About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2021
>>
[2021] ZAKZPHC 50
|
|
Umgungundlovu District Municipality v MLO, New Boss and Zamisanani JV and Another (5831/2020P) [2021] ZAKZPHC 50 (11 August 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 5831/2020P
In
the matter between:
UMGUNGUNDLOVU
DISTRICT MUNICIPALITY APPLICANT
and
MLO,
NEW BOSS & ZAMISANANI JV FIRST
RESPONDENT
BRYAN
WESTCOTT SECOND
RESPONDENT
ORDER
The
following order is issued:
1.
It
is declared that the adjudication process as set out in clause 10 of
the General Conditions of Contract for Construction Works
(2010) 2 ed
edition (the GCC 2010 contract), as amended by the Contract Data, in
respect of the contract for the upgrading of the
Nkanyezini Water
Supply Scheme, is unenforceable due to non-compliance with clause
10.5.1 of the GCC 2010 contract, and any proceedings
conducted in
terms thereof, shall be null and void.
2.
The
first respondent is directed to pay the costs of the application,
including those costs reserved on 8 September 2020.
3.
The
counter-application brought by the first respondent is dismissed with
costs.
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email. The date for the
handing down of the judgment is deemed to be 11 August 2021.
JUDGMENT
Delivered
electronically on 11 August 2021
Bezuidenhout
AJ
[1]
This
matter was initially brought as an urgent application by the
applicant, the Umgungundlovu District Municipality, on 8 September
2020 against MLO, New Boss and Zamisanani JV as the first respondent,
and Mr Bryan Westcott as the second respondent. In part A
of the
notice of motion, the applicant sought an order that pending the
determination of the declaratory relief in part B of the
application,
the respondents are interdicted and prohibited from participating or
proceeding with any adjudication proceedings
conducted in terms of
clause 10 the General Conditions of Contract for Construction Works
(2010) 2 ed (the GCC 2010 contract),
as amended by the Contract Data,
in respect of the contract for the upgrading of the Nkanyezini Water
Supply Scheme, without the
participation of the applicant.
[2]
On
the same day, Balton J granted an order which inter alia contained at
para 5 a recordal in terms of which the first respondent
undertook
‘to suspend pursuing the adjudication forming the subject
matter of the present proceedings’, pending the
final outcome
of the application.
[3]
In
part B of the notice of motion, the applicant seeks an order in the
following terms:
‘
1.
It is declared that the adjudication process as set out in clause 10
of the GCC 2010 2
nd
edition, as amended by the Contract Data in respect of the contract
for the upgrading of the Nkanyezini Water Supply Scheme, is
invalid
alternatively unenforceable, and that any proceedings conducted in
terms thereof shall be null and void.’
It
also seeks costs from the first respondent and only from the second
respondent if he opposes the application, and the usual order
for
‘further and/or alternative relief’.
[4]
The
first respondent has filed a counter-application in which it seeks
the following relief:
‘
1.
To declare that the appointment of Bryan Westcott as adjudicator is
valid and binding and that disputes
raised are to be adjudicated
before him;
2.
In the alternative to prayer 1 above, to provide for the parties to
appoint a member of the Adjudication
Board within 1 week from the
date of the order;
3.
In the further alternative to prayers 1 and 2 above, that the dispute
is referred to arbitration;
4.
The applicant is to pay the costs;
5.
Further and/or alternative relief.'
The
second respondent has played no role in these proceedings.
[5]
The
first respondent is a joint venture or a partnership with whom the
applicant concluded a written contract for the upgrading
of the
Nkanyezini Water Supply Scheme on 17 October 2016. The contract price
was R96 916 329. The contract incorporated
the general
terms and conditions as set out in the GCC 2010 contract with certain
amendments, referred to as contract specific
data, which were set out
in the Contract Data.
[6]
A
dispute has arisen regarding the validity and interpretation of the
dispute resolution clauses of the GCC 2010 contract, which
are found
in clause 10 of the GCC 2010 contract.
[7]
Clause
10.1 sets out the provisions applicable when the contractor, the
first respondent, needs to claim for an extension of time
for the
completion of the permanent works.
[8]
Clause
10.2 deals with dissatisfaction claims. In terms of clause 10.2.1:
‘
In
respect of any matter arising out of or in connection with the
Contract, which is not required to be dealt with in terms of Clause
10.1, the Contractor or the Employer shall have the right to deliver
a written dissatisfaction claim to the Engineer. This written
claim
shall be supported by particulars and substantiated.’
