RANCH INTERNATIONAL PIPELINES (TRANSVAAL) (PTY) LTD v LMG

CONSTRUCTION (CITY) (PTY) LTD;

Citation 1984 (3) SA 861 (W)

D
[zFNz]Flynote : Sleutelwoorde
Work and labour - Building contract - Cannot be said that generally a unilateral right of
stoppage (by the employer of a builder's performance of his obligations) is tacitly agreed
upon - Where builder is not in breach, the employer is obliged to co-operate with him in
the fulfilment E of his obligations - Failing such co-operation, the employer is in mora
and the employer may be compelled in forma specifica to co-operate - While Court has a
discretion, such remedy should not be withheld arbitrarily or capriciously - Interdict
restraining employer from interfering with builder's performance of his obligations
granted. F
[zHNz]Headnote : Kopnota
Speaking of building contracts generally, it cannot be said that a unilateral right of
stoppage (by the employer of a builder's performance of his obligations and in the
absence of any breach by the builder) is tacitly agreed upon. Upon a rational discussion
of the problem, the parties could have resorted to any number of solutions or regimes
designed to G avoid the kind of impasse between employer and builder (or between
contractor and subcontractor, as in this case) which such a tacit term might prevent, and it
cannot be said that such a term is necessary to give business efficacy to such contracts. In
any event the overriding consideration, postulating a builder who is not in breach of
contract, is that the impasse is of the employer's own making and it is for him to unmake
it. Approaching the problem, as one should, by H reference to the doctrine of mora
creditoris, it is clear that there is a duty implied by law, namely the employer's duty to co-
operate with the builder so as to enable the latter to fulfil his obligations and not to
prejudice him in his efforts to fulfil his bargain. Should the employer fail in this duty, he
is in mora. As regards the remedies available to the builder in this event, specific
performance is a remedy to which the builder is entitled as of right and, while the Court
has a discretion, it cannot be withheld arbitrarily or capriciously. I The employer may
thus be compelled in forma specifica to co-operate with the builder. The Court's difficlty
in supervising the performance is traditionally in the forefront of the objections to such an
order, but this difficulty would appear to be imaginary rather than real.
In the instant case the Court, guided by the above considerations, granted the builder
(who claimed its right to perform and sought only its employer's
1984 (3) SA p862
COETZEE J
A co-operation to make this possible) a rule nisi operating as an interim interdict
restraining the employer (who had sought to evict the builder) from interfering with the
builder's performance of his duties. (There was a conflict on the papers as to whether or
not the builder was in breach of its obligations, but the matter was argued, and
adjudicated, upon the basis of the employer's contention that, regardless of whether or not
the builder was in breach, an employer under a B building contract generally has a right
of unilateral stoppage. The Court issued a rule nisi, as opposed to a final order, so as to
allow the employer still to contend, on the return day, that it was for some valid legal
reason entitled to resile from the contract.)
[zCIz]Case Information
Application by an employer for eviction of a builder from a C building site and counter-
application for an interdict restraining the said employer from interfering with the
builder's performance of its obligations. The facts appear from the reasons for judgment.
W P Schutz SC (with him D M Ettlinger ) for Ranch Inte national Pipelines (Transvaal)
(Pty) Ltd.
D A W Mostert SC (with him C H J Badenhorst ) for LMG Construction (City) (Pty)
Ltd.
No appearance for the second and third respondents in the counterapplication.
E [Having heard argument on 26 March, the Court dismissed the application and granted
the counter-application on 28 March, heard argument on leave to appeal against the latter
order on 29 March, and handed down the following reasons for judgment in the
applications, incidentally dismissing the application for leave to appeal, on 17 April
1984.] F
[zJDz]Judgment
COETZEE J: This judgment is delivered in respect of three applications. To avoid
confusion I shall refer to the various parties as "Ranch" (Ranch International Pipelines
(Transvaal) (Pty) Ltd), "LMG" (LMG Construction (City) (Pty) Ltd), "Fluor" (Fluor
Engineers (SA) (Pty) Ltd) and "VM" (Vrey and Maine (Pty) G Ltd). I have already made
orders in the first two matters (cases 84/6624 and 84/7260) and indicated that full reasons
would follow. These are the reasons as also the judgment in the third matter, which is an
application for leave to appeal against the order in case 84/7260.
Ranch was awarded a contract by Fluor for the construction of a certain pipeline. In the
main this involved the excavating of a H trench, laying of the pipeline in the trench and
thereafter its backfilling and compaction. Ranch had prior to tendering already
approached LMG to share the job on a subcontracting basis and for this purpose had
obtained its quote to do the excavation and backfilling portion. The main contract is the I
usual voluminous civil engineering contract document but the subcontract between Ranch
and LMG was not reduced to writing. LMG had to perform its part of the work in
accordance with the specification and terms of the main contract.
The first application (case 84/6624) was launched by Ranch against LMG. It sought an
order urgently that LMG vacate the site of "the works" and be restrained from thereafter
entering on the site.
1984 (3) SA p863
COETZEE J
In its founding papers Ranch sets forth that certain of the A subcontracted work must be
performed simultaneously with certain of the contract work. Because of this, the progress
of the entire works depended on strict adherence to a programme in respect of the
subcontracted work. All operations referred to together as "mainspread tandem
operations" must be performed in part consecutively and in part simultaneously,
notwithstanding B that some of such operations are being performed by Ranch and part
by LMG. Ranch makes the following allegation in respect of this aspect of the work:
"The rate of progress of each of the said operations is dependent on the rate of
progress of all the other operations. If the progress in trench excavation is slow, the
stringing is delayed; if the stringing is delayed, the welding is delayed; if the welding is
delayed, the laying of the pipe is delayed; C if the laying of the pipe is delayed, the
backfill is delayed; and if the backfill is delayed, the 5 kilometre limitation referred to in
clause 5 is exceeded and it is necessary to suspend all trench excavation in order to
enable the said 5 kilometre limitation not to be exceeded."
Ranch alleged that LMG had not only not adhered to the required rate of progress - which
is said to be due to its inadequate D machinery - but that this was compounded by over-
excavating of the trench depth. Because of the failure of LMG to keep up the required
rate of progress, Ranch terminated the subcontract and engaged another subcontractor
(VM) to continue with the subcontracted work. VM moved onto the site and commenced
to E work. LMG insisted, however, on carrying on with its contract and threatened to
seek an interdict against VM if they did not remove from the site. Ranch's case is that
there had been a complete breakdown in its contractual relationship with LMG, that a
dispute has developed resulting in an impasse relating to the construction of the contract
work due to LMG's F insistence on continuing with the construction. In this regard the
following is said:
"LMG insists on continuing with the construction, whilst Ranch is in no
circumstances going to pay LMG for any work which it may perform, nor give LMG any
instructions in regard to the continuation of the subcontract work. The only way in which
this impasse can be resolved is for LMG immediately to vacate the site and subcontract
work, failing which the delay in the further construction thereof will be insurmountable."
G Ranch also fears that its contract with Fluor may be placed in jeopardy as a result of
this problem which it now has with LMG.
In regard to the prejudice to LMG which flows from Ranch's termination of the contract,
it says the following:
"There will be no prejudice to LMG since, if it should subsequently be held that
Ranch's cancellation was in breach of H contract, LMG will have its remedy in damages.
Moreover, in order to avoid any suggestion, even though it would be without foundation,
that, if successful in any such proceedings, LMG might not be able to recover its
damages, Ranch is prepared and hereby tenders a banker's or insurance company
guarantee in respect of all amounts which may be determined to be owing by Ranch to
LMG in respect of work performed under the subcontract I to date and any damages
which may be awarded to LMG should it be held that Ranch's cancellation of the
subcontract was unlawful, less all and any damages for which LMG is found to be liable
to Ranch. The guarantee will be obtained and made available within the next twenty-four
hours."
The legal basis for Ranch's case is its allegation that there was an implied or tacit term of
its contract with LMG that
1984 (3) SA p864
COETZEE J
A "If there was a final breakdown in the relationship between Ranch and LMG,
or if Ranch decided to cancel the subcontract without due cause, LMG would vacate the
site but retain its right to sue for damages."
