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[2021] ZASCA 94
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Sasol South Africa (Pty) Ltd v Murray & Roberts Limited (425/2020) [2021] ZASCA 94 (28 June 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
no: 425/2020
In
the matter between:
SASOL
SOUTH AFRICA (PTY)
LTD
Appellant
and
MURRAY
& ROBERTS
LIMITED
Respondent
Neutral
citation:
Sasol
South Africa (Pty) Ltd v Murray & Roberts Limited
(Case
no 425/2020)
[2021] ZASCA 94
(28 June 2021)
Coram:
SALDULKER and ZONDI JJA and LEDWABA, GORVEN and
POTTERILL AJJA
Heard
:
18 May 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ legal representatives
by email. It has been published
on the Supreme Court of Appeal website and released to SAFLII. The
date and time for hand-down
is deemed to be 10h00 on 28 June 2021.
Summary:
Construction contract – contract
providing for dispute resolution process – arbitration award
final and binding on the
parties until and unless set aside on review
– Project Manager refusing to implement some of the findings of
arbitrator –
dispute relating to Project Manager’s
refusal to implement arbitrator’s findings referred to
adjudicator for adjudication
- adjudicator applying the principles
established in arbitration award – a party to the contract not
entitled to ignore the
adjudicator’s decision simply on the
ground that it considers it to be invalid – appeal dismissed.
ORDER
On
appeal from
: Gauteng Division of the High
Court, Johannesburg (Weiner
J) sitting as court
of first instance:
1.
Save to the extent reflected in paragraph 2 hereof, the appeal is
dismissed with
costs including the reserved costs for the application
for leave to appeal and the costs of two counsel where so employed.
2.
The order of the court a quo is varied to read as follows:
‘
(a)
The respondent (Sasol) is ordered to make
immediate payment to the applicant (Murray & Roberts)
as follows:
1
R130 959.39 plus VAT;
2
R2 340 290.55 plus VAT;
3
R10 888 833.76 plus VAT;
4
R2 420 242.59 plus VAT;
5
R173 938.58 plus VAT;
6
R1 469 609.12 plus VAT;
7
R335 400.27 plus VAT;
8
R991 562.24 plus VAT;
9
R934 931.85 plus VAT; and
10
R102 842.50 plus VAT.
(b)
The respondent is ordered to pay
interest on the amounts set out in paragraphs 1 to 10 above
plus VAT
from 10 June 2019 (being the date from which the respondent was
in
mora
by having failed to make payment to the applicant in
accordance with the decision) to date of payment to be calculated on
a daily
basis at the interest rate equal to the prime lending rate of
ABSA Bank and compounded annually.’
JUDGMENT
Zondi
JA (Saldulker JA and Ledwaba, Gorven and Potterill AJJA concurring)
Introduction
[1]
On 15 March 2015 the appellant, Sasol South Africa (Pty) Ltd (Sasol)
as an employer
and the respondent, Murray & Roberts Limited
(Murray & Roberts) as a contractor, concluded a construction
contract in terms
of which Murray & Roberts would render certain
engineering and construction services to Sasol at its Secunda plant.
The contract
provided for the appointment of a project manager to
perform certain functions under the contract and the mechanism to
resolve
the disputes that might arise between the parties. The
dispute had to be notified and referred first to the adjudicator,
appointed
in terms of the adjudicator’s contract, for
adjudication, whose decision was enforceable as a contractual
obligation and
had to be complied with, pending the referral to
arbitration. A dissatisfied party could thereafter refer the dispute
to arbitration.
[2]
During the execution of the contract various disputes arose between
the parties. These
mainly related to the correctness of the
assessments made by a project manager in respect of payments claimed
by Murray & Roberts
in terms of the contract. Murray &
Roberts referred the disputed payments to the adjudicator. Ten
disputes related to the application
of what was termed PMC200. Murray
and Roberts presented for payment timesheets signed off by Sasol
daily which, it contended, bound
Sasol contractually to make those
payments. Sasol, in turn, took the view that PMC200 should be
applied. This would mean that the
hours worked were not dispositive
of the entitlement to payment. They were only a record and the
project manager was entitled to
deduct costs arising from a failure
to remove resources upon the request of the project manager pursuant
to PMC200. The adjudicator
rejected Murray & Roberts’
claims and confirmed the project manager’s assessments.
