that
AFCO failed to rectify its breaches of the agreements. AFCO in turn
pleads that
it was not required to remedy any issues as the work had
been done in accordance with industry standard.
27.
On 25 February 2019 the Trust’s attorneys
directed a letter to AFCO informing it that both building contracts
were cancelled
and that AFCO was required to cease work immediately
and vacate the construction site by 8 March 2019. The letter recorded
inter-alia
that the Trust was in the process of liquidating its
damages as a result of the cancellation and would advise AFCO in this
regard
as soon as the amount had been finalized.
28.
AFCO does not deny that the Trust was entitled to
cancel the building contracts on 25 February 2019.
Damages
29.
The damages allegedly suffered by the Trust and
its entitlement to repayment of alleged overpayments made to AFCO, is
a significant
area of contestation between the parties. In its
particulars of claim, the plaintiffs plead that as at the date of
cancellation
of the agreements, the Trust had paid AFCO an amount of
R2 099 200.00 in relation to erf 4[...] and an amount of
R2 452.685.00
in relation to erf 4[...]1. It was not disputed by
AFCO that it had been paid these amounts.
30.
The plaintiffs then plead that in relation to erf
4[...] “…the completed works were certified by the
Quantity Surveyor
in terms of the agreement as R1 371 050.34.
As a result, the Plaintiff suffered damages in the amount of
R728 159.66
which is the amount overpaid to the First
Defendant.” Similarly, and in respect of erf 4[...]1, the
plaintiffs plead that
“…the completed works were
certified by the Quantity Surveyor in terms of the agreement as
R1 623 821.96.
As a result, the Plaintiff suffered damages
in the amount of R828 863.00, which is the amount overpaid to
the First Defendant.”
31.
At paragraph 24A of its amended particulars of
claim, the plaintiffs plead that “…it would be equitable
and in the
interests of justice that it be excused from restoring to
the First Defendant that which it received in terms of both
agreements.”
32.
AFCO in its plea denies the plaintiffs’
allegations regarding the damages they allege were suffered by the
Trust as a result
of AFCO’s breach of the agreements. AFCO
pleaded that the plaintiffs had failed to provide evidence of the
valuation by the
quantity surveyor referred to in its particulars of
claim or further evidence supporting its alleged damages.
33.
It was on this basis then that the battle lines
were drawn. The key disputed issues emerging from the pleadings were
AFCO’s
alleged breach of the building contracts and the
plaintiffs’ entitlement to restitution or restitutionary
damages for the
alleged overpayments.
The
evidence
34.
The plaintiffs led the evidence of four witnesses.
35.
The plaintiffs’ witnesses were Mr. Simon
Humpreys, a professional quantity surveyor, Mr. Mark Tame, the first
plaintiff and
a trustee of the Trust, Mr. Rory Cole, a professional
land surveyor and Mr. Matthew Elsworth, the project manager engaged
on the
construction project. I have earlier set out the uncontested
evidence of Mr. Elsworth regarding the quantum of the contractual
penalties.
36.
The defendants for their part elected not to call
any witnesses. The defendants closed their case after the evidence of
the Trust’s
witnesses had concluded.
Mr
Simon Humphreys
37.
Mr. Humphreys is a professional quantity surveyor.
His expertise and professional qualifications were not disputed.
38.
Mr. Humphreys was employed by the Trust on an
hourly basis for a limited scope of work appointment as the quantity
surveyor on the
erf 4[...] and erf 4[...]1 construction project.
Following the cancellation of the building contracts and during March
2019, the
plaintiffs instructed Mr. Humphreys to inspect the
construction work on erf 4[...] and erf 4[...]1 and to calculate the
value of
the construction work on the two erven as at that date and
prepare a valuation statement.
39.
Mr. Humphreys prepared a final valuation statement
in relation to erf 4[...] as at 27 March 2019, which was introduced
into evidence.
The erf 4[...] valuation statement records that the
value of the “…completed work (incl. VAT), excluding
unfixed materials”,
amounted to the sum of R1 371 040.34
and that the percentage work complete was 41.87%.
40.
Mr. Humphreys also prepared a valuation statement
in relation to erf 4[...]1 as at 6 March 2019. This statement that
the value of
the completed work at the time including VAT and
excluding unfixed materials was R1 623 821.96. The
percentage work completed
by AFCO is recorded as being 46.06%.
41.
Both reports were prepared by Mr. Humphreys based
on his observations and calculations during March 2019. Mr. Humphreys
explained
in detail the methodology in terms of which his valuation
statements were prepared and the manner in which he arrived at his
calculations.
According to the valuation statements and Mr.
Humphrey’s oral evidence, the amount he determined as “value
of works
executed” was comprised of two components. The first
component was the value of the contractor’s work for items such
as earthworks, masonry, waterproofing, plastering, plumbing and
electrical work. The second component was PC (prime costs) and
specialist trades such as water and electrical connection and
engineering costs. The total of these two amounts together with VAT
resulted in the amount he determined as the “value of completed
work” and set out in the valuation statements.
42.
Mr. Humphreys testified that certain payment
certificates, which were also introduced into evidence, “…basically
says
what the client owes the contractor” and is the
“contractual certificate for payment.” His evidence was
that
on a monthly basis, he would meet with AFCO staff regarding
their applications for payment and go through same. He would then
prepare
a valuation and would issue it to the plaintiffs.
43.
The cross examination of Mr. Humphreys commenced
with a focus on a “recovery statement” which he had
prepared and which
he explained was an adjustment on the certified
amount. The document records that the recovery statement was “…issued
in terms of 33.0 of the JBCC Principal Building Agreement.”
44.
