Hillary Construction (Pty) Ltd and Another v Roads Agency Limpopo (Pty) Ltd (44632/2008) [2011] ZAGPPHC 161 (18 August 2011)

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[2011] ZAGPPHC 161
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Hillary Construction (Pty) Ltd and Another v Roads Agency Limpopo (Pty) Ltd (44632/2008) [2011] ZAGPPHC 161 (18 August 2011)

UNREPORTABLE
IN
THE NORTH GAUTENG HIGH COURT. PRETORIA
/ES
(REPUBLIC OF SOUTH AFRICA)
CASE
NO: 44632/2008
DATE:18/08/2011
IN
THE MATTER BETWEEN
HILLARY
CONSTRUCTION (PTY)
LTD
...............................................................
1ST
APPLICANT
TSWELOPELE
ROADS AND EARTHWORKS (PTY) LTD
...............................
2nd
APPLICANT
AND
ROADS
AGENCY LIMPOPO (PTY)
LTD
............................................................
RESPONDENT
JUDGMENT
PRINSLOO.
J
[1]
The disputes underlying this application flow from a contract entered
into between the applicants as contractors and the respondent
as
employer in September 2005 in terms of which the applicants would
execute certain road works on behalf of the respondent.
[2]
The works were completed by the applicants some time ago, but a
number of disputes linger on.
[3]
Before me, Mr Raath SC assisted by Mr Van Rhyn. appeared for the
applicants, and Mr Preis SC assisted by Mr Gouws, appeared
for the
respondent.
The
nature of the relief sought, and some provisions of the General
Conditions of Contract ("the GCC") governing the
contractual relationship between the parties
[4]
The full title of the GCC is "General Conditions of Contract for
Road and Bridge Works for State Road Authorities".
[5]
The GCC applies to the present contract as the respondent, a
provincial government organ, functions in terms of the provisions
of
the South African National Roads Agency and National Roads Act 7 of
1998 read together with the Limpopo Roads Agency and Provincial
Roads
Act 398 of 1999.
[6]
The applicants functioned together in terms of a written pre-bid
joint venture agreement for purposes of tendering for the execution

of the works ("the Works").
[7]
The Works to be executed by the applicants comprised the construction
of a new, eight meter wide, 10,8 kilometres long, surfaced
single
carriage way road mainly on virgin ground. It included three major
in-situ culverts, with a total of three minor pre-cast
culverts and
associated drainage structures. It further included two major
T-junctions as well as one major intersection.
[8]
The value of the works came to some R35 million.
[9]
The engineer employed to manage the operation was one Mr Kobus van
der Merwe of the firm Mmabatho Consulting CC ("the engineer").

There was also a resident engineer ("RE"), Mr Potgieter.
[10]
Apart from the GCC, there are other contract documents including the
Standard Specifications for Road and Bridge Works 1998
for state
authorities issued by the Committee of Land Transport Officials
("COLTO"), project documents, Works drawings
and other
documents, which were also applicable to the contractual relationship
between the parties. During the proceedings before
me, the GCC
received the bulk of the attention.
[11]
Numbering amongst the many clauses of the GCC, are those prescribing
the dispute resolution mechanisms in the event of disagreements

arising between the contractor and the engineer and/or the employer.
These are, notably, clauses 45, 51, 60 and 61. Amongst the
provisions
in these clauses, are those which stipulate that failure by an
aggrieved party to lodge an objection within a prescribed
time, will
result in that party becoming time-barred, so that the objection
cannot go forward along the dispute resolution process
and ultimately
be dealt with by way of mediation or arbitration.
[12]
In the case of the bulk of the claims listed in the notice of motion,
disputes have arisen between the parties as to whether
or not the
applicants are time-barred as described. The applicants, by and
large, seek declaratory relief aimed at confirming their
rights to
proceed with the mediation or arbitration processes. As a final
resort, the applicants, in all the claims, also, in the
alternative,
seek relief in terms of
section 8
of the
Arbitration Act, 25 of 1965
,
which authorises a court, in a proper case, to grant relief to a
time-barred contractor by extending the prescribed period whether
or
not it had already expired at the time when the application for the
relief is made.
[13]
Because the provisions of the clauses in the GCC which I singled out,
which deal with the dispute resolution mechanisms, go
to the heart of
the applicants' claims. I deem it necessary to quote the contents for
the sake of easy reference and for illustrative
purposes, lengthy and
somewhat cumbersome as they are:
"45(1)
Subject to any requirement in the Specifications as to the completion
of any portion of the Permanent Works before completion
of the whole,
the whole of the Works shall be completed within the time stated in
the Appendix calculated from the Commencement
Date
(2)
If circumstances of any kind whatsoever which may occur be such as
fairly to entitle the Contractor to an extension of time
for the
completion of the Works or any portion thereof, the Engineer shall
grant the Contractor, on a claim in accordance with
Clause 51, such
extension of time as is appropriate. Such extension of time shall
take into account any special non-working days
and all relevant
circumstances, including concurrent delays or savings of
time
which might apply in respect of such claim; Provided that, in respect
of such claim, the period of 56 days referred to in Subclauses
51(5)
and 51(6) shall be reduced to 28 days.
(3)
Without limiting the generality of Subclause (2), the
circumstances
referred to in that Subclause include
(a)
the amount and nature of additional work,
(b)
abnormal climatic conditions;
(c)
any failure or delay on the part of the Employer or his agents,
employees or other contractors (not being employed by the Contractor)

in the due performance of any obligations as are reasonably necessary
to enable the Works to proceed,
(d)
any provision of these Conditions which allows for an extension of
time.
(e)
any delay occasioned by the replacement of a Selected Subcontractor
in terms of Clause 9, and
(f)
any disruption of labour which is entirely beyond the Contractor's

control.
(4)
If an extension of time is granted, the Contractor shall be paid such
additional time-related Preliminary and General allowances
as are
appropriate having regard to any other compensation which may already
have been granted in respect of the circumstances
concerned."
"51(1)
The following provision shall apply to any claim by the Contractor in
terms of the Contract for an extension of time
for the completion of
the Permanent Works, or for additional payment or compensation:
(a)
the Contractor shall within 28 days after the circumstance, event,
act or omission giving rise to such a claim has arisen or
occurred,
deliver to the Engineer a written claim, referring to this Clause and
setting out
(i)
the particulars of the circumstance, event, act or omission giving
rise to the claim concerned.
(ii)
the provisions of the contract on which he relies in making the
claim;
(iii)
the length of the extension of time, if any, claimedan d the basis
of calculation thereof, and
(iv)
the amount of money, if any, claimed and the basis of calculation
thereof.
(b)
If, by reason of the nature and circumstances of the claim, the
Contractor cannot reasonably comply with all or any of the provisions

of paragraph (a) within the said period of 28 days, he shall
(i)
within the said period notify the Engineer in writing of his
intention to make the claim and comply with such of the requirements

of paragraph (a) as he reasonably can,
(ii)
deliver to the Engineer in writing such additional information as the
Engineer shall, in writing reasonably require, and
(iii)
comply as soon as is practicable with such of the requirements of
paragraph (a) as have not been complied with.
(c)
If the events or circumstances relating to the claim are of an
ongoing nature, the Contractor shall, each month, deliver to
the
Engineer in writing updated particulars required in
terms of
paragraphs (a) and (b).
(2)
If, in respect of any claim, the Contractor did not comply with the
provisions of Subclause (1) because he was not and could
not
reasonably have been aware of the implications of the facts or
circumstances concerned, the period of 28 days referred to in

Subclause (1) shall commence to run from the date when he should
reasonably have become so aware.
(3)
In order that the extent and validity of claims in terms of this
Clause may be properly assessed when they are submitted, the

following provisions shall apply:
(a)
all facts and circumstances relating to the claims shall be
investigated as and when they occur or arise. For this purpose the

Contractor shall deliver to the Engineer records, in a form approved
by the Engineer, of all the facts and circumstances which
the
Contractor considers relevant and wishes to rely upon in support of
his claims, including details of all Constructional Plant,
labour and
material relevant to each claim. Such records shall be delivered
promptly after the occurrence of the event giving rise
to the claim
concerned.
(b)
The Engineer may record such facts and circumstances, additional to
those recorded by the Contractor, as he considers relevant
and the
Contractor shall, for this purpose, supply the Engineer with all the
information which he may require.
(c)
The Engineer and the Contractor shall, at the time of making the
record in terms of paragraphs (a) and (b), set out in writing,
signed
by each of them and deliver to the other of them, their respective
agreement or disagreement as to the correctness of the
matters
recorded.
(d)
Each record of an agreed fact in terms of paragraph (c) shall in any
dispute be conclusive evidence of the fact concerned.
(e)
For the purpose of this Clause, information arising from a technical
investigation or analysis undertaken after the events
giving rise to
the claim have occurred shall not be regarded as facts or
circumstances required to be recorded in terms of this
Clause.
(f)
The Employer, the Engineer and the Contractor shall not in any
proceedings in accordance with Clause 61 be entitled to give
or lead
evidence of or rely on any fact or circumstance not recorded in terms
of this Clause.
(4)
If in respect of any claim to which this Clause refers, the
Contractor shall fail to comply with the provisions of Subclause
(1),
as read with Subclause (2), he shall have no further right to make
the claim concerned.
(5)
Unless otherwise provided in the contract, the Engineer shall, within
56 days after the Contractor has complied with his obligations
in
terms of Subclause (1) as read with Subclause (2) and paragraphs (a),
(b) and (c) of Subclause (3) deliver to the Contractor
and the
Employer his written ruling on the claim (referring specifically to
this Clause) and the amount, if any, thereof allowed
by the Engineer
shall be included to the credit of the Contractor in the next payment
certificate:
Provided
that
(a)
the said period of 56 days may be extended if so agreed between the
Contractor and the Engineer, and
(b)
If, before the Engineer's ruling on the whole claim, any amount
thereof shall have been established to his satisfaction, that
amount
shall be included to the credit of the Contractor in the next payment
certificate.
(6)
If the Engineer fails to give his ruling within the period referred
to in Subclause (5) he shall be deemed to have given a ruling