[3]
Dissatisfied with the outcome, Murray & Roberts referred the
disputed payments
(Disputes 1 and 2) to the arbitrator. No decision
was made by the arbitrator on the other 8 disputes arising from the
same issues
because they had not yet arisen when Disputes 1 and 2
were referred to him. The arbitrator found in favour of Murray &
Roberts.
He held that the timesheets were contractually binding and
that the project manager’s instruction (PMC200), pursuant to
which
the payments were disallowed, was not valid. Murray &
Roberts requested the project manager to implement the terms of the
award
by adjusting payments in relation to all 10 disputes. He
implemented the terms of the award for some of the disputes and
refused
to implement them for the rest, apparently on Sasol’s
instruction.
[4]
In consequence Murray & Roberts notified Dispute 16 requiring the
project manager
to give effect to the ruling on Disputes 1 and 2 in
relation to the balance of the 10 disputes. This was not a referral
of the
balance of the 10 disputes to the adjudicator, since he had
previously decided Disputes 1 to 3, 5 to 6 and 8 to 12 against Murray
and Roberts prior to the award of the arbitrator. The adjudicator
reviewed the project manager’s refusal to pay on the basis
of
the decision of the arbitrator that costs pursuant to PMC200 should
not be deducted and ordered Sasol to pay the disallowed
payments.
Murray & Roberts demanded of Sasol to comply with the
adjudicator’s award. Sasol refused. It contended that
the
decision of the adjudicator was invalid. More about this aspect
later.
[5]
Sasol’s refusal to comply with Murray & Roberts’
demand prompted Murray
& Roberts to approach the Gauteng Division
of the High Court, Johannesburg (high court), on 12 June 2019,
seeking to enforce
as a contractual obligation the decision made by
the adjudicator on 12 May 2019 on Dispute 16. Dispute 16 related to
assessment
number 38 issued by the project manager on 16 November
2018 in terms of which the project manager had disallowed certain
payments
claimed by Murray & Roberts. Sasol opposed the
application and sought to justify its refusal to comply with the
adjudicator’s
decision by contending that it was invalid. In
turn, Sasol launched a counter-application in which it sought an
order declaring
that the decisions previously made by the adjudicator
in respect of disputes 3 to 6 and 8 to 12 were enforceable as
contractual
obligations. The high court (Weiner J) upheld Murray &
Roberts’ claim and dismissed Sasol’s counter-application.
It granted Sasol leave to appeal to this Court.
Factual
background
[6]
The facts which gave rise to the dispute are the following. On 15
March 2015 Sasol
and Murray & Roberts concluded an NEC3
Engineering and Construction Contract for structural, mechanical,
electrical instrumentation
and piping work related to phase 1 of the
volatile organic compound abatement project at Sasol, Secunda. It was
a time charge contract
which meant that Sasol would bear the risk of
overruns.
[7]
The written agreement between the parties comprises various parts of
the NEC3 Engineering
and Construction Contract of June 2005 (with
amendments June 2006). As already stated the contract provided for
the nomination
of the project manager to perform certain prescribed
functions and duties. The contract also provided for a dispute
resolution
process and the parties opted for Option W1, which
contained the agreed dispute resolution provisions.
[8]
The agreed dispute resolution procedures comprise the following three
steps:
(a)
The notification of a dispute (clause W1.3(1));
(b)
The referral of the dispute to adjudication (clause W1.3(1); and
(c)
The referral of the dispute to the tribunal (agreed to be
arbitration) in the event
that a party is dissatisfied with the
adjudicator’s decision (clause W1.4(2)) or if the adjudicator
does not notify his decision
within the agreed time (clause W1.4(3)).
In terms of W1.3(10) the adjudicator’s decision is binding on
the parties unless
and until revised by the tribunal and is
enforceable as a matter of contractual obligation between the
parties. It is not an arbitral
award. The adjudicator’s
decision is final and binding if neither party has notified the other
within the times required
by the contract that he or she is
dissatisfied with a decision of the adjudicator and intends to refer
the matter to the tribunal.
Project
manager’s instruction
[9]
Due to budget constraints and time overruns, during February 2017,
Sasol became concerned
and decided to appoint a team to reassess the
amounts due to Murray & Roberts. On 1 March 2017 the project
manager by way of
a project manager’s communication, termed
PMC200, instructed Murray & Roberts to demobilise with immediate
effect failing
which, he would disallow the costs of the resources in
terms of clause 11(25) of the contract. The demobilisation concerned
involved
the removal from site of resources, namely manpower and
equipment. The reassessment of past payments and the disallowance of
the
resources referred to in PMC200 were reflected in the project
manager’s payment advices 27 and 28 for the months of March
and
April 2017 and they related to payment applications number 35 and 36.
