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2020
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[2020] ZAGPJHC 442
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Aveng (Africa) (Proprietary) Limited v Eskom Holdings SOC Limited and Another (19/28187) [2020] ZAGPJHC 442 (11 September 2020)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO: 19/28187
Reportable: No
Of interest to other
judges: No
Revised: Yes
11 September 2020
In
the matter between:
AVENG
(AFRICA) (PROPRIETARY) LIMITED
Applicant
and
ESKOM
HOLDINGS SOC
LIMITED
First Respondent
MASSEY,
IAN
Second Respondent
JUDGMENT
REYNEKE AJ:
The
applicant (“Aveng”) and the first respondent (“Eskom”)
concluded a construction agreement for the design,
refurbishment and
optimisation of the rail yard and coal offloading facility at the
Majuba Power Station (“the Contract”)
In
the event of disputes between the parties the Contract requires such
disputes first be referred to adjudication. The decision
of the
Adjudicator is final and binding “
unless and until revised
by”
arbitration and is “
enforceable as a matter of
contractual obligation”.
If a party who is dissatisfied
with the Adjudicator’s decision fails to note its
dissatisfaction and intention to refer the
matter to arbitration
within four weeks of the Adjudicator’s decision, the
Adjudicator’s decision becomes final and
binding.
In
this instance five monetary claims by Aveng against Eskom were
disputed and the second respondent was appointed as the Adjudicator
(“the Adjudicator”). In a decision dated 16 April 2019
the Adjudicator upheld Aveng’s claims 3,4 and 5 and awarded
monetary amounts that were to be paid by Eskom. In respect of claim
2, which form the subject matter of this application, the Adjudicator
found Eskom to be liable but deferred the quantification of the
amount to be paid to a further hearing. The parties were directed
to
submit written submissions regarding the quantum of the amount to be
paid.
The
Adjudicator on 30 May 2019 directed Eskom to pay Aveng the sum of
R40 087 353.06 in respect of claim 2.
The
Adjudicator in his second award recorded that the parties had been
engaged in settlement negotiations in respect of all of the
claims
that were subject to the adjudication. The Adjudicator recorded that
the balance of Claim 2 “
be
settled for the agreed sum of R40 087 353.06
”.
Eskom
has paid Aveng in respect of claims 3 and 4. It has not done so in
respect of claims 2 and 5. Through this application, Eskom
seeks the
enforcement of the Adjudicator’s decision relating to claims 2
and 5. Eskom has conceded the relief sought in respect
of claim 5.
Eskom, however, persists in its refusal to satisfy the Adjudicator’s
decision in respect of claim 2.
Eskom
disputes
liability to make payment of the amount of R40 087 353.06
for the reason that it alleges that an agreement was
concluded
between itself and Aveng in terms of which payment of the amount was
conditional upon prior approval of the payment by
Treasury pursuant
to its obligations in terms of the Public Finance Management Act No.
1 of 1999 (“PFMA”) and compliance
by Eskom with its
internal corporate governance processes.
Eskom
further maintains that this payment agreement was incorrectly
recorded because the Adjudicator was not apprised of the full
terms
of the agreement and that the Adjudicator’s award stands to be
corrected.
It
furthermore maintains that no payment is due because there has not
been compliance with the governance processes, nor has there
been
Treasury approval. Eskom maintains that, as an organ of state, it was
precluded from entering into an unconditional agreement
to make the
payment as recorded by the Adjudicator.
Aveng
denies that any agreement rendering payment subject to fulfilment of
any conditions were concluded or that the Adjudicator’s
award
would only be enforceable once Eskom’s internal governance
processes had been complied with and Treasury’s approval
was
obtained.