Clause
10.2.3 grants the engineer 28 days within which to give his written
and ‘adequately reasoned ruling’ on the dissatisfaction
claim.
[9]
Clause
10.3 deals with dispute notices in terms of which the contractor or
the employer (the applicant) may deliver a written notice
to the
other party, regarding any dispute arising out of the contract,
provided that the dispute arises from an unresolved claim.
The
dispute notice ‘shall clearly state the nature of the dispute
and the extent of the redress sought’. The dispute
notice has
to be delivered within 28 days of the event giving rise to the
dispute. Clause 10.3.2 provides that if either party
gives the
requisite notice, the dispute shall be referred ‘immediately’
for adjudication, unless amicable settlement
is contemplated.
[10]
Clause
10.4 provides the parties with the option to agree to settle any
claim or dispute amicably with the help of an impartial
third party,
failing which, adjudication would follow.
[11]
Clause
10.5 deals with adjudication. Clauses 10.5.1 to 10.5.3 are relevant
to the present matter and read as follows:
‘
10.5.1 If
the Contract Data provides for dispute resolution by a standing
Adjudication Board, the Employer, together
with the Contractor,
shall, within 56 days of the Commencement Date, appoint the member or
members of the Adjudication Board.
10.5.2 If
the Contract Data does not provide for dispute resolution by a
standing Adjudication Board, the dispute
shall be referred to ad-hoc
adjudication.
10.5.3 The
Adjudication Board shall consist of the number of the members stated
in the Contract Data. It
shall be effected and its proceedings
conducted in accordance with the Adjudication Board Rules.’
[12]
In
terms of clause 10.6, in the event of a disagreement with the
adjudication board’s decision, ‘either party shall
have
the right to disagree with [such] decision . . . and refer the matter
to arbitration or to court proceedings, whichever is
applicable in
terms of the Contract’. A party can however not dispute the
validity or correctness of the decision before
28 days or after 56
days from receipt of the decision, and the decision remained binding
on both parties unless revised by an arbitration
award or court
judgment.
[13]
Clause
10.7 deals with arbitration, with clause 10.7.1 being of particular
importance. It reads as follows:
‘
If
the Contract Data provides for determination of disputes by
arbitration and a dispute is still unresolved, the matter shall be
referred to a single arbitrator. Any such reference shall be deemed
to be a submission to the arbitration of a single arbitrator
in terms
of the Arbitration Act (Act No. 42 of 1965, as amended), or any
legislation passed in substitution therefor.’
[14]
In
terms of clause 10.8, a dispute shall be determined by court
proceedings if the Contract Data does not provide for the settlement
of disputes by arbitration and if a dispute is still unresolved.
[15]
Clause
10.9.1 deals with the appointment of the dispute resolving person and
reads as follows:
‘
The
dispute resolving person or persons shall be appointed by agreement
of the parties. Failing agreement within seven days of either
party
delivering a request in writing to agree to such appointment, the
person or persons shall be nominated, on the application
of either
party, by the President or his nominee of the South African
Institution of Civil Engineering.’
[16]
The
GCC 2010 contract also contains a section referred to as the
‘Adjudication Board Rules’. Rule 1 contains various
definitions. In terms of these definitions, standing adjudication is
defined as relating to ‘an Adjudication Board which
is
appointed at the outset and for the duration of the Contract’.
Rule 2, which deals with the scope of the rules, refers
to standing
adjudication as ‘a flexible procedure available to parties from
the outset of the Contract for its full duration,
to assist them in
reducing conflict, preventing claims becoming disputes and resolving
any dispute that may arise’.
[17]
Rule
3 of the Adjudication Board Rules deals with the appointment and
establishment of the Adjudication Board. Rule 3.1 indicates
that the
standing Adjudication Board ‘shall be established in accordance
with GCC 2010, Clauses 10.5.1 and 10.9.1’.
In terms of rule
3.3, in respect of a standing Adjudication Board, ‘the parties
shall at the outset of the Contract, jointly
select either one or
three persons, as allowed for in the Contract Data, from the panel of
standing adjudication members of SAICE’.