The application of PMC200 resulted in an amount of about
R42 million
being deducted for those months.
Murray
& Roberts’ referral
[10]
Aggrieved by the deductions, Murray & Roberts, after giving
notices of both disputes on 19
May 2017 and 5 June 2017 respectively,
submitted the disputes to the adjudicator on 7 July 2017 relating to
payment applications
35 and 36 (Disputes 1 and 2). On 20 October 2017
the adjudicator issued a decision upholding the project manager’s
assessments.
Murray & Roberts thereafter referred Disputes 1 and
2 to the arbitrator.
[11]
While the arbitrator’s award in respect of Disputes 1 and 2 was
still pending the project
manager continued to assess the payment
applications submitted by Murray & Roberts in terms of PMC200,
and this resulted in
certain amounts being disallowed. Murray &
Roberts on each occasion disputed the disallowed payments and
referred them to the
adjudicator as Disputes 3, 5, 6, and 8 to 12. As
he had done for Disputes 1 and 2, the adjudicator upheld the project
manager’s
assessments and found in favour of Sasol.
[12]
On 9 October 2018 the arbitrator rendered an award in favour of
Murray & Roberts in relation
to Disputes 1 and 2. He determined
that the PMC200 was not contractually binding and that the timesheets
submitted by Murray &
Roberts for payment, were contractually
binding. Sasol subsequently brought an application for the review and
the setting aside
of the arbitration award but its application was
dismissed by the high court and Sasol’s petition for leave to
appeal was
also dismissed by this Court.
Referral
of dispute 16
[13]
Armed with the arbitrator’s award, Murray & Roberts
approached the project manager
and requested him to give effect to
the legal and factual position between the parties resulting from the
award by revising his
assessment of the amounts due in respect of
Disputes 1 and 2 and his assessments contained in a number of other
payment certificates.
On 23 November 2018 the project manager issued
the revised assessment. In his assessment the project manager, on the
instruction
of Sasol, disregarded certain portions of the award which
Sasol contended were invalid and had undertaken to take them on
review.
Those portions related to the arbitrator’s findings
that the timesheets were contractually binding and PMC200 was not
valid.
Murray & Roberts was dissatisfied with the assessment and
on 16 January 2019 it referred the dispute as Dispute 16 to the
adjudicator.
[14]
Before the adjudicator, Sasol had contended that Murray & Roberts
had sought the adjudicator
to revisit and reconsider his earlier
decisions and that the dispute relating to payment advice 38 was not
a new dispute, but was
an attempt by it to again refer the disputes
relating to payment advices 27 to 37 before the adjudicator. Sasol
submitted that
the adjudicator did not have jurisdiction and was
expressly precluded from reconsidering those parts of the disputes in
respect
of which the arbitrator had already issued an award.
[15]
The adjudicator rejected Sasol’s jurisdictional challenges and
proceeded to consider the
dispute. His reasoning is set out as
follows in paras 32 and 33 of his decision:
‘
[.
. .] I cannot see any reason why, if an arbitrator gives an award
which overturns an adjudicator’s decision, other decisions
of
the adjudicator which were made on the same principle as the
overturned decision, cannot be changed to conform with the
arbitrator’s
award, but can only be overturned in a further
arbitration. Apart from that fact that that will put the Contractor
to unnecessary
expense, it also files in the face of the underlying
practicalities and principles of the contract.
I
accordingly find that, to the extent that the arbitrator’s
award establishes principles that are applicable to the other
disputes, I may revise any of my prior decisions based on new
information.’
[16]
As already stated when Murray & Roberts on 16 May 2019 demanded
that Sasol comply with the
terms of the adjudicator’s decision
it refused to do so. Hence Murray & Roberts brought the
application in the high court
seeking to enforce the decision of the
adjudicator on Dispute 16. Sasol opposed the application and
justified its refusal
to comply with the adjudicator’s decision
by contending that it was of no force or effect in that, so it
argued, in conducting
the adjudication and in issuing his decision,
the adjudicator had acted outside of his powers.
