THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No: 830/2013
Not reportable

In the matter between:
Holm Jordaan & Partners CC

APPELLANT
and
City of Tshwane Metropolitan Municipality

RESPONDENT

Neutral Citation: Holm Jordaan v City of Tshwane Metropolitan Municipality 830/13
[2014] ZASCA 105 (3 September 2014)
Coram: Lewis, Maya, Wallis, Willis JJA and Dambuza AJA
Heard: 21 August 2014
Delivered: 3 September 2014
Summary:  Where an architect‟s commission in respect of the design of a building is
conditional upon a decision to proceed with the project, and final terms are not
agreed by all parties concerned, no contract comes into existence; the decision to
proceed does not amount to a repudiation.

___________________________________________________________________

ORDER

On appeal from:  North Gauteng High Court, Pretoria (J W Louw J sitting as court of
first instance):
The appeal is dismissed with costs including those of two counsel.

JUDGMENT

Lewis JA (Maya, Wallis and Willis JJA and Dambuza AJA concurring)
[1] At issue in this appeal is the question whether there was a contract between
the parties on the terms alleged by the appellant, Holm, Jordaan & partners CC (HJ),
a firm of architects, and the City of Tshwane (the City), the respondent, for the
design and supervision of new municipal headquarters for the City. HJ had won a
competition run by the City‟s predecessor, the City Council of Pretoria, for the design
of new municipal headquarters. Several years later, and after much negotiation and
many changes to the original arrangement between the parties that I shall discuss in
due course, the City advised HJ that it was not proceeding with the project originally
envisaged. HJ regarded this as a repudiation of an enforceable contract and sued for
damages in excess of R4 million, being the fees it claimed it would have earned had
the project gone ahead. The North Gauteng High Court (Louw J) found that there
was no contract on the terms alleged by HJ and dismissed the action. Leave to
appeal to this court was granted by the high court. I shall discuss briefly the
background to the running of the competition, the history of the parties‟ negotiations
and then the contractual terms.

The history
[2] The personnel and departments of the City Council of Pretoria (I shall refer to
it as the Council to distinguish it from the City, the respondent) were, until March
1997, accommodated for the most part in a building known as Munitoria. On 3 March
1997 the west block of Munitoria was razed to the ground by a fire, and the south
block was severely damaged. The building could no longer be occupied and the
personnel were moved to other accommodation rented by the Council on a
temporary basis. The south block was rebuilt, but the remains of the west block had
to be demolished.
[3] In November 1998 the Council decided to hold a competition for an
architectural design of a new municipal building on the site of the west block. The
competition was referred to as Project Phoenix (presumably because the building
would arise from the ashes of the old building) and was open to architects practising
in Pretoria. The first prize for the competition was that the winner would be
commissioned as the architect for the rebuilding of the municipal headquarters, and
its brief would include the design, contract documentation, contract administration
and inspection of the works. HJ entered the competition and in July 1999 the Council
announced that it was the winner. HJ considered that it was entitled to commission
on the entire project. When the project was abandoned by the City, HJ considered
that it had repudiated the contract with HJ, on the terms it alleged. HJ accepted the
repudiation and sued the City for damages for breach of contract.
[4] Before dealing with the „conditions‟ of the competition and other documents
that bear on the contractual arrangements between the parties, it should be noted
that the requirements for a new municipal building grew exponentially after the
competition had been held and initial work done.  The Council was absorbed by a
newly created metropolitan municipality – the City – in December 2000 and new
policies and strategies regarding transport and development of the City, for example,
required more space for personnel and created new requirements for new functions.
The competition brief
[5] The competition brief described in broad terms the area in which the new
building was to be erected, its surrounds and the urban design considerations to be

