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Ref. Unlawful Conduct by Principal Agent and Employer:

22 July 2025

The Principal Agent

Divine Architectural
P.O. Box 265
Sonpark,
Nelspruit 1201

Attention: Mr. Banda (per email: banda@[Link])

Cc: The Employer

Dear Sir,

CONTRACT: MKONDO BOARDING SCHOOL:

RE: N O T I C E O F D I S S A T I S F A C T I O N : U N L A W F U L C O N D U C T O F
PRINCIPAL AGENT AND EMPLOYER

The above-mentioned subject refers.

1. Mpfumelelo Business Enterprise (Pty) Ltd (hereinafter “MBE” / “the Contractor”)

validly suspended the work on site at close of business on Friday the 06 th June
2025. The Notice of Suspension was sent on or about [insert date] to the [define
the Employer] (“the Employer “)and Divine Architectural [indicate if pty ltd or cc]
(“the Principal Agent”) was copied in on the correspondence as per the
provisions of the [define the JBCC contract in use] (“the JBCC Agreement”). A
copy of the notice of Suspension is attached hereto as Annexure “1”.

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2. As per the Contractor’s Notice of intention to suspend the Works, issued on or
about [insert date] and the Notice of suspension itself, the reason for the
suspension is owing to the Principal Agent’s failure to issue Interim Payment
Certificates (“IPC”) in accordance with the provisions of clause 31.1 of the JBCC
Agreement.

3. On the 13th June 2025, MBE received provisional IPC No. 31 reflecting a zero
value which IPC was issued without the required recovery statement attached,
such that the provisional IPC No. 31 cannot be considered to be a validly issued
IPC. A copy of the provisional IPC No. 31 is attached hereto as Annexure “2”.

4. Accordingly, on or about [insert the date] MBE issued a Notice of Disagreement

pertaining to the provisional IPC No. 31. A copy of the Notice of Disagreement
is attached hereto as Annexure “3”.

5. On the 22nd June 2025, the Principal Agent responded to MBE’s Notice of
Disagreement stating that the recovery statement and IPC No. 31 will be issued
no later than the 27th June 2025. A copy of this response is attached hereto as
Annexure “4”.

6. The failure by the Principal Agent to properly assess the Contractor’s

entitlement led to the Contractor not being paid for work done for the past three
months. The Contractor is unable to further finance the project from its own
cash reserves and is consequently unable to pay its subcontractors for work
done from March 2025 to date.

7. During March 2025, the Employer alleged that the Contractor was not paying its
subcontractors. At the Employer’s request, the Contractor undertook an
exercise to prove that the subcontractors were indeed paid in respect of all
amounts certified as the date of the exercise. The only monies due to
subcontractors is in respect of work they executed from March 2025 for which
the Principal Agent has failed to properly certify in an IPC.

8. The Contractor and its subcontractors are not entitled to payment until such
time as the Principal Agent has issued a valid IPC in this regard. MBE notes that
that the only work certified by the Principal Agent since March 2025 was for
electrical work, and further that this work was only certified after the electrical
subcontractor disconnected the power to site due to nonpayment.

9. Importantly, MBE relied on the contractual provisions of the JBCC Agreement to

suspend the works so as order to compel the Principal Agent to fulfil his
contractual duties, in particular, certifying all of the Contractor’s entitlements for
work done since March 2025 to date.

UNLAWFUL CONDUCT BY THE PRINCIPAL AGENT:

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10. CERTIFICATION OF INTERIM PAYMENT CERTIFICATES:

10.1. The Principal Agent continuously fails to correctly certify the Contractor’s
entitlements for work done as provided for in the JBCC agreement.

10.2. In particular, the Principal Agent has failed to certify the Contractors
entitlement for work done on site for the period from March 2025 up to
date.

10.3. The provisions of clause 31 of the JBCC is clear in this regard and
provides that interim payment certificates shall be issued by the Principal
Agent every month and shall be based on a valuation of the works done
by the Contractor [31.1].

10.4. Such interim payment certificate shall include a reasonable estimate of

the value of the work executed [31.4.1] and in this regard the Principal
Agent is obliged and bound by his own and independent assessment of
the value of the work [5.6].

