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[2016] ZAGPPHC 880
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Gauteng Provincial Government v Bombela Concession Company (Pty) Ltd and Others (47315/2016) [2016] ZAGPPHC 880 (22 September 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
number: 47315/2016
Date:
22 September 2016
Reportable:
No
Of
interest to other judges: No
Revised.
In
the matter between:
GAUTENG
PROVINCIAL
GOVERNMENT APPLICANT
And
BOMBELA
CONCESSION COMPANY (PTY) LTD
FIRST
RESPONDENT
THE
HONOURABLE JUSTICE CONRADIE, NO
SECOND
RESPONDENT
THE
HONOURABLE JUSTICE LEVINSOHN, NO
THIRD
RESPONDENT
THE
HONOURABLE JUSTICE MM JOFFE, NO FOURTH
RESPONDENT
JUDGMENT
PRETORIUS
J
,
(1)
The applicant launched a stay application for the
stay of proceedings before the Arbitration Tribunal on 5 October 2016
on the urgent
court roll. The stay application was enrolled on the
urgent court roll for the first time on 8 August 2016 and then on 30
August
2016. On 29 August 2016 I informed the attorneys of both
parties that the matter cannot proceed in the urgent court as it had
not
been enrolled according to the Practice Directive. The attorneys
attended a meeting with the Deputy Judge President on 30 August
2016.
The application was removed from the roll.
(2)
The parties agreed to have the review application
expedited and to abandon the stay application. The review application
was then
placed on the roll to be heard on 15 September 2016 by a
special court. I was requested to deal with the matter urgently and
if
necessary, only to grant an order. I have endeavoured to write the
judgment and not to supply reasons at a later stage. I could
do so
due to both counsel for the applicant and the respondent furnishing
the court with comprehensive heads of argument and oral
argument.
(3)
This is a
review application to review and set aside the award of the Tribunal
consisting of the second, third and fourth respondents,
dated 4 May
2016 in terms of section 33(1)(b) of the
Arbitration
Act
[1]
("the
Act").
(4)
The applicant and first respondent are parties to
a Concession Agreement ("the CA") which was concluded
between the parties
on 28 September 2006 for the design,
construction, partial financing, operation and maintenance of a rapid
rail system linking
Tshwane, Johannesburg and OR Tambo International
Airport ("the system"). System is defined in the agreement
as:
"means (in
relation to Phase 1 and Phase 2) the rapid rail public transportation
system and the Dedicated Feeder and Distribution
Services to be
developed, operated and maintained pursuant to this Agreement
including (without limitation);
(a)
the Train Sets;
(b)
all maintenance equipment and vehicles used
substantially for the purposes of maintaining and/or operating the
Services;
(c)
all spares and materials;
(d)
any measurement or monitoring system;
(e)
all Records and other documentation;
(f)
all things contained on any relevant asset
register;
(g)
anything to be provided by the Concessionaire
pursuant to the Concession Specification,·
(h)
anything in or used in the Railway Line;
(i)
boundary fences; and/or
(j)
computer systems and software;"
(5)
The present proceedings concern the merits of the
claim 3, which forms part of the main Delivery Disruption Dispute
(the "DOD")
in which the first respondent is claiming from
the applicant an amount of approximately R450 million to R500 million
for the construction
of two bridges crossing the N1 at John Vorster
Drive and the N14 at Jean Avenue in Centurion. The hearing of
quantum-claim 3 has
been scheduled to be heard from 5 October 2016
for two weeks. Hence the urgency.
CONDONATION
APPLICATION:
(6)
The
applicant instituted the review proceedings outside the 6 week time
limit stipulated in section 33(2) of the
Act
[2]
.
Section
33(2) provides:
"(2)
An
application pursuant to this section shall be made within six weeks
after the publication of the award to the parties."
(Court
emphasis)
(7)
The applicant now requests condonation from the
court for launching these proceedings out of time, seeking an
extension of the period
stipulated in section 33(2) of the Act. The
second leg of the application is for the filing of a supplementary
founding affidavit
to the applicant's founding affidavit.
(8)
The first respondent opposes the application for
condonation and requests the court to dismiss the application.
(9)
Section 38 of the Act provides that
"the
court may, on good cause shown, extend any period of time fixed by or
under this Act, whether such period has expired
or not".
The
court has a discretion to grant such a condonation application. The
court will consider the degree of non-compliance with the
rules, the
reasons for the non-compliance with the rules, the applicant's
prospect of success in the review application and the
prejudice any
of the parties may suffer.
(10)
To determine good cause the applicant has to have
a satisfactory explanation for the late filing and serving of the
application
for review. The history of the serving and filing of the
application for review has to be considered. The Tribunal published
the
award on 4 May 2016.
(11)
According to the applicant, an opinion was sought
from Adv Trengove SC and Adv Hassim on 13 May 2016 to determine the
prospects
of success. Ten days later the applicant's representatives
and legal representatives consulted with Adv Trengove SC and Adv
Hassim.
There is no explanation as to why it took ten days before a
consultation could be held. The opinion was received by the
applicant's
attorney of record on 9 June 2016.
(12)
The contents of the opinion have not been
disclosed to the respondents or the court. Counsel for the first
respondent repeatedly
invited the applicant to disclose the contents
of the opinion to the court, and not to the first respondent's
counsel. The applicant
chose not to do so as it was argued that the
opinion was confidential. The applicant further neglected in both the
review application
and the condonation application to mention that
the applicant had simultaneously requested an opinion from Adv Loxton
SC. The first
respondent's counsel argued that the court should make
an adverse inference from the non disclosure of the contents of
the
opinion of Adv Trengove SC and Adv Hassim and the fact that the
applicant failed to inform the court and the respondents that it
had
sought a further opinion from Adv Loxton SC.
