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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 2023 -085773
1. REPORTABLE: YES/ NO
2. OF INTEREST TO OTHER JUDGES: YES/NO
3. REVISED: YES / NO
DATE: 14 March 2025
SIGNATURE OF JUDGE:
In the matter between:
CLINIX HEALTH GROUP (PTY) LTD Applicant
and
PEIRRE BADENHORST ENGINEERS INC 1st Respondent
TOM MCDONALD N.O 2nd Respondent
JUDGMENT
MEADEN AJ
On 08 NOVEMBER 2024 upon hearing counsel for the parties and considering the
papers, I handed down the following Order :
[1] “The application is dimissed with costs at scale C.”
The above Order was handed down, taking consideration of the undermentioned:
[1] This is an application entailing the review and set ting aside of an arbitration
award made by the 2nd respondent in his capacity as arbitrator on 19 July 2023.
This arbitration award is annexed as “Annexure FA01” to the Applicant’s
Founding Affidavit .1
[2] In this review application, the applicant contends that the 2nd respondent
misconducted himself in re his duties as arbitrator, in the process exceeding his
powers and committing a gross procedural irregularity. This is alleged in
circumstances where the 2nd respondent , according to the applicant , decided
the dispute arising between the applicant and the 1st respondent (“the parties”)
and on the basis of a case that was not pleaded, presented , nor argued before
the 2nd respondent.
[3] In these circumstances, the applicant seeks to have the above arbitration
award set aside in terms of section 33(1) of the Arbitration Act 42 of 1965 (‘the
Arbitration Act”). The salient portion of section 33(1) references:
“33. Setting aside of award
(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) …
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. ”
1 FA 01 -46 – 01-85.
[4] Presented with the above High Court application, the 2nd respondent did not
take issue with nor oppose this application, preferring to abide the outcome of
this application including the above order handed down.
[5] In contextualizing the factual circumstances of this matter :
5.1 The applicant and 1st respondent entered into PROCSA Client/Consultant
Professional Services Agreements for:
5.1.1 CIVIL ENGINEER2 (Edition 4.0 October 2017), (applicable work – full
civil engineering services for the new hospital and external works for
Clinix Health Group on Erf 1[...], P[...] G[...] Ext 12) ; and
5.1.2 STRUCTURAL ENGINEER3 (Edition 4.0 October 2017), (applicable
work – full structural engineering works for the new hospital and
external works for Clinix Health Group on Erf 1[...], P[...] G[...] Ext 12) .
5.2 The effective date s of the above professional service agreements were 05
March 2018 vis -à-vis the proposed Dr Nthato Motlana Memorial Hospital –
Protea Glen - Site identification and address: Erf 1[...], P[...] G[...] Ext 1 2
(“the project”).
5.3 Per the above PROCSA professional service agreements , the contracting
parties on the above project were:
5.3.1 Client – Clinix Health Group (CHG) (applicant)4;
5.3.2 Consultant – Pierre Badenhorst Engineers Inc (1st respondent) .
5.4 The appointed Principal Agent cited in the above agreements was VSB
Quantity Surveryors CC (VSB) . This entity was also cited as a consultant ,
being the appointed Quantity Surveyor to the above project.5
2 Annexure FA02/01 -86 – 01-115.
3 Annexure FA03 /01-116 – 01-144.
4 Annexure FA02/01 -98 – 01-99.
5 Annexure FA02/01 -99 – 01-100; FA03/01 -129 – 1-01-130.
5.5 These agreements also cited additional consultants , which over and
above the aforesaid applicant and 1st respondent , constituted the
Planning and Design Coordinaton Team employed by the applicant and
which was further supplemented from time to time with additional
consultants where neede d and as effect was given and progress made on
the rollout of the project and applicable works .
5.6 In actually giving effect to the above project and over the period 06 Marc h
2018 – 29 October 2019 ; a series of minuted Planning and Design
Coordination Meetings involving the participation of the Client, Principal
Agent, Architect and various professional consultants (including that of the
1st respondent) took place. These Planning and Design Coordination
minutes were incorporated in the court bundle6, and were compiled by the
above Principal Agent – VSB.
5.7 In essence, the above Planning and Design Coordination meetings
contended with issues arising on a daily/weekly basis in giving effect to the
rollout of the project and related works. These Planning and Design
minutes contextualized the circumstances at hand and being contended
with by the applicant in conju nction with the principal agent and
consultants in re the project. Further reference will be made to applicable
minutes of the Planning and Design Coordination Meetings in the
unfolding circumstances of the matter contended with below.
