Medical Law – Naming of your Practice

The Health Professions Council of South Africa’s (“HPCSA”) Ethical Rules of Conduct contain strict rules with regard to the naming of a medical practice. Failure to comply with these rules may result in disciplinary action by the HPCSA and a guilty finding of unprofessional conduct could attract a fine.

Rule 5 of the Rules of Conduct provides that medical practitioners are obliged to make use of their own names when naming their medical practices. In the event that a medical practitioner practices in a partnership or as part of a juristic person, he or she is entitled to make use of the name of the registered practitioner with whom he or she is in partnership or practices as a juristic person.

Should one of the partners of the partnership or a member of the juristic person die, relocate or leave for another reason, the remaining practitioner(s) may retain the existing practice name on condition that the express consent of the erstwhile partner or member is obtained. Where such erstwhile partner or member is deceased, the consent of the executor of the estate or next of kin will suffice.

A practitioner may not use the words “hospital”, “clinic” or “institute” or any other expression which may give the impression that such private practice forms part of, or is in association with, said entities.

Medical practitioners do not have free rein when naming their practices. Non-compliance with the requirements in this regard as contained in the Health Professions Act (56 of 1974), and the rules and regulations made in terms thereof, could result in severe ramifications for the practitioner concerned.

Medical Law – Naming your Practice

The Health Professions Council of South Africa’s (“HPCSA”) Ethical Rules of Conduct contain strict rules with regard to the naming of a medical practice. Failure to comply with these rules may result in disciplinary action by the HPCSA and a guilty finding of unprofessional conduct could attract a fine.

Rule 5 of the Rules of Conduct provides that medical practitioners are obliged to make use of their own names when naming their medical practices. In the event that a medical practitioner practices in a partnership or as part of a juristic person, he or she is entitled to make use of the name of the registered practitioner with whom he or she is in partnership or practices as a juristic person.

Should one of the partners of the partnership or a member of the juristic person die, relocate or leave for another reason, the remaining practitioner(s) may retain the existing practice name on condition that the express consent of the erstwhile partner or member is obtained. Where such erstwhile partner or member is deceased, the consent of the executor of the estate or next of kin will suffice.

A practitioner may not use the words “hospital”, “clinic” or “institute” or any other expression which may give the impression that such private practice forms part of, or is in association with, said entities.

Medical practitioners do not have free rein when naming their practices. Non-compliance with the requirements in this regard as contained in the Health Professions Act (56 of 1974), and the rules and regulations made in terms thereof, could result in severe ramifications for the practitioner concerned.

Medical law – The Role of the New Health Standards Watchman

The National Health Amendment Act, 12 of 2013 (“the Amendment Act”) provides for the establishment of quality requirements and standards in respect of health services provided by health establishments in both the public and private health sectors.  The purpose of the quality requirements and standards is to promote and protect the health and safety of the users of health services.  These quality requirements and standards are prescribed by the Minister after consultation with the Office of Health Standards Compliance (“the Office”). 

The Amendment Act provides for the appointment of an Ombud, whose function is to consider, investigate and dispose of complaints relating to the non-compliance with the prescribed quality requirements and standards in a fair, economical, independent and expeditious manner. 

When conducting an investigation, the Ombud may obtain testimony by affidavit or declaration, or he may direct any person to appear before him to give evidence under oath or affirmation, or produce any document in his possession or under his control pertaining to the complaint being investigated.  Any person being implicated in a matter being investigated must be given an opportunity to be heard by giving evidence and by questioning other witnesses who have appeared before the Ombud. 

Any aggrieved party may lodge a written appeal with the Minister against a finding by the Ombud within 30 days of becoming aware thereof.  The Minister must appoint an independent ad hoc tribunal and submit the appeal to the tribunal for adjudication.  The tribunal consists of a maximum of three individuals with a retired High Court judge or a magistrate as chairperson.  The remaining two seats are filled by individuals knowledgeable of the health care industry.  The tribunal may confirm, set aside or vary the decision of the Office or the Ombud and must notify all concerned parties accordingly.

Certain provisions of the Amendment Act may be in conflict with the Promotion of Administrative Justice Act, 3 of 2000 (“PAJA”).  PAJA requires that all administrative action must be lawful, reasonable and procedurally fair.  The Amendment Act only allows an accused to question a witness that has been called by the Ombud.  It does not provide for an accused to call its own witnesses.  The question arises as to what will happen should the Ombud fail or refuse to call a witness who has crucial evidence in support of an accused’s case. 

The Amendment Act further stipulates that questioning of a witness must be done “through the Ombud”.  The meaning of this phrase is unclear and it would seem that an accused cannot question a witness directly but has to address questions via the Ombud as a conduit.  The extent to which the Ombud may filter such questions is concerning.

The Amendment Act provides that no self-incriminating evidence made during an investigation by the Ombud may be used against a person in any subsequent criminal proceedings, except with regard to perjury or an offence in terms of the National Health Act, 61 of 2000.  The same protection is not afforded in respect of any subsequent civil proceedings and any self-incriminating evidence will be admissible.  Add this and no allowance for legal representation to the mixture of unfair witness practices and you get a recipe for substantial risk with regard to subsequent civil proceedings.  

The question arises whether an aggrieved patient with a potential civil claim for medical negligence could make use of the Ombud hearings as a tool to seek out self-incriminating evidence against a health establishment.  This is a definite possibility in cases where the alleged transgression by the health establishment relates to non-compliance to one of the promulgated health standards. 

The concept of an Ombudsman is not a new one and has been introduced with some success in other industries, such as the insurance and banking industries.  An Ombudsman without clearly defined powers and appropriate authority when it comes to sanctioning bad behaviour is, however, not expected to be particularly effective.  The Amendment Act contains only basic information pertaining to the Ombud and it will be necessary for the Minister to make regulations that will determine issues such as the identity of complainants, the type of complaints that can be adjudicated, the types of findings that the Ombud can make and the procedures to be followed during the investigation of a complaint.

Medical law – The role of the new Health Standards Watchman

The National Health Amendment Act, 12 of 2013 (“the Amendment Act”) provides for the establishment of quality requirements and standards in respect of health services provided by health establishments in both the public and private health sectors.  The purpose of the quality requirements and standards is to promote and protect the health and safety of the users of health services.  These quality requirements and standards are prescribed by the Minister after consultation with the Office of Health Standards Compliance (“the Office”). 

The Amendment Act provides for the appointment of an Ombud, whose function is to consider, investigate and dispose of complaints relating to the non-compliance with the prescribed quality requirements and standards in a fair, economical, independent and expeditious manner. 

When conducting an investigation, the Ombud may obtain testimony by affidavit or declaration, or he may direct any person to appear before him to give evidence under oath or affirmation, or produce any document in his possession or under his control pertaining to the complaint being investigated.  Any person being implicated in a matter being investigated must be given an opportunity to be heard by giving evidence and by questioning other witnesses who have appeared before the Ombud. 

Any aggrieved party may lodge a written appeal with the Minister against a finding by the Ombud within 30 days of becoming aware thereof.  The Minister must appoint an independent ad hoc tribunal and submit the appeal to the tribunal for adjudication.  The tribunal consists of a maximum of three individuals with a retired High Court judge or a magistrate as chairperson.  The remaining two seats are filled by individuals knowledgeable of the health care industry.  The tribunal may confirm, set aside or vary the decision of the Office or the Ombud and must notify all concerned parties accordingly.

Certain provisions of the Amendment Act may be in conflict with the Promotion of Administrative Justice Act, 3 of 2000 (“PAJA”).  PAJA requires that all administrative action must be lawful, reasonable and procedurally fair.  The Amendment Act only allows an accused to question a witness that has been called by the Ombud.  It does not provide for an accused to call its own witnesses.  The question arises as to what will happen should the Ombud fail or refuse to call a witness who has crucial evidence in support of an accused’s case. 

The Amendment Act further stipulates that questioning of a witness must be done “through the Ombud”.  The meaning of this phrase is unclear and it would seem that an accused cannot question a witness directly but has to address questions via the Ombud as a conduit.  The extent to which the Ombud may filter such questions is concerning.

The Amendment Act provides that no self-incriminating evidence made during an investigation by the Ombud may be used against a person in any subsequent criminal proceedings, except with regard to perjury or an offence in terms of the National Health Act, 61 of 2000.  The same protection is not afforded in respect of any subsequent civil proceedings and any self-incriminating evidence will be admissible.  Add this and no allowance for legal representation to the mixture of unfair witness practices and you get a recipe for substantial risk with regard to subsequent civil proceedings.  

The question arises whether an aggrieved patient with a potential civil claim for medical negligence could make use of the Ombud hearings as a tool to seek out self-incriminating evidence against a health establishment.  This is a definite possibility in cases where the alleged transgression by the health establishment relates to non-compliance to one of the promulgated health standards. 

The concept of an Ombudsman is not a new one and has been introduced with some success in other industries, such as the insurance and banking industries.  An Ombudsman without clearly defined powers and appropriate authority when it comes to sanctioning bad behaviour is, however, not expected to be particularly effective.  The Amendment Act contains only basic information pertaining to the Ombud and it will be necessary for the Minister to make regulations that will determine issues such as the identity of complainants, the type of complaints that can be adjudicated, the types of findings that the Ombud can make and the procedures to be followed during the investigation of a complaint.

Medical Law – Introduction of Quality Requirements and Standards

The National Health Amendment Act, 12 of 2013 (“the Amendment Act”) provides for the establishment of quality requirements and standards in respect of health services provided by health establishments in both the public and private health sectors.  The purpose of the quality requirements and standards is to promote and protect the health and safety of the users of health services.  These quality requirements and standards are prescribed by the Minister after consultation with the Office of Health Standards Compliance (“the Office”). 

The Office will act as the watchdog for monitoring and enforcing compliance by health establishments.  The Office may issue guidelines for the benefit of health establishments on the implementation of said standards and will, inter alia, be responsible for:

1. Inspection and certification of health establishments by making use of health officers and
    inspectors.

2. Investigating complaints relating to non-compliance with the quality requirements and
    standards through the appointed Ombud.