When questioned on this by this by the defendants’
counsel, Mr. Humphreys confirmed that the Joint Building Contracts
Committee
(“JBCC”) Principal Agreement was not applicable
in this case. He explained that the JBCC was referred to in the
recovery
statement he had issued, because it was “…a
convenient form of documentation.” Mr. Humphreys conceded that
in
the present case, it was the terms of the building contracts that
were applicable, not those that are contained in a JBCC contract.
When referred to clause 8.1 of the building contracts, he confirmed
that he was the quantity surveyor or “QS” referred
to in
this clause.
45.
Mr. Humphreys was specifically referred to the
provision of clause 8.1 of the building contracts, which states
inter-alia “…the
determination of the QS shall be final
and binding on the parties.” It was put to Mr. Humphreys that
the effect of this part
of clause 8.1 of the building contract, was
that there was no scope for a recovery by the plaintiffs. He conceded
that it was in
the JBCC scenario that a recovery would form part of
the certification of works by the quantity surveyor. Insofar as the
building
contracts were concerned, he emphasized that he was not
party to the preparation of the contracts and had only been employed
to
do the valuations.
46.
On being questioned further regarding clause 8.1,
Mr. Humphreys accepted that the clause provided for his determination
as the quantity
surveyor, to be final and binding on the parties in
respect of payments to the contractor. He accepted that he was the
judge of
payments to be made to the contractor, what progress had
been made by the contractor and that he had previously prepared the
certificates
for payment to AFCO. Mr. Humphreys did not however
concede the correctness of the submission put to him by the
defendants’
counsel, that the effect of clause 8.1 was that
there was no room for an overpayment because his determination was
final and binding
on the parties.
47.
Mr. Humphreys was then referred to clause 11.1 of
the building contracts, which deals with the termination of the
agreements. The
clause states inter-alia that “…the
damages of such termination shall be a debt due by the contractor to
the employer
as determined by the QS whose decision shall be final
and binding on the parties.” He confirmed that he had not
engaged in
a damages determination exercise as contemplated by this
clause, that he was not involved in determining damages or penalty
and
that clause 11.1 of the agreement had not been implemented or
invoked. Mr. Humphreys was questioned further regarding the drafting
of the building contracts themselves. He stated that he did not know
anything about how the contracts were prepared or distributed.
48.
A further line of the cross-examination of Mr.
Humphreys related to the amounts and calculations in the valuation
statements which
he had prepared. He confirmed under
cross-examination that his calculations included an item of future
work which at that stage
had not been done yet. He however stated
that this was for a minor amount. It was put to Mr. Humphreys by the
defendants’
counsel that his calculations were not limited to
overpayment and also referred to future aspects to be installed in
the building.
The response of Mr. Humphreys was, “…within
reason.” He explained however that this was part of striving to
be fair and that it was common practice to err “…a
little bit on the contractor’s side when he says that he will
have finished”. This, he said, had been the case with AFCO on a
number of the interim valuations.
Mr
Mark Tame
49.
Mr. Tame is the first plaintiff and a trustee of
the Trust. He began by explaining his involvement in the construction
project,
which was a joint venture aimed at developing the Chapman’s
Bay properties for onward sale to residential buyers. Mr. Tame’s
role in the project and joint venture was to take responsibility for
the financial, marketing and sales aspects as well as leading
the
project in relation to civils and engagement of contractors.
50.
With regard to the building contracts at issue,
Mr. Tame testified that the contracts had been handed to the Trust by
AFCO and that
after consulting the Trust’s attorney, various
changes had been made to the contracts by mutual agreement. He could
not however
recall the exact changes which had been made.
51.
After providing this context to the construction
project and the conclusion of the contracts, Mr. Tame’s
evidence then focused
on the contractual clauses and what he
maintained were the breaches thereof by AFCO. He testified that AFCO
had not complied with
clause 1.10 of the building contracts, which
defines the works which were the subject of the agreements and which
work had to be
completed “…substantially in accordance
with the plans and specifications”, attached as schedules to
the agreements.
52.
When asked to expand on this, Mr. Tame said that
it was in the first place unusual in his experience as a developer
for the Trust
to have to pay upfront such a large deposit, such as
the 40% advance payment required by clause 6.1.1. of the agreement.
The Trust
however had accepted this and paid the amount as it was
considered necessary to advance the project and the advance payment
was
specifically made for the purpose of purchasing building
materials.
53.
Mr. Tame’s evidence then moved on to what he
maintained were a series of breaches of the agreements by AFCO. He
testified
that AFCO’s non-compliance with the agreements began
right at the outset of construction, when AFCO cleared the wrong site
in the development area. He stated that this caused problems as the
site was situated in an ecologically sensitive area. His evidence
was
that this was but one of a number of problems which the Trust had
experienced with AFCO throughout the project.
54.
The problems referred to by Mr. Tame in his
evidence included construction delays, problems with the quality of
materials provided
by AFCO and problems with their sub-contractors,
who he stated in one instance, had not been paid by AFCO. Mr. Tame
testified that
“…overall, it was not a great
experience.”
55.
According to Mr. Tame, the Trust had complied
fully with all of its obligations in terms of the agreements, while
AFCO had not.
The attention of Mr. Tame was drawn specifically to
clause 5.1 of the building contracts, which provides in part that the
employer
(the Trust), shall not give instructions to the contractors’
workmen or sub-contractors or interfere with or vary an instruction
given by the contractor or sub-contractor. He confirmed that the
Trust had complied with this requirement and that while project
meetings were held between AFCO, the Trust and its project team,
there was no micro-management of AFCO by the Trust. He stated
that
the project meetings were generally amicable and aimed at resolving
issues.