Subsequent
to the Adjudicator’s award of 16 April 2019 the parties engaged
in without prejudice negotiations to settle the
unresolved quantum
debate in respect of claim 2. Eskom indicated that it was willing to
pay the amount of R40 087 353.06
but subject to compliance
with Eskom’s internal governance processes and Treasury’s
approval. Aveng rejected this offer
because Eskom was unable to
provide any fixed date by which the compliance and approval would be
achieved. In rejecting Eskom’s
offer,
Aveng’s
in an e-mail on 22 May 2019 stated as follows: “
Given
that Eskom is not able to accelerate its governance processes and the
risks related to the timing thereof, we will have to
continue with
the adjudication process.”
Pursuant
to the rejection of the settlement offer Eskom filed its written
assessment of claim 2 and therein maintained that the
quantum to be
awarded should be the amount of R40 087 353.06. The
assessment was not accompanied by any statement that
payment should
be conditional in any way.
In
response to Eskom’s delivery of its assessment of claim 2 Aveng
addressed an e-mail to the Adjudicator and Eskom, in which
it
recorded that Eskom has assessed the quantum of claim 2 and that
“
this amount is a concession and admission of [Aveng’s]
entitlement to at least at R40 087 353.06”
and
that Aveng “
accepts this amount as assessed by [Eskom] and
requests that the Adjudicator proceed to make an award in respect of
this amount”
. Eskom did not at any time object to Aveng’s
characterisation of Eskom’s assessment of claim 2.
As
requested by Aveng the matter was set down for a hearing by way of a
teleconference at which both parties were represented. During
the
course of the hearing the Adjudicator was informed of Aveng’s
acceptance of Eskom’s assessment of the claim in
the amount of
R40 087 353.06. Eskom’s legal representative did not maintain
that the payment of the amount was subject to
Treasury approval or
Eskom’s internal governance processes, either arising from an
agreement or as a legal requirement. As
a consequence, the
Adjudicator issued an award in terms of which the balance of Claim 2
“
be settled
for the agreed sum of R40 087 353.06
”.
Having
regard to the facts as set out above there is no room to find that
the parties entered into an agreement regarding the settlement
of
claim 2. The opposite appears from the facts namely that the
Adjudicator was requested to proceed with the adjudication and
make
an award for the reason that the parties were at odds with each other
and unable to reach any agreement. The amount payable
and awarded by
the Adjudicator did not arise from any agreement between the parties
but from the acceptance by Aveng of Eskom’s
assessment of claim
2 as part and parcel of the adjudication proceedings.
In
view of the finding that no agreement was concluded between the
parties the issue of rectification of the agreement or the correction
of the award does not arise. The award of the Adjudicator was correct
and based on the facts placed before him. The Adjudicator
did not act
a scribe recording an agreement between the parties but executed his
obligation in terms of the contract by issuing
an award. The fact
that the quantum was no longer in dispute does not render it less of
an award.
On
behalf of Eskom it was conceded that any requirements relating to
Treasury’s approval or compliance with Eskom’s
internal
governance processes did not apply to adjudication awards.
The
final matter that requires consideration is whether this Court should
decline to issue an order for specific performance. There
are no
considerations that mitigate against such an order. To decline
ordering Eskom to pay what is due in terms of the contract
would
undermine the contract itself.
It
follows that the relief as prayed for should be granted and the
counter application should be dismissed.
The
following is made an order of this Court:
1
The
first respondent’s counter application is dismissed;
2
The
first respondent is directed to pay the applicant the amount of R40
087 353.06 together with the interest thereon until the
date of
payment;
3
The
first respondent is directed to pay the costs of this application and
the costs of opposing the counter application on the High
Court scale
as between parties, including the costs of two counsel.
_______________________
J.J. REYNEKE AJ
Acting Judge of the
High Court
Gauteng Local
Division, Johannesburg
APPEARANCES
HEARD
:
18 May
2020
DELIVERED
:
11
September 2020
APPLICANTS
: Adv.
Jawaid Babamia & Hendrick Pretorius
Pinsent Masons SA Inc
Junaid.Banoonbhai@pinsentmasons.com
RESPONDENTS
: Edward
Nathan Sonnenbergs Attorneys
aaguitar@ensafrica.com