[18]
Rule
4 deals with ad hoc adjudication procedure, whilst rule 5 deals with
the standing adjudication procedure. Rule 5.1 deals with
meetings and
site visits for standing adjudication, the purpose being ‘to
avert claims and dissatisfactions, to observe and
stay informed with
regard to the progress of the Works’. It also deals with the
set up of regular site visits at intervals
of between 75 and 140
days.
[19]
Rule
5.2 deals with the duties of the contractor and employer for standing
adjudication, ensuring that the adjudication board member
or members
is or are supplied with contract documents ‘at the outset of
the proceedings’.
[20]
Rule
6 deals with the conditions of conduct during adjudication. In terms
of rule 6.3, the Adjudication Board ‘shall not be
required to
observe any rule of evidence, procedure or otherwise, of any court,
except the rules of natural justice. . .’.
In terms of rule
6.4, the Adjudication Board has the power to inter alia obtain legal
or other technical advice, having first notified
the parties of its
intention to do so.
[21]
Rule
8 deals with representation, in terms of which ‘the Parties may
be represented and/or assisted by persons of their choice,
provided
that formal legal representation of one party has the written consent
of the other party’.
[22]
The
document referred to as the Contract Data, contains numerous clauses
of the GCC 2010 contract, referred to as ‘contract
specific
data’ which are listed as compulsory data. Clause 10.5.3 is
listed, with the heading ‘Adjudication’
and reads: ‘The
number of Adjudication Board members to be appointed is one (1)’.
Clause 10.7.1 is also listed with
the heading ‘Arbitration’
and reads: ‘The determination of disputes shall be by
arbitration’. Clause 10.5.1
is listed right at the end, also
with the heading ‘Adjudication’ and reads: ‘Dispute
resolution shall be by standing
adjudication.’
[23]
I
do not deem it necessary to deal with the facts of the matter in much
detail save to say that it is the applicant’s case
that the
first respondent failed to perform in terms of an undertaking given
to re-establish the site on 18 November 2019. The
alleged failure to
comply with the undertaking and the failure to return to the site and
recommence work, constituted a repudiation
by the first respondent of
its obligations under the GCC 2010 contract. On 22 May 2020, the
applicant notified the first respondent
in writing that its conduct
implied that it had repudiated its obligations, and that the
applicant had accepted the repudiation.
The applicant accordingly
cancelled the contract and reserved its rights to claim damages
suffered as a consequence of the repudiation.
[24]
The
first respondent disputed the validity of the cancellation and
claimed inter alia that it was unable to recruit labour and that
the
applicant was obliged to give it notice of its breach. On 18 June
2020, the first respondent gave a notice of a dissatisfaction
claim
in terms of clause 10.2 of the GCC 2010 contract to the engineer and
the applicant, and placed the applicant on terms to
withdraw the
letter of cancellation by 23 June 2020, failing which it would
consider the applicant to be in ‘persistent repudiation’.
It also requested a ruling from the engineer within 28 days.
[25]
On
13 July 2020, the first respondent sent a letter to the applicant and
the engineer stating that as a result of the applicant’s
failure to withdraw the termination notice, the first respondent is
now giving notice of its termination of the contract. It also
enclosed its final termination account for an amount of R26 215 145.
[26]
On
15 July 2020 the engineer, Mr R Pillay, sent an e-mail to the first
respondent , which read as follows:
‘
Please
note your appointment is by the client. As such the repudiation is
between yourselves and the client’.
It
is presumed that the reference to ‘the client’ is in fact
to the applicant. The email appears to indicate that the
engineer did
not want to become involved in the issue of the repudiation between
the applicant and the first respondent.
[27]
On
23 July 2020, the first respondent sent a letter to the applicant
wherein it inter alia objected to the engineer’s e-mail
of 15
July 2020, stating that it ‘does not qualify as an adequate
reasoned ruling’. It also noted that its dissatisfaction
claim
remained unresolved and that it was therefore delivering a dispute
notice. The nature of the dispute and the redress sought
were set out
as follows:
‘
6.1
This
dispute concerns the Employer’s unlawful actions in purporting
to terminate the Contract based on the allegations that
an Engineer’s
determination was subject to preconditions and that such
preconditions were not satisfied by the contractor.
