Passenger Rail Agency of South Africa v Sbahle Fire Services CC
| Jurisdiction | South Africa |
| Judge | Petse DP and Mbha JA, Mocumie JA and Dlodlo JA and NP Mabindla-Boqwana AJA |
| Judgment Date | 04 August 2020 |
| Docket Number | 230/2019 |
| Hearing Date | 18 May 2020 |
| Court | Supreme Court of Appeal |
| Citation | 2020 JDR 1540 (SCA) |
Dlodlo JA (Mbha JA concurring):
Sbahle Fire Services CC (Sbahle), instituted action against Passenger Rail Agency of South Africa (PRASA) for payment of R1, 227 999.21 and R9 095 968.47 in respect of fire and safety consultancy services respectively, rendered to PRASA at the latter's Mabopane Bridge Development Project (the project) over the period from June 2010 to August 2013. On 15 October 2013, PRASA paid to Sbahle an amount of R2 034 938.19 for fire consultancy services rendered over the period June 2010 to November 2012. According to Sbahle, the amount paid by PRASA included the sum of R1, 227 999.21 which Sbahle had claimed for fire consultancy services. However, PRASA instituted a claim in reconvention wherein it claimed the repayment of the R2 034 938.19 it had paid to Sbahle.
In view of the fact that the aforementioned payment effectively settled what Sbahle had claimed in claim 1, it did not proceed with that claim. It, however, persisted with claim 2. The latter claim is in respect of Safety Consultancy fees. Sbahle relied on
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Dlodlo JA (Mbha JA concurring)
the clause of the agreement which it attached to the particulars of claim headed 'fees' read in conjunction with a letter written to Sbahle on behalf of PRASA dated 18 December 2018. The project for fire and safety consultancy was intended to commence on 2 January 2009 and was due for completion on 31 May 2010. At all relevant times, it was common cause that the project did not start on the scheduled date but that it was extended beyond 31 May 2010 to at least August 2013.
Background facts:
During 2008, PRASA embarked on the building of a bridge in a project known as 'Mabopane Bridge Redevelopment Project.' The necessary procurement processes were followed and on 18 December 2008, the Northern Gauteng Regional Tender Procurement Committee of PRASA appointed Sbahle as Fire and Safety Consultant for the project. Letters of appointment setting out the terms and conditions of the contract were addressed to Sbahle. The total fee of the project in respect of the fire consultancy services was fixed at R796 185.72 excluding value added tax (VAT) whilst the fee for the safety consultancy services was 5 per cent of the value of the project cost which was estimated at R134 million excluding VAT.
Both contracts in respect of fire and safety consultancy services expressly provided that should the estimated project value decrease, the respective specified tariffs of the project costs should be applied to the final value. Alternatively, should the estimated project value increase, the services will be free until the completion of the project on 31 May 2010. As at 4 April 2011, PRASA had paid Sbahle a sum of R690 001.43 in respect of fire consultancy services. In respect of safety consultancy at the same date PRASA had paid the sum of R4 664 854.66 to Sbahle. The balance owed to Sbahle in respect of safety consultancy and fire consultancy services was R 1 232 607.84 and R 106 184.29 respectively.
The parties differ in the interpretation of the contract. In respect of the safety consultancy services, PRASA contended that the total fee for the services rendered until the completion of project, regardless of the time period, was fixed at 5 per cent of the total costs of the project. Accordingly, PRASA contended that it had paid in full the
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Dlodlo JA (Mbha JA concurring)
total amount of fees due and payable to Sbahle, regard being had to the fact that the project was not complete and still remained unfinished. PRASA's contention was that any further extension of time with a view to complete the project, did not bring about the change of contract price as indicated in respect of both the fire consultancy and the health and safety consultancy. In the of light of the disagreement on the interpretation of the contract between the parties, PRASA's submission before the Gauteng Division of the High Court, Pretoria (the high court), was that the court ought to determine this issue before the merits of the matter were dealt with.
The clause in the agreement which must be interpreted is entitled 'fees' and reads:
'The client shall pay to the Consultant full remuneration for the performance by the Consultant of the services in accordance with this agreement. The fee shall, be deemed to be inclusive payment for the services and for all disbursement costs, expenses, overheads or profits of every kind incurred or to be earned by the Consultant in connection therewith. If the Consultant is required by the Client to provide material additional services by reason of any alterations, project extension or modifications to the project as required by the Client, then the Client shall pay to the Consultant additional amount in respect of the fee, commensurate with the additional services performed by the Consultant. However, should the extent of extra work or alterations that the same shall have been necessitated in whole or in part, by any negligent act, omission or default on the part of the Consultant, the Client will not pay to the Consultant additional amount in respect to the fee.'