In a lengthy answering affidavit LMG denied these tacit or implied terms alleged by
Ranch. The nub of its case is that Ranch's predicament is of its own making. It says the
following:
B "Coordination of the contract works is one of the many responsibilities of the
applicant and the most important one. The applicant's inability and failure to coordinate
the contract works lies at the heart of the present dispute. It is this failure which is the
root cause of the predicament in which the applicant now finds itself and the cause of the
criticism levelled against it by Fluor in the site minutes and other documents annexed to
the applicant's papers. This failure has hampered the respondent in the performance of its
duties C under the subcontract, resulting in progress delays and additional costs. There
are two main factual episodes which demonstrate the lack of coordination of the contract
works by the applicant, and which have delayed the respondent in the progress and
execution of its part of the subcontract:...".
LMG's attitude is that it is entitled to complete the contract, which it is willing and able to
do. In this regard the following is said:
"51. If respondent were to be deprived of its right to D complete the contract, it
will suffer harm which could not be compensated for by an award of damages by a Court
some years hence.
51.1 The repondent will be constrained to retrench at least 50 of its
valued employees at present employed on the pipeline construction in issue.
51.2 These include valuable personnel E for whom the respondent
could find no gainful employment at present and would mean that the respondent would
be deprived of the services of these people.
51.3 As already intimated, the respondent is employing approximately
R1,4 million worth of machinery on this project, a substantial portion of which was
acquired specially for the project. If the respondent now had to cease its operations it
would not find work in the short term for this machinery and could not F finance its
commitments in respect of the machinery. The result almost inevitably would be a
repossession of the machinery by the respondent's creditors. The problem is not only one
of an eventual compensation in damages but one of an immediate cash flow for which the
bond tendered by the applicant is no remedy.
52. A claim for damages would of necessity involve the assessment and proof of
the respondent's loss of profits. G For this purpose, respondent would be required to
know the exact quantity and cubic capacity of earthworks done and similar information,
none of which would be available to the respondent and all of which would be available
to the applicant and which the applicant would be under no obligation to make available
to the respondent. Even an undertaking by the applicant to furnish information would not
remedy the situation; the applicant has, in the H immediate past, committed at least two
serious breaches of contract.
 53. Since the respondent's active involvement in this pipeline project, it has not
tendered in respect of other major contracts and in the result, a cessation of activities on
this pipeline project will cause it to be left without any immediate projects with which to
continue its normal operations.
54. To allow the respondent to continue with the work under this contract would
not work any great hardship in the I applicant. This statement can be demonstrated and
proved by the events of the last number of days."
Details are then given to illustrate these statements and it concludes as follows:
"55. The above events prove and demonstrate that if put to it, the applicant and
respondent can work together in the completion of this contract. As at the time of the
dictation of this affidavit, the work by the respondent in co-operation with the applicant is
continuing apace and may even
1984 (3) SA p865
COETZEE J
have been completed, that is to say, insofar as the Diep A River crossing
is concerned."
When Ranch indicated after receipt of this answering affidavit that it was no longer
proceeding with its application on an urgent basis, LMG forthwith lodged its own
counter-application (case 84/7260), citing VM as second respondent and Fluor as third
respondent. In this application it claims an order B against VM interdicting it from
performing its subcontract and that it vacate the contract site relating thereto. Against
Ranch it seeks an order interdicting it from interfering with its right to work on the site
and contract works in terms of the subcontract.
These two applications were heard together because much of the material in the first
application were simply used by both C parties as material in that application.
I dismissed the first application with costs, including the costs consequent upon the
employment of two counsel. In the second application (84/7260) I made the following
order:"It is ordered:
1. That a rule nisi be and is hereby issued calling upon D the respondents to show
cause, if any, to this Court on 30 April 1984 at 10 am, or so soon thereafter as counsel
may be heard, why:
(a) the second respondent shall not be interdicted from working on the
works being the subject matter of a subcontract concluded between applicant and first E
respondent during about January 1984 relating to the Saldanha Bay-Milnerton pipeline
and why it shall not be ordered to vacate the contract site;
(b) the first respondent shall not be interdicted from interfering with
applicant's right to work on the said site and contract works in terms of the said
subcontract;
F (c) the first respondent should not pay the costs of this application.
2. That paras 1 (a) and 1 (b) above will operate forthwith as interdicts pendente
lite.
3. That the first respondent must pay the applicant's costs in respect of the hearing
on 26 March 1984, G including those consequent upon the employment of two counsel."
Ranch's application and LMG's counter-application were argued together. Mr Schutz, for
Ranch, rested his whole case on a single point of law, namely that an employer has an
absolute right at any time, before or during the performance of a building contract, to
terminate the contract and evict the H contractor even though the latter has not
committed any breach thereof and is perfectly innocent. If the employer thereby commits
a breach of contract, the only remedy available to the contractor is an action for damages.
He referred to the following authorities: Beetge v Drenka Investments (Isando) (Pty) Ltd
1964 (4) SA 62 (W) at 66C; 1964 Annual Survey of SA I Law at 132, a note written by P
M Nienaber; Power v Hunter (1895) 12 SC 424; Municipality of KweKwe v Imprecon
(Pvt) Ltd 1984 (1) SA 38 (ZSC) ; Mayfield Holdings Ltd v Moana Reef Ltd [ 1973] 1
NZLR 309 (New Zealand); Schierhout v Minister of Justice 1926 AD 99 at 102; London
Borough of Hounslow v Twickenham Garden Developments Ltd
1984 (3) SA p866
COETZEE J
A [1970] 3 All ER 326; (1971) 87% Law Quarterly Review at 309 - 312; Hudson's
Building Contracts 10th ed at 681, 712 and 714 and supplement; Porter v Hannah
Builders (Pty) Ltd (1969) VR 673 (Australia); Graham H Roberts (Pty) Ltd v Maurbeth
Investments (Pty) Ltd (1974) 1 NSWLR 93 (Australia).
So completely did Mr Schutz base his case on this proposition B of law that, in reply,
when I invited him to deal with Mr Mostert's argument that LMG had demonstrated a
clear right on the papers for an interdict, meaning that the only party at fault is Ranch, the
employer, he declined (apart from saying that an admission must not be construed from
this omission) to C advance any argument that LMG was in breach of contract in any
way. He indicated that his client stood or fell on this point as far as his main application
is concerned. As far as the counterapplication is concerned, he relied in addition on the
Court's reluctance to order specific performance of a building contract. This matter
therefore falls to be judged on the basis that Ranch, in breach of the contract, wants to put
D LMG off the site and that LMG has not committed a breach.
Mr Schutz simply quoted the brief dictum of LUDORF J in Beetge's case supra, which is
wholly in his favour, and then devoted the rest of his argument to an examination of the
four English, Australian and New Zealand cases supra in which this E problem in
English law is carefully analysed. Particularly did he encourage me to follow the "close
reasoning" (as he put it) of MAHON J in the New Zealand case (Mayfield Holdings ). In
view of counsel's rather fulsome reliance on the English law as explained particularly in
these Australian and New Zealand cases, I should deal therewith before turning my
attention to South African law.
F This subject falls squarely within that highly technical area of English law known as
trespass, more specifically trespass to land. One of the defences to an action of trespass to
land is the leave and licence of the plaintiff (see Halsbury's Laws of England (Simonds
ed) vol 38 at 739 et seq, particularly at G 750). The subject of licence is itself involved.
There are various types of licence, some revocable at will, others not. In a nutshell, the
position of the builder is that he is regarded as the licensee of the employer to go on to
the land if the latter is also the exclusive possessor of the land. Because of this angle of
approach adopted by English law, the builder becomes a trespasser the moment that the
licence is H revoked. He can then be evicted. This particular type of licence is revocable
at will. This means that the builder must down tools and depart from the site the moment
that the employer tells him to quit. His only remedy is an action for damages. See the
Hounslow case at 333f - g :
 "The threefold classification of licences is well known. There are licences coupled
with an interest, contractual licences, I and bare licences. A licence to go on land to sever
and remove trees or hay, or to remove timber or hay that have already been severed, are
accepted examples of a licence coupled with an interest: see eg Wood v Manley. Such a
licence is irrevocable. The other two forms of licence, however, have been held to be
revocable. Wood v Leadbitter, the Doncaster racecourse case, is the foundation for the
doctrine that the licensor may effectually revoke such a licence even if it is a breach of
contract to do so. The licensee may sue the licensor in contract for that breach,
1984 (3) SA p867
COETZEE J
but apart from that cannot complain if, refusing to leave, %he A is forcibly
evicted. That doctrine was emphatically reaffirmed by the Court of Appeal in Thompson
v Park."
