IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case no:16571/2024
In the matter between:
TEMPANI CONSTRUCTION (PTY) LTD Applicant
And
THE MINISTER OF PUBLIC WORKS AND INFRASTRUCTURE Respondent
Heard: 17 March 2025
Delivered: 15 September 2025
Summary: Contract- parole evidence rule-integrated clause
ORDER
Counter claim dismissed.
Orders sought by applicants granted.
JUDGMENT DELIVERED ELECTRONICAL
NZIWENI J
Introduction
[1] In this application, the applicant seeks to make the final award, made in its favour by the
adjudicator on 28 June 2024, an order of this court. This relief is sought in terms o f
Rule 6.2.2 of the JBCC Adjudication Rules. The applicant also seeks the relief from this
Court on the grounds that the parties had agreed [in an Adjudication Agreement entered
between the parties ] to resolve their disputes only by an adjudication mechanism. The
relief that is sought by the applicant is directed squarely towards making the
adjudicator’s award final and a definite determination upon the subject between the
parties.
[2] Accordingly, the applicant asserts that the parties di d not reach an agreement that
created a right to ‘appeal’ the adjudicator’s determination through the mechanism of
arbitration.
[3] On the other hand, the respondent asserts that the parties set forth a two -tiered
mechanism for resolving disputes or disagreements between themselves. According to
the respondent, both the mechanisms were memorialised in written contracts.
[4] The respondent opposes this application on the basis that the parties agreed to both
adjudication and arbitration mechanisms. The respondent holds the firm view that the
two-tiered mechanisms were set forth in the event that any party is not satisfied with the
adjudicator’s determination, it would be able to take the adjudicators finding to
arbitration as envisaged in the Addendum Contract.
[5] It is common cause between the parties that the Addendum Contract upon which the
respondent relies, was only signed on behalf of the respondent.
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[6] The dispute in this case centers around whether the parties agreed on adjudication and
arbitration to govern their disputes arising out of the JBCC contract. And whether the
integration clause in the JBCC Contract precludes proof of the Addendum Contract.
[7] The respondent has also launched a counter application. In the counter application, the
respondent seeks a declaratory order declaring that the parties have agreed to both
adjudication and arbitration; alternatively, the arbitrator’s findings should be set aside.
[8] The reliefs that are sought in this matter by the parties are related to the factual
background of the matter. It is thus critical to present a review of the background facts to
frame the context relevant to decide this matter. In fact, i t is necessary to sketch the
events forming the background to the dispute. It is also significant to note that quite an
amount of the factual b ackground to these proceedings is not in dispute and I turn,
therefore, to that factual background.
Factual background
[9] The controversy between the parties has a long history that needs to be briefly stated.
The Applicant entered into a building contract with the respondent (“the Department”) for
the construction of a community day centre in Delft (“the Delft project”). The genesis to
the present dispute between the parties is the outstanding monies for the construction
of the Delf t project. As mentioned previously, t he adjudicator made a determination
against Department. Inter alia, the adjudicator determined that the Department is to pay
the applicant the sum of R10 420 365.61 (plus VAT). The date of final completion of the
Delft project was in August 2017.
[10] According to the applicant, despite receiving demand, the Department has not made
payment of the amount due in terms of the adjudicator’s determination, and the
Principal Agent has refused to amend the final account and to issue a final certificate in
accordance with the determination.
[11] As I have previously observed, the order sought by the Applicant in these proceedings
is pursuant to Rule 6.2.2 of the JBCC Adjudication Rules. Rule 6.2 of the Adjudication
Rules states the following:
“6.2 Either party may:
6.2.1 Within five (5) days, in writing, request the adjudicator to correct any patent
clerical, typographical or arithmetical error or clarify any ambiguity in the
determination. Such party shall simultaneously furnish the other party with the
copy of such request. The adjudicator shall comply with such request within a
further five (5) working days.
6.2.2 Apply to the High Court for the enforcement of the determination. The
parties shall accept the jurisdiction of such court.”
[12] This matter involves three separate instruments. The first one is the JBCC contract and
the other ones are the Adjudication Agreement and the Addendum Contract.
JBCC Contract
[13] The JBCC contract has an integration clause that provides as follows:
“1.8 This agreement is the entire contract between the parties regarding the matters
addressed in this agreement. No presentations, terms conditions or warranties not
contained in this agreement shall be binding on the parties. No agreement or addendum
varying, adding to, deleting or cancelling this agreement shall be effective unless
reduced to writing and signed by the parties.” Own underlining.
[14] On 31 May 2023 , the applicant’s attorneys addressed a letter, to amongst others , the
Department’s attorneys, seeking changes in the process for dispute resolution . The
letter read in part as follows:
“DISPUTE HAS ARISEN
4. It is evident from the content of your letter that a dispute has arisen between
the parties and that such dispute stands to be r esolved by way of dispute
resolution mechanisms provided for in the contract.
ALTERNATIVE DISPUTE RESOLUTION MECHANISMS
5. Our client is of the opinion that the parties will not be able to resolve this
dispute by way of Mediation. In this regard, we record as follows:
5.1. Mediation is not a precondition in the contract for Adjudication / Arbitration
to commence.
5.2. Media tion is unfortunately relatively unsuccessful where a public body is
concerned as it is challenging to ensure that the parties at the Mediation have an
adequate mandate and discretion to settle a matter.