10.5. On the 12th June 2025, the Principal Agent addressed correspondence to
MBE, attaching provisional IPC No. 31 for review by MBE. This
correspondence further provided that an IPC would be issued on the 27 th
June 2025.

10.6. On the 20th June 2025, MBE issued a notice of disagreement regarding
provisional IPC No. 31, stating that the Principal Agent did not provide a
recovery statement and that the Contractor therefore is unable to review
the document.

10.7. The Principal Agent’s continued failure to properly certify MBE’s

entitlements is in contravention of the explicit provisions of the JBCC
agreement, and, as such, is unlawful.

11. UNLAWFUL ENGAGEMENT WITH SUBCONTRACTORS AND UNLAWFUL

REDUCTION OF CONTRACTOR’S SCOPE OF WORKS:

11.1. It has been brought to the Contractor’s attention that during the
suspension of the works, the Employer and/or Principal Agent have been
directly engaging with the Contractor’s subcontractors in an attempt to
persuade them to continue with the works despite the works having been
validly suspended by the Contractor, which suspension extends to the
Contractor’s subcontractors. The Employer/Principal Agent has also
engaged with other contractors to arrange for them to execute work that
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 forms part of MBE’s scope of works.

11.2. In this regard, MBE refers the Employer and Principal Agent to the
provisions of subclause 17.4, which provides as follows:

“17.4 Should the contractor fail to proceed with due diligence with a contract
instruction, the principal agent may notify the contractor to proceed within five
(5) working days from receipt of such notice. Without further notice, on default
of the contractor, the employer may employ other parties to give effect to such
contract instruction in addition to any other rights the employer may have. The
employer may recover expense and loss [33.0] resulting from such event.”

11.3. MBE hereby confirm that the Principal Agent did not issue such
contractual notice to proceed with the works and that MBE would not be
obliged to proceed with the works for as long as the works remains
validly suspended.

11.4. MBE further notes that the contract document does not allow for the
Principal Agent or the Client to unilaterally alter, remove or assign any
portion of MBE’s scope of works without the proper contractually
prescribed procedures being followed.

11.5. As such the above conducts amounts to a breach of the provisions of the
of the agreement by the Principal Agent and the Employer insofar as the
direct communication with MBE’s subcontractors.

11.6. Further, the employment of other contractors to execute any part of

MBE’s scope of works in contravention of the provisions of the JBCC
Agreement constitutes a further breach of the JBCC Agreement.

11.7. MBE reiterates that the above conduct is unlawful and constitutes a
breach of the JBCC Agreement and if not remedied, will entitle the
Contractor to exercise the remedies available to it under the JBCC
Agreement.

12. UNLAWFUL DIRECT PAYMENTS TO SUBCONTRACTORS:

12.1. MBE has further been informed that the Employer is now making direct
payments to the local community leaders in order for them to facilitate
payments to MBE’s local subcontractors to prevent the local
subcontractors from disrupting work on site.

12.2. This conduct is also unlawful insofar as all payment to MBE’s

subcontractors, for work done under their respective subcontract
agreements with MBE have to be made directly MBE based on the fact
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 that MBE has a contractor with the Employer and the subcontractors
have a contract with MBE. In other words, the Employer is not priviy to
the subcontracts between MBE and its subcontractors.

12.3. MBE reiterates that no formal contractual procedure has been followed
by the Principal Agent or the Employer, such that both the Employer and
the Principal Agent are impermissibly circumventing the provisions of the
JBCC Agreement. MBE view such conduct by the Principal Agent and
the Employer as a breach of the JBCC Agreement.

12.4. Whilst the Employer has elected to pay MBE’s local subcontractors and
local labour force directly, the Principal Agent has neglected to ensure
that MBE’s specialized subcontractors work, executed since March 2025,
is correctly certified and paid.

12.5. The Employer’s professional team and/or the Employer’s representatives

have directly contacted some of these specialized subcontractors,
without the knowledge or consent of MBE, and in so doing, have insisted
that these subcontractors complete the works in the full knowledge of the
fact that that the works have been suspended due to the Employer’s
default occasioned by the Principal Agent’s failure to discharge its duties
as they arise in the JBCC Agreement.