6.2 The
dispute further concerns the Employer’s failure not to comply
with the provisions of clause 9.2 of
the Contract. The clause
specifically requires that the Employer afford the contractor with no
less than 14 days written notice,
to enable it to rectify any alleged
breach of the Contract. The Employer failed to comply with this
obligation.
6.3 The
Employer’s actions in purporting to terminate the Contract when
it had no legitimate basis to do
so constitute a repudiation.
6.4 The
Contractor will request the Adjudicator to make a finding that the
Employer repudiated the Contract.’
The
letter also stated that an amicable settlement was not feasible and
‘the Contractor shall refer the matter directly to
adjudication
in terms of clause 10.5’.
[28]
On
24 July 2020, the first respondent sent another letter to the
applicant and the engineer, setting out the details of the dispute
and nominating three persons to act as adjudicator, ‘[i]n
accordance with rule 4.1.1.3 of the Adjudication Board Rules’.
The applicant was requested to confirm the appointment of one of the
persons. The second respondent, Mr Bryan Westcott, appeared
on this
list.
[29]
It
is interesting to note at this stage that rule 4.1.1.3 referred to in
the letter, does not appear in the section dealing with
the standing
adjudication procedure but rather in the section dealing with ad hoc
adjudication procedures.
[30]
It
appears from the papers, and the correspondence attached, that the
first respondent approached the second respondent to proceed
with the
adjudication, whereafter the second respondent communicated with the
applicant and its attorney of record. The applicant’s
attorney
informed the second respondent on 19 August 2020 that the dispute
notice and notice of dissatisfaction, written and submitted
by the
first respondent were a nullity, that the applicant did not agree to
adjudication and that it was intending to institute
an action for
damages.
[31]
The
second respondent replied on 19 August 2020 and inter alia indicated
that the adjudication process could proceed on an ex parte
basis.
[32]
On
28 August 2020, the applicant’s attorney wrote to the first
respondent’s attorney, informing him that there was no
contractual basis for the adjudication to proceed and that the first
respondent’s attempt to appoint an ad hoc adjudicator
was ultra
vires the contract. The only way to resolve the dispute was to
approach the high court. He said the following:
‘
3.
In
terms of the Contract Data, the parties made the election
contemplated in clause 10.5.1, namely that dispute resolution should
be conducted by a standing Adjudication Board. However, the parties
failed to appoint the member of the standing Adjudication Board
within 56 days of the commencement date as is expressly stipulated in
clause 10.5.1.
4.
No
request was lodged by either party, during the aforesaid 56-day
period, for the appointment of a standing Adjudication Board.
No
referral was made as contemplated in clause 10.9.1 during that
period.
5.
The
joint venture’s attempt to rely on clause 10.9.1 to make an
appointment outside of the 56 day period is simply not competent.
6.
Clause
10.5.2 provides that a dispute shall be referred to ad-hoc
adjudication if the Contract Data does not provide for a standing
Adjudication Board. However, that is not the case. The Contract Data
specifies a standing Adjudication Board and thus rules out
any
possibility of appointing an ad-hoc adjudicator.
7.
In
the premises, the Adjudication process provided for in clause 10 was
not implemented. Furthermore, by virtue of the parties’
failure
to implement an Adjudication process, there is no basis for
proceeding to the subsequent stages of the dispute resolution
procedure.’
[33]
On
29 August 2020, the second respondent sent an e-mail to the
applicant’s attorney, confirming that neither party had signed
the adjudication agreement confirming his nomination and appointment.
He stated that the contractor ‘has indicated that he
intends
proceeding on an ex parte basis should the Employer decide not to
participate’.
[34]
On
4 September 2020, the first respondent’s attorney responded to
the applicant’s attorney’s letter by stating
that the
applicant’s view that the non-implementation of clause 10.5.1
nullified the dispute resolution provisions was not
competent and
that the first respondent was entitled to refer the dispute to
adjudication. It was also made clear that the first
respondent would
be proceeding with the adjudication process.
[35]
On
the same day, the second respondent sent an e-mail to the applicant’s
attorney, advising him that the first respondent
wanted to proceed
with the adjudication. He placed the applicant on terms to respond by
8 September 2020, failing which he would
proceed on an ex parte
basis.
[36]
The
applicant issued the application papers on 7 September 2020 for the
urgent application to be heard on 8 September 2020, as mentioned
above.