5.3. This specific dispute is not capable of being mediated as the parties legal
positions are diametrically opposed.
6. Having said that, our client is committed to the resolution of the dispute in the
most expeditious, practical and cost-effective manner.
7. In order to achieve this objective, our client would like the parties to refer the
matter (sic) Adjudication. However, due to the legal complexity of the dispute,
Adjudication in its unadulterated form is not appropriate as it is in both parties
interest that they are guided by legal professionals.
8. Kindly advise whether the DPW will agree as follows:
8.1. That the dispute is referred to Adjudication.
8.2. . . .
8.3 . . .
8.4 . . .
9. Should the DPW not be prepared to have this dispute adjudicated (on the
above basis) , then the matter must be resolved by way of arbitration
proceedings.
10. Arbitrations are far more adversarial, lengthy and costly by nature . . .
11. In the event that the DPW insists on Arbitration, we suggest that DPW select
one of the four advocates.
12. Kindly take instruction and revert within the next 10 days.
13. Should we receive no response, it is our instruction to follow the usual
approach to have an arbitrator appointed by Association in terms of the
contractual provision applicable”.
[15] On 09 June 2023, the Department’s attorneys replied to the applicant’s attorneys letter,
pointing out the following:
“2. We herewith confirm that our client has made the following recommendations
to the Department:
2.1 The dispute be referred to adjudication . S hould th is be unsuccessful, the
matter should then go to arbitration;
2.2 . . .
2.3 That the normal rules of adjudication apply;
2.4 . . .
3. It is our instructions that our client is still awaiting the feedback from the
Department regarding the above recommendation.
We trust you find the above in order and will revert as soon as confirmation is
received from Department.”
[16] On 08 December 2023, the Department’s representative emailed the applicant’s
representative the Addendum contract requesting the applicant to complete and to sign
the Addendum contract. The Addendum contract is only signed by the Department, and
it also reflects that it was signed [by the Department] on 10 November 2023.
[17] The Adjudication Agreement concluded between the parties was signed by both parties
in January 2024.
[18] On 12 July 2024 the Department’s legal representative wrote a detailed letter to the
applicant’s representative reading in part as follows:
“To this end we draw your attention to the attached letter of Schroter Attorneys, . .
. addressed to yourself on 09 June 202 3, in which they informed your office of
the following . . .
5. On the strength of the recommendati on and after consulting its intern al legal
advisors, the Department accordingly agreed to amend the agreement to make
provision for the standard dispute resolution clauses, of adjudication and
arbitration. To this end the attached amended addendum to the agreement was
signed . . . and emailed to you . . . for countersigning.
6. As a result , the Department has always approached this dispute on the basis
that should adjudication not be successful, the matter could be referred to
arbitration, upon notice of dissatisfaction of the adjudication determination by any
of the parties.
7. Considering the above . . .the above actions taken by the Department in
amending the initial agreement to make provis ion for adjudication and arbitration
reflect the true intention of the parties to resolve this dispute.
8. we note your instructions that your client does not consent to arbitration, but
we do think that such instructions are not properly considered, as your client has
already consented to arbitration. My own emphasis.
Clause 40 of the contract stated that any dispute between the parties that cannot
be resolved inter se, the parties would refer the matter to be resolved through
litigation.
[19] Pursuant to the conc lusion of the JBCC [building contract], the parties entered into an
Adjudication Agreement by which they decided to refer the disputes between them to
adjudication. The parties also agreed that their Adjudication Agreement would be
governed by the JBCC Adjudication Rules.
[20] On 28 June 2024, the adjudicator made a determination in the following terms:
6.1. The Department is to pay the Applicant the sum of R10 420 365.61 (plus
VAT);
6.2. The principal agent appointed on the project by the Department Equity
Studio (Pty) Ltd (“A”), was found to have been incorrect in rejecting the Claimants
claims for an adjustment of the contract value.
6.3. That the amount of R10 420 365.61 (plus VAT) is to be included in the final
account on the project and that a final payment certificate was to be issued.
6.4. The final payment certificate is to be issued immediately.
6.5. The Department is to pay the costs of the adjudication including the
adjudicator’s costs and the Claimant’s costs on a party-and- party basis.
[21] In a letter (“letter of dissatisfaction”) to the adjudicator dated 5 July 2024, the
Department advised that it was dissatisfied with the determination and that it intended to
refer the dispute to arbitration.
[22] The Applicant responded to the letter of dissatisfaction by the Department, by email in
which it [Applicant] stated inter alia:
“That the building contract did not provide for the determination to be referred to
arbitration (due to the Department being dissatisfied therewith, or at all for that
matter”). The Department does not enjoy a contractual right to refer the dispute
to arbitration. If the Department is “ dissatisfied” with the determination, then the
dispute to be referred to litigation, unless the parties agree otherwise.
Since the Applicant is not prepared to consent to an arbitration process, the
Department would need to proceed with litigation.”
[23] On 12 July 2024, the Department’s attorney sent the applicant’s attorneys an email.
See paragraph 18 of this judgment for the contents of the email.
[24] The email also stated that when the parties referred the matter to Adjudication , the
Department did so with an understanding that the standard dispute resolution clauses of
adjudication and arbitration would apply. To buttress this contention, the Department
emphasised that a written addendum to the building con tract that was prepared and
signed by the Department on 10 November 2023. However, the addendum was not
counter signed by the Applicant.