The Office functions under the control of a Board consisting of between 7 to 12 members.  The Board must, in consultation with the Minister, appoint a Chief Executive Officer (“CEO”) of the Office, who will be a member of the board ex officio.  The CEO is responsible for appointing and managing suitably qualified employees and developing efficient administration.  The Amendment Act enables the CEO to delegate any of his powers or duties to an employee of the Office.  The CEO is also entitled, after consultation with the Board, to appoint expert or technical committees to assist the Office in the performance of its functions, including the conducting of inspections. 

The Amendment Act makes provision for the designation of health officers and the appointment of inspectors responsible for inspecting health establishments to ensure compliance with the National Health Act, 61 of 2000 (“the Act”).  During an inspection, the health officers or inspectors may question any person who may have information relevant to the inspection, require the production of any document (including patient health records) and take samples of any substance or photographs relevant to the inspection.  Even though the Amendment Act cautions that inspections must be conducted with strict regard to, inter alia, a person’s right to privacy, it is concerning that the health officers and inspectors may obtain copies of patient health records seemingly without such patient’s consent.   This provision of the Amendment Act seems to constitute an infringement of an individual’s right to privacy of personal information. 

In the event of a health establishment not complying with any prescribed quality requirement or standard, the health officer or investigator will issue a notice of compliance describing, inter alia, the breach and the steps to be taken over a prescribed period of time to remedy the breach.  Should the health establishment fail to comply, certain prescribed penalties may be imposed, such as temporary or permanent closure of the health establishment or part thereof, a fine or referral to the National Prosecuting Authority for prosecution. 

The Amendment Act provides for the appointment of an Ombud, whose function is to consider, investigate and dispose of complaints relating to the non-compliance with the prescribed quality requirements and standards in a fair, independent, economical and expeditious manner. 

Any aggrieved party may lodge a written appeal with the Minister against a decision of the Office or a finding by the Ombud within 30 days of becoming aware thereof.  The Minister must appoint an independent ad hoc tribunal and submit the appeal to the tribunal for adjudication.  The tribunal consists of a maximum of three individuals with a retired High Court judge or a magistrate as chairperson.  The remaining two seats are filled by individuals knowledgeable of the health care industry.  The tribunal may confirm, set aside or vary the decision of the Office or the Ombud and must notify all concerned parties accordingly.

The introduction and implementation of quality requirements and standards in the public sector is most welcome.  However, the implementation thereof in the private sector may have little effect as most private healthcare facilities already subscribe to international standards, such as accreditation by the International Organization for Standardization (ISO).

Medical law – Introduction of Quality Requirements and Standards in the National Health System

The National Health Amendment Act, 12 of 2013 (“the Amendment Act”) provides for the establishment of quality requirements and standards in respect of health services provided by health establishments in both the public and private health sectors.  The purpose of the quality requirements and standards is to promote and protect the health and safety of the users of health services.  These quality requirements and standards are prescribed by the Minister after consultation with the Office of Health Standards Compliance (“the Office”). 

The Office will act as the watchdog for monitoring and enforcing compliance by health establishments.  The Office may issue guidelines for the benefit of health establishments on the implementation of said standards and will, inter alia, be responsible for:

1. Inspection and certification of health establishments by making use of health officers and 
    inspectors.

2. Investigating complaints relating to non-compliance with the quality requirements and 
    standards through the appointed Ombud.

The Office functions under the control of a Board consisting of between 7 to 12 members.  The Board must, in consultation with the Minister, appoint a Chief Executive Officer (“CEO”) of the Office, who will be a member of the board ex officio.  The CEO is responsible for appointing and managing suitably qualified employees and developing efficient administration.  The Amendment Act enables the CEO to delegate any of his powers or duties to an employee of the Office.  The CEO is also entitled, after consultation with the Board, to appoint expert or technical committees to assist the Office in the performance of its functions, including the conducting of inspections. 

The Amendment Act makes provision for the designation of health officers and the appointment of inspectors responsible for inspecting health establishments to ensure compliance with the National Health Act, 61 of 2000 (“the Act”).  During an inspection, the health officers or inspectors may question any person who may have information relevant to the inspection, require the production of any document (including patient health records) and take samples of any substance or photographs relevant to the inspection.  Even though the Amendment Act cautions that inspections must be conducted with strict regard to, inter alia, a person’s right to privacy, it is concerning that the health officers and inspectors may obtain copies of patient health records seemingly without such patient’s consent.   This provision of the Amendment Act seems to constitute an infringement of an individual’s right to privacy of personal information. 

In the event of a health establishment not complying with any prescribed quality requirement or standard, the health officer or investigator will issue a notice of compliance describing, inter alia, the breach and the steps to be taken over a prescribed period of time to remedy the breach.  Should the health establishment fail to comply, certain prescribed penalties may be imposed, such as temporary or permanent closure of the health establishment or part thereof, a fine or referral to the National Prosecuting Authority for prosecution. 

The Amendment Act provides for the appointment of an Ombud, whose function is to consider, investigate and dispose of complaints relating to the non-compliance with the prescribed quality requirements and standards in a fair, independent, economical and expeditious manner. 

Any aggrieved party may lodge a written appeal with the Minister against a decision of the Office or a finding by the Ombud within 30 days of becoming aware thereof.  The Minister must appoint an independent ad hoc tribunal and submit the appeal to the tribunal for adjudication.  The tribunal consists of a maximum of three individuals with a retired High Court judge or a magistrate as chairperson.  The remaining two seats are filled by individuals knowledgeable of the health care industry.  The tribunal may confirm, set aside or vary the decision of the Office or the Ombud and must notify all concerned parties accordingly.

The introduction and implementation of quality requirements and standards in the public sector is most welcome.  However, the implementation thereof in the private sector may have little effect as most private healthcare facilities already subscribe to international standards, such as accreditation by the International Organization for Standardization (ISO).

Annelize Hefer

 +27 12 346 1278


 annelize@markraminc.co.za
  add to my contacts >> 


Annelize obtained her LLB degree cum laude from the University of Pretoria where she was awarded the Vice Chancellor & Rector Medal for Best Law Student of the University for all four years of study

She completed her articles at one of the largest law firms in the country.  She was then appointed as legal advisor of an underwriting agency, writing business on behalf of, inter alia, a leading insurance company in South Africa.  She gained extensive experience in insurance, more specifically Professional Indemnity Insurance for a variety of professions, including attorneys, advocates, engineers, architects, estate agents and brokers.  She completed various insurance examinations and was registered with the FSB as both a Key Individual and Representative.

Annelize discovered early on in her career that she had a preference for Medical Malpractice and she completed a Certificate in Medical Law through UNISA.  Throughout her career as legal advisor, she dealt with Medical Malpractice involving hospitals, clinics, nurses and various medical professionals (including Allied Healthcare Practitioners).  She decided to return to practice where she can focus on Medical Law.     

Medical Law – HPCSA Guidelines on the Keeping of Patient Records

THE IMPORTANCE OF KEEPING PROPER PATIENT RECORDS

The Health Professions Council of South Africa places “health care practitioners” – i.e. persons registered with the HPCSA – under an obligation to keep proper medical records. The HPCSA has published Guidelines on the Keeping of Patient Records (HPCSA) Pretoria (2008), and compliance with these Guidelines is critical for both continuity of patient care and for defending complaints or negligence claims.

A health record is defined as “any relevant record made by a health care practitioner at the time of or subsequent to a consultation and / or examination or the application of health management”, and contains the information about the health of an identifiable individual recorded by a health care professional, either personally or at his or her direction.

The following documents are regarded as the essential components of a health record, depending on the nature of the individual case:

· Hand-written contemporaneous notes taken by the health care practitioner;

· Notes taken by previous practitioners attending to health care or other health care practitioners, including a typed patient discharge summary or summaries;

· Referral letters to and from other health care practitioners;

· Laboratory reports and other laboratory evidence such as histology sections, cytology slides and printouts from automated analysers, X-ray films and reports, ECG traces, etc;

· Audiovisual records such as photographs, videos and tape-recordings;

· Clinical research forms and clinical trial data;

· Other forms completed during the health interaction such as insurance forms, disability assessments and documentation of injury on duty;

· Death certificates and autopsy reports.

The HPCSA requires that the following minimum information be included in a patient’s medical record:

· Personal (identifying) particulars of the patient;

· The biological, psychological and social history of the patient, including allergies and idiosyncrasies;

· The time, date and place of every consultation;

· The assessment of the patient’s condition;

· The proposed clinical management of the patient;

· The medication and dosage prescribed;

· Details of referrals to specialists, if any;

· The patient’s reaction to treatment or medication, including adverse effects;

· Test results;

· Imaging investigation results;

· Information on the times that the patient was booked off from work and the relevant reasons;

· Written proof of informed consent, where applicable.

Medical records must be objective recordings of what a health care practitioner has been told or discovered through investigation or examination, must be clear and legible, made contemporaneously and signed and dated. The records should be stored securely for a period of not less than six (6) years from the date on which they become dormant.

The HPCSA further requires that records should be complete, but concise. Self-serving or disapproving comments should be avoided in patient records (facts and drawn conclusions which are essential for patient care should be recorded).

Adherence to the Guidelines can make all the difference with regard to a clinical negligence claim being successfully defended, and all health care practitioners should ensure that they are familiar with the contents of the Guidelines.

Construction Law – Labour unrest in construction – who bears the risk?

The Medupi power station project will no doubt see claims for an extension of time for completion and claims for additional payment following recent reports of labour unrest on the construction site in Lephalale.

Construction at the multi-billion power plant was temporarily suspended on 16 January 2013 for more than a week as a result of what is being referred to as an “illegal strike” by Hitachi Kaefer and Alstom Kentz workers affiliated with the National Union of Metalworkers of SA. The workers are claiming that they have not received sufficient December bonuses and are also “not being paid double” on weekends.  This follows a similar strike in September 2012 when evacuation was ordered at the Medupi site because of violent strikes by workers.

Eskom is scheduled to start supplying power to the national grid from the first unit of the Medupi power plant by the end of this year.  Eskom’s Hilary Joffe has, however, confirmed that labour unrest threatens the completion milestones set out in the current project programme. 

Eskom will ultimately face the risks associated with the delays as contractors are likely to claim extensions of time for completion of certain portions of the project. Eskom may also face claims for additional payment as a result of the delay to contract works and disruption of project schedules. 