[17]
In substantiation of its defence Sasol asserted, first, that the
adjudicator decided a dispute
which was the same or substantially the
same as the ones that he had previously decided which, it argued, was
something that he
was not permitted to do under the adjudicator’s
contract; second, that he had received information after the time
allowed
for him to do so had expired; and third, that he had given
his decision outside the time period allowed for him to do so.
[18]
In challenging the merits of the decision, Sasol contended that the
adjudicator had failed to
consider the dispute before him, in
particular the timesheets which formed basis of Murray & Roberts’
claims and the
effect of such failure, it argued, prevented it from
making submissions on those timesheets. In
Carillion
Construction v Devonport Royal Dockyard Ltd
[220] EWCA Civ 1358
the court at para 52 endorsed the correctness of the principle that
‘where an adjudicator has acted in
excess of his jurisdiction
or in serious breach of the rules of natural justice, the court will
not enforce his decision.’
[19]
The first point taken by Sasol was that the adjudicator erred in
holding that the arbitration
award applied to all other payment
assessments or his previous decisions. It argued that the arbitration
award applied only to
the disputes that were referred to arbitration
and it did not apply to all other payment assessments disputes. This
was because,
so proceeded the argument, the hierarchy of dispute
resolution processes in the contract required that all steps should
be followed
before the dispute was referred to the arbitrator. Sasol
argued that to hold that the arbitrator’s award established a
principle
to be applied to all other payment assessments would render
dispute resolution processes meaningless as this would mean that the
arbitrator’s award was to be applied to all previous
assessments and decisions, even if no notice of dispute had been
given
or if no referral to the adjudicator had been made in relation
to a particular project manager’s assessment. Relying on
Graham
v Park Mews Body Corporate and Another
[2011] ZAWCHC 370
;
2012
(1) SA 355
(WCC);
[2012] (1) All SA 187
Sasol submitted that the fact
that the arbitrator came to a particular finding in relation to
PMC200 in relation to Disputes 1
and 2 was inadmissible in another
arbitration about any other dispute.
[20]
In
Park Mews
the court at para 61 referred to the judgment in
Land Securities plc v Westminster City Council
[1993] 4 All ER
124
, in which Hoffmann J held as follows at 127:
‘
In
principle the judgment, verdict or award of another tribunal is not
admissible evidence to prove a fact in issue or a fact relevant
to
the issue in other proceedings between different parties. The leading
authority for that proposition is Hollington v F Hewthorn
& Co
Ltd
[1943]
2 All ER 35
,
[1943] KB 587
,
in
which a criminal conviction for careless driving was held
inadmissible as evidence of negligence in a subsequent civil action.
There has been criticism of this decision and important exceptions
have since been created by statute, notably in the Civil Evidence
Act
1968, but none of them apply here.
In
Hunter v Chief Constable of West Midlands
[1981]
3 All ER 727
at
734
,
[1982]
AC 529
at
542, Lord Diplock said that Hollington’s case was ‘generally
considered to have been wrongly decided’. He did
not elaborate
on this remark, which in any case was not necessary for the decision.
In Savings and Investment Bank Ltd v Gasco
Investments (Netherlands)
BV
[1984]
1 All ER 296
at 303,
[1984] 1 WLR 271
at
280 Peter Gibson J said that Hollington’s case still
represented the common law. Still more recently the principle has
been applied by the Privy Council to exclude evidence of the
conviction of a principal offender at the trial of an accessory (see
Hui Chi-ming v R
[1991]
3 All ER 897
,
[1991] 1 AC 34).
Mr
Barnes QC for the plaintiff did not seek to challenge Hollington’s
case as a statement of the common law, but he said that
it is based
upon the rule which excludes opinion evidence. Goddard LJ, who gave
the judgment of the court said (
[1943]
2 All ER 35
at
40,
[1943]
KB 587
at
595):
“
It
frequently happens that a bystander has a complete and full view of
an accident; it is beyond question that while he may inform
the court
of everything that he saw, he may not express any opinion on whether
either or both of the parties were negligent. The
reason commonly
assigned is that this is the precise question the court has to
decide; but in truth it is because his opinion is
not relevant. Any
fact that he can prove is relevant; but his opinion is not. The
well-recognised exception in the case of scientific
or expert
witnesses depends on considerations which, for present purposes, are
immaterial. So, on the trial of the issue in the
civil court, the
opinion of the criminal court is equally irrelevant.”.’