dismissing the claim."
"60(1)
In respect of any matter not required to be dealt with in terms of
Clauses 51 or 61(6), the Contractor shall have the
right by written
notice to the Engineer to require him to consider any disagreement
which he raises with the Engineer provided
that the said written
notice shall be given within 21 days after the cause of disagreement
has arisen. (2) The Engineer shall give
a ruling on the disagreement
in writing to the Employer and the Contractor, referring specifically
to this Clause, which ruling
he may give at any time after his
receipt of the written notice referred to in Subclause (1), but he
shall do so by not later than
fourteen days after his receipt of a
written request from the Contractor requiring him to do so. failing
which he shall be deemed
to have given a ruling dismissing all the
Contractor's contentions."
"61(l)(a)
The Contractor shall have the right to dispute any ruling given or
deemed to have been given by the Engineer in terms
of Clause 51 or
Clause 60;
Provided
that, unless the Contractor shall, within 42 days after his receipt
of a ruling or after a ruling shall have been deemed
to have been
given, give written notice (hereinafter referred to as a 'Dispute
Notice') to the Engineer, referring to this Clause,
disputing the
validity or correctness of the whole or a specified part of the
ruling, he shall have no further right to dispute
that ruling or the
part thereof not disputed in the said notice.
(b)
All further references herein to a ruling shall relate to the ruling,
or part thereof, specified in the Dispute Notice, as varied
or added
to by agreement between the Contractor and the Engineer or by the
Engineer's decision in terms of paragraph (c) or by
the Mediator's
opinion to the extent that it has become binding in terms of
Subclause (2)(f).
(c)
The Engineer
(i)
shall, before giving his decision on the dispute, consult the
employer thereon and give the
Contractor a reasonable opportunity
to present written or oral submissions thereon;
(ii)
shall deliver his decision in writing to the Employer and to the
Contractor;
(iii)
may give decision at any time after his receipt of the Dispute Notice
but shall do so by not later than 42 days after his
receipt of a
further written notice from the Contractor requiring him to do so,
failing which, he shall be deemed to have given
a decision affirming,
without amendment. the ruling concerned.
(d)
Unless either the Employer or the Contractor, hereinafter referred to
as 'the parties', shall, within 28 days after his receipt
of notice
of the decision in terms of paragraph
(c)(ii)
or after the decision is deemed to have been given in terms of
paragraph
(c)(iii),
have given notice in writing to the Engineer, with a copy to the
other party, disputing the Engineer's decision or a specific
part
thereof, he shall have no further right to dispute any part of the
ruling not specified in his said notice.
(e)If
either party shall have given notice in compliance with paragraph
(d), the dispute shall be referred immediately to mediation
in terms
of Subclause (2).
(f)
Notwithstanding that the Contractor may, in respect of a ruling, have
given a Dispute Notice, the ruling shall be of full force
and carried
into effect unless and until otherwise agreed by both parties in
terms of Subclause (2)(f) or as determined in an arbitration
award or
a Court judgment.
2.
(a) The mediation referred to in Subclause (l)(e) shall be conducted
by a Mediator selected by agreement between the parties
or, failing
such agreement within seven days after a written request by either
party for such agreement, nominated on the application
of either
party by the President for the time being of the South African
Institution of Civil Engineers.
(b)
Neither party shall be entitled to be represented at any hearing
before or at any meeting or in any discussion with the Mediator

except by
(i)
the party himself, if a natural person,
(ii)
a partner in the case of a partnership,
(iii)
an executive director in the case of a company,
(iv)
a member in the case of a close corporation,
(v)
the Engineer,
(vi)
a bona fide employee of the party concerned,
(vii)
a professional Engineer appointed for the purpose by the party
concerned.
Such
limitation shall not be construed as preventing any person from
giving evidence as a witness.
(c)
The Mediator shall, as he deems fit. follow formal or informal
procedure and receive evidence or submissions orally or in writing

... (here follows stipulations as to how the Mediator may conduct his
proceedings).
(d)
The Mediator shall have the power to propose to the parties
compromise settlements of or agreements in disposal of the whole
or
portion of the dispute.
(e)
The Mediator shall, as soon as reasonably practical, give to each of
the parties his written opinion on the dispute, setting
out the facts
and the provisions of the contract on which the opinion is based and
recording the details of any agreement reached
between the parties
during the mediation.
(f)
The Mediator's opinion shall become binding on the parties only to
the extent correctly recorded as being agreed by the parties
in the
Mediator's written opinion or otherwise as recorded as being agreed
in writing by both parties subsequent to the receipt
of the
Mediator's opinion.
(g)
The dispute on any matter still unresolved after the application of
the provisions of paragraph (f) shall be resolved by arbitration
or
Court proceedings, whichever is applicable in terms of the contract.
(My note: it is common cause that for present purposes,
arbitration
proceedings are applicable.)
(h)
Save for reference to any portion of the Mediator's opinion which has
become binding in terms of paragraph (f), no reference
shall be made
by or on behalf of either party, in
any proceedings subsequent to
mediation, to the Mediator's opinion, or to the fact that any
particular evidence was given, or to
any submission, statement or
admission made
in the course of the mediation.
(i)
Irrespective of the nature of the Mediator's opinion.
(i)
each party shall bear his own costs arising from the mediation, and
(ii)
the parties shall in equal shares pay the Mediator the amount of his
expenses and the amount of his fee based on a scale of
fees as agreed
between the Mediator and the parties before the commencement of the
mediation.
3.
If the Contract provides for determination of disputes by arbitration
and if a dispute is still unresolved as provided in Subclause
(2)(g)
or the dispute is one to which Subclause (6) refers,
(a)
the matter shall be referred to a single Arbitrator to be agreed on
between the parties or, failing such agreement within 28
days after
delivery to the parties of the Mediator's opinion, nominated on the
application of either party by the President for
the time being of
the South African Institute of Civil Engineers, and any such
reference shall be deemed to be a submission to
the arbitration of a
single Arbitrator in terms of the
Arbitration Act (Act
42 of 1965, as
amended), or any legislation passed in substitution therefor;
(b)
in the absence of any other agreed procedure, the arbitration shall
take place in accordance with the Rules for the Conduct
of
Arbitrations issued by the Association of Arbitrators which are
current at the time of the arbitration;
(c)
the Arbitrator shall, in his award, set out the facts and the
provisions of the Contract on which his award is based.
(4)
If the Contract does not provide for the determination of disputes by
arbitration and if a dispute is still unresolved as provided
in
Subclause (2)(g) or the dispute is one described in Subclause (6),
the dispute shall be determined by Court proceedings.
(5)
(a) Nothing herein contained shall deprive the Contractor of the
right to institute immediate Court proceedings in respect of
failure
by the employer to pay the amount of a payment certificate on its due
date or to refund any amount of retention money on
its due date for
refund.
(b)
No ruling or decision given by the Engineer in accordance with the
provisions of the Contract shall disqualify him from being
called as
a witness and giving evidence before the Arbitrator or the Court on
any matter whatsoever relevant to the dispute concerned.
(c)
The Arbitrator and the Court shall have full power to open up, review
and revise any ruling, decision, order, instruction, certificate
or
valuation of the Engineer relevant to the matter in dispute.
(d)
The following provisions shall apply in respect of the appointment of
a Mediator or Arbitrator in terms of this Clause:
(i)
if, for any reason, the person appointed fails to assume or to
continue in the office concerned, the provisions of this Clause
shall
apply mutatis mutandis in the appointment of a successor, and
(ii)
in making his nomination in terms of Subclause (2)(a) or Subclause
(3)(a), the President for the time being ...
(iii)
if the President required to make a nomination in terms of this
Clause shall have a direct or indirect interest in the subject-matter

of the dispute, ...
(6)
Notwithstanding anything elsewhere provided in this Clause, any
dispute between the Contractor and the Employer
(a)
not relating to a ruling, decision, order, instruction or certificate
by the Engineer, or
(b)
arising after the completion of the Contract or if a Defects
Liability Period is provided, after the termination of that period,

shall be determined, without the application of the provisions of
Subclauses (1) and (2), by arbitration or Court proceedings,

whichever is applicable in terms of the Contract, and which may be
initiated by either party, in which event the provisions of

Subclauses (3), (4) and (5) shall apply mutatis mutandis.
(7)
This clause is a separate, divisible Agreement from the rest of the
Contract and shall remain valid and applicable notwithstanding
that
the Works may have been completed or that the rest of the Contract
may be void or voidable or may have been cancelled for
any reason."
[14]
So much for a brief description of the nature of the relief sought in
the notice of motion, and a reference to some of the
important
clauses to be found in the GCC.
[15]
However, before these aspects can be considered in greater detail,
attention must be given to an argument raised on behalf
of the
applicants which, during the proceedings before me, became known as
"the main point".
This
argument is aimed at achieving a result whereby the five claims (or
those which I may allow) are referred directly to arbitration
in
terms of the provisions of clause 61(6) of the GCC, thereby
leap-frogging any difficulties which may arise, such as issues of

time-barring, from a more careful analysis of claims 1 to 5.
I
therefore turn to the main point.
The
main point
[16]
Before describing the essence of the main point, and dealing with the
merits thereof, it must immediately be observed that
the main point
was not pleaded in either the founding affidavit or the replying
affidavit.
[17]
There is no prayer in the notice of motion to accommodate the relief
sought to be achieved through the main point. There was
no attempt to
amend the notice of motion to make provision for such relief.
[18]
Moreover, and to their credit, counsel for the applicants, in their
argument, paid due regard to the pitfalls which may confront
an
applicant, electing to litigate on affidavit, when genuine disputes
of fact become apparent. Counsel duly considered the principles
laid
down in the well-known case of Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 3 SA 623
(A).
[19]
Counsel for the applicants also carefully considered, and dealt with,
the possible difficulties flowing from the failure by
an applicant to
apply, at the outset of the proceedings, for a referral to evidence
or trial of certain issues in the spirit of
Uniform Rule of Court
6(5)(g). No such application was forthcoming.
[20J
At the commencement of the proceedings, Mr Preis specifically invited
my attention to all these aspects. With reference to
the fact that
the main point was not pleaded in either the founding affidavit or
the replying affidavit, nor catered for in the
notice of motion, Mr
Preis argued that the applicants ought to be precluded altogether
from arguing the main point at all.
After
hearing submissions on this argument, I made a ruling that counsel
would be allowed to present argument on the main point,
and that I
would deal with the issue in the final judgment.
[21]
I turn to a brief outline of what the main point is about.
The
applicants allege with some force, more particularly in the replying
affidavit, that there was a measure of "connivance"
between
the respondent and the engineer in the sense that the respondent
coerced the engineer to foist a different payment procedure
upon the
applicants, namely a procedure which was not in line with the
provisions of clause 52 of the GCC.
Briefly
put. the clause 52 procedure amounts to the following:
The
applicants submit a monthly statement for payment to the Engineer of
all amounts which the applicants consider due to them.
The Engineer
must then certify an amount which he considers to be due to the
Contractor (applicants). This lesser amount (it would
generally be
less than the amount claimed) is then payable within 35 days.
Any
difference between the contractor and the engineer would then in the
ordinary course be dealt with by way of the dispute resolution

process described in clauses 60 and 61, supra.
It
is common cause that all went well, and according to the mentioned
guidelines, until the Works had reached an advanced stage
of
completion and up to a point where thirteen certificates had been
issued. At that stage, so the applicants contend, the engineer
was
obliged by the respondent not to submit a certificate for payment
before "a common understanding" had been reached
between
the engineer and the applicants. The applicants then had to submit
repeated "revisions" with quantities reduced
to the level
where the engineer was willing to accept them. In the absence of such
compliance, no payment would be certified. The
applicants contend
that this change of stance came about because of financial
difficulties on the part of the respondent particularly
when it came
to obtaining funding from the relevant department. According to the
applicants, these financial difficulties were
exacerbated by the
engineer's initial under-estimation of quantities.
[22]
Another alleged example of the "connivance" between the
engineer and the respondent, has its origin in alleged inconsistent