Numsa’s Irvin Jim has been reported as stating that the consistent frustration of construction is a deliberate act from contractors in an effort to delay the project in order to claim benefits from Eskom.

Eskom may have to review its current project labour agreement in order to avoid further delays and associated claims caused by the labour unrest.

Claims on these types of major projects involving numerous contractors’ and sub-contractors’ agreements (which are often linked to one another) require analysis of the various parties’ contractual rights and obligations.   Markram Incorporated specialises in construction law.

Medical Law – The Requirements for dispensing doctors

Prior to 01 April 1966 the authority of medical practitioners to dispense or compound medicines was governed by section 52 of the Health Professions Act.

Under this act, a medical practitioner who desired to dispense medicines simply had to inform the HPCSA of his intention to dispense medicines. The HPCSA had a discretion to then enter the name of such medical practitioner in the register of medical practitioners who were allowed to dispense medicines. A medical practitioner whose name had been entered in the register then became entitled personally to dispense medicines prescribed by him or her or by any medical practitioner with whom he was in partnership or with whom he was “associated as principal or associate or locum tenens”.

When the Medicines and Related Substances Act 101 of 1965 (“the Act”) came into operation on 01 April 1966, the position was changed dramatically. Section 22C of the Act now required a doctor wishing to dispense medicine to patients to apply to the Department of Health for a dispensing licence. Certain conditions for the granting of a dispensing licence were prescribed in the regulations to the Act. It also became a requirement that the applicant complete a supplementary dispensing course.

The conditions for the granting of a dispensing licence are set out in regulation 18 to the Act. The application has to be submitted to the Director-General of the Department of Health (“the Director-General”) and regulation 18 requires the application to contain at least the following information:

• The name, residential and business addresses (both physical and postal) of the applicant;

• The exact location of the premises where the dispensing will be carried out;

• Proof of completion of the prescribed supplementary course;

• Telephone and fax numbers of the applicant;

• Proof of registration with a statutory council such as the Health Professions Council of South Africa;

• A copy of the required notice to other health facilities in terms of sub-regulation 4;

• Motivation as to the need for a dispensing licence in a particular area; and

• Any other information that the Director-General may require.

Sub-regulation 18(4) has been the subject of much debate in the medical community since the Regulations came into effect. It directs that the Director-General is obliged to consider the existence of other licensed health facilities in the vicinity of the premises from where the applicant intends to carry out the dispensing. The Department of Health (with reference to this regulation) adopted a self-made rule that doctors not be allowed to dispense within a 5 km radius of any pharmacy. This position was obviously met with extreme opposition from the medical community as a whole.

The matter finally got the attention of the Constitutional Court in the matter of The Affordable Medicines Trust and Others v Minister of Health and Another (CCT27/04) [2005] ZACC 3. The matter was heard on 11 November 2004 and decided on 11 March 2005.

The Applicants challenged inter alia the powers of the Director-General to prescribe conditions upon which dispensing licences may be issued, the “coupling” of a licence to dispense medicines to particular premises and the factors which the Director-General is required to consider when reviewing an application for a licence.

The arguments put forth by the Applicants were, in broad terms, the following:

• The power given to the Director-General to prescribe conditions upon which dispensing licences may be issued is too broad and may have the effect of giving the Director-General arbitrary legislative powers.

• The “coupling” of a licence to dispense medicines with specified premises is not authorised by the Act and therefore the Minister exceeded her powers when making the regulation giving the Director-General this right. In the alternative, the requirement of this “coupling” falls outside the authority to regulate the practice of the medical profession.

• The regulations, in their entirety, are vague and as such gives the Director General powers to make arbitrary decisions.

The Constitutional Court held that the provisions of the Act and its Regulations had to be considered in the light of the government’s stated objective to increase the public’s access to safe medicines. When considered with this objective in mind, the provisions of both the Act and the Regulations, although conferring many powers on the Minister and the Director-General, could not be regarded as unconstitutional.

The Court also held that the statutory framework giving rise to the Regulations provided sufficient guidance to enable the Director-General to adequately determine conditions upon which to issue licences and also limited the power of the Director-General to prescribe conditions by the context in which these powers are to be exercised.

Regarding the “coupling” of the dispensing licence to particular premises, the Constitutional Court (in agreement with the High Court) found that the “coupling” facilitates regular inspection and held that if the public is to have access to safe medicines, the dispensing of medicines cannot be separate from the premises where dispensing takes place.

It was held that Regulation 18 does not expressly require the licence to dispense medicines to be linked to specific premises. However, the Regulation contemplates that health-care providers who wish to dispense medicines will do so from the premises where the medical practitioner practises from (as principal or as associate, assistant or locum tenens with another practitioner).

The Court held that in the case of a medical practitioner who practices as an assistant, the licence will reflect the premises of the principal, these being the premises from which such medical practitioner will dispense medicines. Similarly, a locum tenens will dispense medicines from the premises of the principal who holds a dispensing licence. Since a locum tenens may work under various principals, the licence may be issued subject to the condition that he may only dispense medicines from premises of principals who have been issued with dispensing licences.

The Court further held that a medical practitioner with satellite practices will be issued with a single licence listing all the premises from which medicines will be dispensed. Whenever a medical practitioner wishes to expand his practice to other premises, application has to be made for the addition of the new premises to the licence.

The Constitutional Court also held that the Regulations providing that medical practitioners are not permitted to dispense where there is a pharmacy within a 5 km radius had the effect of protecting pharmacies from competition with medical practitioners. The Court held that was not the purpose of the Act and Regulations 18(5)(a), (c), (d) and (e) were declared unconstitutional and invalid.

Medical practitioners who fail to comply with the provisions of the Act may face removal from the HPCSA’s register, effectively suspending them from practice. It seems that there are still practitioners who are unaware of the current requirements relating to dispensing licences and these practitioners are putting their careers at stake.

Medical Law – Requirements for dispensing doctors

Prior to 01 April 1966 the authority of medical practitioners to dispense or compound medicines was governed by section 52 of the Health Professions Act.

Under this act, a medical practitioner who desired to dispense medicines simply had to inform the HPCSA of his intention to dispense medicines. The HPCSA had a discretion to then enter the name of such medical practitioner in the register of medical practitioners who were allowed to dispense medicines. A medical practitioner whose name had been entered in the register then became entitled personally to dispense medicines prescribed by him or her or by any medical practitioner with whom he was in partnership or with whom he was “associated as principal or associate or locum tenens”.

When the Medicines and Related Substances Act 101 of 1965 (“the Act”) came into operation on 01 April 1966, the position was changed dramatically. Section 22C of the Act now required a doctor wishing to dispense medicine to patients to apply to the Department of Health for a dispensing licence. Certain conditions for the granting of a dispensing licence were prescribed in the regulations to the Act. It also became a requirement that the applicant complete a supplementary dispensing course.

The conditions for the granting of a dispensing licence are set out in regulation 18 to the Act. The application has to be submitted to the Director-General of the Department of Health (“the Director-General”) and regulation 18 requires the application to contain at least the following information:

• The name, residential and business addresses (both physical and postal) of the applicant;

• The exact location of the premises where the dispensing will be carried out;

• Proof of completion of the prescribed supplementary course;

• Telephone and fax numbers of the applicant;

• Proof of registration with a statutory council such as the Health Professions Council of South Africa;

• A copy of the required notice to other health facilities in terms of sub-regulation 4;

• Motivation as to the need for a dispensing licence in a particular area; and

• Any other information that the Director-General may require.

Sub-regulation 18(4) has been the subject of much debate in the medical community since the Regulations came into effect. It directs that the Director-General is obliged to consider the existence of other licensed health facilities in the vicinity of the premises from where the applicant intends to carry out the dispensing. The Department of Health (with reference to this regulation) adopted a self-made rule that doctors not be allowed to dispense within a 5 km radius of any pharmacy. This position was obviously met with extreme opposition from the medical community as a whole.

The matter finally got the attention of the Constitutional Court in the matter of The Affordable Medicines Trust and Others v Minister of Health and Another (CCT27/04) [2005] ZACC 3. The matter was heard on 11 November 2004 and decided on 11 March 2005.

The Applicants challenged inter alia the powers of the Director-General to prescribe conditions upon which dispensing licences may be issued, the “coupling” of a licence to dispense medicines to particular premises and the factors which the Director-General is required to consider when reviewing an application for a licence.

The arguments put forth by the Applicants were, in broad terms, the following:

 • The power given to the Director-General to prescribe conditions upon which dispensing licences may be issued is too broad and may have the effect of giving the Director-General arbitrary legislative powers.

• The “coupling” of a licence to dispense medicines with specified premises is not authorised by the Act and therefore the Minister exceeded her powers when making the regulation giving the Director-General this right. In the alternative, the requirement of this “coupling” falls outside the authority to regulate the practice of the medical profession.

• The regulations, in their entirety, are vague and as such gives the Director General powers to make arbitrary decisions.

The Constitutional Court held that the provisions of the Act and its Regulations had to be considered in the light of the government’s stated objective to increase the public’s access to safe medicines. When considered with this objective in mind, the provisions of both the Act and the Regulations, although conferring many powers on the Minister and the Director-General, could not be regarded as unconstitutional.

The Court also held that the statutory framework giving rise to the Regulations provided sufficient guidance to enable the Director-General to adequately determine conditions upon which to issue licences and also limited the power of the Director-General to prescribe conditions by the context in which these powers are to be exercised.

Regarding the “coupling” of the dispensing licence to particular premises, the Constitutional Court (in agreement with the High Court) found that the “coupling” facilitates regular inspection and held that if the public is to have access to safe medicines, the dispensing of medicines cannot be separate from the premises where dispensing takes place.

It was held that Regulation 18 does not expressly require the licence to dispense medicines to be linked to specific premises. However, the Regulation contemplates that health-care providers who wish to dispense medicines will do so from the premises where the medical practitioner practises from (as principal or as associate, assistant or locum tenens with another practitioner).

The Court held that in the case of a medical practitioner who practices as an assistant, the licence will reflect the premises of the principal, these being the premises from which such medical practitioner will dispense medicines. Similarly, a locum tenens will dispense medicines from the premises of the principal who holds a dispensing licence. Since a locum tenens may work under various principals, the licence may be issued subject to the condition that he may only dispense medicines from premises of principals who have been issued with dispensing licences.

