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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NUMBER: 1886/2020

CASE NUMBER: 1887/2020

In the matter between:-

GET CONNECTED CONSTRUCTION (PTY) LTD                   Plaintiff

and

MEMBER OF THE EXECUTIVE COUNCIL (MEC)                  Defendant

FOR THE PUBLIC WORKS AND ROADS IN THE

NORTH WEST PROVINCIAL GOVERNMENT

This judgment is handed down electronically by circulating it to the e-mail addresses of the parties. The date of the judgment is deemed to be 22 July 2024

JUDGMENT

FMM REID J

Introduction

[1] The plaintiff issued summons against the defendant, in two different actions, for payment of certain monies arising from two building contracts for the construction of two rural schools, one named Thotlang Thutho Senior Secondary School in the village of Bono Bona, and the other being Loretlweng Primary School in the village of Ganyesa, in the Northwest Province. The plaintiff seeks payment of the under mentioned money against the defendant pursuant to a contractual claim.

[2] The dispute under case number 1886/2020 relates to the impugned contract concluded by the two parties for the construction of Tlotlang Thuto Secondary School at Bona Bona village at an amount of R42,393,028-38 (Forty-Two Million Three Hundred and Ninety-Three Thousand Twenty-Eight Rand and Thirty-Eight Cents).

[3] The dispute under case number 1887/2020 relates to the impugned contract for the construction of Loretlweng Primary School at Ganyesa at an amount of R47,096,255-70 (Forty-Seven Million Ninety-Six Thousand Two Hundred and Fifty-Five Rand and Seventy Cents).

[4] The merits and quantum were separated in terms of Rule 33(4) of the Uniform Rules of Court.

[5] On the issue of merits, this Court is called upon to make findings on the following:

5.1. The legality of the two contracts. The defendant pleads that the contracts between the plaintiff and defendant are void ab initio for want of compliance with section 217 of the Constitution of the Republic of South Africa 108 van 1996 (the Constitution).

5.2. Misrepresentation giving rise to the conclusion of the contracts. The defendant claims to be entitled to reclaim all monies already paid to the plaintiff, by way of damages, resulting from the fact that it was induced by the plaintiff to enter into the contract by various material misrepresentations.

5.3. Which party cancelled the contract. The defendant claims it had cancelled the contract as a result of various material breach on the side of the plaintiff. The plaintiff claims that it had cancelled the contract as a result of the defendant’s repudiation of the contract.

[6] Should the Court find that the defendant succeeds on the principle of illegality, the remainder of the issues will fall away and the only further enquiry will be as to an equitable remedy remedy in terms of section 174 (2) of the Constitution. If not, the remainder of the issues are to be determined.

Factual matrix

[7] The defendant is the responsible Department to build schools to fulfil the Government’s Constitutional duties in terms of the human rights of Education as set out in section 29 of the Constitution.

[8] The plaintiff has developed a cheap and and lightweight building material, alternative to brick and mortar, for the use of inter alia in the construction of rural residences, clinics and schools. In the process it had developed a product called “Green Crete”. Green Crete is not concrete: it is a lightweight product made of plastic waste, polystyrene, fly-ash, cement and other chemical products, from which building blocks are produced.

[9] In or around 2014, the plaintiff was engaged by various private institutions to build low-cost housing units, clinics and schools. They were also in the process of building an orphanage, called “Village of Hope”. Various officials with senior positions in the Department became aware of the prospects of using alternative building methods in the construction of schools and the creation of job opportunities in the Province. The evidence of the plaintiff was that he was approached by officials from the Department to build schools with such Green Crete blocks.

[10] The plaintiff was requested to give a presentation to the Executive Committee of the defendant, which presentation took place on 24 October 2014. On 28 October 2014, the Head of Department (HOD), Mr Thobakgale, presented a Memorandum to the Premier of the North West Province, which led to the conclusion of a “Memorandum of Understanding” being concluded between the plaintiff and various Provincial Entities.

[11] On 2 August 2016, an internal memorandum was addressed to the HOD, in which he was requested to allow deviation from the normal tender based procurement system in terms of the tender regulations. In the memorandum, special reference is made to the fact that the deviation must be reported to the Provincial Treasury, to be in compliance with the tender regulations. This memorandum, and the subsequent deviation from the normal tender based procurement system, was approved. However, the deviation was never reported to the Provincial Treasury or Auditor-General as it should have been done by the Department.

[12] The appointment of the plaintiff to build the schools was not done pursuant to an open, transparent, and competitive public procurement process, but followed the memorandum in which the HOD approved the request for deviation from the normal procurement process. This appears on the memorandum, also referred to as the submission, which was initiated by Mr Mpho Letlape, the then Chief Director: Infrastructure and which was approved with amendments by the former HOD, Mr Pakiso Mothupi. The defendant’s Mr Manzini and the former Chief Financial Officer, Ms Tsimane was in support of the submission and emphasised the need to comply with the prescripts by reporting the deviation to both Treasury and the Auditor-General.

[13] A memorandum of understanding (MOU) was concluded between the plaintiff and the provincial government, in which the identified projects are to be subjected to a viability and feasibility study before it is executed. This is apparent from sub-clauses 6.1.1.and 6.1.2 of the MOU where the following is recorded:

“6.1.1. The Parties note and agree that they will work together towards identifying, investigating, planning and agreeing various projects.

6.1.2. The process of identifying, investigating, planning and agreeing Projects, will include a determination of/on the meaningfulness, viability, feasibility and sustainability of the project before same is moved to execution. If it is found that a Project is not meaningful, viable, feasible and/or sustainable, then the Project will not be moved execution unless the nature, scope and extent of the Project is adapted in such a manner as would cause it to be (or become) meaningful, viable, feasible and sustainable”.

[14] The HOD as the Accounting Officer has the authority to approve such deviations as mentioned in the memorandum, to deviate from following the normal procurement process. This was confirmed in a decision from the Supreme Court of Appeal dealing with a judgment from this Division in TEB Properties CC v MEC for Department of Health and Social Development, North West 2011 JDR 1670 where it was held at paragraph 16 that:

“[16] As to the import of regulation 16 A6.4 this court in Chief Executive Officer, S A Security Agency [2011] 3 All SA 23 (SCA) para 15 said the following:

'The regulation permits an accounting officer or the chief executive officer to deviate from a competitive process subject to conditions. As mentioned it is not contended that a "system" may not provide for such deviations. First, there must be rational reasons for the decision. That is a material requirement. Second, the reasons have to be recorded. That is a formal requirement. The basis for these requirements is obvious. State organs are as far as finances are concerned first of all accountable to the National Treasury for their actions. The provision of reasons in writing ensures that Treasury is informed of whatever considerations were taken into account in choosing a particular source and of dispensing with a competitive procurement process. This enables Treasury to determine whether there has been any financial misconduct and, if so, to take the necessary steps in terms of regulation.' . . .”

(own emphasis)

[15] On 5 August 2016 the defendant issued two letters of appointment in terms of which the contracts were awarded to the plaintiff.

[16] During the construction of the schools, the plaintiff realised that the Green Crete blocks that it intended to use were 90mm wide, which were too thin and were easily damaged in transit. The plaintiff decided to use a sturdier, wider block that is 120 mm wide.

[17] The construction took place under the supervision of Tectura’s Principal Agent, Architect, Structural Engineer and Quantity Surveyor. Payment certificates were issued by the defendant to the plaintiff during the construction period of more than 4 years. On 19 September 2019 Interim Payment Certificate 22 was issued which certified the works to be 94.42% complete. In Loretlweng, after the site was established on 1 August 2017, the building proceeded to receipt of Interim Payment Certificate 19 issued on 8 November 2019.

