Primavera Construction SA v Government, North-West Province, and Another

JurisdictionSouth Africa
Citation2003 (3) SA 579 (B)

Primavera Construction SA v Government, North-West Province, and Another
2003 (3) SA 579 (B)

2003 (3) SA p579


Citation

2003 (3) SA 579 (B)

Case No

777/2000

Court

Bophuthatswana Provincial Division

Judge

Friedman JP

Heard

August 21, 2002

Judgment

September 19, 2002

Counsel

M D Kuper SC (with him S Symon) for the plaintiff.
D M Fine SC (with him I V Maleka SC and L Nkosi-Thomas) for the defendants.

Flynote : Sleutelwoorde D

Prescription — Extinctive prescription — Period of prescription — Arbitration award — Arbitration award made order of E Court — Arbitrator's award acquiring status of judgment debt — Section 11(a)(ii) of Prescription Act 68 of 1969 applying — Debt prescribing after 30 years. F

Prescription — Extinctive prescription — Period of prescription — When it commences — 'Debt is due' in s 12 of Prescription Act 68 of 1969 — Must be taken to mean when right of action, in sense of transpiration of every fact necessary to sustain cause of action, accruing to creditor.

Headnote : Kopnota

In March 1984 the plaintiff had entered into a written agreement with the Government of Bophuthatswana in terms of which the plaintiff, G as contractor, was to construct a stadium in Mmabatho. The agreement comprised a memorandum of agreement and a letter of intent. In terms of clause 5 of the letter of intent the total agreed price for the project was specified as being R18 750 000 (based on US$15 million), subject to an escalation formula with February 1984 as base. Clause 5 of the H memorandum, however, referred only to the sum of R18 750 000. The architect issued a certificate of completion on 5 December 1985. However, by June 1984 a dispute had arisen between the plaintiff and the Government as to the contract sum: whereas the Government was of the opinion that it owed a fixed amount of R18 750 000, the plaintiff contended that the rand sum had to be adjusted according to the I variation in the rand/dollar exchange rate so as to ensure that it was paid the rand equivalent of US$15 million upon completion of the project. The dispute was referred to arbitration in terms of an arbitration agreement contained in clause 26 of the memorandum. The relief sought by the plaintiff in the arbitration was a declaration that the letter of intent and the memorandum had to be rectified by the insertion of J

2003 (3) SA p580

a clause stating that 'the total agreed price for the . . . project shall be the rand equivalent of US$15 million, subject A to the Haylett Escalation Formula, with February 1984 as base'. The arbitration proceedings commenced on 25 January 1989. After many vicissitudes and breaks in the arbitration process, including the resignation and replacement of several arbitrators, the plaintiff in June 1995 launched an application for the substitution of the Government of Bophuthatswana by the defendants. The matter was B settled and the settlement made an order of the Court dated 22 November 1995. The settlement agreement and resultant Court order provided, inter alia, that any order of the arbitrator would operate as an order of Court. The arbitration proceeded and the award was delivered on 15 December 1997. The award stated that the agreement had to be rectified in accordance with the plaintiff's wishes, that is so as to reflect a contract sum of the rand equivalent C of $15 million subject to the escalation formula with February 1984 as base. The plaintiff duly claimed payment of the outstanding balance of the contract sum as reflected in the rectified agreement, an amount of over R75 million. The defendants refused to pay and the plaintiff in November 2000 issued summons against them. The defendants raised a special plea that the plaintiff's claim had prescribed because the D debts on which the plaintiff's cause of action were founded had arisen more than three years before the service of plaintiff's summons, alternatively because the said debts had been the subject of arbitration as intended in s 13(1)(f) of the Prescription Act 68 of 1969 and had thus prescribed one year after the proceedings had come to an end, that is on 15 December 1998. E

Held, that prescription began running when a debt became due, that is when creditor's cause of action fully accrued to him and he was able to pursue his claim. A cause of action accrued when every fact necessary to sustain the action had transpired. In prescription cases it was, however, in the light of the wide definition given to 'debt' in the context of prescription in judgments such as Standard Bank of SA Ltd v Oneanate Investments (Pty) Ltd (in F Liquidation) 1998 (1) SA 811 (SCA) preferable to speak of a right of action rather than a cause of action. Even so, every fact required to be proved by the plaintiff to support his right to judgment had to be in existence. (At 596A/B-F, 597G-H and 597I-598A.)