(13)
After having received the opinions the applicant
proceeded with the application for review. The founding affidavit in
the application
was signed on 14 June 2016 by Mr Jack van der Merwe
and issued at court on the same date. On 14 June 2016 the papers were
delivered
to the office of the sheriff for service on the four
respondents. The papers were returned on 17 June 2016 as the papers
had not
been adequately certified. The applicant's attorney dealt
with the matter and the papers were once more dispatched to the
sheriff
for service on 17 June 2016. Apparently the papers only
reached the sheriff on 21 June 2016 and were only served on 22 June
2016
- five days out of time. It is clear from the applicant's
application that the attorney did not follow up to ascertain
whether
the papers were filed timeously. The explanation is that it
was due to work pressure, but it is expected of a diligent attorney,
in these circumstances where time is of the essence, to ensure that
papers are served and filed in time. This explanation cannot
be
accepted. The further explanation that it was due to a
misunderstanding between the attorneys and the sheriff does not take
the matter any further.
(14)
There is no explanation as to why a condonation
application for the late filing of the papers was not launched
immediately. The
condonation application was only instituted on 18
August 2016 - two months after the time limit had expired on 17 June
2016. There
is no explanation as to why it took 12 days from 6 August
2016, when the notice of motion was signed, until 18 August 2016 to
have
the application issued. I cannot find that the applicant had
acted with the diligence that is required to launch the review
application
timeously and then wait another two months before issuing
the condonation application.
(15)
The review application, according to the
applicant, has a great prospect of success on the merits, as the
applicant had throughout
maintained that the Tribunal lacked
jurisdiction in the arbitration. The basis of the review is that the
Tribunal misdirected itself
with regards to the extent of its
arbitral powers and jurisdiction. According to the applicant the
first respondent had to refer
the claim 3 dispute to be considered by
the parties' respective Chief Executive Officers before launching the
arbitration. The
further complaint is that the dispute initially
referred was not the same as had been pleaded. The first respondent's
counsel submitted
that the applicant has poor prospects of success as
the jurisdictional complaint had been dealt with in the separated
issues of
claim 2 and the issue of
res
judicata
in claim 3. The applicant had,
during the hearing of claim 2, abandoned the jurisdictional
challenges. The Tribunal had also dealt
with clause 4.1 and 4.2 of
Schedule 9 during a previous hearing. The question of jurisdiction,
according to AFSA rules, must be
decided by the Tribunal. In this
instance, it is argued that the applicant had subjected it to the
Tribunal's jurisdiction in the
two separated issues, prior to the
hearing of claim 3.
(16)
According to the first respondent, should the
court uphold the review application the first respondent would suffer
irreparable
harm, which is a fact the court has to take into
consideration. The hearing of the question of quantum before the
Tribunal will
also be affected, as it has been set down for 5 October
2016 for two weeks.
(17)
It is common cause that the proceedings of the
approximately R500 million dispute over claim 3 has been before the
Tribunal for
more than three years and that the applicant had taken
part in the
res judicata
hearing
in respect of claim 3, thereby consenting to the Tribunal's
jurisdiction. During the second separated hearing to determine
the
applicant's rights and obligations under clause 4 of Schedule 9 the
applicant did not contend that clause 4 gave it a jurisdictional
defence to claim 3.
(18)
The challenge to the Tribunal's jurisdiction was
only raised at the start of the claim 3 merits hearing. At that time
the first
respondent had spent R15 million in preparation for the
hearing of claim 3.
(19)
The reasons, set out by the applicant in the
replying affidavit, for the review application was:
"11.1 The purpose
of the Review application is to set aside the Award published by the
Tribunal on 4 May 2016. This was following
a full hearing on the
merits of Claim 3 which involved many other issues than just the
jurisdictional points raised in the review.
11.2 The Province
defended that claim on all those issues
with
hope that it would succeed.
11.3 When it did not
succeed the Province sought legal advice from Counsel who was not
involved in that process."
(Court
emphasis)
(20)
In other
words, the applicant
"wants
to have the best of both worlds. The law will not allow it to do
so''
[3]
.
The applicant apparently only decided to challenge the Tribunal's
jurisdiction, when it did not succeed on all the other points
in the
arbitration. This cannot be allowed.
(21)
I find that due to the lack of prospects of
success in the review application, the lack of explanation for
waiting two months to
launch the condonation application and the lack
of adequate reasons for the late serving of the review application
that the application
for condonatlon cannot succeed.
(22)
Should I be wrong in this finding, I now deal
with the review application.
THE
REVIEW APPLICATION:
(23)
The
applicant instituted review proceedings in terms of section 33 of the
Arbitration
Act
[4]
("the
Act"). Section 33(1) and (2) of the Act provides:
"(1) Where-
(a)
any
member of an arbitration tribunal has misconducted himself in
relation to his duties as arbitrator or umpire; or
(b)
an
arbitration tribunal has committed any gross irregularity in the
conduct of the arbitration proceedings or has exceeded its powers;
or
(c)
an
award has been improperly obtained,
the court may, on the
application of any party to the reference after due notice to the
other party or parties, make an order setting
the award aside."
(24)
The
defendant 1s the Gauteng Provincial Government, which is represented
in these proceedings by the Gautrain Management Agency,
established
by section 2 of the
Gautrain
Management Act
[5]
("the
GM Act"). The Agency's responsibility and duties in terms of the
GM Act
is the
management of the Gautrain Project.
(25)
The first respondent is the Bombela Concession
Company (the concessionaire) who contracted as the concessionaire
under the Concession
Agreement ("CA") to build the
Gautrain.
(26)
The second respondent is a retired judge of the
Supreme Court of Appeal, the third respondent is a retired judge of
the High Court,
Kwa Zulu Natal Division and the fourth
respondent is a retired judge of the High Court, South Gauteng
Division.
(27)
The second, third and fourth respondents are
cited in their nominal capacities as members of the arbitral tribunal
established under
the auspices of the Arbitration Foundation of
Southern Africa (AFSA).
(28)
The second respondent is currently serving as
chairperson of the arbitral Tribunal against whose award the review
was launched.
The second, third and fourth respondents indicated that
they will abide by the findings of the court.
(29)
The current dispute is referred to as the "Delay
and Disruption Dispute" ("DDD"). The claim pertinent
to this
application is claim 3 which relates to the concessionaire's
construction of two bridges by way of a cantilever construction
methodology.
The first bridge is that of the John Vorster Viaduct
("Viaduct 5b") and the second bridge is the Jean Avenue
Viaduct
("Viaduct 5d").