responses by the engineer and the respondent to a demand from the
applicants for the issue of a variation order (the term used
by the
applicants) authorising the expenditure of a further R8.4 million to
complete the project. After some time, an amount of
R4,9 million was
initially authorised and, thereafter, this was reduced to an amount
of some R4,7 million. In a somewhat complicated
argument (bearing in
mind that the applicants are litigating on affidavit) they illustrate
that part of the difference between
the R4,7 million and the R4,9
million is an amount of some R181 000,00 which was allowed for
accommodation of traffic (something
which resorts under claim 2) and
thereafter, rather mysteriously, left out of the equation.
These
perceived inconsistencies are attributed by the applicants to a "lack
of honesty" and a lack of objectivity on the
part of the
engineer when it comes to the dealings between the applicants and the
respondent.
Armed
with these conclusions of a lack of honesty and "connivance"
the applicants rely on authority for the proposition
that the legal
consequences of this "connivance" between the engineer and
the respondent are as follows: as the engineer
has placed himself
under the influence and control of the respondent, the result was
that he could not properly carry out the functions
vested in him; his
decisions and certificates were of no force and effect, void and
worthless, as were any rulings, or decisions,
issued, or which could
be issued, by him in terms of clauses 60 and 61(1) of the GCC. I
assume the same would apply to clause 51
of the GCC. Counsel argued
that the principle is that the actions of the engineer will be
legally ineffectual if it was induced,
inter alia, in collusion with
or under the domination of either of the parties. I was referred to
the cases of Uitenhage Municipality
v Schuddingh
1936 CPD 506
and
Universiteit van Stellenbosch v J A Louw
1983 4 SA 321
(A) at 337D-F.
In the last-mentioned case, dealing with the conduct of an architect,
there was also a dispute between the building
owner and the
contractor and it was held that "whether an architect acts as
certifier or quas/-arbitrator he must maintain
a fair and judicial
view". It was also observed about the architect that "his
duty as certifier must in respect of fairness
and impartiality be the
same as that of an arbitrator".
Heavy
reliance was also placed by the applicants on an old English case of
Hickman & Co v Roberts
1913 AC 229
at 234. It was argued that the
position of an engineer is akin to that of an architect for these
purposes.
In
reaching the climax of their argument on the main point, counsel for
the applicants deliver their coup de grace in the following
terms (1
paraphrase from their heads of argument): by his conduct in conniving
with the respondent, the engineer has disqualified
himself totally to
function at all as such. In conducting itself thus the respondent was
not only an accomplice: it was the main
actor, compelling the
engineer so to act.
Legally,
there was therefore no engineer who could make any ruling whether for
extension of time in terms of clause 45 read with
clause 51, any
claims for additional compensation in terms of clause 51, or in
regard to disagreements as intended in clauses 60
and 61. Any claims
made by the applicants in terms of those clauses would accordingly
have been legally futile. Accordingly, this
dispute does not relate
to any of the actions of the engineer listed in clause 61 (6)(a),
rendering the dispute directly susceptible
to arbitration. These
principles apply to all five the claims mentioned in the notice of
motion and in regard to any rulings and/or
decisions which the
engineer may have issued, or may have failed or refused to issue.
It
is convenient to revisit the relevant portions of clause 61(6),
already quoted above:
"Notwithstanding
anything elsewhere provided in this Clause, any dispute between the
Contractor and the Employer:
(a)
not relating to a ruling, decision, order, instruction or certificate
by the Engineer ...
shall
be determined, without the application of the provisions of
Subclauses (1) and (2) by arbitration or Court proceedings, whichever

is applicable in terms of the contract, and may be initiated by
either party in which event the provisions of Sub-clauses (3),
(4)
and (5) shall apply mutatis mutandis"
One
of the beneficial spin-offs of the main point, if upheld, would be
that the provisions of clauses 45, 51, 60 and 61, are leap-frogged

out of the equation, and, in the process, there will be no necessity
to consider uncomfortable suggestions that the applicants
may be
time-barred in respect of all or any of the five claims. There will
also be no need to seek the protection of
section 8
of the
Arbitration Act
, supra, in the form of extension of expired time
periods leading to time-barring. In short, the clause 61(6) relief
will overtake
the relief prayed for in the notice of motion even
though the notice of motion is silent in respect of the clause 61(6)
relief.
Finally, as I already indicated, the clause 61(6) relief and
the main point are not mentioned anywhere in the founding or replying

affidavits.
[23]
So much for the brief description of the main point.
[24]
In developing the argument around the main point, counsel for the
applicants referred to, inter alia, extracts from the lengthy

answering affidavit offered by the respondent to illustrate what the
applicants submitted to be clear signs of connivance between
the
engineer and the respondent to the extent that the actions of the
engineer would be rendered pro non scripto on the authority
of the
aforementioned cases of Uitenhage Municipality, Hickman & Co v
Roberts and others.
[25]
Passages on which particularly heavy reliance were placed in support
of this argument, are those to be found in paragraph 78.10
of the
opposing affidavit, under the heading "requirements of the
respondent relating to certificates". These are the
passages:
"78.10.2.6
The respondent requires any interim payment certificates to be signed
by the Contractor, the Engineer and the Resident
Engineer.
78.10.2.7
This requirement provides the respondent with confirmation that, when
a payment is made, all parties involved have reached
a common
understanding as to the value of the Works executed and certified for
payment.
78.10.2.8
The respondent further requires the Contractor to submit an invoice
in the amount of the certified value subsequent to
the issuing of the
certificate and pursuant to payment.
78.10.2.9
It accordingly follows that the Engineer does not submit certificates
for payment to the respondent unless the Contractor
has signed the
certificate and submitted an invoice for the value of the certified
amount."
[26]
The argument, if I understood it correctly, was that this procedure
illustrated a conspiracy between the engineer and the respondent
to
force the applicant to agree to more modest payments in order to
relieve pressure on the tight budget on which the respondent
had to
operate. It was argued that this conduct by the engineer flew in the
face of the provisions of
section 52(1)
of the GCC which,
essentially, provides that monthly payments are to be made on the
following basis: the applicant must deliver
to the engineer a monthly
statement for payment of all amounts he considers to be due to him
(taking certain factors into account)
whereupon the engineer shall,
by signed payment certificates issued to the respondent and the
applicant, certify the amount which
he considers to be due to the
applicant, again taking into account certain prescribed values,
amounts, adjustments and other factors
listed in
section 52(l)(a)
to
(f).
[27]
On a general reading of the papers, I find it difficult to read
anything sinister into the passages quoted from paragraph 78.10
of
the answering affidavit. I add that, although the main point was not
raised in the founding affidavit or the replying affidavit,
so that
the respondent and the engineer would not have been alerted thereto,
the respondent is at pains to refer to, inter alia,
the requirements
of
section 52(1)
in, for example, paragraph 79 of the answering
affidavit. I deem it convenient to quote a few extracts from
paragraph 79:
"79.1
In accordance with the provisions of Clauses 47 and 52(1) of the GCC,
it is required that the Engineer adjust quantities
claimed for, but
not agreed to, to quantities the Engineer deems to be correct.
(Note,
this, as I have illustrated, is a correct interpretation of the
requirements of
section 52(1).)
0in;
line-height: 200%">
79.2
As is dealt with above, also in terms of Clause 52(8) of the GCC,
the Engineer has the right to make corrections to previous
payment
certificates.
79.3
These corrections may be in favour of either of the parties. The
purpose of the corrections is thus to afford the Engineer
the
opportunity to address any mistakes or re-assess the value of the
work should a re-measurement or new information so require.
79.4
This procedure is not meant to be restrictive and corrections are
made in the discretion of the Engineer after consideration
of all
available information.
79.5
Given the applicants' contention that the Engineer certified and
manipulated quantities for purposes of keeping any prospective

payments within the confines of an under-estimated budget. I deem it
pertinent to address this issue with reference to individual
payment
certificates ..."
The
respondent then continues, in compelling fashion, to deal with
certificates 14 to 18 which are really the only contentious ones.
It
should be remembered that the first thirteen certificates were
issued, as I understand the papers, without any serious disputes

flowing therefrom.
[28]
In his address, Mr Preis, in dealing with the suggestion that the
respondent may have unduly interfered with the preparation
of the
payment certificates, reminded me of the provisions of
section 2(8)
of the GCC which reads as follows:
"Notwithstanding
any provisions to the contrary in the Contract, the Employer shall
have the right to reverse and, should he
deem it necessary, to amend
any certificate, direction, decision or valuation of the Engineer and
to issue a new one, and such
certificate, direction, decision or
valuation shall for the purposes of the Contract be deemed to be
issued by the Engineer, provided
that the Contractor shall be
remunerated in the normal manner for work executed in good faith in
terms of an instruction issued
by the Engineer and which has
subsequently been rescinded."
This
sub-section clearly authorises the employer (respondent) to play an
active part in the preparation of payment certificates.
Indeed, the
employer is authorised to take drastic measures such as to even
reverse a certificate.
On
a general reading of the papers, and given the compelling fashion in
which the respondent deals with the issue of certificates
in, for
example, paragraphs 78 and 79 of the opposing affidavit. 1 find no
basis whatsoever to establish on these affidavits, that
perceived
interference by the respondent in the preparation of the certificates
amounted to improper conduct as intended by Uitenhage
Municipality
and other cases, rather than duly authorised conduct as provided for
in
section 2(8).
[29]
In attempting to determine on affidavit, whether a case has been made
out for this rather drastic final relief, and whether
the applicant
has succeeded in proving the alleged improper conduct or "connivance"
on the part of the respondent and
the engineer, one must also
constantly bear the well-known principles in mind which were laid
down in Plascon-Evans Paints v Van
Riebeeck Paints
[1984] ZASCA 51
;
1984 3 SA 623
(AD)
at 634C-635E. In considering the opposing affidavit which, generally,
leaves me with a favourable impression, I see no allegations
or
denials on the part of the respondent which "are so far-fetched
or clearly untenable" (see Plascon- Evans at 635C)
which would
leave me with a decision that the version presented by the respondent
falls to be rejected on the papers.
On
this subject, it is interesting to observe that in Uitenhage
Municipality, relied upon by the applicant, the learned
judge-president
also found himself unable to decide whether or not
the alleged irregular conduct had been established in the
application, and decreed
that the issue would have to be decided at
the trial. He did so in the following terms at p514:
"That
would on the authority of Roberts v Hickman be a sound contention, if
at the trial evidence should be produced establishing
an influence
and control by the applicant over the Engineer which the respondent
was ignorant of when he acted as he did in regard
to the certificate
of 31 October, 1933. That, however, is not a matter which can be
decided at this stage. It will have to wait
for decision until the
allegations set out in paragraph 5 of the declaration have been gone
into at the trial."
[30]
I add that I have been quite unable, either on reading the papers or
from my debate with Mr Raath, to establish a convincing
reason for
the applicants' failure to simply employ the dispute resolution
mechanisms provided for in
sections 60
and
61
of the GCC to address
their dissatisfaction with the manner in which the payment
certificates were prepared by the engineer and
the respondent, rather
than to embark on this cumbersome exercise to attempt to prove
untoward conduct on affidavit. The respondent
puts it as follows in
paragraph 78.5 of the opposing affidavit:
"...
it is respectfully contended that any difficulty a Contractor
experiences in connection with the Engineer's approval or
failure to
approve claimed quantities in respect of alleged work performed, can
be addressed by utilising the dispute resolution
mechanisms contained
in the GCC."
Before
me, it was common cause that with regard to many other disputes
between the parties these mechanisms were duly employed and
the
resultant arbitrations took place. Some of those arbitrations are
still pending. Indeed, counsel before me were in general
agreement,
that a decision to uphold the main point, namely that the actions of
the engineer were of no force and effect, would
inevitably have an
impact, perhaps dramatically so in certain instances, on these
pending arbitrations.
[31]
In the result, I have come to the conclusion that the applicants have
failed to prove, on affidavit, that the respondent and
the engineer
were guilty of conduct which would place this matter inside the ambit
of Uitenhage Municipality, Hickman and other
decisions. For this
reason alone, I am of the view that the main point cannot be upheld.
[32]
I have also come to the conclusion that there is another, equally
compelling, reason why the argument on the main point should
fail. In
their heads of argument, counsel for the applicants, in urging me to
uphold the main point, contend for far-reaching final
declaratory
relief on affidavit. The declarator should state that none of the
functions of the engineer purportedly performed by
him in terms of
the contract had any legal effect vis-a-vis the applicants. They
argue that legally, there was "therefore
no Engineer" who
could make any ruling whether for extension of time in terms of
clause 45 read with clause 51 of the GCC,
any claims for additional
compensation in terms of clause 51 or in regard to disagreements as
intended in clause 60. These are
all subjects carefully pleaded in
support of claims 1 to 5 to which I will shortly turn. Counsel argue
that "any claims made
by the applicants in terms of those
clauses would accordingly have been legally futile".
[33]
I have pointed out repeatedly that no case whatsoever for such relief
was pleaded either in the founding affidavit or the replying