I shall now deal with these four decisions seriatim.
In the Hounslow case, these complexities were compounded by the fact that the employer
approached the Court (Chancery Division) on motion for an injunction to restrain the
contractor from B trespassing on the building site, which meant that equitable remedies
were involved. At 336 - 338, MEGARRY J said the following:
"Quite apart, then, from the question whether the contractor has a licence coupled
with an interest, there is the question whether the contractor has a contractual licence
which either expressly or by implication is subject to a negative obligation by the
borough not to revoke it. If this is so, then on the law laid down by the Court of Appeal,
equity would interfere to C prevent the borough from revoking the licence or, if it had
been revoked, from acting on the revocation. A fortiori, equity would refuse to grant the
borough an injunction to enforce the revocation.
Now in this case the contract is one for the execution of specified works on the
site during a specified period which is still running. The contract confers on each party
specified D rights on specified events to determine the employment of the contractor
under the contract. In those circumstances, I think that there must be at least an implied
negative obligation of the borough not to revoke any licence (otherwise than in
accordance with the contract) while the period is still running, just as in Hurst's case there
was an implied negative obligation not to revoke the licence until the performance had
concluded:...
There is a further consideration of some importance. This is not a case in which
the issue is merely one of the damages, as E in Wood v Leadbitter, Hurst's case or
Cowell's case. The borough is seeking equitable relief, namely, an injunction to expel
what on one view may be a trespasser and on another view may be someone with a
contractual right to remain; and on the latter view the borough is asking the Court to
assist it in breaking its contract. I do not think that the Court will do this. As FARWELL
J said of a plaintiff in one case -
'The relief which he seeks he can obtain only in the Court of equity and that Court
will not extend relief to one who F is putting forward a claim to equitable assistance
merely to enable him thereby to escape from his contractual obligations'.
See Re Buchanan-Wollaston's Conveyance, Curtis v Buchanan-Wollaston,
affirmed by the Court of Appeal. That was a very different type of case, but I think that
the principle must be general. Equity will not assist a man to break his contract. Here, the
borough is in effect saying to the Court, G 'You should grant an injunction to evict the
contractor even if in so doing you would be helping me to break my contract.' I do not
think that equity is any more ready to help an applicant who says that it does not matter
whether or not he is breaking his contract than one who is avowedly doing so."
These passages demonstrate two points. Firstly, the curious (to South African eyes)
distinction between law and equity and its effect on available remedies. Secondly, and
more importantly, H the implication of a negative obligation of the employer not to
revoke its licence otherwise than in accordance with the contract. Unless such a term can
be implied, the contractor has to leave when his licence is revoked. MEGARRY J implied
such a negative obligation and the applicant therefore succeeded.
I Porter's case was decided in the Supreme Court of Victoria. The employer obtained an
order against the builder to vacate the site on the simple basis that to refuse the injunction
would mean that the employer would be compelled to accept performance despite the fact
that a building contract is not specifically enforceable. The implication of a
1984 (3) SA p868
COETZEE J
A negative obligation was apparently not urged in argument and LUSH J did not discuss
it. This aspect therefore played no part in the result.
The judgment in the Mayfield Holdings case in the Auckland Supreme Court is indeed
very closely reasoned. MAHON J granted an injunction against the contractor ordering
him to vacate the site. He held that there was no implied negative covenant in B the
building contract on the part of the owner not to revoke the builder's licence in breach of
contract. Because the implication of the unexpressed term must be necessary to give the
transaction such business efficacy as the parties must have intended, he could not imply
this term. The building contract had business efficacy without such a term as the
continuation C of an impasse between owner and contractor could only be to the
detriment of both parties. At 320 he says:
"Surely the contractor would say: 'If a final breakdown in our relationship occurs,
or if you decide to cancel the contract without due cause, then I agree that you go ahead
and finish the job yourself, and I will sue you for my lost profit.' I am therefore not
prepared to hold in the case before me that there was a covenant implied in the contract
binding the owner not to D revoke the contractor's licence in breach of contract."
MOHAN J went on to consider the question whether, assuming there to be a negative
implied covenant in the terms described, the contractor can in reliance on that covenant
successfully resist the injunction applied for by the owner. This was a pure E specific
performance problem. If the contractor can attain that result by relying on the negative
implied covenant then he is obtaining indirect specific performance of the building
contract. The pith of the approach of English law to this problem is, with respect, very
well encapsulated in the following extract from his judgment (at 321/2). Because of the
general inaccessibility to New Zealand law reports, this passage is worth quoting in full:
F "I think it is perfectly clear that as a matter of long settled practice the Courts
have declined to order specific performance of a building contract save in exceptional
circumstances - Fry On Specific Performance 6th ed at 46. The grounds relied upon for
that principle are usually twofold:
(a) damages are an adequate remedy;
(b) the difficulty of supervision of a detailed building project.
 G There has, I think, been a tendency to discount the second reason as an
independent ground for refusing specific performance of a building contract, the view
being taken that in the case of modern contracts the details of the structure are specified
in detail and may be the subject of effective although inconvenient supervision, even
bearing in mind the potential liability of the defendant to attachment or committal in the
case of departure from any of the terms or conditions of H the contract decreed to be
performed. On the other hand I think it equally clear that damages in almost every case
must be an adequate remedy whether the plaintiff be the owner or the builder. In an
ordinary case the owner is only concerned with getting his building completed in
accordance with the plans and specifications and it will be immaterial to him whether that
work is done by the original builder or a duly qualified substitute. So, also, with the
builder. He enters into the contract in order to make a profit. If he abandons the contract
I works in consequence of alleged breach of contract on his part but later turns out to be
in the right, then he merely sues for and recovers the appropriate damages.
The general question of specific performance in the case of building contracts
came before the Court of Appeal in England in Wolverhampton Corporation v Emmons
[ 1901] 1 KB 515. In that case the plaintiff borough had sold land to the defendant on his
covenant to construct buildings on the land. He failed to do so and when the plaintiff sued
for specific performance the
1984 (3) SA p869
COETZEE J
argument was advanced that the plaintiff was seeking specific A performance of
a building contract and that such decrees were not granted. The Court of Appeal found in
favour of the plaintiff borough upon the ground that the general rule against specific
performance in building contracts did not apply in the case where land had actually been
sold subject to a building covenant and ROMER LJ set out three separate conditions
which were necessary in order to justify specific performance of a building agreement:
(1) That the nature of the building work is exactly B defined so that
performance if need be can be supervised.
(2) That the interest of the plaintiff in having the contract performed is of such
a nature that he cannot adequately be compensated for breach of the contract by damages.
(3) That the defendant in terms of the contract has obtained the possession of
the land on which the work is contracted to be done.
He went on to hold that all three conditions were satisfied in C that case. It will
be apparent, however, that in the ordinary building contract, even though the first of those
conditions may be satisfied, the second and third conditions will commonly not exist. I
am clear that they do not exist here. In this case damages are plainly adequate
compensation to the contractor in the event of breach and in the second place the
contractor is here only in possession of the site by virtue of the ordinary contractual
licence created between the owner and builder and D does not have the proprietary right
of ownership or otherwise contemplated in the third of the conditions stated by ROMER
LJ.
