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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

Case No: 47218/2020

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

27 September 2021

In the matter between:

BAPEDI AND ASSOCIATES CC

(Registration No. 2008/103553/23)                                                         APPLICANT

and

TUSK CONSTRUCTION SUPPORT SERVICES (PTY) LTD   FIRST RESPONDENT

DEPARTMENT OF TRANSPORT AND PUBLIC

WORKS – WESTERN CAPE PROVINCIAL

GOVERNMENT                                                                   SECOND RESPONDENT

 

JUDGMENT

STRYDOM J

INTRODUCTION

[1]   The first respondent is the contractor appointed by the second respondent to execute certain works pertaining to the refurbishment of the Groote Schuur Hospital. The applicant was appointed by the first respondent as a subcontractor to upgrade sewer lines.

[2]   The parties entered into a contract described as the “NEC3 Engineering and Construction Short Contract” (hereinafter referred to as the “NEC3 contract”).

[3]   The works proceeded but subsequently certain disputes arose between the applicant and the first respondent.

[4]   When these disputes arose, it became important to establish the exact terms of the contractual arrangement between the parties. The first respondent contended that the contract incorporated the standard NEC3 Engineering and Construction Short Contract (June 2005 edition). The applicant disputed this.

[5]   A number of disputes arose during the execution of the contract resulting in an extension of time claim. The applicant was aggrieved by the fact that its claim was not granted and on 30 October 2019, issued a “dispute notice”.

[6]   On 11 February 2020, the applicant wrote a further letter to the first respondent wherein it stated that:

“We shall take no further part on [sic] this project effectively immediately, until an arbitrator is appointed …”

[7]   On 14 February 2020, the first respondent’s agent sent a letter to the applicant in which it was contended that the suspension of the execution of the works constituted a breach and repudiation of the contract.

[8]   On 17 February 2020, the first respondent accepted the repudiation and cancelled the contract.

[9]   This cancellation conveyed to the applicant gave rise to this application.

[10]   In the notice of motion, the applicant seeks an order:

10.1      To review and set aside the Notice of Termination of the contract;

10.2      A declaratory order to the effect that the disputes between the parties be subjected to Adjudication before an Adjudicator;

10.3      That any party may apply to the President of the South African Institute of Civil Engineers to appoint an arbitrator; and

10.4      A cost order.

[11]   Adjudication is a purely contractual remedy and is to be distinguished from arbitration which is in part regulated by statute.

THE ISSUES TO BE DECIDED

[12]   The first issue to be decided is whether the NEC3 contract, including the standard terms and conditions, forms the basis of the dispute resolution provisions between the parties. If it does:

12.1      The correct dispute resolution forum is adjudication or arbitration in accordance with the provisions thereof and the disputes between the parties, including the cancellation issue, must be determined in accordance therewith; but

12.2      The applicant’s claim has become time-barred.

THE APPLICABILITY OF THE NEC3 CONTRACT AND THE STANDARD TERMS AND CONDITIONS

[13]   The applicant disputes the fact that it agreed to any document other than the Tender Document and the Contract Data of the NEC3 contract. The applicant, so it was submitted, has never had, seen, signed nor agreed to the Conditions of Contract which forms part of the NEC3.

[14]   When the disputes arose between the parties, the first respondent referred to and placed reliance on these Conditions of Contract. At that stage the applicant disputed the fact that the first respondent could place reliance on conditions, which the applicant alleges, the parties never agreed to.

[15]   The decision in this matter largely hinges on whether the parties agreed that the further Conditions of Contract, which were expressly incorporated in the Tender Documents by way of reference, form part of the contract between the parties. It is in fact common cause that the Tender Documents submitted and signed by the applicant expressly incorporated the NEC3 standard form of contract by reference. The question remains whether the applicant was bound thereby.

[16]   The Form-of-Offer-and-Acceptance signed by the applicant and submitted with its tender, provides as follows:

“The Tenderer identified in the offer signature block, has examined the documents listed in the Tender Data and addenda thereto as listed in the Returnable Schedules and by submitting this offer has accepted the Conditions of Tender by the representative of the Tenderer, deemed to be duly authorised, signing this offer, the Tenderer offers to perform all of the obligations and liabilities of the Contractor under the Contract including compliance with all its Terms and Conditions according to their true intent and meaning for an amount to be determined in accordance with the Conditions of Contract identified in the Contract Data”.

