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Can the employer terminate its contract with a contractor for failing to adhere to the programme under the Joint Building Contracts Committee (“JBCC”)? 

 

The short answer is yes (subject to the employer following the requisite conditions).

 

Many contractors or subcontractors have failed to take the concept of a programme seriously or diligently enough.  It is often the party that is truly on top of this aspect of the project that tends to prevail when disputes of progress arise.

 

The JBCC 2014 edition defines the programme as “a diagrammatic representation of the planned execution of units of work or activities indicating the dates for commencement and completion prepared and maintained by the contractor.”[1]

 

It is frequently an overlooked tool that actually protects the contractor and plays a critical role in the timely completion of the project.  Failure to use it properly may end up providing the employer an opportunity to terminate the contract.

 

This is because the employer will, in most cases, be looking toward the programme to make sure the contractor is performing.  In terms of clause 29, the employer may give notice of his intention to terminate, if the contractor has failed to proceed with the works within the period stated.  The “period stated” is not clearly set out, but this clause refers to clause 12.2.17.

 

Clause 12.2.17 states very clearly that after commencement, the contractor must “proceed with due diligence, regularity, expedition, skill and appropriate resources to bring the works to practical completion and to final completion.”

 

The gist of this clause is relatively obvious, although the question then arises, how does the programme then come into the picture?  The programme, after all, is not referenced in any of these clauses.  Moreover, it is not automatically incorporated as an annexure to the contract.

 

Clause 12.2.6 states that the contractor must “Prepare and submit to the principal agent within fifteen (15) working days of receipt of construction information a programme for the works in sufficient detail to enable the principal agent to monitor the progress of the works.”  And this is to be updated under clauses 12.2.9 and 23.5.

 

To understand how the programme should be viewed, however, we must turn to the rules of interpretation under our law.  In Adventure Golf Bruma CC v Redefine Properties Ltd[2], the court set out the correct approach to interpreting contracts.  The key aspects of this process for our purposes are the following:

 

     "15.3.      The meaning of a provision is determined with reference to its language and in the light of its factual context, which      includes what has previously been referred to as “background circumstances” and “surrounding circumstances”. [3] Since interpretation is “one unitary exercise”,[4] the process requires the court “from the outset” to consider the language and context of the provision together,[5] “whether or not there is any possible ambiguity”.[6]

 

Moreover, one must consider the document as a whole, including “the apparent purpose to which [the provision] is directed”, and “the material known to those responsible for its production”.

 

So how, then, should the programme be considered with respect to the contract?  Is it properly incorporated into the contract, if it is a required document?  Does that even matter?  In light of the rules of interpretation, can it be considered under South African law?

 

Perhaps the correct question to ask is how would a court/adjudicator/arbitrator determine if a contractor is, in fact, proceeding with the requisite “due diligence, regularity, expedition, skill and appropriate resources to bring the works to practical completion and to final completion” without some type of measuring stick?

 

Consider Abajabuli Project Services CC v Uthekela District Municipality,[7] a KZN high court matter in which the engineer determined that the contractor had failed to proceed with the works in accordance with the approved programme and terminated its contract, as a result.  Note also that the GCC 2010 does not annex the programme prior to contract signing.  However, it is a deliverable and a live document, much like in the JBCC.

 

The judge in the court a quo spent much time considering the programme and the contractor’s failure to meet its milestones, as did the high court on appeal.  The court found that the engineer was justified in putting the contractor to terms and eventually terminating the contract under GCC clause 3.1.2 based on his reasoning that the contractor failed to meet the programme.  The court stated the following:

 

     “[52]…that the contractor was behind in the performance of the programme. Pursuant thereto, the [employer] was entitled to demand that the default be remedied and to terminate the contract if this was not done. The correct procedures according to the terms of the GCC were followed.

 

     [53]        The contractor failed to remedy its default within 14 days as required by the demand dated 1 July 2013 sent to the contractor.”

 

Again, the programme is a critical part of a construction project.  It is a tool used by the parties to measure progress and remedy issues hindering this progress.  The failure to maintain and adjust the programme, and in particular, keep up with the programme could have significant consequences for the contractor.  The employer may put the contractor in default, which would first be required under clauses 29.1.2 and 29.3 of the JBCC, and eventually terminate should the contractor fail to remedy.

 

 

[1]     See JBCC Principal Building Agreement Definitions section.

[2]    (6836/2013) [2014] ZAGPJHC 314 (2 September 2014) citing Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun     Transport (Edms) Bpk 2014 (2) SA 494 (SCA)

[3]     KPMG (above) para 39; Bothma-Batho (above) para 12

[4]     Bothma-Batho (above) para 12

[5]     Endumeni (above) para 24; KPMG (above) para 16

[6]     Bath v Bath (above) para 7

[7]     (AR35/18) [2019] ZAKZPHC 54 (1 July 2019)