56.
On being led further regarding the contractual
breaches by AFCO, Mr. Tame testified that in respect of erf 4[...]1,
the height levels
as constructed by AFCO were incorrect and that the
problem was even worse with erf 4[...]. In respect of erf 4[...], he
said that
the height levels were so out that the Trust had to change
the entire roof structure.
57.
The height level exceedances had according to Mr.
Tame, been brought to the Trust’s attention by neighboring
homeowners in
the residential development. He testified that the
Trust had to undertake remedial work after termination of the
building contracts
with AFCO. With regard to the erf 4[...] dwelling,
this involved a redesign of the roof, which required submission and
approval
by the Home Owners Association. In addition, plumbing and
electrical work had to be taken over by other contractors.
58.
Mr. Tame was referred to the position which
pertained after the cancellation of the agreements on 25 February
2019 and after AFCO
had left the site. He was asked how far the
houses were from completion at that stage. He answered they were
“…substantially
from completion” and that as far
as he could recall, the roofs for the houses were not on at that
stage.
59.
As to the approximate cost to the Trust of the
remedial work which had to be undertaken on the houses, he testified
that it was
a substantial amount and that on both houses, the Trust
“…had ended up paying about R5 million.” He did
however
record that to be fair, there had been additions by the Trust
to the erf 4[...] property.
60.
Regarding the damages sought by the Trust, Mr.
Tame testified that on his understanding, the Trust was seeking
payment of “…the
difference between what was paid and
what was put in.” His evidence was that the defendants had been
compensated for the
work that they had done. According to Mr. Tame,
it would not make financial sense for the properties to be demolished
and payment
demanded from the defendants for the full amount paid by
the Trust.
61.
An extensive aspect of the cross-examination of
Mr. Tame dealt with the correspondence directed by Mr. Elsworth to
the Trust on
20 September 2018 setting out the details of defective
work performed by AFCO. It will be recalled that in this
correspondence,
AFCO was put on terms to rectify within 14 days a
number of areas of what the Trust maintains was defective and poor
workmanship.
This included replacement of damp proof membranes,
internal door openings which were too low, vertical brickwork, window
openings
which were not square and the electrical fix which had
chased into the slab, was not industry standard and could compromise
the
slab.
62.
In the said correspondence, Mr. Elsworth in
addition stated “…this approach to the product [by AFCO]
has created a
build that is severely behind schedule, will produce a
finished house that is unsaleable in the market and will ultimately
have
issues manifest in its lifetime because of poor waterproofing
and brickwork.”
63.
Mr. Tame was cross-examined on the various areas
of poor workmanship recorded in the 20 September 2018 correspondence.
He conceded
that with regard to the replacement of the damp proof
waterproofing, AFCO employees had remedied and corrected this defect.
He
conceded that “by and large”, the waterproofing and
door problems listed by Mr. Elsworth, had been rectified by AFCO.
The
same applied to the vertical brickwork problems which he accepted had
been rectified by AFCO.
64.
With regard to the electrical fix, which Mr.
Elsworth had stated was not industry standard and of a generally
“appalling quality…and
needs to be completely redone”,
Mr. Tame re-iterated in cross-examination that this aspect had not
been rectified by AFCO
and had to be remedied later by the Trust, at
its own cost. He stated that while it was true that “…the
walls wouldn’t
fall over”, the overall quality of the
workmanship by AFCO was poor.
65.
A further aspect of the cross-examination related
to what defendants’ counsel put to Mr. Tame as being the
approach in construction
disputes, which was that where there is a
query regarding poor workmanship, the problem would be fixed by the
owner and the costs
then claimed from the builder. The position was
not, as counsel put it, for the owner to claim back what the builder
had been paid.
Mr. Tame conceded that in respect of the remedial work
for the electrical fix, the Trust had remedied this problem but had
not
sought to claim these costs from the defendants.
66.
Mr. Tame was questioned as to why the Trust had
decided not to sue the defendants for damages for the costs it had
incurred in performing
remedial work on the houses constructed by
AFCO. He responded by stating that the Trust did not want to go down
the line of claiming
damages as this would end up involving expert
witnesses, being a “…he said, she said” and that
this would “…waste
the courts time.” He stated
that while the Trust had decided not to claim damages from AFCO for
the remedial work it had
to pay for to complete the build, it had
embarked on the present case, which “…was about
remedying a wrong.”
67.
With regard to the provisions of the building
contracts relating to the final determinations by the quantity
surveyor, Mr. Tame
stated under cross-examination that these clauses
had been specifically included to prevent back and forth disputes
regarding payment
claims by AFCO. He conceded that in respect of the
remedial work performed, the costs and details thereof were not
before the Court,
the Trust had not claimed these as damages from the
defendants and that what the Trust was claiming was an overpayment.
Mr
Rory Cole
68.
The plaintiff’s next witness was Mr. Rory
Cole. Mr. Cole is a professional land surveyor. His expertise and
qualifications
were not disputed.
69.
Mr. Cole was instructed by the plaintiffs to take
as built measurements of the construction work carried out by AFCO on
erf 4[...]
and erf 4[...]1. He prepared a report dated 4 February
2019, which was introduced into evidence.
70.
Mr. Cole testified that the as-built height of the
dwelling constructed by AFCO on erf 4[...], exceeded at three points
the design
final floor level (“FFL”) height in the agreed
architectural drawings.
71.
The as-built heights taken on the first floor
living room differed by +0.59m (590 millimetres) in relation to
design FFL height,
the as-built heights taken on the garage differed
by +0.43m (430 millimetres and the as-built heights taken on the top
of the wall
differed by +0.35 m (350 millimetres) in relation to
design FFL height.
