THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case No: 592/2017
In the matter between:

PREMIER ATTRACTION 300 CC
t/a PREMIER SECURITY

Appellant

and

CITY OF CAPE TOWN

Respondent

Neutral citation: Premier Attraction 300 CC t/a Premier Security v City
Of Cape Town, (592/2017) [2018] ZASCA 69 (29 May 2018)

Coram: Majiedt, Swain and Mbha JJA and D Pillay and Schippers AJJA
Heard:
7 May 2018

Delivered: 29 May 2018

Summary: Contract – interpretation – application to recover claims for
security services – appellant electing to abide – invoicing on respondent’s
calculations of price escalations– not communicating objection to alleged
short payment  – defences of waiver and prescription upheld.

________
ORDER:

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On appeal from: High Court of South Africa, Western Cape Division,
(Davis J sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.

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JUDGMENT

___

D Pillay AJA (Majiedt, Swain and Mbha JJA and Schippers AJA
concurring):

[1] This is an appeal against the judgment of Davis J in the High Court,
Western Cape Division, in which he dismissed the claim of the appellant,
Premier Attraction CC t/a Premier Security (Premier) for payment of R16
469 681.94 (the claim) but upheld the claim for payment of R 2 339
296.27 (the additional claim) against the respondent, the City of Cape
Town (the City).   The dispute turns on the interpretation of a contract to
determine the prices for security services that Premier rendered to the
City. Relying upon the defences of waiver and prescription the City
resisted the claim. The appeal in respect of the claim is with the leave of
this court. The City did not cross-appeal against the award of the
additional claim.

[2] Turning to the facts, Premier tendered successfully to render
security services to the City for six years from 1 October 2008 to 30
September 2014. The contract prices for the first two years were agreed.
No dispute arose in relation to the pricing for that period. Price increases

for subsequent years depended on whether the Minister of Labour issued
sectoral determinations for the security industry as contemplated in the
Labour Relations Act 66 of 1995. If there were increases Premier could
apply to the City for a variation of the prices.

[3] The first period of the contract expired in September 2010.
Triggered by increases in the applicable sectoral determination, Premier
applied for an increase for the second phase, being October 2010 to
September 2012. It submitted invoices based on its interpretation of the
contract and calculation of the increases. The City disagreed with
Premier’s calculations and rejected its invoices. Believing that the City
would not pay any amount if it claimed payment on the basis of its own
calculations, Premier submitted invoices based on the City’s calculations.
Although Premier disagreed with the City’s calculations, it did not
communicate its disagreement to the City.

[4] Notwithstanding Premier’s dissatisfaction this state of affairs
persisted in the next phase of the contract until September 2014. The third
phase of the contract commenced on 1 October 2014. No dispute in
relation to that phase arises in the appeal. However, as the size of the
contract diminished by more than two-thirds of the previous contracts,
Premier faced the difficulties and risks of retrenching two-thirds of its
workforce. Consequently, Premier found itself in dire financial straits.

[5] After the contract expired in September 2014, Premier
communicated to the City its intention to claim the alleged shortfall for
the first time at a meeting on 9 December 2014. On 14 January 2015 it
demanded payment. By letter of 18 February 2015 the City gave its
reasons for denying liability for any amounts.

[6] On 24 June 2015 Premier notified the City of its claims in terms of
The Institution of Legal Proceedings Against Certain Organs of State Act
40 of 2002 (the Act). In the notice it conceded that it was ‘not sent within
six months of the debt becoming due.’ It explained that it had been in
discussions with the City ‘in an attempt to avoid litigation’; that the City
was apprised of the facts; that the dispute turned on a contractual
interpretation; and consequently, that the City was not prejudiced.

[7] On 25 June 2015 Premier applied urgently to the high court for
payment of both claims. On 30 June 2015 it obtained an order enrolling
the dispute on the semi-urgent roll for 27 October 2015.

[8] The high court dismissed the claim, holding that those amounts that
fell due between 1 September 2010 and 25 June 2012 had prescribed. It
also found that Premier had waived its right to claim payment of the
shortfall. It reasoned that in the founding affidavit Premier attested to
generating invoices for amounts it believed to be incorrect ‘for a
considerable period without demur and certainly without any attempt to
invoke rights which it might have enjoyed … in particular … the
arbitration clause.’ Having ‘waived unequivocally whatever rights it
might have enjoyed’ the high court saw no point in ‘engaging further’ to
determine whether Premier had a claim for payment of any shortfall.

