IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

CASE No: A532/09

In the matter between;

And

JUDGMENT DELIVERED ON 11 MAY 2011

HENNEY, J:

INTRODUCTION AND BACKGROUND

[1] On 31 May 2004 and at Knysna, the Respondent ("Plaintiff") and the Appellant ("Defendant") entered into a written building contract also known as the Joint Building Contracts Committee Levies 2000 ("JBCC").
[2] In terms of this JBCC, Mark Bell Architects was appointed as the agent of the Defendant and one. P Morkel was employed by the agent as Quantity Surveyors. On completion of the building works by the Plaintiff a final payment certificate was issued by the Plaintiff. The Plaintiff instituted a claim against the Defendant which was based on an alleged final payment certificate in terms of the JBCC contract for the sum of R62 733,31.

[3] The Defendant denies the allegations of the Plaintiff and in particular, pleaded that he denied that the payment certificate was a validly certificate issued by the Defendant agent. Mark Bell Architects, in terms of the agreement

Furthermore, he denies that the Plaintiff is entitled to payment from the Defendant in terms of the alleged payment certificate.

[4] The Defendant also raised a Special Plea in terms of Clause 18 of the JBCC contract, which provided that any dispute between the parties shall be referred to arbitration conducted by an arbitrator, appointed by the Chairman of the Association of Arbitrators (Southern Africa).

[7] After hearing the evidence dealing essentially with the validity of the final payment certificate the court found that the dispute was not a dispute between the Plaintiff and the Defendant, for the purposes of invoking the Arbitration clause, but a dispute between the agent of the Defendant, Mark Bell Architects and the Defendant.

(8] The court found that the certificate issued by the quantity surveyor was in fact issued by the agent (Mark Bell) through the quantity surveyor.

The appeal in this matter turns on these issues:

[10] A further duty of the agent was to issue payment certificates and completion certificates in terms of the agreement, it is common cause that 12 interim payment certificates were issued by the quantity surveyors and payments were made in accordance with such certificates by the Defendant. The Defendant refused to pay the Plaintiff the amount due after the same quantity surveyors issued a final payment certificate in the amount of R62 733,31.

[11] The Defendant contends that the final payment certificate was not a valid certificate in terms of the JBCC contract, due to the fact that the contract as per clause 6.1.5 only empowered the agent (Mark Bell Architects) to issue payment certificates, or completion certificates, in terms of the agreement. For anyone else to have issued a payment certificate the JBCC contract required an amendment in terms of clause 1.5 of the JBCC contract.

12.1 Whether the acceptance of the previous payment certificates by the Plaintiff as issued by the quantity surveyor, constitute a variation to the agreement by means of estoppel, that only the agent is authorised to issue payment certificates, and if so;
12.2. Whether the agent could have "delegated" his authority to SBDS Morkel Quantity Surveyors, to issue the payment certificate in terms of the agreement.
12.3. Whether the claim is based on a valid payment certificate that can be regarded as a liquid document for obtaining a court order in terms of Clause 13.17.2 of the JBCC agreement.

If there is no valid payment certificate, whether this is a dispute that can be settled by arbitration in terms of Clause 18 of the agreement.

Clause 1.5 of the JBCC agreement provides that:

It is common cause that no such variation was agreed to after the JBCC agreement was entered into between the Plaintiff {contractor} and the Defendant (employer).
In terms of this agreement, the only person that could issue payment certificates was the agent or Mark Bell & Associates In order for someone other than Mark Bell and Associates, the agent, to have done this, there had to be a variation or amendment to the contract.

[14] When the 12 previous payments certificates were issued, by the Quantity Surveyors, this did not amount to a variation of the contract as required in terms of Clause 1.5. because this was not a variation reduced to writing by the parties.

[15]    In Brisley v Drotsky 2002 (4) SA 1 (SCA), it was held:

"This principle laid down in SA Sentrale Ko-Op Graanmaatskappy Bpk v Shifren en Andere 1964 (4) SA 760 that a term (an entrenchment clause) in a written contract providing that all amendments to the contract have to comply with specified formalities is binding and still remain in force. Furthermore, the principles of bona fides, namely that the entrenchment clause ought not to be enforced because it would under the circumstances be unreasonable, unfair and in conflict with principles of bona fides cannot be successfully invoked."

(16] Morkel was not an agent of the defendant for the purposes of issuing a payment certificate, the agreement is clear on this. It is also clear as stated in Shifren and later in Brisley that the appellant cannot be estopped to deny the existence of the clause in the contract that all payment certificates should be issued by the agent. Mark Bell and not by the quantity surveyor. Morkel.

It therefore cannot be accepted that the certificate was issued in terms of the contract. Only if there was a valid certificate issued in terms of the contract then the dispute is not subject to arbitration as set out in Clause 18

[17] The agreement specifically states under Clause 13.17.2 that a payment certificate issued by the agent, shall be regarded as a liquid document for obtaining a court order Therefore, only a valid payment certificate will constitute a liquid document in order to obtain a court order In this regard counsel for the appellant made reference to Joob Joob Investments (Pty) Ltd v Stocks Mavundla Joint Venture 2009 (5) SA 1 SCA and at:

The defendant was ordered to pay the wasted costs on 22 July 2008 on an attorney and client scale.

This is clearly not correct, it seems, because during his Heads of Argument, at page 570 of the record, the defendant refers to a letter on page 542 of the record it had sent to the plaintiff dated 21 July 2008, wherein the defendant had given his reasons why he was not available on such short notice to proceed on 22 July 2008.

This was not disputed and it seems accepted by the plaintiff. The defendants tendered to pay for the wasted costs on a party and party scale. The reasons afforded by the defendant that he was unavailable due to the fact that he was

notified by his employer only on 17 July 2008, that he had to report for duty and if he was unable to do so, he risked termination of his employment by his employer. This cannot be regarded as an unreasonable request for postponement and certainly in my view, did not justify a costs order against him on a punitive scale. See in this regard Gamewest (Pty) Ltd v Regional Land Claims Commissioner Northern Province and Mpumalanga 2003 (1) SA 373 (SCA) and also Van Dyk vConradie 1963 (2) SA 413

I therefore, find that there was no justification to order costs on an attorney and client basis.

'that the wasted costs is in respect of the postponement on 22 July 2008 be awarded on a party and party basis."

I agree, it is so ordered.