Van Streepen & Germs (Pty) Ltd v Transvaal Provincial Administration

• Jurisdiction: South Africa
• Judge: Corbett JA, Botha JA, Hefer JA, Grosskopf JA and Nestadt JA
• Judgment Date: 21 August 1987
• Citation: 1987 (4) SA 569 (A)
• Hearing Date: 15 May 1987
• Court: Appellate Division

Corbett JA:

Appellant, a building contractor, entered into a written contract with respondent, the Transvaal Provincial F Administration, for the erection of six hostels at the Pretoria Teachers' Training College. The contract was signed on 24 August 1981. The contract price was R33 647 052. The whole works were to be completed within a period of 36 months. Thereafter appellant commenced work on the contract. In the process of doing so it engaged additional staff, entered into G contracts with subcontractors, hired plant and equipment, provided a guarantee for the due performance of its obligations under the contract, took out all-risks insurance cover, set up a site establishment and started building.

On 29 January 1982 respondent's architects wrote a letter to appellant informing it that owing to a shortage of funds H respondent was compelled to cancel the contract with immediate effect. Appellant replied to this letter on 1 February 1982, stating that it disputed the right of respondent to cancel the contract on the grounds alleged and that it regarded the respondent's action as a wrongful repudiation of the contract and a material breach thereof. Appellant stated further that in consequence thereof it had elected to cancel the contract and I claim all damages sustained as a result of the breach.

In due course appellant instituted an action in the Transvaal Provincial Division claiming damages from respondent for breach of contract in an amount of R5 889 868,89. As appears from para 7 of the appellant's particulars of claim, this amount was made J up as follows:

Corbett JA

(a) Expenses incurred in the execution of the contract and not covered by payments made for work done	R 733 663,39
(b) Liability to subcontractors	1 343 807,50
(c) Loss of profit on balance of contract	3 812 398,00
	R5 889 868,89

B The expenses referred to in (a) above related to the site establishment, the cost of insurance and the guarantee, and the leasing and erection of cranes and other equipment. According to respondent's heads of argument submitted to the Court, the C total amount paid to appellant by respondent for work done on the contract prior to cancellation amounted to R3 654 800,29. This is more than the figure stated by appellant in its particulars of claim, but this is evidently accounted for by payments made subsequent to this pleading; and in any case nothing turns on this difference.

D In its plea respondent referred to clause 3(6) of the conditions of contract, which form part of the contract between the parties, and pleaded, inter alia, that in terms of this clause it was entitled unilaterally to cancel the contract; that, in any event, in the case of any cancellation of the contract, this clause limited the appellant in its claim 'for damages or otherwise' to 'an amount not exceeding 5% of the E scheduled prices on the nett value of the work omitted beyond 20% of the contract amount', and that the clause precluded appellant from claiming all damages suffered by it as a result of a wrongful repudiation of the contract by respondent.

Here I should add that appellant's particulars of claim contained a lesser alternative claim based on the supposition F that clause 3(6) applied and had the effect of entitling respondent to cancel the contract unilaterally and of limiting appellant's claim for damages. It is not necessary, however, to give details of this claim.

After the close of pleadings and on the application of the appellant (respondent apparently consenting), an order was granted in the Transvaal Provincial Division in terms of Rule G 33(4) of the Uniform Rules of Court, directing that the trial of certain issues on the pleadings be stayed until the remaining issues (referred to as the 'liability issues') had been decided. The issues stayed related to (i) the work done by H appellant under the contract and the monetary value thereof; (ii) whether appellant had suffered the damages alleged in its particulars of claim and, if so, the monetary value thereof; and (iii) the monetary value of 5% of the scheduled prices on the nett value of work omitted beyond the contract amount by reason of the cancellation of the contract. In addition, the order amended prayers (a) and (b) of plaintiff's particulars of claim ((a) being the claim for damages amounting to R5 889 868,89 and (b) being the lesser alternative claim referred to above) -

I '... as follows for the purposes of the decision of the liability issues:

"(a)

An order declaring that the plaintiff is entitled to payment of damages, if any, as claimed in para 7 (without determination of the amount of such damages) of its particulars of claim, whether or not such J damages exceed the amount referred to in para 6 of defendant's plea.