[9] As Premier succeeded partially in obtaining an order for the
payment of the additional claim, the high court awarded it 30 per cent of
the costs incurred in respect of the main and additional claims, such costs
to include 30 per cent of the costs of two counsel.

[10] In this court Premier contended that the high court erred on the law
and facts in concluding that it had by its conduct waived its right to claim
the contract prices it contended for; that it had not with full knowledge of
its right abandoned it expressly or by conduct; and that the City failed to
plead and prove waiver. The contract ‘entitled but did not oblige Premier
to raise a dispute when it arose.’ Instead ‘faced with the City’s breach of
the contract, it elected to abide by it.’ It insisted that without full
knowledge of its rights until it received its counsel’s opinion in March
2015, it could not have waived its rights. Hence the high court had erred
in finding that it had waived its rights to claim the increases in the
contract price according to its own calculations. Regarding prescription,
Premier contended that in accordance with the common law it was
entitled to allocate payments to the oldest outstanding debt.

[11] Waiver is a defence on a point of law that can be raised on the
facts, provided that whenever it is invoked the other side has a fair
opportunity to respond.1  All that the City had to do was to set out the
facts adequately. It did so as follows in the answering affidavit:

‘18.
Throughout the duration of the contract period, Premier at various intervals
applied for and received price increases in accordance with the conditions of contract.

19.
Premier, at all relevant times accepted the price escalations offered by the City.

20.
If Premier was aggrieved by the price escalation to which the City was
prepared to agree, it ought to have declared a dispute as provided for in the contract. It
chose not to do so.
21.
By accepting the amounts paid to it by the City throughout the duration of the

1 Erasmus Superior Court Practice rule 6(5)(d)(ii) B1-45.

contract period, Premier signalled its acceptance of the amended price escalations. It is
therefore not open Premier now to allege that it did not agree to the price escalations.
Premier at no point issued a notice of breach to the City, nor did it declare a dispute or
take such dispute to arbitration as provided for the contract.’

[12] In reply Premier admitted these averments but persisted that
although it received price increases from the City periodically, they were
not in line with its interpretation of the contract. That notwithstanding,
Premier insisted that it had no option but to accept the price escalations
offered by the City; but there was no agreement about this. Premier
continued to submit invoices in accordance with the City’s interpretation
believing that had it submitted invoices for amounts it contended for, the
City would not have authorised payment to Premier.

[13] Manifestly on these facts Premier had a fair opportunity to respond
to the waiver defence. The City gave clear2 and proper3 notice of its
intention in its affidavits to raise the defence of waiver. 4 No express
waiver was necessary once such inference could reasonably be drawn.5

[14] An intention to waive must be inferred reasonably; no one can be
presumed to have waived rights without clear proof.6 The test for such
intention is objective. Some outward manifestation in the form of words
or conduct is required; silence and inaction will do when a positive duty
to act or speak arises. Mental reservations not communicated have no

2 Borstlap v Sbangenberg en andere 1974 (3) SA 695 (A) at 704 F-H.
3 Linton v Corser 1952 (3) 685 at 696B.
4 Laws v Rutherfurd 1924 AD 261 p263; Amler’s Precedents of Pleadings 8th edition
p 384, relying on Montesse Township & Investments Corp (Pty) Ltd & another v
Gouws NO & another 1965 (4) SA 373(A); Greathead v SA Commercial Catering
and Allied Workers Union 2001 (3) SA 464 para 17.
5 Laws v Rutherfurd at 264.
6 Road Accident Fund v Mothupi 2000 (4) SA 38 SCA para 15, 16,18 and 19.

legal effect. 7 These elements of the test for waiver coalesced in Premier’s
reply.

