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WITHINSHAW PROPERTIES (PTY) LIMITED
AND
DURA CONSTRUCTION COMPANY (SA)(PTY) LIMITED
418/82/AV
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
WITHINSHAW PROPERTIES (PTY)
LIMITED Appellant
AND
DURA CONSTRUCTION COMPANY (SA)(PTY)
LIMITED Respondent
CORAM: Jansen, Trengove, Viljoen, Nicholas, JJA, Galqut, AJA
HEARD: 15 May 1984
DELIVERED: 29 May 1984
JUDGMENT NICHOLAS, JA
This appeal arises out of a building contract
which
2
which was concluded in July 1973. The parties were the
employer, WITHINSHAW PROPERTIES (PTY) LTD ("WITHINSHAW") and the contractor,
DURA CONSTRUCTION CO.(SA)(PTY) LTD
("DURA"). The contract, which was in the
standard form approved and recommended inter alia by the Institute of S A
Architects, was for the erection of a shopping centre and cinema complex in Main
Road, Wynberg, Cape, at
a cost of 1,25 million rands.
Shortly after the
conclusion of the contract, DURA formed a wholly owned subsidiary named DURA
CONSTRUCTION CAPE (PTY) LTD ("DURA
CAPE"), which,with the knowledge and consent
of WITHINSHAW, performed all the contrac-tual obligations of DURA as its
agent.
The
3
The building work was started in July/August
1973, and was substantially completed by March 1975.
In about July 1974 a problem arose.
The building specification provided for the
laying, in accordance with the manufacturer's instructions,
of a
waterproofing membrane called Hyload 75 on the
parking deck which formed the
roof of the complex.
A company named HAEFELE AND SONS (PTY) LTD ("HAEFELE")
was
appointed as' sub-contractor to perform this work, which
it guaranteed
against defects in labour and materials.
The manufacturer's instructions were
not clear in regard to
the method of bonding the membrane to the deck.
WITHINSHAW's
consultants, a firm of consulting engineers named HILL
KAPLAN
SCOTT AND PARTNERS ("HILL KAPLAN") instructed that
spot
4
spot bonding should be used, and about 20% of the
total area involved was bonded by this method. It was urged, however, by Mr
HAFAELE,
who was an expert in waterproofing with more than 25 years experience,
that a fully bonded method be used, and indicated that, if
it were not the work
could not be guaranteed. HILL KAPLAN bowed to Mr HAFAELE's opinion and issued a
written instruction that the
full bonding method be adopted for the area
remaining.
This decision was unfortunate. Shortly after the laying was completed, there occured blistering or bubbling of the membrane in the fully bonded area. As a result vehicles travelling over it tore the membrane, with the consequence that leaking occurred into the premises
below
5
below. The cost of repairing the waterproofing was estimated to be about R30
000,00.
There arose a question as to the responsibility for the repair work.
DURA CAPE disclaimed responsibility, contending that the work
had been performed
in accordance with the specification and HILL KAPLAN's written instructions.
HAFAELE too disclaimed responsibility,
claiming that the defect was due not to
deficiency in labour or materials, but to a faulty design. And HILL KAPLAN
disclaimed responsibility,
contending that the fully bonded method had been
insisted upon by HAFAELE.
The question of responsibility had not been
resolved by 25 November 1977, when the architects referred
to
6
to in the building contract (THE MEYER, LOUW PARTNERSHIP), issued a final
certificate for the sum of R110 721,09.
WITHINSHAW made no payment under the
certificate, and
on 20 April 1978 DURA issued summons against it out of the
Cape Provincial Division for a total of R110 721,09, interest and costs.
At the
end of the trial, which began on 4 August 1982, judgment was granted in favour
of the plaintiff for the sum of R67 517,67,
plus interest and costs including
the costs of two counsel. (It had become common cause during the trial that an
amount of R36 599,00
and further amounts totalling R6 604,42 had been paid to
DURA without prejudice).
WITHINSHAW now appeals to this Court against the
whole
7
whole of the judgment and order.