[18] At that stage the Province had been placed under administration and the Administrator was the previous HOD, Mr Thobakgale. Mr Du Plessis, from the National Department of Public Works, was deployed to investigate various matters in the Province. After a site visit to the plaintiff’s projects, various meetings and exchange of correspondence, the HOD, on 7 October 2019, summarily stopped the project and, as he later said, “evicted the contractor” from site. The plaintiff as was never thereafter allowed back on site to perform any further work.

[19] When the Province was placed under administration, the Administrator, Mr Thobakgale, on 16 January 2020, wrote a letter to the plaintiff, relating to both schools, placing them on 14 days’ notice to submit:

19.1. Approved documents.

19.2. Approved and signed documents and plans which would include a rational design performed by a registered engineer prior to construction.

19.3. Approved and signed off documents by the accounting officer approving the rational design;

19.4. Preliminary design reports PW371 and PDR-S 01 to 04.

19.5. Appointment letters from the relevant departments for the two projects in question.

19.6. Appointment letter for the Coligny School Hostel Project.

[20] The plaintiff contends that the aforesaid letter in itself constitutes a repudiation, since the contract exonerates the plaintiff completely from any design responsibility.

[21] It is common cause that the plaintiff was evicted from the site by the local community members during protest actions of which the Department’s officials were aware. The plaintiff was not allowed to return to the building site. The defendant failed to secure that the building sites are available to proceed with the further building procedures. The plaintiff contends that this constitutes a repudiation.

[22] On 15 September 2020, the plaintiff’s attorney sent a letter to the Department in terms of which he indicated that the plaintiff had accepted the repudiation of the contracts and decided to cancel same.

Plea and counterclaim

[23] The defendant’s plea and counterclaims are, mutatis mutandis, premised on the following averments:

23.1. That the Principal Building Agreements, in the form of the standard JBCC Contract, in respect of both schools were unlawful, invalid and in breach of the procurement process system of the defendant’s department in terms of section 217 of the Constitution, section 38(1)(a)(iii) of the Public Finance Management Act and National Treasury Practise Note No. 11 of 2008/2009, as the appointments were not made pursuant to an open and transparent public procurement system or where it was done as an unsolicited proposal, that the process outlined in Treasury Practise Note No. 11 of 2008/2009 were not followed.

23.2. In the alternative, that the conclusion of the Principal Building Agreements, in the form of the standard JBCC Contract, in respect of both schools were induced by material and false representation based on the plaintiff’s claim to construct the two schools utilising the Green Crete alternative building construction system as certified by Agrèment SA under certificate 2015/477 where as in truth and fact, the plaintiff utilised a different building system resulting in the loss to the defendant.

23.3. In the further alternative, that the defendant is entitled to cancel the Principal Building Agreements, in the form of the standard JBCC Contract in respect of both schools in accordance with clause 4.1 of the JBCC Contract as a result of material breach by the plaintiff on the basis of any of the following events:

23.3.1. Its failure to comply with the National Building Regulations and Building Standards Act 103 of 1977 for failure to obtain approved building designs for the two schools from the local municipality;

23.3.2. Its failure to satisfy the requirements of SANS 10400 in respect of the strength and structure of the walls of the two schools;

23.3.3. Its failure to submit approvals of the design of the structural walls either in terms of Agrèment SA or the rational design as approved by the municipality; and

23.3.4. Its alteration of the bill of quantities without the approval and/or concurrence of the principal agent and the defendant.

[24] I will proceed to discuss each of the defences individually.

The legal position: Illegality

[25] The onus to prove illegality is on the defendant. In Pratt v First Rand Bank Ltd [2008] ZASCA 92; 2009 (2) SA 119 (SCA) at para 13 the Supreme Court of Appeal held that a plaintiff who seeks a declaratory order that a contract is illegal, bears the onus to prove illegality.

[26] Where illegality is raised as a collateral defence to a claim for enforcement, such as the present, the courts have consistently held that the defendant bears the onus to prove illegality. Thus, in Diners Club SA (Pty) Ltd v Singh 2004(3) SA 630 (D) at 645F-G. Levinsohn J stated that:

“[t]he legal onus of establishing that a term in a contract (admittedly entered into by the defendants) is contra bonos mores rests on the defendants. This carries with it the duty finally to satisfy the Court that it ought to succeed on the issue and they have also the duty to adduce evidence in regard to the factual background relevant to the defence”

[27] This view accords with the scholarly articles written by Floyd 2012 THRHR 539, note 5; and Du Plessis 2015 SALJ 664.

[28] The defendant pleads as follows in relation to the issue of illegality:

“2.2. The defendant pleads that the conclusion of the Principal Building Agreement in respect of the construction of Loretlweng Secondary School, Bonabona village, in the North West province was unlawful, invalid and in breach of the system of procurement for goods and services by the Department of Public Works and Roads ( DPWR) in terms of the relevant provisions of section 217 of the Constitution, section 38(17(a)(il) of the Public Finance Management Act as well as the National Treasury Practice Note No. 11 of 2008/2009 regulating unsolicited proposals in that:

2.2.1. The appointment of the plaintiff did not follow an open and transparent public procurement process where potential bidders are invited to bid for the provision of the construction services prior to the appointment;

2.2.2. In the event that the plaintiff's appointment was purportedly made as an unsolicited proposal, the DPWR did not enter into an unsolicited proposal agreement with the plaintiff to detail the following aspects:

2.2.2.1. the methodology of costs to be paid to the plaintiff in respect of the proposal

2.2.2.2. the procedure for further developing the project;

2.2.2.3. the allocation of responsibility for developing bid documents in accordance with the DPWR supply chain management system;

2.2.2.4. the confidentiality of the proposal;

2.2.2.5. the intellectual property rights acquisition, if any; and

2.2.2.6. the appointment of the plaintiff did not follow the procurement process envisaged in paragraph 5 of Practice Note No 11 of 2008/2009.”

[29] The legal position regarding illegal transactions is rather strict. Section 172(1) of the Constitution provides, in peremptory terms:

“When deciding a constitutional matter within its power, a court-

(a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency; and

(b) may make any order that is just and equitable, including-

(i) an order limiting the retrospective effect of the declaration of invalidity; and

(ii) an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.”

(own emphasis)

[30] Once it is found that the contract is illegal for being inconsistent with the Constitution, it must be declared invalid. See: Municipal Manager: Qaukeni Local Municipality and Another v FV General Trading CC 2010(1) SA 356 (SCA at para 16; Eastern Cape Provincial Government and Others v Contractprops 25 (Pty) Ltd 2001(4) SA 142 (SCA) at para 8 and 9.

[31] Section 217(1) of the Constitution provides:

“When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.”

[32] Section 217 of the Constitution does not, in and of itself, supply a total and final test for legality: it is a policy statement and injunction to Parliament to pass national legislation to prescribe a framework within which procurement must be done.

[33] Pursuant to this injunction, Parliament has passed the Public Finance Management Act 1 of 1999 (the “PFMA”). The defendant relies on section 38(1)(a)(iii), which provides as follows:

“The accounting officer for a department, trading entity or constitutional institution-

(a) must ensure that that department, trading entity or constitutional institution has and maintains-

(i) effective, efficient and transparent systems of financial and risk management and internal control;

(ii) a system of internal audit under the control and direction of an audit committee complying with and operating in accordance with regulations and instructions prescribed in terms of sections 76 and 77;

(iii) an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective;

(iv) a system for properly evaluating all major capital projects prior to a final decision on the project;”

[34] Pursuant to s 76(4)(c) of the PFMA, a Framework for Supply Chain Management was promulgated in Government Gazette 25767 of 5 December 2003 as Treasury Regulations See: MEC for Health, Gauteng v 3P Consulting (Pty) Ltd 2012 (2) SA 542 (SCA) at para 16. Section 16A thereof deals with Supply Chain Management. In broad brush strokes it enjoins accounting officers to develop and implement in his or her institution, a supply chain management system in accordance with the Constitution. Regulation 16A.6.4 provides:

“If in a specific case it is impractical to invite competitive bids, the accounting officer or accounting authority may procure the required goods or services by other means, provided that the reasons for deviating from inviting competitive bids must be recorded and approved by the accounting officer or accounting authority.”

