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Norland Construction (Pty) Ltd v OR Tambo District Municipality

22 August 2019

This case related to a contract entered into between the above mentioned parties in relation to the Construction of the Cengane Dam and other ancillary work. Construction of the dam was delayed. The contract makes provision, in certain circumstances for extension of time claims, in the event of delays to practical completion. Norland Construction submitted various extension of time claims. The OR Tambo Municipality denied that it was entitled to these claims and opposed them.

The contract entered into between the parties was based on the following documents:

  1. The General Conditions of Contract for Construction Works (Second Edition) 2010 (“the GCC”);
  2. SANS 1200 – Standardised Specification for Civil Engineering Construction;
  3. Tender documents consisting of tendering procedures, returnable documents, agreement and contract data, pricing data and scope of works; and
  4. Drawings.

Determination of the issues

Claim 1

Norland alleged that it was entitled to a claim of 55 days which amounted to R 1 054 500.52 (VAT inclusive),in terms of clause 5.12.2.4 of the GCC, due to a disruption in its works caused by the local work force in which it either “remained absent from site, or for the few days that they were on site, did not perform work of any significance.”

It pleaded that this particular disruption by the labour was out of its control, that it had given notice to the Engineer in terms of clause 10.1 and had complied with the relevant provisions of the contract but was not granted an extension of time or paid the amount which it claimed.

The Defendant made the admission that a notice was submitted, but pleaded that it did not grant the extension or pay the claim because the Engineer had rejected the claim and when the Plaintiff disputed this and referred the matter to adjudication, the adjudicator had also refused the claim. The Engineer had dismissed the claim as it was of the opinion that the disruption of the work was not completely out of the Plaintiff’s control as envisaged by clause 5.12.1.4 if the GCC.

In this regard, it is common cause that work on site stopped on 6 February 2013 and only resumed at the beginning of May 2013. The specific problems related to the local community, the project steering committee (“PSC”) and an unhappiness relating to the rate of pay. There had been a lack of cooperation, insubordination and insolence from the staff as well as threats on the wellbeing on certain high-level staff of the Plaintiff. For this reason, site was closed, and meetings were held in order to remedy the situation. Without any solutions, the Plaintiff was ordered back not Site and it refused citing the safety of its staff being a concern. The Defendant noted this concern but said that the Plaintiff was in breach of its obligations and should therefore return to site. After a significant number of back and forths, as well as a bounty on a particular manager’s head, and only after the Defendant agreed to pay the minimum wage to the local workforce.

The learned Judge found that fact that the labour problems could only be resolved by the Defendant agreeing to pay the local workforce the minimum wage, a new and effective chairperson had to be appointed to the PSC and weeding out so-called trouble-makers in the local work force meant that on a balance of probabilities the delay of 55 days which was caused by the unrest was entirely beyond control as envisaged by clause 5.12.2.4 of the GCC and that the Plaintiff had proven its entitlement.

Claim 2

The Plantiff alleged in its second claim that it was entitled to claim of 187 days which amounted to R 2 624 716.44 (excluding VAT), in terms of clause 2.2.1 of the GCC, which allows a claim by the Contractor in the event that it encounters “adverse physical conditions which could not have been reasonably foreseen by an experienced contractor at the time of submitting its tender”.

It was argued by the Plaintiff that the tender documents that it was supplied with did not indicate there would be any problems with the erection of the dam and rather that it would be straight forward. The learned Judge found that even the Engineer had not foreseen any significant difficulties lying ahead but that the Contractor did encounter vastly different sub-surface conditions than expected when considering the tender documents. The learned Judge therefore found that the adverse physical condition encountered by the Plaintiff were not reasonably foreseeable by an experienced contractor at the time of tendering.

Contractual Compliance

Claim 1

Clause 10.1.1 of the GCC requires the contractor to make its claim within 28 days of the circumstances giving rise to it occurring. The contractor notified the engineer of its intention to claim for an extension of time, it also notified the engineer when it was in a position to submit a claim and requested a further seven days to do so. The Defendant never challenged the Plaintiff on its allegation that it submitted the claim to the Engineer as soon as was practicable.

Claim 2

The full extent of the Plaintiff’s claim was only established over an extended period of time. The Engineer had also instructed the Plaintiff to keep a record of all extra work undertaken and to report monthly. This was done by the Plaintiff. The Plaintiff was therefore not in a position to lodge a claim within 28 days as us required by clause 10.1.1.1 of f the GCC but it did give notice of same as required by 10.1.1.2 and complied with its obligations in terms of 10.1.1.2.2.

The learned Judge therefore found that both claims complied with the procedures stipulated in the contract.

The Time Bar Issue

The previously mentioned adjudicator decided, of its own accord, that the Plaintiff was out of time in making the above claims. He erred in two ways. The first being that he was not entitled to adjudicate on it as the Engineer never took the point and secondly being that the claims were lodged timeously. The learned Judge referred to Fischer & another v Ramahlele and others [2014] 3 All SA 395 (SCA) where Theron and Wallis JJA held that “it is not for the court to raise new issues not traversed in the pleadings or affidavits, however interesting or important they may seem to it, and to insist that the parties deal with them. The parties may have their own reasons for not raising those issues. A court may sometimes suggest a line of argument or approach to a case that has not occurred to the parties. However, it is then for the parties to decide whether they wish to adopt the new issues” The learned Judge therefore found that the claims could not have been dismissed for any lateness of filing.

Costs and the Order

The Plaintiff argued that the Defendant’s refusal to attempt to resolve the issues through mediation should result in the Defendant paying the Plaintiff’s costs on an attorney-client scale but the Defendant argued that it defences to the Plaintiff’s claims that it relied on which nullified the usefulness of mediation.

Despite the learned Judge finding that the defences were not good in law, it was held that the Defendant was still entitled to rely on them and that it had made a number of concessions which shortened proceedings and the Defendant therefore could not be accused of acting unreasonably.

The learned Judge therefore granted the extensions of time, payment of the Plaintiff’s claims plus VAT as well as interest at the prescribed rate from date of demand to date of payment and costs of the suit on a party and party scale.