taken into account, and indicated that the floor area was variable within a range of 41
000 and 51 000 square meters. In addition it specified the facilities that were
required and a maximum cost for office construction (R125 million) and for parking
(R35 million) – a total of R160 million. The brief ended with a statement in relation to
financing proposals: „Since the City Council does not have the finance to erect the
new office building, finance for the project will have to be sourced elsewhere.
Entrants may submit financing proposals if they so choose. However such proposals
will not be taken into account in the evaluation of design proposals.‟
The competition rules and terms
[6] The Council, as the „promoter‟, invited entries from Pretoria architectural firms.
Entrants had to register and pay an entry fee. The names of the assessors were
listed, and it was stated that a Competition Registrar would be appointed. Several
requirements were set out for the way in which designs and documents should be
submitted. Clause 2.16, on which much turns, read:
„Each of the stage one finalists shall receive an amount of R10 000 . . . This award is to
defray costs incurred in the submission of a second stage entry . . . .
Subject to his/her compliance with the conditions contained herein, the finalist of the scheme
placed first shall be commissioned as architect for the project, which commission shall
constitute the first prize. The Promoter shall enter into an agreement with the winner, the
terms of which shall be the standard terms of agreement between the City Council of
Pretoria and architects for a service including design, contract documentation, contract
administration and inspection of the works. The R10 000 award made to the winner as a
stage one finalist shall form part of the design concept (sketch plan) fee. Should the project
not be proceeded with after the adjudication of the second stage, the winner will be paid the
design concept (sketch plan) fee.
While it is the intention of the Promoter to proceed with the final design and documentation
and with the construction of the new complex should the go-ahead be obtained from the City
Council, the Promoter is under no obligation to do so.‟ (My emphasis.)
Winning the competition
[7] On 13 September 1999 the executive director of city planning and
development wrote to HJ confirming that it had submitted the winning entry „subject

to the Competition Brief, Rules and conditions with which you are fully conversant‟.
The letter continued that it was the Council‟s intention to „commission your firm as
Architectural Consultants for the new building, should it be decided to proceed with
the project. As explained to you  . . .  the Council‟s decision whether or not to
proceed with the Project is dependent on a variety of factors, the most important of
which are acceptable financing proposals and clarity with regard to the effect of the
new uni city on accommodation requirements in a new building.‟  (My emphasis.) HJ
responded in due course stating that it eagerly awaited the decision to proceed with
Project Phoenix, and said: „We understand that our formal appointment as Architects
in terms of the Competition Brief, Rules and Conditions follows on this decision.‟
Events after 1999
[8] Nothing of consequence happened in the next couple of years, save, as I
have said, that the City was established, incorporating the former Council and 11
other municipalities, as a result of which the need for additional accommodation in
the municipal headquarters grew substantially. In January 2002 the City approached
HJ and requested it to assist with a new needs assessment – a bulking exercise.
And on 14 April 2003 HJ wrote to the City stating that further to a meeting with a City
official, it confirmed that the concept of the competition was in principle acceptable to
people at the meeting and that the floor area would increase to 76 000–80 000
square meters. The letter continued: „We were asked at that meeting whether we are
prepared to work in a joint venture with a BEE company. We confirm that since the
project is to increase in scope, we are prepared to work in a joint venture with a BEE
company.‟ But it also set out the requirements that would have to be met by such an
entity before it would enter into a joint venture with it, and stipulated that it would do
the selection of the entity in partnership with the City.
[9] Some ten days later the City resolved at a meeting:
„1 That the building of a new Municipal Headquarters for the City of Tshwane Metropolitan
Municipality on the Munitoria site, be approved.
2 That the winning firm of the competition, Messrs Holm Jordaan & Partners, be
commissioned to render the architectural services required for the building of a new
Municipal Headquarters on condition that such services are rendered through a joint venture
partnership with a BEE appointed by Council on its (Council) own terms and condition.  . . . .

