R25m wind farm in non-payment dispute

An Eastern Cape wind-energy project is at the centre of a legal wrangle between two companies over nonpayment amounting to more than R25m. 

The Johannesburg high court dismissed the engineering contractor’s claim for nonpayment, after its client, the project managing company, proved it had a defence against paying. 

In 2019, Optipower, a division of mining contractor Murray & Roberts, was awarded a contract by Goldwind SA to work on a wind farm in the Eastern Cape called Golden Valley. According to the project developer, BioTherm Energy, Golden Valley could produce more than 477GWh of electricity each year, which could cater to the demand of about 120,000 SA households.

According to Optipower, it specialises in electrical and industrial maintenance. In 2021, it built a substation linking Golden Valley to the national grid and implemented a dedicated power line linking it to the Kopleegte substation, Optipower says.

Golden Valley is part of the SA government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to get private sector participation in the energy market as government aims to deliver on its own plan.

R60m in damages

After completing some of its work, Optipower issued an invoice to Goldwind for about R25m, which was due in February 2021. However, Goldwind did not pay.

Goldwind did not deny not paying, but says Optipower itself owes money as a result of delay damages. This is an amount owed by a contractor to the client as a result of incomplete work or work not completed in the time agreed.

Goldwind says Optipower delayed in achieving completion dates for every part of the projects it was supposed to complete. Goldwind calculated the delay to be in excess of 3,000 days. Using the delayed damages formula in the contract both companies signed, Goldwind calculated Optipower owed almost R60m in damages. It had issued an invoice for the damages to Optipower in March 2021 — a month after Optipower’s invoice for R25m.

Goldwind then instituted arbitration proceedings in August 2022, but Optipower disputed Goldwind’s claims. In those proceedings, however, Goldwind sought to solve a number of disputes. Those proceedings, which are confidential, are still before three arbitrators.

While this was happening, Optipower instituted proceedings in the Johannesburg high court.

Optipower asked for a summary judgment: this is where, in limited circumstances, a litigant can ask a court to simply give judgment in its favour instead of going to trial, because an opponent has no proper defence, a speedy method to avoid a long, drawn-out trial. 

Optipower argued Goldwind did not have a proper defence for not paying the amount due in 2021. Because there was no defence, Optipower asked the court to grant judgment in its favour.

In response, Goldwind told the court it did have a defence. It said the damages owed by Optipower itself to Goldwind, about R60m, is far more than what Goldwind is being asked for in court, about R25m. Goldwind also highlighted there is an ongoing dispute in arbitration proceedings and the matter must be finalised there before a court can hear the matter.  

Optipower told the court this is wrong in law, because the damages have not properly been calculated.

However, judge Fiona Dippenaar agreed with Goldwind that because various issues are still being determined by the arbitration proceedings, it may impact Optipower’s claim. There’s a chance, she said, that the arbitrators’ determination “may still ultimately defeat [Optipower’s] claim”. She said it was “not appropriate” for her “to comment on issues” still to be determined by the arbitrators.  

Dippennaar also stressed that whether Goldwind’s defence had any merit was not for her to decide at this point, but rather for a full trial court. Goldwind only needed to show it had a defence that was not bad in law. This Goldwind did.

She therefore dismissed Optipower’s claim for a summary judgment of R25m with costs, since the claim was part of arbitration proceedings and Goldwind had a proper defence it could try to prove at a later trial.

moosat@businesslive.co.za