Held, further, that the next question was whether the plaintiff had acquired a right of action either in 1984, when the contract was entered into, or in 1987, when the work was completed, and G that this in turn involved a consideration of the subject of rectification (if it were to be shown that the written agreement did not reflect the parties' common intention). Since rectification had to be claimed by action and not motion proceedings, the immediate question was whether the plaintiff had an action for rectification of the agreement so as to reflect what the plaintiff claimed to be the common H intention of the parties as set out in the letter of intent relating to the contract price. (At 598A-B and 599A/B-B/C.)

Held, further, that it was important to draw a distinction between the right of action, which entailed a rectification of the contract, and the amount due, which involved quantifying the amount of the debt owing in terms of the parties' true intention. The plaintiff had therefore acquired an action for rectification either immediately I after the agreement was signed (in 1984), or at the latest when the work was completed (in 1987). It could also have sued for rectification of the contract as well as for payment of the amount due based on the contract as rectified. (At 599D/E-G/H.)

Held, further, that counsel for the plaintiff's argument that the fact that the parol evidence rule would have applied, or that no action could have been taken J

2003 (3) SA p581

until rectification, had precluded the plaintiff from instituting an action for the rectification could not be A upheld. The process of rectification operated as a solvent of the parol evidence rule, and accordingly in the absence of anything else the plaintiff's claim would have prescribed because the period of prescription in respect of the claim for rectification would at the very best for the plaintiff have become prescribed in 1990. (At 599G/H-I.)

Held, further, that the arbitration proceedings commencing on 25 January 1989 and lasting until 17 December 1997 had B important consequences for the plaintiff's rights. Since the arbitration agreement (which had been made an order of Court) had provided that the award would operate as order of Court, and since the arbitration had gone the plaintiff's way, the dispute between the parties had been resolved in plaintiff's favour. The plaintiff accordingly had a right of action in terms of the agreement as rectified which would in the normal course have prescribed after three years or, since an extra year was added if the debt was the object of a C dispute subjected to arbitration, at the very worst for the defendants in four years. (See ss 11 and 12 read with s 13(f) of the Act.) (At 599I/J-J and 601A-D/E.)

Held, further, as to whether the claim for arbitration was a process that had had the effect of interrupting the running of prescription as intended in s 15 of the Act, that it was not necessary to decide this question since the period relating to the interruption D of prescription by the arbitration proceedings was either three or four years, which still brought the present summons within the period of prescription. What was of decisive importance was that the agreement for arbitration contained in the settlement agreement was made an order of Court on 22 November 1995. (At 601D/E-F/G and 603H-I.)

Held, further, as to the applicability of the 30-year period of prescription laid down for judgment debts, that it was clear that an E arbitrator's award only acquired the status of a judgment debt once it was made an order of the Court. Otherwise a party's right to enforce the award would ordinarily prescribe three years after the publication of the award. (At 604C/D-F.)

Held, further, that it was beyond doubt that the agreement for arbitration contained in the settlement agreement 1995 had been made into an order of Court and incorporated a judgment debt, and that F it was in any event trite law that where an award was made an order of Court it could be enforced in the same way as any judgment debt. (At 604H-605B.)

Held, accordingly, that the plaintiff's claim had, because of the arbitration proceedings and in particular because the judgment debt was made an order of Court, not prescribed and that the defendants' special plea fell to be dismissed. (At 605D-E/F.) G

Cases Considered

Annotations

Reported cases

APB 4X4 Motor Dealers (Pty) Ltd v IGI Insurance Company Ltd 1999 (3) SA 924 (SCA): referred to

Benjamin v Gurewitz 1973 (1) SA 418 (A): followed H

Benson and Another v Walters and Others 1984 (1) SA 73 (A): followed

Blaas v Athanassiou 1991 (1) SA 723 (W): referred to

Cape Town Municipality and Another v Allianz Insurance Company Ltd 1990 (1) SA 311 (C): followed

Cape Town Municipality v Allie NO 1981 (2) SA 1 (C): referred to

Coetzee v SAR & H 1933 CPD 570: followed I

Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd...