The above clause must be read together with a letter from PRASA to Sbahle dated 18 December 2008. It reads as follows:
'We, Intersite Property Management Services (Pty) Ltd ("Intersite"), acting on behalf of SA Rail Commuter Corporation Limited ("SARCC"), have pleasure in confirming your appointment as fire consultant, with specific reference to your proposal dated 09 December 2008 and supplemented by the terms and conditions of this letter, the appointment shall, in relation to the above-mentioned project, entail:
1. The client will not entertain any extra fees claims unless he introduces a substantial or material change to the scope of the project.
2. The fee shall be paid in accordance with the agreed fee as per Annexure "A"
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Dlodlo JA (Mbha JA concurring)
3. Should any ambiguity exist between this letter, and previous correspondence which has taken place in connection with your appointment as Fire Consultant for this Project, the terms and conditions of this letter shall take precedence.'
The pleadings:
In claim 1, Sbahle averred that on 18 December 2008 at Midrand, alternatively Pretoria, it concluded an agreement with PRASA in terms whereof it was appointed as the Fire Consultant in respect of the project. In concluding the agreement, Sbahle was represented by Mr David Khuzwayo (Mr Khuzwayo) and PRASA represented by Intersite Property Management Services (Intersite). Intersite was in turn duly represented by Mr Pheko Moatshe (Mr Moatshe).
The agreement concerning claim 2 is alleged to have been concluded in December 2008. The express terms of the agreement that are relevant for purposes hereof and which Sbahle was contractually bound to perform entailed the following:
'(a) Compilation of a safety plan; (b) Assist in hazard identification and risk assessments; (c) Compilation and facilitation of a risk profile; (d) SHE specification; (e) Relating to guidelines within the disciplines of safety; (f) Site visits to assess and gather information for the compilation of audit reports; (g) Health and Safety Committee recommendations reviewing; (h) Quarterly site audits but not limited; (j) On-the-job health and safety awareness, etc; (k) To assist in compliance with the basic legal requirements including; (l) Continual reporting to ensure consistency between client and appointed contractors; (m) Health and Safety inspections; (n) Health and Safety Committee meetings; (o) To ensure a safe/health work environment; (p) Performing baseline health and safety audit to determine a degree of conformance within requirements of occupations health and safety; (q) Providing detailed written reports highlighting deviations found and suggestions for improvement/ rectification; (r) Providing assistance with any part of the safety and health program.'
Up to 31 May 2010, Sbahle was entitled to a fee of R5 897 462.50 excluding VAT. The additional terms were that fees would be deemed to be inclusive payment for services and for all disbursements, costs, expenses, overheads or profits of every kind incurred or to be earned by Sbahle in connection therewith. Importantly, the agreement provided that if Sbahle was required by PRASA to provide material additional services by reason of any alterations, project extension or modifications to the project as required by
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Dlodlo JA (Mbha JA concurring)
PRASA, the latter would pay to Sbahle an additional amount in respect of the fees, commensurate with the additional services performed.
However, should the extent of the extra work or alterations have been necessitated or come about as a result of default on the part of Sbahle, PRASA would not be liable to Sbahle for any additional amount in respect of the fees. It is averred that up to 31 May 2010, Sbahle was entitled to a total contract amount of R5 897 462.50 excluding VAT, over a period of 17 months payable in monthly tranches of R395 476.89 inclusive of VAT. Sbahle's contention was that PRASA breached the terms of the agreement by neglecting and/or failing to pay it for services rendered over the period June 2010 to May 2012. Sbahle had issued invoices for this period, but as at May 2012 the total amount of R9 095 968.47 was outstanding and remained due and payable.
In its amended plea, PRASA admitted that the project had not been completed but it denied that Sbahle was still rendering services to it. PRASA pleaded that it did not, at any stage, request nor require Sbahle to provide any services or material additional services by reason of any alteration, project extension or any modifications thereof. It was specifically denied by PRASA that Sbahle was rendering the same services as it rendered before 31 May 2010. PRASA pleaded...
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