[15] The reply fortifies the finding that by accepting the price
escalations offered by the City Premier signalled its intention to waive its
rights to claim payment on its own interpretation and calculations of the
contract prices. First, Premier had full knowledge of its rights but failed to
act positively to enforce them. 8  It knew that it had claims for price
increases whenever the sectoral determinations increased remuneration
for the security industry. Promulgation of the determinations alerted it to
the amounts of the increases and enabled it to calculate its claims.
Furthermore the claims were for the alleged underpayment of invoices. So
Premier knew that the payments were not what they should have been;
that its claim lay against the City; and that importantly, it could contest
the City’s interpretation by invoking the dispute resolution mechanisms in
the contract. These circumstances imposed a positive duty upon Premier
to act to dispel any inference of acquiescence that its silence might
suggest. Premier did not act.

[16] Second, Premier’s financial circumstances compelled it to act to
enforce its rights. Premier knew that such increases that the City paid
were insufficient to ensure compliance with the sectoral determinations
and private security industry laws; that if the City did not pay its claims it
would have to absorb the shortfall; that if it did not meet the shortfall it
would not only run into financial difficulties but also risk criminal
prosecution for violating provisions of the sectoral determinations.

7 Ibid.
8 Laws v Rutherfurd p263; Mohamed v President of the RSA (Society for the Abolition
of the Death Penalty in South Africa intervening) 2001 (3) SA 893 (CC) para 61-67;
Greathead v SA Commercial Catering and Allied Workers Union para 17.

[17] Counsel informed the court from the Bar that initially the losses
were about R1 million, an amount not so significant in the nature of such
contracts that Premier could not carry the shortfall. Premier also allegedly
waited for the forthcoming sectoral determinations to assess whether the
shortfall could be accommodated. These submissions are inconsistent
with Premier approaching the high court for urgent relief on the basis that
it would have met ‘its financial demise long before a trial can take place.’
Instead, they confirm Premier’s election to abide by the City’s offer and
to carry the debt. If the alleged shortfalls had not been onerous initially,
then subsequently it became increasingly so. Premier lamented its
inability to pay its taxes and other statutory commitments. As a business
it had to act and to act quickly to stop the haemorrhage.

[18] Two cases that Premier referred to in order to disavow knowledge
of its rights do not assist it. In Mohamed9 the appellant was unaware of
his right to claim protection against the death penalty and did not have
access to legal advice. By contrast, Premier knew its rights and had
access to lawyers if it wanted legal advice. In Greathead, abandoning a
law point when counsel and client had not considered the point until the
appeal, was construed not to be a waiver of rights.10 Rendering invoices
on Premier’s calculations was as conscious and deliberate an act as
depositing a cheque was in Collen v Rietfontein Engineering Works. 11 In
both instances acceptance of the other sides’ offers was by conduct.

[19] Third, when faced with options – to contest or abide – Premier

9 Mohamed & another v President of the RSA (Society for the Abolition of the Death
Penalty in South Africa intervening) 2001 (3) SA 893 (CC) para 61-67.
10 Greathead v SA Commercial Catering and Allied Workers Union para 17.
11 Collen v Rietfontein Engineering Works 1948 (1) 413 at 429-430.

elected to abide by the City’s calculations of the contract prices. Such
election between bipolar options is a waiver.12 Premier waived one right
by choosing another right that was inconsistent with the former.13 Having
approbated it could not thereafter reprobate.14 Its intention was manifestly
inconsistent with the continuance of the right, an inference the Court can
reasonably draw from the nature of the conduct proved. 15

[20] In these circumstances I find that the City discharged its onus of
proving on a balance of probability that Premier waived its right to claim
prices on its interpretation and calculations of the contract.16 This finding
disposes of the appeal. For the sake of completeness I deal with the
defence of prescription.

[21] The facts that support the waiver defence also support the case for
prescription. The debts became due as soon as Premier raised and
submitted invoices in accordance with the payment procedures prescribed
in the contract. Those procedures had been concluded for claims arising
from 1 October 2010 to 25 June 2012.  Accordingly those claims had
expired by the time Premier served its application in June 2015.

[22] By electing to abide by the City’s alleged breach Premier made a
deliberate choice from which it must be inferred that it was aware of its
legal options. The Constitutional Court held in Mtokonya v Minster of
Police 17 that the degree of knowledge required under s 12(3) of the

12 Moyce v Estate Taylor 1948 (3) SA 822 (A) 829.
13 Feinstein v Niggli & another 1981(2)SA 684(A) at 698G-H.
14 Administrator, Orange Free State & others v Mokopanele & another 1990 (3) SA
780 AD at 787 G-H.
15 Hepner v Roodeport-Maraisburg Town Council 1962 (4) AD 772 at 778H.
16 Ibid.
17 Mtokonya v Minster of Police 2017 (11) BCLR 1443 CC para 62.