affidavit. No such relief is prayed for in the notice of motion
either. A case that the engineer's actions, and also those of the

respondent, were unlawful, and that the engineer's decisions were
void or of no force and effect, should have been pleaded - see,

generally, Yannakou v Apollo Club
1974 1 SA 614
(A) at 623G-H and
Pratt v First Rand Bank Ltd
[2008] ZASCA 92
;
2009 2 SA 119(SCA)at
123F-H.
[34]
It was also argued on behalf of the applicants that the far-reaching
relief now sought could have been granted under the prayer
"further
and/or alternative relief appearing in the notice of motion. With
this submission I disagree. In my opinion, the
nature of the relief
to be sought must, at the very least, be set out in the affidavits in
such a fashion that the opposing party
can be left in no doubt as to
what such relief amounts to. This is not the case in the present
instance. Moreover, the respondent
was not even in a position to file
a rejoinder because the relief was not identified in the replying
affidavit either - see, generally,
the remarks of the learned judge
in the full court decision of City of Cape Town v Mgoqi & Another
2006 4 SA 355
(CPD) at 362F-363C.
[35]
The flaw in the case as presented by the applicants without an
appropriate amendment of the notice of motion is highlighted
by the
fact that much of the relief presently claimed stands in stark
contrast to the suggested relief of a declarator that the
actions by
the engineer were of no force and effect. For example, in respect of
the fourth claim, declaratory relief is sought
to the effect that
"the Engineer is still to issue a ruling on this claim in terms
of Clause 60(2) of the GCC". Such
relief, not abandoned, can in
no way be reconciled with the relief contended for in support of the
main point, in the absence of
an appropriate amendment. The same
difficulty presents itself with regard to other relief presently
sought in the notice of motion.
[36]
In all the circumstances, and to avoid uncertainty, I order that the
arguments in support of the main point are dismissed.
[37]
I now turn to the first to fifth claims as they are formulated in the
notice of motion and dealt with in the papers.
Brief
remarks about the first to fifth claims
[38]
These claims are all for declaratory relief.
[39]
All the claims contain, as a last resort, in terms of a final
alternative prayer, a request for relief in terms of
section 8
of the
Arbitration Act 25 of 1965
. Such relief is aimed at obtaining an
extension of the period within which claims were to be filed in the
event of a finding that
the claims are presently time-barred.
[40]
It is convenient to quote the wording of
section 8
of the
Arbitration
Act:
"Where
an arbitration agreement to refer future disputes to arbitration
provides that any claim to which the agreement applies shall be

barred unless some step to commence arbitration proceedings is taken
within a time fixed by the agreement, and a dispute arises
to which
the agreement applies, the court, if it is of the opinion that in the
circumstances of the case undue hardship would otherwise
be caused,
may extend the time for such period as it considers proper, whether
the time so fixed has expired or not, on such terms
and conditions as
it may consider just but subject to the provisions of any law
limiting the time for commencing arbitration proceedings."
[41]I
now turn to the individual claims. The first claim
[42]
The first claim is aimed at a declarator that the period 2 April 2007
to 24 June 2007 does not qualify for the computation
of penalties.
[43]
The claim has its origin in a telephonic conversation between Mr Sam
Phupheli ("Phupheli"), the General Manager:
Operations of
the respondent, and Mr Ed Hillary ("Hillary"), the then
Executive Chairperson of the first applicant, which
took place on 2
April 2007.
[44]
The case of the applicants is that during that telephonic
conversation, Phupheli instructed the applicants not to proceed with

the execution of the Works, as a cessation of operations would assist
the respondent to apply pressure on the provincial Department
of
Roads and Transport ("the department") to provide funds to
the respondent in order to meet its financial obligations
to the
applicants.
Phupheli,
in an affidavit, admits the telephonic conversation, but denies the
alleged contents thereof. He also denies that he had
any authority to
order a cessation of operations.
[45]
According to the applicants, the communication conveyed during the
telephone discussion resulted in a suspension of the execution
of the
Works by the applicants from 2 April 2007 to 24 June 2007. The
applicants contend that this period should not qualify for
the
computation of any penalties that may be applicable. Penalties, in
terms of the agreement, are calculated to amount to R2 800,00
per day
and the total value of the claim comes to R232 400,00.
[46]
It was argued on behalf of the applicants that the communication of
Phupheli to Hillary amounted to a repudiation of the agreement
so
that the obligations of the applicants to perform in terms of the
agreement were suspended during the relevant period of the

repudiation namely 2 April to 24 June 2007.
[47]
With regard to this claim, as with the others, the applicants are
confronted with the ongoing problem of having to prove their
case on
affidavit in the face of clear factual disputes. In this case the
main dispute is the contents of the discussion between
Phupheli and
Hillary on 2 April 2007. The test in Plascon-Evans, supra, is
constantly under consideration.
"...
it is correct that, where in proceedings on notice of motion disputes
of fact have arisen on the affidavits, a final order,
whether it be
an interdict or some other form of relief, may be granted if those
facts averred in the applicant's affidavits which
have been admitted
by the respondent, together with the facts alleged by the respondent,
justify such an order ..." at 634G-I.
As I already recorded
earlier, I find nothing in the version presented by the respondent in
the answering affidavit, "so far-fetched
or clearly untenable"
(Plascon-Evans at 635C) that I feel justified in rejecting them
merely on the papers.
[48]
Against this background, the applicants are forced to constantly rely
on certain other events, communications and correspondence
which they
submit would militate in favour of a finding against the respondent
on the probabilities.
One
such "event" is a lengthy letter written by an official of
the first applicant to the engineer on 11 April 2007. The
letter
first deals with a host of other disputes, pre-dating 2 April, in
which, inter alia, the dispute resolution mechanisms prescribed
by
clause 61 of the GCC are invoked. Later in the letter the purported
cessation of Works on 2 April 2007 is mentioned and the
following is
said about the alleged phone-call:
"On
Monday 2 April 2007 Mr Ed Hillary received a phone-call from Mr S
Phupheli of RAL asking him why we were continuing with
the work on
site at there was no funds available." Nothing is stated about
the alleged invitation by Phupheli for the cessation
of Works in
order to facilitate pressure on the department to make payment. I
find no convincing explanation for this lacuna in
the summary of the
phone-call of 2 April.
The
applicants then contend for an adverse inference to be drawn against
the respondent for the latter's perceived delay in reacting
to the
cessation of the
Works.
From the papers, it appears that there was no unreasonable delay on
the part of the respondent to deal with the alleged cessation.

According to the minutes of a site meeting held on 24 April 2007
(site meeting no 19) the "purported" suspension of the

Works was already on that occasion discussed between the applicants
and the engineer. This was shortly after the letter of 11 April.
The
engineer also uses the word "purported" because there is a
dispute as to whether or not there was a complete cessation
of the
Works. The version of the respondent is that the applicants carried
on with the Works, albeit at a slower rate. There are
clear
indications that there was a continuation, at least, of repairs which
the applicants had to effect to the seal of one of
the roads which
had not been properly applied resulting in poor binding between the
seal and the base. These repairs were commenced
by the applicants
before 2 April and were only completed on 6 June 2007.
It
also appears from the respondent's version as contained in the
answering affidavit (which I have to accept) that the applicants
were
warned about their unilateral cessation of the Works. The respondent
puts it as follows:
"105.2
It is reiterated that the aspect of the cessation of the Works was
not only discussed but that the Engineer personally
warned the
Contractor that its conduct of unilateral cessation of the contract
works had been in breach of the GCC.
105.3
As was also dealt with above, it is reiterated that the Contractor
had been so warned as early as 20 March 2007, at the time
when there
had been only threats of a cessation."
[49]
I now turn to the affidavit of Phupheli. I find the contents thereof,
and the version of Phupheli, convincing enough and certainly
not "so
far-fetched or clearly untenable" that I would be justified in
rejecting his version. It is convenient to quote
the relevant extract
from his affidavit:
"The
alleged instruction to cease contract works
5.
Having regard to the affidavit of Daly aforementioned, it is alleged
that, during April 2007, I issued a direct instruction
to Mr Ed
Hillary ('Hillary') the Executive Chairperson of the first applicant
to cease the operations on the contract site seeing
as, so it is
alleged, 'cessation of operations would assist the respondent in
applying pressure to the provincial Department of
Roads and Transport
in procuring the additional funds needed by the respondent in order
to have the project completed'.
6.
Although the conversation with Hillary is admitted, the nature and
import of the conversation as alleged are denied.
7.
The events which gave rise to this conversation are briefly dealt
with hereunder.
8.
For some months preceding the conversation I was informed by the
project manager of the respondent, Mr Robert Nemavhola, that
the
execution of contract works was at that stage being frustrated by
protracted disagreement between the Engineer and the Contractor