In view of these considerations, I cannot think that the contractor in this case can
be permitted to rely on an implied negative covenant by the owner not to revoke the
licence in breach of contract when the contract itself could not be specifically enforced. It
may be only putting that proposition in a different way to say that reliance by the
contractor on E the supposed implied negative covenant is prevented by the equitable
doctrine of mutuality. An argument of the same kind was put to MEGARRY J in the
Twickenham Garden case but the learned Judge did not believe that the doctrine of
mutuality extended so far. With respect, I think it does extend so far. Considerable
controversy has always surrounded the true scope and extent of the doctrine of mutuality,
especially in the form in which it was originally formulated by Sir Edward Fry, and it
may well be that attempts to state the doctrine in a formulated F structure are to be
deprecated. However this may be, the notion of mutuality in deciding whether to grant an
equitable remedy certainly seems to be of the essence of the law of equity, so long as care
is taken that the doctrine is not applied in the sense of an intractable principle governing a
stated situation in such a way as to defeat the overriding purpose of the equity
jurisdiction. For myself I would accept as an accurate statement of the operation of the
doctrine the G following passage from the judgment of CARDOZO J in Epstein v
Gluckin (1922) 233 NY 490:
'If there ever was a rule that mutuality of remedy existing, not merely at the time
of the decree, but at the time of the formation of the contract, is a condition of equitable
relief, it has been so qualified by exceptions that, viewed as a precept of general validity,
it has ceased to be a rule today... What equity exacts today as a condition of relief is the
assurance that the decree, if rendered, will operate without injustice or oppression H
either to plaintiff or to defendant... Mutuality of remedy is important in so far as its
presence is essential to the attainment of that end.'
I take the view that in this case the doctrine of mutuality is applicable because the
limits prescribed by CARDOZO J are present. The doctrine applies to strike down the
defence of the present plaintiff to this application for an injunction because the indirect
specific performance otherwise conferred on him as contractor is not balanced by any
comparable remedy available I on the same contract to the owner. This seems to me, as I
have said before, to be in accordance with ordinary principles upon which equitable relief
is granted or refused."
(My italics.)
The Graham Roberts case supra was decided by HELSHAM J in the Equity Division of
the New South Wales Supreme Court. The plaintiff
1984 (3) SA p870
COETZEE J
A builder had sought an order restraining the employer from interfering with the works
and a declaration that he was not entitled to revoke the plaintiff's licence to go on the site
of the building works. At 103, the learned Judge says the following in regard to the
implication of a negative covenant:
"Fourthly, I have come to the conclusion that on the true B construction of the
contract the licence of the builder to go on to the land to carry out the works was subject
to an implied agreement that it would not be revoked whilst the contract was still on foot
and there was work to be done by the builder under it. This I regard as being only the
application of commonsense, as such an implied agreement or term is obviously
necessary to give business efficacy to the contract, but the defendant seeks to rely upon
two express clauses in the contract which it argues prevent any such implication from
being made."
 C The learned Judge went on to examine these two express clauses. He rejected the
defendant's argument but continued to state that in the law of New South Wales a
contractual licence coupled with an agreement not to revoke it, is itself revocable at law.
Back to square one! What is interesting though is the D learned Judge's views regarding
the implied term, which are diametrically opposed to those of MAHON J. In his rejection
of the plaintiff's claim for specific performance, the principles of equity, as can be
expected, loomed as large as in the other judgments to which I have referred. The New
Zealand case was, strangely, not quoted and it may be that if HELSHAM J had read the
judgment of MAHON J, he might have had other views about E the implication of a
negative covenant.
In 87 Law Quarterly Review at 309 - 312, the judgment of MEGARRY J was almost
immediately criticised. In the supplement to Hudson's Building Contracts, the Australian
and New Zealand cases are accepted as correctly setting forth the law. MEGARRY F J is
roundly criticised while MAHON J's judgment is regarded as "outstanding", "masterly
and convincing". Purely as a foreign observer I can echo these sentiments. It is indeed an
excellent example of the judicial craft. It gave me much pleasure to read and it
contributed greatly to my understanding of this branch of English law. More than any of
the many other judgments and textbooks which I have consulted.
G It is abundantly evident from the aforegoing brief review that, systematically and
juridically, the differences between our law and English law in this respect are huge and
fundamental. This goes for both rights and remedies. It is quite profitless to attempt any
kind of reconciliation. There H are a few useful points of contact but these require
careful handling. In our system the whole problem reposes neatly in the law of
contractual obligations and only these principles need be applied. All the learning
surrounding trespass, licence, equitable remedies and so forth is of little or no assistance.
It is in the main only the resultant solution which is interesting from a comparative legal
viewpoint.
In dealing with the specific performance aspect, Mr Schutz I relied, inter alia, on the
doctrine of mutuality. Because Ranch cannot obtain specific performance of the contract,
so his argument goes, LMG cannot do so either. He cited Schierhout's case supra, loc cit,
as authority that this doctrine, which in the words of MAHON J is "of the essence of the
law of equity", is part of South African law. He is, however, very far off the mark. This is
what INNES CJ said:
1984 (3) SA p871
COETZEE J
"The plaintiff is a member of the public service; he is A therefore a servant of the
Crown. Now, it is a well established rule of English law that the only remedy open to an
ordinary servant who has been wrongfully dismissed is an action for damages. The
Courts will not decree specific performance against the employee, nor will they order the
payment of the servant's wages for the remainder of his term. Macdonell (Master and
Servant 2nd ed at 162) however, points out that Equity Courts did at one time issue
decrees for specific performance. But the practice has long been abandoned, and for B
two reasons: the inadvisability of compelling one person to employ another whom he
does not trust in a position which imports a close relationship; and the absence of
mutuality, for no Court could by its order compel a servant to perform his work faithfully
and diligently. The same practice has been adopted by South African Courts, and
probably for the same reason. See Wolhuter v Lieberman 20 CT at 116 and cf Hunt v
Eastern Province Boating Co 111 EDC at 23."
The learned Chief Justice clearly referred to English law, C equity in particular. Where
he speaks of the practice of South African Courts he mentions that they did it for "the
same reason", in the singular. Only the second of two reasons which he mentions in the
equity context, is absence of mutuality. Why should this one "reason" be absence of
mutuality and not the D inadvisability of compulsion (which is the other reason),
particularly as in the two cases quoted in support of "the same practice" there is no
mention at all of this doctrine? It is in any event quite unthinkable that INNES CJ would
have smuggled in a doctrine which is so completely foreign to our law, actually quite
incompatible with it, in so sideways a manner. This aspect need not detain one. Its only
value is that it is E illustrative of the care that must be exercised when one relies on
foreign judgments. The product of an attempt at marrying principles of two systems of
law in a field where, systematically, they differ so radically, is not always a hybrid. More
often than not it is simply confusion of thought.
I turn now to South African law. Beetge's case supra concerned F the builder's lien and
his right to be restored to possession of the works for this purpose after he had been
dispossessed. LUDORF J said the following at 66:
"It is common cause that the respondent has since engaged others to continue with
the work. According to the witness Viviers, who is applicant's foreman, these people
were using G the applicant's scaffolding when he went to the premises on 14 May. In his
replying affidavit Stojakovic admitted that applicant's equipment was still on the
premises but claims that this consists of a few paltry odds and ends and has tendered their
return in the affidavit.
I agree with Mr Schneider that applicant's conduct in insisting on proceeding with
the work after cancellation of the contract was wrong: whether the contract was wrongly
or rightly terminated his only remedy was an action for damages and he H could have
been interdicted from proceeding with the work. See Power v Hunter 12 SC 424. But this
does not assist the respondent because, although cancellation results in an obligation
being placed on the builder to stop work, it does not entitle the owner to dispossess the
builder and deprive him of his lien. Pretoria Racing Club v Van Pietersen 1907 TS 687 at
691.
The question to be decided in this case is whether applicant was in possession of
the premises or the building and whether he was unlawfully dispossessed. I agree with
Mr Kriegler, on I behalf of the applicant, that whether he was in lawful possession is a
question of fact. If he was, his dispossession on the admitted facts was clearly unlawful."
(My italics.)
The italicised dictum is clearly obiter. It is not part of the ratio decidendi. The learned
Judge dealt with an argument raised by counsel
1984 (3) SA p872
COETZEE J
A which, as appears from the above passage, he thought was irrelevant. It is in any event
quite elliptical. There is no reasoning. Purely a reference to Power v Hunter 12 SC 424.
This is understandable as the learned Judge considered that this statement of the law
could not assist him in arriving at a conclusion in that case.