[25] On 15 July 2024, the Applicant’s attorneys sent an email to the Department’s attorneys
asserting, amongst others, that the applicant disputes the Department’s construction of
the agreement between the parties. In the email , the applicant denies the existence of
an arbitration agreement (in writing or otherwise) and that there was no binding
amendment to the contract to provide for arbitration. The email further states that the
default position remains litigation as per the original contract between the parties.
Parties’ submission
a. Applicants’ submissions
[26] According to the applicant, i n this case, it is common cause that the final account
should have been issued in January 2016. The final account was only delivered seven
years later in February 2023. The applicant avers that this was a breach of contract.
Due to the late issuance , the applicant was kept out of pocket, in respect of substantial
outstanding amount [several millions of rands] . To address this, in 2018, the applicant
then launched an urgent application to get the outstanding amounts. After an order was
granted in 2019, it took another four years for the Departments’ agents to issue a final
account.
[27] At the time when the final account was issued, in terms of the building contract, the
procedure for the resolution of disputes was through litigation. After the issuance of the
final account, disputes arose between the parties in respect of monies that the applicant
final account, disputes arose between the parties in respect of monies that the applicant
alleged should have bee n included i n the final account. The Applicant’s attorneys
proposed that the parties should refer these dispute s for adjudication. This led to the
parties concluding an Adjudication Agreement in January 2024.
[28] An a djudicator was appointed, and an adjudication hearing was held. At the end of
June, the Adjudicator delivered his determination. According to the applicant, the
Department refused to comply with the determination. The applicant asserts that the
Department took the position that the matt er should at that stage be referred to
arbitration without any legal basis for that position.
[29] The applicant drew this Court’s attention to the amendment to the Standard Contract in
relations to dispute resolution by means of the State Provisions. According to the
applicant, t he conventional procedure s [Adjudication and Arbitration] were removed
from the Standard Contract and replaced with litigation.
[30] The applicant is of the view that it is significant that this Court should have regard to
the amendment of the Standard Provisions in relation to dispute resolution by means of
the State Provisions.
[31] The applicant then asserts that the parties then amended clause 40 that stipulated that
litigation was the only option. And that shortly after the issuance of final account,
disputes aro se [applicant contended that this is so because certain amounts it was
entitled to were not included in the final account].
[32] According to the applicant, it was never the applicant’s intention to refer the arising
disputes for arbitration. The applicant asserts that one, if not the primary, reason behind
adjudication mechanism is that it is a short, inexpensive, and relatively easy process as
opposed to arbitration and litigation.
[33] The applicant further contends that the Department’s assertion falls foul of the parole
evidence rule. To this end, the applicant contends that the Department intends to rely on
extrinsic evidence to add or alter the provisions of an agreement. It is also the
applicant’s contention that it is not for the department to tell the court what the intentions
of the parties were, but the court’s duty.
[34] Further, it is the applicant’s contention that the Department’s reliance on the Addendum
Contract is still born as the clause 1.8 of the JBCC Contract has a non-variation clause.
The applicant contends that the respondent’s reliance on the Addendum Contract is
legally unsustainable as it was not signed by both parties as required by clause 1.8 of
the JBCC. It is further the applicant’s contention that th e applicant refused to sign the
Addendum Contract.
[35] It is the applicant’s contention that even on the Department’s case , the Addendum
Contract had to be signed by both parties to have any effect , as reflected by the email
dated 08 December 2023, from Grant de La Cruz. The applicant further asserts that the
Addendum Contract also specifically stipulates that all pages of the Addendum Contract
must be initialed in the same way as the original bid document.
[36] The applicant further argued that the fact that the Department was unsuccessful in its
attempt to get the Addendum Contract signed by the applicant is important as far as
context is concerned.
[37] Mr de Villiers, SC on applicant’s behalf , made it very clear during his submissions that
at no stage during communication between Mr Pienaar [on behalf of the applicant] and
Ms Hossain on behalf of the Department] regarding finalisation of the Adjudication
Agreement, did Ms Hossain refer to the Addendum Contract.
[38] Counsel for the applicant earnestly points out that the Addendum Contract was never
part of the negotiations that culminated in the conclusion of the Adjudication Agreement.
[39] According to the applicant, t he first relevant context in this matter is the letter dated 31
May 2023, from the applicant’s attorney , advising that the parties should not refer the
matter to arbitration.
[40] Mr de Vivier SC argues and stresses that the background context in this matter,
provides the strongest evidence supporting the applicant’s contention that the
Adjudication Agreement is the binding agreement between the parties. According to the
applicant’s counsel, the following background context is necessary to fully understand
the intentions of the parties:
a. That the parties agreed on the dispute resolution provision in the JBCC.
b. That the applicant communicated its preferred choice that is adjudication.
c. That at that relevant stage, a normal under lining purpose of adjudication and
arbitration no longer existed , as the building had been com pleted and the final
account had been issued.
d. That Mr de La Cru z’s attempt to introduce the Addendum came out of the blue
and he was informed that the applicant would not sign the Addendum.
e. During the f inal stage of the negotiations , Ms Hoosain never referred to the
Addendum.
[41] According to the applicant, the proposal was that the Adjudicator was meant to be the
final arbiter of the parties’ disputes.