[6] The PROCSA style agreements concluded as between the applicant and 1st
respondent comprised the undermentioned stages:
6.1 Stage 1: Inception;7
6.2 Stage 2: Concept and Viability;8
6.3 Stage 3: Design Development;9
6.4 Stage 4: Documentation and Procurement;10
6 04-1100 – 04-1248.
7 Applicant’s FA, 01 -12 at para 23.1.
8 Applicant’s FA, 01 -12 at para 23.2.
9 Applicant’s FA, 01 -12 – 01-13 at para 23.3.
6.5 Stage 5: Construction;11 and
6.6 Stage 6: Close Out12.
[7] At the Planning and Coordination Design meeting held on 21 May 2019
(meeting no. 21) it was specifically minuted by the principal agent that:
“3.2 APPOINTMENTS
3.2.1 PROCSA documents to be revised. CHG will meet with each consultant
individually. Consultant services to terminate after stage 4.”13
[8] This was reiterated in the ensuing Planning Meeting no. 22 held on 20 August
2019 and again at item 3.2.1 of these minutes.14
[9] Then in Planning Meeting no. 23 held on 29 October 2019 and per the minutes
contained therein , under “CLIENT MATTERS” the following was recorded:
“2.3 CHG will pay outstanding invoices submitted to date from PIC funding.
Invoice details do not have to change – changes with regards to VAT numbers,
etc will only be implemented after first payments are done.
2.4 VSB to send updated summary of invoices submitted to date to CHG.
2.5 Fees for work done by all consultants to date to be updated – VSB will
contact each team member to finalize.”15
[10] The above directions emanating from the applicant as minuted in the above
Planning & Design Coordination Meeting No. 21 – 23, were circulated by the
principal agent in the space of six months with the various consultants and in
the course of the aforesaid Planning and Design Coordination meetings . These
directions entailed a material and substantial deviation from that set out per the
above defined stages of the PROCSA agreements and with the applicant
10 Applicant’s FA, 01 -13 at para 23.4.
11 Applicant’s FA, 01 -13 – 01-14 at para 23.5.
12 Applicant’s FA, 01 -14 at para 23.6.
13 Minutes of Planning and Design Coordination Meeting 21 - 04-1266.
14 Minutes of Planning and Design Coordination Meeting 22 - 04-1273.
15 Minutes of Planning and Design Coordination Meeting 23 - 04-1280.
terminating works and services of the various consultants (including the 1st
respondent) upon the completion of stage 4 of the PROCSA agreements .
[11] This was further summarized in the arbitrator’s award16 and where the arbitrator
recorded inter alia ; that the above minutes revealed:
11.1 The applicant’s commitment to pay its professional consultants up to the
termination of stage 4;
11.2 the principal agent being directed to update the total fees due to the
various professional consultants, and
11.3 the professional consultants to invoice the applicant hereon and the
applicant then to pay such invoices out of PIC funding.
[12] This came about in circumstances where upon regard being had to the various
construction tenders being received and considering the lowest bid tabled by
Tri-Star Construction; this tenderer proposed the conclusion of an Engineering
Procument and Construction (EPC) style contract and which then found favour
with the applicant and would supersede the previously concluded PROCSA
style agreements .
[13] With this , the various consultants were then to be paid by the applicant on all
updated invoices submitted and again per the above minute s of 29 October
2019 . The various consultants ’ fees invoiced for work s to the conclusion of
stage 4 were to be updated by the principal agent and in consultation with the
consultants. Here, the applicant mandated the principal agent to establish and
determine the updated fees of the consultants arising vis-à-vis their respective
PROCSA agreements. This culminated in the principal agent , just short of a
year later, providing the applicant with a “DR NMM HOSPITAL:
PROFESSIONAL FEE SUMMARY”17 dated 08 September 2020.