An examination of the judgment in Power's case supra is called B for. This reveals an
almost similar situation. It was an application by the employer for an order restraining the
builder from entering upon and doing certain work upon the applicant's property. Some
work had already been done and the sole point relied on by respondent's counsel (see at
425) was C the builder's right to retain possession until the matter was settled by
arbitration under the agreement. This appears also from the very brief judgment of DE
VILLIERS CJ who said the following at 426 - 7:
"The respondent admits that he received the letter and insists upon proceeding
with the work. Has a contractor, under such circumstances, the right to proceed with the
work upon the D premises and against the wishes of the employer? To the questions put
in this form Mr Searle was bound to answer that the contractor has no such rights, but he
denies the right of the applicant to obtain an interdict on the ground that under the
contract all disputes must be settled by arbitration. The contract provides that the work is
to be done in a workmanlike manner, and so on, subject to the conditions that should any
difficulty arise that cannot be mutually settled, the same be referred to arbitration. The
difficulty which has now arisen is E incapable of being settled by arbitration and never
was intended to be referred to arbitration. Rightly or wrongly, the applicant refuses to
allow the building to proceed. If he is right the contract is at an end, no question can arise
whether the work is properly performed, and no reference to arbitration is required. If the
applicant is wrong the respondent has his action for damages for breach of contract, but
as it is admitted that he cannot insist upon proceeding with his work, it follows that he
cannot insist upon referring to arbitration F the question whether the work has been done
in a workmanlike manner. It certainly never was intended to refer to arbitration the
question whether an interdict should or should not be granted, and that is the only
question with which the Court has now to deal. The interdict must be granted with costs."
(My italics.)
In the light of the last sentence, which I have italicised, it G is doubtful whether Mr
Searle's admission and the learned Judge's apparent acceptance of it, presumably during
argument, that the contractor has no right to proceed with the work against the wishes of
the employer, is part of the ratio decidendi. There does not seem to have been any kind of
debate H of this question. Nor does it appear that the learned Chief Justice went into this
question at all, beyond simply referring to respondent's counsel's admission, which
destroyed his own point which he took regarding the respondent's right to have the matter
settled by arbitration. But apart from that, the learned Chief Justice in the last sentence
finds that it was never intended to refer the grant of an interdict to I arbitration "which is
the only question with which the Court has now to deal". This judgment cannot possibly
be regarded as authority for so far-reaching a proposition as now contended for by
counsel. Small wonder that it is not even mentioned in any of the South African
textbooks save two. One is Maasdorp's Institutes of South African Law 8th ed vol III at
231, where the following passage appears:
1984 (3) SA p873
COETZEE J
"A builder cannot insist upon completing the work against the A wish of the
building-owner. Consequently, where a building-owner has put an end to a contract,
whether rightly or wrongly, the contractor has no right to proceed with the work against
the owner's wish, and if he attempts to do so, he may be interdicted. His only remedy, if
the employer has acted illegally in cancelling the contract, is to proceed against him by
way of action for breach of contract."
The only authority for this statement (see footnote 62) is Power's case.
The other is McKenzie The Law of Building Contracts and B Arbitration in South Africa
at 115, where this case is quoted only as authority for the proposition that the question as
to whether or not a contractor should be interdicted from proceeding with the work is not
one which should be referred to arbitration. In my view that is all that was decided in
Power's C case and I would agree with McKenzie's treatment of this decision. Beetge's
case receives similar treatment at the hands of this learned author. He refers to it purely in
the context of builders' liens (see at 47). The furthest that McKenzie goes in regard to the
rights of the guilty employer is to say (at 42) that:
"where performance or further performance is prevented by the act of an
employer a contractor would have little choice but to accept the repudiation".
D This is simply a practical consideration and not intended as a statement of legal
principle.
Principially, there is no basis in our law for suggesting that the employer has this right
which, for want of a better term, I would label the unilateral right of stoppage. Every
valid obligation in our law is enforceable. There is of course a E whole variety of rights
and duties which the law implies in respect of specific contracts, rights and duties which
are not common to all contracts. Hence one must examine locatio conductio operis to
determine whether in this specific contract the right of unilateral stoppage exists. I have
consulted all the South African textbooks which might have something to say F on the
subject and also the more well-known Roman-Dutch law writers such as Voet, Van
Leeuwen, De Groot, Van der Keessel, Huber and Van der Linden. Nowhere could I find a
trace of a suggestion of a unilateral right of stoppage. The one exception is Maasdorp to
which I have already referred, who, with G respect, read more into Power's case than is
warranted. This dearth is to be expected as the problem only arises at the stage of
prestation by the employer when the question of enforcement thereof by the builder falls
for decision. The question of whether the builder is entitled to enforce his contract in
forma specifica is a different matter altogether, one which is surrounded by other
principles and considerations which are common to all contracts.
H The opposite result achieved by English law can equally easily be understood as it is
there a simple case of trespass after revocation of a licence unless a negative covenant,
not to revoke the licence, comes to the builder's aid. One has no difficulty in concluding
as far as our law is concerned that I the unilateral right of stoppage as a term implied by
law, as opposed to it being a tacit term, is no part of our legal system.
Mr Schutz, despite relying on Beetge's case and the comment thereon in the 1964 Annual
Survey (loc cit ), nevertheless made it clear that he puts his case on a tacit term of the
contract as opposed to one implied by law. The latter is inherent in LUDORF J's dictum
and in the
1984 (3) SA p874
COETZEE J
A comment in the Annual Survey. This is the reason why I have had to deal with this
more fully. From this point of view, so his argument ran, the New Zealand and Australian
cases are persuasive. I agree that this is so as building contracts are very much the same
in all these countries and they are performed in practice along similar lines. It is certainly
legitimate to compare judgments on similar contracts in the B process of determining
whether a similar tacit term exists. But again, two warnings need to be sounded.
Firstly, one must be careful how these cases on English law are used because in this
respect there is also a vital difference. In English law the builder bears the onus of
establishing a C tacit term (the negative covenant) as without that benefit he is, upon
revocation of the licence, a simple trespasser and quite helpless. In our law, on the other
hand, the onus to establish a positive tacit term that the employer has the unilateral right
of stoppage, rests squarely on the employer. Unless he discharges this onus, there is no
such right.
Secondly, in the words of Lord WRIGHT in Luxor (Eastbourne) Ltd D v Cooper 1941
AC 108 at 130, what is in question in all these cases is the interpretation of a particular
contract and any attempt to enunciate decisions on the construction of agreements as if
they embodied rules of law is deprecated in general. To some extent decisions on one
contract may help by E way of analogy and illustration in the decision of another
contract. But however similar the contracts may appear, the decision as to each must
depend on the consideration of the language of the particular contract, read in the light of
the material circumstances of the parties in view of which the contract is made.
In the first instance the particular contract must be examined and this approach remains
valid when a question of tacit terms F arises. The classic formulation of the test for
implying such terms which fell from the lips of Lord WRIGHT at 137 (op cit ) is worth
repeating:
"There have been several general statements by high authorities on the power of
the Court to imply particular terms in contracts. It is agreed on all sides that the
presumption is against the adding to contracts of terms which the parties have G not
expressed. The general presumption is that the parties have expressed every material term
which they intended should govern their agreement, whether oral or in writing. But it is
well recognized that there may be cases where obviously some term must be implied if
the intention of the parties is not to be defeated, some term of which it can be predicated
that 'it goes without saying', some term not expressed but necessary to give to the
transaction such business efficacy as the parties must have intended. This does not mean
that the Court can embark on H a reconstruction of the agreement on equitable
principles, or on a view of what the parties should, in the opinion of the Court, reasonably
have contemplated. The implication must arise inevitably to give effect to the intention of
the parties.
These general observations do little more than warn Judges that they have no right
to make contracts for the parties. Their province is to interpret contracts. But language is
imperfect I and there may be, as it were, obvious interstices in what is expressed which
have to be filled up. Is there then any reason in the present case for thinking that there is
some defect in expression or something omitted because it seemed too obvious to
express? I cannot find any such reason."