[42] In the replying affidavit, the applicant refers to the Addendum as an abandoned attempt
to amend the JBCC contract. As such, so the argument ran, the respondent cannot rely
on the unsigned Addendum to elevate it to be above Adjudication Agreement.
b. The Department’s submission
[43] In essence, the Department wants to prove existence of a separate Arbitration
contract, as a valid and binding agreement between the parties . According to the
Department’s counsel, the crucial aspect which the applicant did not take the court to its
confidence is the failure to reveal the existence of the Addendum in its founding papers.
[44] According to the Department, the Adjudication Agreement is only a part of the
agreement between the parties. Mr R Stelzner, SC, c ounsel for the Department,
vehemently argued that the whole of the agreement was broader and that the
Adjudication Agreement was not to be the sole dispute resolution mechanism. Thus, the
Department argued that from purpose and context of this matter it is clear that the
Adjudication Agreement was not meant to be the sole dispute resolution mechanism.
[45] Department asserts that the Addendum contract is fundamental part of determining
whether the applicant is entitled to enforcement of the adjudication award or not and
that depends on the interpretation of the Adjudication Agreement.
[46] According to Mr Stelzner SC, the parole evidence rule does not prevent a party from
telling the court what the whole agreement was. The Department argues that the parole
evidence does kick in when only parts of the agreement are placed before the court. It is
the Department’s contention that the Adjudication Agreement is not the sole memorial of
the parties’ transaction in this suit . According to the Department, the Department is
seeking to place the full picture, full content and full context before the court in order to
assess what the Adjudication Agreement is. The argument continues to state that the
Adjudication Agreement needs to be seen in the context of that which prec eded it and
for the purpose for which it was signed.
[47] It is also the Department’s submission that the parties agreed to amend the JBCC
contract and agreed to other dispute resolution mechanism . It was contended on behalf
of the Department that JBCC Contract postulates litigation and alternatively adjudication
and arbitration.
[48] According to the Department, the applicant wishes that this Court should ignore the
history and the context and just look at the Adjudication Agreement. It is the Department
history and the context and just look at the Adjudication Agreement. It is the Department
submission that should this Court scrutinise the context too closely, the case of the
applicant would collapse in its entirety.
[49] It was submitted on beha lf of the Department that what it argued for the respondent is
not in conflict with what is provided for in the Adjudication Agreement.
[50] The Department’s counsel also relied on the email dated 08 September 2023, from Mr
Botha to the applicant. He argued t hat the applicant cannot come and argue that there
was no Addendum Contract signed by both parties but there was an Adjudication
Agreement.
[51] It was contended on behalf of the respondent that what is crucial about the Addendum
Contract are two things, the f irst one is that the dispute resolution by litigation clause
was substituted by adjudication . According to the Department, the Addendum that is
signed on behalf of the Department provides for a full dispute resolution mechanism.
[52] It was argued on behalf of the Department that in terms of clause 40.5# of the JBCC ,
should a party be dissatisfied with the decision of the adjudicator, the dispute which is a
subject matter of dissatisfaction shall be finally resolved by the arbitrator.
[53] According to th e Department, subsequent to the decision to have a full dispute
resolution mechanism, the acting head of the legal department of the Department was
presented with the Adjudication Agreement and they signed it. It is argued that the
Adjudication Agreement ‘s context is the Addendum signed on behalf of the Department
previously and the purpose is to resolve the dispute first by way of adjudication if one of
the parties is dissatisfied with the adjudication, then by way of 40.5# of the JBCC.
[54] It is submitted on Department’s behalf that when the applicant states that it never
agreed to the Addendum Contract as they never signed it, that means that there is no
amendment of the JBCC Contract, as the Department made it clear that the only
amendment that was mandated was one as provided for in the Addendum. According to
the Department, the Addendum was sent to the applicant’s attorney and the applicant’s
the Department, the Addendum was sent to the applicant’s attorney and the applicant’s
attorney signed the Adjudication Agreement. And in so doing the applicant’s attorney
only dealt with part of the agreement. So the argument continues, as a result, there was
a partial integration of the whole parties ’ agreement. It is the argument of the
Department that the applicant deliberately signed part of the agreement.
[55] According to the De partment, the context shows that the Addendum identified that
there would be a process of adjudication and arbitration. Thereafter the parties signed
the Adjudication Agreement to deal with the adjudication part . Having committed
themselves to adjudication as part of adjudication and arbitration , the applicant cannot
come and argue that the whole arbitration requirement falls away.
[56] According to the Department, the parties agreed to both adjudication and arbitration
mechanisms. Further, the Department contends that when the parties agreed to amend
the building contract, it was amended to cater for both adjudication and arbitration.
[57] The Department argues that it is opportunistic of the applicant to seek an order from
this Court for payment for claims that are in excess of R10 million. It was further
submitted on the Department’s behalf that it was a self -serving omission on the part of
the applicant not to sign the Addendum Contract and this creates a deception. It was
contended that, when the Department signed the Adjudication Agreement, it was not
informed that the applicant was refusing to sign the Addendum. When Mr Stelzner SC
drew this Court’s attention to the email from Charlton Botha to Sean Pienaar, dated 26
September 2023, he argued that the email conveys that the adjudication process meant
to be part of a broader agreement that was still in the process of being vetted and
needed to be mandated and sanctioned.
[58] According to the Department, the parties started to deal with a specific component of
the process, the Adjudication Agreement. The Department counsel submitted that the
Department thought that the addendum was signed and that is why the Department
signed the Adjudication Agreement.