72.
With regard to the as-built height of the house on
erf 4[...]1, Mr. Cole found that at five points, the as-built height
exceeded
the specified design FFL height. These differences in
as-built height versus design FFL height, related to the first-floor
bedroom
(+0.8m) (800 millimetres), the first floor living room
(+0.18m) (180 millimetres) and the garage (+0.06m) (60 millimetres).
73.
In relation to design apex height, the living room
timber truss apex differed from specification by +0.04m (400
millimetres) and
the bedroom timber truss apex by +0.58m (480
millimetres). Mr. Cole testified that the extent to which the
as-built heights of
constructed dwellings exceeded the design FFL
heights, was not in line with the architectural drawings which the
parties had agreed
to.
74.
The cross-examination of Mr. Cole focused on the
extent to which his findings on the various exceedances of design FFL
height, fell
within the 1% variation or tolerance range provided for
by clause 15.1 of the building contracts. It will be recalled that
clause
15.1 states that “…the dimensions and sizes shown
in the drawings will be strictly observed as far as is practical
and
the contractor shall be entitled to vary any measure by a maximum of
1% in his discretion.” It was apparent at the outset
of the
cross-examination, when counsel for the defendant, referring to his
own calculations of the 1% variation or tolerance allowed
by clause
15.1, that Mr. Cole was unaware of the details of this clause. He
stated in this regard that “…yeah, but
I don’t
know what the tolerance is, so I’m not sure if its 1%. I can’t
comment on that.”
75.
It was put to Mr. Cole that all three of the
heights in respect of the house constructed on erf 4[...] fell within
the 1% tolerance
/ variation range provided for by clause 15.1 of the
contract. Mr. Cole conceded that this was the case and accepted that
if the
tolerance was 1%, erf 4[...] would have no problem regarding
heights. In respect of the house constructed on erf 4[...]1, it was
put to Mr. Cole that four of the five heights in relation to this
property, fell within the 1% tolerance provided for by clause
15.1.
Mr. Cole accepted this to be so.
76.
In respect of his findings regarding the +0.8m
(800 millimetres) design FFL versus as-built surveyed height
exceedance for the first-floor
bedroom of the erf 4[...]1 house, it
was put to Mr. Cole that this was a mere 16cm over the 1% tolerance
or variation range provided
for by clause 15.1. Mr. Cole’s
response was that in his view, “…this was quite a lot
over.”
Evaluation
Requisites
for restitution
77.
It
was authoritatively stated by Innes CJ over a century ago in
Victoria
Falls and Transvaal Power Co Ltd v Consolidated Langlaagte Mines
[1]
that
the purpose of and the fundamental rule in the award of damages for
breach of contract, is to place the innocent party in the
position he
or she would have occupied had the contract been properly performed,
so far as that can be done, by the payment of
money and without
causing undue hardship to the defaulting party.
78.
The
party who has complied with his obligations in terms of the agreement
but who is a victim of a breach thereof by the other party,
is thus
entitled to be placed in the position he would have occupied had
there been no breach. The application of the rule thus
entails a
comparison between the financial situation the injured party would
hypothetically have occupied had the agreement been
fulfilled and
that party’s actual financial situation subsequent to the
breach.
[2]
79.
A
party who however seeks restitution, thereby exercises not a claim
for contractual damages per se, but a distinct contractual
remedy. In
Kudu
Granite Operations (Pty) Ltd v Caterna Ltd
[3]
,
Navsa, JA and Heher AJA (as he then was), said the following:
“
There is a
material difference between suing on a contract for damages following
upon cancellation for breach by the other party
(as in Baker v.
Probert 1985(3) SA 429 (A), a judgment relied on by the Court a quo)
and having to concede that a contract in which
the claim had its
foundation, which has not been breached by either party, is of no
force and effect.
The first-mentioned scenario
gives rise to a distinct contractual remedy
:
Baker at 439A,
and restitution may provide a
proper measure or substitute for the innocent party’s damages
.”
80.
This
principle was subsequently approved by the SCA in
National
Sorghum Breweries (Pty) Limited t/a Vivo Africa Breweries v
International Liquor Distributors (Pty) Limited
[4]
,
where Olivier JA noted that a claim for
restitution
in the form of repayment of the purchase price previously paid by
the claimant, was a
distinct
contractual remedy.
81.
The Court held that the
required elements for a cause of action seeking restitution in this
form, were the following:
“…
t
he
necessary allegations were the conclusion of the contract, the breach
thereof, the payment of the purchase price, and the cancellation
of
the contract
.”
82.
In what follows, I evaluate whether the plaintiffs
have established the requirements for restitution of the amounts
which they claim
from AFCO.
Conclusion
of the contracts
83.
It is common cause and established on the evidence
that the building contracts at issue were concluded between the
parties. The
validity of the contracts and their terms is common
ground. The payments made by the Trust to AFCO are also not disputed.
Breach
of the contracts
84.
Clause 2.1 of the building contracts sets out the
standard required for the construction of the two dwellings on erf
4[...] and
erf 4[...]1. This clause makes it clear that AFCO was
contractually obliged to construct the houses “…in a
proper
and workmanlike manner, substantially in accordance with the
agreement.” Clause 1.10 in addition required AFCO to construct
the houses “…substantially in accordance with the plans
and specifications referred to in the schedule [to the agreement].”
85.
As stated earlier, Mr. Cole’s report and his
oral evidence was that the as-built height of the house on erf 4[...]
exceeded
the design final floor level (“FFL”) height at
three points. In respect of the as-built measurements for height of
the house on erf 4[...]1, he found that at five points the as-built
height exceeded the design FFL height.