[21]
I disagree with Sasol’s submissions. In the arbitration award,
the tribunal determined
certain principles which the project manager
was contractually obliged to apply in terms of clauses 50 and 51.3
when assessing
payment advice 38 (PA 38), but instead the project
manager decided to do so selectively. As correctly submitted by
Murray &
Roberts, in Dispute 16 the adjudicator merely ‘stepped
into the shoes’ of the project manager and reviewed and revised
the project manager’s failure by finding that he should have
applied the principles determined by the tribunal and that,
if he had
done so, he would have assessed PA 38 in the amounts set out in the
adjudicator’s decision.
[22]
The second point taken by Sasol was that in terms of clause 2.1 of
the adjudicator’s contract
‘the adjudicator does not
decide any dispute that is the same or substantially the same as one
that he or his predecessor
has previously decided.’ It argued
that the disputes in respect of the previous assessments of the
project manager had been
decided by the adjudicator. Those
assessments had, so proceeded the argument, become adjudicator’s
decisions and were contractually
binding on the parties. The project
manager was no longer entitled to change them.
[23]
The interpretation of clause 2.1 contended for by Sasol is incorrect.
In the first place, Dispute
16 related to whether the project manager
was correct to withhold payment in the face of the arbitrator’s
finding that he
had been incorrect to do so as a result of PMC200. In
terms of the contract, the project manager was obliged to consider
and to
take into account contractual entitlements determined in
favour of Murray & Roberts in the arbitrator’s award. This
obligation
was imposed on him by clause 50.5 and 51.3 of the
construction contract. Clause 50.5 provides the following:
‘
The
Project Manager corrects any wrongly assessed amount due in a later
payment certificate.’
Clause
51.3 states:
‘
If
an amount due is corrected in a later certificate either
·
by
the Project Manager in relation to a mistake or a compensation event
or
·
following
a decision of the Adjudicator or the tribunal,
interest
on the correcting amount is paid. Interest is assessed from the date
when the incorrect amount was certified until the
date when the
correcting amount is certified and is included in the assessment
which includes the correcting amount.
’
[24]
In this matter the project manager was requested to make an
assessment in compliance with the
terms of the award. In the process
of making an assessment and on the instruction of Sasol he refused to
comply with certain portions
of the award. Upon a referral to him of
the project manager’s refusal to comply with the terms of the
arbitrator’s
award, the adjudicator had the power in terms of
clause W1.3(5) of the contract to ‘review and revise any action
or inaction
of the Project Manager . . . related to the dispute . .
.’. When the adjudicator acts under this clause, he does not
reconsider
a prior decision which he himself had made, but he simply
does what the projector manager was supposed to have done in terms of
the contract in accordance with the principles established in the
arbitration award. The adjudicator was entitled to act in
circumstances
where the project manager had, on Sasol’s version
‘declined to apply the part of the arbitration award that is
subject
of the review application’. It was thus never in
dispute that the project manager was obliged to apply the award and
Dispute
16 was only about the manner in which the project manager
applied it. For these reasons Sasol’s contention must fail.
[25]
A third ground of Sasol’s attack on the validity of the
adjudicator’s decision, was
that the adjudicator failed to
notify the dispute timeously, that is to say when he issued his
decision, his jurisdiction had ceased.
Sasol asserted that the
adjudicator should have issued his decision on 12 March 2019, and not
on 12 May 2019. Sasol contended that
when the adjudicator issued his
decision he no longer had jurisdiction to do so, his jurisdiction
having, so Sasol argued, ceased
on 12 March 2019. In elaborating on
its defence Sasol stated that Murray & Roberts referred Dispute
16 to adjudication on 16
January 2019 and that in terms of the
contract the four-week period provided for in clause W1.3(8) for
receiving information terminated
on 12 February 2019 and the further
four-week period for the adjudicator’s decision on 12 March
2019 as the parties had not
agreed to extend it.
[26]
Sasol relied heavily on the judgment of Twala J in
Group Five
Construction (Pty) Ltd v Transnet SOC Limited
[2019] ZAGPJHC 11,
para 21 in which it was held that, without the consent of the
parties, the adjudicator cannot extend the time
period beyond the
four-week prescribed period.
[27]
Explaining the processes that occurred between the date of receiving
the referral, up to the
time of giving his decision, the adjudicator
stated that from 16 January to 21 February 2019, the
parties submitted e-mails
and written submissions. On 27 February
2019, within the four-week period from the date of submission of
Sasol’s submissions,
he informed Sasol and Murray & Roberts
that he would allow Murray & Roberts to submit further
information, as requested
by Mr Fourie of Sasol in his e-mails, dated
19 February 2019 and 21 February 2019 to ensure that any decision he
arrived at, was
based on correct facts. He allowed Sasol to reply to
anything new in those submissions. In addition to what was contained
in the
e-mails, the adjudicator requested further information from
both parties.