16 Annexure FA01/ 01 -102 at para 101.
17 Annexure SOC 14 – 04-286.
[14] In these circumstances, the 1st respondent then based its claim on the above
updated “ DR NMM HOSPITAL: PROFESSIONAL FEE SUMMARY” compiled
by the principal agent and which arrived at the undermentioned total :
14.1 Structural engineering R 2 213 888.79 (excl. vat);
14.2 Civil engineering R 1 539 049.73 (excl. vat);
14.3 Subtotal (excl. vat) R 3 852 938.52 (excl. vat) ;
14.4 Vat R 577 940.78
14.5 Total R 4 430 879.30 (vat incl.)
[15] The 1st respondent then compiled and presented to the applicant, tax invoice
3074 in the sum of R 4 430 879.30 (vat incl.) and in so doing , accepted the
principal agent’s above professional fee summary relating to the 1st
respondent. The principal agent in proceeding as above, abided the directions
of the applicant and as minuted in the above Planning and Design Coordination
meetings and which culminated in the production, inter alia, of the aforesaid
professional fee summary and ensuing invoice from the 1st respondent .
[16] It is further noteworthy here that the principal agent was also the applicant’s
appointed quantity surveyor on the project and enjoyed comprehensive insights
on the scope and extent of the works and costings attributed thereto.
[17] It is useful here to contextualize the role of the principal agent. In Aveng
Grinaker v MEC Department of Human Settlements18 it was confirmed that the
principal agent represents the client/employer in the capacity of a key
independent professional role player. The principal agent’s role contributes to
the strengths or weakness es of the entire building project and the principal
agent manages the services of all consultants during the project
implementation, ensuring that the best interests of the client/employer are
served. The principal agent here issues instructions on behalf of and binds t he
client/employer . The authority of the principal agent in confirming payment
obligations due by the client/employer in favour of independent professional
18 (EL459/15) [2018] ZAECELLC 3; [2018] 3 All SA 466 (ECLD, East London) (5 June 2018).
consultants and further in authorizing payment and binding the client/employer
hereto is not in dispute.
[18] Per the definition of principal agent in the above PROCSA agreements19, a
principal agent is described as the entity named in the schedule, appointed and
authorized by the client as agent to manage and administer the contracts. In
compiling and presenting the above DR NMM HOSPITAL: PROFESSIONAL
FEE SUMMARY, the principal agent abided the directions of the applicant in
updating the professional fee summary and then binding the applicant hereto.
This was confirmed by the 2nd respondent in his above arbitration award and I
concur with this conclusion of the 2nd respondent.20
[19] In being presented with the 1st respondent’s above invoice and taking account
of interim payments already made in aggregate of R 3 429 923.57 in favour of
the 1st respondent for services rendered, the applicant in turn refused to effect
payment of the balance then outstanding (per the professional fee summary
presented by the principal agent and quantity surveyor and invoiced on by the
1st respondent to the applicant ) or to compromise hereon and effect payment in
favour of the 1st respondent .
[20] Instead, the applicant sought to sidelin e its principal agent and quantity
surveyor and proceeded in engag ing with third parties , including Glenro
Commercial & Construction Consultants (Pty) Ltd and of which there is no
record of prior involvement in the above project and in attempt ing to asses s the
scope and extent of the works of the 1st respondent .
[21] This then culminated in a dispute arising between the applicant and 1st
respondent and in these circumstances, the 1st respondent on 25 October 2021
engaged with the Association of Arbitrators (Southern Africa) (‘the Association”)
regarding the appointment of an arbitrator to contend with:
19 Annexure FA02 /01-90 at 1.1.15 and FA03 – 01-120 at 1.1.15.
20 Annexure FA01/01 -102 at para 102.
“Dispute in terms of PROCSA Agreement clause 13.0, 13.1., 13.3. Non -
payment of invoices. Clinix disputes amount to be paid, not paying invoices in
full, not disputing the invoice to clause 13.3. Also not in agreement with the fee
structure as set out in contract.”
[22] Ultimately, th is dispute became the subject of arbitration proceedings convened
before the 2nd respondent – Tom McDonald N.O and who was then presented
and contended with the above factual matrix .
[23] In the course and scope of the conduct of these arbitration proceedings, the
applicant engaged independent experts - Messrs Zimba and Wickham and the
1st respondent in turn engaged Mr. Von Geusau. In so doing , further disputes
arose a s between the se experts.
[24] The 2nd respondent concluded that Wic kham, Zimba and Geusau all provided
somewhat different evaluations of the percentage works undertaken and
completed by the 1st respondent.21 In understanding and appreciating the
above factual matrix ; the 2nd respondent inter alia had regard to the principal
agent’s minutes no. 21 – 23 and ensuing professional fee summary and related
documentation. The principal agent was intimately involved in the project and
had the 2nd respondent not so done , then he may have placed himself at risk of
being accused of being remiss.