I have always regarded the analysis of MILLIN J in Rapp and Maister v Aronovsky 1943
WLD 68 of that contract, to determine whether a term should be implied therein, with
respect, as one of the best
1984 (3) SA p875
COETZEE J
examples of the logical and judicial approach to this kind of A problem. Amongst others,
he said at 74 - 75:
"It has often been pointed out that it is not sufficient to show that the term would
be highly reasonable or convenient to one or other or even both of the parties. The cases
show that the Court has to be continually on its guard against being persuaded to
introduce a term which, on analysis of the argument, appears to be no more than a term
which would make the carrying out of the contract more convenient to one of the B
parties or to both of the parties and might have been included if the parties had thought of
it and if they had both been reasonable. You are not to imply the term merely because if
one of the parties or a bystander had suggested it, you think only an unreasonable person
would have disagreed. You have to be satisfied that both parties did agree. It is quite a
different proposition, if in the hypothetical case SCRUTTON LJ puts in, you feel the
parties might say: 'You have called our C minds to something we have not thought of
and what you say is not unreasonable, let us discuss it.' If that is all that the Court feels
might have happened then the Court is not entitled to imply the term...
If you come to the conclusion that if the matter had been raised with the parties at
the time they were agreeing and a number of different ways of dealing with the point
could have been suggested, it is surely not competent for a party seeking to imply a term
to select one of these possibilities and to say D that is the term which ought to be
implied. If other terms could be thought of which are just as reasonable, or even more
reasonable, then it is clear that none of those terms was necessarily agreed by the parties,
and the person proposing the term has merely selected arbitrarily one of a number of
possible terms which might have been agreed if the parties had had their attention drawn
to the matter."
(My italics.)
E Apart from mentioning a few features of the contract in casu Mr Schutz really
contended for a tacit right of unilateral stoppage in building contracts generally. He
emphasised this particularly in his argument on the application for leave to appeal. He
suggested that I might be the only Judge not to have F found such a tacit term in building
contracts. A simple tally of the four English law cases to which he referred does not bear
him out. MEGARRY J and HELSHAM J both found for the existence of the negative
covenant which goes further than simply not being convinced, as I am, that such a
positive right has been proved. LUSH J expressed no opinion thereon. So that MAHON J
is the only one of the four Judges to have gone the G other way in his favour. To these
cases, counsel wished to add the Municipality of KweKwe case supra decided in the
Zimbabwean Supreme Court. But this case is not in point as it turned on the proper
mediation procedure to be followed in terms of the contract after a notice of expulsion
had been given by the H owner and the engineer had subsequently issued a certificate
upholding this notice. GEORGES CJ did not, indeed was not called upon to, investigate
the question of tacit terms. At 45F he refers in passing ("but perhaps in the final
analysis...") to the point that was made in the note on Hounslow's case in 87 LQR (loc
cit ).
Speaking of building contracts generally, I am unpersuaded, on two grounds, that such a
unilateral right of stoppage is tacitly agreed upon.
I Firstly, the furthest that I can bring myself to believe about the probable attitudes of
builder and employer when entering into the contract, is that they might have said "You
have called our minds to something we have not thought of and what you say is not
unreasonable, let us discuss it." As MILLIN J points out (supra, loc cit ) if a
1984 (3) SA p876
COETZEE J
A number of different ways of dealing with this difficulty could have been suggested,
there is no scope for the suggested tacit agreement. I am satisfied that upon such notional
discussion of the problem, the parties could have devised any number of solutions or
regimes, particularly depending on the kind of difficulty which might be encountered by
the employer as envisaged by them.
B Secondly, this term is not necessary to give the contract that business efficacy which it
can clearly be seen both parties must have intended. Why does it not have business
efficacy without that term? The importance of the so-called resulting impasse is to my
mind grossly over-emphasised. In the C case of the innocent builder it would be
something of the employer's own making and if I were sitting in a Court of Equity, I
would be inclined to disregard that consideration altogether. It is general experience that
in the course of execution of a large proportion of building contracts, there are frequent,
sometimes very vehement, disagreements which often lead to a lot of bad blood. That is
the reason why these D documents usually contain elaborate machinery of mediation and
arbitration with which to solve these problems. One knows that these provisions are
extensively used in practice. What then is the necessity of this suggested term? On the
contrary, I find myself in agreement with MEGARRY J and HELSHAM J that business
E efficacy demands that such a term be excluded. It grates me to contemplate that in the
course of executing a contract the employer, for his own personal reasons, should be able
to chase the builder off the site merely because he prefers another. Even when it suits the
innocent builder much better financially and otherwise to complete the job rather than
claim damages. This is what business efficacy is all about. I do not believe F that a
building contract can be said to have business efficacy in the objective sense unless such
a right is excluded. If a foolish contractor wants to include such a term expressly that is
his affair.
On this aspect of business efficacy I must not by the expression of the aforegoing views
be understood to suggest G that only in the case of the well-known standard building
contract which contains mediation machinery would the contract have business efficacy
without a tacit unilateral right of stoppage. It is only that difficulties flowing from an
impasse are more systematically dealt with under such provisions. The overriding
consideration is that, postulating a builder who is not in breach of contract, the impasse is
something of the H employer's own making. Let him then unmake it and get on with his
bargain. He is at fault by not co-operating. This is a duty which the law implies, as I shall
presently point out. To my mind the concept of business efficacy of contracts does not,
logically, predicate the class of possibilities where a party I is at fault. Such cases can
safely be left to the law which ensures the very business efficacy which to my mind can
clearly be seen both parties must have intended.
Coming to the contract in casu, there is no reason to regard it in a different light. Ranch
must persuade me that the tacit term exists. In making the allegation, which was denied,
no special facts or circumstances were relied on to suggest that in this particular contract
such a
1984 (3) SA p877
COETZEE J
tacit term was probably agreed to. Nor is there any particular A feature of the terms of
the contract which might point in this direction and I therefore cannot find that this
suggested tacit term has been proved by Ranch.
How then is this type of problem dealt with by our common law? I mentioned to Mr
Schutz in argument that it seemed to me to be a case of mora creditoris and that its
principles should be B applied. Counsel however eschewed this legal concept and still
persisted therein at the stage of the application for leave to appeal. He dealt with it as if it
were an invention of De Wet and Yeats. This makes it necessary that I deal briefly with
this concept, which is an important and valuable doctrine in our law. De Wet and Yeats
devote a lengthy discussion to this topic at 163 - 175 of the fourth edition of their C well-
known work. At 166 they define it as follows:
"Die skuldeiser verkeer in mora indien hy die afwikkeling van die
voldoeningsproses vertraag. Dit gebeur indien die skuld vervulbaar is, die skuldenaar
prestasie aanbied en die skuldeiser versuim om sy medewerking te verleen."
(My italics.)
D The essence of mora creditoris is contained in the italicised words in this passage.
Many legal problems can arise from the failure of the creditor to co-operate with the
debtor which prejudices him in his efforts to perform his bargain. The rights and
remedies of the debtor in such a case are to be found under this rubric. In casu, the
creditor operis (Ranch) E refuses to co-operate with the debitor operis (LMG). If Ranch
is thus in mora creditoris, it remains to investigate the remedies allowed to the debitor in
such event. The problem is then resolved systematically (as it is in English law) instead
of casuistically.
De Wet and Yeats refer extensively to a thesis of A B de Villiers, in 1953, Mora
Creditoris as Vorm van Kontrakbreuk, F the promoter being Prof J C de Wet. They point
out (at 164 footnote 142) that they were strongly influenced by this thesis and that it is a
pity that it is unpublished. This thesis has been made available to me through the courtesy
of Rand Afrikaans University and I have found it very valuable indeed. I am indebted to
De Villiers for most of what follows.
De Villiers deals pertinently with the view (which also G underlies Mr Schutz's attitude)
that in such cases the creditor can simply be regarded as a debtor in respect of his
reciprocal obligation. See 43 - 45 where he says:
"In verband met die medewerkingsverpligting moet ten slotte gewys word op 'n
standpunt wat aangetref word by diegene wat ontken dat daar so 'n verpligting op 'n
skuldeiser rus. As daar H so 'n verpligting sou bestaan, so word verklaar, sou die
skuldeiser ten opsigte daarvan ook maar skuldenaar wees; versuim om so 'n verpligting
op tyd na te kom, sou dan mora debitoris wees; daar sou dan nie 'n plek ingeruim kan
word vir mora creditoris as selfstandige vorm van kontrakbreuk nie. In die
uitsonderingsgevalle waar selfs die verpligtingontkenners erken dat daar 'n
medewerkingsverpligting bestaan, soos byvoorbeeld, as die skuldeiser uitdruklik
onderneem het om mee te werk, beskou die aanhangers van die pasaangehaalde standpunt
I die skuldeiser dan ook werklik as skuldenaar ten opsigte van sy beloofde medewerking,
en as hy dan versuim om op tyd mee te werk, word sy gedrag beoordeel as synde 'n geval
van mora debitoris. So redeneer Van Brakel dan: 'Het is echter duidelik, dat in zulke
gevallen, waarin dus dan kooper niet slechts een recht op de praestatie is gegeven, doch
tevens op hem een verbintenis rust om deze in ontvangst te nemen, zijn weigering geen
ander karakter draagt dan die van elke
1984 (3) SA p878
COETZEE J
A andere weigering van een debiteur om zijn verplichtingen na te leven. Er is dan
ook geen reden hier van crediteursversuim als een eigenaardige rechtsfiguur te spreken.