[37]
The
first respondent has raised a point in limine in its answering
affidavit that this court does not have jurisdiction to hear
or make
a ruling on the matter pending the final resolution of the dispute
via arbitration, in light of the parties election of
arbitration as
the selected method of finally resolving disputes. The point in
limine was not pursued in argument before me, quite
rightly so as it
is settled law that this court has the requisite jurisdiction.
[1]
[38]
It
is common cause that the applicant and the first respondent failed to
appoint the member of the Adjudication Board within 56
days of the
commencement date as required by clause 10.5.1 of the GCC 2020
contract, or at all for that matter. The contract data
only provides
for dispute resolution by standing adjudication.
[39]
Counsel
for the applicant, Mr Harpur SC, submitted that there can be no
adjudication process if a member to the Adjudication Board
had not
been selected and as a result of that, the matter can also not
proceed to arbitration. He also submitted that although
the first
respondent conceded that the parties had failed to appoint a member
to the Adjudication Board within 56 days, it nonetheless
proceeded to
appoint an adjudicator on what amounted to be an ad hoc basis, which
the contract does not provide for.
[40]
I
was referred to
Laws
v Rutherfurd,
[2]
where Innes CJ held that a court ‘cannot make new contracts for
parties’. See also in this regard what was held by
Wallis JA in
Natal
Joint Municipal Fund v Endumeni Municipality
[3]
that ‘. . . in a contractual context it is to make a contract
for the parties other than the one they in fact made’.
[41]
Counsel
for the applicant also submitted that the dispute between the parties
concerns a question of law, and that a court of law
should determine
which party was entitled to cancel the contract. This would have a
bearing on what basis the final account will
be prepared or how
damages are determined, namely: termination due to contractor’s
fault, termination due to employer’s
fault or no-fault
termination.
[42]
I
was also referred to the Adjudication Board Rules, and it was
submitted that the standing Adjudication Board is supposed to deal
with technical issues relating to ongoing works, and not disputes
about who is entitled to repudiate or cancel the contract.
[43]
It
is in my view clear, upon reading the clauses in the Adjudication
Board Rules referred to above, that the establishment of the
Adjudication Board and standing adjudication is aimed at becoming
involved and being implemented right from the outset of the contract
to assist the parties in resolving issues and disputes relating to
the works being done. It is quite telling that the engineer,
Mr
Pillay, spontaneously responded to the first respondent’s
notice by saying that the repudiation of the contract is a matter
between the parties.
[44]
Counsel
for the applicant also submitted that because the adjudication
process fell away, so to speak, the arbitration process should
similarly fall away. This submission is based on the wording of
clause 10.7.1, which refers to a dispute being referred for
arbitration
if it ‘is still unresolved’.
[45]
Bearing
in mind the sequence of the dispute resolution processes set out in
clause 10, namely commencing with a dissatisfaction
claim, then a
dispute notice, then adjudication followed by arbitration and court
proceedings, if provided for, it is clear in
my view that arbitration
would only follow if the dispute remains unresolved after the parties
had followed the processes preceding
that. Accordingly, if there was
no adjudication, then arbitration could not follow.
[46]
In
PA Ramsden
McKenzie’s
Law of Building and Engineering Contracts and Arbitration
7
ed (2014) at 234, the author deals with arbitration clauses in
building contracts and states that before a matter is referred
for
arbitration, ‘. . .the preliminary steps must be taken. . .’.
Reliance for this statement is placed on
Richtown
Construction Co (Pty) Ltd v Witbank Town Council and another
.
[4]
The facts in
Richtown
are
briefly that the contract required disputes firstly to be referred to
the engineer, if the engineer should fail to give a decision
or if
any of the parties were dissatisfied, the dispute would be referred
for mediation. If either party was dissatisfied with
the mediation,
the matter ‘shall’ be referred for arbitration but only
upon completion of the works. The parties did
not follow the
prescribed procedures and the applicant in the matter attempted to
obtain an immediate arbitration prior to the
works being completed.
Le Roux J
[5]
found that no
effort was made to comply with the requirements of clauses 69(1) or
(2), which provided for the referral to the engineer
and then to
mediation. He said the following:
‘
It
is quite clear that subclauses (1) and (2) are intimately interlinked
with the whole procedure of settlement of disputes, the
final step
being subclause (3). There can be no question that unless the parties
waive their rights in terms of these clauses,
or expressly vary the
contract in this respect, the clause as a whole must be taken to be
operative, and it cannot be truncated . . .