[25] According to the applicant, the 1st respondent required to prove how much work
was completed by it and with that, the associated entitlements to fair value for
services rendered in relation to such work.22 Per the applicant, the 2nd
respondent required to determine how much of the work had been completed
by the 1st respondent and consequently , what was the fair value payable by the
applicant to the 1st respondent for the services rendered in accordance with the
PROSCA agreements.
21 Annexure FA O1/ 01 -81 at para 193 -194.
22 Applicant’s Replying Affidavit/ 01 -270 at para 25.1.
[26] In this context, the applicant attempt ed and for purposes of this review
application to limit the ambit of the inquiry of the 2nd respondent to that of
considering the evidence of the various experts for purposes of determin ing the
percentage s of works completed by the 1st respondent in the various stages of
the services referenced in the civil and structural engineering PROCSA
agreements. This is then entrenched by the applicant and in it averring that the
2nd respondent exceeded his power qua arbitrator, misconducted himself in
relation to his duties and committed a gross irregularity by:
26.1 “Determining that the Parties amended the Agreements as set out in the
minutes of the Planning and Design Coordination Meetings No 21, No 22
and No 23 (hereinafter referred to as the “Amended Agreement Issue”)
notwithstanding that this element did not form part of either Party’s
pleaded case, with neither party leading evidence or providing argument in
relation to the amendment to the Agreements, as found by the 2nd
respondent23;
26.2 determining that VSB was in a better position to determine the value of the
services as rendered by the 1st respondent when this was not the case
before the 2nd respondent and;24
26.3 breaching the provisions of Article 18 of the rules which provide: ‘Subject
to these Rules, the arbitral tribunal may conduct the arbitration in such
manner as it considers appropriate, provided that the parties are treated
with equality and that at an appropriate sta ge of the proceedings each
party is given reasonable opportunity in presenting its case. The arbitral
tribunal, in exercising its discretion s hall conduct the proceedings so as to
avoid unnecessary delay and expense and to provide a fair and efficient
process for resolving the parties’ dispute’ ”25.
23 Applicant’s Heads of Argument /06-38 at para 76.1. .
24 Applicant’s Heads of Argument/06 -39 at para 76.2.
25 Applicant’s Heads of Argument/06 -39 at para 76.3.
[27] The aforesaid stands to be reconciled against the actual dispute declared by
the 1st respondent and referred to ad paragraph 2126 above. Clearly in this
regard, the dispute was not limited and as framed and set out in paragraph 26
above.
[28] In this context , the 1st respondent contend ed that part of the documents
received in evidence during the arbitration were the various minutes of the
Planning and Design Coordination Meetings (incorporating minutes No. 21 –
23) and which minutes were attached to the 1st respondent’s statement of case .
Flowing herefrom was the production of the principal agent’s professional fee
summary of 8 September 202027 and wh ich the 1st respondent accept ed and
relied on in presen ting its tax invoice of 9 October 202028 to the applicant.
There is no commercial and legal basis upon which the applicant can inhibit the
2nd respondent having regard to the above factual matrix in the course of the
arbitration at hand.
[29] The arbitrator , in giving consideration to the above factual circumstances , would
have realize d that consequent upon Planning and Design Coordination
Meeting s No. 21 – 23; the above PROCSA agreements were inter alia; to be
summarily te rminated upon the completion of stage 4 , thus resulting in a
variation of the contracting parties’ rights and obligations under the PROCSA
agreements and including th e consultants performing up to completion of stage
4 of the works and with that then being remunerated therefor.
[30] Presented with the above dispute, the 2nd respondent adopted a logical and
practical approach in reviewing and being appreciative of the above factual
matrix and in the process realizing th at the PROCSA agreement s were being
prematurely terminated upon completion of stage 4 and with that followed the
compilation and production of the principal agent’s updated professional fee
summary. This very fee summary had in turn been relied upon by the 1st
26 “Dispute in terms of PROCSA Agreement clause 13.0, 13.1., 13.3. Non -payment of invoices. Clinix
disputes amount to be paid, not paying invoices in full, not disputing the invoice to clause 13.3. Also
not in agreement with the fee structure as set out in contract.”
27 Annexure SOC 14.
28 Annexure SOC 15.
respondent in invoicing the applicant as above. This then included the 2nd
respondent taking consideration of the existence and participation of the
principal agent that was also the project’s appointed quantity surveyor. The
principal agent was indeed in the best position to compile the updated fee
summary and was directed so to do by the applicant and bound the applicant
accordingly in so doing .