It was contended on its behalf that
DURA's claims should have been dismissed on any one of three grounds:
(a) DURA had no title to sue on the architects' certificate;
(b) The certificate was not a final certificate within the
meaning of the building contract, because it was
qualified by a letter written by the architects dated
25 November 1977, which accompanied it; and
(c) The architects were not legally entitled to issue the
certificate in the face of the dispute as to respon
sibility for the defective waterproofing.
(a) DURA's title to sue
The certificate reads as follows:
"Certificate"
9
The point made on behalf of WITHINSHAW is that this document did not certify
the amount of R110 721,09 as being due to DURA; it certified
it as being due to
DURA CAPE, a different persona. Consequently it conferred no rights on
DURA CAPE, which was not a party to the building contract, and no rights on
DURA, which was
not the person to whom the certificate was issued.
The point
is without merit. "DURA CAPE" was a misnomer. That is clear from the certificate
itself, read with the building contract
under which it was issued and to which
it refers. It recites at the head that it is "to be presented by the contractor
to the employer
for payment". The architects certify that under the terms
of
10 of the contract, the payment detailed below is due: from
the employer to the contractor. The intention was clearly to issue the
certificate to the contractor, which was DURA, and the insertion of the name of
DURA CAPE was a mistake.
How the mistake arose, is also clear. It is common
cause that DURA CAPE executed the contract works as agent for DURA; the
architects
gave instructions to DURA CAPE and addressed correspondence to DURA
CAPE; they issued monthly certificates to DURA CAPE; and WITHINSHAW
paid such
certificates to DURA CAPE without any objection. It is not surprising in the
circumstances that the architects came to
think, wrongly, that the name of the
contractor was DURA CAPE.
(b)
11
(b) Certificate not a final certificate
On 25 November 1977 (being the date of issue
of the final certificate), the architects wrote a letter
to WITHINSHAW, a
copy of which was Annexure "X" to the
defendant's plea and which will be
referred to as such.
It was in the following terms:
"THE MEYER, LOUW PARTNERSHIP
BP Centre 25 November 1977
Thibault Square Our Ref: 5202/518
Cape Town GM/mjb
Withinshaw Properties(Pty) Limited,
P.O.Box 30,
WYNBERG
7824
Dear Sirs,
re: FINAL CERTIFICATE - Erection of New Withinshaw Centre
In
12
In accordance with the attached final statement issued by the Quantity Surveyors, Hudson Caietta and Gess, we have issued the Certificate No. 21 and FINAL for the above contract amounting:- to R110 721,09 (ONE HUNDRED AND TEN THOUSAND, SEVEN HUNDRED AND TWENTY ONE RAND and NINE CENTS).
This will be the final payment to be made on this contract and we beg to remind you that the matter of the defective surfacing and waterproofing to the parking deck on the first floor level is still unresolved. We, as your Architects, have indicated to the Main Contractor that in our opinion the onus for the defect rests with the Sub-contractor who maintained that his guarantee was dependent on a fixing specification other than that detailed by the Civil Consultants, Hill Kaplan Scott and Partners. The Sub-Contractor refuses to accept our decision and it would appear therefore that this matter will eventually have to go to arbitration for settlement. Since this
may
13
may take some time before finality is reached, it would be unfair to ask the Main Contractor and his other Sub-Contractors to wait for payment until that time. We suggest that an amount of R30 000,00 (THIRTY THOUSAND RAND) be withheld pending the final decision in the matter.
Yours faithfully
THE MEYER LOUW PARTNERSHIP
(sgd)
GERARD MEYER
c.c. Dura Construction Cape (Pty) Limited Hudson Caietta and Gess Hill Caplan Scott and Partners"
The contention on behalf of WITHINSHAW was that
the final certificate must be read together with Annexure
"X" which accompanied it and that, when so read, it is no
longer clear and
unambiguous and does not unequivocally
amount to a final certificate within
the meaning of the
building
14
building contract.