Het is een gewoon geval van wanpraestatie, waarop de gewone regels van toepassing
zijn.' Na dit my voorkom, word die besondere aard van die medewerkingsverpligting uit
die oog verloor by die stelling van die pasaangehaalde standpunt. Hierdie verpligting van
'n skuldeiser ten opsigte van sy skuldenaar se prestasie moet B onderskei word van die
verpligting, wat by 'n wederkerige ooreenkoms op hom rus, naamlik, om 'n teenprestasie
aan sy skuldenaar te lewer. Die medewerkingsverpligting is uiteraard nie 'n selfstandige
verpligting, 'n ruilverpligting, soos die verpligting om 'n teenprestasie te lewer nie. Dit is
eintlik 'n aksessore verpligting wat 'n skuldeiser se vorderingsreg aankleef. De Wet en
Yeats stel die saak in die regte lig waar hulle op Van Brakel en sy geesgenote se
standpunt antwoord: 'Ongetwyfeld is die skuldeiser, streng gesproke, wat hierdie C
verpligting om prestasie te ontvang betref, ook skuldenaar, maar die eienaardige hiervan
is dat hy skuldenaar is juis omdat hy skuldeiser is. Hierdie eienaardigheid alleen al
regverdig 'n besondere behandeling van hierdie verskynsel as selfstandige vorm van
kontrakbreuk. Bowendien wyk hierdie vorm van kontrakbreuk van die behandelde vorms
af ook wat betref die middels waartoe dit aanleiding gee.' Hierdie verklaring van De D
Wet en Yeats dien myns insiens as 'n afdoende antwoord op die hierbo-aangehaalde
redenering van Van Brakel en op die hierbo-aangehaalde standpunt wat hy en sommige
van die ander verpligtingontkenners voorstaan."
An Appellate Division decision which leaves no doubt about the duty of co-operation on
the part of the creditor is Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration E 1974 (3) SA 506 (A) . One of the contractor's complaints was that the
builder's agent, the engineer, failed to provide drawings timeously and it relied on a tacit
term as framed by it in its pleadings. The Court a quo held that such a term as framed was
not established. On appeal the majority of the Court agreed with the Court a quo in this
respect. JANSEN JA and CORBETT AJA, whilst also agreeing, were of the opinion, F
however, that the appellant should be allowed to rely on a different form from that in
which it had cast the suggested term and actually framed the term which they believe the
appellant ought to have relied on. What is important for present purposes is that both
these Judges refer to the duty of co-operation which is so much of the essence of mora G
creditoris. JANSEN JA at 529 says that if the drawings are necessary,
"die ingenieur dan nie net bevoeg nie, maar ook verplig moet wees om sodanige
tekeninge en instruksies te verskaf, ten einde die kontrakteur in staat te stel om sy deel
van die kontrak behoorlik na te kom "
(my italics) and refers immediately to De Wet and Yeats 3rd ed at 128. This is a reference
to the same passage which I have H quoted above from 166 of the fourth edition. It is
couched in identical language. CORBETT AJA (at 534E) not only quotes 128 of De Wet
and Yeats but also 135 of this work, where the learned authors deal with the debtor's right
to enforce this duty to co-operate in forma specifica. What is interesting is I this learned
Judge's reference to English law which also recognises this fundamental duty of co-
operation. Seeing that this was not the basis for the divergence of opinion, this case is
actually another instance in our case law of recognition of the doctrine of mora creditoris.
The remedy which is sought in casu is, indirectly, specific performance. In chapter 4 De
Villiers deals with the consequences of mora
1984 (3) SA p879
COETZEE J
creditoris from the point of view of the debtor's remedies - A in section B (at 307) he
deals with the question
"Kan die skuldeiser gedwing word in forma specifica om sy medewerking te
verleen?"
He examines Roman-Dutch law and says (at 309) that
"'n mens vir die Romeins-Hollandse reg mag aanneem dat 'n skuldenaar ook
gedwing kon word tot nakoming in forma specifica van sy medewerkingsverpligting".
B Coming to South African cases, the learned author (see at 313 - 316) points to a
number of decisions (such as for instance Gokal v Moti and Another 1941 AD 304)
where such orders having that effect were made. His conclusion that this right exists is
supported by De Wet en Yeats (op cit at 174) who ask rhetorically
C "Waarom sou die bouaannemer wat 'n aanvang gemaak het met die bouwerk
die aanbesteder nie kan dwing om hom toe te laat om te voltooi nie."
De Villiers concludes this section (at 316 - 7) by saying, inter alia :
"'n Hof het egter 'n diskresionêrs bevoegdheid om die aangevraagde bevel vir
nakoming in forma specifica te weier. In hierdie verband verklaar DE VILLIERS WN
AR in Haynes v Kingwilliamstown Municipality :
'It is, however, equally settled law with us that although D the Court will as far as
possible give effect to a plaintiff's choice to claim specific performance it has a discretion
in a fitting case to refuse to decree specific performance and leave the plaintiff to claim
and prove his id quod interest. The discretion which a Court enjoys, although it must be
exercised judicially, is not confined to specific types of cases, nor is it circumscribed by
rigid rules. Each case must be judged in the light of its own circumstances.'
E As 'n skuldenaar dus nakoming in forma specifica van sy skuldeiser se
medewerkingsverpligting vorder, sal die Hof in die uitoefening van sy diskresionêre
bevoegdheid die belang wat die skuldenaar by vervulling het, en al die ander
omstandighede van die geval, in oorweging neem."
I accept that the aforegoing exposition of the law by De Villiers (also that of De Wet and
Yeats ) accurately reflects our law. Haynes' case, to which the learned author refers, is F
reported in 1951 (2) SA 371 (A) . The nature and scope of the Court's discretion in the
grant of specific performance as set out in Haynes' case was paraphrased by VAN
DIJKHORST J in National Union of Textile Workers and Others v Stag Packings (Pty)
Ltd and Another 1982 (4) SA 151 (T) at 156, a decision of G the Full Court. The law is
clear. This is a remedy to which a party is entitled as of right. It cannot be withheld
arbitrarily or capriciously. This is another of the important differences between our law
and English law which starts off on the premise that a building contract is not specifically
enforceable unless the three conditions mentioned by MAHON J H supra are satisfied.
The right of an ordinary servant who had been dismissed to enforce his contract, was in
issue in the National Union Textile Workers case. The contention that the Court would
not order the reinstatement of the servant as this would amount to an order for specific
performance of an employment contract involving the rendering of personal services was
rejected. At 156E of the report, the case of I Industrial and Mercantile Corporation v
Anastassiou Brothers 1973 (2) SA 601 (W) is cited with approval.
This case is very interesting as it provides a typical example of mora creditoris where the
creditor was compelled in forma specifica to cooperate with the debtor (see 610H)
without the learned Judge apparently realising that he was applying one of the principles
of this doctrine.
1984 (3) SA p880
COETZEE J
A See at 607E - G, from which it appears that the learned Judge had great difficulty
because he
"considered many authorities, both South African and English and found none
which exactly matches this situation".
He therefore proposed to mention authorities
"which are in some way apt to this case and seek to apply them in what seems to
me to be a practical manner".