[35] Section 217(1) of the Constitution lays the ground rules in relation to the sourcing of goods and services by all organs of state in the Republic. It provides as follows:

“(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.”

[36] On the other hand, section 38(1)(a)(iii) of the Public Finance Management Act 1 of 1999 (“The PFMA”) provides as follows:

“(1) The accounting officer for a department, trading entity or constitutional institution-

(a) must ensure that that department, trading entity or constitutional institution maintains-

…

(iii) an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective ...”

[37] Deviations from the above legislative prescripts are allowed in certain prescribed instances. In this regard, Treasury Regulation 16A6.4 provides for a process of deviation from following the normal procurement process and is couched thus:

“If in a specific case it is impractical to invite competitive bids, the accounting officer or accounting authority may procure the required goods or services by other means, provided that the reasons for deviating from inviting competitive bids must be recorded and approved by the accounting officer or accounting authority.”

[38] In line with the above Treasury Regulation, the National Treasury Practice Note 8 of 2007/2008 provides a practical guide on the procurement of goods and service beyond the value of R500 000-00 and on deviations. It provides at clause 3.4 that:

“3.4.1 Accounting officers / authorities should invite competitive bids for all procurement above R 500 000.

3.4.2 Competitive bids should be advertised in at least the Government Tender Bulletin and in other appropriate media should an accounting officer / authority deem it necessary to ensure greater exposure to potential bidders. The responsibility for advertisement costs will be that of the relevant accounting officer / authority.

3.4.3 Should it be impractical to invite competitive bids for specific procurement, e.g. in urgent or emergency cases or in case of a sole supplier, the accounting officer / authority may procure the required goods or services by other means, such as price quotations or negotiations in accordance with Treasury Regulation 16A6.4. The reasons for deviating from inviting competitive bids should be recorded and approved by the accounting officer / authority or his / her delegate. Accounting officers /authorities are required to report within ten (10) working days to the relevant treasury and the Auditor-General all cases where goods and services above the value of R1 million (VAT inclusive) were procured in terms of Treasury Regulation 16A6.4. The report must include the description of the goods or services, the name/s of the supplier/s, the amount/s involved and the reasons for dispensing with the prescribed competitive bidding process.”

(own emphasis)

[39] The constitutional framework dealing with procurement of goods and services by the government provides checks and balances. The rampant malaise is internal corruption. As the court pointed out in Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others 2014 (1) SA 604 (CC) at para 27:-

“… deviations from fair process may themselves all too often be symptoms of corruption or malfeasance in the process. In other words, an unfair process may betoken a deliberately skewed process. Hence insistence on compliance with process formalities has a threefold purpose: (a) it ensures fairness to participants in the bid process; (b) it enhances the likelihood of efficiency and optimality in the outcome; and (c) it serves as a guardian against a process skewed by corrupt influences.”

[40] The plaintiff argues that the conclusion of the contract was not inconsistent with the Constitution, on the basis that the defendant was unable to discharge the onus resting upon it to prove illegality.

[41] It is argued by the defendant that corruption is the mischief which is being addressed by the need to observe no other approach but the constitutional approach in assessing processes followed by an organ of state in the procurement of goods and services.

[42] In Glenister v President of the Republic of South Africa and Others 2011 (3) SA 347 (CC) at para 176, the court is emphatic: -

“Endemic corruption threatens the injunction that government must be accountable, responsive and open; that public administration must not only be held to account, but must also be governed by high standards of ethics, efficiency and must use public resources in an economic and effective manner. As it serves the public, it must seek to advance development and service to the public. In relation to public finance, the Constitution demands budgetary and expenditure processes underpinned by openness, accountability and effective financial management of the economy. Similar requirements apply to public procurement, when organs of State contract for goods and services.”

[43] In Chief Executive Officer, SA Social Security Agency NO & others v Cash Paymaster Services (Pty) Ltd [2011] 3 All SA 23 (SCA) at para 14, the purport of Treasury Regulation 16A6.4 was understood in the following context:

“The regulation permits an accounting officer or the chief executive officer to deviate from a competitive process subject to conditions. As mentioned it is not contended that a “system” may not provide for such deviations. First, there must be rational reasons for the decision. That is a material requirement. Second, the reasons have to be recorded. That is a formal requirement. The basis for these requirements is obvious. State organs are as far as finances are concerned first of all accountable to the National Treasury for their actions. The provision of reasons in writing ensures that Treasury is informed of whatever considerations were taken into account in choosing a particular source and of dispensing with a competitive procurement process. This enables Treasury to determine whether there has been any financial misconduct and, if so, to take the necessary steps in terms of regulation.”

[44] The plaintiff called Mr Heinrich Snyman to testify. His evidence was to the effect that he joined the plaintiff as its Chief Executive Officer during May 2015. He became aware of the signed memorandum of understanding between the plaintiff and the North West provincial government. According to him, the plaintiff’s appointment came about after having been requested to provide a quotation on the construction of the two schools based on the bill of quantities that were prepared by the professional team that was previously appointed by the defendant to prepare same for a conventional method of construction. Subsequent thereto, the plaintiff received a letter of appointment from the then Head of Department, Mr Pakiso Mothupi and the contract amounts, in respect of the two respective schools, appear on the respective letters of appointment, which amounts were later changed and reflected in the signed JBCC contracts. Under cross-examination, he conceded that organs of state are obliged to conduct their procurement processes through an open, transparent and competitive system as a norm. He conceded that it was not the case in respect of the appointment of the plaintiff in the two schools. He further confirmed that he was not privy to the discussions that led to the conclusion of the MOU.

[45] The defendant called Ms Johanna Hart to testify regarding the illegality of the contracts. The further evidence produced by the defendant, of Ms Mangoejane Moiloa (“Ms Moiloa”), Messrs Mpho Sepotokele (“Mr Sepotokele”) and Mothusi Matthews Monye (“Mr Monye”), confirmed the fact that the plaintiff was not appointed following an open and transparent public procurement process.

[46] It is common cause that the deviation from following the normal procurement processes was not reported to the Treasury and Auditor-General. The evidence of Mrs Hart remained unchallenged as she is the responsible official for the Compliance Unit in the department and she has confirmed that no reporting was done.

[47] In proving illegality, the defendant relies on Treasury Practice Note 11 of 2008/2009. The Practice Note however, deals with unsolicited bids. The evidence before this Court does not indicate that an unsolicited bid was applicable to the facts of the matter, but rather an exception to the normal procurement process which was not reported by the Department as an exception.

[48] The process outlined in National Treasury Practise Note No. 11 of 2008/2009 was not followed by the defendant’s department in the appointment of the plaintiff and there was no prior process to test the market about whether the plaintiff was the sole service provider to provide alternative building method and all other processes.

[49] It is not the duty of this Court to pronounce on the decision, or failure of reporting the decision to deviate from the normal procurement system. It is also not this Court’s function, with the benefit of hindsight, to second-guess the HOD’s decision. There clearly was, on both sides, the best intentions to benefit the local communities and the fiscus.

[50] The plaintiff submits that the defendant has failed to prove that the contracts are tainted with illegality, and argues that the counterclaim and all defences relating to illegality should be dismissed.

[51] The defendant submits that the plaintiff’s knowledge or lack thereof regarding the department’s compliance with the law is no bar from scrutinizing the legality of the two contracts based on compliance with procurement prescripts.