(30)
A hearing was held in respect of the merits of
claim 3 before the Tribunal over the period of 15 to 29 February 2016
and the merits
of claim 3 was argued before the Tribunal on 10 and 11
March 2016. The Tribunal's Award was published on 4 May 2016.
(31)
The
applicant requests the court to review and set aside the Award in
terms of section 33(1)(b) of the
Act
[6]
on the
grounds that the Tribunal exceeded its powers in arriving at the
following conclusions:
"70.
1 In
relation to the John Vorster viaduct:
70.
1.1 on
a
proper interpretation of item 191.44 of the Assessment Table
the
bridge selected by SANRAL for aesthetic reasons was not the
original balanced
cantilever concrete bridge of the BAFO but
a
different balanced cantilever bridge;
70.
1.2
Province
was in respect of the said cantilever concrete bridge to issue
a
PVN;
70.1.3 Province's
refusal to issue the said PVN constituted
a
Province Breach as contemplated in the
Schedule
9
of the CA;
70.
1.4 Province is to
pay the Concessionaire compensation to be quantified in
a
later
hearing.
70.
2. In
relation
to the Jean Avenue bridge:
70.2.1
the Concession Specification required the
construction
of
a
composite bridge
as developed in the Preliminary Design;
70.2.2
GAUTRANS's choice of
a
concrete balanced cantilever bridge to
replace the envisaged composite bridge does not constitute
a
Necessary Consent required for the
construction of the said concrete balance cantilever bridge;
70.2.3
Province
was contractually obligated to issue
a
PVN for the construction of the said
concrete balanced cantilever bridge;
70.2.4 Province's
refusal to issue the PVN as aforesaid constituted
a
Province Breach as contemplated in Schedule 9
of the CA;
70.2.5
Province is to pay the Concessionaire compensation to
be quantified in
a
later
hearing.
70.3
Province's defences that the arbitral tribunal lacks
the jurisdiction to arbitrate these disputes as well as its defence
of waiver
are dismissed.
70.4 Province is to
pay the costs of the arbitration on the High Court scale on
a
party and party basis, which costs are to
include the costs of two counsel, the qualifying fees of
Bombela's expert witness, travel fees and
disbursements for Perrier and Vial/on and the translator, the
arbitrator's
fees, the
costs of the AFSA venue hire and the transcription costs."
(Court emphasis)
(32)
The first ground was that the dispute underlying
the concession claim 3 was not the claim initially referred to and
considered by
the respective CEO's of the applicant and the first
respondent. The argument is that the first respondent had thus not
complied
with the provisions of clause 4.1 to 4.3 of Schedule 10 to
the CA. This, according to the applicant, relates to the applicant's
challenge to the jurisdiction of the Tribunal.
(33)
The concessionaire had failed to notify the
applicant in accordance with the provisions of clause 4.2 of Schedule
9 to the CA that
it wanted the dispute determination in accordance
with the provision of Schedule 9 within the period provided for in
paragraph
4.2.
(34)
The second ground was that the Tribunal
incorrectly found that the applicant was contractually obliged to
issue a Provincial Variation
Notice ("PVN") for the
construction of a concrete balanced cantilever bridge at the Jean
Avenue Viaduct. According to
the applicant the Tribunal failed to
indicate which clause in the CA imposed such an obligation on the
applicant, whilst the Tribunal
was not entitled to do so as no such
obligation arose from the CA.
(35)
A Province Variation Notice is defined in the CA
as:
"means a notice
given by the Province as
provided in
clause
63.1. 1"
And
clause 63.1.1 provides in respect of Variations:
"Subject to the
provisions
of
this
clause 63, the Province may by notice (the "Province's Variation
Notice') to the Concessionaire at any time until eighteen
(18)
calendar months before the Expiry Date due to the effluxion
of
time request the Concessionaire to make any
Variation and the Province's Variation Notice shall specify the
nature and extent
of
the
proposed Variation m sufficient detail to enable the Concessionaire
to evaluate it in accordance with this clause 63."
(36)
The third ground is that the Tribunal exceeded
its powers by taking into account information relative to quantum and
lacking the
jurisdiction to do so, as the parties had expressly
agreed to exclude such information.
(37)
The first respondent opposes this application,
firstly on the basis that the review application is out of time.
Secondly, that the
challenge to the jurisdiction of the Tribunal over
claim 3 is bad in law as according to the first respondent, the
applicant long
ago submitted to the jurisdiction of the Tribunal over
claim 3. The first respondent argues that the other complaints
advanced
by the applicant are unfounded and do not amount to grounds
of review, but might have been grounds for appeal had the arbitration
award not been final.
LEGAL
POSITION:
(38)
The court
has an extremely limited discretion to set aside an arbitration award
in terms of section 33(1) of the
Act
[7]
.
(39)
In
Lufuno
Mphaphuli v Andrews
[8]
,
Kroon
AJ confirmed the finding of the Supreme Court of Apeal in
Telcordia
Technologies Inc v Telkom SA Ltd
[9]
and
held:
"In Telcordia the
Supreme Court of Appeal held, inter alia, that
-
(a)…
(b)…
(c)…
(d) by agreeing to
arbitration the parties to a
dispute
necessarily agree that the fairness of the
hearing will be determined by the provisions of the Arbitration Act
and nothing else;
and
(e) by agreeing to
arbitration the parties limit interference by the courts to the
grounds of procedural irregularities set out
in s
33(1)
of the Act, and, by necessary implication, they waive the right to
rely on any further ground of review, 'common-law' or otherwise."
(40)
In
Amalgamated
Clothing & Textile Workers Union v Veldspun Ltd
[10]
the
court held:
"As to
misconduct, it is clear that the word does not extend to bona fide
mistakes the arbitrator may make whether as to fact
or law. It is
only where
a
mistake
is so gross or manifest that it
would
be evidence of misconduct or partiality that
a
Court might
be
moved to vacate an award;
. . . even a
gross mistake, unless it establishes mala fides or partiality, would
be insufficient to warrant interference. "
(Court
emphasis)
(41)
O'Regan J
emphasized in
Lufuno
Mphaphuli
[11]
that
a decision to refer a dispute to private arbitration is a choice
which should be respected.