The Court further held that a medical practitioner with satellite practices will be issued with a single licence listing all the premises from which medicines will be dispensed. Whenever a medical practitioner wishes to expand his practice to other premises, application has to be made for the addition of the new premises to the licence.

The Constitutional Court also held that the Regulations providing that medical practitioners are not permitted to dispense where there is a pharmacy within a 5 km radius had the effect of protecting pharmacies from competition with medical practitioners. The Court held that was not the purpose of the Act and Regulations 18(5)(a), (c), (d) and (e) were declared unconstitutional and invalid.

Medical practitioners who fail to comply with the provisions of the Act may face removal from the HPCSA’s register, effectively suspending them from practice. It seems that there are still practitioners who are unaware of the current requirements relating to dispensing licences and these practitioners are putting their careers at stake.

Construction Law – Where the employer fails and/or refuses to make payment of a certified amount to the contractor

The standard JBCC Principal Building Agreement (“the Agreement”), more specifically Clause 31.1, determines that the principal agent should issue an interim payment certificate each month until the issue of a final payment certificate.

The Agreement defines a “payment certificate” as a document issued by the principal agent on a monthly basis certifying the amount due and payable by the employer to the contractor or vice versa in terms of the JBCC Payment Certificate form.

In terms of Clause 31.9 of the Agreement the employer should pay the contractor the amount certified in a payment certificate (final or interim) within seven calendar days of the issued date of the payment certificate.  But what if the employer fails to make payment of the certified amount?

Where the contractor does not receive payment of the certified amount by the due date as determined in Clause 31.9, Clause 31.11 provides that the employer shall be liable for default interest on the certified amount, calculated from the due date for payment up to and including the date on which the contractor receives payment, without prejudice to any other rights the contractor may have.

Clause 31.15 determines that in the aforementioned instances, the contractor may give three working days’ notice to suspend the works to the employer.  The contractor should then also provide the principal agent with a copy of the said notice.

Clause 31.16 provides certain remedies on behalf of the contractor where the employer failed to make payment or only made partial payment of the certified amount.  In such instances, the contractor may:

“31.16.1 Issue a demand to the employer in terms of the payment guarantee where such is provided (3.1); or

31.16.2 Exercise his lien or right of continuing possession where this has not been waived in terms of the contract data and where practical completion has not been achieved; or

31.16.3 Give notice of suspension of the works (31.15).  Where the employer fails to act in relation to such notice the contractor may give notice of termination (38.1.4,6)”

In Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture 2009 (5) SA 1 (SCA) the Supreme Court of Appeal (“SCA”) provided clarity regarding one of the possible processes to enforce payment of certified amounts.  In this matter the respondent, Stocks Mavundla Zek Joint Venture (“the contractor”), concluded a written JBCC Agreement (“the Agreement”) to build a resort hotel for the appellant, Joob Joob Investments (Pty) Ltd (“the employer”).

The principal agent issued various certificates in respect of work completed.  The employer refused to make payment of the amounts certified in the aforesaid certificates.  The contractor cancelled the agreement and instituted action against the employer in the High Court in which it claimed payment of the certified amounts set out in the aforesaid certificates.  The contractor then applied for summary judgment after the employer entered appearance to defend the matter.

The employer opposed the application for summary judgment by raising the following defences:

1. Certificate 10 was not due and payable as the contractor had failed to deliver a tax invoice that complies with Clause 31.9 of the Agreement, as the date of valuation of the work done differed from the date of valuation that appeared in the tax invoice in question; and

2. Certificates 11 and 12 related to damages and the principal agent’s mandate did not extend to certification of damages, i.e. because the certificates were for the damages, they were illiquid.

In respect of the first defence, the court a quo found that there was no requirement in the agreement that a tax invoice had to include a date of valuation.  All that was required in terms of the Agreement was a tax invoice for the amount due.

In respect of the second defence, the Court a quo found that the employer had not shown that the certification of damages was not in accordance with the Agreement.

The Court a quo therefore dismissed the employer’s defences and granted summary judgment on all three certificates.

The employer appealed against the aforesaid decision of the Court a quo to the SCA.  On appeal, the following submissions were made on behalf of the employer:

1) After cancellation, the principal agent was limited to preparing a final account and final payment certificate and there was thus no room for an interim certificate such as certificate no. 11; and

2) Even in the absence of a bona fide defence, the High Court ought, in the exercise of its discretion, to have refuse summary judgment.

The SCA ruled that, in relation to certificate no. 10, the employer’s main contentions were without merit.  There is no requirement in terms of the Agreement that a tax invoice should follow any particular format.  The Agreement also did not prescribe what information the tax invoice had to contain and there was a direct correlation between certificate 10 and the tax invoice in question.  The SCA also stated that Clause 31.9 was complied with and the Court a quo could not be faulted in that conclusion.

In relation to certificate no. 11, the SCA held that the submission on behalf of the employer was wrong and that certificate no. 11 was issued in accordance with the Agreement.

The SCA also held, with relation to certificate no. 11 and 12, that the employer’s submission was without foundation and that on a proper construction of the agreement, it was clear that the principal agent was not only entitled, but was obliged, in appropriate circumstances, to certify damages.

Further, the SCA held that both final and interim payment certificates are liquid documents, because they were issued by the employer’s agent, with the consequence that the employer was in the same position it would have been if it had itself signed an acknowledgment of debt in favour of the contractor.  The certificate thus embodies an obligation on the employer to pay the certified amount.  The certificate gives rise to a new cause of action and is also regarded as the equivalent of cash.

The contractor therefore held three liquid documents which were the equivalent of acknowledgments of debt.

In conclusion, the SCA held that no sustainable defence had been put up by the employer and that the Court a quo’s judgment was fully justified.  The Appeal was consequently dismissed with costs.

Construction Law – Where employer fails and/or refuses to make payment of a certified amount to the contractor

The standard JBCC Principal Building Agreement (“the Agreement”), more specifically Clause 31.1, determines that the principal agent should issue an interim payment certificate each month until the issue of a final payment certificate.

The Agreement defines a “payment certificate” as a document issued by the principal agent on a monthly basis certifying the amount due and payable by the employer to the contractor or vice versa in terms of the JBCC Payment Certificate form.

In terms of Clause 31.9 of the Agreement the employer should pay the contractor the amount certified in a payment certificate (final or interim) within seven calendar days of the issued date of the payment certificate.  But what if the employer fails to make payment of the certified amount?

Where the contractor does not receive payment of the certified amount by the due date as determined in Clause 31.9, Clause 31.11 provides that the employer shall be liable for default interest on the certified amount, calculated from the due date for payment up to and including the date on which the contractor receives payment, without prejudice to any other rights the contractor may have.

Clause 31.15 determines that in the aforementioned instances, the contractor may give three working days’ notice to suspend the works to the employer.  The contractor should then also provide the principal agent with a copy of the said notice.

Clause 31.16 provides certain remedies on behalf of the contractor where the employer failed to make payment or only made partial payment of the certified amount.  In such instances, the contractor may:

“31.16.1 Issue a demand to the employer in terms of the payment guarantee where such is provided (3.1); or

31.16.2 Exercise his lien or right of continuing possession where this has not been waived in terms of the contract data and where practical completion has not been achieved; or

31.16.3 Give notice of suspension of the works (31.15).  Where the employer fails to act in relation to such notice the contractor may give notice of termination (38.1.4,6)”

In Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture 2009 (5) SA 1 (SCA) the Supreme Court of Appeal (“SCA”) provided clarity regarding one of the possible processes to enforce payment of certified amounts.  In this matter the respondent, Stocks Mavundla Zek Joint Venture (“the contractor”), concluded a written JBCC Agreement (“the Agreement”) to build a resort hotel for the appellant, Joob Joob Investments (Pty) Ltd (“the employer”).

The principal agent issued various certificates in respect of work completed.  The employer refused to make payment of the amounts certified in the aforesaid certificates.  The contractor cancelled the agreement and instituted action against the employer in the High Court in which it claimed payment of the certified amounts set out in the aforesaid certificates.  The contractor then applied for summary judgment after the employer entered appearance to defend the matter.

The employer opposed the application for summary judgment by raising the following defences:

1. Certificate 10 was not due and payable as the contractor had failed to deliver a tax invoice that complies with Clause 31.9 of the Agreement, as the date of valuation of the work done differed from the date of valuation that appeared in the tax invoice in question; and

2. Certificates 11 and 12 related to damages and the principal agent’s mandate did not extend to certification of damages, i.e. because the certificates were for the damages, they were illiquid.

In respect of the first defence, the court a quo found that there was no requirement in the agreement that a tax invoice had to include a date of valuation.  All that was required in terms of the Agreement was a tax invoice for the amount due.

In respect of the second defence, the Court a quo found that the employer had not shown that the certification of damages was not in accordance with the Agreement.

The Court a quo therefore dismissed the employer’s defences and granted summary judgment on all three certificates.

The employer appealed against the aforesaid decision of the Court a quo to the SCA.  On appeal, the following submissions were made on behalf of the employer:

1) After cancellation, the principal agent was limited to preparing a final account and final payment certificate and there was thus no room for an interim certificate such as certificate no. 11; and

2) Even in the absence of a bona fide defence, the High Court ought, in the exercise of its discretion, to have refuse summary judgment.

The SCA ruled that, in relation to certificate no. 10, the employer’s main contentions were without merit.  There is no requirement in terms of the Agreement that a tax invoice should follow any particular format.  The Agreement also did not prescribe what information the tax invoice had to contain and there was a direct correlation between certificate 10 and the tax invoice in question.  The SCA also stated that Clause 31.9 was complied with and the Court a quo could not be faulted in that conclusion.

In relation to certificate no. 11, the SCA held that the submission on behalf of the employer was wrong and that certificate no. 11 was issued in accordance with the Agreement.

The SCA also held, with relation to certificate no. 11 and 12, that the employer’s submission was without foundation and that on a proper construction of the agreement, it was clear that the principal agent was not only entitled, but was obliged, in appropriate circumstances, to certify damages.

Further, the SCA held that both final and interim payment certificates are liquid documents, because they were issued by the employer’s agent, with the consequence that the employer was in the same position it would have been if it had itself signed an acknowledgment of debt in favour of the contractor.  The certificate thus embodies an obligation on the employer to pay the certified amount.  The certificate gives rise to a new cause of action and is also regarded as the equivalent of cash.