Therefore,
the next question which arises is whether it can be said that there
has been a compliance with the conditions preceding
the right to go
to arbitration. I have already expressed the view that there has not
been compliance or waiver of these provisions.’
[6]
[47]
Counsel
for the first respondent, Ms B Brammer, submitted that although the
parties had failed to comply with clause 10.5.1, they
could still
agree to an Adjudication Board, if that is what was envisioned when
they concluded the contract. It was also submitted
that as the
dispute remained unresolved, the matter could still proceed to
arbitration, despite the fact that adjudication had
not taken place.
[48]
Counsel
for the first respondent, in her heads of argument, dealt with the
issue of waiver, submitting that the applicant had failed
to prove
that the first respondent had waived its rights to settle disputes by
adjudication due to the failure to appoint the Adjudication
Board
member within the prescribed time period. I agree with the
applicant’s response to this argument, namely that the first
respondent has perhaps mischaracterised the applicant’s case
concerning the inoperability of the dispute resolution clause
as
being an allegation of waiver. The issue of waiver is in my view of
no consequence to the issues before me, unless referred
to in the
context as in
Richtown supra
which has not been done.
[49]
The
first respondent’s counsel further submitted that adjudication
is a common feature of construction contracts, and is supposed
to be
a quick way to resolve disputes, and by including it in the GCC 2010
contract and the Contract Data, the parties clearly
intended it to be
part of the dispute resolution process. It was also submitted that it
does not seem fair to invalidate an entire
process because of
non-compliance with clause 10.5.1.
[50]
It
is in my view clear that the applicant is not agreeable to an ad hoc
arbitration, and it is furthermore clear that the process
embarked
upon by the first respondent is not provided for in the contract. The
first respondent is clearly attempting to force
adjudication upon the
applicant, whereas it is very clear that the parties have failed to
comply with the requirements of clause
10.5.1. To ask me to direct
that adjudication should in fact proceed is doing exactly what Innes
CJ
[7]
and Wallis JA
[8]
referred to when they held that a court cannot make new contracts for
parties. It would have been an entirely different issue if
both
parties realised that they had failed to comply with the requirements
of clause 10.5.1, entered into an addendum in terms
of which they
agreed to vary the contract and to make provision for adjudication.
This is not what has happened and I certainly
cannot force the
applicant to take such a step when the GCC contract does not allow
for it.
[51]
The
applicant is seeking a declarator that the adjudication process set
out in clause 10 of the GCC 2010 contract is invalid, alternatively
unenforceable and that any proceedings conducted in terms thereof
shall be null and void. I had certain misgivings about the way
in
which the relief was being framed and at the hearing counsel for the
applicant suggested replacing the word “invalid”
with
“inoperative” in para 1 of Part B. Be that as it may, it
is quite clear to me that the current position is simply
that the
parties cannot proceed with adjudication as they have failed to
comply with clause 10.5.1. As a result of their non-compliance
with
clause 10.5.1 and the inability to resolve the dispute via
adjudication, they cannot proceed to have the matter decided via
arbitration. This matter clearly can only be resolved in one way and
that is through litigation in the high court. The matter is
clearly a
legal issue and even if it was not, the fact of the matter remains
that the dispute resolution process as set out in
the GCC 2010
contract and the Contract Data cannot be followed as a result of
non-compliance with clause 10.7.1.
[52]
For
the same reasons, and with reference to the counter-application, the
appointment of the second respondent as adjudicator cannot
be valid.
It would also not be competent to now make an order that a member of
the Adjudication Board be appointed as prayed for
by the first
respondent, or to refer the matter for arbitration. The motivation
for the institution of the counter application
is also unclear,
especially in light of the applicant’s municipal manager’s
undertaking in his founding affidavit that
the applicant tenders to
participate in the adjudication if the court finds the dispute
resolution process to be in force.