[12]
(42)
The court
in the case of
Zhongji
Construction v Kamoto Copper Company
[13]
followed the English Courts in the case of
Fili
Shipping Co Ltd v Premium Nafta Products and Others
[14]
and the
Fiona
Trust
Holding Corporation and Others v Primalov and Others
[15]
case and recognised the limited powers of the court in dealing with
arbitrations.
(43)
This
underlines that the
dictum
of
Botha
and Another v Rich NO and Others
[16]
is applicable in this instance. I must agree with first respondent's
counsel who relies on
Purser
v Sales
[17]
where Mpati AJA held:
"I find myself in
respectful agreement with Theron J when he says in the William
Spilhaus case, supra:
"...
I can see no
reason for thinking that our Courts in general would fail to give
effect to the rule of the common law as it is to
be gathered from
Voet, 2. 1.20, as read with 2. 1.18, 26 and 27,
that
a
defendant who has pleaded to the plaintiff's main claim
without objecting to the jurisdiction must, at any rate after the
stage
of litis contestatio has been reached, be
considered
to have bound himself irrevocably to accept the jurisdiction of the
court
-
and this even in
a
case where his failure
to raise the question of the jurisdiction might have been
due
to some mistake on his part." (1001H-1002A)."
(Court
emphasis)
(44)
In
Bonugli
and Another v Standard Bank of South Africa Ltd
[18]
the
court found that by the conduct of the appellant the appellant
"unequivocally
submitted to its jurisdiction".
In
the present circumstances I find that by taking part in the res
judicata
hearing
and the interpretation hearing in respect of clause 4.1 and 4.2 the
applicant had on a balance of probabilities submitted
to the
jurisdiction of the Tribunal in respect of claim 3.
(45)
In
Telcordia
Technologies Inc v Telkom SA Ltd
[19]
Harms
JA dealt with arbitration awards being set aside as follows:
". .
.'disregarded the principle of party autonomy in arbitration
proceedings and failed to give due deference to an arbitral
award,
something our courts have consistently done since the early part of
the 19th Century. This approach
is
not
peculiar to
us;
it
is
indeed part of
a
worldwide tradition. Canadian law, for
instance, "dictates
a
high
degree of deference for decisions
. . .
for
awards of consensual arbitration tribunals in particular." And
the "concerns of international comity,
respect for the capacities of foreign and transnational tribunals,
and sensitivity to
the need of the international commercial
system
for predictability in the resolution of
disputes" have given rise in other jurisdictions to the adoption
of
"a
standard
which
seeks
to
preserve the autonomy of the forum selected by the parties and to
minimise
judicial
intervention when reviewing international commercial arbitral
awards".
(46)
If I apply these principles in the matter at hand
I must agree that the application of the referral provisions, clauses
4.2 and
4.3 of Schedule 10, must be interpreted widely. By doing so I
find that the presumption that the parties intended that all
disputes,
arising from the CA, must be decided by the same Tribunal,
must be taken into consideration.
(47)
The primary
obligations of the concession were to design and construct the
Gautrain System in accordance with the Concession specification
set
out in Schedule 1 of the agreement. This specification could only be
amended pursuant to Variation Notices issued in terms
of the
agreement. Clause 63 provides for Province Variation Notices ("PVN")
and Concession Variant Notices ("CVN").
This review deal
with PVN's. This court is fully aware of the distinction between an
appeal and a review. In the
Telcordia
case
[20]
at
paragraph 50 it was found that if a party waive its right to appeal,
it waives its right to have the merits of the arbitration
argued and
reconsidered, which is exactly the case here.
(48)
Therefor a
tribunal's award, where there is no right of appeal, cannot be
reviewed on the ground that it is based on an error of
law or fact
(See the
Veldspun
case
[21]
and
Telcordia
cases
[22]
.
(49)
In the
Telcordia
case
[23]
,
referring
to
Dickenson
and Brown v Fisher's Executors
[24]
the
Supreme Court of Appeal held at paragraph 55 that
"the
general principle that when parties select an arbitrator as the judge
of fact and law, the award is final and conclusive,
irrespective of
how erroneous, factually or legally, the decision was".
(50)
In the present instance I cannot find that the
Tribunal erred in fact or in law, but it is clear that even if I
could find that
the Tribunal had erred in fact and/or law, I would
not be able to adjudicate the matter as the parties chose arbitration
as a dispute
resolution mechanism. The applicant was to make payment
for the construction project in accordance with clause 26 of the CA.
(51)
When the agreement was concluded there were a
number of unresolved issues which the parties attempted to regulate
in an Assessment
Table that was attached as a schedule to the
agreement. The agreement further provided that the parties were under
a duty to co-operate
with one another
"in
order to facilitate the performance of this agreement".
(52)
The agreement defines the
"Dispute
Resolution Procedure"
as the procedure
for the avoidance and resolution of disputes as set out in Schedule
10.
(53)
According to Schedule 10 when a dispute arises a
party may issue a
"Notice of Dispute"
and that such a dispute be considered in
accordance with the Dispute Resolution procedures as provided in
Schedule 10. The
"Notice of Dispute"
is defined in Schedule 10 as:
"a
written notice
given by either the Province or the Concessionaire to the other Party
notifying the other Party of the existence
of
a
Dispute and
requiring such Dispute to be
considered in accordance with the
Dispute Resolution
procedures provided for in this Schedule 10
in accordance with this Schedule 10.
Such notice shall set
out details of the Dispute provided that the party giving the notice
shall not be bound by or limited to the
details or basis of the
Dispute as set out in the notice".
(Court emphasis)
(54)
Due to the last provision the Tribunal has
jurisdiction to decide disputes as ultimately pleaded by the parties.
Clauses 4.2 and
4.3 of Schedule 10 sets out the procedures to be
followed to resolve the dispute. Clause 4.2 provides:
"Upon receipt by
a
Party of
a
Notice of Dispute, the Parties shall
engage their respective chief executives (or
empowered individuals) to seek an amicable settlement. Within two (2)
Business Days
of the service of the Notice of Dispute, the party who
has served the Notice of Dispute shall provide the other Party with
brief
details of the matter in issue and the remedy sought and making
express reference to this Clause 4.2 of Schedule 10. The Party
receiving such details will issue within five (5) business days its
brief response. The chief executives (or empowered individuals)
will
meet within ten (10) Business Days of the issue of the response to
discuss the matter in an endeavour to amicably resolve
the Dispute.