[59] The Department’s counsel emphasised the point that the context of the whole
[59] The Department’s counsel emphasised the point that the context of the whole
agreement is broader. Counsel on behalf of the Department, submits that this Court is
going to find the context leading up to the two documents [Adjudication Agreement and
the Addendum] in the letter sent to the applicant’s attorneys from Mr Grant de La Cruz,
the chief architect, on 8 December 2023 . The counsel further argues that the letter
highlights and emphasises the fact that the only amendment the Department is going to
be prepared to agree to is the one that is mandated by the Department. The
Department maintains that the only amendment that was mandated was the one
provided for in the Addendum Contract.
[60] It is the Department’s counsel’s argument that if the applicant maintains that they never
agreed to the Addendum contract, then there is no amendment of the JBCC Contract.
Then the amendment contemplated by the Adjudication Agreement was not effected.
The Department submits that this is the case because there was a partial integration of
the old parties’ agreement.
[61] Mr Stelzner SC further asserts that nowhere in the Adj udication Agreement would this
Court find that it [the Adjudication Agreement] is the only method to resolve disputes.
[62] The Department submits that the adjudicator did not address the defences raised by
the Department and simply ignored them or did not engage with them. As such, the
award by the adjudicator was plainly erroneous.
Evaluation
[63] The Addendum Contract by its terms it was intended to provide for a process of
adjudication followed by arbitration should either party be dissatisfied with the decision
given by the adjudicator . And was intended to amend and supplement the original
contract [JBCC].
[64] The rules for interpreting contracts are well -settled and are laid out in plethora of
authorities. In this matter, this Court is expected to give effect to the mutual intention of
the parties as it existed at the time of contracting, so far as the same is ascertainable . It
is common cause between the parties that the building contract JBCC only made
provision for litigation. That the Adjudication Agreement is silent on arbitration. It is also
common ground that the Department unilaterally drafted and signed an Addendum
Contract.
[65] The issue for determination is wh at the agreement was between the partie s. Put
differently, whether the Adjudication Agreement denotes the full agreement between the
parties.
Integration
[66] The applicant asserts that the parties in the Adjudication Agreement expressly
bargained for only Adjudication. On the other hand, the Department fervently contends
that the Adjudication Agreement only expresses certain terms of their agreement rather
than the agreement in its entirety.
[67] In this regard, this Court has to amongst others, determine as to whether:
a. the Adjudication Agreement appears on its face to be a complete agreement;
b. whether the Addendum contract directly contradicts the Adjudication Agreement;
and
c. would the Addendum Contract tend to deceive this Court.
[68] It is significant to note that when the parties to an agreement express their intention
that ought to be the complete expression of their agreement. And that should signify that
integration had occurred. Ordinarily, th e presence of an integration clause in an
agreement will be quite convincing factor, if not decisive one, on the issue of integration.
In essence, this denotes that the agreement concluded between the parties may not be
contradicted by evidence of other agreements.
[69] In the present application, the Adjudication Agreement does not contain an integration
clause. In this regard , the applicant argues that it is the integration clause in the JBCC
contract that bars the proof of the Addendum Contract.
[70] During the making of a contract parties are at liberty of rejecting or accepting a bargain
offered. To that end, parties are at liberty to make unjust contracts. And when an unjust
contract is concluded between the parties, a party cannot expect the courts to amend
the terms that prove unsatisfactory or unjust.
The parties’ intention
[71] The applicant’s counsel submits that the evidence the Department wants to rely on in
respect of the unsigned Addendum is extrinsic evidence. The applicant says the
assertion that the applicant accepted the Addendum that was signed by the Department
is untr ue. The applicant asserts further that the Addendum was sent to applicant’s
director, who refused to sign the document because that was not what the parties
agreed to.
[72] It is well-established that the intention of the parties in any agreement is determined
from the language used by the parties in the agreement or from their conduct in relation
thereto. It is also a well-settled interpretation principle that a court canno t create a
contract the parties did not intend to conclude or to insert language one or both parties
now wish had been included. In fact, in the interpretation of a contract, a court is tasked
with giving effect to the mutual intention of the parties at the time of the conclusion of
the contract.
[73] In this case, there is no impasse about the meaning of a particular word or phrase . It is
well established that if the contract’s language is unambiguous, then the ordinary sense
of the wording must prevail in its interpretation. No party in this matter argued that the
terms of the JBCC Contract, the Adjudication Agreement and the Addendum Contract
are ambiguous.
[74] And it is not in dispute that the JBCC Contract contains a n integration clause . By
necessary implication the integration clause in the JBCC Contract is applicable to
Adjudication Agreement. When the court is faced with the duty to interpret an
agreement, the interpretation has to have effect to the parties’ intent . In this matter, the
parties have a different take on the terms to which they agreed to. As asserted by the
Department that the applicant as the party seeking to enforce the Adjudication
Agreement bears the onus of proving that the contract it seeks to enforce is valid
contract and its terms.
[75] The applicant did not sign the Addendum Contract and thus contends that it is not
bound by it as it never assented to the terms of the Addendum Contract. The
Department asserts that the Addendum Contract was executed to further modify the
JBCC and constitute a valid modification of the original JBCC Contract. The Department
further asserts that they would not have signed the Adjudication Agreement absent the
Addendum Contract. In essence, the Department argues that the existence of the
Addendum Contract demonstrates a latent ambiguity within the Adjudication Agreement.
