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1 JUDGMENT
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
In the matter between
LOMASTEP PTY (LTD)
and
CASE NO : 117612/2024
DATE : 2025-10-21
DE LETE WH ICH EVER IS NO T APPLICABLE
(1) REPORTABLE : Yf?s / NO
(2) OF INTERES T TO OTH ER JUDG ES : ~ S / NO
(3) R~ D
MECSA CONSTRUCTION PTY (LTD)
JUDGMENT
SWANEPOEL, J :
[1] In this application, the applicant seeks an order
against the respondent for payment of the sum of R44 316
20 399 .17 , pursuant to a determination by an adjudicator,
Justice Willis, which was handed down on 27 May 2024.
Interest on that amount and costs.
[2] On 29 July 2016 , the party entered into a written
construction agreement for the construction of a mixed -use
building. The agreement contained an alternative dispute
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resolution clause, the material parts of which read as
follows:
"[40.1] Should any dispute 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 agreement.
[40.3] Where a dispute is referred to adjudication,
the following shall apply:
[40.3.3]. The adjudicator's findings shall be
binding on the party's, who shall give effect to
it without delay unless and until it is
subsequently revised by an arbitrator. A
dispute arose as a result of the respondent
allegedly failing to bring the building to
practical completion, resulting in penalties
being levied against the respondent in the
aforementioned amount under three payment
certificates."
20 [3] The applicant first applied to this Court for a monetary
order and when the respondent raised the defence that the
agreement required the parties to first refer the matter to
either adjudication or arbitration, the applicant conceded
the point in limine, whereafter it referred the matter to
adjudication. The dispute before the adjudicator falls
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outside of the question that I have to determine, but for the
sake of comp leteness, the respondent raised three
defences, abandoning its other defences for the purposes of
the adjudication:
[3.11 That the matter had not been properly referred
to adjudication and that the adjudicator consequently
did not have the requisite jurisdiction to hear the
matter.
[3.21 That the respondent had provided a variable
10 construction guarantee issued by Lombard Insurance
Company Limited, that the applicant had called upon
Lombard to pay in terms of the guarantee and that it
had received payment , thereby extinguishing the debt
arising from the penalties and resulting in the applicant
being in fact indebted to the respondent.
[3.31 That the dispute between the parties was so
varied that adjudication was not appropriate for the
determination of the disputes.
[41 The adjudicator held, in the respect of first defence,
20 that there was in fact a live dispute between the parties and
that it was not necessary for a party raising the dispute to
give forma l notice of disagreement. The adjudicator held
that he had jurisdiction to hear the matter. It bears
mentioning that clause 5 .4 .6 of the JBCC adjudication rules
provide for an adjudicator to decide on his own jurisdiction.
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[5] In respect of the payment defence, the adjudicator
found that there was no factual nexus between the payment
in terms of the guarantee and the payment certificates
under which the penalties were levied. The adjudicator held
that Lombard's obligation to pay under the guarantee arose
from the fulfilment of certain conditions contained in the
guarantee and not from the respondent's indebtedness in
respect of penalties .
[6] As for the defence that adjudication was inappropriate,
10 the adjudicator held there was nothing in the agreement
that vested a discretion in the adjudicator to postpone the
determination of a matter until a separate dispute had been
resolved elsewhere. In fact, he found that, should the
adjudicator refuse to come to a finding on a matter, that
would be the antithesis of what an adjudication is about.
20
[7] The adjudicator consequently made the following
award:
[7 .1] The respondent was ordered to pay the
applicant R44 316 399.17.
[7.2] The respondent was ordered to pay interest
as follows:
[7.2.1] on the amount of R17 727 257.33 from
1 April 2019 to date of payment at the rate of
10.8 percent per annum compounded monthly.
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[7.2.2]
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On the amount of R21 392 198.45 from
27 April 2019 to date of payment at the rate of
10.8 percent per annum compounded monthly.