[53]
I
was referred to
section 3(2)
(c)
of the
Arbitration Act 42 of 1965
, in terms of which a court may, on
application of any party to an arbitration agreement, on good cause
shown, ‘order that
the arbitration agreement shall cease to
have effect with reference to any dispute referred’. I was also
referred by both
counsels to various cases relating to what amounts
to good cause and whether a point of law justifies a refusal to refer
the matter
for arbitration. In
Sera
v De Wet
[9]
the following was said:
‘
In
my view, a Court of law is far better equipped to adjudicate upon the
matters raised by the applicant. The outcome of the action
proposed
to be instituted by the applicant will hinge mainly upon the issue as
to whether the contract was properly cancelled
by the architect
or not. The main ground for cancellation, as I have pointed out, was
the alleged failure on the part of the applicant
to proceed with the
work diligently and expeditiously. On this issue the respondent will
necessarily have to rely to a large extent
on the evidence of the
architect. Mr.
Roux
,
for the respondent, has suggested that it is not certain that the
architect will be called by the respondent if this matter goes
to
arbitration. I fail, however, to see how the respondent can do
without the architect. The hearing, whether it be before an
arbitrator or a Court, will not largely, if at all, involve expert
evidence on technical matters peculiar to the building trade.’
[54]
I
do not deem it necessary to deal with this aspect in detail because
of what I have found regarding the non-compliance with clause
10.5.1.
But in the event that I am wrong in that regard, I am in any event of
the view that due to the nature of the dispute and
the facts
surrounding the dispute as mentioned above, the matter should not be
dealt with by way of arbitration, and is clearly
best suited to be
resolved by court proceedings.
[55]
As
far as the question of costs are concerned counsel for the first
respondent submitted that the urgent application was brought
on four
hours’ notice to the respondents and that there was no
justification for the application or for the relief sought.
Counsel
for the applicant submitted that the respondents made it clear that
they wanted to proceed with adjudication and a deadline
had been set
by the second respondent for the applicant to respond by.
[56]
It
was also submitted by applicant’s counsel that the court was
persuaded that the matter was indeed urgent or else it would
not have
heard the application. My attention was drawn to the fact that the
costs were reserved as is clear from the order granted
by Balton J on
8 September 2020. It was submitted that the reserved costs should
follow the result.
[57]
In
my view there is no reason to deviate from the general rule that
costs should follow the event.
[58]
I
accordingly make the following order:
1.
It
is declared that the adjudication process as set out in clause 10 of
the General Conditions of Contract for Construction Works
(2010) 2 ed
edition (the GCC 2010 contract), as amended by the Contract Data, in
respect of the contract for the upgrading of the
Nkanyezini Water
Supply Scheme, is unenforceable due to non-compliance with clause
10.5.1 of the GCC 2010 contract, and any proceedings
conducted in
terms thereof, shall be null and void.
2.
The
first respondent is directed to pay the costs of the application,
including those costs reserved on 8 September 2020.
3.
The
counter-application brought by the first respondent is dismissed with
costs.
BEZUIDENHOUT
AJ
Appearances
For
the applicant: Adv
G D Harpur SC
Adv
A L Christison
Instructed
by: Matthew
Francis Inc.
Suite
4, 1
ST
Floor
Block
1
21
Cascades Crescent
Montrose
Pietermaritzburg
Tel: 033
940 8326
Fax: 086
459 1488
E-mail:
yuri@mfilaw.co.za
Ref: NY
MAHARJ/DJ/05U022007
For the first
respondent: Adv
B Brammer
Instructed
by: MDA
Attorneys
33
West Street
Houghton
Estate
Johannesburg
Tel: 011
648 9500
Email:
johannb@mdalaw.co.za
C/O
Botha and Olivier Inc.
239
Peter Kerchoff Street
Pietermaritzburg
Tel: 033
342 7190
For the second
respondent: No
Appearance
Instructed by:
Date of
Hearing: 7
May 2021
Date of
Judgment: 11
August 2021
[1]
Foize
Africa (Pty) Ltd v Foize Beheer BV and others
2013 (3) SA 91
(SCA) para 21.
[2]
Laws
v Rutherfurd
1924
AD 261
at 264.
[3]
Natal
Joint Municipal Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18.
[4]
Richtown
Construction Co (Pty) Ltd v Witbank Town Council and another
1983
(2) SA 409
(T).
[5]
Ibid
at 413H.
[6]
Ibid
at
414H-415B.
[7]
Laws
v Rutherfurd
fn
2.
[8]
Natal
Joint Municipal Fund v Endumeni Municipality
fn 3.
[9]
Sera
v De Wet
1974 (2) SA 645
(T) at 653G-H.