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16 practice notes
  • Society of Lloyd's v Price; Society of Lloyd's v Lee
    • South Africa
    • Invalid date
    ...1997 (4) SA 1 (CC) (1997 (1) SACR 567;1997 (6) BCLR 708 (CC))Primavera Construction SA v Government, North-West Province andAnother 2003 (3) SA 579 (B) at 604EProtea International (Pty) Ltd v Peat Marwick Mitchell & Co 1990 (2)SA 566 (A) at 568I–JPurser v Sales; Purser and Another v Sales a......
  • Group Five Construction (Pty) Ltd v Minister of Water Affairs and Forestry
    • South Africa
    • North Gauteng High Court, Pretoria
    • 5 May 2010
    ...Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA 311 (C); Primavera Construction SA v Government North West Province 2003 (3) SA 579 (B); Naidoo & Another v Lane & Another 1997 (2) SA 913 (D); First Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd 1981 (4) SA ......
  • Protea Property Holdings (Pty) Ltd v Boundary Financing Ltd (Formerly Known as International Bank of Southern Africa Ltd) and Others
    • South Africa
    • Invalid date
    ...(Pty) Ltd v Rosenberg 1974 (2) SA 477 (C): referred to Primavera Construction SA v Government, North-West Province and Another 2003 (3) SA 579 (B): referred Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co Ltd 1963 (1) SA 632 (A): dictum at 644F - H applied Santos Professional Footbal......
  • Standard Bank of South Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...to Orton v Barhouch 1973 (2) SA 565 (D): not followed Primavera Construction SA v Government, North-West Province, and Another 2003 (3) SA 579 (B): referred The Master v IL Back & Co Ltd and Others 1983 (1) SA 986 (A): referred to E Truter and Another v Deysel 2006 (4) SA 168 (SCA) ([2006] ......
  • Request a trial to view additional results
16 cases
  • Society of Lloyd's v Price; Society of Lloyd's v Lee
    • South Africa
    • Invalid date
    ...1997 (4) SA 1 (CC) (1997 (1) SACR 567;1997 (6) BCLR 708 (CC))Primavera Construction SA v Government, North-West Province andAnother 2003 (3) SA 579 (B) at 604EProtea International (Pty) Ltd v Peat Marwick Mitchell & Co 1990 (2)SA 566 (A) at 568I–JPurser v Sales; Purser and Another v Sales a......
  • Group Five Construction (Pty) Ltd v Minister of Water Affairs and Forestry
    • South Africa
    • North Gauteng High Court, Pretoria
    • 5 May 2010
    ...Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA 311 (C); Primavera Construction SA v Government North West Province 2003 (3) SA 579 (B); Naidoo & Another v Lane & Another 1997 (2) SA 913 (D); First Consolidated Leasing Corporation (Pty) Ltd v Servic SA (Pty) Ltd 1981 (4) SA ......
  • Protea Property Holdings (Pty) Ltd v Boundary Financing Ltd (Formerly Known as International Bank of Southern Africa Ltd) and Others
    • South Africa
    • Invalid date
    ...(Pty) Ltd v Rosenberg 1974 (2) SA 477 (C): referred to Primavera Construction SA v Government, North-West Province and Another 2003 (3) SA 579 (B): referred Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co Ltd 1963 (1) SA 632 (A): dictum at 644F - H applied Santos Professional Footbal......
  • Standard Bank of South Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...to Orton v Barhouch 1973 (2) SA 565 (D): not followed Primavera Construction SA v Government, North-West Province, and Another 2003 (3) SA 579 (B): referred The Master v IL Back & Co Ltd and Others 1983 (1) SA 986 (A): referred to E Truter and Another v Deysel 2006 (4) SA 168 (SCA) ([2006] ......
  • Request a trial to view additional results

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