Prescription Act 68 of 1969 did not include knowledge of the legal
conclusions by the creditor before a debt can be said to be due.18

[23] Moreover, Premier’s election to abide by the City’s calculations
and to carry the shortfall are inconsistent with its after the fact
construction that it was entitled to allocate payments to the most onerous
(long standing) debt. It did not state that it had made these allocations,
submitting merely that it was entitled to do so.  Prescription extinguished
the alleged shortfalls; a debt cannot be revived on the expiry of the
prescriptive period. 19

[24] Counsel for the City urged us to also pronounce on the question of
condonation.  He submitted that the high court had not granted
condonation because it issued no order condoning Premier’s non-
compliance with the provisions of the Act. Without such order it was not
competent for the high court to enter the merits of the claims.
Consequently, Premier had no right to any remedy. It was Premier’s duty
to obtain an order granting condonation to persist with this appeal.  And,
without an order, the City in turn was frustrated in pursuing a cross-
appeal. Counsel concluded by urging that it was incumbent on this court
to address every point in issue in order to assist the Constitutional Court
if it were to be seized with a further appeal.20

18 Ibid para 51.
19 Protea International (Pty) Ltd v Peat Marwick Mitchell & Co 1990 (2) SA 566 (A)
at 568 I–569 A.
20 Serengeti Rise Industries (Pty) Ltd & another v Aboobaker NO & others (845/2015)
[2017] ZASCA 79; 2017 (6) SA 581 (SCA) (2 June 2017); S v Jordan and others (Sex
Workers Education an Advocacy Task Force and Others as Amici Curiae 2002 (6)
642; 2002 (11)BCLR 1117 para 6 and 21.

[25] Counsel’s submission is an attack on the form rather than the
substance of the judgment. Although the high court did not expressly
issue an order granting condonation, its intention to do so is unmistakable
from its judgment; it was ‘prepared to grant the necessary condonation.’
Any doubt about the high court’s decision was clarified in its judgment
refusing leave to appeal in which it described its response to the question
of condonation as a ‘generous interpretation of the facts applied to the
law; that is generous to Premier … ’

[26] If condonation had not been granted then on the City’s contentions,
the entire order, including the order in favour of Premier for payment of
the additional claim, would also have been open to a cross-appeal. The
City did not challenge this part of the order. Had the City genuinely
wanted to cross-appeal it could have invoked rule 42(1)(b) of the Superior
Court Practice to cure any ambiguity, error or omission. Having failed to
adopt a sensible and inexpensive approach, the City cannot now be
allowed to unravel the entire judgment of the high court. The City has not
cross-appealed. I need say no more about condonation.

[27] Regarding the preparation of the record, rule 8(8) and (9) of the
rules of this court require the parties to seriously and genuinely engage
each other with a view to agreeing on the issues and portions of the record
relevant for the appeal.  This requirement is not only a matter of costs and
convenience for the court and the litigants; it is also about maximising
efficient use of time and other limited resources in the greater interest of
dispensing justice. Senior and junior counsel on both sides could not
possibly have concluded that judges of this court, with calculator in one
hand, a magnifying glass in the other, would trawl through 3764 invoices
to determine pricing.  The invoices were entirely irrelevant in a case that

turned on the interpretation of a contract. The City’s legal representatives
were largely at fault in refusing to accede to Premier’s legal
representatives’ efforts to drastically reduce the size of the record. Legal
representatives are urged to implement rule 8 properly to avoid the risk of
being mulcted with costs.

[28] In the result the following order is granted:

The appeal is dismissed with costs, including costs of two counsel.

__________________
D PILLAY
ACTING JUDGE OF APPEAL

APPEARANCES

Appellant:
S Kirk-Cohen SC

C Small
Instructed by:        Erasmus Ranchod & Associates: Cape Town

Lovius Block: Bloemfontein

Respondent:
A Katz SC

M Adhikari
Instructed by:        Welgemoed Attorney: Cape Town

Rosenhoff Reitz Barry Attorneys: Bloemfontein