[17]   In the “Contract Data: Part 1” signed by the applicant and submitted together with its tender, the following is expressly stated:

“The Conditions of Contract are the NEC3 Engineering and Construction Short Contract (June 2005) available from the South African Institute of Civil Engineering 0118055947 or Engineering Contract Strategies 0118033008 (Tenderers to obtain copies at their own cost) and the following additional conditions …”

[18]   In the letter of appointment dated 1 March 2019 and signed by the managing director of the first respondent, the following is stated:

“2. Your appointment will be informed by the following:-

2.1    This letter of appointment;

2.2    The NEC3 Engineering and Construction Short Contract (June 2005) and associated contract data;

2.3    The signed Tender Documents, pricing data and scope of work.”

[19]   At the site handover meeting attended by representatives of both parties, it was minuted as follows:

“In accordance with preliminaries as per NEC3 the Contractor is to prepare a programme of the Works within one month of site handover. The Contractor shall make provision in his programme for practical completion, works completion and final completion as envisaged in the contract. In accordance with NEC3 the Principal Agent shall upon receipt of the programme of the Works determine a number of milestones to be achieved within the construction process of the Works.

The Contractor shall supply the Principal Agent with dates upon which these milestones will be achieved, and these dates shall be duly recorded. It must be noted that revision of such milestone dates will only take place in accordance with amended NEC Contract Document …”

[20]   In the applicant’s own letter dated 2 October 2019, it submitted a claim for extension of time to the Principal Agent in accordance with the NEC3 contract, expressly referenced therein.

[21]   Pursuant to the aforesaid extension of time claim, the applicant gave notice of a dispute to the first respondent in terms of the said contract. It is noted expressly in the preamble thereof as follows:

“This notification is notified by the Contractor to the Project Manager and the Employer in terms of clause W1.3(1) of the NEC Engineering and Construction Contract (ECC) June 2005 (with amendments June 2006).”

[22]   As stated hereinbefore, the applicant does not deny that its representative signed the NEC3 contract which was a document signed after the tender was awarded. Each page of this lengthy contract was signed by a representative of the applicant. The applicant denies being bound by the “conditions of contract identified in the Contract Data” as referred to in Schedule 9: C1.1 form of offer and acceptance forming part of the document signed by the applicant.

[23]   In the Contract Data (Part 1) it is specifically stated as quoted above, that the conditions of contract are the NEC3 Engineering and Construction Short Contract (June 2005).

[24]   It is the applicant’s case that despite the incorporation of the Conditions of Contract, the applicant is not bound by these further conditions as these Conditions of Contract were not presented to the applicant for signature. The conditions were never signed by the representative of the applicant and therefore the applicant is not bound thereby.

[25]   The applicant submitted that the contractual obligations between the parties are based upon based upon the tender document and the portion of the NEC3 contract called Contract Data and no other document. These were the documents signed on behalf of applicant. The further terms of conditions forming part of the NEC3 Engineering and construction Short Contract were not signed and if a document is not presented for signature and therefore not signed by a contracting party, such party is not bound by that part of the contract as the necessary animus contrahendi would be lacking. For this proposition, the applicant placed reliance on the matter of Africa Solar (Pty) Ltd v Divwatt (Pty) Ltd.[1] The factual matrix of this matter was summarised by the court at paragraphs 8 and 9 as follows:

“[8]   The major issue between the parties at this stage of the proceedings is whether the standard terms applied to the sale. That dispute arose in the following circumstances. During August 1993 a meeting took place between representatives of the two parties. I shall refer to it as ‘the prior meeting’. The defendant’s representatives expressed interest in the H70 module which the plaintiff was then in the process of developing and which it was prepared to manufacture especially for the defendant. It was agreed that the plaintiff would provide five H70 sample panels free of charge to the defendant which the defendant would test for functionality in tandem with water pumps. Shortly before delivery of the sample panels to the defendant was due to take place, a Ms Gerber telephoned Mr Pichulik, the defendant’s financial director. She introduced herself to him as a bookkeeper and credit supervisor in the plaintiff’s employ. Neither of them was present at the prior meeting. According to Pichulik she sought certain particulars from him about the defendant since the defendant was then still a relatively new concern, (‘a start-up company’, as Pichulik described it), about which the plaintiff, before committing five H70 panels valued at close to R5 000, required at least some information. It was therefore arranged that she would telefax a form for him to complete. According to him she said:

‘I will send you our standard form to please fill in in order to - from an administrative point of view that you know I’m cleared on this.’

and again:

‘… she said she needed this to update her information because of the unusual situation that we were not paying for those panels.’