The contractor therefore held three liquid documents which were the equivalent of acknowledgments of debt.

In conclusion, the SCA held that no sustainable defence had been put up by the employer and that the Court a quo’s judgment was fully justified.  The Appeal was consequently dismissed with costs.

Construction Law – Liability of the Agent to Compensate Contractor for its loss in terms of the JBCC Principal Building Agreement

In the matter of Hyde Construction CC v Blue Cloud Investments 40 (Pty) Ltd 2011 JDR 0954 (WCC) the Court had to decide whether a contractor can succeed with a delictual claim against an agent to compensate the contractor for its loss.

The main dispute arose between the contractor and the first defendant, the employer, who concluded a written JBCC Principal Building Agreement (“the Agreement”) on 25 July 2005.  In terms of the Agreement, the contractor would undertake certain building work at the employer’s premises, including alterations and additions to an existing shopping centre.  The principal agent was a registered architect and was appointed in the capacity of a principal agent of the Agreement.

The contractor alleged that it duly performed its obligations under the Agreement and that the employer was indebted to it for an amount that exceeds R7 million.  The amount is comprised of R4.4 million allegedly due to the contractor together with various interest components calculated under the Agreement.

The contractor’s claim against the principal agent was brought in the alternative, in that, if the Court found that the employer was not liable to the contractor for the compensatory and/or default interest, then the principal agent would be liable to it.

The contractor alleged in its particulars of claim that, in terms of Clause 34.5 and/or Clause 38.5.7 of the Agreement, there was a legal duty owed by the principal agent to the contractor.  According to the contractor the principal agent breached such legal duty by negligently failing to comply with its alleged contractual obligations and the contractor subsequently suffered damages as a result of the alleged loss of the compensatory interest and the default interest.

EXCEPTION FILED BY THE PRINCIPAL AGENT:

The principal agent filed an exception to the contractor’s particulars of claim, objecting on the following grounds:

1. The principal agent, in its capacity as principal agent of the employer, did not have locus standi in judicio to be sued in his own name;

2. The “legal duty” alleged by the contractor was not competent in law; and

3. The contractor’s particulars of claim lacked averments necessary to sustain a cause of action against the principal agent.

LOCUS STANDI OF THE PRINCIPAL AGENT:

Locus standi in judicio is the capacity or ability of a party to participate in litigation proceedings.

The objection of the principal agent is based on the fact that, in terms of the Agreement, he was at all material times acting as agent for the employer.  Therefore the suit should more properly be brought against his principal, the employer.

The Court did not agree with the aforesaid and decided that this first basis for exception must fail.

LIABILITY FOR PURE ECONOMIC LOSS:

Fundamental to a delictual claim for pure economic loss is the necessity to plead and prove wrongfulness.  The court had to consider whether the contractor made out a case for the extension of delictual liability.  To do so, it was necessary for the court to consider the Agreement.

CONSIDERATION OF THE AGREEMENT BY THE COURT:

Clause 5 of the Agreement determined that the principal agent would be the only person with the authority to bind the employer.  As such, he was liable to the employer for any negligence on his part which may cause financial loss to the employer.

In terms of Clause 34.1, one of the principal agent’s duties was to prepare the final account for submission to the contractor within 90 days of practical completion of the works.  Clause 34.5 determines that in the event that there is no objection from the contractor to the final account, the principal agent was required to issue a final payment certificate within seven days.

Clause 34.11 states that the employer was obliged to pay the contractor so called “compensatory interest” on the net amount certified by the principal agent in the final payment certificate.  Clause 34.12 determined that in the event that the contractor did not receive timeous payment of the amount due in the final payment certificate, the employer would be liable for so-called “default interest”.  This amount would be recoverable by the contractor from the employer’s payment guarantee which the contractor was entitled to request in terms of Clause 15.4.2 of the Agreement.

According to the contractor the principal agent did not comply with its obligations under the Agreement by negligently failing to issue further interim payment certificates and failed to issue the final account and/or the final payment certificate.  The contractor was of the view that the aforementioned omissions resulted in it suffering damages in the form of loss of interest. 

DOES THE PRINCIPAL AGENT HAVE A LEGAL DUTY TO AWARD THE CONTRACTOR?

There was no contract concluded between the principal agent and the contractor.  Accordingly, in formulating a delictual claim against the principal agent, the contactor sought to rely on a legal duty purportedly owed to it by the principal agent.

The contractor’s view that the failure by the principal agent to certify in terms of Clause 38 of the Agreement, constituted a breach of a legal duty owed to it, was assessed by the Court.  The claim against the principal agent is brought in the alternative.  The Court found that the contractor had a contractual claim against the employer under the Agreement to recover the lost interest and emphasised that the principal agent was appointed in terms of an agreement with the employer.  The Court also remarked that, when the contractor elected to contract with the employer on the basis of the JBCC Agreement, it knew of the merits and demerits inherent in that form of agreement.  The contractor was not obliged to contract in terms of the JBCC Agreement and had it wished to protect itself against the principal agent’s potential negligence, it was free to contract on that basis.

CONCLUSION:

The Court found that the contractor has advanced no cogent grounds for the extension of delictual liability to the principal agent in the circumstances.  The Court also found that the claim against the principal agent is bad in law to the extent that it is alleged that the principal agent bore a legal duty towards the contractor.

The architect’s exception to the contractor’s particulars of claim was upheld with costs.

Construction Law – Liability of Agent to Compensate Contractor for its loss in terms of the JBCC Principal Building Agreement

In the matter of Hyde Construction CC v Blue Cloud Investments 40 (Pty) Ltd 2011 JDR 0954 (WCC) the Court had to decide whether a contractor can succeed with a delictual claim against an agent to compensate the contractor for its loss.

The main dispute arose between the contractor and the first defendant, the employer, who concluded a written JBCC Principal Building Agreement (“the Agreement”) on 25 July 2005.  In terms of the Agreement, the contractor would undertake certain building work at the employer’s premises, including alterations and additions to an existing shopping centre.  The principal agent was a registered architect and was appointed in the capacity of a principal agent of the Agreement.

The contractor alleged that it duly performed its obligations under the Agreement and that the employer was indebted to it for an amount that exceeds R7 million.  The amount is comprised of R4.4 million allegedly due to the contractor together with various interest components calculated under the Agreement.

The contractor’s claim against the principal agent was brought in the alternative, in that, if the Court found that the employer was not liable to the contractor for the compensatory and/or default interest, then the principal agent would be liable to it.

The contractor alleged in its particulars of claim that, in terms of Clause 34.5 and/or Clause 38.5.7 of the Agreement, there was a legal duty owed by the principal agent to the contractor.  According to the contractor the principal agent breached such legal duty by negligently failing to comply with its alleged contractual obligations and the contractor subsequently suffered damages as a result of the alleged loss of the compensatory interest and the default interest.

EXCEPTION FILED BY THE PRINCIPAL AGENT:

The principal agent filed an exception to the contractor’s particulars of claim, objecting on the following grounds:

1. The principal agent, in its capacity as principal agent of the employer, did not have locus standi in judicio to be sued in his own name;

2. The “legal duty” alleged by the contractor was not competent in law; and

3. The contractor’s particulars of claim lacked averments necessary to sustain a cause of action against the principal agent.

LOCUS STANDI OF THE PRINCIPAL AGENT:

 Locus standi in judicio is the capacity or ability of a party to participate in litigation proceedings.

The objection of the principal agent is based on the fact that, in terms of the Agreement, he was at all material times acting as agent for the employer.  Therefore the suit should more properly be brought against his principal, the employer.

The Court did not agree with the aforesaid and decided that this first basis for exception must fail.

LIABILITY FOR PURE ECONOMIC LOSS:

Fundamental to a delictual claim for pure economic loss is the necessity to plead and prove wrongfulness.  The court had to consider whether the contractor made out a case for the extension of delictual liability.  To do so, it was necessary for the court to consider the Agreement.

CONSIDERATION OF THE AGREEMENT BY THE COURT:

Clause 5 of the Agreement determined that the principal agent would be the only person with the authority to bind the employer.  As such, he was liable to the employer for any negligence on his part which may cause financial loss to the employer.

In terms of Clause 34.1, one of the principal agent’s duties was to prepare the final account for submission to the contractor within 90 days of practical completion of the works.  Clause 34.5 determines that in the event that there is no objection from the contractor to the final account, the principal agent was required to issue a final payment certificate within seven days.

Clause 34.11 states that the employer was obliged to pay the contractor so called “compensatory interest” on the net amount certified by the principal agent in the final payment certificate.  Clause 34.12 determined that in the event that the contractor did not receive timeous payment of the amount due in the final payment certificate, the employer would be liable for so-called “default interest”.  This amount would be recoverable by the contractor from the employer’s payment guarantee which the contractor was entitled to request in terms of Clause 15.4.2 of the Agreement.

According to the contractor the principal agent did not comply with its obligations under the Agreement by negligently failing to issue further interim payment certificates and failed to issue the final account and/or the final payment certificate.  The contractor was of the view that the aforementioned omissions resulted in it suffering damages in the form of loss of interest. 

DOES THE PRINCIPAL AGENT HAVE A LEGAL DUTY TO AWARD THE CONTRACTOR?

There was no contract concluded between the principal agent and the contractor.  Accordingly, in formulating a delictual claim against the principal agent, the contactor sought to rely on a legal duty purportedly owed to it by the principal agent.

The contractor’s view that the failure by the principal agent to certify in terms of Clause 38 of the Agreement, constituted a breach of a legal duty owed to it, was assessed by the Court.  The claim against the principal agent is brought in the alternative.  The Court found that the contractor had a contractual claim against the employer under the Agreement to recover the lost interest and emphasised that the principal agent was appointed in terms of an agreement with the employer.  The Court also remarked that, when the contractor elected to contract with the employer on the basis of the JBCC Agreement, it knew of the merits and demerits inherent in that form of agreement.  The contractor was not obliged to contract in terms of the JBCC Agreement and had it wished to protect itself against the principal agent’s potential negligence, it was free to contract on that basis.

