Group Five Construction (Pty) Ltd v Minister of Water Affairs and Forestry

• Jurisdiction: South Africa
• Judge: Southwood J
• Judgment Date: 05 May 2010
• Citation: 2010 JDR 0512 (GNP)
• Docket Number: 39161/05
• Court: North Gauteng High Court, Pretoria

Southwood J:

[1]

The plaintiff claims from the defendant payment of a number of amounts pursuant to a written agreement ('the contract') entered into on 28 November 1995 in terms of which the plaintiff undertook the construction of the Injaka Dam and Appurtenant Works ('the Works') at the Sabie River Government Water Scheme for a contract price of R147 231 618,60. The contract consists of a number of documents including the General Conditions of Contract ('GCC') which provide for compensation and additional amounts to be paid by the defendant to the plaintiff in the circumstances provided for.

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Southwood J:

[2]

Clause 61 of the GCC provided for the reference of disputes to mediation. On 14 November 2000 the parties entered into a written agreement ('Amendment 1') in terms of which they agreed that Amendment 1 replaced the provisions for mediation in clause 61(2) of the GCC and that where a dispute, but for the provisions of Amendment 1, would have been referred to mediation in terms of clause 61(1)(e), such dispute would be referred to the Dispute Review Board ('DRB') created by Amendment 1 ('DRB1'). In March 2004 the parties entered into a second written agreement ('Amendment 2') having a similar effect to Amendment 1: i.e. that disputes would not be referred to mediation in terms of clause 61 of the GCC, but would be referred to a DRB created by Amendment 2 ('DRB2').

[3]

In his special plea the defendant raises prescription. The defendant contends that claims A-D were referred to the DRB created by Amendment 1; that the plaintiff did not accept the recommendations of the DRB; that the plaintiff gave notice to the defendant that it intended to refer each claim to court; that each claim fell due in terms of section 12(1) of the Prescription Act 68 of 1969 ('the Act') on the date on which the plaintiff gave notice of its intention to refer the matter to court; that the dates were all more than three years before the plaintiff served its summons on the defendant and, accordingly, that claims A-D have become prescribed in terms of s 11 of the Act.

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Southwood J:

[4]

In its replication the plaintiff denies that the amounts claimed in claims A-D became due in terms of s 12 of the Act at any time prior to the completion date. The plaintiff alleges that the completion date was 4 March 2003 which was the date reflected in the final approval certificate dated 5 March 2003 issued in accordance with clause 55(1) of the GCC. The plaintiff contends that the prescription period of three years did not elapse between 4 March 2003 and 2 December 2005. In the alternative, the plaintiff alleges that prescription was interrupted in respect of each the plaintiff's claims (i.e. A-D) by service within the prescribed prescription period, of a process whereby the plaintiff claimed payment of the debts as contemplated in s 15(1) of the Act and that such interruption persists. In the further alternative, the plaintiff contends in respect of the claim of R7 601 195 referred to in paragraph 22(c) of the particulars of claim, that prescription commenced to run on 6 October 2004, the date on which the plaintiff gave notice of its intention to refer the claim to court and 3 years did not elapse before summons was served on 2 December 2005.

[5]

S 10 of the Act provides that a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt. In terms of s 11(d) the period of prescription applicable to the claims is three years. S 12(1) provides (ss (2), (3) and (4) are not applicable) that prescription shall commence to run as soon as the debt is due.

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Southwood J:

[6]

The question of prescription depends upon the date upon which the debts became due. If they became due on the dates upon which the plaintiff gave notice that it intended to refer them to court they clearly prescribed as the plaintiff's summons was served more than three years after the last of these dates.

[7]

The word 'debt' clearly includes any liability arising from and being due or owing under a contract – see Leviton & Son v De Klerk's Trustee 1914 CPD 685 at 691; HMBMP Properties (Pty) Ltd v King 1981 (1) SA 906 (N) at 909A-B. A debt is 'due' when it is immediately claimable by the creditor or conversely, immediately payable by the debtor – see HMBMP Properties (Pty) Ltd v King supra at 909C-D; The Master v IL Back and Co Ltd 1983 (1) SA 986 (A) at 1004F-H. This means that there has to be a debt immediately claimable by the creditor, or, stated in another way, that there has to be a debt in respect of which the debtor is under an obligation to perform immediately – see Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838; The Master v IL Back and Co Ltd supra 1004D-E; Deloitte Haskins & Sells v Bowthorne Hellerman Deutsch 1991 (1) SA 528 (A) at 532G-I.