86.
Mr. Cole had testified that the extent to which
the design heights had been exceeded in the constructed dwellings,
was not in line
with the agreed architectural drawings. Mr. Cole
however conceded that all three of the heights in respect of the
house constructed
on erf 4[...] fell within the 1% variation range
provided for by clause 15.1 of the agreements. He also conceded that
four of the
five height exceedances in relation to dwelling on erf
4[...]1, fell within the 1% variation range.
87.
Mr. Cole’s survey had found a +0.8m (800
millimetres) as-built surveyed height versus design FFL height
exceedance in respect
of the first-floor bedroom of the dwelling
constructed on erf 4[...]1. He disputed and did not accept the
submission by the defendants
this was merely a 16cm exceedance of the
1% contractual tolerance range. His response, as stated earlier, was
that this was “…quite
a lot over.”
88.
Mr. Cole was a credible witness, his expertise was
not disputed and I accept the veracity of his evidence. His evidence
regarding
the as-built height exceedance for bedroom 1 of the
dwellings constructed by AFCO on erf 4[...]1, was not disputed. Nor
is there
any dispute that this measurement exceeded the maximum
1% tolerance or variation range permitted by clause 15.1 of the
building
contracts.
89.
The plaintiffs have in my view established that in
this respect, there was a material breach by AFCO of its obligations
under clause
1.10, clause 2.1 and clause 15.1 of the building
contracts.
90.
Turning then to the evidence of Mr. Tame, he
testified in detail that the quality of the work performed by AFCO on
both houses was
not proper and workmanlike and was in breach of
clause 2.1 of the building contracts.
91.
Mr. Tame’s evidence in my view corroborates
the evidence of Mr. Cole in a number of respects. His evidence
further confirms
that the height levels for both houses were
incorrectly constructed by AFCO and not in accordance with the agreed
architectural
drawings and specifications. There was no significant
challenge to Mr. Tame’s evidence that in respect of the
dwelling constructed
by AFCO on erf 4[...], the height levels were so
out that the Trust had to change the entire roof structure. Nor was
his evidence
disputed insofar as it related to the remedial work
which the Trust had to perform on the house built on erf 4[...],
which involved
a redesign of the roof that required approval of the
Home Owners Association.
92.
It was submitted by the defendants that Mr. Tame
had testified that “substantial completion of the two houses
had been achieved
by AFCO.” That is not my reading of Mr.
Tame’s evidence. As stated earlier, the plaintiffs’
counsel specifically
asked Mr. Tame to comment on the position which
pertained after the cancellation of the agreements on 25 February
2019 and after
AFCO had left the site. Mr. Tame was asked how far the
houses were from completion at that stage. He answered that the
houses were
“…
substantially
from completion
”
, not that they
were substantially completed, as submitted by the defendants.
93.
Mr. Tame’s evidence in this regard is also
consistent with the evidence and valuation statements prepared by Mr.
Humphreys,
which record that as at March 2019, the percentage work
completed by AFCO on the erf 4[...] dwelling was only 41.87% and in
respect
of erf 4[...]1, the percentage of work completed was 46.06%.
These figures were not disputed by the defendants.
94.
Mr. Tame was closely questioned about the email
correspondence directed by Mr. Elsworth to AFCO on 20 September 2018,
which put
AFCO to terms to remedy poor workmanship relating to the
damp proof membranes, internal door openings, vertical brickwork,
window
openings which were not square and the electrical fix which
had chased into the slab. As the plaintiffs’ counsel submitted,
Mr. Tame conceded acknowledged and conceded that the damp proof
membranes and internal door openings had subsequently been repaired
by AFCO.
95.
Mr. Tame however made it clear that with regard
with regard to the electrical fix, which Mr. Elsworth had described
as not being
industry standard and of a “generally appalling
quality”, that this aspect had not been rectified by AFCO at
all and
remained a problem, which the Trust had to subsequently
repair at its cost. He consistently maintained under
cross-examination
that while it was so that the walls of the houses
“would not fall over”, the work done on the houses by
AFCO was not
workmanlike or professional.
96.
Mr. Tame conceded that aspects of the defective
workmanship were later repaired by AFCO after they were put on terms.
In my judgment
however, the fact that certain admitted defects were
later repaired by AFCO,would not have made the appearance of these
defects
any less burdensome for the Trust. The Trust had already paid
AFCO a substantial deposit and was compelled to place AFCO on terms
to repair a number of serious building defects. A professional
builder who constructs door openings that cannot fit a door and
window openings which are not square, can hardly be said to have
performed his work in a workmanlike manner. I therefore do not
consider Mr. Tame’s concession to redound to the benefit of
AFCO. The plaintiff’s palpable sense of frustration with
the
conduct of AFCO in the construction process was readily apparent from
Mr. Tame’s evidence and the correspondence directed
to AFCO by
Mr. Elsworth.
97.
Having denied in terms in its Plea that it
breached any of the provisions of the building contracts as they
related to the obligation
to perform quality and proper workmanship
in its construction of the dwellings, one would have expected
evidence from AFCO at the
trial in support of these denials. It was
not to be so. The defendants closed their case without calling any
witnesses, let alone
evidence from J3 Engineering, on the basis of
whose report it was pleaded by AFCO that it performed quality work in
line with industry
standards.
98.
I agree with the submissions by the plaintiffs’
counsel that Mr. Tame was a credible, honest witness. The is no
reason not
to accept his evidence relating to AFCO’s breaches
committed during the building of the dwellings on both erven. I
consider
the plaintiffs to have established that AFCO materially
breached its obligations under clause 1.10 and clause 2.1 in its
construction
of the works required by clause 1.10 of the building
contracts.
