Compagnie Interafricaine De Travaux v South African Transport Services and Others

• Jurisdiction: South Africa
• Citation: 1991 (4) SA 217 (A)

Compagnie Interafricaine De Travaux v South African Transport Services and Others
1991 (4) SA 217 (A)

1991 (4) SA p217

Citation	1991 (4) SA 217 (A)
Court	Appellate Division
Judge	Corbett CJ, Hefer JA, Vivier JA, Milne JA and Eksteen JA
Heard	February 18, 1991; February 19, 1991; February 20, 1991
Judgment	March 21, 1991

Flynote : Sleutelwoorde D

Declaration of rights — When ordered — Declaration sought on the basis E of assumed facts — Real and pertinent dispute between parties as to whether contractor in a civil engineering contract entitled to 'reasonable remuneration' on the basis of such assumed facts — Principle that Court will not exercise its power to make a declaratory order in order to answer abstract, academic or hypothetical questions not applicable to such a situation. F

Engineering and construction law — Civil engineering contract — Contract for the construction of a tunnel providing in clause 2(b) that 'no claim by the contractor will be considered on account of the materials . . . being different from those assumed by him in tendering for the contract, except in the case of adverse subsurface conditions G which in the opinion of the engineer could not reasonably have been foreseen' — Claim under such provision lying only where adverse subsurface conditions result in materials etc being different from those originally assumed and give rise to expense or loss — Clause 35 in contract providing for the ordering of alterations, extras, additions to H or omissions from the contract by the engineer, to be quantified in terms of clause 50, cannot be made to accommodate claim under clause 2(b) and machinery for quantification of remuneration for work done in terms of variation orders provided by clause 50 also having no application to claim under clause 2(b) — No provision in contract for negotiation or determination of amount of remuneration payable in I respect of a claim under clause 2(b) — Law implying in such circumstances a right to receive reasonable remuneration — Engineer not entitled to refuse to consider claim on the ground that insufficient information provided — If engineer considered claim to be insufficiently substantiated, it was his duty to reject the claim — In J such event,

1991 (4) SA p218

A claimant could refer claim to employer's chief civil engineer in terms of the contract and, if dissatisfied with latter's decision, to arbitration.

Arbitration — Contractor lodging claim with engineer in terms of provision in civil engineering contract — Engineer not entitled to B refuse to consider claim on the ground that insufficient information provided — If engineer considered claim to be insufficiently substantiated, it was his duty to reject the claim — In such event, contractor could refer claim to employer's chief civil engineer in terms of the contract and, if dissatisfied with latter's decision, to arbitration. C

Headnote : Kopnota

The principle that the Court will not exercise its power to make a declaratory order in order to answer abstract, academic or hypothetical questions has no application in a case where a declaratory order is sought on the basis of assumed facts and there is a real and pertinent dispute between the parties as to whether or not the party seeking the declaratory order is entitled to relief where the facts so assumed are D present, in casu whether the appellant, the contractor in a civil engineering contract, was entitled to 'reasonable remuneration' if certain facts on which such claim was based were assumed to be present.