12.6. The Principal Agent and the Employer are fully aware of the fact that
MBE and its subcontractors executed work since March 2025 which work
has not been certified by the Principal Agent despite this work having
been assessed by the Employer’s professional team.

13. CONCLUSION:

13.1. The Principal Agent and the Employer incited the local community by
alleging, on numerous occasions, that the Contractor had been paid and
that the Contractor is failing to pay the local subcontractors while in the
full knowledge that such statements were incorrect. The Contractor has
proven that this is untrue and that all monies that were certified for local
subcontractors has indeed been paid over to its subcontractors.

13.2. The Principal Agent is fully aware of the fact that it is unlawful to remove
any part of MBE’s Scope of Works contrary to the provisions of the JBCC
Agreement. In this regard the Contractor specifically refers the Principal
Agent to the provisions of clause 17 of the JBCC agreement, including its
subclauses and, in particular, subclause 17.3.

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 13.3. The Principal Agent did not issue any valid contract instruction entitling
the Employer to remove any part of work from MBE’s scope of work, or
any instruction entitling the Employer to employ other contractors to give
effect to such contract instructions.

13.4. The Principal Agent has a legal duty to hold the balance of fairness
between the Contractor and the Employer and by allowing the Employer
to act in such an unlawful manner, the Principal Agent is in breach of its
obligations. The provisions of clause 5.6 of the JBCC read as follows:

“5.6 The employer shall not interfere with or prevent the principal agent from
exercising his independent judgement when performing his obligations in
terms of this agreement.”

13.5. MBE has comprehensively set out the legal principles regarding the
obligations of the Principal Agent in its Notice of Dispute issued on the
05th March 2025. Be that as it may, MBE hereby, reiterates these legal
principles, specifically in light of the Principal Agent’s continued unlawful
conduct. In particular, the Contractor reiterates the general principals as
stated in the case of Hoffman v Meyer1

“The architect’s function in issuing the final certificate is to determine what is

finally due and owing by his employer, the building owner to the contractor. In
discharging that function the architect is, so it seems to me, primarily still acting
in the protection of his employer’s interest. He must, of course – as also in the
case of interim certificates – be honest and impartial in determining what is the
contractors due. The circumstance that he is engaged by the owner does not
entitle him to cheat the contractor.” (Own emphasis)

13.6. In terms of the provisions of subclauses 8.5.9 and 8.5.7 of the JBCC
agreement, MBE is not liable for the cost of making good physical loss
and repairing damage to the works where this results from the use or
occupation of any part of the works by the Employer, the Employer’s
servants or agents and those for whose acts or omissions they are
responsible or an act or omission by a direct contractor appointed.

13.7. MBE has endeavored to assist the Client in Employer the completing the
project, to its own financial detriment, over a period of two and half years.
The frequent under evaluations and late evaluations resulted in late
payments, has led to various disagreements that has culminated in MBE
having to resort to embarking on an Adjudication process.

13.8. MBE is entitled to its markup on all unlawful direct payments made to
MBE’s subcontractors.

13.9. MBE is further entitled to be compensated for work unlawfully executed

1
Hoffman v Meyer 1956 (2) 752 (C) at 758 C
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 by direct/term contractors insofar as this work forms part of MBE’s scope
of work. In this regard MBE reiterate that the Principal Agent did not
follow the contractually agreed process for removing any part of the work
from MBE’s scope of work.

13.10. The Principal Agent is hereby informed that it should, without delay,
ensure that the unlawful conduct, as set out above, is put to an end, and
further that work executed by MBE must be properly certified in interim
payment certificates.

13.11. MBE reserves its right to report this unlawful and unprofessional conduct
to the Principal Agent’s professional regulatory body and/or the
SACPCMP in order to ensure that the Principal Agent is adequately
disciplined, notwithstanding its right to terminate the JBCC Agreement
and claim its damages, including loss of profit.

14. We trust that you find the above in order, all MBE’s rights remain reserved.

Jan Pretorius
Commercial Advisor