[28]
The adjudicator also invited the parties to motivate if they wanted
to submit oral argument.
On 5 March 2019, Murray & Roberts
submitted its further information. Sasol responded to Murray &
Roberts’ further
information and supplied the information
requested by the adjudicator on 14 March 2019. An oral hearing was
held on 16 April 2019
and Murray & Roberts and Sasol submitted
written heads.
[29]
In view of the considerable reliance placed on the
Group Five
decision by Sasol, it would be appropriate to analyse that decision
in a little detail. The facts are adequately set out in the
headnote
as follows:
‘
In
January 2011, the applicant and respondent entered into a written
engineering and construction contract (“the ECC”).
A
dispute arose pertaining to the respondent’s issuance of a
final payment certificate. After the applicant notified the
respondent of the dispute, in April 2018, the matter was referred for
arbitration and in September 2018 the arbitrator rendered
his award.
The present application was for an order directing the respondent to
give effect to the decision of the arbitrator’s
award.
On
19 July 2018, the arbitrator requested further information from the
applicant. He then requested that the parties allow him an
additional
seven days to finalise his request for further information, after
which he would be in a position to finalise his award
within 4 weeks.
The respondent refused to grant the arbitrator the extension
requested. The arbitrator continued to communicate
and received
certain information from the applicant without any further
contribution and participation from the respondent and
published his
decision on 18 September 2018.’
[30]
When Group Five sought to enforce the adjudicator’s decision,
Transnet opposed it and contended
that the decision was invalid. It
submitted that the adjudicator failed to publish his decision within
four weeks which period
was from 29 June 2018 to 29 July 2018. It
contended that the adjudicator should not have proceeded with the
adjudication of the
matter without the consent of both parties since
it refused to give consent on 31 July 2018. It submitted that since
it had, by
filing a notice to refer the dispute to arbitration on 31
July 2018, brought the adjudication process to a stop and
disempowered
the adjudicator from continuing with the adjudication.
The court upheld Transnet’s submissions and held at para 21
that:
‘
In
terms of clauses W1.3.3 and W1.3.8 of the agreement between the
parties the time period for the publication of the adjudicator’s
decision is four weeks from the date when he receives the last
submissions from the parties, unless the parties agree to grant
him
an extension of time. These clauses do not state what should happen
when a party does not grant the consent to extend the period.
I am of
the respectful view that the intention of the parties to make the
requirement of consent from the parties to afford the
adjudicator
more time is meant to give the parties control over the process of
the adjudication. It is meant to give the parties
some power to deal,
should they find themselves in that situation, with a recalcitrant
adjudicator. The ineluctable conclusion
is therefore that, absent
such consent to the extension of time, the adjudicator should publish
his report on due date failing
which his mandate is terminated. I am
therefore unable to disagree with Counsel for the respondent that,
from the plain wording
of these clauses, the adjudicator is not
competent to proceed and act beyond the time period set by the
agreement if he is unable
to secure the necessary consent from both
parties. No other meaning can be ascribed to these provisions for
they are not at all
ambiguous.’
[31]
Returning to the facts of the present matter, in my view, when the
adjudicator considered the
dispute, he was obliged to gather
sufficient facts to enable him to make a decision and to do so within
the framework provided
for in the construction contract and the
adjudicator’s contract.
[32]
Clause W1.3(3) of the construction contract states the following:
‘
The
Party referring the dispute to the Adjudicator includes with his
referral information to be considered by the Adjudicator. Any
more
information from a Party to be considered by the Adjudicator is
provided within four weeks of the referral. The period may
be
extended if the Adjudicator and the Parties agree’.
[33]
It was submitted by Murray & Roberts that this clause allows both
parties to provide further
information or to reply to further
information until the last day of the four-week period. Only after
that day, would the adjudicator
be in a final position to consider
whether, based on the information already received, additional
information would ‘. .
.
enable him to carry out his work
.
. .’. I agree with this submission.
[34]
CIause W1.3(5), third and fourth bullet points of the conditions of
contract states:
‘
The
Adjudicator may…
·
instruct
a Party to provide further information related to the dispute within
a stated time and
·
instruct
a Party to take any other action which he considers necessary to
reach his decision and to do so within a stated time
.