The appellant, as contractor, and the first respondent, as employer, had entered into a civil engineering contract for the construction of a railway tunnel through the Hex River mountains. The general conditions of contract contained fairly standard clauses relating to the overall E superintendence of the contract works by the engineer (the third respondent), for the ordering of alterations, extras, additions to or omissions from the contract by the engineer (clause 35); prescribing how remuneration for such alterations, extras, etc was to be determined (clause 50); regulating payment of what was due to the contractor by means of measurement certificates; and providing for the arbitration of disputes (clause 69). Clause 2(a) and (b) of the general conditions F provided as follows: '2(a) The contractor shall be held to have inspected and examined the site of the works and its surroundings and to have satisfied himself before submitting his tender as to the nature of the ground and subsoil, the form and nature of the site, the nature of the work, the quantities and the materials necessary for the completion of the works, the means of access to the site, the accommodation and camping sites he may require and, in general, to have obtained all requisite information as to the risks, contingencies and other circumstances including local climatic conditions which may influence or G affect his tender. (b) The contractor shall be held to have satisfied himself before tendering as to the correctness and sufficiency of his tender, and of the rates and prices stated in the bills of quantities, and/or schedule of prices. These rates and prices shall be held to cover all his obligations under the contract and everything necessary for the proper completion and maintenance of the works. No claim by the contractor will be considered on account of the materials, methods of construction and/or site conditions being different from those assumed H by him in tendering for the contract, except in the case of adverse subsurface conditions which in the opinion of the engineer could not reasonably have been foreseen.' The aforementioned clause 35 provided as follows: 'The engineer may order alterations, extras, additions to or omissions from the contract, and the contractor shall carry out or give effect to such orders on receipt of written notice from the engineer, and in accordance with such plans as may from time to time be issued by I the engineer.' During the year following the commencement of the works, the appellant came to realise that the quality of the rock through which the tunnel had to be excavated was worse than that which had or could reasonably have been foreseen or assessed at tender stage from the data or conclusions contained in a geological report which had been made available by first respondent to tenderers. The appellant thereupon submitted a claim to the engineer for additional remuneration and for an extension of the time for the completion of the contract, such claim being based on the last sentence of clause 2(b) of the general J conditions. This claim was eventually submitted to arbitration

1991 (4) SA p219

A but, as a result of subsequent developments, the appellant decided that it would be speedier and more effective if it were to abandon the arbitration proceedings and submit a new comprehensive claim to the engineer with a view to that becoming the basis of a new arbitration. The appellant made a claim for 'reasonable remuneration' in terms of clause 2(b) of the general conditions and alternative claims in terms of clause 2(b) which were to be costed in terms of clause 50. The attitude of the engineer and the Chief Civil Engineer of the first respondent (the fourth respondent) was that the claim could not be considered (a) B because, as regards the main claim, a claim for reasonable remuneration was not 'contractually based' since the contract made no provision for remuneration on this basis; and (b) as regards the alternative claims involving clause 50, because the appellant had failed, in its formulation of the claim, to state what assumptions or allowances it made when arriving at the unit prices for tunnelling quoted in its tender. Furthermore, the engineer and the fourth respondent did not accept that any adverse subsurface conditions not reasonably foreseeable C had been encountered in the excavation of the tunnel. The appellant thereupon wrote to the first respondent requesting that the matter be submitted to arbitration on the issue as to whether, in the event of it being found that there were adverse subsurface conditions which could not reasonably have been foreseen resulting in materials, methods of construction or site conditions being different from those assumed at the time of tender, the appellant was entitled to be paid a reasonable D remuneration in respect thereof or whether it was limited to quantifying its claim by the provisions of clause 50. The first respondent's attorney responded stating that, inasmuch as the engineer had refused to consider the claim, there was no arbitrable dispute to go to arbitration in terms of clause 69 and that first respondent had accordingly declined to go to arbitration. An attempt by the appellant to have an arbitrator appointed in terms of clause 69 by the president of the South African Institute of Civil Engineers (the second respondent) failed. The E appellant then launched motion proceedings in a Local Division against the four respondents for, inter alia, an order (1) declaring that, on the assumption that the materials, methods of construction and/or site conditions were different from those assumed by the applicant in tendering for the contract and that there were adverse subsurface conditions which, in the opinion of the third or fourth respondents or any arbitrator(s), could not reasonably have been foreseen: (a) the F appellant was entitled to reasonable remuneration in respect of a claim in terms of clause 2(b); and (b) third respondent was not entitled to refuse to make a ruling on the appellant's main claim but should have either admitted it or rejected it; . . . (3) declaring that, in the event that the appellant's claims gave rise to a dispute or difference between them as contemplated by clause 69(a) of the general...