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[2020] ZASCA 32
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Ekurhuleni West College v Segal and Another (1287/2018) [2020] ZASCA 32 (2 April 2020)
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1287/2018
In
the matter between:
EKURHULENI WEST
COLLEGE
APPELLANT
and
STANLEY HAROLD
SEGAL
FIRST RESPONDENT
TRENCON CONSTRUCTION
(PTY) LTD
SECOND RESPONDENT
Neutral
citation:
Ekurhuleni West College v Segal and Another
(1287/2018)
[2020] ZASCA 32
(2 April 2020)
Coram:
PONNAN, VAN DER MERWE, MOLEMELA, DLODLO and NICHOLLS JJA
Heard:
17 February 2020
Delivered:
2 April 2020
Summary:
Review – adjudicator’s determination under a building
contract susceptible to revision in pending arbitration –
proceedings uncompleted – review generally entertained only to
prevent grave injustice – no such circumstance shown
–
high court correctly dismissed review application.
ORDER
On
appeal from:
Gauteng Division of the High Court, Pretoria (De Vos
J sitting as court of first instance):
The
appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Van
der Merwe JA (Ponnan, Molemela, Dlodlo and Nicholls JJA concurring)
[1]
The appellant, the Ekurhuleni West College (the College), is a public
college established as a juristic person in terms of s
3 of the
Continuous Education and Training Act 16 of 2006. In terms of a
written building contract, the College employed the second
respondent, Trencon Construction (Pty) Ltd (Trencon), to build a
conference centre on its premises. By the time that the construction
came to be ‘practically completed’ within the meaning of
the building contract, various disputes arose between the
parties.
Trencon referred these disputes to the first respondent, Mr Stanley
Harold Segal (the adjudicator) for adjudication. Aggrieved
by the
adjudicator’s determination, the College approached the Gauteng
Division of the High Court, Pretoria for the review
and setting aside
thereof. Trencon opposed the application and filed a
counter-application for the enforcement of the determination.
De Vos
J dismissed the application with costs and granted the
counter-application with costs on the attorney and client scale,
in
both instances including those of two counsel, but granted leave to
the College to appeal to this Court.
[2]
Clause 40 of the building contract dealt with the settlement of
disputes. The relevant provisions thereof were as follows:
‘
40.0
SETTLEMENT
OF DISPUTES
40.1 Should any
disagreement arise between the
employer
, including his
principal agent
or
agents
, and the
contractor
arising out of or concerning this
agreement
or its
termination, either
party
may give notice to the other to
resolve such disagreement.
40.2 Where such
disagreement is not resolved within ten (10)
working days
of
receipt of such notice it shall be deemed to be a dispute and shall
be referred by the party which gave such notice to either:
40.2.1
Adjudication [40.3] where the adjudication shall be conducted in
terms of the edition of the
JBCC
Rules for Adjudication
current at the time when the dispute was declared or,
40.2.2
Arbitration [40.4] where the arbitrator is to be appointed by the
body selected by the parties [41.3] whose rules shall apply.
Where no
body is stated or where the stated body is unable or unwilling to
act, the appointment shall be made by the chairman for
the time being
of the Association of Arbitrators (Southern Africa). The appropriate
rules current at the time when the dispute
is declared shall apply.
40.3 Where a dispute is
referred to adjudication the following shall apply:
40.3.1 The
adjudicator
shall be appointed in terms of the Rules [40.2.1]
40.3.2 The
adjudicator
shall not be eligible for subsequent appointment as the
arbitrator
40.3.3
The
adjudicator’s
decision shall be binding on the
parties
who shall give effect to it without delay unless and
until it is subsequently revised by an
arbitrator
[40.4]
40.3.4
Should either
party
be dissatisfied with the decision given by
the
adjudicator
, or should no decision be given within the
period set in the Rules, such
party
may give notice of
dissatisfaction to the other
party
and to the
adjudicator
within ten (10)
working days
of receipt of the decision
or, should no decision be given, within ten (10)
working days
of
expiry of the date by which the decision was required to be given the
dissatisfied party shall refer the dispute to arbitration.