Pichulik testified that a one page document was received by him. It was headed ‘Application for Credit Facilities’, although the defendant had not applied for such facilities and no decision had yet been taken by the defendant, pending the testing of the product in the field, to either apply for credit or to order any panels from the plaintiff. Pichulik put the document aside but after some further prompting from Gerber he completed it in part and faxed it back. On rereading the document he realised:

‘Obviously I also saw when I read through this at a later date, that she also obviously wanted to check us out from a credit point of view, it was not just updating records, see who the directors are and things like that.’

He filled in the blank spaces with details about the defendant, its assets, its directors and management, its bankers and auditors, but left open the space for ‘credit amount applied for’ and to the question: ‘Are directors/owners/ partners/members prepared to sign guarantees?’, he inserted: ‘To be negotiated’. He deleted the spaces below the question ‘Particulars of fixed property offered as security’. Then followed a paragraph which he did not delete. It read:

‘All purchases will be made in terms of and subject to the conditions of trade of Helios Power (Pty) Ltd, [the then name of the plaintiff] as printed on the reverse hereof, which by signing this, I acknowledge having read, understood and accepted. I also warrant that I am authorised to sign this application.’

Pichulik inserted the date and signed it as ‘director’.

[9]    Notwithstanding the words ‘as printed on the reverse hereof’ the reverse side of the document, according to Pichulik, was not faxed through to him at the time. He was accordingly unaware of the standard terms when he partially completed, signed and returned the page faxed to him; nor indeed when, some time later, an order for a number of H55 and H70 model panels was placed on behalf of the defendant. It is about the reverse side of the document, containing the plaintiff’s standard terms quoted later, that the battle rages. I shall refer to the contentious document faxed to and completed by him as ‘the document’.”

[26]   From the above, it is clear that the defendant in Africa Solar did not sign the reverse page of a credit application document which contained all the standard conditions and pursuant to this contended that he was not bound by the standard conditions. When the reverse side of the document was later sent to Pichulik, it was the first time that he had sight of the plaintiff’s standard terms and conditions when credit is provided to a customer.

[27]   The Honourable Court in Africa Solar then found as follows:

“[33] Pichulik’s explanation was that he had no animus contrahendi in completing and returning the document. The onus was on the plaintiff to prove the contract on which it relied. Proof of the terms of the contract included proof of the anterior question whether both parties had the requisite animus contrahendi. The production of the document, signed by Pichulik, would of course be a telling indication that the defendant had the necessary animus. But that factor is counterbalanced by Pichulik’s evidence that the document, to the knowledge of Gerber, was produced for a specific limited purpose. That evidence is credible. There is no counter to it. If, at the end of all the evidence, there is uncertainty as to whether animus contrahendi on the part of both parties had been established, the plaintiff, on that particular issue, had to lose. In my view this is precisely such a case. There is, furthermore, support in the evidence (for the reasons mentioned in paras 19 and 30 above) for the analogous approach adopted by the trial Court, leading to the same conclusion.

[34] In the result the plaintiff’s standard terms were in my opinion not of application to the supply of the panels that the defendant ordered from the plaintiff. It follows that those terms could not serve to prevent the defendant from resisting a claim for payment with the exceptio non adimpleti contractus, or from advancing a counterclaim.”

[28]   In my view this matter is distinguishable from the applicant’s matter.

[29]   In the Tender Document the applicant was specifically made aware of the further terms and conditions contained in the NEC3 terms and conditions. The applicant was even informed where a copy of the document could be obtained. When the representative of the applicant signed the document, it did so with this knowledge and the representative had the necessary animus iniuriandi to contract on the terms stipulated in the Tender Document.

[30]   This is not a matter where the original document was signed for a completely different purpose, to wit, merely to obtain information from the party on whose behalf the document was signed. It was common cause in the Africa Solar matter that when Pichulik signed the credit application form he was not applying for credit.