[76] According to the Department, the Adjudication Agreement is incomplete. Thus, there is
partial integration.
[77] To give effect to each part of the contract, [the terms of the agreement] the entire
agreement is to be taken holistically and not in a piecemeal fashion. Or, putting it in
another way, no clause is to be taken in isolation . It is also well settled that putting a
contract in writing ensures clarity about what the parties’ obligations are and what they
are biding themselves to . When parties reduce a contract in writing, the intention of the
parties is to be ascertained from th e writing alone , if possible . Hence, the written
contract, in general, is said to be the sole memorial of the agreement between the
parties.
[78] Thus, a clear written agreement may triumph over any negotiations or conditions
related to it that preceded or accompanied the execution of the contract. Hence, the
parole evidence rule entails that evidence that is intended to contradict the terms of the
written agreement is not allowed. In fact, it is trite that a court cannot consider extrinsic
evidence of any prior agreement or verbal agreement to vary or contradict the clear and
unambiguous terms of a written, integrated contract. But to this general rule [the parole
evidence rule], there are exceptions.
Exception to the parole evidence rule
[79] AJ Kerr, in The Principles of the Law of Contract 6 ed (2002) at 348, highlighted the
point that it is better to look at the parole evidence rule as a question of the integration
of parts into a whole. The learned author further states the following:
“Thus in National Board (Pretoria) ( Pty) Ltd and another v Estate Swanepoel,
Botha J A approved the following statement in Wigmore on Evidence: This
process of embodying the terms of a jural act in a single memorial may be
termed the integration of the ac t, ie its formation from scattered parts into an
integrated documentary unit. The practical consequences of this is that its
scattered parts, in their former and inchoate shape, do not have any ju ral effect;
they are replaced by a single embodiment of the act.
In other words: When a jural act is embodied in a single memorial , all other
utterances of the parties on that topic are legally immaterial for the purposes of
determining what are the terms of their act”.
[80] The learned authors Schwikkard & van Der Merwe 3rd Edition 462 -463 states:
“There are several qualifications and exceptions to the general rule excluding parol e
evidence. Some of these are not truly exceptions, but rather instances which fall
outside the scope of the rule. Where for instance, a written contract is not intended to
outside the scope of the rule. Where for instance, a written contract is not intended to
cover the terms of the transaction all -inclusive, evidence of further oral terms is not
precluded. The rule does not apply to a document which contains a mere narration of an
event, and which does not constitute a jural act; nor does the rule exclude evidence
which throws light on the true nature of the transaction referred to in a written document.
. . Parole evidence may for instance, be admissible of a collateral agreement and
additional terms and subsequent oral variations, but not where writing is a requirement
of law, and such evidence seeks to contradict the written instrument. A similar result
arises where the contract contains a clause to the effect that no variation or rescission
of the contract shall be valid unless it is reduced to writing. But that, of course, is not
due to the operation of the parole evidence rule. Curiously , even contracts that are
required by law to be in writing can be cancelled orally.”
[81] In this case, the Department seeks this Court to consider the facts and circumstances
surrounding the execution of the agreements to determine as to whether the contract is
fully integrated or partially integrated. On the other hand, t he applicant strongly asserts
that the parole evidence rule does not allow this Court to do that. Factors relevant to
this consideration include the following:
a. Clause 2 of the Adjudication Agreement states the following:
“The parties agree that the disputes between them (referred to in paragraph 4
below) be resolved by adjudication in terms of this agreement.
b. Clause 4 of the Adjudication Contract states that:
“ADJUDICATION DISPUTES”
The parties confirm that the disputes to be determined in this Adjudication relate to
the construction contract (JBCC) concluded between the parties in relations to the
construction of the Delf Community Day Centre.”
c. Clause 5 of the Adjudication Agreement provides the following:
“RULES GOVERNING THE ARBITRATION
5.1 The JBCC Adjudication Rules January 2020 edition , published by the
Association of Arbitration of Southern Africa (“the Rules”).
5.2 The parties confir m, as envisaged in clause 5.4.3 of the Rules, that they a gree
that both parties shall be entitled to be represented by practising attorneys (and
advocates) at the Adjudication.”
[82] This court has a difficult task of deciding whether the parties had a true meeting of the
minds and how to resolve the parties’ disagreement.
[83] As previously mentioned, the Adjudication Agreement does not contain a clause that
states that its terms are the complete and final agreement between the parties. Thus,
the question that begs is whether it is an integrated agreement . There is also no
indication that the Adjudication Agreement is conditional or that the parties did not
intend to be bound by its terms. The question that aptly arises is whether the Addendum
Contract is a separate and unrelated contract.
[84] It is so that the JBCC Contract contains a clause that states the following:
“1.8 This agreement is the entire contract between the parties regarding the
matters addressed in this agreement . No presentations, terms conditions or
warranties not contained in this agreement shall be binding on the parties. No
agreement or addendum varying, adding to, deleting or cancelling this agreement
shall be effective unless reduced to writing and signed by the parties.”
[85] Obviously the JBCC Contract contained an integrated clause. It categorically specifies
that it may be amended only by a written instrument signed by all of the parties. The
Adjudication Agreement does not mention anything about arbitration and does not
include any clause that alludes to an Addendum Contract.