[52] In analysis of the law and in application thereof to the facts of the matter, the appointment of the plaintiff cannot be nullified for failure of the Department to duly report the deviation from the normal procurement process to the Treasury and Auditor General.

[53] To my mind, it would lead to gross irregularities and be inherently unfair towards a private party where the Government Department fails to follow the correct internal procedures, and the private party suffers the damages for the inaction of the Department in failing to execute their internal departmental duties. In this instance, the contract was awarded as a deviation contract and the deviation was approved by the HOD. The failure of the responsible people to report the deviation to the Auditor-General and Treasury, cannot be laid at the door of the plaintiff.

[54] The legal principle res perit domino (i.q. casum sentit dominus) (die verlies van die saak tref die eienaar / the loss of the thing is to the prejudice of the owner”. The application of this legal principle has the effect, and is colloquially referred to as “Damage rests where it falls”. The plaintiff cannot suffer damages at the hands of the defendant, for something that was out of the plaintiff’s control, and in which process the plaintiff had no authority. It cannot be expected of every private party that contract with the State, to ensure that the internal process of the State was correctly followed. The fault lies at the door of the Government and it is there that the damage should rest as well.

[55] Resultantly, I find that the defendant has failed to prove that the contracts are tainted with illegality.

[56] Based on the aforesaid, I find that the process leading to the appointment of the plaintiff to execute construction works at the two schools that are the subject-matter of this consolidated action was in compliance with the legislative purpose underpinned by section 217 of the Constitution and the appointments therefore are lawful and valid.

[57] I proceed to deal with the remainder of the defences raised by the defendant.

MISREPRESENTATION

Onus of proof:

[58] The authorities are to the effect that the party who relies on misrepresentation, bears the onus of proof of such misrepresentation. See: Lombard Insurance Company Ltd v Landmark Holdings (Pty) Ltd 2010 (2) SA 86 (A) at para 20; Loomcraft Fabrics CC v Firstrand Bank Ltd [1995] ZASCA 127; 1996 (1) SA 812 (A); Casey v Firstrand Bank 2014(2) SA 374 (SCA) at para 16; Raubex Construction v Bryte Insurance Company Ltd [2019] ZASCA 14; Bombardier Africa Alliance Consortium v Lombard Insurance Company Ltd 2021(1) SA 397 (SCA) at para 22.

[59] Schmidt Law of Evidence para 2.2.1.2 says the following:

“That plaintiff has to establish the prerequisites for defendant’s liability does not necessarily require him to prove or disprove every disputed fact. If the defendant has put in issue a fact preventing the enforceability of plaintiff’s claim, such as his own lack of contractual capacity, fraud perpetrated by the plaintiff, the contract’s illegality or a provision rendering it contrary to public policy, the defendant will have to prove his allegation. These are seen as facts relied upon by defendant and falling outside plaintiff’s cause of action.”

See also Claasen v African Batignolles Construction (Pty) Ltd 1954 1 SA 552 (O) 563C, Magna Alloys and Research SA (Pty) Ltd v Ellis 1984 4 SA 874 (A) 898C-D

The Law:

[60] The first element that must be proven is a false representation.

See: Schmidt v Dwyer 1959 (3) SA 896 (C); Kern Trust (Edms) Bpk v Hurter 1981 (3) SA 607 (C).

[61] The second element is that it must be made by the plaintiff or its agent.

See: Karabus Motors (1959) Ltd v Van Eck 1962 (1) SA 451 (C).

[62] The third element is that it was a material misrepresentation, in other words one that would influence a reasonable person to rely thereon and to conclude a contract.

See: Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A); Faulkner v Freeman 1985 (3) SA 555 (C).

[63] The fourth element is that it must have been wrongful.

See: Ehlers NO v Graphorn NO; Graphorn v KZN Natuurbewaringsraad  [2005] 4 All SA 601 (SCA); Cape Empowerment Trust Limited v Fisher Hoffman Sithole 2013 (5) SA 183 (SCA); Brouze v Wenneni Investments  [2015] 4 All SA 543 (SCA) paras 110–115; Cuba NO and others v Holoquin Global (Pty) Ltd and others  [2016] 4 All SA 77 (GJ).

[64] The fifth element is that it must be negligent, i.e. whether, when the misrepresentation was made, it was foreseeable that the defendant would act upon it and conclude the contract.

See: Novick v Comair Holdings Ltd 1979 (2) SA 116 (W) p. 150.

[65] The sixth element is that it must have induced the counterparty to enter into the contract (causation). That is a factual question.

See: Bayer SA (Pty) Ltd v Frost 1991 (4) SA 559 (A) p. 570

The defendant’s pleaded case on misrepresentation:

[66] The defendant pleads the misrepresentation relied upon as follows. The plaintiff brought the defendant under the impression that:

66.1. That it was the holder of a patented design for the Green Crete Building System;

66.2. That the patented design was approved by Agrèment South Africa, (a statutory body functioning under the Department of Public Works) under certificate 2015/477;

66.3. That it had the necessary skills, expertise and knowledge to execute building projects using alternative construction methods for the two schools involved in this matter, in accordance with the terms and conditions of the Principal Building Agreement, the Bill of Quantities and the drawings;

66.4. That it will promptly and diligently deliver the schools in accordance with the Green Crete Building System in accordance with Agremènt Certificate 2015/477.

The evidence on misrepresentation

[67] No evidence of any misrepresentation that the defendant labored under, prior to the conclusion of the contract, was led by the defendant. No person who was involved in the project prior to the conclusion gave any evidence on behalf of the defendant. The plaintiff argues that the Court was not assisted by the defendant to identify who the individual was who made the alleged representation on behalf of the plaintiff and to whom at the defendant the representation was made.

[68] It was specifically pleaded by the defendant that the misrepresentation about Agrèment Certification had been made in “early 2014”. The first such certificate was issued only in May 2015. It is improbable that such representation would have been made, more than a year before such certificate has been issued.

[69] The plaintiff submits that the alleged misrepresentation was not proved.

[70] The defendant was, prior to the appointment of the plaintiff and during the plaintiff’s duties as contractor, represented by a full complement of architects, engineers and quantity surveyors, in one instance of the ilk of Architecture, Engineering, Construction, Operations, and Management (AECOM) an internationally renowned multidisciplinary team of experts, who had the requisite knowledge and understanding of the National Building Regulations. These experts had designed the schools, drawn plans, submitted same to the local authority and oversaw the process from site establishment to signing off the Interim Payment Certificates.

[71] At no stage during construction did the design team raise any query about the plaintiff’s building methods. It does not lie in the mouth of the defendant to say that it was misled by reference to an Agremènt Certificate under circumstances where they had those powerful teams of experts at their disposal. None of these experts were called to testify.

[72] The evidence tendered by Mr Fullard on behalf of the plaintiff to the effect that the Agremènt Certificate in itself requires a rational design to be made in order to comply with the National Building Regulations, was not contested. The defendant allowed the plaintiff to proceed with the building of the schools on the basis of the plaintiffs “shop drawings”.

[73] It is common cause that no rational design as claimed by the defendant was ever produced by the design team. What they did was to ask the plaintiff for “shop drawings”. Those drawings are produced by semi-skilled contractor employees, and often by qualified tradesmen. They do not and cannot produce a rational structural design drawing that is required by Agremènt SA.

[74] It is common cause that the Principal Building Agreement placed the design responsibility squarely on the employer (thus the defendant) and its agents, and expressly exonerates the contractor from any design responsibility except its own temporary works (such as excavations, retaining berms, scaffolding and the like).

[75] The Principal Building Agreement places the obligation to ensure that the contract is signed in its correct form on the Principal Agent.

[76] It is common cause that, at no time was any of the terms of the contract varied or amended.

