The motivation behind this monthly newsletter is to provide better and more frequent communication to CAASA members, and to solicit suggestions and responses to the contents. We need feedback from you to ensure that the content of this newsletter, our webinars and annual conference remain both topical and relevant.
CONTENTS:
Termination and the Recovery of Additional Costs Incurred
CAASA Annual General Meeting
CAASA Mentoring Programme
TERMINATION AND THE RECOVERY OF ADDITIONAL COSTS INCURRED
All construction contracts provide that, where the contract is terminated due to default on the part of the contractor, the employer is entitled to recover the additional costs incurred in completing the works by himself or others.
Does this provide a blank cheque for the employer? Does the employer have to prove that he acted reasonably in hiring the new contractor and that the he didn’t overcharge? Or are those matters for the prior contractor?
In South African law, reasonableness generally asks whether a decision or measure is one that a reasonable decision‑maker could reach, considering the context, the reasons given, the impact on affected parties, and the range of lawful choices available
Given that the onus lies with the claimant to prove his damages the employer will need to show that he acted reasonably in appointing the new contractor. This may take the form of calling for quotes or negotiating based on market-related prices. However a part of the works may be critical, and the employer may not have the luxury of time to appoint a new contractor. As stated above reasonableness must be considered with regards to the context and the circumstances at the time.
So the claimant must prove the reasonable cost of the reasonable steps; that then fixes the ceiling for his recovery.
Once the claimant has proven his claim it is then up to the defendant to show that the claimant failed to mitigate the loss by taking reasonable steps, and, if he is successful, the damages are reduced.
The difference between these two is important in practice. For the first, the claimant bears the onus. For the second - which is an aspect of mitigation - the defendant bears the onus.
In summary
To recover compensation for losses due to termination, the claimant must prove the reasonable cost of steps which were reasonably required to complete the works. These costs are not necessarily limited to those incurred by the replacement contractor.
A key question is whether the claimant’s response was reasonable.
The issue of reasonableness is decided at the time the steps are taken or proposed to be taken. All the circumstances must be considered and compared with the circumstances prior to termination. The Court will ask whether the steps taken were "ordinary." There may be more than one reasonable course.
Once the claimant has proven the reasonable cost, it's for the defendant to establish that the claimant failed to mitigate the cost by adopting a reasonable course. An alternative course doesn't become reasonable just because it's cheaper.
Any extras or additions outside the original scope are for the account of the claimant and cannot form part of the recovery.
Proving your damages can be a tricky exercise. There are 3 broad types:
Damages that flow directly from the breach – the cost of the new contractor.
Damages that were in the contemplation of the parties - damages that both parties actually foresaw because special circumstances were communicated.
Remoteness of damages - Even if a breach or wrongful act causes loss, the defendant is only responsible for losses that are not too remote — meaning losses that were reasonably foreseeable at the time of contracting.
CAASA AGM
By now all CAASA members will have been notified of our Annual General Meeting to be held at 9h00 on Friday 28th August 2026.
You will also have seen a call for members to put themselves forward to serve on the Executive Committee as both Honorary and Ordinary Members.
The Honorary Members who serve for a 3-year period are:
Chairman
Vice-Chairman
Secretary
Treasurer
The 3-year period expires at this AGM.
Ordinary Members serve for a 1-year period only from AGM to AGM.
It is important that we get fresh thinking and new ideas on the Committee and welcome members to put their name forward. We have already received some nominations, which is highly encouraging.
CAASA MENTORING PROGRAMME
Further to my last newsletter I am happy to report that we have 8 CAASA members who have applied for our mentorship programme which commences on the 17th of August.
When we ran this as a pilot last year the feedback we received from the participants was only positive. I am confident that this year’s participants will find the programme equally beneficial.