regarding various issues which included disputes regarding
quantities, extensions of time for Works to be completed and other
ancillary aspects.
9.
I proceeded to contact Hillary. At that stage my intention was to
have a conversation with him in an attempt to address and
possibly
resolving the qualms of the applicants.
10.
During the conversation Hillary complained that the respondent
apparently had no funds available and that the applicants were
not
being paid monies which were due to them. There were also
insinuations that the Contractor would stop working, given the
respondent's
alleged non-payment.
11.
In answer to these insinuations I enquired from Hillary why, if he
says that there are no funds available in respect of the
contract
works, was he continuing with the work.
12.
I never conveyed, directly or indirectly, to Mr Hillary that the
contract works should be ceased, as he now alleges.
13.
The conversation was very much interrogation by me in attempting to
get to the gist of the alleged problem the applicants were

experiencing.
14.
During the conversation it was never conceded that there were no
funds available in respect of the project, it was never stated
that
acessation of Works could serve to apply pressure on the department
as is alleged or that the applicants were at all entitled
to cease
operations on the contract site,
15.
It is respectfully contended that the meaning the applicants attempt
to attach to the aforesaid conversation is wholly contrived
and
misstated.
16.
Aside from the fact that I never instructed Hillary to cease the
contract works, such an instruction would, in any event, fall
outside
the purview of my specific authority as General Manager: Operations
of the respondent ..."
[50]
On this version, which I must accept, and also on the version that
the engineer warned the applicants about the unilateral
cessation of
Works even before 2 April, which I must also accept, I have to
conclude, as I do, that the applicants have failed
to prove, on these
papers, that Hillary was instructed by Phupheli to suspend the Works
on 2 April 2007.
[51]
There is another issue which requires attention, namely whether this
claim is subject to the procedures provided for in clauses
45 and 51
of the GCC or whether the mechanisms prescribed in clauses 60 and 61
are to be applied. It is convenient to quote prayers
2.1 to 2.4 of
the notice of motion which relate to the first claim: "2.1 It is
declared that this claim is not subject to
the procedures provided
for in clauses 45 and 51 of the GCC.
2.2
It is declared that the period between 2 April 2007 and 24 June 2007
does not qualify for the computation of penalties in terms
of clause
46 of the GCC.
2.3
Alternatively to 2.2 it is declared that this claim is not subject to
the provisions of clauses 60, 61(1) or 61(2) of the GCC,
and is to be
treated in accordance with clause 61(6) of the GCC.
2.4
Alternatively to prayers 2.2 and 2.3 above:
2.4.1
it is declared that the applicants and the respondent have by
agreement dispensed with the ruling and decision phases provided
for
in clause 60 and 61(1) of the GCC in consequence whereof the matter
is to proceed directly to mediation and, if applicable,
arbitration
in accordance with the provisions of clause 61(2) and (3) of the GCC.
2.4.2
It is declared that the appointment of Mr Nilen as mediator is valid
for purposes of the treatment of this claim ..."
Prayer
2.5 deals with the protection in terms of
section 8
of the
Arbitration Act, which
I shall consider at a later stage.
[52]
It was conceded on behalf of the applicants that, in the event of a
finding that the claim is subject to clauses 45 and 51,
the relief
sought in prayers 2.3 and 2.4 cannot succeed.
[53]
Clause 45(2), quoted in full earlier, provides that:
"If
circumstances of any kind whatsoever which may occur be such as
fairly to entitle the Contractor to an extension of time
for the
completion of the Works or any portion thereof, the Engineer shall
grant the Contractor, on a claim in accordance with
Clause 51, such
extension of time as is appropriate ..."
[54]
Clause 45(3) provides a list of circumstances intended by clause
45(2) which includes:
"(c)
any failure or delay on the part of the employer or his agents,
employees or other contractors (not being employed by
the Contractor)
in the due performance of any obligations as are reasonably necessary
to enable the Works to proceed ..."
[55]
In terms of clause 51(l)(a):
"The
Contractor shall, within 28 days after the circumstance, event, act
or omission giving rise to such a claim as arisen
or occurred,
deliver to the Engineer a written claim, referring to this clause and
setting out ... (the required particulars are
listed)."
[56]
Clause 51(4) provides:
"If,
in respect of any claim to which this clause refers, the Contractor
shall fail to comply with the provisions of Subclause
(1), as read
with Subclause (2), he shall have no further right to make the claim
concerned."
[57]
It is common cause that the applicants did not file a claim as
intended by clauses 45 and 51, within the twenty eight day period.
[58]
In my view it is clear, given the wide wording of clause 45(2) with
the reference "circumstances of any kind whatsoever"
that
this clause applies to the present situation. Iam fortified in this
conclusion by the wording of clause 45(3)(c) which deals
with "any
failure or delay on the part of the employer or his agents, employees
or other contractors ... in the due performance
of any obligations as
are reasonably necessary to enable the Works to proceed ..."
This would, in my view, include an instruction
from Phupheli, if it
ever occurred which I have found it did not, which would have led to
a delay in the continuance of the Works.
[59]
As submitted by Mr Preis for the respondent, a finding that clauses
45 and 51, and the mechanisms therein provided, are applicable
to
cases of alleged unilateral instructions for a cessation of the
Works, is fortified by reference to other provisions of the
GCC, such
as clauses 13 and 44.
Clause
13 imposes a duty on the employer to, from lime to time as the Works
proceed, give to the contractor possession of such further
portions
of the site as may be required to enable the contractor to proceed
with the constructions of the Works with due dispatch
in accordance
with the program. If the contractor suffers any delay or additional
cost from failure of the employer to give possession
in accordance
with the terms of this clause, the contractor shall be entitled to
make a claim in accordance with clause 51.
Similarly,
clause 44 provides that, if the contractor suffers delay or
additional cost for failure or delay on the part of the employer,
his
agents, employees or other contractors in the due performance of any
obligations which are necessary in order to enable the
Works to
proceed in accordance with the contract, the contractor shall be
entitled to make a claim in accordance with clause 51.
[60]
In the result, I have come to the conclusion that, if Phupheli had
instructed the applicants to cease their operations, they
should have
employed the mechanisms provided for in clauses 45 and 51 in order to
get relief or compensation. Their failure to
do so, renders their
claims, if any, time-barred as intended by the provisions of clause
51(4).
[61]
It follows that the relief claimed in prayers 2.1, 2.2, 2.3 and 2.4
of the notice of motion cannot be granted. As to the relief
claimed
in prayer 2.3, where a declarator is sought to the effect that the
dispute should be dealt with in terms of clause 61(6),
which
contemplates a situation not relating to a ruling, decision, order,
instruction or certificate by the engineer, this also
cannot be
upheld in view of my earlier finding that clauses 45 and 51 apply to
the present situation, always, of course, on the
assumption that
Phupheli gave the instruction for the operations to be suspended.
[62]
What is left of the first claim, is the final alternative prayer for
relief in terms of
section 8
of the
Arbitration Act, supra
. Where all
the claims contain such a final alternative prayer, I shall deal with
the subject after having considered all the individual
claims.
The
second claim
[63]
The claim relates to the accommodation of traffic that has to be
diverted and directed through temporary lanes and detours
during the
execution of the Works, and amounts payable to the applicants in
respect of these operations.
[64]
As described in the heads of argument presented by counsel for the
applicants, the case of the applicants is that this claim
does not
emanate from a dispute concerning the proper measurement of the
quantities according to which payment is to be made but
"that it
sprung from the Engineer's manipulation of the amounts payable to the
applicants (at the behest of the respondent)
purportedly justified by
a belated misinterpretation of the relevant provisions of the
contract documents".
[65]
The value of the claim comes to Rl 252 952,80.
[66]
The relief claimed in respect of the second claim is the following:
"3.1
It is declared that the applicants and the respondent have by
agreement dispensed with the ruling and decision phases
provided for
in clause 60 and 61(1) of the GCC in consequence whereof the matter
is to proceed directly to mediation and, if applicable,
arbitration
in accordance with the provisions of clause 61(2) and (3) of the GCC.
3.2
It is declared that the appointment of Mr Nilen as mediator is valid
for purposes of the treatment of this claim."
3.3
This is again the final resort alternative claim for protection under
section 8
of the
Arbitration Act.
[67]
Mr Nilen was a "mediator" appointed in March 2008 by the
President of the South African Institute of Civil Engineers
after the
latter received representations in this regard from the applicants
without any input from the respondent. The respondent's
attitude is
that the applicants wrere not entitled to bring about the appointment
of a mediator in the fashion in which it had
been done or at all.
[68]
On the version of the applicants themselves, it appears that a
dispute on this subject of payment for accommodation of traffic

diverted through temporary lanes and detours started simmering
between a representative of the applicants, Mr Jackman, and the

engineer at a meeting on 26 January 2007.
On
2 March 2007 the applicants wrote to the engineer revisiting the
discussions (and disagreements) of 26 January 2007 and motivating

claims for payment for these traffic services.
On
15 March 2007 the engineer responded to the letter of 2 March in some
detail. He dealt with each item raised by the applicants
and
pronounced his findings thereon. I quote a few examples:
"No
instruction was issued by the Engineer to water deviations. The
measurement of the item is thus zero."
And-
"No
instruction was issued by the Engineer to blade deviations. The
measurement of the item is thus zero."
"The
total length of deviations considered as approved is 4,2 kilometres
asindicated on the attached appendix ... made up as
follows:
section
over existing bridge 1,2 kilometres section between point A and point
B 1,8 kilometres."
"Item
15.03 ... is measured at ten sets ofjackets and safety hats."
"Restricted
haul to be 700 m3."
"Over
all to be measured at 2 300 m3 – kilometres."
[69]
Further exchanges and correspondence between the parties ensued.
[70]
On 13 June 2007 the engineer wrote to the applicants and part of the
letter reads as follows:
"The
Engineer has on numerous occasions indicated final quantities. These
quantities have all been discussed and corresponded
to with your Mr
Jackman. As indicated in the attached comments, some of the work
needs final measurement on completion as agreed
with Mr Jackman, and
for the interim these quantities are estimated final quantities."
[71]
On 18 June 2007 the applicants wrote to the engineer dealing with the
various specifications relating to this particular subject.
In this
letter, the applicants also purport to invoke the provisions of
clause 60 of the GCC by calling for a ruling to be made
by the
engineer within fourteen days.
On
25 June 2007 the engineer responded to this letter, and also called
on the applicants to record the date of disagreement, as
determined
by them, in the spirit of the requirements of clause 60(1) of the
GCC. The applicants indicated that, according to them,
the date of
disagreement was 13 June 2007. On 2 July 2007 the engineer wrote with
a proposal that an independent third party be
involved to scrutinise
submissions and correspondence and to facilitate a meeting where all
issues could be addressed and a report
compiled for the employer
(respondent).
The
issue remained unresolved, and this is where the applicants,
unilaterally, approached the President of the South African Institute