[77] The plaintiff thus submits that there was no evidence of the misrepresentations pleaded, wrongfulness, negligence on the side of the plaintiff or reliance on such representation inducing the conclusion of the contract.

[78] I agree with the submissions of the plaintiff. I do not find that any misrepresentation was made to the defendant, prior to or for the duration of the agreement.

1^st Material breach of contract: defendant’s case

[79] The second issue for determination as pleaded by the defendant in the plea and counterclaim can be summarised as follows:

79.1. The conclusion of the Principal Building Agreements, in the form of the standard JBCC Contract, in respect of both schools were induced by material and false representation based on the plaintiff’s claim to construct the two schools utilising the Green Crete alternative building construction system as certified by Agrèment SA under certificate 2015/477.

79.2. The defendant acted in terms of that representation and appointed the plaintiff, whereas in truth and fact, the plaintiff utilised a different building system resulting in the loss to the defendant.

79.3. The plaintiff’s replication to the defendant’s plea on this aspect reveal the following:

79.3.1. That one Hendrik Johannes Snyman was invited by the former MEC, Madoda Sambatha to make a presentation to the North West Executive Council in respect of the alternative building methods based on the Green Crete Building System utilised by the plaintiff at Village of Hope which was constructed at Hartebeespoort area.

79.3.2. Hendrik Snyman made such a presentation to EXCO on 27 October 2014.

79.3.3. After the presentation, the defendant compiled a MOU, which MOU was signed on 14 January 2015 by the former Premier and MEC on behalf of the North West Government and Mr Snyman on behalf of, amongst others, the plaintiff.

[80] Subsequent to the signing of the MOU and during August 2016, the plaintiff was provided with certain building plans and was invited to submit quotations for the building of, amongst others, the two schools that are the subject matter of this consolidated action.

[81] Prior to the conclusion of the MOU, the plaintiff was issued with Agrèment SA certificate 2015/447, which, amongst others, certified the usage of wall panels of dimensions 1200x900x90mm.

[82] Neither the plaintiff nor the defendant led any direct evidence of any of the parties who were present during the presentation of 27 October 2014 but from the testimony of Mr Snyman, Mr Du Plessis and Mr Willem Kotzè, read together with the relevant pleadings, the following arre common cause facts:

82.1. The letters of appointment in respect of the two schools and signed by Mr Mothupi, refer to the plaintiff constructing the said schools using alternative construction method. This can be gleaned from paragraph (a) of the letter of appointment for Tlotlang Thuto dated 5 December 2016 where the following is stated:

“(a) You are hereby appointed to construct the above-mentioned school as per the memorandum of agreement to pilot alternative building methods.”

82.2. That the plaintiff was certified to utilise a wall panel of 1200x900x90mm by Agrèment SA in terms of certificate 2015/447, the plaintiff, but nonetheless, in constructing the two schools, utilised a wall panel with different dimensions, being 1200x450x120mm, which dimensions differed from the certificate, and which were not certified by Agrèment SA.

82.3. That Mr Du Plessis requested the plaintiff to provide him with the Agrèment SA certificate relating to the use of the wall panel with the dimension of 1200x450x120mm and the plaintiff provided him, initially, with a letter where a certain Dr Wekesa confirmed, in a handwritten inscription, the certification of the new dimension, which confirmation was later sent through a letter dated 14 August 2017 under the letterheads of Agrèment SA, which was later found to be not authentic or correct.

82.4. That the Administrator then directed a letter signed on 7 October 2019 ordering the plaintiff to discontinue the construction of the two schools.

[83] It is trite law that, for a party to succeed with a claim premised on misrepresentation, such a party should establish (a) a statement made, (b) which statement is false, (c) that the statement so made was material to the extent of inducing the other party to rely upon it, (d) the intention on the part of the plaintiff made to ensure that the defendant rely on such statement and (e) that in fact the defendant acted on such statement.

See: Novick and Another v Comair Holdings Ltd and Others 1979 (2) SA 116 (W) at 149D-150C and Standard Bank of South Africa Ltd v OK Bazaars (1929) Ltd 2000 (4) SA 382 (W) at 393E-F.

[84] On a proper reading of the MOU entered into between the parties, read with the contents of the letter of appointment, the plaintiff’s appointment and utilisation of alternative construction method could only mean the Green Crete System and its wall panel as certified by Agrèment SA under certificate 2015/447. There was no indication to any other material or method being used.

[85] The presentation and the conclusion of the MOU and the ultimate appointment, were all premised on the fact that the plaintiff was utilising the Green Crete System together with its certified panel of 1200x900x90mm dimension as so certified by Agrèment SA.

[86] It is not disputed that Mr Snyman, the witness for the plaintiff, conceded that the plaintiff opted to utilise a different wall panel than the one which was so certified by Agrèment SA.

[87] The representation which the plaintiff made and upon which the appointment of the plaintiff was based, being the Agrèment SA certified wall panel of 1200x900x90mm dimension, led to the defendant to appoint the plaintiff. The defendant only to realise upon the execution of the schools to the progress of 95% and 25% respectively, that the representation made was not correct and that a 120mm block was used and not the 90mm block as identified in the Agrèment SA certificate.

[88] The defendant argues that the plaintiff attempted to present a falsified “certification” of the new dimension wall panel by Dr Wekesa. The plaintiff’s evidence was to the effect that the alteration of the dimensions was authorised in writing, as can see on the certification, from 90mm to 120mm. The defendant submits that the representation made about the kind of wall panel that was going to be utilised was incorrect and false.

[89] Our law on the effect misrepresentation of facts is trite. A party who has been induced to conclude a contract based on a material misrepresentation of facts which induced him to do so, is entitled to rescind that contract.

See: RH Christie Christie’s Law of Contract in South Africa 7 ed (2016) 341.

[90] The defendant argues that the above justifies the appointment of the plaintiff to be nullified based on misrepresentation of facts and the plaintiff.

1^st Material breach of contract: plaintiff’s case

[91] It is submitted on behalf of the plaintiff that the defendant pleaded that the plaintiff materially breached the contract and that the defendant was “entitled to cancel” (cancellation is not pleaded) in accordance with clause 4.1 of the agreement.

[92] Clause 4.1 of the agreement reads as follows:

“The contractor shall not be responsible for the design of the works other than the contractor’s temporary works or his subcontractor’s temporary works. The contractor shall not be responsible for the primary co-ordination of design elements.”

[93] This provision does not afford the defendant any right of cancellation: if anything, it exonerates the plaintiff from executing any design work.

[94] It is common cause that the plaintiff had, from the start, not followed the architects’ design drawings, in three material respects:

94.1.Firstly, it did not construct the schools with ordinary strip foundations but did so on a raft foundation. It did not get engineering drawings from the appointed engineer, but engaged their own engineers, Hage Engineers. Mr Fullard explained that that is nothing strange in the trade, since such an engineer works under the supervision of the appointed engineer and submits a Form 3, where after the appointed engineer submits his Form 4.

94.2.Secondly, the roof structure is indicated as timber trusses on the architects’ drawings. The roofs were not constructed with timber but with light steel frames, likewise designed by and signed off by the supplier’s engineer.

94.3.Thirdly, the construction of the walls. Agrèment Certificate 2015/477 specifies (apart from a rational design which was not done by the employer’s design team) the use of modules (“blocks”) 1200 mm long, 900 mm high and 90 mm wide, on the alternate sides of which grooves were cut, so that they would interlock with the blocks on either side. Mr Snyman testified that it soon became apparent that those blocks were very difficult to handle on site due to their size, and because the grooves deduced the thickness of the edges, they were prone to be damaged and chipped even before they reached the site. He further explained that they then decided to use a thicker but smaller block. Made from the same material and constructed in the same way as the thinner blocks. The only difference was that they were not cut on the sides in order to interlock. These blocks were slid into a metal channel fixed to the foundation, glued together with tile glue and received a fiberglass mesh on both sides, which is then plastered with a special plaster to complete the structures.