[86] A contract is completely integrated i f on its face it is plain that the parties intended the
writing to be a final and total expression of their agreement. Similarly, a contract that
appears to be unambiguous on its face may still contain a latent ambiguity that can only
be exposed by extrinsic evidence. Hence, in order to determine whether extrinsic
evidence is admissible, the test is not whether on its face, the contract and its meaning
appear to the court to be unambiguous, but whether the evidence offered is relevant to
prove a meaning to which the language of the instrument is reasonably susceptible.
[87] More importantly, it is not correct to exclude relevant extrinsic evidence that would
explain the meaning of a written contract unless it is possible to determine the meaning
the parties ascribed to the words from the contract alone.
[88] In this matter, the Department is arguing that the existence of the Addendum Contract
exposes and demonstrates the ambiguity of the Adjudication Agreement. The counsel
on behalf of the Department vehemently asserted that the Addendum Contract is merely
a partial integration of the agreement that was intended by the parties. The
Department’s case reveals that the Adjudication Agreement and the Addendum Contract
are still scattered parts of the parties’ intentions. As such, so the argument continues the
Adjudication Agreement cannot be regarded as integral documentary unit, as it does not
set out the entire agreement between the parties . The Department’s argument
postulates that when this Court has made a determination that these two jural acts are
embodied in a single memorial , whether apart [the Adjudication process] or both
[Adjudication and Arbitration ], the parole evidence rule will only be applicable then. I
agree. In order to determine the intention of the parties, this court needs to have regard
to both instruments and the history leading to them.
[89] According to the applicant, other aspects that are crucial to the context of this matter
are the following:
a. the response provided by the Department’s attorney in response to the
applicant’s letter dated 31 May 2023, which stated that the dispute should be
referred to adjudication and should adjudication be unsuccessful, the dispute
should go for arbitration.
b. the telephone conversation between Schröter attorneys [ Department’s attorneys]
and Mr Pienaar [on behalf of the applicant] where the two agreed to refer the
matter the matter to adjudication.
c. A further aspect relate d to context is the email dated 08 September 2023, from
Charlton Botha , on beha lf of the Department, which indicated that it was the
Department’s stated position that the parties must attend to this matter by means
a formal amendment signed by all the parties. The applicant submits that it is
significant to note that the issue of formalities was discussed when the subject of
discussion was the draft Adjudication Agreement.
d. On 26 September 2023, an email from Mr Botha to Mr Pienaar amongst others ,
indicated that the Department was not yet in a position to advance with the
adjudication process, as the agreement was meant to be signed by both parties.
Mutual assent
[90] This Court cannot enforce a contract unless it is able to determine what in fact the
parties have agreed to. To begin with, the court is precluded from interfering or making
a contract for the parties, as parties are free to choose if they want to contract, with
whom and on what terms . The court, however, will enforce a binding contract between
the parties. The essence of a contract is a meeting of the minds.
[91] Accordingly, mutual assent as a material prerequisite must be manifested. For a valid
contract to exist, each party needs to have a serious and deliberate intention to contract
or to be legally bound by the agreement, the animus contrahendi (See Fleet Africa (Pty)
Ltd v Nijs (JA9/15) [2017] ZALAC 8; (2017) 38 ILJ 1059 (LAC); [2017] 5 BLLR 450
(LAC) (20 January 2017) at paragraph 21 and Scottish Union & National Insurance Co
Ltd v Native Recruiting Corporation Ltd 1934 AD 458 at 465). The parties must also be
ad idem (or have the meeting of the minds) as to the terms of the agreement. Obviously,
absent the animus contrahendi between the parties or from either of them, no
absent the animus contrahendi between the parties or from either of them, no
contractual obligations can be said to exist and be capable of legal enforcement.’ See
Nijs supra.
[92] First and foremost, in this case, there is no doubt that the JBCC Contract prescribes a
method of acceptance. The JBCC contract is a standard contract that was prepared by
the Department. The Department requires that this Court should turn a blind eye to the
failure to comply with the prescribed method of acceptance . This is because the
Department asserts that it was not meant to be bound only by the Adjudication
Agreement as its validity was conditional upon the conclusion of the Arbitration
Contract.
[93] In the circumstances of this case, this contention is unsound. This Court cannot ignore
unambiguous contractual undertakings. To do so would be to create an act without legal
significance.
[94] The parties agreed before the amendment of the JBCC Contract that writing and
signatures constitute a formality. The Adjudication Agreement appears to be carefully
and formally drafted. It is detailed and gives an impression that it was drafted by a
person knowledgeable about the subject matter.
[95] There is no evidence in this matter to prove that the applicant induced the respondent
to believe that it agreed on the two-tier dispute resolution mechani sms. Instead, the
evidence reveals that the applicant refused to sign the Addendum Contract when the
Department requested it to do so . There is also no evidence or a suggestion that the
applicant made a tacit waiver of signing as the prescribed method of acceptance for a
valid formation of the agreement.
[96] What the Department is seeking from this Court is that this Court should strain the law
or the facts of this matter to find that the parties had a meeting of mind to have a two-
tier dispute resolution mechanism.
[97] This then begs the question as to what constitute a written agreement? As far as the
Addendum Contract is concerned, the applicant was provided with a draft that
embodied in writing all its terms . The issue with the Addendum Contract is that it was
not signed by the applicant.