[7.2.3] On the amount of R5 196 943.39 from
1 April 2019 to date of payment at the rate of
10.8 percent per annum compounded monthly.
[7.3] The respondent was ordered to pay costs on
the high court scale C , including the costs
attendant non the conduct of the of arbitration, and
the costs of the adjudicator.
[8] The respondent has since given notice of its
dissatisfaction with the award and I am told that the
arbitration proceedings have commenced. The applicant
argues that on a plain reading of clause 43.3.3 the
adjudication determination must be given effect until it has
been set aside by arbitration. The respondent argues that
where an adjudicator acts in excess of his jurisdiction, the
determination is void and cannot be enforced. The
respondent also repeats his argument that the Lombard
20 payment extinguished the penalties debt.
[9] In Framatome v Eskom Holdings SOC Ltd 2022 (2) SA
395 (SCA) the Court dealt with a dispute that had been
resolved by adjudication. In the High Court Eskom had
argued that the adjudicator had decided a dispute that had
not been referred to him , a contention that the High Court
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upheld finding that the decision of the adjudicator was
therefore unenforceable. In the Supreme Court of Appea l,
the court considered the process of adjudication. It pointed
out with reference to Hudson's Building and Construction
Contracts that adjudication had always been regarded as a
quick and dirty exercise to avoid delays in payment pending
definitive determination of litigation. The court said:
"If the interpretation contended for by Eskom is
correct, it will substantially undermine the
effectiveness of the scheme of adjudication. It is
plain that the purpose of adjudication was to
introduce a speedy mechanism for settling disputes
in construction contracts on a provisional interim
basis and requiring the decisions of adjudicators to
be enforced pending the final determination of
disputes by arbitration. Sight must not be lost of
the fact that adjudication is merely an intervening
provisional stage in the dispute resolution process.
Parties still have recourse to litigation and
arbitration. Only a tribunal may revise an
adjudicator's decision. As that decision has not
been revised, it remains binding and enforceable. "
[10] There is no reason why the same principles should not
apply in this case . The intention of clause 43 .3 .3 is clear:
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The adjudicator's decision stands until revised and it should
be given effect to.
[11] Consequently, I make the following order.
[11.1] The determination of Justice Wallace dated
27 May 2024 is hereby enforced and the respondents of
forthwith give effect thereto until such time as the
decision may be reviewed in arbitration in the following
manner :
[11.1.1] The respondent shall pay the applicant
R 44 ,316 ,399 .17.
[11.1.2]
follows:
The respondent shall pay interest as
[11 .1.2.1] On the amount of R17 727 257.33 from
1 April 2019 to date of payment at the rate of
10 .8 percent per annum , compounded monthly.
[11.1.2 .2] On the amount of R21 392 198.45 from
27 April 2019 to date of payment at the rate of
10 .8 percent per annum , compounded monthly.
[11 .1.2.3] On the amount of R5 196 943.39 from
1 April 2019 to date of payment at the rate of
10 .8 percent per annum , compounded monthly.
[11.1.3] The respondent shall pay the cost of
the application on the High Court Scale C , including
the cost of two counsel where so employed.
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SWANEPOEL, J
8
JUDGE OF THE HIGH COURT
DATE: ... .f. .. (..( I.. \2)~ -
JUDGMENT
TRANSCRIBER'S CERTIFICATE
LOMA STEP//MESCA CONSTRUCTION
I, the undersigned, hereby certify that so far as it is audible to
me , the aforegoing is a true and correct transcript of the
proceedings recorded by means of a digital recorder in the matter
between the parties stated above:
CASE NUMBER
RECORDED AT
DATE HELD
NUMBER OF PAGES
117614/2024
PRETORIA
2025-10-21
8
TRANSCRIBER'S NOTES/ PROBLEMS EXPERIENCED
TRANSCRIBER : MRS F VAN SCHALKWYK
DATE COMPLETED: 2025-10-31
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