Corbett JA

A Alternatively to prayer (a)

(b)

An order declaring that the plaintiff is entitled to

(i)

payment of the damages referred to in para 13(b) of the plaintiff's particulars of claim; and

(ii)

payment for work done and expenses and liabilities incurred (without determination B of the amount thereof) if any, referred to in para 14 of the plaintiff's particulars of claim; and

(iii)

payment of interest at the rate of 11% per annum on the amount referred to in (ii) above from 27 January 1982 to date of payment."'

Although this is not expressly stated, it is clear that the C amendment was to take the form of a substitution of new prayers (a) and (b) 'for the purposes of the decision of the liability issues'. In regard to the new prayer (a), I should explain that the amount referred to in para 6 of the defendant's (respondent's) plea is the amount, as calculated by respondent, of appellant's entitlement in terms of clause 3(b), D viz R1 199 690. (At the stage of argument before us respondent had recalculated this entitlement in the sum of R1 163 142,07, but nothing turns on this.) I should also explain that the new prayer (b) incorporates appellant's alternative claim.

In substance the purpose of this order in terms of Rule 33(4) was to determine the issues as to (a) whether clause 3(6) entitled respondent unilaterally to cancel the contract, and E (b) whether in the circumstances of this case appellant's claim for damages was limited by the provisions of clause 3(6). And it was on these issues that the matter went to trial before Flemming J. At the trial appellant adduced the evidence of two witnesses, Mr C D C Malherbe, an expert on economic conditions in the building industry, and Mr J F van Streepen (Jnr), a F director of appellant. Respondent called no evidence. The trial Judge held, in effect, (1) that respondent was not entitled unilaterally to cancel the contract and that its purported cancellation on 29 January 1982 amounted to an unlawful repudiation of the contract, which repudiation appellant accepted on 1 February 1982, thereby cancelling the G contract; and (2) that appellant's claim for damages for breach of contract was governed and limited by the provisions of clause 3(6) of the conditions of contract. The full order made by the Court a quo reads:

'1.

It is found and declared

(a)

para 5 of plaintiff's declaration has been proved;

(b)

plaintiff has resultantly become entitled to H payment from defendant of damages, no part of which is excluded from the operation of clause 3(6) of the conditions of contract, which damages will include the heads of damages pleaded in para 7 of the declaration, in such amounts and insofar as they constitute recoverable damages at I common law, but within the limits, basically 5%, as set out in clause 3(6).

2.

The alternative declaratory order is refused.

3.

All questions of costs are reserved, also in regard to any special qualifying orders because of, eg, unwarranted steps in regard to discovery or in regard J to particulars sought and furnished. Subject

Corbett JA

A thereto, the plaintiff is nevertheless ordered to make immediate payment of defendant's costs related to the hearing before me, which costs will include the costs of two counsel.'

This was embodied in a formal order issued by the Registrar of the Court.

An application to the trial Judge for leave to appeal was dismissed with costs. On a petition to the Chief Justice, B however, leave to appeal to this Court was granted and it was ordered that the costs of the application for leave to appeal were to be costs in the appeal. Subsequently appellant filed a notice of appeal noting an appeal against the whole of the judgment and order of the Court a quo.

At the hearing before us respondent's counsel took the point in C limine that the judgment of the Court a quo was not appealable. This point had not previously been raised in opposition to either of the applications for leave to appeal. Appellant's counsel, on the other hand, contended that the matter was appealable. I proceed to consider this issue.

In terms of s 20(1) of the Supreme Court Act 59 of 1959 as D amended ('the Act'), and subject to the necessary leave to appeal having been granted, this Court is empowered to hear an appeal from 'a judgment or order' of the Court of a Provincial or Local Division. As has been explained in several cases, E 'judgment' in the context relates to a decision given upon relief claimed in an action, while 'order' refers to a decision given upon relief claimed in an application on notice of motion or petition or on summons for provisional sentence (see Desai v Engar and Engar 1966 (4) SA 647 (A) at 653A - B and the cases there cited). But not every decision made by the Court in the course of judicial proceedings constitutes a judgment or order. Some may amount merely to what is termed 'a ruling', against which there is no appeal. The distinction between a ruling...