5 That the various funding options for the rebuilding of a Municipal Headquarters be
investigated by the Municipal Manager in consultation with the Chief Financial Officer. . . .‟
[10] The City advised HJ of the resolutions by letter on 14 May 2003, and stated
that: „The final terms and conditions regarding the appointment, brief and
remuneration details of this contract will follow after agreement of the above details
by all parties concerned.‟ HJ accepted the appointment on 4 June 2003, writing to
the City that they had noted the condition in relation to a „BEE appointed company‟. It
said that although this had not been a requirement of the competition „we are
prepared to accommodate BEE involvement‟. It continued to say that to avoid
„fruitless expenditure‟ it and the City would have to agree on the BEE requirement,
the payment of outstanding fees and the confirmation of the programme.
[11] HJ did further work in evaluating the project to which the City had agreed. The
requirements for the new headquarters of the City had increased very substantially.
The work done by HJ on the bulking exercise and on the re-evaluation of the
requirements of space was also substantial. Even prior to the meeting of the City in
April 2003, it had sent to the City a second interim account, dated 24 March 2003, for
payment of a fee of R3 080 207.35. HJ was eventually paid these fees.
[12] In a report that HJ sent to the City on 6 August 2003 it estimated that the total
new project cost would be in excess of R1.2 billion. And it sent a further invoice for
R1 117 373.73 for the work it had done already. It also wrote to the City, on 18 July
2003, reminding it of the statement in the appointment letter that the final terms and
conditions regarding appointment, brief and remuneration details of the contract
would follow after agreement between „all parties concerned‟. The letter continued:
„We are of the opinion that the appointment of the BEE architectural joint venture
partner has progressed to the extent where a proper Client/Architect agreement can
now be signed between the parties.‟ The writer thus enclosed the standard
client/architect agreement recommended by the Institute of South African Architects
(the Institute) with the letter.
[13] At this stage no BEE entity had been identified and, as the letter from HJ
showed, it was anticipated that a formal agreement had still to be concluded. I shall
revert to this issue when dealing with the legal principles that determine whether a
contract has been concluded.

[14] The response of the City, written by the Deputy Manager, Architectural
Services on 15 October 2003, was that the final terms of the contract had yet to be
negotiated – as HJ had itself said. It confirmed the work that HJ had performed
already and stated: „At this stage my Council is considering various options to
finance the project. . . . You are therefore requested not to proceed with any further
work on the project until further instruction.‟
[15] The City then commissioned various feasibility studies for the project and
called on interested parties to comment on the studies. It suggested a different
project entirely. HJ did comment, pointing out the report‟s failure to mention its earlier
involvement and that as a result of winning the competition it was entitled to be
appointed as the architect for the new municipal headquarters. On 25 January 2009,
the acting municipal manager wrote to HJ explaining that it was contemplating a
Public Private Partnership (PPP) which would have to be approved by National
Treasury, and advised that, as a result of the public process of calling for comment
on the feasibility study, the council of the City had rescinded the council resolution of
24 April 2003, and that the City had given its approval in principle to a PPP.  He said
that „your appointment to Phoenix was subject to the condition, amongst others, that
[the City] had reserved the right not to proceed with the Project‟. He advised that HJ
was entitled to participate in the PPP procurement bidding process.
[16] HJ regarded this as a repudiation of the contract between it and the City,
accepted the repudiation through a letter sent by its attorneys, and advised that it
would take legal action – hence the action for damages that was brought before the
high court. The issues for determination, as they were crystallised at the hearing of
the appeal, are thus whether a contract between HJ and the City ever came into
existence, and if so, whether it was repudiated. (I shall not deal with the various
defences that were raised by the City during the course of the trial – and which
occasioned considerable delay in its hearing – that are no longer relevant.)
Did a contract between HJ and the City, on the terms alleged by HJ, ever come
into existence?
[17] HJ contended before the high court and before this court on appeal that a
contract in terms of which it was commissioned as architect for the entire project was
concluded in three stages: on 24 April 2003 when the City adopted the resolutions