[31]   In the applicant’s matter, the portions of the contract signed on behalf of the applicant specifically referred to the NEC3 standard form of contract by reference. When the applicant signed the tender documents it signed it for one purpose and one purpose only and that was to contract with the first respondent to do the works. It was not signed for a different purpose as in the Africa Solar matter. The conditions of contract were specifically referred to in the “Contract Data: Part 1” and the applicant was informed that this document could be obtained from either the South African Institution of Civil Engineering or Engineering Contract Strategies.

[32]   Moreover, at a site handover meeting attended by representatives of both parties' reference was made to the amended NEC Contract Document.

[33]   When the applicant wanted to obtain an extension of time it relied on the NEC Contract for its claim. When this was refused the applicant delivered a notice of dispute in terms of the NEC Contact.

[34]   I am in agreement with the submission on behalf of the first respondent that the fact that the standard form NEC3 Contract was not signed by the parties is of no consequence. It was clearly incorporated by reference in the contract documents between the parties and the parties have acted in accordance therewith.

[35]   When the representatives of the applicant signed these documents, they must have had the necessary animus contrahendi to bind the applicant by the conditions contained in the NEC3 document.

[36]   In Fassler, Kamstra & Holmes v Stallion Group of Companies (Pty) Ltd[2] it was, correctly in my view, held “ … it is not necessary for the parties to sign the written agreement, it is enough if they have adopted and acted on it.”

[37]   I found that the applicant is bound by the standard terms and conditions of the NEC3 contract.

[38]   The consequence of this finding is that the disputes between the parties should have been referred to Adjudication timeously in terms of clause 93(3). This clause provides:

“93.1 A dispute resolution or in connection with this contract is referred to and decided by an adjudicator”

And clause 93.3 provides:

“(1)   A party may refer a dispute to the Adjudicator if:

-       the party notified the other party of a dispute within four weeks of becoming aware of it; and

-       between two and four further weeks have passed since the notification.

If the disputed matte is not notified and referred within the time limits set out in this contract, neither party may subsequently refer it to the adjudicator or the tribunal.”

[39]   The applicant’s dispute arose on 30 October 2019.

[40]   The applicant informed the first respondent that it intended to refer the dispute to arbitration on 11 February 2020.

[41]   The first respondent cancelled the contract on 17 February 2020.

[42]   The applicant’s purported referral to adjudication fell well outside of the time periods stipulate in clause 93.3 and was consequently not in terms of the contract.

[43]   This court cannot now make an order contrary to the contractual arrangement between the parties. None of the provisions of the NEC3 Conditions of Contract enable the applicant to override this dispute resolution procedure and approach this court for any order in terms of which such dispute is resolved.

[44]   Accordingly, the special pleas of the first respondent pertaining to the jurisdiction of this court and the lapsing of the time for exercising the right to refer a dispute for adjudication by the applicant should be upheld.

[45]   The relief the applicant is seeking in prayers 2 and 3 should be dismissed.

[46]   The determination of the contract was also a dispute which should have been referred to adjudication timeously pursuant to clause 93(1) and (3). This was not done. There is no need for this court to decide the lawfulness of the termination of the contract. Consequently, the applicant has not made out a case for the relief in prayer 1 of the notice of motion.

ORDER

[47]   The following order is made:

1.   The application is dismissed with costs including the cost of senior counsel.

R STRYDOM

JUDGE OF THE HIGH COURT

GAUTENG DIVISION OF THE HIGH COURT, PRETORIA

 

Delivered: This judgment was prepared and authored by the Judge whose name is reflected and is handed down electronically by circulation to the Parties/their legal representatives by email and by uploading it to the electronic file of this matter on CaseLines. The date for hand-down is deemed to be 27 September 2021.

 

APPEARANCES

For the Applicant:                        ADV. E. P. VAN DER HOVEN

Instructed by:                               WNA ATTORNEYS INCORPORATED

For the First Respondent:            ADV. P. ELLIS SC

Instructed by:                               LARSON FALCONER HASSAN PARSEE INC.

                                                         MACINTOSH CROSS & FARQUHARSON

For the Second Respondent:      NO APPEARANCE

 

Date of hearing:                          31 August 2021

Date of judgment:                       27 September 2021

 

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