Loch Logan Waterfront (Pty) Limited and The Trustees of the N Georgiou Trust v Bentel Associates International (Pty) Limited

Bentel Associates International (Pty) Ltd, an architectural firm, was appointed by the N Georgiou Trust in 2006 to design and construct extensions to the Loch Logan Waterfront shopping centre in Bloemfontein. The contract was documented through a series of letters incorporating standard Institute of South African Architects terms. Before completion, on 20 October 2005, the Trust sold the property and business as a going concern to Loch Logan Waterfront (Pty) Ltd for R200 million. After the sale, Bentel sent VAT invoices to the company instead of the Trust. Upon completion in 2007, Bentel claimed outstanding fees and disbursements of approximately R5.8 million from both the Trust and the company. Both defendants disputed the fees and counterclaimed for breach of contract. The trial court (Kruger J) found in favour of Bentel but awarded a significantly reduced amount due to miscalculation, granted only the company liable (not the Trust), awarded interest at 9% (not the prescribed 15.5%), and awarded no costs. Both parties were granted leave to appeal. The appellants failed to file the appeal record timeously despite multiple extensions, and the appeal lapsed. Bentel proceeded with its cross-appeal.

• Whether condonation should be granted for the late filing of the appeal record and whether the appeal should be reinstated
• Whether the company or the Trust was party to the architect's contract with Bentel (the locus standi issue)
• Whether there was a valid written delegation of the Trust's contractual obligations to the company
• The correct calculation of fees and disbursements owed to Bentel
• The applicable rate of interest on outstanding fees (prescribed rate versus lower rate)
• The appropriate costs order

1. The appellants' application for condonation for late filing of the record and reinstatement of the appeal was dismissed with costs of two counsel. 2. The cross-appeal was upheld with costs of two counsel. 3. The order of the trial court was set aside and replaced with: (a) The N Georgiou Trust is ordered to pay Bentel the sum of R2,496,265.30 plus interest at 15.5% per annum from 19 May 2009 to date of payment; (b) The N Georgiou Trust is ordered to pay Bentel's costs including those of two counsel.

1. Condonation for non-compliance with court rules will be refused where there is flagrant breach, excessive delay, and no reasonable explanation, regardless of prospects of success on appeal. Condonation is not a mere formality. 2. Delegation of contractual obligations requires written consent of the creditor where the contract expressly so provides. Informal conduct such as accepting payment from or sending invoices to a third party does not constitute written consent to delegation. 3. A contract term requiring variation to be in writing and signed by both parties must be strictly complied with; informal arrangements do not satisfy such requirements. 4. Claims for professional fees and disbursements that are determinable by calculation (even if disputed) are liquidated debts attracting interest at the prescribed rate under the Prescribed Rate of Interest Act 55 of 1975 from service of demand or summons. 5. Where parties plead that one entity 'took over' rights and obligations from another, without properly pleading the elements of delegation (including creditor consent), evidence of such taking over is inadmissible.

Lewis JA commented critically on the trial court's practice of allowing all evidence without objection and determining admissibility later, stating this is poor trial management that prolongs trials and risks consideration of irrelevant or hearsay evidence (citing Price Waterhouse Coopers Inc v National Potato Co-operative). The court also observed that in construction projects with complex contractual matrices involving multiple professional agents, it would make no commercial sense for the principal contractor to remain liable to one entity while the agents become liable to another entity - the entire contractual structure must be considered cohesively. The court noted that Mr Gautschi SC was placed in an 'invidious position' and faced an 'unenviable task' in attempting to argue for condonation given the conduct of the appellants' attorneys, suggesting sympathy for counsel placed in difficult positions by their instructing attorneys' failures.

This case reinforces important principles regarding: (1) Condonation applications - that flagrant and unexplained breaches of court rules will result in refusal of condonation regardless of prospects of success, and that condonation is not a mere formality even where delay is attributable to attorneys; (2) Delegation of contractual obligations - that where a contract expressly requires written consent for delegation and written variation, informal arrangements such as sending invoices to a different entity do not constitute valid delegation; (3) The doctrine of 'going concern' sales - that sale of a business as a going concern does not automatically transfer all contractual obligations to the purchaser without proper delegation agreed to by creditors; (4) Professional fees claims - clarifying when such claims are liquidated for purposes of the Prescribed Rate of Interest Act; and (5) Trial management - criticizing the practice of allowing all evidence and ruling on admissibility later as poor trial management that prolongs proceedings and risks improper consideration of inadmissible evidence.