CONCLUSION:

The Court found that the contractor has advanced no cogent grounds for the extension of delictual liability to the principal agent in the circumstances.  The Court also found that the claim against the principal agent is bad in law to the extent that it is alleged that the principal agent bore a legal duty towards the contractor.

The architect’s exception to the contractor’s particulars of claim was upheld with costs.

Engineering Law – Final Certification & Defences thereto

The issuing of a final certificate in terms of a building contract carries with it certain legal consequences for Employers and Principle Agents (normally Architects, Quantity Surveyors or Engineers). In the case of Ocean Diners (Pty) Ltd V Golden Hill Construction the Court clarified the legal position.

These consequences depend in the first instance on the proper interpretation of the applicable contractual terms. Where a building agreement provides that a final certificate shall constitute conclusive evidence as to the sufficiency of the works and materials, as well as of the value thereof, it is determinative of the respective rights and obligations of the parties in relation to matters covered by the certificate. The certificate therefore constitutes (in the absence of a valid defence) conclusive evidence of the value of the works and the amount due to the contractor.

STATUS OF THE FINAL CERTIFICATE

The Court found that the certificate embodies a binding obligation on the part of the employer to pay that amount and gives rise to a new cause of action (subject to the terms of the contract). The failure of the employer to make payment as contractually stipulated entitles the contractor to sue on the certificate.

If the effect of a building contract is to confer finality upon a certificate validly issued, it cannot be withdrawn or cancelled by an architect in order to correct mistakes of fact or value in it, unless the contract provides for it, alternatively such an arrangement is agreed to by the parties.

Therefore, once the architect has issued the final certificate, he is functus officio insofar as the certificate and matters pertaining thereto are concerned. That being so, the architect cannot withdraw or cancel the final certificate.

A final certificate is not even open to attack because it was produced on erroneous reports of the agent of the employer or the negligence of the employer’s architect. The failure of the employer’s professional team to properly scrutinise the claims put forward by the contractor and to rectify any errors, or their possible negligence in failing to satisfy themselves as to the correctness of the claims and valuations before issuing the certificate, will accordingly not provide a defence to an action on the certificate. It can also not provide a basis for the cancellation or withdrawal of the certificate by the architect.

PUBLIC POLICY

An undertaking by an employer in a building contract that a final certificate shall be conclusive evidence of the employer’s indebtedness is not in the least offensive to public policy. A party may also contractually agree to abandon his ordinary right to prove that an admission was wrongly made (on his behalf by his principle agent). Such a contractual term is not in itself against public policy.

The purpose of such a clause is to bring about finality in the respective rights and obligations of the parties. It also obviates the need for litigation over what are likely to be minor issues. To ensure this, the parties contractually bind themselves to accept as final and conclusive the certificate of a professional person they are entitled to expect will act fairly and impartially. Its provisions cannot therefore be said to be contrary to public considerations.

POSSIBLE DEFENCES TO THE CERTIFICATE

The certificate is, however, not indefensible. It is subject to all defences that may be raised in an action based on a final certificate. Any defence available to the employer, or on which the employer seeks to rely, ought to be pleaded.

All authorities indicate that negligent or innocent misrepresentation (relating to an architect’s certificate) would not be a valid defence to a claim on a final certificate. Possible defences to the certificate would be limited to considerations offensive to public policy, such as fraud.

EMPLOYER’S RIGHTS

When it is known that the final certificate is not entirely accurate in relation to either the valuation reflected therein or the amount due to the contractor, it would not be contrary to public policy to enforce it. Public policy is largely concerned with the potential for manifest unfairness or injustice within a given situation.

Where the employer has suffered damage through a negligent failure on the part of either his quantity surveyor or architect to act in his best interests, he would (subject to prescription) have an action for damages against the specific member of the professional team. The situation where the certificate is known to be inaccurate is therefore not one inherently fraught with unfairness or injustice as far as the employer is concerned.

Engineering Law – Should an Engineer’s duties be extended beyond its contractual obligations?

The question of what the extent of an engineer’s duties are, usually come into play whenever an engineered structure fails.  One prominent element to this question is whether an engineer’s duties extend beyond a contractual obligation with its employer.    

In Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd this issue was raised and clarified by the Supreme Court of Appeal.

BACKGROUND
In this matter the engineer was employed by Strijdom Park Extension 6 (Pty) Ltd (“the employer”) to design a steel reinforced concrete slab separating the ground floor from the basement of a warehouse which was erected by Abcon (Pty) Ltd (“the contractor”).  The concrete slab failed two years after occupation of the warehouse was taken.

The employer instituted a claim for damages against the contractor and the engineer, alleging that they had breached their respective agreements with the employer.  The claim against the engineer was settled, but the claim against the contractor was heard on appeal.  
The parties were in agreement that the collapse must have occurred during the casting of the slab when the concrete was poured over and into the network of the reinforcing steel.   
The question that had to be decided on appeal was, firstly, whether the failure of the slab was at least partly attributable to a defective engineering design and, secondly, whether the engineer had a duty to the contractor.  

The Court considered the following undisputed evidence:
•    the failure was due to the collapse of the upper of two criss-cross mats of steel bars that had been encased in the concrete to reinforce it;
•    the collapse was a consequence thereof that many of the stools (which kept the two mats apart) were found to have been bent out of shape;
•    the contact between the upper mat and the stools was limited to one bar of the mat resting on the centre of the horizontal piece of each of such stools;
•    the stools were not fastened; and
•    the stool collapse occurred during the casting of the slab.

THE CONTRACTOR’S ARGUMENT
The contractor, firstly, took the stance that it was not liable for the damages as it had constructed the concrete slab in accordance with the engineer’s design, which was allegedly defective.

Secondly, the contractor relied on the fact that the engineer had approved the way in which the reinforcement was installed.  

Lastly, the contractor pointed out that the engineer’s design did not indicate that there had to be two bars of the top mat per stool, nor that the stools had to be fastened.

The contractor claimed that it did not notice the collapse of the upper mat, nor did it realise that the stools had not been tied.  It is clear from the contractor’s evidence that he left every relevant decision pertaining to the assembly of the reinforcement to the engineer and the steel contractor.  

THE EMPLOYER’S ARGUMENT
The employer contended that:
•    It was the duty of the contractor to assemble the reinforcement mats and to maintain same in the correct position.

•    Proper construction practice demanded that, wherever possible, two bars of the upper mat should be placed on each stool and that the feet of the stools be tied.  There is no reason for an engineer to indicate these practices on his drawings as these requirements are part and parcel of proper construction practice and solely the contractor’s duty.

•    The contractor should have noticed the collapse during the pouring process and should have stopped the work in order to consult the engineer.

•    If the contractor had observed its duties as set out above, the failure would not have occurred.

THE COURT’S APPROACH
The Court agreed with the employer’s stance.  

There was no evidence supporting the allegation that the engineer’s design was defective.
Although the engineer had approved the steel structure on site, he did not carry a duty to supervise the work of the contractor.  It was the contractor’s decision how it carried out the construction work and it cannot shift the blame to the engineer in the circumstance where it did not perform its work in a proper and workmanlike manner.  It was also the contractor’s obligation to ensure that the construction of a design is free of defects.

In the Court’s view, it was reasonable of the engineer to expect that the contractor would ensure proper assembly of the reinforcement mat by noticing any displacement and taking appropriate action if it occurred.  

The Court further clarified that the engineer had only a contractual duty to its client and not to the contractor.  The engineer did not even have a duty to intervene if the contractor appeared to be going wrong (unless it was apparent to the engineer that the contractor did not know his business and was going to go wrong).  Such a duty to intervene would only arise if the contractor appeared set on an incredible act of recklessness.  

The Court therefore held that the slab had failed because the contractor failed to carry out the construction in a proper and workmanlike manner.

CONCLUSION
•    An engineer’s duties are not extended beyond what is set out in his agreement with his employer.  

•    An engineer will therefore not have the duty to supervise the work of a contractor, unless he is contractually required to do so and he cannot be held liable for another party’s contractual breach.

Engineering Law – Should an Engineer’s duties be extended beyond its contractual obligations?

The question of what the extent of an engineer’s duties are, usually come into play whenever an engineered structure fails.  One prominent element to this question is whether an engineer’s duties extend beyond a contractual obligation with its employer.    

In Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd this issue was raised and clarified by the Supreme Court of Appeal.

BACKGROUND
In this matter the engineer was employed by Strijdom Park Extension 6 (Pty) Ltd (“the employer”) to design a steel reinforced concrete slab separating the ground floor from the basement of a warehouse which was erected by Abcon (Pty) Ltd (“the contractor”).  The concrete slab failed two years after occupation of the warehouse was taken.

The employer instituted a claim for damages against the contractor and the engineer, alleging that they had breached their respective agreements with the employer.  The claim against the engineer was settled, but the claim against the contractor was heard on appeal.  
The parties were in agreement that the collapse must have occurred during the casting of the slab when the concrete was poured over and into the network of the reinforcing steel.   
The question that had to be decided on appeal was, firstly, whether the failure of the slab was at least partly attributable to a defective engineering design and, secondly, whether the engineer had a duty to the contractor.  

The Court considered the following undisputed evidence:
•    the failure was due to the collapse of the upper of two criss-cross mats of steel bars that had been encased in the concrete to reinforce it;
•    the collapse was a consequence thereof that many of the stools (which kept the two mats apart) were found to have been bent out of shape;
•    the contact between the upper mat and the stools was limited to one bar of the mat resting on the centre of the horizontal piece of each of such stools;
•    the stools were not fastened; and
•    the stool collapse occurred during the casting of the slab.

THE CONTRACTOR’S ARGUMENT
The contractor, firstly, took the stance that it was not liable for the damages as it had constructed the concrete slab in accordance with the engineer’s design, which was allegedly defective.

Secondly, the contractor relied on the fact that the engineer had approved the way in which the reinforcement was installed.  

Lastly, the contractor pointed out that the engineer’s design did not indicate that there had to be two bars of the top mat per stool, nor that the stools had to be fastened.

The contractor claimed that it did not notice the collapse of the upper mat, nor did it realise that the stools had not been tied.  It is clear from the contractor’s evidence that he left every relevant decision pertaining to the assembly of the reinforcement to the engineer and the steel contractor.  