of Civil Engineers to appoint a "mediator" which turned out
to be Mr Nilen.
[72]
On 3 December 2007 the applicants wrote to the engineer, stating,
inter alia, the following:
"Further
to all previous Dispute Notices, we hereby issue a blanket Dispute
Notice all in terms of clause 60 and 61, given
that we have now
received the Engineer's final account and it has 97 quantities which
are in dispute ..."
173]
On 14 December 2007 the engineer wrote, inter alia, as follows:
"The
disputed items which fall within this sub-category appear under
sections Bl and B2 of appendix A.
Concerning
these disputed items, we record as follows:
•
on
15 March 2007 we issued our ruling in respect of your claims tor
accommodation of traffic;
on
18 June 2007 you gave written notice of disagreement in respect of
this ruling:
•
however,
you failed to give such written notice within the 21 day period
stated in clause 60(1) of the General Conditions.
Therefore,
your right to raise a disagreement and/or a dispute in respect of
this ruling became and remains time-barred. Your attempt
to try to
circumvent the consequences of such a failure by issuing a 'blanket
Dispute Notice' is disingenuous and invalid."
[74]
Where clause 60(1) refers to the "cause of disagreement" it
seems to me, on a general reading of the papers, that
this "cause
of disagreement" probably already arose at the first meeting of
26 January 2007. Nevertheless, as I have
indicated by quoting
extracts from the letter of 15 March 2007, it appears to me that, in
that letter, the engineer adopted a firm
stance and pronounced
himself finally on a number of issues.
This
aspect is developed further in the opposing affidavit. I quote a few
extracts: "174.2 The letter dated 15 March 2007 constitutes
a
ruling in terms of the GCC ..."
"175.2
A disagreement in respect of accommodation of traffic had at that
stage arisen, as evinced by the letter of the applicants
dated 2
March 2007 (annexure C2FA46). There is no provision in the GCC that
the Engineer may only rule on quantities once the Contractor
so
requests. In terms of Clause 47 of the GCC the Engineer is obliged to
value the Works and he may do so at any time."
"This
ruling dated 15 March 2007 constitutes the effective date of the
dispute. By virtue of the provisions of Clause 60, read
with Clause
61 of the GCC, the Contractor had 21 days from this date to note its
disagreement. This was not done."
"It
is, however, reiterated that the claim became time-barred under
Clause 61 of the GCC (42 days after receipt of the Engineer's
ruling
dated 15 March 2007)."
[75]
It appears that the stance of the respondent that this claim has
become time-barred comprises a two pronged argument. In the
first
place the respondent argues that the applicants failed to give the
mandatory written notice to the engineer within twenty
one days after
"the cause of disagreement" had arisen. This notice must be
a written one to the engineer requiring him
to consider any
disagreement raised by the contractor with the engineer. It appears
that this argument of the respondent is well-founded.
Judging by the
answering affidavit, supra, it seems that the second leg of the
attack is that the contractor also failed to give
a written "Dispute
Notice" to the engineer, in the spirit of the requirements of
clause 61(1 )(a) within forty days after
his receipt of a ruling or
after a ruling shall have been deemed to have been given. Such a
ruling would have been deemed to have
been given fourteen days after
18 June 2007 when the ruling was called for in terms of the
provisions of clause 60(2). This, also,
appears to be a valid
argument.
[76]
It should be noted, however, that the relief sought in prayer 3.1 of
the notice of motion is not aimed at a declarator pronouncing
upon
the respondent's argument that the claim has become time-barred. It
is aimed at a declarator to the effect that the parties,
by
agreement, dispensed with the "ruling and decision phases"
provided for in clause 60 and 61(1) of the GCC.
[77]
The attitude of the applicants is that the exchange of correspondence
up to the letter of the applicants of 18 June 2007 represented
no
more than "an exchange of views, and the general debate between
the applicants and the Engineer with reference to the various

considerations which had to be taken into account in order to
determine the merits of the claim". The applicants argue that
at
no stage during the course of that debate had the various views
entertained by the applicants on the one hand and the engineer
on the
other hand "hardened into a disagreement as intended in clause
60 of the GCC". This is emphatically denied in
the answering
affidavit. On my reading of the correspondence, including the letters
of 2 March and 15 March 2007, supra, there
was a clear disagreement
between the parties and the engineer firmly pronounced thereon and
expressed his findings and measurements
in the letter of 15 March.
The
applicants argue that when the engineer proposed the involvement of
"an independent third party" to facilitate a meeting
where
all the issues could be addressed, and when the parties engaged each
other in further exchanges
thereafter,
this constituted an agreement that the "ruling and decision"
stages of clauses 60 and 61 had been by-passed
and an agreement that
the parties would proceed directly to mediation. This is emphatically
denied in the answering affidavit.
It was argued on behalf of the
respondent that the "independent third party" proposed
(which proposal in any event never
got off the ground) was merely
intended to be a facilitator and not a mediator in the true sense of
the word as intended by the
provisions of clause 61.
It
was also argued on behalf of the respondent that the argument that
the exchanges between the parties never "hardened into
a
disagreement" is ill-founded. The term "disagreement"
is not defined in the GCC. On behalf of the respondent it
was argued
by Mr Preis that "disagreement" should then bear its
ordinary meaning namely that "a difference of opinion
exists"
as explained in the Concise Oxford Dictionary. It is clear, from the
analysis I attempted to provide, that there was
undoubtedly a
difference of opinion between the parties well before 18 June 2007.
[78]
I see no justification for rejecting the version offered by the
respondent. Plascon-Evans again comes to the fore. On these

affidavits, I am of the view that the applicants have failed to make
out a case for a declarator as sought in prayer 3.1 of the
notice of
motion, namely that the parties have by agreement dispensed with the
"ruling and decision phases" provided
for in clauses 60 and
61 of the GCC. I am also not persuaded that a case has been made out
for a declarator in terms of prayer
3.2 that the appointment of Mr
Nilen as a mediator was valid given the fact that the respondent
played no role in the decision
to appoint such a mediator.
[79]
What is left of the second claim is the alternative prayer for relief
in terms of
section 8
of the
Arbitration Act. As
I have indicated,
this will be dealt with after consideration of all the individual
claims.
The
third claim
[80]
The claim relates to differences between the parties regarding the
measurement and calculation of the earth works quantities,
upon the
basis of which the remuneration payable to the applicants was to be
calculated. This relates to the measurement of rock
quantities, the
"compaction factor" and "overhaul". The total
value of this claim amounts to R2 351 240,10.
[81]
The relief claimed in respect of this third claim is as follows:
"4.1
It is declared that the applicants and the respondent have by
agreement dispensed with the ruling and decision phases
provided for
in Clause 60 and 61(1) of the GCC in consequence whereof the matter
is to proceed directly to mediation and, if applicable,
arbitration
in accordance with the provisions of Clause 61(2) and (3) of the GCC.
4.2
It is declared that the appointment of Mr Nilen as Mediator is valid
for purposes of the treatment of this claim.
4.3
Alternatively to prayers 4.1 and 4.2 above: it is declared that the
matter is still open for the applicants to request a ruling
within 14
(fourteen) days as intended by Clause 60(2) of the GCC in which event
the provisions of Clause 60 theranent and in so
far as it may become
applicable. Clause 61 of the GCC will apply."
Prayer
4.4 contains the usual further alternative prayer for protection in
terms of
section 8
of the
Arbitration Act.
[82
]
I turn to the relief as prayed for in the notice of motion.
[83]
As to prayers 4.1 and 4.2, the case of the applicants, that the
parties by agreement dispensed with the "ruling and decision

phases" provided for in clauses 60 and 61 of the GCC, is the
same as it is in respect of claim two. I have already dealt with
the
argument when considering claim two, and my finding in that regard
need not be repeated for purposes of claim three.
[84]
I turn to the relief sought in prayer 4.3 of the notice of motion.
[85]
On a general reading of the papers, it appears to me as if the claim
forming the subject of the third claim for declaratory
relief, namely
the claim involving a dispute between the parties regarding the
measurement and calculation of earth works quantities
has become
time-barred.
[86]
Although I must confess to finding the allegations and
counter-allegations in the founding and answering affidavits somewhat

confusing, it appears to me that the stance adopted by the respondent
amounts to the following: on 15 March 2007 the engineer wrote
to the
first applicant referring to a meeting held earlier the same day and
illustrating, on a general reading of this letter,
a dispute which
had arisen between the parties with regard to the calculation of the
mass earth works quantities. By way of illustration,
it is convenient
to quote a portion of this letter: "4. There is a discrepancy of
volumes of undercut from two pages of
information
supplied. We have used the initial page indicating
undercut
volumes.
5.
The quantities for layer works used by you in calculating haul is
different from the quantities you have claimed under 3400.
6.
Kindly peruse the document regarding the logic in terms of
source/destination of material as well as the overhaul on such. You

should indicate to us where you find differences with your quantities
in terms of this.
7.
We are of the opinion that your method of determining quantities
differ from documents submitted, and especially the basis of
your
calculation of overhaul."
On
19 March 2007 the engineer wrote another letter to the first
applicant under the heading "mass earth works" in which
he
appears to embark on a very detailed discussion relating to the
calculation of these quantities. In the end, in paragraph 10
of the
letter, he says the following:
"We
thus consider the mass earth works agreed as per appendix Al."
According
to the respondent, this amounts to a ruling in the form of a
determination as intended by the provisions of clause 47
of the GCC.
This, according to the engineer, amounted to a clear indication of a
disagreement between the parties. If the applicants
wanted to pursue
the matter further, they would have the right, in terms of clause
60(1) of the GCC, by written notice to the engineer
to require him to
consider this disagreement provided that the written notice shall be
given within twenty days after the cause
of disagreement had arisen.
On
21 June 2007, the applicants, referring, inter alia, to the letter of
15 March 2007, purported to give this notice as intended
by clause
60(1) requesting the engineer to consider the disagreement.
The
respondent deals with this issue as follows in the answering
affidavit:
"211.2
It is reiterated that the ruling/cause of disagreement concerning
this aspect existed as early as 19 March 2007. As
was dealt with in
the letter dated 14 December 2007 (annexure C3FA83) notice of
disagreement, as contemplated in clause 60(1) under
the COLTO GCC
should have been given within 21 days from this date.
211.3
As the Contractor disregarded the applicable provisions of the GCC in
this regard, the applicants' claim cannot advance beyond
clause
60(1).
211.4
It is contended that, seeing as any request for a ruling in terms of
clause 60(1) was made after expiration of the prescribed
time periods
in terms of the GCC, any reference to clause 60(2) is ill-conceived
and irrelevant."
[87]
It was argued before me that the determination to be found in the
lengthy letter of 19 March 2007 is not a "ruling".
The
respondent insists that it is. It was also argued on behalf of the
applicants that "the matter had only hardened into
a
disagreement by the very notice given by the applicants by way of
their letter of 21 June 2007". This is an argument similar
to
the one raised with regard to the second claim, supra. Again, the
respondent insists that the dispute had already "hardened
into a
disagreement" well before 21 June 2007 and, at least, by 19
March 2007. I cannot see how these disputes can be resolved
on
affidavit. I have to accept the version presented by the respondent.
In any event, as indicated, it seems to me that a disagreement
or "a
difference of opinion" as argued by Mr Preis with reference to
the Concise Oxford Dictionary, is clearly evident
from the letters of
15 March and 19 March 2007.
[88]
It follows that I have to find, as I do, that the applicants had
failed to give the engineer written notice to consider the