Cancellation
of the contracts
99.
There is no dispute between the parties that the
building contracts were cancelled by the Trust. The defendants
accept that
the Trust was entitled to cancel the building contracts
on 25 February 2019.
Restitution
of payments made to AFCO
100.
The main dispute between the parties is whether
the Trust is entitled to restitution or restitutionary damages in the
form of payment
of the difference between the amounts which the Trust
paid to AFCO and the value of the completed works as determined by
Mr. Humphreys.
101.
Three main arguments were advanced by the
defendants in support of their contentions that the plaintiffs were
not so entitled and
that failure of the plaintiffs’ claims for
the alleged overpayments was inevitable. Firstly, it was contended
that the plaintiffs’
claims amounted to a re-valuation or
revisiting of the work performed by AFCO and that this was not
permitted by the contracts.
The Trust had therefore not proved, so it
was argued, that the completed works had been “certified by the
quantity surveyor
in terms of the agreement” as alleged at
paragraphs 23 and 24 of the particulars of claim.
102.
Secondly, the defendants argued that the Trust had
elected not to hold AFCO liable for payment of damages as provided
for in clause
11.1 of the building contracts and that consequently,
the specifics of the defective work and the cancelation of the
contracts
were of no moment. Thirdly, it was submitted that even if
the Trust and the QS were entitled on some basis to revalue the work
done, the valuation statements prepared by Mr. Humphreys lacked
integrity and could not be relied on as they included future
rectification
expenses and materials on and off site.
103.
Clause 8.1 of the building contract is key to the
first main contention advanced by the defendants. That contention
being that the
Trust’s claims amount to a re-evaluation of the
work performed, which is not permitted by the contracts and clause
8.1 in
particular. Clause 8.1 in its entirety states:
“
The
CONTRACT PRICE shall be paid by the CONTRACTOR as per the
confirmation of the QS of the monthly progress achieved. The
CONTRACTOR
shall submit the payment to the QS before the 20
th
of each month. Payment by the
EMPLOYER will be made on the last day of the month into the
CONTRACTOR’S account and only after
confirmation of the
progress that has been reached for the month by the QS to the
employer. The determination of the QS shall be
final and binding on
the parties.”
104.
T
he purpose of clause 8.1 is in my view to
establish and regulate a contractual mechanism for payment of the
agreed contract price
by the Trust to AFCO. That mechanism requires
payment to the contractor to be made on the basis of and expressly
subject to “confirmation”
by the QS “…of the
monthly progress achieved.” The clause then goes on to
determine the dates by which payments
claimed by the contractor are
to be submitted and when such payments are to be effected by the
employer. The latter is again subject
to the QS confirming to the
employer the progress that has been achieved by the contractor for
the month to which the payment relates.
105.
Finally, the clause provides that the
determination by the QS shall final and binding on the parties. This
“determination”
by the QS, can only be reasonably
interpreted to relate to the confirmation of the work done by the
contractor. That confirmation
is a necessary pre-condition for
payment to the contractor. The clause in essence provides for a
mechanism to avoid payment disputes
during the contract period by
requiring the assent and confirmation of the QS regarding monthly
progress before payment can be
made to the contactor. The QS is in
addition vested by clause 8.1 with the power to confirm monthly
progress by the contractor
and his determination in this regard is
final and binding on the parties.
106.
I consider the interpretation of clause 8.1 set
out above to be sensible and business-like and consistent with the
intentions of
the parties. Although the evidence of Mr. Tame is not
necessarily admissible regarding the meaning of clause 8.1, it is
noteworthy
he confirmed that the clause was specifically inserted in
the agreement in order to avoid disputes and “back and forth”
regarding payments to the contractor.
107.
Clause 8.1 of the building contracts in my view
neither expressly nor impliedly preclude the Trust from seeking
restitution as a
contractual remedy for breach of the provisions of
the contract.
108.
Nor does clause 8.1 in terms preclude the quantity
surveyor from determining, after the cancellation of the building
contracts,
the value of the work which had been performed by the
contractor. Clause 8.1 serves a different and distinct purpose. It is
a dispute
avoidance mechanism which places the function of making
final and binding determinations regarding payment claims by the
contractor
during the lifespan of the contracts, in the hands of the
quantity surveyor.
109.
The defendants’ contention that clause 8.1
bars the restitutionary relief claimed in the action, rests on the
premise that
the “certification” of the completed works
referred to by the Trust in paragraphs 23 and 24 of the particulars
of claim,
amounts to an impermissible “re-valuation” of
the work previously done by AFCO. The proposition and premise on
which
it is based is unpersuasive. The effect of clause 8.1 of was to
render, during the course of the contract, determinations by the
quantity surveyor authorizing payments to AFCO, final and binding.
This however does not in my judgement mean that Mr. Humphreys
was
subsequently and after the contracts had already been cancelled,
precluded by clause 8.1 or the building contracts from making
a
determination as to the quantum of the completed works on site as at
March 2019.
110.
In making such a determination, I do not agree
that Mr. Humphreys’ evidence impermissibly revisits or
re-evaluates the work
previously performed by AFCO, as the defendants
sought to argue. The argument overlooks the purpose for which the
evidence was
tendered. Mr. Humphreys was tasked by the plaintiffs to
quantify and determine the monetary value of the completed works as
at
March 2019. He did so in his valuation statements. He gave
undisputed evidence explaining the methodology and calculations
underlying
his determinations. In particular, it was not disputed
that the monetary value of the completed works on both erven as at
March
2019 was that determined by Mr. Humphreys in his valuation
statements and no evidence to the contrary was led by the defendants.