[31] The circumstances as framed in Planning and Design Coordination meetings
No. 21 – 23 above brought about a change of direction in the project , including
in re the envisaged termination of the PROCSA agreements and upon the
various consultants achieving completion of stage 4.
[32] Further given the existence of a principal agent , in understanding the scope,
extent and circumstances of the rollout of the PROCSA agreements ; it was
prudent for the 2nd respondent to take cognizance of, inter alia, the Planning
and Design Coordination meeting minutes and specifically meetings No. 21 –
23 and with that the principal agent’s updated fee summary . The principal agent
here enjoyed a hands on and current insight on the scope and extent of the
works of the various consultants and including that of the 1st respondent and
further had been instru cted by the applicant to value and update the various
professional consultants’ accounts as at the completion of stage 4 of the
PROCSA agreements. The principal agent did this , thus culminating in its
production of its revised professional fee summary of 08 September 2020 and
which was then relied upon by the 1st respondent and in its ensuing production
of its tax invoice 3074 dated 9 October 202 0, duly addressed to the applicant.
[33] It is indeed doubtful here and certainly no insights have been provided by any
of the litigants regarding Glenro Commercial & Construction (Pty) Ltd together
with any of the independent experts introduced by the applicant and 1st
respondent enjoying any superior knowledge and insights compared with that
of the principal agent/project quantity surveyor. Further, had the 2nd respondent
not given consideration to the insights of the appointed principal agent/quantity
surveyor on the project as above , then undoubtedly; there would have been
room to criticize the 2nd respondent for being remiss and actually negligent in
not so doing.
[34] Much is made here by the applicant of the 2nd respondent committing a gross
irregularity in concluding that consequent on Planning and Design Coordination
Meetings No 21 - 23 as above , an amendment of the PROCSA agreement
occurred. There is no substance to these allegations on the part of the
applicant. The 2nd respondent certainly could not ignore the above summarized
factual matrix in establishing the scope and extent of the works undertaken by
the 1st respondent for stages 1 – 4 and then in attributing va lue thereto. Further,
I can see no impediment in the 2nd respondent placing reliance on the advices
and conclusions of the principal agent /project quantity surveyor .
[35] What is indeed noteworthy here , is that the applicant in opposing the 1st
respondent’s claim , did not reference formally taking issue with the underlying
principal agent’s professional fee summary of 08 September 2020 that was duly
accepted by the 1st respondent and which in turn was premised on the insights
of the project’s quantity surveyor. I am not aware of any impedi ment arising in
the applicant so doing. Had there been a genuine issue here, then and in giving
effect to the criteria of the above PROCSA agreements, the applicant should
have placed in contest the above professional fee summary presented by the
principal agent and quantity surveyor and raised issue with these very entities.
There is no substantive reference in this application to this ever occurring. In
the absence of such disputes, refusing to pay on the principal agent’s above
requested updated professional fee summary, aside from being disingenuous;
left the applicant financially accountable in favour of the 1st respondent and as
confirm ed in the 2nd respondent’s above award. This review application in its
own right is very narrow and contrived, disregarding the reality of the above
factual matrix and serves only to aggrevate the already tenuous position of the
applicant vis-à-vis the 1st respondent.
[36] Accordingly, I conclude that the applicant has not made out a case regarding
the 2nd respondent misconduct ing himself in relation to his duties as arbitrator
and in the process exceed ing his powers and committ ing a gross procedural
irregularity in the conduct of the above arbitration proceedings culminating in
the 2nd respondent’s award of 19 July 2023. This award remains of full effect
and may at the 1st respondent’s instance and request be made an order of
court.
[37] In the circumstances I conclude that there are no valid and sustainable grounds
upon which to review and set aside the arbitration award as published by the
2nd respondent on 19 July 2023.
ORDER
Accordingly. I ma de the undermentioned order:
[1] “The application is dimissed with costs at scale C.”
MEADEN JR
ACTING JUDGE OF THE HIGH COURT
This Judgment was handed down electronically by circulation to the parties’ and or
parties’ representatives by email and by being uploaded to CaseLines. The date and
time for the hand down is deemed to be 1 3h00 on this 14th day of March 2025.
Appearances
For Applicant: Adv. A Glendinning
Instructed by: Neil Du Toit Inc.
For 1st Respond ent: Adv. TJ Jooste
Instructed by: VFV Attorneys
Date of Hearing: 08 November 2024
Date of Judgment: 14 March 2025