disagreement within twenty one days after
"the
cause of disagreement had arisen" as intended by the peremptory
requirements of clause 60(1) of the GCC. This, as
alleged by the
respondent in the answering affidavit, supra, brought an end to the
process so that it is no longer open to the
applicants to request a
ruling within fourteen days in terms of the provisions of clause
60(2) of the GCC. The result of all this
is that the relief sought in
prayer 4.3 of the notice of motion cannot be granted.
[89]
I add that the applicants appeared to make an attempt at remedying
the situation by issuing a so-called "blanket Dispute
Notice all
in terms of clause 60 and 61" as late as 3 December 2007. This
issue was already dealt with when I considered the
relief sought
under the second claim, as was the response thereto given at the
time, on 17 December 2007. by the engineer. With
regard to the third
claim, for "additional quantities" the engineer gave the
same answer in the same letter of 17 December
2007 along the
following lines:
"Concerning
these disputed items, we record as follows: • On 19 March 2007
we issued our ruling in respect of your claims
for such additional
quantities.
On
21 June 2007 you gave written notice of disagreement in respect of
this ruling.
However,
you failed to give such written notice within the 21 day period
stated in clause 60(1) of the General Conditions. Therefore,
your
right to raise a disagreement and/or a dispute in respect of this
ruling became and remains time-barred. Your attempt to try
to
circumvent the consequences of such failure, by issuing a 'blanket
Dispute Notice' is disingenuous and invalid."
This
argument was also repeated by the respondent in the answering
affidavit.
[90]
In the result, the relief sought in prayers 4.1, 4.2 and 4.3 of the
notice of motion falls to be dismissed.
[91]
What is left, is the further alternative prayer (prayer 4.4 of the
notice of motion) for relief in terms of
section 8
of the
Arbitration
Act, which
I will deal with shortly.
The
fourth claim
[92]
This claim relates to alleged negative adjustments to the applicants'
quantities in respect of a wide ranging series of items,
apart from
those dealt with in the second and third claims, allegedly payable to
the applicants in accordance with the rates specified
in the Schedule
of Quantitites, allegedly first allowed but then refused by the
engineer in the course of his approval of the payment
certificates.
The
total value of this claim is said to amount to Rl 056 252,73.
[93]
The relief prayed for is to be found in prayer 5 of the notice of
motion and it is the following:
"5.1
It is declared that
5.1.1
the applicants gave due and timeous notice of disagreement as
intended in Clause 60(1) of the GCC on 3 December 2007;
5.1.2
the Engineer is still to issue a ruling on this claim in terms of
Clause 60(2) of the GCC."
Point
5.2 is the usual alternative prayer for protection in terms of
section 8
of the
Arbitration Act.
[94
]
I turn to the relief sought in prayer 5.1.
[95]
The main thrust of the applicants' case appears to be the following:
on 28 November 2007 the engineer referred to the disputed
quantities
as "our final measurement on all items". According to the
applicants, this was the first manifestation of
a disagreement as
intended by the provisions of clause 60(1) of the GCC which triggered
the by now well-known "blanket Dispute
Notice" dated 3
December 2007, and therefore well within the peremptory twenty one
day notice period.
The
respondent, in the answering affidavit, denies that the letter of 28
November 2007 refers to "negotiations on the part
of the
Contractor for purposes of settlement of any disputes". On a
general reading of this letter, I see no indication that
it is
couched in the form of a settlement offer.
It
is argued on behalf of the respondent that the applicants had been
aware, as early as 27 July 2007. of the dispute in respect
of
quantities. It is pointed out that this is confirmed in the minutes
of a site meeting of the same date. This is annexure "C2FA60".

A submission in this regard is made in the answering affidavit.
[96]
In the answering affidavit, the respondent pleads that in terms of
the GCC, it is not incumbent upon the engineer to negotiate,
resolve
or settle any possible disputes which may exist in respect of payment
issues. Under the GCC, the engineer is required to
make a ruling.
Subsequent to such a ruling it is incumbent upon the contractor to
exercise any remedies available in terms of the
GCC. The respondent
refers to other correspondence from which it is clear, according to
the respondent that no negotiations were
contemplated. In the
answering affidavit the respondent puts it as follows:
"As
has been extensively been dealt with above, the applicants had many
remedies available to it other than simply capitulating
and accepting
the engineer's measurements and quantities. The applicants elected
not to avail themselves of these alternative remedies."
The
respondent points out that throughout the course of the
administration of the contract various disputes arose. Some of these

were properly noted and administered in terms of the dispute
resolution mechanisms contained in the GCC.
Some
of these disputes, as I also pointed out earlier, currently form the
subject-matter of mediation or arbitration and fall outside
the
purview of this application. The respondent points out, correctly in
my view, that the applicants appear to have selectively
chosen not to
abide by the dispute resolution mechanisms in certain instances and
now attempt so the respondent alleges, in bringing
this application,
to lay this default squarely at the feet of the respondent and the
engineer.
[97]
It was argued before me on behalf of the respondent that, even on the
applicants' own version, there was never any express
waiver of the
respondent's contractual rights during the course of the execution of
the contract. What appears to be the applicants'
case, is that they
had unilaterally interpreted the engineer's alleged conduct to mean
that they did not have to adhere to the
relevant time clauses
contained in the GCC. It was argued on behalf of the respondent,
correctly in my view, that there exists
no legal basis upon which the
applicant, on the facts as preferred by the applicants, can attribute
its unilateral interpretation
in respect of the engineer's alleged
conduct to the engineer or can obtain recourse for its non-compliance
with the contract at
the expense of the respondent.
[98]
It was also contended on behalf of the respondent, as a general
proposition, that a so-called "blanket Dispute Notice"
is
inconsistent with the dispute resolution mechanisms contained in the
GCC. In any event, the applicants failed to issue a notice
of
disagreement as a compulsory condition precedent to the issuing of a
Dispute
Notice. Compliance with clause 60 (the issuing of a written notice of
disagreement) is a jurisdictional requirement for
the invocation of
clause 61. In my view, this argument is correct. The requirement for
the contractor to give a written notice
to the engineer to require
him to consider the disagreement within twenty one days after the
cause of disagreement had arisen is
couched in mandatory terms in
clause 60(1).
[99]
Where the issue is to be decided on affidavit, I am not justified in
rejecting the version of the respondent. According to
this, the
applicants had been aware, as early as 27 July 2007, of the dispute
and there was no attempt on the part of the engineer
to embark upon
settlement negotiations or to lull the applicants into a false sense
of security. The applicants failed to exercise
their remedies in
terms of the GCC, as they did in respect of other matters now pending
on arbitration. I see nothing so "far-fetched
or clearly
untenable" in the version presented by the respondent to justify
a rejection thereof in the spirit of Plascon-Evans.
From the
aforegoing it follows, that the claim is time-barred, and that the
relief prayed for in prayer 5.1.1 falls to be dismissed.
That being
the case, the relief prayed for in 5.1.2 cannot be granted either.
[100]
What is left is a consideration of the prayer for relief under
section 8
of the
Arbitration Act, which
I will shortly deal with.
The
fifth claim
[101]
This claim relates to a dispute regarding the date upon which the
applicants became entitled to a so-called certificate of
practical
completion. The applicants contend that they were entitled to a
certificate of practical completion being issued on 15
August 2007
and the engineer only issued a certificate on 26 October 2007. The
value of the claim amounts to approximately R139
200.00.
[102]
The relief prayed for in the notice of motion in respect of this
claim is the following:
"6.1
It is declared that the applicants have duly and timeously:
6.1.1
given notice of disagreement in terms of Clause 60(1) of the GCC on
29 October 2007;
6.1.2
delivered a Dispute Notice in terms of Clause 61 (1 )(a) on 4 March
2008."
This
prayer is followed by the usual alternative prayer for protection
under
section 8
of the
Arbitration Act.
[103
]
During the proceedings before me Mr Raath, quite properly, conceded
that the applicants have difficulty with the relief claimed
under
6.1.1 and 6.1.2 and pointed out that the main thrust of the
applicants' case in respect of claim 5 is contained in the
alternative
prayer for
section 8
protection. In the result. I will
not deal with the relief claimed under 6.1.1 and 6.1.2, other than
holding that the relief therein
mentioned is not granted.
[104]
I add that, with regard to the fifth claim, there was a further
prayer in the notice of motion, prayer 7, dealing with the
provisions
of the Conventional Penalties Act 15 of 1962. Both counsel, at the
end of the hearing before me, urged me to postpone
the relief claimed
in prayer 7 sine die irrespective of the outcome of this application.
I will do so in due course.
[105]
I turn to the combined prayers for relief under
section 8
of the
Arbitration Act.
Claims
for relief in terms of
section 8
of the
Arbitration Act. Act
25 of
1965
[106]
The text of
section 8
has already been quoted.
[107]
In the proceedings before me, I was referred to the case of
Administrateur, Kaap v ASIA Konstruksie (Edms) Bpk
1989 4 SA 458
(CPD). In this judgment, the application of
section 8
was carefully
and extensively considered by the learned judge, TEBBUTT, J. The
English law on the subject was also carefully scrutinised
and taken
into account. The learned judge pointed out, at 467H-I, that the
provisions of section 27 of the English "Arbitration
Act of
1950" were adopted in identical terms into section 8 of the
South African Arbitration Act ("section 8").
[108]
It appears from the judgment that the approach of the English courts
developed over the years from a stricter one to a more
generous one.
In Liherian Shipping Corporation v A King & Sons Ltd
[1967] 1 All
ER 934
(CA) Lord DENNING says the following at 93 8B:
"It
does appear in the past the Courts have been inclined to emphasise
the word 'undue', and to say that if a man does not
read the contract
and is a day or two late, it is a 'hardship'; but it is not an 'undue
hardship', because it is his own fault.
I cannot accept this narrow
interpretation of the statute. These time-limit clauses used to
operate most unjustly. Claimants used
to find their claims barred
when, by some oversight, they were only a day or two late. In order
to avoid that injustice, the Legislature
intervened so as to enable
the Courts to extend the time whenever 'in the circumstances of the
case undue hardship would otherwise
be caused'. 'Undue' there simply
means excessive. It means greater hardship than the circumstances
warrant. Even though a claimant
has been at fault himself, it is an
undue hardship on him if the consequences are out of proportion to
his fault."
See,
in general, the discussion on the subject by the learned judge at
467I-469J.
[109]
It appears from the judgment, at 469E-J, that the approach in
Liberian Shipping, also known as "the Pegasus case"
was
generally followed by the English courts and in The Jocelyne [1977] 2
LI LR 121 at 129 BRANDON, J proposed the following guidelines
to be
considered when confronted with an application in terms of section 8
(the English section 27):
"The
guidelines laid down in the majority judgments in the Pegasus case
can, in my view, be summarised as follows: (1) the
words 'undue
hardship' in section 27 should not he construed too narrowly;
(2)
undue hardship means excessive hardship and, where the hardship is
due to the fault of the claimant, it means hardship the consequences