that I referred to earlier; on 14 May 2003 when those resolutions were
communicated to HJ and on 4 June 2003 when HJ accepted the offer made when
the resolutions were communicated. This was, of course, preceded by the
competition held in 1998, where HJ had won the right to be commissioned for the
project that was the subject of the competition.
[18] But, as Louw J found, the right to be commissioned as architect for the
remaining stages of the project (the first two having been completed as part of the
competition) was conditional on funding being found, and was also conditional on the
Council, and later the City, proceeding with the project. HJ‟s response to that on
appeal is that the right may have been conditional on the decision by the City to
proceed, but that that condition was fulfilled – and the decision made – when the City
passed the resolution to appoint HJ as the architect.
[19] However, that resolution was itself conditional on HJ entering into a joint
venture partnership with a BEE entity and it was implicit in the resolutions passed
and the letter communicating them that funding for the project had still to be found.
As the correspondence referred to earlier shows, no BEE entity was ever identified.
So a party to the alleged contract was not known and other material terms of the
contract were not agreed. The terms of the competition rules had long become
irrelevant. Project Phoenix was no more.
[20] An entirely different project was contemplated when the City passed the
resolutions, and indeed, much of the work that HJ had done in the „bulking‟ exercise
and subsequently showed that the project was infinitely bigger in scale and cost than
that originally anticipated. The area of the municipal headquarters was considerably
greater and the estimated cost had gone from R160 million to an amount in excess
of R1.2 billion.
[21] The terms of the contract had thus still to be agreed to identify not only a party
to it (the BEE entity) but the way in which HJ was to be remunerated, and the
respective roles of HJ and the unidentified BEE entity, amongst other things. HJ in
effect argued that there was a contract with an unknown entity and on uncertain
terms that would have been material.

[22] It sought to avoid this seemingly insurmountable problem by relying on this
court‟s decision in Command Protection Services (Gauteng) Pty Ltd t/a Maxi Security
v South African Post Office Ltd 2013 (2) SA 133 (SCA). In dealing with the principle
that not all terms of a contract need be determined before a contract is concluded,
Brand JA said (paras 12 and 13):
„It frequently happens, particularly in complicated transactions, that the parties reach
agreement by tender (or offer) and acceptance while there are clearly some outstanding
issues that require further negotiation and agreement. Our case law recognises that in these
situations there are two possibilities. The first is that the agreement reached by the
acceptance of the offer lacked animus contrahendi because it was conditional upon
consensus being reached, after further negotiation, on the outstanding issues. In that event
the law will recognise no contractual relationship, the offer and acceptance notwithstanding,
unless and until the outstanding issues have been settled by agreement. The second
possibility is that the parties intended that the acceptance of the offer would give rise to a
binding contract and that the outstanding issues would merely be left for later negotiation. If
in this event the parties should fail to reach agreement on the outstanding issues, the
original contract would prevail (see eg CGEE Alsthom Equipments et Enterprises
Electriques, South African Division v GKN Sankey (Pty) Ltd 1987 (1) SA 81 (A) at 92A – E;
Namibian Minerals Corporation Ltd v Benguela Concessions Ltd1997 (2) SA 548 (A) ([1997]
1 All SA 191) at 567A – C).

Illustrations of cases that were held by this court to be manifestations of the first possibility
are to be found in Namibian Minerals Corporation and in Premier, Free State, and Others v
Firechem Free State (Pty) Ltd 2000 (4) SA 413 (SCA) ([2000] 3 All SA 247), while the facts
in Alsthom Equipment and in Murray & Roberts Construction Ltd v Finat Properties (Pty) Ltd
1991 (1) SA 508 (A) were held to demonstrate the second (see also Lewis v Oneanate (Pty)
Ltd and Another 1992 (4) SA 811 (A) at 820I – 821E). The criterion as to whether the facts of
a particular case indicate the one or the other was succinctly summarised thus by Corbett JA
in Alsthom Equipments at 92E – F:
“Whether in a particular case the initial agreement acquires contractual force or not depends
upon the intention of the parties, which is to be gathered from their conduct, the terms of the
agreement and the surrounding circumstances. . . .”