[98] To begin with, it is trite that not every agreement constitutes a contract. It is my firm
view that the proof that a party has expressed its unconditional assent to a contract
cannot only be proven by the mere existence of a written instrument. Thus, when the
parties have expressed their intentions and reduced them into a written document , that
does not necessarily mean that a valid contract has been concluded even if it is signed
by the parties . Unconditional assent to the terms of the written agreement must be
proven if required.
[99] Equally, a signed written contract is not always an indication of a valid agreement
between the parties . In this matter, there is prescribed mode and formalities for
acceptance of a contract. And signatures are one of them. Accordingly, the parties in
terms of the JBCC contract agreed that agreements between them would be concluded
only upon signature by both parties.
[100] In Pillay v Shaik 2009 4 SA 74 (SCA) [2012] at para 50, the following was stated:
“In my opinion it is clear from Goldblatt v Freemantle , supra, and the authorities
cited therein that, in the absence of a statute which prescribes writing signed by
the parties or their authorised representatives as an essential requisite for the
creation of a contractual obligation (something that does not apply here), an
agreement between parties which satisfies all the other requirements for
contractual validity will be held not to have given rise to contractual obligations
only if there is a pre -existing contract between the parties which prescribes
compliance with a formality or formalities before a binding contract can come into
existence.
That this is so is clear, for example, from C W Decker's annotation on Van
Leeuwen's Roman Dutch Law 4.2 sec 1 (n ot sec 2 as Innes CJ says at 129)
Leeuwen's Roman Dutch Law 4.2 sec 1 (n ot sec 2 as Innes CJ says at 129)
where he pointed out (Kotzé's translation, 2 ed, vol 2, p 12) that we no longer
uphold the distinction drawn in Roman law between real, verbal, literal and
consensual contracts because all contracts with us are made with c onsent. With
regard to written contracts he referred to an observation by Samuel Strykius
(Modern Pandect 2.14.7) as follows:
'. . . we must regard the written contracts as distinct, in so far as we should bear
in mind that although the writing does not constitute the essentiality of the
contract, which is contained in the mutual consent of the parties, they may
nevertheless agree that their verbal agreement shall be of no effect until reduced
to writing, in which case the agreement cannot before signature have any binding
force, although there exists mutual consent; and it cannot be said that the writing
served not in perfecting the transaction, but only as proof thereof . . ., since here
it is agreed that the consent should not operate without the writin g, which must
be observed as a legitimate condition.” My own emphasis.
[101] It is evident that the circumstances in the Shaik matter were different to this one,
hence, the doctrine of quasi assent is not applicable in this case. This becomes clear
when the following is stated in the Shaik matter, supra, at para 52.
[102] Unlike in the Shaik matter, i n the present case there were clearly no agreements
between the parties that the mutual consent between them would not operate in the
absence of a document embodying its terms signed by both buyer and seller.
Conclusion
[103] Even though a n integration may be partial as well as complete , in this matter, when
regard is had to paragraph 1.8 of the JBCC contract, the correspondence written by the
applicant to the Department and the Adjudication Agreement, it becomes clear that the
parties intend ed that the Adjudication Agreement to express their final and complete
terms in the agreement in its entirety rather than certain terms. Thus, the Adjudication
Agreement shows that the parties have agreed to it as a complete and final embodiment
of the terms of their agreement. Thus, the extrinsic ev idence cannot be used to
contradict its terms.
[104] In this case, as previously mentioned , the JBCC contract categorically states the
requirements for a valid contract. And one of them is the signing by the parties. The
applicant did not sign the Addendum Contract, and as such the Addendum Contract did
not come into existence. Consequently, the applican t is not bound by it . Even the
Department for that matter is not bound by the terms of the Addendum Contract.
[105] Having considered the above , I conclude that the Adjudication Agreement is a
completely integrated document. As such, there is nothing in this case to convince this
Court that the existence of the Adjudication Agreement depends on the validity of the
Addendum Contract.
Parties are at liberty to conclude agreements that are good and bad. T he courts in
ensuring and upholding freedom of contract enforce all voluntary agreements concluded
between the parties. The exception to freedom of contract is contracts that offend public
policy. Accordingly, I disagree with the Department’s submission that the applicant is
snatching at a bargain in circumstances where it knows or should have known that it is
not entitled to what that it is claiming.
[106] As far as the attack levelled against the Adjudicator’s determination is concerned, this
Court does not have power to interfere with the finding of the adjudicator , as the parties
have agreed that their disputes would be determined by the adjudicator.
[107] Because of my findings, the counter claim of the Department cannot be sustained.
Costs
[108] In light of the facts of this matter, I am not convinced that the opposition of the
Department was not warranted . Additionally, the matter warranted the empl oy of senior
counsel.
[109] In the result, I make the following order:
a. The respondent’s counter claim is dismissed
b. The determination of MR Howard Boetcher dated 28 June 2024 is made an order
of this Court
c. The respondent is ordered to pay the costs of suit on scale C.
_______________________
CN NZIWENI
JUDGE OF THE HIGH COURT
APPEARANCES
For the applicant : Adv. P de B. VIVIER SC
Attorneys : Enderstein Malumbete In.
SW Pienaar
For the first respondent : Adv. R STELSNER SC
Adv. A NACERDIEN
Attorneys : Office of the State Attorney
Aayesah Hoosaim