40.4 Where a dispute is
referred to arbitration the following shall apply:
40.4.1
The
arbitrator
shall be appointed at the request of either
party
by the body stated in 40.2.2
40.4.2
The arbitration shall be conducted by the
arbitrator
in
accordance with the rules of the body stated in the
contract data
40.4.3
The
arbitrator
shall have the power to open or revise any
certificate, opinion, decision, requisition, or notice relating to
the dispute as if
no such certificate, opinion, decision, requisition
or notice had been issued or given
40.4.4
The
arbitrator’s
decision shall be binding on the
parties
who shall give effect to it without delay.’
[3]
It is common cause that the rules referred to in clause 40.2.1 of the
building contract were the JBCC Adjudication Rules (published:
October 2014) (the rules). Under the heading INTERPRETATION, rule 1.1
provided:
‘
Adjudication is an
accelerated form of dispute resolution in which a neutral person
determines the dispute as an expert and not
as an arbitrator and
whose determination is binding unless and until varied or overturned
by an arbitration award.’
The
rules contained detailed provisions regulating the procedure to be
followed by the adjudicator. Rule 5.1 to 5.3 provided for
only three
sets of submissions, namely a statement of claim, a statement of
defence and a replication. In terms of rule 5.7.7,
the adjudicator
was empowered to require a party, within a period determined by him,
to submit any further information, documents
or evidence which he
might reasonably require to make a determination. Rule 5.5 provided
that the adjudicator might conduct a hearing
but was not obliged to
do so. And, in terms of rule 5.4.1, the adjudicator had to act as an
expert and not as an arbitrator in
determining the disputes.
[4]
Rule 6.1.2 provided that the adjudicator’s written
determination of a dispute shall include the reasons for his
decisions.
In line with clause 40.3 of the building contract, rule
6.1.4 provided that the adjudicator’s written determination
shall
be binding on the parties unless and until such determination
of the dispute is overturned or varied in whole or in part by an
arbitration in terms of the dispute resolution clause of the building
contract. Rule 6.2 provided either party with the right to
request
the adjudicator to correct a patent clerical or arithmetical error or
to clarify an ambiguity in the determination and
to apply to the high
court for the enforcement of the determination.
[5]
In compliance with rule 5.1, Trencon submitted a detailed statement
of claim with supporting documents, consisting of a total
of some 250
pages. In terms thereof Trencon submitted 13 claims for determination
by the adjudicator. The College submitted a statement
of defence and
this was followed by Trencon’s replication in terms of rule
5.3.1.
[6]
Notwithstanding the absence of any provision therefor in the rules,
the College submitted a written response to Trencon’s
replication (the rejoinder). Trencon objected, which prompted the
College to submit a ‘letter of appeal’. This essentially
contained an appeal to the adjudicator to accept the rejoinder.
Matters threatened to get out of hand when Trencon submitted separate
written responses to the rejoinder and the ‘letter of appeal’.
[7]
Sanity prevailed, however, when the adjudicator informed the parties
on 5 February 2017 that the rejoinder would not be considered
for
purposes of the adjudication. This of course also applied to the
submissions made in response to the rejoinder. In a further
email
dated 14 February 2017, directed to both the College and Trencon, the
adjudicator, acting in terms of rule 5.7.7, requested
further
specified information from Trencon. In the same email the adjudicator
informed the parties as follows:
‘
At this juncture
and based on the information requested, I doubt whether it will be
necessary to conduct a hearing in order to arrive
at my
determination.’
Trencon
submitted the additional information to the adjudicator and the
College on 21 February 2017. Neither the adjudicator’s
email
nor Trencon’s additional information elicited any response from
the College. In the event, the adjudicator decided
that it was
unnecessary to conduct a hearing.
[8]
On 14 March 2017, the adjudicator made his written determination
available. It contained extensive reasons for his conclusions.
He
only allowed five of Trencon’s claims and determined the total
amount payable by the College. At the behest of Trencon,
the
adjudicator corrected a patent error of calculation and made a
revised written determination available on 19 March 2017. In
terms
thereof the amount of R3 253 484,41 was payable by the College to
Trencon.
[9]
On 28 March 2017 the College gave notice of dissatisfaction in terms
of clause 40.3.4 of the building contract and thus referred
the
disputes to arbitration. This did not, of course, relieve the College
of the obligation in terms of clause 40.3.3 to make payment
to
Trencon without delay. However, the College neglected to do so.
Instead, on 13 April 2017, it issued an application to review
and set
aside the determination.