[23] In my view it is clear that, whatever HJ‟s intention is now said to be, the City
regarded the terms that had still to be determined as crucial to the conclusion of the

contract. That appears from the documents that I have referred to. Moreover, it was
HJ‟s view too, communicated by its letter sent to the City on 18 July 2003 requesting
that a proper agreement be concluded on the terms of the standard agreement
approved by the Institute. The parties simply could not have intended that material
terms of the contract would be negotiated in the future. There was nothing to fall
back on if those terms were eventually not agreed.
[24] Moreover, as the City argued, no agreement had been reached on the scope
of the work; the allocation of responsibilities; the limitation of responsibilities; the fees
or methods of calculating them; the provisions for termination; the details of
professional indemnity insurance and the provisions for dispute resolution. These
terms are essential to an architect‟s commission in terms of rule 3 of Board Notice 28
of 2004 (GG 26143 of 19 March 2004), promulgated under the Architectural
Profession Act 44 of 2000, which sets out the code of professional conduct for
architects.
[25] I find, accordingly, that no contract commissioning HJ as the architect for the
building of municipal headquarters, contemplated when the City resolved to appoint
HJ, together with a BEE entity in a joint venture, ever materialized. The action had to
fail on this basis alone.
Repudiation
[26] However, I think it important to say something about the claim that the City
had repudiated the contract and was liable for damages as fees lost by HJ as a
result. If the court had found that there was in fact a contract concluded between HJ
and the City, it was always the prerogative of the City not to go ahead with the
project. No owner is ever obliged to continue with building or even to commence
building simply because it has commissioned an architect to design one. The
commissioning of an architect does not entail an obligation to build. The architect is
entitled to fees for work done: not to fees for the building project as a whole where
the project is not commenced or is stopped.
[27] I do not think it necessary to discuss the nature of an architect‟s contract with
an owner, given the conclusion to which I have already come. But for the sake of
completeness I refer to the standard terms of appointment used by the City, and of

those that were suggested by HJ (approved by the Institute), in terms of which the
City (as the owner) has the right to suspend the project, in which case the architect
was entitled to full remuneration for services rendered and disbursements made up
till the date of suspension. The Institute terms provide also that if a project is
resumed or reinstated after a year, the project is to be regarded as a „new
commission‟ and fees must be negotiated.
[28] While HJ argued that these terms refer to a suspension, which must be
temporary in nature, and not to a project that is not commenced, the same principle,
in my view, must a fortiori apply. As the high court found, a suspension must include
an indefinite suspension. And I do not accept the argument of HJ that although the
building for which it was commissioned was stopped its mandate continued.
Accordingly, even if a contract had come into existence, the City would not have
been liable for damages for repudiation.
[29] Regrettably, the record prepared on behalf of HG did not comply with the
rules of this court. No core bundle was provided although it was clearly warranted:
the documents that I have referred to were scattered in the various volumes. To add
insult to injury, numerous irrelevant documents were included. The full transcription
of the oral evidence was said to be necessary for the purpose of the hearing of the
appeal although much was inadmissible and very little was referred to in the heads
of argument. Non-compliance with the rules of court by legal representatives is to be
deprecated.
[30] The appeal is dismissed with costs including those of two counsel.

_______________________
C H Lewis
Judge of Appeal

APPEARANCES
For Appellant:

S D Wagener SC
Instructed by:

Coetzer & Partners, Arcadia

Honey Attorneys, Bloemfontein

For Respondent:

S J Maritz SC, W Mhakari SC and A Vorster
Instructed by:

Hugo & Ngwenya Inc, Centurion

Phatshoane Henney Attorneys, Bloemfontein