94.4.Mr Snyman further testified that these sturdier blocks were to the advantage of the defendant. Under cross-examination, Mr Snyman held his contention that the structures were not finalised when the plaintiff was prevented from completing the buildings and as such, the buildings were not stable. The buildings would only be stable once the complete structure has been finalised.

[95] The evidence of Mr Snyman was that, after establishing that the building methods were not the same as normal brick and mortar for which the defendant’s design teams designed, the Principal Agents could do one of three things, for which they should answer for professionally:

95.1.They could stop the process immediately when it started by issuing a contract instruction in terms of clause 5,3, read with 17.1.3 or 17.1.4 of the contract. It must be borne in mind that there is a reason why the Principal Agent is the only person on site who may give such instructions: he or she is a professional person, normally, as in this case, an architect, who uses his or her professional judgment. The employer cannot issue these instructions. It is common cause that no such instructions were issued.

95.2.The Principal Agents could simply ignore what is going on, on site and leave the contractor to his own devices. That would be a gross dereliction of duties, and it is improbable that that happened.

95.3.The Principal Agents could request information from the contractor and prepare a rational design, or if they did not want to do so themselves, they could call upon the employer to engage a suitably qualified person to do so. On probability, that is what happened: they called for the contractor’s shop drawings, clearly in order to establish whether the deviations are such that a rational design is required. It is improbable that they would simply ignore their duties as professionals.

[96] Against this background I shall now deal with the various pleaded breaches. Since they are differently pleaded in the two matters, Tlotlang Thutho (case 1886) and Loretlweng (case 1887).

[97] The first breach is that the plaintiff breached the National Building Regulations in that it failed to obtain the approval of building plans from the local authority. The statement is factually correct but legally flawed. The contract does not place any obligation on the contractor to submit plans and get approval. Section 4 and Regulation A2.9. of the Act places that obligation on the owner of the property.

[98] The second pleaded breach is that the plaintiff failed to comply with SANS 10400 in respect of the strength and structure of the walls. It is common cause between the parties, both engineers having conceded that SANS 10400 (i.e. the building regulations issued under the Act), make no provision for alternative building methods except Agrèment Certified methods, although in this case the certificate requires a rational design which was not provided to the builder. A building contractor who bona fide carries out the works with no guidance from the team engaged to support the project, does not commit a breach of contract.

[99] The third pleaded breach is that the plaintiff unlawfully altered the Bills of Quantities (BOQ). The plaintiff submits that there was no evidence to support this alleged breach. The plaintiff was required to quote on the alternative method without bills of quantities and with only the plans being given to them. They prepared their own BOQ’s and submitted a quote. Thereafter they were given the conventional BOQ’s to price, which they also did, and the cost came in much higher. That evidence of Mr Snyman was not contested.

[100] The fourth pleaded breach is that the plaintiff failed to produce an Agrèment Certificate or municipal approved rational design. Neither of these obligations appear from the contract. The plaintiff bore no design responsibility and the contract nowhere requires any Agrèment certification.

[101] Having said this, and having thus far approached the case on the basis that the National Building Regulations apply to the two projects in casu it is important to note that section 2(3) and (4) of the National Building Regulations and Building Standards Act 103 of 1977 provides:

“(3) Subject to the provisions of subsection (4) this Act shall not bind the State.

(4) In respect of any building to be erected by or on behalf of the State, such plans, specifications and certificate as may be prescribed by national building regulation, shall before the commencement of such erection be lodged with the local authority in question for its information and comment: Provided that the Minister may-

(a) if he, with the concurrence of the Minister of Defence, the Minister of Law and Order and the Minister of Justice, is of the opinion that the erection or proposed erection of any building or class of buildings by or on behalf of the State is in the interest of or connected with the security of the Republic, exempt the State in relation to any such building or class of buildings;

(b) by virtue of economic considerations, necessity or expediency, exempt the State, either generally or in any particular case, after notice in writing to the local authority in question, from the provisions of this subsection.”

[102] Local authority approval of drawings is not required by law for the building of schools on state owned property.

[103] The evidence shows that the principal Agent issued no less than 22 Interim Payment Certificates to the plaintiff, certifying that the works were 94.24% complete. No breach notice regarding the building work was ever issued.

[104] This Court considered the allegations of breach of contract by the defendant, as well as the plaintiff’s response thereto. What is a significant indication of whether there was a breach of contract or not, is the issue of an Interim Payment Certificate. The uncontested evidence before this Court is that the building project is inspected by the engineer or project manager, who then certifies that the project is done up to standard, on which certification an Interim Payment Certificate is issued.

[105] The defendant’s witnesses were at a loss of words and could not explain how Interim Payment Certificates were issued, and the plaintiff was paid for the majority of the project done, if the defendant was misled as pleaded by the defendant. One or two Interim Payment Certificates could have been issued before the material misrepresentation was discovered, but it is highly unlikely that a number of twenty-two Interim Payments Certificates are issued where there was material breach of contract.

[106] The evidence set out above, leads this Courts to a finding that the plaintiff did not breach the contract on the basis pleaded by the defendant, or otherwise.

[107] The 1^st material breach of contract by the plaintiff, as pleaded by the defendant, is thus dismissed.

2^nd material breach of the contract: defendant’s case

[108] The defendant pleads that it is entitled to cancel the Principal Building Agreements, in the form of the standard JBCC Contract in respect of both schools in accordance with clause 4.1 of the JBCC Contract as a result of material breach by the plaintiff for:

108.1. The plaintiff’s failure to comply with the National Building Regulations and Building Standards Act 103 of 1977 for failure to obtain approved building designs for the two schools from the local municipality.

108.2. The plaintiff’s failure to satisfy the requirements of SANS 10400 in respect of the strength and structure of the walls of the two schools.

108.3. The plaintiff’s failure to submit approvals of the design of the structural walls either in terms of Agrèment SA or the rational design as approved by the municipality.

108.4. The plaintiff’s alteration of the BOQ without the approval and/or concurrence of the principal agent and the defendant.

[109] The plaintiff’s response to the above propositions advanced by the defendant can be summarised that:

109.1. The two schools were not constructed utilising the approved certificate 2015/477 but a different dimension was used.

109.2. The plaintiff had no responsibility to submit and obtain approved designs for the construction of the walls using their wall panel as this responsibility rested with the principal agent in both schools and in accordance with the JBCC contract.

[110] On this Court’s analysis of the evidence tendered by the witnesses, Mr Snyman for the plaintiff, Ms Moiloa, Mr Sepotokele, Mr Monye and Mr Du Plessis for the defendant, the following facts emerge:

110.1. That the plaintiff submitted approved designs by competent engineers for the foundation and roofing at the two schools, but the plaintiff failed to submit the rational designs for the construction of the wall for approval by the local municipality and the client, being the defendant.

110.2. The plaintiff initially submitted a purported approval of the new dimension wall panel which was signed by Dr Wekesa.

110.3. That at meetings held on site at Tlotlang Thuto School, the plaintiff was informed of its obligation to submit its designs for the wall construction to the local municipality for approval. This was not done.

110.4. That the plaintiff disputes any obligation to submit designs for the wall construction to the local municipality for approval.

[111] The defendant submits that at no point during the said meetings was there any objection registered on behalf of the plaintiff to the effect that the submission of designs for approval by the local authority was not the plaintiff’s responsibility but that of the principal agent.

[112] It is common cause that the walls at Tlotlang Thuto School and Loretlweng are not stable, with the other school’s walls having collapsed. The plaintiff accounts this to the structure not being finalised but having been prevented to finalise the building.