THE EMPLOYER’S ARGUMENT
The employer contended that:
•    It was the duty of the contractor to assemble the reinforcement mats and to maintain same in the correct position.

•    Proper construction practice demanded that, wherever possible, two bars of the upper mat should be placed on each stool and that the feet of the stools be tied.  There is no reason for an engineer to indicate these practices on his drawings as these requirements are part and parcel of proper construction practice and solely the contractor’s duty.

•    The contractor should have noticed the collapse during the pouring process and should have stopped the work in order to consult the engineer.

•    If the contractor had observed its duties as set out above, the failure would not have occurred.

THE COURT’S APPROACH
The Court agreed with the employer’s stance.  

There was no evidence supporting the allegation that the engineer’s design was defective.
Although the engineer had approved the steel structure on site, he did not carry a duty to supervise the work of the contractor.  It was the contractor’s decision how it carried out the construction work and it cannot shift the blame to the engineer in the circumstance where it did not perform its work in a proper and workmanlike manner.  It was also the contractor’s obligation to ensure that the construction of a design is free of defects.

In the Court’s view, it was reasonable of the engineer to expect that the contractor would ensure proper assembly of the reinforcement mat by noticing any displacement and taking appropriate action if it occurred.  

The Court further clarified that the engineer had only a contractual duty to its client and not to the contractor.  The engineer did not even have a duty to intervene if the contractor appeared to be going wrong (unless it was apparent to the engineer that the contractor did not know his business and was going to go wrong).  Such a duty to intervene would only arise if the contractor appeared set on an incredible act of recklessness.  

The Court therefore held that the slab had failed because the contractor failed to carry out the construction in a proper and workmanlike manner.

CONCLUSION
•    An engineer’s duties are not extended beyond what is set out in his agreement with his employer.  

•    An engineer will therefore not have the duty to supervise the work of a contractor, unless he is contractually required to do so and he cannot be held liable for another party’s contractual breach.

Medical Law – The Medical Schemes Act and Direct Payment to Service Providers

Section 59 of the Medical Schemes Act, Act 131 of 1998, provides inter alia that:

1)    “A supplier of a service who has rendered any service to a beneficiary in terms of which an account has been rendered, shall, notwithstanding the provisions of any other law, furnish to the member concerned an account or statement reflecting such particulars as may be prescribed;
2)    A medical scheme shall, in the case where an account has been rendered, subject to the provisions of this Act and the rules of the medical scheme concerned, pay to a member or supplier of service, any benefit owing to that member or supplier of service within 30 days after the day on which the claim in respect of such benefit was received by the medical scheme”.

The question arises whether this section merely allows medical schemes to pay service providers directly or whether it in actual fact creates an obligation on medical schemes to make payments directly to service providers, as has been argued by service providers.

The Supreme Court of Appeal, in Medscheme Holdings (Pty) Ltd and Another v Bhamjee [2005] ALL SA 16 (SCA), found that Mr Bhamjee, a medical practitioner, had no basis upon which to demand that Medscheme (a registered medical scheme) pay him directly.

In this decision, the Court appeared to recognise that although section 59(2) creates a basis upon which medical schemes are allowed to discharge obligations owed to members by reimbursing service providers directly, the section does not oblige a medical scheme to do so where the provider had lodged an account with the medical scheme.

This view was confirmed in the recently decided and reportable matter of Tshwane Pharmacy (Pty) Ltd v GEMS which was heard by the North Gauteng High Court under case number 28532/11.

In this matter the Applicant (a service provider) applied to Court on an urgent basis for an order directing that the Respondent (a registered medical scheme) make payment to them directly, and not to their members.

The Applicant argued that the key phrase in section 59(2) of the Act is “benefit owing to the member or provider of the service” and that on a common sense interpretation of the section it means that where a member has not paid the supplier of the service the medical scheme has no discretion but is obliged to pay the supplier.

The Court did not agree with this argument, and held that section 59(2) must be interpreted in context. Subsection (1) provides that a supplier of a service who has rendered a service is obliged to furnish the member concerned with an account containing prescribed particulars. Subsection (2) then provides that when such an account has been rendered the medical scheme may pay to the member or the supplier of the service the benefit owing to that member or supplier of the service.

The Court also held that, in the context of the section, the benefit owing must refer to the amount owing by the member to the supplier for the service rendered. The Court stated that it is irrelevant that the benefit becomes owing to the member by virtue of the agreement between the member and the medical scheme and, to the supplier, by virtue of the agreement between the member and the supplier. The subsection does not create an obligation on the medical scheme to pay the supplier.

Furthermore, the Court held that the subsection clearly provides that payment is subject to the rules of the medical scheme, and in the case of the Respondent its rules stated unambiguously that the Respondent has the right to pay either the member or the supplier of the service.

Accordingly, the Court found no basis for an obligation on the Respondent to pay the Applicant directly and dismissed the application with costs.

From the above it is clear that in order to ensure payment for services rendered service providers must either claim payment directly from their patients, or ensure that they have contractual agreements with the medical schemes. For now, our Courts seem unwilling to impose a statutory obligation on medical schemes to make payment directly to service providers in the absence of such a contractual arrangement.

Medical Law – The Medical Schemes Act and Direct Payment to Service Providers

Section 59 of the Medical Schemes Act, Act 131 of 1998, provides inter alia that:

1)    “A supplier of a service who has rendered any service to a beneficiary in terms of which an account has been rendered, shall, notwithstanding the provisions of any other law, furnish to the member concerned an account or statement reflecting such particulars as may be prescribed;
2)    A medical scheme shall, in the case where an account has been rendered, subject to the provisions of this Act and the rules of the medical scheme concerned, pay to a member or supplier of service, any benefit owing to that member or supplier of service within 30 days after the day on which the claim in respect of such benefit was received by the medical scheme”.

The question arises whether this section merely allows medical schemes to pay service providers directly or whether it in actual fact creates an obligation on medical schemes to make payments directly to service providers, as has been argued by service providers.

The Supreme Court of Appeal, in Medscheme Holdings (Pty) Ltd and Another v Bhamjee [2005] ALL SA 16 (SCA), found that Mr Bhamjee, a medical practitioner, had no basis upon which to demand that Medscheme (a registered medical scheme) pay him directly.

In this decision, the Court appeared to recognise that although section 59(2) creates a basis upon which medical schemes are allowed to discharge obligations owed to members by reimbursing service providers directly, the section does not oblige a medical scheme to do so where the provider had lodged an account with the medical scheme.

This view was confirmed in the recently decided and reportable matter of Tshwane Pharmacy (Pty) Ltd v GEMS which was heard by the North Gauteng High Court under case number 28532/11.

In this matter the Applicant (a service provider) applied to Court on an urgent basis for an order directing that the Respondent (a registered medical scheme) make payment to them directly, and not to their members.

The Applicant argued that the key phrase in section 59(2) of the Act is “benefit owing to the member or provider of the service” and that on a common sense interpretation of the section it means that where a member has not paid the supplier of the service the medical scheme has no discretion but is obliged to pay the supplier.

The Court did not agree with this argument, and held that section 59(2) must be interpreted in context. Subsection (1) provides that a supplier of a service who has rendered a service is obliged to furnish the member concerned with an account containing prescribed particulars. Subsection (2) then provides that when such an account has been rendered the medical scheme may pay to the member or the supplier of the service the benefit owing to that member or supplier of the service.

The Court also held that, in the context of the section, the benefit owing must refer to the amount owing by the member to the supplier for the service rendered. The Court stated that it is irrelevant that the benefit becomes owing to the member by virtue of the agreement between the member and the medical scheme and, to the supplier, by virtue of the agreement between the member and the supplier. The subsection does not create an obligation on the medical scheme to pay the supplier.

Furthermore, the Court held that the subsection clearly provides that payment is subject to the rules of the medical scheme, and in the case of the Respondent its rules stated unambiguously that the Respondent has the right to pay either the member or the supplier of the service.

Accordingly, the Court found no basis for an obligation on the Respondent to pay the Applicant directly and dismissed the application with costs.

From the above it is clear that in order to ensure payment for services rendered service providers must either claim payment directly from their patients, or ensure that they have contractual agreements with the medical schemes. For now, our Courts seem unwilling to impose a statutory obligation on medical schemes to make payment directly to service providers in the absence of such a contractual arrangement.

Company Law – Winding-up of a Close Corporation – The New Companies Act

LAWS REGULATING WINDING-UP PROCEEDINGS

The winding-up of a Close Corporation (“CC”) is regulated by sections 66 to 81 of the Close Corporation Act 69 of 1984 (“The CC Act”).   This Act, however, does not specifically regulate winding-up proceedings of a CC, but instead incorporates the applicable sections of the Companies Act dealing with winding-up proceedings by reference.  The applicable sections of the Companies Act should therefore be read as if it prescribes the proceedings for both Companies and Close Corporations.

The Companies Act 61 of 1973 (“the old Act”) used to regulate winding-up proceedings of a company (and therefore the winding-up of a CC) under sections 337 to 348 thereof.  In terms of section 344 of the old Act, read with section 68 of the CC Act, a CC could be wound-up, inter alia:
•    if the CC is unable to pay its debts as described in section 345 of the old Act; and
•    if the Court is satisfied that it is just and equitable that the CC should be wound up.

In terms of section 345 of the old Act, read with section 69 of the CC Act, a CC is deemed unable to pay its debts when:
•    a creditor to whom the CC is indebted in a sum of not less than R 100 has served on the CC, at its registered office, a demand requiring the CC to pay the sum due and the CC has for 21 days thereafter neglected to pay the sum or secure or compound for it to the reasonable satisfaction of the creditor; or
•    the sheriff has issued a return of service against the CC stating that it does not own sufficient disposable property to satisfy a judgment in favour of a creditor; or
•    it is proved to the satisfaction of the Court that the CC is unable to pay its debts, taking into account the contingent and prospective liabilities of the CC.

In terms of the provisions of the old Act a Court could therefore order that a CC be wound-up if a creditor could prove that the CC was indebted to it and was unable to pay such debt.