[10]
The grounds for review relied upon in the application were firstly
that the adjudicator failed to comply with the rules of
natural
justice by: refusing to have regard to the rejoinder; not affording
the College an opportunity to submit a response to
the further
information submitted by Trencon at the request of the adjudicator;
and not conducting a hearing. Secondly, the College
attacked the
determination on the substantive merits of the claims that had been
allowed by the adjudicator.
[11]
The court a quo dismissed the review application on three independent
grounds. These were:
(a) that the notice
of dissatisfaction and pending arbitration, on its own, precluded the
review application;
(b) that the rules
of natural justice were not applicable to the matter and, even so,
were not shown to have been breached;
(c) that the
adjudicator correctly determined the substantive merits of the claims
in question.
[12]
As I shall elaborate below, in my view ground (a) is dispositive of
the matter. In the result it is not necessary to finally
determine
grounds (b) or (c). However, for the benefit of the parties, I shall
say something about of each of grounds (b) and (c).
[13]
In respect of ground (b), the court a quo agreed with the
dictum
in
Sasol Chemical Industries Limited v Odell and Another
[2014] ZAFSHC 11
para 18 that an adjudication of this nature is
not subject to the common law. This led the court a quo to conclude
that the rules
of natural justice did not find application to the
matter.
[14]
The legal position is, however, more nuanced than this. It was
lucidly set out by Botha JA in
Turner v Jockey Club of South
Africa
1974 (3) SA 633
(A) at 645H-646B: ‘In the case of a
statutory tribunal its obligation to observe the elementary
principles of justice derives
from the expressed or implied terms of
the relevant enactment, while in the case of a tribunal created by
contract, the obligation
derives from the expressed or implied terms
of the agreement between the persons affected. (
Maclean v.
Workers’ Union
,
(1929) 1 Ch.D. 602
at p. 623). The test for
determining whether the fundamental principles of justice are to be
implied as tacitly included in the
agreement between the parties is
the usual test for implying a term in a contract as stated in
Mullin
(Pty.) Ltd. v. Benade Ltd.
,
1952 (1) S.A. 211
(A.D.) at pp.
214-5, and the authorities there cited. The test is, of course,
always subject to the expressed terms of the agreement
by which any
or all of the fundamental principles of justice may be excluded or
modified. (
Marlin’s
case,
supra
at pp. 125-130).’
It
is clear from the context that this passage dealt with tacit terms of
a contract (the unexpressed intention of the parties) and
not with
implied terms (imported into contracts by law). See
Ashcor Secunda
(Pty) Ltd v Sasol Synthetic Fuels (Pty) Ltd
[2011] ZASCA 158
paras 10-11 and authorities cited there. See also
Marlin v Durban
Turf Club and Others
1942 AD 112
at 127;
Jockey Club of South
Africa and Others v Feldman
1942 AD 340
at 350-351 and
Lamprecht
and Another v McNeillie
[1994] ZASCA 45
;
1994 (3) SA 665
(A) at 668C-I.
[15]
These principles impact on the present matter in the following
manner. The adjudicator operated as a tribunal created by contract.
Express contractual provisions regulated the procedure that he had to
follow. The College did not challenge any of these provisions
as
being contrary to public policy. It follows that there was no room
for the tacit importation of any rule of natural justice
into the
agreement of the parties. See
Robin v Guarantee Life Assurance Co
Ltd
[1984] ZASCA 72
;
1984 (4) SA 558
(A) at 567B-F. The College therefore had to
show that the express contractual provisions had been breached.
Taking into account
the nature and purpose of the adjudication, the
adjudicator conducted it strictly in terms of these contractual
provisions. Therefore
there appears to be no merit in the College’s
reliance on procedural unfairness.
[16]
As to ground (c), it is trite that a judicial review is not concerned
with the correctness of the result on the substantive
merits of the
decision in question, but with the fairness and regularity of the
procedure by which the decision was reached. Consequently
the court a
quo erred in entering into and determining the substantive merits of
the claims in question. The dismissal of the review
application could
not properly have been based on ground (c).
[17]
I now turn to ground (a). The question is whether the court a quo
correctly held that the pending arbitration, by itself, justified
the
dismissal of the review application. The court a quo reasoned that by
referring the disputes to arbitration, the College elected
to enforce
one of two mutually exclusive remedies, resulting in the waiver of
the right to take the adjudicator’s determination
on judicial
review. I do not think that in the circumstances the remedies of
arbitration and review were necessarily mutually exclusive.