[8]

The primary issues raised by the special plea and the replication thereto are:

(1)

whether each claim became enforceable/payable on the date on which the plaintiff gave notice of its intention to refer the matter

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Southwood J:

to court (claim A, 6 September 2001: claim B, 30 October 2001: claim C, 22 February 2002 and claim D, 20 March 2002): or

(2)

whether the claims became enforceable/payable only on the date of final approval (i.e. 4 March 2003); alternatively

(3)

whether prescription was interrupted in respect of each of claims A, B, C and D by service within the prescription period of a process whereby the plaintiff claimed payment of the claims as contemplated in s 15(1) of the Act;

(4)

whether the claim of R7 601 195 referred to in paragraph 22(c) of the particulars of claim only became enforceable/payable on 6 October 2004 when the plaintiff gave notice of its intention to refer the matter to court.

[9]

At the pre-trial conference the parties agreed that the issues raised by the plea of prescription and the replication should be decided separately from all the other issues in terms of Rule 33(4) and at the commencement of the trial an appropriate order was made. The parties also agreed on certain facts for the purpose of deciding the prescription issues in terms of Rule 33(4) (these facts are set out in a separate document entitled 'Admitted Facts for Purposes of a Separated Issue in terms of Rule 33') and that the defendant would close its case in terms of Rule 39(13) on the basis of the agreed facts

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Southwood J:

and that the plaintiff would lead such evidence as may be found to be admissible on the referral agreement whereafter the defendant would lead its evidence in rebuttal.

[10]

For present purposes, the admitted facts may be summarised as follows:

(1)

On 28 November 1995 the parties entered into the contract, which consists of a number of documents including the GCC;

(2)

In terms of the contract the plaintiff undertook the construction of the Injaka Dam and Appurtenant Works ('the Works') at the Sabie River Government Water Scheme for a contract price of R147 231 618,60;

(3)

The GCC include a number of clauses which make provision for compensation and/or additional payment to the plaintiff in the circumstances described therein;

(4)

The GCC also contains a number of clauses governing the procedure relating to claims for compensation and/or additional payment and the resolution of any disputes arising out of such claims (collectively 'the Dispute Resolution Procedure');

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Southwood J:

(5)

In terms of clause 55(1) of the GCC the Works would not be considered as completed in all respects until a final certificate ('a final approval certificate') was delivered by the engineer to the plaintiff and the defendant stating the date on which the Works were completed and all defects corrected in accordance with the contract;

(6)

On 5 March 2003, acting pursuant to clause 55(1) of the GCC the engineer delivered to the plaintiff and the defendant a final approval certificate in which the engineer certified that pursuant to the final inspection held on 4 March 2003 the Works had been completed and all defects corrected in accordance with the contract;

(7)

During the execution of the contract the plaintiff made a number of claims for compensation and/or additional payment pursuant to the relevant clauses of the GCC. In the pleadings these claims are referred to as claims A, B, C and D;

(8)

Claim A is a claim for payment of R6 843 476,68 in terms of clauses 3(3) and 50(1) read with clause 51 of the GCC.

In terms of clause 3(3) the contractor is deemed to have based his tender on the technical data given in the Tender Documents and, if in the performance of the contract, any circumstances

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Southwood J:

differ from this technical data and this causes delay or additional cost the contractor shall be entitled to make a claim in accordance with clause 51. In terms of clause 50(1) (read with clause 50(4)) if the contractor encounters adverse physical conditions or artificial obstructions which could not have been reasonably foreseen by an experienced contractor at the time of submitting his tender and the contractor is of the opinion that additional work will be necessary which would not have been necessary if the particular physical conditions or artificial obstructions had not been encountered, the contractor shall be entitled to make a claim in accordance with clause 51. In the performance of the contract the plaintiff encountered circumstances and conditions in respect of the quantity, quality and suitability of rock for use as concrete aggregates different from the technical data provided by the defendant in the tender documentation and/or which constituted adverse physical conditions as a result of which the plaintiff became entitled to payment of the...