The
provision of ‘
further information
’ necessarily
applies to information after the four-week period in clause W1.3(3)
and places no limitation on the extent of
the ‘
stated time’
.
[35]
CIause W1.3(8) provides as follows:
‘
The
Adjudicator decides the dispute and notifies the Parties and the
Project Manager of his decision and his reasons within four
weeks of
the end of the period for receiving information. The four-week period
may be extended if the Parties agree
.’
In
the context of the subsequent agreement in the adjudicator’s
contract, ‘. . .
the end of the period for receiving
information
. . .’ clearly adds an additional two weeks
after the request for additional information. It undermines Sasol’s
argument
that the four-week period in clause W1.3(3) had not been
extended by agreement. The parties expressly extended the period by
agreeing
with the adjudicator that he could ask for additional
information to be provided to him within two weeks.
[36]
Additional clause 2.5 of the adjudicator’s contract provides:
‘
The
Adjudicator may ask for any additional information from the Parties
to enable him to carry out his work. The Parties provide
the
additional information within two weeks of the Adjudicator’s
request
.’
[37]
It was submitted by Murray & Roberts that the phrase ‘. . .
any additional information
. . .’ logically refers to
information over and above that which the adjudicator received in the
four-week period provided
for in clause W1.3(3) and which the
adjudicator started to consider after that period, resulting in his
decision that additional
information would ‘
enable him to
carry out his work
’. I agree with Murray & Roberts’
submission.
[38]
CIause 1.7 of the adjudicator’s contract regulates the position
where there is a conflict
between the provision of the adjudicator’s
contract and the construction contract. It provides:
‘
If
a conflict arises between this
[adjudicator’s]
contract
and the contract between the Parties then this
[adjudicator’s]
contract
prevails
.’
[39]
The adjudicator’s contract allows an entitlement to more
information and more time than
that provided for in the ‘
contract
between the parties
’ and to the extent that there is a
conflict between the adjudicator’s contract and the
construction contract, the adjudicator’s
contract must prevail.
[40]
From these events, it must be accepted that the date of hearing
constituted ‘
the end of the period for receiving
information
’. The adjudicator was therefore obliged in
terms of clause W1.3(8) to deliver his decision and his reasons
within four weeks
of the end of the period for receiving information
(being 16 April 2019), which he did on 12 May 2019. The
Group Five
case upon which Sasol relied, is distinguishable on the facts from
the present case in that in that case the court did not consider
the
implication of additional clause 2.5 of the adjudicator’s
contract which gives the adjudicator the right to request and
to
receive additional information, after which the four-week period for
his decision commences. The contention that the decision
is invalid
because of the adjudicator’s failure to deliver his decision
within four weeks of the end of the period for receiving
information,
must therefore be rejected.
[41]
In the alternative, Sasol argued that the adjudicator’s
jurisdiction ceased when Sasol
issued a notice of dissatisfaction in
terms of clause W1.4(3) of the construction contract. In terms of
this clause ‘if the
adjudicator does not notify his decision
within the time provided by this contract, a party may notify the
other party that he
intends to refer the dispute to the tribunal. A
party may not refer a dispute to the tribunal unless this
notification is given
within four weeks of the date by which the
Adjudicator should have notified his decision’.
[42]
On 26 March 2019 Sasol gave its first notice of dissatisfaction in
terms of W1.4(3). This notice
was given on the basis that the
adjudicator had failed to give his decision within four weeks from
the end of the period for receiving
information. In para 2 of the
notice Sasol stated:
‘
7.
The Employer accordingly notifies the Contractor, which this
notification constitutes, that the Employer intends to refer the
matter (Dispute 16) to the tribunal due to the fact that the
Adjudicator has not issued his decision in respect of Dispute 16
within the period stated in the contract.’
[43]
Sasol’s notification was premature because at the time that it
was issued the period within
which the adjudicator was required to
deliver his decision, had not expired. He was entitled to receive
from the parties, and to
request the parties to provide, additional
information either in terms of clause W1.3 (8) of the construction
contract or of the
additional clause 2.5 of the adjudicator’s
contract.
[44]
In any event the adjudication proceeded until it reached its finality
despite Sasol having given
notification of referral. On 16 April 2019
both parties made oral submissions after which the adjudicator
undertook to deliver
his decision within two weeks of 16 April 2019.