The old Act has recently, however, been wholly replaced with the Companies Act 71 of 2008 (“the new Act”), save for sections 337 to 348.  These sections of the old Act have been incorporated into item 9 of Schedule 5 of the new Act, subject to a limitation on the applicability thereof.  The applicability of sections 343, 344, 346 and 348 to 353 of the old Act has been limited to apply only in circumstances where a winding-up order is sought against an insolvent CC and shall therefore not apply to solvent CC’s.  As a result hereof, section 68 of the CC Act (the counterpart of section 344 of the old Act, dealing with circumstances under which a CC may be wound up) has also been repealed.  The effect of the aforementioned is that a solvent CC may now only be wound-up by Court order under the circumstances set out in section 81 of the new Act and no longer under the circumstances set out in section 344 of the old Act, read with section 68 of the CC Act.  

Section 81 of the new Act provides that a solvent CC may be wound-up by Court order if, inter alia:
•    one or more of the CC’s creditors have applied to the Court for an order to wind up the CC on the grounds that the CC’s business rescue proceedings have ended in accordance with section 132(b) or (c)(i) and it appears to the Court that it is just and equitable in the circumstances for the CC to be wound up; or
•    it is otherwise just and equitable for the CC to be wound up.

In light of the recent change in legislation a solvent CC may therefore no longer be wound-up purely because of the fact that it is indebted to a creditor and it is unable to pay its debts.  

This has been confirmed in the Free State division in the recent unreported judgments of Daffue J in Herman v Set-Mak Civils (5495/2011) [2012] ZAFSHC 58 (5 April 2012) and Zietsman AJ in HBT Construction and Plant Hire CC v Uniplant Hire CC 2012 JDR 0334 (FB).  In these judgments it is confirmed that a solvent CC can only be wound up by the Court on application of a creditor thereof if business rescue proceedings have ended and it is just and equitable that the CC be wound-up, alternatively if it is otherwise just and equitable for the CC to be wound up.  The mere fact that a CC is not paying the creditor’s debt is, however, not ground which makes it just and equitable for a CC to be wound-up and a creditor will have to prove factual insolvency of the CC before section 344 of the old Act, read with section 68 of the CC Act, will become applicable.  

PRACTICAL CONSIDERATION

In accordance with section 69 of the CC Act, a creditor shall send to the CC, at its registered office, a demand requiring the CC to pay the sum due within 21 days of receipt thereof prior to initiating winding up proceedings.  “Days” are defined as work days excluding the day on which the first event occurs (service of the letter of demand) and including the day on which the second event is to occur (the last day of the 21 day period).

An application for winding up of a CC shall be accompanied by a certificate by the Master, issued not more than ten days before the date of the application, to the effect that sufficient security has been given for the payment of all fees and charges necessary for the prosecution of all winding up proceedings and of all costs of administering the CC in liquidation until a provisional liquidator had been appointed.

A copy of the application for winding up a CC together with the supporting affidavits must be served on the Master prior to filing same with the Court in order for the Master to consider whether it should apply to Court for postponement of the hearing of the matter.  The application and affidavits should thereafter also be served on:
•    any registered trade union of the employees of the CC;
•    the employees of the CC (by affixing a copy to any notice board to which the applicant and the employees have access inside the premises of the CC or by affixing a copy to the front gate or door of the premises where the applicant has no access to the premises);
•    SARS; and
•    the CC at its registered address.

The applicant must then, prior to or during the hearing of the matter, file an affidavit which sets out the manner in which the above service requirements have been complied with and which is deposed of by the person who furnished a copy of the application to the said entities / persons (in practice service is done by the sheriff and the return of service constitutes an affidavit as aforementioned).

The general Rules of Application, as set out in Rule 6 of the Uniform Rules of Court, apply to winding up proceedings.

Engineering News – The Future of the Engineering Sector Seems Bleak

Engineering News recently reported that only 105 000 out of 496 000 of last year’s matriculants are able to pursue studies in engineering due to poor results in their final examinations.

Marna Thompson from the Department of Basic Education confirmed that the number of matriculants who have written and passed mathematics have declined steadily since 2008.  This leaves South Africa, each year, with an even greater shortfall on skills development opportunities for companies looking to fill learnership programmes and apprenticeships.

The Engineering Council of South Africa recently launched a national initiative to improve the current skills shortage in engineering, in line with the government’s plan to develop 30 000 engineers by 2014.  South Africa has a considerable deficiency of trained engineers, each engineer serving around 3 000 people, as opposed to 227 in Brazil and 543 in Malaysia.

According to the North West University, however, South Africa needs at least 25 000 engineering graduates per year in order for the country to be economically competitive.   These alarming figures of skills shortages in our country have moved the North West University to open a new engineering faculty of 18 000m² which can host 1 200 students in an attempt to produce a larger number of engineering graduates each year.  In light of the poor matric results, this initiative may be in vain as there are fewer students demonstrating a capacity to qualify for engineering studies each year.

Skills shortages do not only hamper South Africa’s infrastructure capacities and other developments, but also poses an increased risk to insurance companies providing professional indemnity insurance to the engineering industry.  Insurance companies may see an increase in liability claims against professional engineers in the years to come if more is not done to promote the engineering profession under young South Africans.

Markram Incorporated specialises in the fields of Insurance- and Engineering Law and keeps up to date with the latest developments.

Medical News – The effect of the Consumer Protection Act on Medical Professionals

According to a Business LIVE report dated 01 May 2012, a 2011 study by the Professional Provident Society (PPS) shows that professionals such as doctors, pharmacists and dentists are experiencing higher levels of confidence that the Consumer Protection Act (“CPA”) would add value to their clients, suggesting that medical professionals are beginning to accept the value of the legislation.

Dr Dominique Stott, an executive at PPS, is quoted as saying that the CPA is applicable to almost all services provided within South Africa, and since medical practitioners and hospital clinics provide medical services to the public, their services will also be impacted by the CPA.

Dr Stott states that if any member of the public is unhappy with the provision of medical services, they can approach the consumer commission and lodge a complaint against either a doctor or a hospital.

According to Dr Stott medical professionals will now have to ensure that communication documents are in plain English, and in language that consumers can understand. In addition, practitioners have to ensure that their contracts with the public do not contain terms that are unreasonable or unjust, and further have to ensure that their services are not directly marketed to consumers who have previously registered pre-emptive blocks for such marketing.

Dr Stott added that no negative option marketing will be allowed, so consumers cannot be sent messages suggesting that if a consumer does not opt out, they will automatically be opted in.

Dr Stott states that “all these factors mean service providers will now need to tread carefully when dealing with consumers, to avoid being brought in front of the commission. Consumers also now have a well-defined process that they can follow when their rights have been tampered with.”

However, Dr Stott believes that there are also benefits for the medical profession in that “often doctors are faced with a situation where patients book appointments and either cancel them at the last minute or simply don’t turn up. In these cases, doctors will still be entitled to levy a cancellation charge, though this must be reasonable and in line with general practice in the industry”.

To ensure compliance, Dr Stott advises that medical professionals should familiarise themselves with the Act and the workings of the National Consumer Commission.
  

Construction Law – The Legal Principles underlying the Builder’s Lien

In terms of common law a builder has a right of retention over the building or structure (site) or portion thereof that he has constructed, enhanced or repaired to secure payment of the contract price, by means of retaining physical control of the site, until such time as his claim has been satisfied or the contractor has been provided with appropriate alternative security in respect of his claim.

The following general requirements must be satisfied in order for a valid builder’s lien to arise and be enforceable by the contractor:

•    The owner of the property must be enriched and the amounts owing to the contractor must be due to him (and not merely owing or accrued). It was held in FHP Management (Pty) Ltd v Theron and Another 2004 (3) SA 392 (C) that the purported expenditure must in fact have been incurred and the improvements must have been necessary or useful, or must have maintained or enhanced the market value of the property.

•    The contractor must be and remain in possession of the site or the section thereof forming the subject matter of the builder’s lien. Such possession is made up of two elements: the contractor’s physical control or occupation of the site and the contractor’s intention to hold and exercise that possession over the site so as to secure some benefit for himself against the owner. The lien does not automatically revive if the contractor relinquishes its possession and subsequently regains it. The only exception to this rule would be if the contractor is deprived of his possession by force, the threat of force or as a result of fraud.

The contractor must be mindful of the fact that it is not enough for him to contend symbolic possession in that he has employees and/or a security guard on site or that he has stored materials and equipment belonging to him on site, although on the facts of the case this might well be sufficient evidence of natural possession. Rather, it is necessary for the contractor to prove that the site (or the relevant sections of the site) over which the builder’s lien is asserted is occupied and under the control of the contractor at all material times. A temporary absence, as occurs at the end of a working day, will not interrupt the lien provided that the contractor remains engaged in the work and in his assertion of his occupation of the site.

Possession need not be exclusive to one person. Where the employer engages several independent contractors to complete different sections of the work, whether as principals or as subcontractors, each one of them may enjoy a lien over the whole or a severable part of the structure, provided each retains possession and asserts his right thereto against the employer or owner as seen in Beetge v Drenka Investments (Isando) (Pty) Ltd 1964 4 SA 62 (W).

In Wightman v Headfour (Pty) Ltd 2008 (3) SA 371 SCA the Supreme Court of Appeal held that possession is not ipso facto lost where a contractor exercising a lien over a property allows the owner of the property access for limited purposes. In such instances the court will consider both the giving and receiving of access in context to determine if the physical possession was actually given up.

According to the Court, in the event that the contractor comes to an agreement with the owner in terms of which he allows the owner access to the property physical possession will only be lost if the contractor intends to abandon the control which he had hitherto exercised exclusively.

In this case the contractor delivered a duplicate set of keys to the owner because he had come to an agreement with the owner in terms of which he would allow the owner access to the property. At no stage did the contractor intend to relinquish control to the owner, and the owner had ostensibly received the keys on the same basis.

However, the owner then used the duplicate keys to obtain entry and in doing so manifested a state of mind to possess the premises despite the terms of the agreement. This was done by giving access to his own contractors and causing entry to be refused to the contractor.

The Court held that there was no doubt that the owner’s true intention was withheld from the contractor in order to gain control of the premises and that the owner accordingly took occupation without the contractor’s knowledge. The Court further held that this constituted spoliation and the owner was ordered to provide the contractor with satisfactory security or alternatively restore possession of the property to the contractor.

Accordingly, it can be seen from the above that the intention to maintain possession of the site will be of tantamount importance when the Court considers the existence of a builder’s lien.