111.
Mr. Humphreys was extensively cross-examined on
whether his valuation statements were consistent with clause 8.1 of
the building
contracts. He did not concede that the clause precluded
him from determining the value of the works executed by AFCO. The
valuation
statements themselves are an undisputed written recordal of
the basis on which he had quantified the value of the works and the
specific components of that valuation.
112.
The defendants’ contentions that Mr.
Humphrey’s valuations of the completed work done by AFCO are
precluded by the terms
of the building contracts, are in my view
without merit.
113.
The second argument advanced by the defendants was
that the restitutionary relief sought was not competent or
established because
the Trust had elected not to hold AFCO liable for
payment of damages as provided for in clause 11.1 of the building
contracts.
This contention misconstrues the nature of the
restitutionary remedy, which as stated earlier, our Courts have held
to be an independent
contractual remedy.
114.
The
plaintiffs were not required to expressly label their main cause of
action as one for restitution or restitutionary damages.
All that
they were required to do was plead the elements of their cause of
action for restitution, being the agreements, payment
to AFCO, breach
of the agreements by AFCO and cancellation by the plaintiffs.
Where upon cancellation of a contract, a plaintiff
seeks recovery of
his own performance by claiming repayment of money, the nature of his
cause of action is that of a distinct contractual
remedy, not an
enrichment action.
[5]
115.
It is so that the Trust may have an additional
remedy in law for damages sustained due to the defendants’
breach of contract,
including damages in respect of the remedial work
subsequently performed by the Trust. The existence of such a remedy
does not
non-suit the Trust from seeking restitution of the
difference between the amounts it paid to AFCO for work done and the
actual
value of the completed work which was executed by AFCO. More
so in circumstances where the quantified value of the completed work,
has on the undisputed evidence of Mr. Humphreys been determined to be
of a significantly lesser value than the amount which the
Trust paid
AFCO for that very work. The notional availability of an
alternative remedy to the Trust for it to sue for its
full damages as
a result of the conduct of AFCO, is in my view not mutually exclusive
of its right to seek restitution as an independent
contractual remedy
and substitute for its damages.
116.
The defendants third argument was that the
valuation statements prepared by Mr. Humphreys lacked integrity and
could not be relied
on as they included future rectification expenses
and materials on and off site. The criticism is in my view,
overstated. The focus
during cross-examination of Mr. Humphrey on a
relatively minor amount of R3 139.50 included in his recovery
statement document
as being “work executed by others”,
does not in my judgment detract from the veracity of his evidence as
a whole or
his valuation methodology which, as stated earlier, was
not materially disputed by the defendants. The defendants disputed
the
Trust’s entitlement to restitution not Mr. Humphrey’s
calculations of the value of the completed works executed by AFCO.
117.
I am not persuaded that the evidence of Mr.
Humphreys and valuation statements recording the value of the
completed works executed
by, falls to be rejected on the basis
contended by the defendants.
118.
The various grounds on which the defendants
contend that the plaintiffs have not established their claim to
restitutionary damages,
are in my view individually and cumulatively
without merit.
Equity
of restitution
119.
The
general principle of reciprocity applies to the restitutionary remedy
and requires that when a contract is cancelled and restitution
claimed, the innocent party must also make or tender to make
restitution of whatever he has received.
[6]
The
principle is not absolute and the failure to tender such restitution
is not necessarily fatal to the innocent party’s
claim. As
Nienaber JA stated in
Extel
Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd
[7]
“
t
he
rule that a rescinding party must tender restitution is not an
inflexible one; it applies only where such restitution remains
physically possible. When, through no fault of the party rescinding
restoration is no longer physically possible, he is not precluded
by
that fact alone from resiling from the contract.”
120.
The
general rule that a party claiming restitution is required to tender
restoration of what it received pursuant to the contract,
may be
departed from in an appropriate case, taking into account equitable
considerations. Trollip JA put it thus in
Feinstein
v Niggi
[8]
“
The
object of the rule is that the parties ought to be restored to
the respective positions they were in at the time they
contracted. It is founded on equitable considerations.
Hence,
generally a court will not set aside a contract and grant
consequential relief for fraudulent misrepresentation unless the
representee is able and willing to restore completely everything that
he has received under the contract. The reason is that
otherwise, although the representor has been fraudulent, the
representee would nevertheless be unjustly enriched by recovering
what he had parted with and keeping or not restoring what
he had in turn received, and the representor would correspondingly
be
unjustly impoverished to the latter extent.
(see
Actionable
Misrepresentation
(supra at
para 294 and note 5 thereto);
Marks
Ltd v Laughton
1920
AD 12
at
21;
Harper
v Webster
1956
(2) SA 495
(FC)
at
502B - D;
Van
Heerden en Andere v Sentrale Kunsmis Korporasie (Edms) Bpk
1973
(1) SA 17 (A)
at
31G - 32A). But since the rule is founded on equity it has been
departed from in a number of varying circumstances where
considerations
of equity and justice have necessitated such departure
(see
Harper's
case
where the cases are collected and especially at 500B, 502E).
”
121.
The plaintiffs submitted that it would be
equitable and that justifiable that the Trust be excused from
restoring to AFCO what the
Trust had received from in respect of the
construction of the dwellings on the two erven. The plaintiffs
submitted that Mr. Tame’s
evidence was that it would not be
commercial sensible or feasible for the properties to be demolished
in order to put the parties
back in the position that they would have
been in prior to the conclusion of the agreements.
122.
