Kwikspace Modular Buildings Ltd v Sabodala Mining Co Sarl and Another

• Jurisdiction: South Africa
• Citation: 2010 (6) SA 477 (SCA)

Kwikspace Modular Buildings Ltd v Sabodala Mining Co Sarl and Another
2010 (6) SA 477 (SCA)

2010 (6) SA p477

Citation	2010 (6) SA 477 (SCA)
Case No	173/09
Court	Supreme Court of Appeal
Judge	Cloete JA, Lewis JA, Shongwe JA, Griesel AJA and Theron AJA
Heard	February 23, 2010
Judgment	March 18, 2010
Counsel	PHJ van Vuuren for the appellant.; AJ Daniels for the first respondent.

Flynote : Sleutelwoorde B

Evidence — Foreign law — Proof — Presumption that South African law and law of foreign country the same — Law of foreign country (in casu Australia) on points in issue readily ascertainable with sufficient certainty — Law of foreign state applied in determining points in issue, namely interpretation of building contract — Law of Evidence Amendment Act 45 of 1988, s 1(1). C

Engineering and construction law — Building contract — Performance guarantee — Interpretation — Contract providing that law applicable to it was law of Western Australia — In Australia building contract may contain provisions enforceable by contractor that limit right of beneficiary of unqualified D performance guarantee to present guarantee to issuer; but clause in question did not — In any event, on facts, held that principal had enforceable right under contract which it was entitled to assert — No tacit term in contract obliging principal, in its notice to contractor in terms of relevant clause, to set out grounds on which demand under performance guarantee would be made. E

Headnote : Kopnota

In a case involving the interpretation of a building contract which contained a provision that the law applicable to the contract would be that of the state of Western Australia, the parties relied on the presumption that the law of a foreign state is, in the absence of evidence to the contrary, presumed to be the same as the law F of South Africa. However, the court held that, as the law in Australia on the points in issue in this appeal could be ascertained readily and with sufficient certainty, as contemplated in s 1(1) of the Law of Evidence Amendment Act 45 of 1988, it would apply Australian law to the interpretation of the building contract, and in particular the clause in issue. (Paragraph [7] at 482B - C.)

The clause in issue in casu (a performance guarantee stipulated in clause 5.5 of G the General Conditions of Contract) provided that '(a) party may have recourse to retention moneys and/or cash security and/or may convert into money security that does not consist of money where — (a) the party has become entitled to exercise a right under the Contract in respect of the retention moneys and/or security; and (b) the party has given the other party notice in writing for the period stated in the annexure [which was two H days] of the party's intention to have recourse to the retention moneys and/or cash security and/or to convert the security; and (c) the period stated in the annexure [two days] has or have elapsed since the notice was given.' In interpreting the contract, and in particular clause 5.5, the court held that, as a matter of law in Australia, a building contract can contain provisions enforceable at the suit of the contractor which amount to preconditions to, I and therefore limit, the right of the beneficiary of an unqualified performance guarantee to present it to the issuer. The court went on to hold that, as a matter of Australian law clause 5.5 did not qualify the principal's right to present the guarantees, but in any event, on the facts, it had such a right which it was entitled to assert; and no tacit term was to be incorporated into clause 5.5 obliging the principal, in its notice to the contractor required by J

2010 (6) SA p478

A that clause, to set out the grounds on which the demand would be made. (Paragraphs [3], [13], [19], [20], [21] and [22] at 480A - C, 487C - E, 491B, 491C - D, 492F - I and 493A - C.)

Cases Considered

Annotations

Reported cases B

Southern Africa

Durbach v Fairway Hotel Ltd 1949 (3) SA 1081 (SR): dictum at 1082 applied

Harnischfeger Corporation and Another v Appleton and Another 1993 (4) SA 479 (W): referred to

Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd and Others 2010 (2) SA 86 (SCA): referred to C

Loomcraft Fabrics CC v Nedbank Ltd and Another 1996 (1) SA 812 (A) ([1996] 1 All SA 51): considered

Transnet Ltd v Rubenstein 2006 (1) SA 591 (SCA) ([2005] 3 All SA 425): dictum in para [28] applied.

