Adel Builders (Pty) Ltd v Thompson

• Jurisdiction: South Africa
• Court: Supreme Court of Appeal
• Judge: van Heerden ACJ, Nienaber JA, Howie JA , Melunsky AJA and Mthiyane AJA
• Judgment Date: 12 September 2000
• Citation: 2000 (4) SA 1027 (SCA)
• Hearing Date: 22 August 2000
• Docket Number: 274/98
• Counsel: C M Eloff SC (with him A Beyleveld) for the appellant. M H Wessels SC for the respondent.

Howie JA: C

[1] This matter, which involves an appeal and a cross-appeal against orders made by Mpati J in an action in the South Eastern Cape Local Division, is before us with the leave of the learned Judge. His judgment is reported in 1999 (1) SA 680 (SE) ([1998] 2 B All SA 534) and I shall refer to it as 'the reported judgment'. D

[2] Appellant company, a building contractor, undertook in terms of a written building contract to construct a house for respondent in Port Elizabeth. When the balance of the contract price remained outstanding appellant sued for payment. Respondent counterclaimed for damages for breach of contract, with interest from date of judgment, alleging that appellant's workmanship was defective in various material respects. E

[3] The proceedings in convention were later abandoned and, in a document entitled 'Consent to judgment', appellant purported to submit to judgment in respect of the counterclaim. The so-called consent, which was not a confession to judgment in terms of Rule 31, and which did not acknowledge liability in a specified sum, did no more F than embody an admission of liability in respect of the 'fair and reasonable cost' of the remedial action alleged by respondent to be necessary, and respondent took no judgment to enforce compliance.

[4] Later still the counterclaim was amended. A claim for consequential damages (also allegedly arising from appellant's defective workmanship) was included, the amount of damages claimed was G increased and interest was now claimed 'at the legal rate a tempore morae'. The increase in the quantum claimed was due in part to the alleged consequential damages and in part to allowance for future escalation in building costs.

[5] Pleading to the amended counterclaim, appellant contended that the claim as it was prior to amendment had been resolved by the H so-called consent to judgment and denied the allegations relative to consequential damages and escalation. Appellant went on to plead that it had twice previously tendered to perform the necessary remedial work at its own expense, to which tender respondent had failed to respond. Repeating the tender, appellant denied all and any liability. I

[6] Preparatory to trial of the issues in reconvention, the parties reached agreement that as at February 1992 respondent's damages in respect of necessary remedial work amounted to R330 000, of which R200 000 represented the cost of such work which had not yet been done by February 1992. They also agreed on the extent to which escalation in J

Howie JA

building costs would have increased the latter amount by the date of trial in June 1997. In addition, appellant accepted A liability for respondent's costs of suit and certain qualifying expenses. Those points of accord having been reached, the parties submitted three questions for the trial Court's decision:

(1)

whether in terms of the building contract consequential damages B were claimable;

(2)

whether respondent was entitled to allowance being made for escalation in the computation of his damages; and

(3)

whether, in view of the then newly introduced s 2A of the Prescribed Rate of Interest Act 55 of 1975 (the Act), respondent was entitled to pre-judgment interest on the damages awarded. C

[7] Mpati J answered the first two questions in the negative. Hence the cross-appeal. As to the third, the answer was in the affirmative. In arriving at that answer the learned Judge fixed the time of assessment of the damages as being February 1992 and the amount (as a necessary consequence of the parties' agreement) as R330 000. D He then held (contrary to the argument presented to him on behalf of appellant) that s 2A of the Act, which came into operation on 5 April 1997, applied not only to future cases but also to damages claims pending before that date and therefore to respondent's counterclaim. Consequently, the trial Court, in awarding R330 000 as damages, found respondent entitled to pre-judgment interest, at the legal rate, E from 1 February 1992. Against that finding the appeal was brought.

[8] In this Court the parties were represented by counsel who had not appeared at any earlier stage of the litigation. Counsel for respondent, while not abandoning the issue of the consequential damages, did not seek to add to the submissions in his predecessor's F heads of argument. In this respect counsel exercised wise judgment. There is nothing in the point. Moreover, he accepted that his client could not legally be entitled to both interest and...