They may use whichever means they jointly consider appropriate to
resolve the dispute."
(55)
In terms of clause 4.3 should the parties be
unable to reach an amicable resolution, the party who issued a Notice
of Dispute may
issue a notice requiring that the dispute be resolved
in accordance with the provisions of Schedule 10. Clause 4.8
stipulates that
all other disagreements which do not constitute a
dispute, shall be resolved by way of arbitration under the AFSA
rules. Rule 11.1
of the AFSA Rules provides:
"The arbitrator
shall have the widest discretion and powers allowed by law to ensure
the just, expeditious, economical, and
final determination of all the
disputes raised in the proceedings, including the matter of costs."
(56)
Rule 11.2.1 is relevant in the present
circumstances dealing with the jurisdiction of the Tribunal:
"to rule on his
own jurisdiction, including rulings on any dispute in regard to the
existence or validity of the arbitration
agreement or the scope
thereof'
(57)
Article 8.1 of the Rules provides:
"Arbitrator to
deal with jurisdictional issues
8. 1 Where the
Secretariat has accepted
a
Request
for Arbitration but
a
party
cited as
a
defendant
disputes that he was
a
party
to an arbitration agreement, or that the arbitration agreement is
still valid and operative, or that
the
claim falls within the terms of the arbitration agreement, or
a
defendant to
a
counterclaim disputes that the counterclaim
falls within the arbitration
agreement,
an arbitrator shall be appointed in accordance with these Rules, to
consider the matters so contested and decide whether
or not to
proceed with the arbitration, and, if he decides to proceed
therewith, to do so."
(58)
Article 10.1.2 of the Rules provides:
"10.1.2 in cases
where the party cited as defendant disputes
that
he was
a
party to the
arbitration agreement, or that the arbitration agreement is still
valid and binding, or that the claim
falls
within the terms of the arbitration agreement, (all of which disputes
are hereinafter referred to
as
'jurisdictional disputes'),
then
(unless the party against whom the jurisdictional dispute is raised,
informs the arbitrator that he does not wish to proceed
until such
dispute has been decided by a court) first decide the jurisdictional
disputes, and, if he decides them against the party
raising any or
all of such disputes, then make
a
ruling for
a
period for the delivery of
a
statement of defence (if not already
delivered) and counterclaim,
if any,
in accordance with 6. 1.
5
and
a
statement of defence
to any counterclaim in accordance with 6.4 and then
proceed
as
set
out below."
(Court emphasis)
(59)
At the second separated hearing, dealing with
clause 4 of Schedule 9, the award was never challenged by the
applicant and is binding
on the parties. The Tribunal held that
clause 4.1 did not impose a time-bar on the invocation of dispute
resolution proceedings
and that clause 4.2 is not mandatory and
found:
"The word 'may'
connotes that it is not obligatory to do
so
and accordingly does not constitute
a
pre-condition to seeking relief in terms of
the schedule."
This
award was accepted and not challenged in court at all. This applies
equally in the present matter.
(60)
The applicant and the concessionaire's
predecessor, the Bombela consortium concluded the Concession
Agreement on 28 September 2006.
At the time the agreement was signed
it was unknown whether SANRAL would approve the composite steel
I-beam bridges which were
proposed in the preliminary design for the
John Vorster bridge and the Jean Avenue bridge. This resulted in an
Assessment Table
attached to the CA to attempt to provide who would
be responsible for the additional costs of a different bridge should
a different
bridge be constructed. Subsequently SANRAL rejected the
composite I steel bridge and required a balanced cantilever bridge.
On
30 November 2006 the concessionaire was instructed to build a
balanced cantilever bridge over Jean Avenue. On 9 December 2006
SANRAL
and the applicant instructed the concessionaire to build a
balanced cantilever bridge over John Vorster Drive.
(61)
As early as 15 December 2009 the concessionaire
addressed separate letters to the applicant in respect of the two
bridges and set
out,
inter alia:
"In view of this
Province decision to vary the design provisions of the Concession
Agreement our understanding is that to fulfil
their contractual
obligations the procedure they must follow is to issue a Province
Variation Notice pursuant to Clause 63 of the
Concession Agreement. "
(62)
A PVN would have entitled the first respondent to
an adjustment of the price due to the increased costs of the balanced
cantilever
bridges.
(63)
The applicant only responded to these letters
more than two months later on 2 March 2007 refusing to issue the
requested PVN's.
On 5 April 2007 the technical details of the Jean
Avenue bridge were approved at a meeting and it was decided to submit
a Review
In Principle to, inter alia, Gautrans, on 13 April 2007.
This amounted to an approval of the preliminary design, the effect of
which was to replace the design of the composite bridge in the
Concession Specification with the new cantilever bridge. This bridge
now became part of the Concession Specification which Bombela in
terms of clause 13.1.1 of the CA became obliged to construct.
(64)
It was common cause before the Tribunal that in
terms of the agreement any amendment to the concession specification
needed a variation
notice, either from the province or from the first
respondent, dependant on who amended the concession specification.
(65)
Even though
there existed a dispute, at the time, whether the applicant had to
issue PVN's for the balanced cantilever bridges over
John Vorster
Drive and Jean Avenue, the first respondent constructed the bridges.
The first respondent did so in good faith and
because of the express
contractual obligation to co-operate with the Province to facilitate
the completion of the contract. Clause
12.1
[25]
of the CA provides:
"Subject to
clause 12.2 (No Relief) each Party (the "First Party')
undertakes to co-operate with the other (the "Second
Party' ) in
order to facilitate the performance of this Agreement and in
particular will:
12.1.1
use reasonable endeavours to avoid unnecessary complaints, disputes
and claims against or with the Second Party;"
(66)
On 25 September 2009 the first respondent filed a
Notice of Dispute relating to various disputes in relation to the
construction
project. In paragraph 2 it is set out:
"The Dispute
between the Concessionaire and Province is at to the consequences and
entitlements arising from Province's breach
in relation to its
obligations in relation to procurement and delivery of Land with
requisite Land Use Rights and to Variations
and Relevant Events, as
well as from discovery of Unknown Utilities."