This period was not the period stipulated in the contract but was the
period determined
by the adjudicator himself and within which he had
expected to make the decision available to the parties. This did not
happen.
[45]
When the adjudicator failed to deliver his decision within the period
stipulated by him, that
is, within two weeks of 16 April 2019, Sasol,
on 7 May 2019, gave its second notice of dissatisfaction. Sasol
contended that the
adjudicator was not entitled to extend this period
for him to provide his decision. It gave notice of its intention to
refer the
dispute to the tribunal. In para 6 of the notice Sasol
stated:
‘
6.
Accordingly and insofar as it may be argued that the Employer’s
notification in terms of Clause W 1.4(3) as issued on the
26
th
of March 2019 was invalid and the Adjudicator was entitled to
disregard it, which is denied by the Employer,
the
Employer hereby gives notice in terms of Clause W1.4(3) of its
intention to refer the dispute to the tribunal as a result of
the
Adjudicator not having provided his decision within 2 weeks of the
16
th
of April 2019, the period as extended by him
.’
Again
Sasol’s notification was premature for the simple reason that
in terms of W1.3(8) the adjudicator had to make his decision
within
four weeks of the end of the period for receiving information. The
parties made submissions on 16 April 2019, which meant
that the
adjudicator had to make his decision within four weeks of 16 April
2019.
[46]
On 12 May 2019 the adjudicator issued his decision. Thereafter on 28
May 2019 Sasol served a
third notice on the adjudicator of its
intention to refer the dispute to the tribunal. Sasol did not refer
the dispute to the tribunal
and neither did it take the decision to
the tribunal for it to be set aside. It therefore remained binding
and was enforceable
as a matter of contractual obligation between the
parties.
[47]
Lastly, Sasol contended that Murray & Roberts’ failure to
place before the adjudicator
timesheets on which its claims were
based, deprived it of the opportunity to consider them in addressing
the adjudicator. The adjudicator,
argued Sasol, failed to afford it a
right to be heard before he took a decision on timesheets. And that
in doing so, he breached
the
audi alteram partem
principle.
This contention must fail. Sasol did not squarely raise this
point before the adjudicator. Sasol’s refusal
to pay Murray &
Roberts was not based on the ground that the timesheets were
incorrect, but rather based on the project manager’s
reliance
on clause 11.2(25) in disallowing the costs of resources. The
calculation and quantum of the amounts reflected in the
timesheets
were never in dispute between the parties.
[48]
In the result the appeal must fail. But the order of the high court
must be amended in the light
of the fact that some of the amounts
Sasol was ordered to pay had since been paid and the parties provided
this Court with the
draft order reflecting what the true position
should be in relation to the amounts still to be paid by Sasol.
[49]
In the result an order in the following terms is made:
1.
Save to the extent reflected in paragraph 2 hereof, the appeal is
dismissed with
costs including the reserved costs for the application
for leave to appeal and the costs of two counsel where so employed.
2.
The order of the court a quo is varied to read as follows:
‘
(a)
The respondent (Sasol) is ordered to make immediate payment to the
applicant (Murray & Roberts)
as follows:
1
R130 959.39 plus VAT;
2
R2 340 290.55 plus VAT;
3
R10 888 833.76 plus VAT;
4
R2 420 242.59 plus VAT;
5
R173 938.58 plus VAT;
6
R1 469 609.12 plus VAT;
7
R335 400.27 plus VAT;
8
R991 562.24 plus VAT;
9
R934 931.85 plus VAT; and
10
R102 842.50 plus VAT.
(b)
The respondent is ordered to pay interest on the amounts set out in
paragraphs 1 to 10 above
plus VAT from 10 June 2019 (being the date
from which the respondent was
in mora
by having failed to make
payment to the applicant in accordance with the decision) to date of
payment to be calculated on a daily
basis at the interest rate equal
to the prime lending rate of ABSA Bank and compounded annually.’
D
H ZONDI
JUDGE OF
APPEAL
APPEARANCES:
For
appellant:
P H J van Vuuren SC (with him H M Viljoen)
Instructed
by:
Cliffe Dekker Hofmeyr, Sandton
Phatshoane
Henney Attorneys, Bloemfontein
For
respondent:
L J
van Tonder SC
Instructed
by:
Tiefenthaler Attorneys Inc, Sandton
Honey
Attorneys Inc, Bloemfontein