Australia D

Bachmann Pty Ltd v BHP Power New Zealand Ltd [1998] VSCA 40 ([1999] 1 VR 420): applied

Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136 ((2008) 249 ALR 458): applied

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24 ((1982) 149 CLR 337; (1982) 41 ALR 367; (1982) 56 ALJR 459): applied E

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd; Elastic Rail Spike Co (Aust) Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14 ((1986) 160 CLR 226; (1986) 64 ALR 481; (1986) 60 ALJR 294; (1986) 4 ANZ Insurance Cases 60-700): dictum at 489 (ALR) applied F

Ewing International LP v Ausbulk Ltd [2008] SASC 25 (2008 WL 353205): considered

Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812: applied

Pearson Bridge (NSW) Pty Ltd v State Rail Authority of New South Wales (1982) ACLR 81: referred to G

Wood Hall Ltd v The Pipeline Authority and Another [1979] HCA 21 ((1979) 141 CLR 443; 24 ALR 385; 53 ALJR 487): considered.

England

Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] QB 159 (CA) ([1978] 1 All ER 976; (1977) 3 WLR 764): referred to H

TTI Team Telecom International Ltd and Another v Hutchinson 3G UK Ltd [2003] 1 All ER (Comm) 914 ([2003] EWHC 762 (TCC)): considered.

Statutes Considered

Statutes

I The Law of Evidence Amendment Act 45 of 1988, s 1(1): see Juta's Statutes of South Africa 2009/10 vol 1 at 2-811.

Case Information

Appeal from a decision in the South Gauteng High Court, Johannesburg (Victor J). The facts appear from the judgment of Cloete JA.

PHJ van Vuuren for the appellant.

AJ Daniels for the first respondent. J

2010 (6) SA p479

Cur adv vult. A

Postea (March 18).

Judgment

Cloete JA (Lewis JA, Shongwe JA, Griesel AJA and Theron AJA concurring):

[1] The present appeal concerns the right of a building contractor to B interdict the other party with whom it contracted for the performance of the building works, from presenting a performance guarantee unconditional in its terms and furnished by a financial institution to the other party.

[2] On or about 30 December 2006 Kwikspace Modular Buildings Ltd, C a South African company, which is the appellant in these proceedings and to which I shall refer as the contractor, entered into a written contract with Sabodala Mining Co SARL, a company incorporated in terms of the laws of Senegal, which is the first respondent in these proceedings and to which (taking my cue from the contract between the D parties) I shall refer as the principal. The contract was for the supply and installation of an accommodation village at the Sabodala Gold Project Site in Senegal. The contract documents comprised a formal instrument of agreement; the special conditions of contract (SCs) and appendix A thereto (the site-specific conditions); the general conditions of contract (GCs), being the Australian Standard General Conditions of Contract E AS 2124 - 1992, and annexures thereto; the contract schedules; the contract specification (Scope of Work); appendices, and drawings (to take precedence in that order). GC 23 provided that the principal was obliged to ensure that at all times there was a superintendent and GC 24 made provision for the appointment by the superintendent of representatives to F exercise any of the functions of the superintendent under the contract. Annexure A to the GCs provided that the law applicable to the contract would be that of the state of Western Australia.

[3] The appeal turns on the interrelationship of GC 5 and the guarantees provided pursuant thereto. It is necessary to quote extensively from both. G GC 5 dealt with security, retention moneys and performance undertakings. It provided inter alia (amended as aforesaid), as follows:

'5.1

Purpose

Security, retention moneys and performance undertakings are for the purpose of ensuring the due and proper performance of the Contract.

. . . H

5.3

Form of security

The security shall be in the form of cash or an approved unconditional irrevocable undertaking given by an approved financial institution. The costs (including stamp duty and other taxes) of and incidental to the provision of the security shall be borne by the party providing the I security.

The party having the benefit of the security shall have the discretion to approve or disapprove the form of an unconditional undertaking from the financial institution giving the undertaking. The form of unconditional undertaking attached as Attachment 1 to the General Conditions of Contract is approved. J

2010 (6) SA p480

Cloete JA

A . . .

5.5

Recourse to retention moneys and conversion of security

A party may have recourse to retention moneys and/or cash security and/or may convert into money security that does not consist of money where -

(a)

the party has become entitled to exercise a right under the B Contract in respect of the retention moneys and/or security; and

(b)

the party has given the other party notice in writing for the period stated in the annexure [which was two days] of the party's intention to have recourse to the retention moneys and/or cash security and/or to convert the security; and

(c)

the period stated in the annexure [two days] has or have elapsed C since the notice was given.'

[4] Two...