B If, with respect, the learned Judge had been apprised of the systematic approach of our
common law to mora creditoris, his problem would have disappeared. The correct
solution which he nevertheless found (in "a practical manner") would surely have come
more easily. As far as specific performance is C concerned, particularly in a case where
it is a matter of forcing the creditor to co-operate so as to make it possible for the debtor
to perform his contract, the learned Judge said the following, at 609A, with which I find
myself in complete agreement:
"It seems to me that a Court should avoid becoming supine and spineless in
dealing with the offending contract breaker, by giving him the benefit of paying damages
rather than being D compelled to perform that which he had undertaken to perform and
which, when he was called upon to perform by summons, and he chose to defy the claim
of the plaintiff. He went to the extent of engaging another person to supply the same
services for him, almost immediately. This is to my mind not a case where it can be said
to be impossible to perform either at the time when the summons was issued, when he
engaged the other supplier to install his equipment or even at the later stages, during the
trial of the action. That it would be inconvenient E for him is likely, that he will suffer
some financial loss is likely, but that he has brought on himself by an arrogant denial of
his commitments and I do not believe he should earn particular sympathy for that.
..........."
And at 610A:
"There is no reason by way of evidence to assume that the F seller and the
supplier of this equipment will not perform his part adequately. It is his business to install
equipment and I would assume that, in the ordinary course of events, he would do so
properly in order to earn his money. I do not contemplate, with any degree of anxiety, the
prospect of a plaintiff who has obtained a decree of specific performance in his favour,
but who has to perform his part of the contract, in order to bring about payment, would
do otherwise than perform properly."
G In the process of deciding whether specific performance should be refused in casu as
contended by Ranch, a few general observations about building contracts may first be
made. The Court's difficulty of supervising the performance is traditionally in the
forefront of the objection to such an order. Cf the judgment of MAHON J supra.
I wonder if this so-called difficulty is not grossly H over-emphasised. Is it not imaginary
rather than real? I could not find a case on record where such a difficulty actually arose in
practice and which had to be dealt with by the Court after an order to perform a building
contract had been made. Why should there be any difficulty? What is the need of I
supervision anyway? Does the Court ever supervise the execution of its judgments?
Surely not. Orders ad factum praestandum are made all the time. There is no supervision
thereof and no intervention by the Sheriff. If there is an intentional refusal to perform,
contempt proceedings may follow. Why should different considerations then apply to
building contracts? Accurate performance of them with the requisite skill or
workmanship is irrelevant in this context. As it is in the
1984 (3) SA p881
COETZEE J
A case of every other order ad factum praestandum. The judgment creditor will surely
cancel the contract when it is unintentionally incorrectly performed. The judgment does
not replace the contract. After all, this risk, as well as that of not succeeding in contempt
proceedings, the owner took when he asked the Court for this order. It is his affair. If the
owner has elected to claim this remedy and he is prepared to take these risks, why, one
may ask, should it lie, as a matter of B logic, in the mouth of the defaulting builder to
advance any reason connected with the quality of his performance or his general
unwillingness, as a basis for avoiding an order compelling him to perform his bargain?
In the instant case where the builder claims his right to perform and seeks only the
employer's co-operation to make this C possible, in the sense of allowing him to
perform, these considerations apply with much greater force. The interdict which
enforces this duty is negative in form as it simply prohibits Ranch from interfering with
LMG. Prohibitory interdicts abound in our law and practice. They are frequently the only
practical remedies and their enforcement seldom raises problems. This is simply another
one. If LMG commits any breach D of contract which entitles Ranch to resile, it is still
free to do so at any time in the future and, thereupon, to take appropriate action. The so-
called impasse on which Ranch relies is unimpressive. If it does not pay LMG, as is
threatened, that is the latter's problem to deal with in its own way. If it E refuses to give
LMG instructions, also as is threatened, without having a locus paenitentiae, it will leave
itself open to an action for damages by both LMG and Fluor. If it consciously seeks to
achieve this result that is its affair. This kind of dog in the manger attitude however
strikes me as childish and not worthy of serious consideration as a so-called impasse.
F I have therefore come to the conclusion that there is no reason why Ranch's duty to co-
operate should not be enforced in forma specifica. The appropriate method in this case is
by prohibitory interdict. I decided however not to make a final order but to issue a rule
nisi operating as an interim interdict. This will make it possible for Ranch still to G
contend, and prove, on the return day, that it was for some valid legal reason entitled to
resile from the contract.
I now come to the application for leave to appeal against this order. Mr Schutz argues
that these problems are fit for the attention of the Appellate Division which might well
take a different view of them. He selected the mora creditoris H approach which I have
adopted as a special target. He referred to Alfred McAlpine & Son (Pty) Ltd v Transvaal
Provincial Administration 1977 (4) SA 310 (T) which was the sequel to the McAlpine
case in the Appellate Division supra, when these parties continued their litigation in the
Provincial Division on the same contract. He argues that TRENGOVE J (as he then was)
had dealt with the employer's failure to provide drawings I on a mora debitoris basis -
see at 338 et seq. This is true. The plaintiff based this part of its case on the tacit term as
framed by JANSEN JA and CORBETT JA.
As I pointed out above, these two Judges of Appeal relied on the very passages in De Wet
and Yeats (3rd ed) where these authors deal
1984 (3) SA p882
COETZEE J
A with mora creditoris. The creditor's duty to co-operate features prominently in both
judgments. This apparently escaped the plaintiff's counsel in the subsequent trial as it
does not appear from TRENGOVE J's judgment that his attention had been drawn to this
aspect of their judgments. I am sure that if this more correct approach had been urged
before TRENGOVE J, this B learned Judge probably, with respect, would have found
the much more direct and shorter route to the conclusion which he reached regarding the
requisite demand for placing the defendant in mora. There are a few simple rules which
are part of this doctrine and which deal with the debtor's duty to call upon the creditor for
his required assistance and co-operation C as a prerequisite to a variety of remedies,
including damages. The rule, for instance, which in mora debitoris cases is expressed by
the maxim dies interpellat pro homine is in mora creditoris cases more accurately
expressed by dies offert pro homine. See De Villiers (op cit at 149 et seq ) where he deals
with the "medewerkingsoproep". TRENGOVE J might have been spared a lot of trouble.
D Be that as it may, it does not matter as it makes no difference to the conclusion which
can be reached by either route. It is only that I prefer what I believe to be the purer
approach, juridically speaking, one which is more firmly rooted, to my mind, in the
principles and system of Roman-Dutch E law. Speaking for myself, this is conducive to
orderly thinking about a complex legal problem. Not that any other method is necessarily
wrong.
A further point urged by Mr Schutz, based on the decision of COLMAN J in Stiebel v
Horn and Others 1971 (3) SA 643 (W) , is that the Court will not make an order ad
factum praestandum by way of interim relief pendente lite. There is to my mind no F
such principle and COLMAN J specifically refrained from laying it down (see at 646E -
G). Upon the supposition that the present order is one ad factum praestandum, this is an
appropriate case for this type of relief. If interim relief of this nature were refused under
present circumstances then, practically, LMG would have been deprived of this remedy
quite G effectively. It would be a remedy that has only theoretical existence. I should do
my best to avoid such a result.
Although unlikely, as I see the position, it is not impossible that another Court might take
a different view of the law. But there are also other considerations. Since the recent
amendment H to the Supreme Court Act, interlocutory orders are now appealable as of
right. I agree with Mr Mostert's argument that there is nevertheless no need for a
departure from the time-honoured approach to the question of leave to appeal in such
matters. Because they lack finality, Courts have always I been disinclined to grant leave
unless it is the plaintiff (who is dominus litis ) who wishes to appeal. See Herbstein and
Van Winsen 3rd ed at 710. A good case on a balance of convenience must be made out in
these cases. In the absence of any attempt during Mr Schutz's argument to rely on breach
of contract by LMG, this matter was considered on the basis that Ranch lacked a locus
paenitentiae. His omission, he assured me, was deliberate and not accidental. Once
1984 (3) SA p883
BROOME J
this is so, I do not see any balance of convenience in Ranch's A favour which should
persuade me to grant it leave to appeal. It might just as well wait a few weeks as the rule
nisi might not even be confirmed.
The application for leave to appeal is refused with costs.
Ranch International (Tvl) (Pty) Ltd's Attorneys: I Mendelow, Browde & Fluxman. LMG
Construction (City) (Pty) Ltd's B Attorneys: Dyason, Odendaal & Van Eeden.