And
in paragraph 3(a):
"The
Concessionaire has, in numerous letters commencing from the Effective
Date of the Concession Agreement, advised Province
of the potential
consequences of Province's breach in relation to its obligations with
respect to making available the Land and
procurement and delivery of
the Properties with requisite Land Use Rights and to Variations and
Relevant Events, as well as the
extent and consequences of the
discovery of Unknown Utilities, and the actual delays suffered."
(67)
In the letter dated 28 August 2009 referred to by
the first respondent in the Notice of Dispute it was clearly stated
that the dispute
in relation to John Vorster Drive was:
"58. As no final
decision on the structure of the bridge was reached before the
signature of the Concession Agreement, the
Concessionaire agreed to
study a number of alternative options to the composite I-beam
structure, and the parties agreed as reflected
in the Concession
Agreement that 'any changes to [the /beam] design other than
reverting to the original balanced cantilever concrete
bridge of the
BAFO - as a result of SANRAL's aesthetic requirements
will require
a
Variation Notice from Province . . .. ....
59. Following various
meetings between the Province, the Concessionaire and SANRAL,
it
was decided that the Concessionaire was to build a concrete balanced
cantilever bridge at the John Vorster interchange, as recorded
in the
minutes of the meeting held on 7 December 2006 and confirmed in
SANRAL's letter dated 19 April 2007.
60. The Concessionaire
advised the Province by letter dated
15
December 2006 (ref BOM-GPG-LET-00707) that such
a
change would have been implications in terms
of methodology and design.
60.1
As
a
result of the
revised balanced cantilever structure design, an additional 60m span
had to be created at the Southern part of the
viaduct in
order to equalise the bending effect,
requiring the design of an additional abutment (A5), South from Pier
6.
60.2
Furthermore,
the balanced cantilever structure was all concrete and was
significantly heavier than the steel beam composite solution,
thus
increasing the loads on the piers and foundations and resulting in an
increase of their size.
60.3
In
addition, the construction of the balanced cantilever structure
required permanent construction tower cranes to be erected at
the
sides of the piers which meant that more land had to be procured and
delivered.
63. The decision to
change the composite bridge to a balanced cantilever bridge
introduced architectural requirements which were
not originally
contemplated in the
CA. " (Court
emphasis)
And
the Jean Avenue dispute:
"103. However, in
a letter from the Gauteng Provincial Government, the Department of
Public Transport Roads and Works (identified
as a party to the
Concession Agreement)
dated 13 November
2006, the Concessionaire was requested to modify the design of
viaduct 5d and construct
a
balanced
cantilever
bridge in reinforced
concrete.
(Court emphasis)
104. As a result the
Concessionaire directed a letter to the Province on 15 December 2006
(ref. BOM-GPG LET. 00708), to request
the Province to issue a
Province's Variation Notice in order
for the requested changes
to the design and methodology to be contractually recorded in the
Concession Specification.
105.
In the same letter, the Concessionaire also advised the Province
of the consequences arising out of this change, including, amongst
others, the additional geotechnical investigation required, the
preliminary design to be entirely re-done and the change in the
alignment.
106.
The Province did not issue any Province's Variation
Notice."
(Court emphasis)
(68)
It was thus clear that already on 25 September
2009 the first respondent alerted the applicant and set out that due
to the variation
from the I steel bridges to the balanced cantilever
bridges that the first respondent had been put to extra cost and that
the first
respondent would be seeking compensation for these
variations. In both instances the first respondent requested Province
Variation
Notices.
(69)
The first statement of claim was filed by the
first respondent on 29 July 2011. The claim appeared under claim 4
and alleged that
an instruction issued by the applicant on 30
November 2006 should be read as a variation notice.
(70)
The applicant filed its statement of defence ten
months later, on 21 May 2012. In this statement of defence the
Tribunal's jurisdiction
was challenged on the basis that the dispute
had not first been referred for amicable resolution in terms of
clause 4.1 and 4.3
of Schedule 10.
(71)
It was further alleged in the alternative that
claim 4 was
res judicata
as
it had been determined in the arbitration in the Record of Decision
dispute.
(72)
On 26 April 2013 the first respondent amended its
claim and the claim relating to the two relevant bridges was now
claim 3. The
allegation was that the applicant did not issue PVN's in
respect to the design changes. According to the first respondent this
was a breach of contract that entitled the first respondent to
damages.
(73)
On 8 November 2013 the applicant filed its
amended statement of defence where in paragraph PAS Page 1438 and PA9
page 1695 the applicant
withdrew the challenge to the jurisdiction of
the Tribunal over claim 3, but raised challenges to the jurisdiction
of the Tribunal
over claim 2, which were unrelated to claim 3. The
applicant, however, persisted in the plea of
res
judicata
against claim 3.
(74)
On 4 December 2013 the Tribunal issued an award
which separated certain issues, namely the special plea of
res
judicata
to claim 3, the interpretation of
clause 4 of Schedule 9 and challenging the Tribunal's jurisdiction to
several of the claim 2 subsections.
(75)
In April 2014 the Tribunal held a hearing on the
res judicata
defence
to claim 3. I must agree with first respondent's counsel that by
partaking in that hearing the only inference this court
can draw is
that the applicant subjected itself to the jurisdiction of the
Tribunal over claim 3.
(76)
The Tribunal handed down its award on 30 June
2014 dismissing the applicant's plea of
res
judicata.
It is telling that the applicant
does not take issue that the Tribunal did not have the necessary
jurisdiction to deal with this
special plea and to hand down an
award. No review application followed the publishing of this award.
(77)
In the second separated hearing the issues that
had to be adjudicated were the interpretation of clause 4 of Schedule
9, as the
applicant had abandoned its jurisdictional objections in
respect of claim 2's sub claims. The Tribunal handed down its
award
on 3 July 2015 and held that paragraph 4.1 of Schedule 9 did
not operate as a time bar and that paragraph 4.2 of Schedule 9
created
a dispute resolution procedure which the parties were not
obliged to follow, as has been set out earlier in this judgment.
There
was no mention at the second separated hearing that failure to
comply with clause 4.2 of Schedule 9 precludes a referral to
arbitration
under Schedule 10 and raises a jurisdictional issue.