It was furthermore submitted that there was
another factor justifying the Trust being excused on equitable
grounds from restoring
what it had received from AFCO. This was that
AFCO had already been paid for the work that it had performed and
that both the amounts
paid to AFCO and Mr. Humphreys evidence
regarding the value of the work performed by AFCO, were unchallenged.
The Trust in any
event does not seek restitution of the full amount
paid to AFCO. The Trust submits that it seeks restitution in the form
of payment
of the balance of the moneys paid to AFCO, that being the
difference between what was paid to AFCO for the construction of the
two dwellings and the actual value of the partially built dwellings
so constructed.
123.
The defendants did not seek to challenge Mr.
Tame’s evidence that demolishing the properties in order to
restore what the
Trust had received from AFCO, would not make
practical or commercial sense. The dwellings on the property were
already partially
built to roof height at the time of cancellation of
the contracts on 25 February 2019. It is difficult to see how
restoration of
the constituent building materials purchased by AFCO
for aspects such as masonry, plastering, plumbing, waterproofing and
electrical
work and utilized to construct two partially built houses,
would at his stage be practical, let alone physically possible.
124.
Mr. Tame’s evidence was that both properties
had subsequently been sold to third parties following the remedial
work performed
by the Trust to complete the build. On this basis as
well, restoration by the Trust to AFCO would be physically
impossible. The
defendants did not seek to argue the contrary.
125.
I am consequently of the view that the plaintiffs
have established that there are just and equitable grounds to excuse
the plaintiffs
from restoring what the Trust had received from AFCO,
prior to the cancellation of the two building contracts on 28
February 2019.
Conclusion
126.
The plaintiffs have in my view established their
entitlement to restitutionary damages for payment of the difference
between the
amounts the Trust paid to AFCO for construction of the
dwellings and the value of the completed work executed by AFCO. The
plaintiffs’
claims succeed for the reasons set out above.
127.
With regard to costs, the plaintiffs sought costs
on the attorney and own client scale as provided for in clause 12 of
the building
contracts. The defendants did not suggest that costs
would not be payable on the basis of the scale agreed in clause 12 of
the
contracts, in the event of the plaintiffs’ claims
succeeding.
128.
I am not persuaded by the defendants’
submissions that no order as to costs ought to be made in respect of
the plaintiffs’
penalties claim. The defendants’ plea
actively resisted the penalties claim inter-alia on the basis that
the plaintiffs had
“forced numerous delays at own behest”
and that the plaintiffs had acted in an obstructive and
unprofessional manner
and delayed AFCO from commencing with its work.
None of these allegations were pursued by the plaintiffs at the trial
or put to
the plaintiffs’ witnesses. The submission that the
defendants had only disputed the quantum or extent of the penalties
and
had in fact never disputed their liability for the penalties, is
untenable and not borne out by the pleadings.
129.
The plaintiffs claim against the fifth defendant
however stands on a different footing. The plaintiffs claim against
the second
and fifth defendant in their personal capacity on the
basis of reckless trading, was only abandoned at the start of the
trial on
29 April 2024. I agree with the submissions by the
defendants’ counsel that no claim against the fifth defendant
survived
the abandonment. The fifth defendant is accordingly entitled
to his costs.
Order
130.
I make the following order:
130.1
The first defendant is ordered to pay the
plaintiffs:
130.1.1
the amount of R728 159.66.
130.1.2
the amount of R828 863.00.
130.1.3
the amount of R281.250.00.
130.1.4
interest on the aforesaid amounts a
tempore
morae
.
130.2
The second, third and fourth defendants, jointly
and severally, the one paying the other to be absolved, are ordered
to pay the
plaintiffs:
130.2.1
the amount of R800 000.00.
130.2.2
interest on the aforesaid amounts a
tempore
morae
.
130.3
The first, second, third and fourth defendants are
ordered pay the plaintiffs costs on scale as between attorney and own
client.
130.4
The plaintiffs claim against the fifth defendant
is dismissed with costs, including the costs of counsel on scale C.
S
G MAGARDIE
Acting
Judge of the High Court
Western
Cape Division
Appearances:
For
the plaintiffs: Adv P Torrington
Instructed
by: Dykes Van Heerden (Cape Inc)
For
the defendants: Adv F Arnoldi SC
Instructed
by: Bennecke Thom Incorporated
Date
of hearing: 29 April 2024, 30 April 2024 and 27 May 2024
Date
of judgment: 24 February 2025
[1]
Victoria Falls and Transvaal Power Co Ltd v Consolidated Langlaagte
Mines
1915 AD 1
at 22.
[2]
Culverwell v Brown
1990 (1) SA 7
(A) at 25.
[3]
Kudu Granite Operations (Pty) Ltd v. Caterna Ltd
2003 (5) SA 193
(SCA) at 202 E-F.
[4]
National Sorghum Breweries (Pty) Limited t/a Vivo Africa Breweries v
International Liquor Distributors (Pty) Limited
[2000] ZASCA 159
;
(2001 (2) SA 232
(SCA at para 4.
[5]
Probert v Baker
1983 (3) SA 229
(D) at 233. The judgment was
referred to by the SCA with approval in Kudu Granite Operations
(Pty) Ltd v Caterna Ltd
2003 (5) SA 193
(SCA) at 202 E.
[6]
Marks Ltd v Laughton 1920 AD 12 21.
[7]
Extel Industrial (Pty) Ltd and Another v Crown Mills (Pty) Ltd
(271/96, 272/96)
[1998] ZASCA 67
;
1999 (2) SA 719
(SCA);
[1998] 4
All SA 465
(A) (17 September 1998).
[8]
Feinstein
v Niggi
1981 (2) SA 684
(A) 700G – 701A.
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