SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT
OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

21 September 2018

STATUS

Immediate

Buffalo City v Nurcha Development Finance (378/2017) [2018] ZASCA
122 (21 September 2018)

Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.

The SCA today dismissed an appeal against a decision of the Eastern Cape
Division of the High Court (East London Circuit) in which that court held that
Buffalo City Metropolitan Municipality had entered into a contract with a low-
cost housing finance company, Nurcha, a subsidiary of the National Urban
Housing and Reconstruction Agency. The City had appointed a contractor to
build low cost housing within its jurisdiction. Nurcha lent funds to the
contractor to finance the project after issuing an irrevocable instruction to the
City to pay all progress payments into a designated bank account managed
by a sister company, Tusk.

The payment instruction, signed for by an official of the City, was signed and
dated some time before the construction contract was concluded, but after the
contractor had won a tender award. The SCA held that the City had, by its
unequivocal conduct in accepting the instruction, entering into the
construction contract and making payment into the designated bank account

over a period of five months, concluded a tacit contract with Nurcha. When it
paid into a different bank account it was in breach of the contract, and was
liable for damages.

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