(78)
The first respondent filed two subsequent
amendments to its statements of claim on 23 May 2014 and 3 August
2015 respectively. On
2 October 2015 the applicant pleaded to both
amendments and there was no express challenge to the jurisdiction of
the Tribunal
in claim 3. The applicant, however, pleaded an
alternative defence of prescription to the merits of claim 3.
(79)
The first respondent brought an application in
November 2015 to separate merits and quantum in the claim 3 hearing.
This application
was opposed by the applicant and one of the grounds
of opposition was that the first respondent had introduced matters of
quantum
in paragraphs 30 and 31 of the replying witness statements.
The first respondent undertook not to rely on these paragraphs at the
merits hearing. The separation was granted.
(80)
On 15 February 2016 the applicant, for the first
time, sought determination of the allegations contained in paragraphs
298 - 300
of the second amended statement of case of the first
respondent. The heading indicated
"The
defendant's alternative defence of prescription"
and
did not indicate a challenge, to the jurisdiction of the Tribunal.
(81)
The Tribunal dealt with this late attempt to
question the Tribunal's jurisdiction as follows at the hearing:
"CHAIRPERSON:
Well, this point I see is raised in amended papers dated October
2015.
MR LOXTON SC: Yes.
CHAIRPERSON: Was that
when it made its first appearance?
MR LOXTON SC: I don't
know.
CHAIRPERSON: The point
about the reference?
MR LOXTON SC: I'm
afraid,
-
I can find
the answer. CHAIRPERSON: It was pleaded in October 2015, so
presumably it was thought of either then or shortly before
October
2015, but wasn't that too late?
MR LOXTON SC: I may
well be.
CHAIRPERSON: I mean by
that time the parties had already been to refer claim number 3 to
arbitration, to us, and quite apart from
that it seems to me to be
undesirable in an arbitration to take
a
point
like this.
MR LOXTON SC: At that
stage.
CHAIRPERSON: It is
like ducking the issues.
MR LOXTON SC: Yes,
that may be the answer . . ."
(82)
After refusing to deal with this question
separately the hearing proceeded. During oral argument the applicant
made no attempt to
advance this jurisdictional complaint and the
issue of jurisdiction was not part of counsel's argument before the
Tribunal.
(83)
Prior to the hearing on 15 February 2016 there
was no indication on the pleadings that the applicant intended
dealing with the prescription
argument as a jurisdictional point as a
result of pleading prescription in paragraphs 298 - 300. The second
statement of defence
does not contain the word
'Jurisdiction"
and there is no allegation to challenge the
Tribunal's jurisdiction. It is important to note that the applicant
in the first amended
statement of defence dated 8 November 2013, had
abandoned the challenge to the jurisdiction of the Tribunal over
claim 3 that it
had raised to the corresponding claim 4 in the
original statement of defence it had filed on 21 May 2012. This
confirmed the Tribunal's
and the applicant's belief that the
Tribunal's jurisdiction over claim 3 was no longer an issue and that
the applicant had subjected
itself to the jurisdiction of the
Tribunal.
(84)
The applicant, on 4 December 2013, requested the
Tribunal to deal with the
res judicata
issue
separately in respect of claim 3. This was done and the applicant had
participated fully in the
res judicata
hearing
on claim 3 in April 2014 and did not take issue with the Tribunal's
jurisdiction at the time and neither complained of the
Tribunal's
lack of jurisdiction on 30 June 2014 when the award of the Tribunal
was handed down. The only conclusion I can come
to is that the
applicant acknowledged the Tribunal's jurisdiction when dealing with
the issue of
res judicata
in
respect of claim 3. The same applies to the second separated hearing
where the interpretation of clause 4.1 and 4.2 of Schedule
9 was
determined on 3 July 2015 as the applicant did not raise the
objection that the first respondent had to comply with these
clauses,
before referring the dispute under Schedule 10 and did not raise this
as a jurisdictional issue.
(85)
AFSA Rule
10.1.2 requires jurisdictional disputes to be determined in advance
of all other disputes. The reason for this is evident
as found in
Naidoo v
EP Properties
[26]
where
Bosielo JA found:
"It is common
cause that this attack was not raised on the papers in the litigation
preceding the order by Moosa J, nor in
answer to the statement of
case or in evidence before the arbitrator.
Any
complaint about the arbitrator's lack of jurisdiction being
potentially dispositive of the matter should have been raised at
the
beginning of the arbitration as a point in limine. This was never
done.
Instead, Tobias participated in
the arbitration proceedings until December 2009 when he
unsuccessfully applied for
a
postponement.
It is
common cause
that Tobias was until then represented by an
attorney and counsel. In those circumstances
it is safe to infer that he participated knowingly and voluntarily in
the arbitration
proceedings. In this regard the following dictum by
Gauntlett AJ in Abrahams v RK Komputer SON BHD
2009 (4) SA 201
(C) at
210E-F is apposite:
'If, as her affidavit
would have it, it is the latter, it does not avail her now
-
disgruntled by the results
-
to fossick in the procedural ashes of the
proceedings and to disinter her perception when it suits. An attack
based on bias
-
with
its devastating legal consequences of nullity
-
is not to be banked and drawn upon later by
tactical choice. As the Court of Appeal in England has put it,
"It is not
open to [the litigant] to wait and see how her claims ... turned out
before pursuing her complaint of bias
...
[she] wanted to have the best of both
worlds. The law will not allow her to do
so.
"
'
This is exactly what
Tobias did in this case. Instead of objecting to the jurisdiction of
the arbitrator at the beginning, he participated
in this protracted
arbitration until the proverbial shoe started to pinch."
(Court
emphasis)
And
in the
Zhongji
Construction case
[27]
where
Gorven AJA confirmed:
"When a party
raises a challenge to the jurisdiction of a court, this issue must
necessarily be resolved before any other issues
in the proceedings.
The reason is simple. If the court has
no jurisdiction, it is precluded from dealing with the merits of the
matter brought to it."
(Court emphasis)
I
find that it was reasonable of the first respondent and the Tribunal
to accept that the issue of jurisdiction was no longer an
issue as
the applicant had subjected itself to the Tribunal's jurisdiction
during the
res judicata
hearing relating to claim 3. The
abovementioned
dictum
is applicable in the present instance.