The certificate was issued to the contractor
in terms of paragraph (a) of clause 25 of the building
contract which provided:
"25(a) The Contractor shall be entitled to receive from the Architect a monthly certificate, a penultimate certificate and a final certificate .... of the amount due to him from the Employer ..."
Paragraph (f) provided:
"(f) As soon as practicable .... the Architect shall issue a final certificate of the value of the Works extended by the Contractor . ..."
It was stated at the head of the certificate that it was to
be presented by the contractor to the employer for payment.
It was certified that "under the terms of the contract"
"payment
15
"payment as detailed below"(i.e. for the sum of R110 721,09) "is due from the
employer to the contractor".
Annexure "X", on the other hand, was addressed
not to the contractor but to the employer, although, in accordance with the
architects'
usual practice, copies were sent to DURA CAPE, the quantity
surveyors, and HILL KAPLAN. It did not purport to vary the amount due
from the
employer to the contractor. It merely made a suggestion to the employer, for him
to act upon or not as he thought fit, that
an amount of R30 000,00"be withheld
pending the final decision in the matter". That suggestion could not derogate in
any way from
the clear and explicit statement in the certificate that the nett
retention was "NIL".
In
16
In my view, therefore, there is no substance in the contention, (c)
Architects not entitled to issue certificate
Counsel for
WITHINSHAW submitted that the issue of the final certificate was ultra
vires of the architects because "where a dispute has arisen to the knowledge
of the architect before he issues his final certificate, his
power to issue a
final certificate is ousted and the dispute falls to be decided by the
arbitrator."
For this submission reliance was placed on two
English cases: Lloyd
Bros. v Milward (1895) which is
referred to in Hudson's Building and
Engineering Contracts,
10th ed, pp 438-9; and J A Milstone and Sons
Ltd (in Liqui
dation)
17
dation) v Yates Castle Breweries Co., 1938(2) All ER 439.
Neither of those cases, however, laid down any principle
of law. Each of them was concerned with the application of the building
contract concerned to the facts of the particular case.
Here the Court would be concerned with a different
contract and the facts of the present
matter. It is not
clear what those facts are, because this defence was
not
adumbrated in the plea, and the facts were not fully canvassed
in the evidence.
The relevant portions of the arbitration clause
in the building contract (clause 26) read:
"26. Provided always that in case any dispute of difference shall arise between
the
18
the employer or the Architect on his be-half, and the Contractor, .... then the Architect shall determine such dispute or difference by a written decision given to the Contractor. The decision shall be final and binding on the par-ties, unless the Contractor within fourteen days of the receipt thereof by written notice to the Architect disputes the same, in which case or in case the Architect for fourteen days after a written request to him by the Employer or the Contractor fails to give a decision as aforesaid, such dispute of difference shall be and is hereby referred to the arbitration and final decision of .... an Arbitrator..."
There was, in regard to responsibility for the
waterproofing, an exchange
of letters and frequent discussions
over many months between the Architects,
HILL KAPLAN, HAFAELE
and DURA CAPE, during which they engaged in mutual
recri-
minations
19 minations. It does not appear, however, that there
crystallized "a dispute of difference .... between the Employer or the Architect
on his behalf, and the Contractor" within the meaning of clause 26. On the
contrary, the architects informed the employer in Annexure
"X" -
"We, as your Architects, have indicated to the Main Contractor that in our opinion the onus for the defect rests with the Sub-Contractor who maintained that his guarantee was dependent on a fixing specification other than that detailed by the Civil Consultants, Hill Kaplan Scott and Partners. The Sub-Contractor refuses to accept our decision and it would appear therefore that this matter will eventually have to go to arbitration for settlement."
There was no evidence that the architects gave a "decision" or that WITHINSHAW or DURA at any stage requested the architects to give a decision in writing in terms of
clause
clause 26.
The factual basis for the third submission
was accordingly absent, and this defence fails like the others.
The appeal is dismissed with costs, including the costs of two counsel.
H C NICHOLAS, JA JANSEN, JA )
GALGUT, AJA
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