of which are put out of proportion to such a fault;
(3)
in deciding whether to extend time or not, the Court should look at
all the relevant circumstances of the particular case;
(4)
in particular, the following matters should be considered:
(a)
the length of the delay;
(b)
the amount at stake;
(c)
whether the delay was due to the fault of the claimant or to
circumstances outside his control;
(d)
if it was due to the fault of the claimant, the degree of such fault;
(e)
whether the claimant was misled by the other party;
(f)
whether the other party has been prejudiced by the delay, and, if so,
the degree of such prejudice."
[110]
These guidelines were endorsed by TEBBUTT, J at 469I-J.
[Ill]
I add that the learned judge also concluded, in clear and unequivocal
terms, that the officials of the applicant were at fault
and to blame
for the delay in timeously
taking
the necessary steps in terms of that particular contract.
Nevertheless, the learned judge, referring to the Jocelyne case,
then
went on to say, at 473A-B:
"Al
is die versuim aan die skuld van die applikant te wyte moet die Hof
nogtans oorweeg, om vas te stel of daar oormatige ontbering
was, of
die gevolge van daardie skuld vir die applikant sodanig is dat dit
buite verhouding staan tot sy skuld."
In
the end, at 474B-E, the learned judge answered this question in the
affirmative and granted the application for relief in terms
of
section 8.
[112]
There was some debate before me, although not pursued with much force
by either side, involving the phrase "unless some
step to
commence arbitration proceedings is taken within a time fixed by the
agreement ..." found in the first portion of
section 8.
The
debate, if I understood it correctly, was whether or not the
applicants had taken such a step (as intended by section 8) to
bring
the dispute within the ambit of section 8 so as to render it
applicable to the present case.
On
behalf of the applicants T was referred to Murray & Roberts
Construction (Cape) (Pty) Ltd v Upington Municipality
1984 1 SA 571
(AD). This case did not involve section 8. The appellant had sought
an order declaring that a claim for damages by the respondent

municipality against the appellant contractor arising out of the
alleged breach by the appellant of an engineering contract concluded

between the two parties had become prescribed in terms of the
Prescription Act 68 of 1969
. The respondent, in opposing the grant of
the order, had alleged that the completion of the running of
prescription had been delayed
in terms of section 13(l)(f) of the Act
by the submission of the dispute between the parties to the engineer
for his decision in
terms of clause 69 of the engineering contract.
Clause 69 prescribed a procedure for the subjection of disputes to
arbitration
which required the dispute to be first submitted to the
engineer for decision. It was held that the procedure laid down in
clause
69 taken as a whole had to be considered one of arbitration
and that the dispute in that case had been subjected to arbitration

when it was submitted to the engineer. This stayed the running of
prescription until the arbitration proceedings came to an end
- see
the judgment at 582E-F.
On
behalf of the respondent I was referred to Wilmington (Pty) Ltd v
Short & McDonald (Pty) Ltd
1966 4 SA 33
(D&CLD) where it was
held that section 8 deals with a step which must be taken in terms of
an agreement to commence arbitration
proceedings after a dispute has
arisen between the parties to the agreement and not a step which must
be taken before it can be
said that a dispute has arisen which in
terms of the agreement may form the subject-matter of arbitration
proceedings. It was held
that section 8 accordingly does not entitle
the court to grant an extension of the time fixed by a clause in a
contract within
which the employer must notify the contractor of any
complaints or objections he may have to the final account delivered
by the
contractor. The following was said at 35A-C:
"Clause
22(h) of the conditions of contract fixes the time within which the
employer must advise the Contractor of any complaints
or objections
he may have to the final statement of account delivered by the
Contractor. It does not fix the time within which
some step must be
taken to commence arbitration proceedings in the event of the
employer advising the Contractor of any such complaints
or
objections. The giving of notice by the employer under that clause is
not a step which, in the technical sense, is taken to
commence
arbitration proceedings. It does not advance the proceedings a stage
nearer completion. It is merely an act done with
the object of
qualifying the employer to put forward his defence to the
Contractor's claim in the event of arbitration proceedings
being
instituted."
It
was not clear to me, on considering the heads of argument presented
on behalf of the respondent, how the circumstances in the
present
case can be said to bear any resemblance to those in Wilmington. In
any event, it appears that Wilmington is not in harmony
with Murray &
Roberts which appears to prescribe, although it did not deal with
section 8, that the arbitration process is
set in motion as soon as
the issue is submitted to the engineer.
[113]
In my view, the phrase "unless some step to commence arbitration
proceedings is taken ..." cannot be read in isolation.
One must
at least consider the whole of the first phrase of section 8 which
reads as follows:
"Where
an arbitration agreement to refer future disputes to arbitration
provides that any claim to which the agreement applies
shall be
barred unless some step to commence arbitration proceedings is taken
within a time fixed by the agreement..."
In
my view, clauses 45, 51, 60 and 61 of the GCC, prescribing dispute
resolution mechanisms leading to mediation and arbitration,
if
necessary, are clauses such as those intended by section 8 and
defined in the first portion thereof: clause 51(1 )(a) dictates
that
the contractor shall within twenty eight days after the event (giving
rise to a claim for an extension of time) deliver the
claim to the
engineer. If the contractor fails to do so, clause 51(4) prescribes
that he shall have no further right to make the
claim concerned. If
the contractor complied with these requirements the dispute gets
channeled towards mediation and perhaps arbitration
in terms of
clauses 60 and 61. I have held that, as far as the first claim is
concerned, the contractor fell foul of the mandatory
requirements of
clause 51(1) read with 51(4). These are clearly clauses as intended
by section 8. The same applies to clauses 60
and 61 where I have
found the applicants to be in default of delivering the written
notice within twenty one days as intended by
the provisions of clause
60(1).
[114]
Against this background, I consider the debate which was presented to
me with reference to Murray & Roberts and Wilmington,
supra, not
to be directly relevant to the circumstances of this particular case.
[115]
I turn briefly to the guidelines to be considered when deciding
whether or not section 8 relief ought to be granted as prescribed
in
the Jocelyne and adopted by TEBBUTT, J in Administrates, Kaap.
[116]
Each case must be treated on its own merits.
[117]
On a wide and more generous interpretation, 1 consider that undue
hardship would be caused to the applicants if the relief
is not
granted in terms of section 8. The amount involved is a substantial
one. According to my calculations it exceeds R5 million.
There would,
presumably, also be an interest factor to be taken into account. On a
general reading of the papers, I am of the view
that, if arbitration
proceedings were to take place, the applicants have a reasonable
prospect of success.
The
length of the delay, in respect of all the claims, was not inordinate
or excessive. In most instances the disagreement occurred
earlier in
2007 and notices of disagreement were delivered, generally speaking,
in June and/or in December of the same year. This
very complex and
lengthy application was launched in September 2008.
As
to the degree of fault on the part of the applicants, it has to be
said that there is some indication that the applicants may
have been
lulled into a false sense of security in believing, albeit
unreasonably so, that they did not have to strictly comply
with the
conditions of the GCC to avoid being time-barred in their prospective
claims. One of the factors which played a role in
this regard was the
proposal by the engineer to appoint and independent third party or
facilitator.
As
to the question of prejudice, it seems to me that the prejudice that
will be suffered by the applicants if the relief is not
granted, will
exceed any prejudice to be suffered by the respondent. It is common
cause that the road has been built and has been
in use for some time.
The respondent, therefore, is enjoying the benefit of the completed
Works. Moreover, I was told, as already
mentioned, that there are
still other arbitrations pending flowing from the same project. On
the other hand, the loss to be suffered
by the applicants, if the
relief is not granted will be substantial in monetary terms.
[
118] In all the circumstances, I have come to the conclusion that a
proper case has been made out for section 8 relief. As far
as the
first claim is concerned, it can perhaps be reasoned that, where I
have found that it has not been established that Phuphcli
ordered a
cessation of the works, there was no basis for the applicants to
apply in terms of clause 45 read with clause 51 of the
GCC for an
extension of time, so that claim 1 should be dismissed altogether.
Nevertheless, in the general scheme of things. I
have come to the
conclusion that justice will be better served if all the claims are
treated equally for purposes of the section
8 relief.
Costs
1119]
TEBBUTT, J, although he granted the relief in Administrates, Kaap,
had no hesitation in ordering the successful applicant
to pay the
costs (see the judgment at 474E-F).
[120]
In the present case, a great deal of the argument during the five day
hearing before me was absorbed by the submissions relating
to the
main point, in respect of which the applicants were unsuccessful.
Large portions of the heads of argument were also devoted
to the main
point. Moreover, the five claims were also dismissed, barring the
alternative relief sought in terms of section 8.
The section 8
arguments before me occupied a minute portion of the total time
devoted to this hearing.
Moreover,
an application for section 8 relief is in the form of a request for
an indulgence, as was also pointed out by TEBBUTT,
J. Generally, an
applicant is ordered to pay the costs under such circumstances. I am
also of the view that the opposition presented
by the respondent was
not unreasonable, particularly with regard to the main point and the
main arguments involving the five claims
where the respondent was
successful.
[121] For all these
reasons. I am of the view that the applicants ought to be ordered to
pay the costs of these proceedings.
The
order
[122]
The following order is made:
1.
In respect of the first, second, third, fourth and fifth claims it
is ordered in terms of
section 8
of the
Arbitration Act 25 of 1965
as
amended, that the date available to the applicants to give notice of
disagreement or to apply for an extension of time, whichever
is
applicable, in terms of
sections 45
,
51
and/or 60 of the GCC
alternatively to deliver a Dispute Notice as intended in clause 61(1
)(a) thereof is hereby extended to a
date being ten business days
calculated from the date of this order, and it is declared that upon
such notice having been given,
the further proceedings and
requirements of clauses 60 and 61 of the GCC shall continue to apply
on the basis that the said notice
of disagreement and/or application
for extension of time shall be deemed to have been given in due
course and in compliance with
all requirements of the Contract.
2.
The relief claimed in prayer 7 of the notice of motion is postponed
sine die.
3.
The applicants, jointly and severally, are ordered to pay the costs
of the respondent, which will include the cost of two counsel.
W
R C PRINSLOO
JUDGE
OF THE NORTH GAUTENG HIGH COURT
44632-2008
HEARD
ON: 16 MAY 2011 TO 23 MAY 2011
FOR
THE APPLICANTS: R J RAATH SC ASSISTED BY G P VAN RHYN
INSTRUCTED
BY: BOTHA BRESLER ATTORNEYS
FOR
THE RESPONDENT: D A PREIS SC ASSISTED BY S GOUWS
INSTRUCTED
BY: DE BRUIN OBERHOLZER ATTORNEYS