The
review was inter alia based on alleged procedural unfairness, whereas
the arbitration will entail a rehearing of the merits
of Trencon’s
claims in terms of the building contract.
[18]
But ground (a) is based on a different but very firm foundation, one
which Trencon was entitled to invoke in support of the
order of the
court a quo. In terms of clause 40.4.3 of the building contract, the
arbitrator will revise the adjudicator’s
determination as if it
had not been issued or given. Thus, the determination will be
revisited during a further step in the agreed
procedure for the
settlement of disputes. It follows that the College required the
court a quo to review unterminated proceedings.
[19]
In
Wahlhaus and Others v Additional Magistrate, Johannesburg and
Another
1959 (3) SA 113
(A) at 119H-120B, this court held that by
virtue of its inherent power to restrain illegalities in inferior
courts, the high court
may, in a proper case, grant relief by way of
review, interdict or
mandamus
against the decision of a
magistrates’ court given before conviction. This power, said
Ogilvie Thompson JA for the court,
must be sparingly exercised. The
court said that it was impractical to attempt any precise definition
of the ambit of this power,
for each case must depend on its on
circumstances. The court, however, laid down the general rule that
the power should be exercised
only ‘in rare cases where grave
injustice might otherwise result or where justice might not by other
means be attained’.
[20]
These principles have been approved and followed on countless
occasions. Their purpose is to limit piecemeal litigation in
the
interests of justice. They are not limited to criminal proceedings.
See
Anglo American Corporation of SA Ltd v Sierzputowski
1973
(3) SA 709
(T) at 714C-H and
Magistrate, Stutterheim v Mashiya
2004 (5) SA 209
(SCA) paras 13-14. They have been applied to the
proceedings of statutory and non-statutory tribunals. See, for
instance,
Brock v SA Medical and Dental Council
1961 (1) SA
319
(C) at 324B-E and
Laggar v Shell Auto Care (Pty) Ltd and
Another
2001 (2) SA 136
para 14. In my view, the principles laid
down in
Wahlhaus
are equally applicable to the present matter.
[21]
Did the College place its case for the review of the adjudicator’s
determination within the ambit of these principles?
I think not.
Central to the answer to this question is the nature and purpose of
the adjudication in terms of the building contract
and the rules. It
was designed for the summary and interim resolution of disputes. The
adjudicator was given wide inquisitorial
powers to resolve the
disputes as expeditiously and inexpensively as possible. But the
adjudicator’s determination was not
exhaustive of the disputes,
as it may be overturned during the final stage of the dispute
resolution process. See, in respect of
similar provisions,
Radon
Projects (Pty) Ltd v NV Properties (Pty) Ltd and Another
[2013]
ZASCA 83
;
2013 (6) SA 345
(SCA) paras 7-9.
[22]
The College agreed to be bound by the adjudicator’s
determination. Its remedy was to refer the matter to arbitration.
It
invoked that remedy and could have pursued it expeditiously. In these
circumstances holding the College to its contract would
not cause
grave injustice nor irreparable harm.
[23]
It follows that the review application had to fail and the
counter-application for enforcement of the determination was
correctly
allowed. The College complained, however, about the
attorney and client costs order on the counter-application and
pointed out
that the court a quo gave no reasons for a punitive costs
order. The absence of reasons for a costs order may indicate that the
court did not exercise its discretion judicially. I shall assume in
favour of the College that this is the case here and that this
court
should reconsider the costs of the counter application. In my view
the review application amounted to an abuse of process.
Instead of
forthwith making payment in terms of the interim determination as it
was obliged to do and despite having expeditiously
invoked the remedy
of arbitration, the College went to court with an application that
was bound to fail. Thus it intentionally
frustrated the rights that
Trencon’s counter-application aimed to enforce. For these
reasons costs on the attorney and client
scale was justified.
[24]
In the result the appeal is dismissed with costs, including the costs
of two counsel.
____________________
C
H G VAN DER MERWE
JUDGE
OF APPEAL
APPEARANCES
For
Appellant: P Ellis SC, P Ellis (Jnr)
Instructed
by: Roelf Nel Inc., Pretoria
Honey
Attorneys, Bloemfontein
For
1st Respondent: No appearance
Instructed
by: Gildenhuys Malatji Inc., Pretoria
For
2nd Respondent: M D Cochrane SC, C de Witt
Instructed
by: Nupen Staude De Vries Inc., Pretoria Claude Reid Attorneys,
Bloemfontein