[113] The two experts, Messrs Fullard and Kotzè, in their joint minute and testimony, agreed that:

113.1. A rational design by a professional engineer was required and it was the responsibility of an approved competent person to prepare rational designs.

113.2. They agree that a rational design was not done.

113.3. They further agree that the two buildings are not fit for occupation unless a competent person can sign-off the designs.

[114] The above points are confirmed by the following passages in the report compiled by the plaintiff’s expert, Mr Fullard:

“As the Green Crete walling system was used without an Agrèment Certificate the school walls had to be designed using a rational design by a competent person in terms of the NBR. Even if there was an Agrèment Certificate in place, these certificates also call for a rational design to be performed in compliance with the NBR.

…

We have seen no evidence that the Structural Engineers, nor the Builder’s Engineer, performed a rational design for these two school buildings. There are thus no rational designs that can be tabled should the local authority of the Defendant call for the same”.

[115] The report filed by the defendant’s expert, Mr Kotze, makes the following conclusion:

“[A]s there is no data with no rational design to reference to (and the construction method was already proven to not conform to NBR by other reports) the structure cannot be certified by any responsible engineer.”

Analysis

[116] It is trite that all buildings constructed within the Republic of South Africa must comply with the provisions of the law as contained in the National Building Regulations and Building Standards Act, 1977 (the Act) as well as other guiding standards that are promulgated from time to time under this Act.

[117] The main objective of this legislation is to promote uniformity in the law relating to the erection of buildings and to prescribe building standards. The building standards are, in turn, intended to promote the public interest, safety and health.

See: Mobile Telephone Networks (Pty) Ltd v Beekmans NO and Others 2017 (4) SA 623 (SCA) at para 19.

[118] Section 4(1) to (3) of the Act provides as follows:

“4(1) No person shall without the prior approval in writing of the local authority in question, erect any building in respect of which plans and specifications are to be drawn and submitted in terms of this Act.

(2) Any application referred to in subsection (1) shall be in writing on a form made available for that purpose by the local authority in question.

(3) Any application referred to in subsection (2) shall-

(a) contain the name and address of the applicant and, if the applicant is not the owner of the land on which the building in question is to be erected, of the owner of such land

(b) be accompanied by such plans, specifications, documents and information as may be required by or under this Act, and by such particulars as may be required by the local authority in question for the carrying out of the objects and purposes of this Act.”

[119] In Berg River Municipality v Zelpy 2065 (Pty) Ltd 2013 (4) SA 154 (WCC) at para 26 the court held as follows regarding the purpose of the Act:

“One of the Act's main purposes, in providing for the laying-down of standards for plans and specifications and in requiring plans to be approved by the local authority, is to ensure that buildings will be safe and suitable for their intended use. The erecting of a building is not an end in itself; a building is erected so that it may, upon completion, be occupied and put to use. The reason the Act forbids the erecting of buildings without approved plans and provides for their demolition if they are unlawfully erected is to prevent the existence of buildings which, because of the absence of approved plans, may be unsafe and unsuitable for use (even though no enquiry into safety and suitability is required in order for the act of erecting to be unlawful or in order to obtain an interdict or a demolition order). Even when a building has been erected in accordance with approved plans, s 14 does not permit it to be used or occupied without the local authority's further approval. This is a further mechanism to ensure that the building is safe and suitable for occupation, as is apparent, inter alia, from the requirement for the certificates specified in ss 14(2) and 14(2A).”

[120] It follows that all provisions of the above Act, the Regulations and standards that are promulgated pursuant to the above Act are all terms that are implied by law in any building and/or construction project, regardless of whether the parties to that contract specifically provide for them therein.

[121] In Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA 506 (A) at 532G the often-quoted case about implied and tacit terms, the court, per Corbett AJA, explained an implied term as follows:

“…[T]he implied term (in the above-defined sense) is essentially a standardised one, amounting to a rule of law which the Court will apply unless validly excluded by the contract itself. While it may have originated partly in the contractual intention, often other factors, such as legal policy, will have contributed to its creation..”

[122] There are undoubtedly competing interests at play in this matter, including constitutional rights.

[123] In Beadica 231 CCC and Others v Trustees, Oregon Trust and Others 2020 (5) SA 247 (CC) at para 87 the Constitutional Court explained the position in the following terms:

“In our new constitutional era, pacta sunt servanda is not the only, nor the most important principle informing the judicial control of contracts. The requirements of public policy are informed by a wide range of constitutional values. There is no basis for privileging pacta sunt servanda over other constitutional rights and values. Where a number of constitutional rights and values are implicated, a careful balancing exercise is required to determine whether enforcement of the contractual terms would be contrary to public policy in the circumstance.”

[124] The defendant submits, that the expected standards in terms of strength and stability of the walls of the schools built, utilising the Green Crete system and the responsibility of the plaintiff as a contractor to provide designs and approvals of such designs from the local authority were not specifically provided for in the JBCC, the said terms must be read as implied by law into the JBCC and binding on the plaintiff.

[125] The defendant further submits that in assessing the difference between the oral evidence of the two witnesses, Mr Fullard’s opinion is simply premised on documentation presented to him whereas Mr Kotzè personally visited the two sites to make his own observations.

[126] The plaintiffs case centered around its reliance on clause 4 of the JBCC agreement which places the design responsibility on the principal agent of the contract.

[127] In analysis of the evidence before me, as well as the pleadings, this Court has regard to the following issues in coming to a conclusion:

127.1. According to both parties’ experts, although the standard JBCC contract was used, this particular contract was special in the sense that the building system which was to be used were not conventional masonry walling system, but the Green Crete Smart block walling system.

127.2. When the contracts were signed, the parties were aware thereof that the designs for conventional construction were not going to be used as the plaintiff was appointed to utilise an alternative building method, for it was chosen specifically for the unique product of theirs.

127.3. The plaintiff did not construct the two schools utilising Agrèment SA certification, but to an amended certification which increased the thickness of the building blocks.

[128] On the basis of the clear understanding between the parties emanating from the presentation made by Mr Hendrick Snyman to the Department, the signing of the MOU and the letters of appointment issued by Mr Mothupi to the plaintiff, the plaintiff commenced building the schools. The process of building was continued as the Interim Payment Certificates were issued.

[129] In Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd [1998] ZASCA 57; 1998 (4) SA 844 (SCA) at 855F-G the following was said about the duty that the professional team owes to its client vis a vis the contractor:

“Moreover, the engineer's contractual duty is to his client, not to the contractor. It is not even his duty to the contractor (although it might well be his duty to his client) to intervene if the latter appears to be going wrong unless it is apparent to him that the contractor does not know his business and is going to go wrong. In short, it is the contractor's decision how he carries out the construction work and he cannot pass the blame for defective work on to the engineer (or architect, for that matter).

[130] The defendant’s professional teams on both sites did not perform as expected. Their conduct does not, and cannot, exonerate both the plaintiff and defendant from their obligations to comply with the National Building Regulations and the Act.

Repudiation

[131] On 7 October 2019 when the Department was placed under Administration the work done on both sites were found to not be in accordance with the 2015 Agrèment Certificate. The work was ordered to cease immediately. There was no process of cancellation followed in terms of clause 36.2 of the MOU, but the work was forced to halt in its tracks.