(86)
The case of
Botha
and Another v Rich NO and Others
[28]
is
relevant where Nkabinde J held:
"Bilateral
contracts are almost invariably cooperative ventures where two
parties have reached
a
deal
involving performances by each in order to benefit both. Honouring
that contract cannot therefore be
a
matter
of each side pursuing his or her own self interest without
regard to the other party's interests.
Good
faith is the lens through which we come to understand contracts in
that way."
(Court emphasis)
(87)
In the present instance the applicant had not
acted in a way that shows the contractual principle of good faith.
The first respondent
had expended close to R 15 million on legal
expenses on the merits of the claim 3 dispute. Belatedly the
applicant sought to have
a jurisdiction dispute determined on 15
February 2016. It is clear that in paragraph 12.1 of the CA the CA
expressly provided under
Obligations that:
"Subject to
clause 12.2 (No Relief) each Party (the "First Party')
undertakes to co-operate with the other (the "Second
Party') in
order to facilitate the performance of this Agreement and in
particular will:
12.1.1 use reasonable
endeavours to avoid unnecessary complaints, disputes and claims
against or with the Second Party;"
The
first respondent had acted in good faith and had built the two
cantilever bridges as requested by the applicant, despite not
receiving the relevant PVN's.
PROVINCE
VARIATION NOTICE (PVN):
(88)
The Tribunal found that the Variation Notice to
be issued was a Province Variation Notice and the applicant is liable
for the costs
of the variation. This is the reason for the
applicant's application for review as it contends that no PVN was
necessary in either
of the variations of the two bridges.
(89)
The Tribunal, according to the Tribunal, had to
determine the following:
"Despite there
having been no variation, the Jean Avenue bridge built and handed
over by the Concessionaire
was
built
in terms of the new specifications for the cantilever bridge. The
question
is
who
has
to pay for
its
construction."
(90)
In the award the Tribunal found that the
applicant was contractually obliged to issue a PVN for the
construction of the Jean Avenue
bridge, as well as the John Vorster
bridge. The failure by the applicant to do so constituted a breach of
the CA and the Tribunal
would determine the compensation that the
applicant has to pay at the quantum hearing of 5 October 2016.
(91)
The remedy
sought by the applicant at the time was that the first respondent
should have refused to construct anything but the twin
1- beam bridge
or to have downed tools. This would have been in breach of paragraph
12.1 of the CA and contrary to the behaviour
expounded by Nkabinde J
in the
Botha
case
[29]
.
(92)
The applicant further argued that the Tribunal
had relied on the excluded quantum data and consideration when
considering the facts.
I have read the award thoroughly in this
regard and can find no reliance by the Tribunal on paragraphs 30 and
31 of the first respondent's
replying witness statement. I find that
the issue was who of the parties were liable for the deviations to
the construction of
the Jean Avenue and John Vorster Drive bridges.
The Tribunal considered the background circumstances to enable the
Tribunal to
properly understand the agreement. There was no untoward
decision in respect to the quantum of the application. Therefore this
ground of review is dismissed.
(93)
The applicant filed supplementary heads of
argument on 13 September 2016 which the applicant did not argue at
the hearing of the
review, but indicated that the applicant did not
abandon the ground of review. I have dealt with the averments that
the Tribunal
had taken into consideration the issue of costing and
pricing of the bridges. These arguments have been dismissed by me and
take
the matter no further.
(94)
I am requested to grant a punitive costs order to
show the court's disapproval at the manner this review application
was launched.
On 8 August 2016 the application for the stay of the
arbitration was struck from the roll as the matter had been enrolled
in a
manner inconsistent with the provisions of the Practice Manual.
Once more the applicant placed the second stay application on the
urgent roll of 30 August 2016 not heeding Rabie J's note on 8 August
2016 to approach the Deputy Judge President for a special
date. The
Deputy Judge President directed that the matter being heard on 15
September 2016. No reason is set out why the condonation
application
was only served on 18 August 2016, after the notice of motion had
already been signed on 6 August 2016. The replying
affidavit in the
condonation application was only served on 7 September 2016 together
with the heads of argument after the time
to do so, according to the
court's instructions, had expired. Both the court and the first
respondent have been inconvenienced
to a great extent by the conduct
of the applicant.
(95)
In the result I make the following order:
1.
The condonation application is dismissed with
costs, on an attorney and client scale, including the costs of two
counsel;
2.
The review application is dismissed with costs on
an attorney and client scale, including the costs of two counsel;
3.
The applicant is directed to pay the first
respondent's costs related to the two interim stay applications,
including the costs
of the appearances on 8 August 2016 and 30 August
2016 on an attorney and client scale, including the costs of two
counsel.
____________________
Judge
C Pretorius
Case
number
: 47315/2016
Matter
heard on
: 15 September 2016
For
the Applicant
: Adv EC Labuschagne
SC
Adv MPD Chabedi
Instructed
by
: Ledwaba Mazwai Attorneys
For
the Respondent
: Adv A Bham SC
Adv
M Chaskalson SC
Adv
E Webber
Instructed
by
: Tiefenthaler Attorneys
Date
of Judgment
: 22 September 2016
[1]
Act 42 of 1965
[2]
Supra
[3]
Naidoo v EP Property Projects (Pty) Ltd
[2014] ZASCA 97
at paragraph
25
[4]
Supra
[5]
Act 5 of 2006
[6]
Supra
[7]
Supra
[8]
2009(4) SA 529 (CC) at paragraph 65
[9]
2007(3) SA 266 (SCA)
[10]
1994(1) SA 162 (A) at 1690-G
[11]
Supra
[12]
Paragraph 219
[13]
2015(1) SA 345 (SCA)
[14]
[2007] UKHL 40
[15]
[2007] EWCA Civ 20
[16]
2014(4) SA 124 (CC)
[17]
2001(3) SA 445 (SCA) at paragraph 18
[18]
2012(5) SA 202 (SCA) at paragraph 23
[19]
Supra
[20]
Supra
[21]
Supra
[22]
Supra
[23]
Supra
[24]
1915 AD 166
at 174
[25]
Page 173
[26]
[2014] ZASCA 97
at paragraph 25
[27]
Supra at paragraph 50
[28]
Supra
[29]
Supra