[132] This, in my view, is a clear repudiation of the contract. In Nash v Golden Dumps (Pty) Ltd 1985 (3) SA 1 (A) at 22D – F Corbett, JA, as he then was, said:

“Where one party to a contract, without lawful grounds, indicates to the other party in words or by conduct a deliberate and unequivocal intention no longer to be bound by the contract, he is said to "repudiate" the contract (see Van Rooyen v Minister van Openbare Werke en Gemeenskapsbou 1978 (2) SA 835 (A) at 845A - B). Where that happens, the other party to the contract may elect to accept the repudiation and rescind the contract. If he does so, the contract comes to an end upon communication of his acceptance of repudiation and rescission to the party who has repudiated (see Joubert Law of South Africa vol 5 para 226). The consequence of this is that the rights and obligations of the parties in regard to the further performance of the contract come to an end and the only forms of relief available to the party aggrieved are, in appropriate cases, claims for restitution and for damages.”

[133] The plaintiff did not immediately accept the repudiation, but accepted the repudiation on 15 September 2020 and cancelled the contracts, as it was entitled to do. In Primat v Nelson Mandela Bay Metropolitan Municipality, Lewis, JA held:

“[22] In Nash v Golden Dumps (Pty) Ltd 1985 (3) SA 1 (A) at 22D – H Corbett JA explained that a repudiation occurred —

'(w)here one party to a contract, without lawful grounds, indicates to the other party in words or by conduct a deliberate and unequivocal intention no longer to be bound by the contract'.

When there is a repudiation the aggrieved party may elect to cancel and sue for damages, in which case he or she will inevitably be bound by that election, or elect to abide by the contract and claim performance. Once the contract is cancelled it cannot be revived.

[23] The aggrieved party must choose between these different remedies and is bound by his or her election. As Friedman J said in Bekazaku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd  1996 (2) SA 537 (C) ([1996] 1 All SA 509) at 542E – F:

'The remedies available to the innocent party are inconsistent. The choice of one necessarily excludes the other, or, as it is said, he cannot both approbate and reprobate. Once he has elected to pursue one remedy, he is bound by his election and cannot resile from it without the consent of the other party.'

The statement was approved and applied by this court in Merry Hill (Pty) Ltd v Engelbrecht  2008 (2) SA 544 (SCA) ([2007] ZASCA 60) para 15.

[24] But if the aggrieved party elects to abide by the contract and claim performance from the party who has repudiated, as Culverwell shows, he or she may claim performance and, in the alternative, cancellation and damages. This is the so-called double-barrelled procedure sanctioned in Custom Credit Corporation (Pty) Ltd v Shembe 1972 (3) SA 462 (A), by virtue of which the aggrieved party may claim in one action, first performance, and in the alternative, if that is not forthcoming, cancellation and damages. The double-barrelled procedure was sanctioned by Innes CJ in Ras and Others v Simpson  1904 TS 254 and is a useful procedural device.

[25] But as Nicholas AJA observed in Culverwell, after referring to Ras v Simpson, even where the aggrieved party has elected to abide by the contract, in the face of persistent breach despite the opportunity to relent, the aggrieved party may elect to cancel. Where the defaulting party is clearly determined not to purge the breach, and shows an unequivocal intention not to be bound by the contract, the aggrieved party may abandon his or her futile attempt to claim performance and change the election, claiming cancellation and damages. This is the view taken by GB Bradfield in Christie's Law of Contract in South Africa 7 ed (2016) at 639 where it is suggested that 'persistence' should be understood 'as a further indication of intention to repudiate after having been given an opportunity to reconsider', in which case 'what is involved is an election to cancel based on repeated breach rather than a change of mind'

[26] The requirement of a new and independent act of repudiation by the Municipality before Primat could change its election and exercise its right to cancel and claim damages is not one mentioned in any of the earlier authorities. And, as Primat submits, it makes no sense because it would allow the defaulting party who steadfastly refuses to comply with the contract to keep the contract alive until it commits another act of repudiation.”

[134] The evidence before this Court indicates that the defendant repudiated the contracts and that the plaintiff accepted the repudiation and cancelled the contracts.

[135] Although the onus rested on the defendant to prove the illegality and the misrepresentation as pleaded, it failed to call the then HOD, who later became the Administrator and is currently the Acting Commissioner of Correctional Services, Mr Samuel Thobakgale. If there is one person who could have clarified the legality and misrepresentation issues, it would have been him, for he was the Accounting Officer required to ensure that a contract is not signed if tainted with illegality. He was the only person who could testify as to whether the defendant was misled. No reason was adduced why he was not called.

[136] Also significantly, the professional consultants appointed to design and oversee the execution of the two projects, all fully mandated agents of the defendant throughout the design and construction phases of the contracts, were not called: they would have been able to clarify why they did not provide the plaintiff with a rational design of the works, why they never raised any problem with the construction, and why they continued to issue Interim Payment Certificates and certify payments to be made to the plaintiff.

Conclusion

[137] I find that the defendant has failed to established the merits of each separated issue placed before this Court for determination, for the reasons set out above.

[138] On the legality of the plaintiff’s appointment:

138.1. Although undisputed evidence points to the fact that the appointments in respect of both schools were not preceded by a public tender, the deviation from following normal tender process was done for rational reasons. The non-compliance with the requirement relating to notification of the Treasury and Auditor-General is the fault of the defendant and the plaintiff cannot be held accountable for such fault.

138.2. The appointment is found to be valid and lawful.

[139] The plaintiff did not commit any breach of the contract, given the fact that it received a total of 22 Interim Payment Certificates and no indication from the department that the alternative building method, which has been initially approved were deemed to be not acceptable during the building period.

[140] The plaintiff was prevented from completing the buildings on both sites. The prohibition of work was at the hands of the department. The defendant repudiated the contract, and the repudiation was accepted by the plaintiff.

[141] As a result of the above, I find in favour of the plaintiff.

Cost

[142] The general principle is that the successful party is entitled to its costs. No reason has been advanced, and I find no reason, why the general principle should not be applied.

[143] The volume of the matter, which comprises of no less than 24 lever arch files of documents, as well as the nature and complication of the legal principles involved in this matter, justify the appointment of two (2) counsel, which is to include senior counsel. This view is clearly supported by both parties whom appointed senior counsel.

ORDER

In the premise, the following order is made:

(i) The defendant’s counterclaim is dismissed.

(ii) It is declared that the plaintiff did not breach the terms of the contract.

(iii) It is declared that the defendant repudiated the contract and that the plaintiff accepted the repudiation and cancelled the contract on 15 September 2020.

(iv) The case is postponed for determination of the quantum of the plaintiff’s claims on a date to be arranged with the Registrar.

(v) The defendant is ordered to pay the costs of suit, to date hereof, including the costs consequent upon the employment of senior counsel, and the qualifying, preparation and attendance fees of the expert, Mr Andre Fullard.

FMM REID

JUDGE OF THE HIGH COURT

NORTH WEST DIVISION MAHIKENG

DATE JUDGMENT RESERVED: 15 SEPTEMBER 2023

DATE OF JUDGMENT:- 22 JULY 2024

APPEARANCES:

ON BEHALF THE PLAINTIFF:	ADV P ELLIS SC
INSTRUCTED BY:	ADAMS & ADAMS ATTORNEYS PLAINTIFFS ATTORNEY LYNNWOOD BRIDGE 4 DAVENTRY STREET LYNNWOOD MANOR PRETORIA REF: GWVV/MH/LT4818 TEL: 012 432 6000 EMAIL: Gregor.Wolter@adamsadams.com Magdalene.Haripersad@adams.africa C/O SMITH STANDTON INC 29 WARREN STREET MAFIKENG DOCEX 4, MAFIKENG REF: JN/GET4/0002/2020/rr
ON BEHALF OF THE DEFENDANT:	ADV OK CHWARO WITH ADV J LYSTER
INSTRUCTED BY:	MOKONE ATORNEYS INC ATTORNEYS FOR DEFENDANT 10 TILLARD STREET MAHIKENG TEL: 083 516 3083 EMAIL: info@mokoneinc.co.za REF: MS MOKONE D.0020/CIV

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