---

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

(1)     REPORTABLE: NO

(2)     OF INTEREST TO OTHERS JUDGES: NO

(3)     REVISED

19 November 2021

Case number:40842/20

 

In the matter between:

RMV ENGINEERING PROJECTS (PTY) LTD                                                          Applicant

 

And

 

PRO-SERVE CONSULTING (PTY) LTD                                                                     Respondent

 

JUDGMENT

 

1.         The applicant brought an application for an order that effect should be given to the determination by the adjudicator, made on 27 July 2020. In terms of the determination the respondent was ordered to pay to the applicant a VAT inclusive amount of R2 531 720, 48 (Two million five hundred thirty-one thousand seven hundred twenty rand and forty-eight cents). The applicant also applied for an order that the respondent should pay contractual interest at a rate of 7% calculated from 28 July 2020 to the date of payment.

 

BACKGROUND

 

2.         The parties in casu entered into an NEC3 Engineering and Construction Contract (the Contract). The respondent was appointed as the lead consultant whilst the applicant was appointed as the contractor by the respondent.

 

3.         The contract contained certain dispute resolution provisions, which can be found at clause W1 of the agreement.

 

4.         The relevant clauses in the contract are the following:

 

4.1.     Clause W1.1: ‘A dispute arising under or in connection with this contract is referred to and decided by the Adjudicator.’

 

4.2.     Clause W1.2(2): ‘The Adjudicator acts impartially and decides the dispute as an independent adjudicator and not as an arbitrator.’

 

4.3.     Clause W1.3(1): ‘Disputes are notified and referred to the Adjudicator in accordance with the Adjudication Table.’

AJUDICATION TABLE

 

Dispute about	Which Party may refer it to the Adjudicator	When may it be referred to the adjudicator
An action of the Project Manager or the Supervisor	The Contractor	Between two and four weeks after the Contractor’s notification of the dispute to the Employer and the Project manager, the notification itself being made not more that four weeks after the Contractor becomes aware of the action
The Project Manager or Supervisor not having taken an action	The Contractor	Between two and four weeks after the Contractor’s notification of the dispute to the Employer and the Project Manager, the notification itself being made not more than four weeks after the Contractor becomes aware that the action was not taken
A quotation for a compensation event which is treated as having been accepted	The Employer	Between two and four weeks after the Project Manager’s notification of the dispute to the Employer and the Contractor, the notification itself being made not more than four weeks after the quotation was treated as accepted
Any other matter	Either Party	Between two and four weeks after notification of the dispute to the other Party and the Project Manager

 

4.4.     Clause W1.3(2): ‘The times for notifying and referring a dispute may be extended by the Project Manager if the Contractor and the Project Manager agree to the extension before the notice or referral is due. The Project Manager notifies the extension that has been agreed to the Contractor. If a disputed matter is not notified and referred within the times set out in this contract, neither Party may subsequently refer it to the Adjudicator or the tribunal.’

 

4.5.     Clause W1.3(5): ‘The Adjudicator may

· review and revise any action or inaction of the Project Manager or Supervisor related to the dispute and alter a quotation which has been treated as having been accepted,

· take the initiative in ascertaining the facts and the law related to the dispute,

· instruct a Party to provide further information related to the dispute within a stated time and

· instruct a Party to take any other action which he considers necessary to reach his decision and to do so within a stated time.’

 

4.6.     Clause W1.3(8): ‘The Adjudicator decides the dispute and notifies the Parties and the Project Manager of his decision and his reasons within four weeks of the end of the period for receiving information. This four week period may be extended if the Parties agree.’

 

4.7.     Clause W1.3(10): ‘The Adjudicator's decision is binding on the Parties unless and until revised by the tribunal and is enforceable as a matter of contractual obligation between the Parties and not as an arbitral award. The Adjudicator's decision is final and binding if neither Party has notified the other within the times required by this contract that he is dissatisfied with a decision of the Adjudicator and intends to refer the matter to the tribunal.’

 

4.8.     Clause W1.3(11): ‘The Adjudicator may, within two weeks of giving his decision to the Parties, correct any clerical mistake or ambiguity.’

 

4.9.     Clause W1.4(1): ‘A Party does not refer any dispute under or in connection with this contract to the tribunal unless it has first been referred to the Adjudicator in accordance with this contract.’

 

4.10    Clause W1.4(2): ‘If after the Adjudicator notifies his decision a Party is dissatisfied, he may notify the other Party that he intends to refer it to the tribunal. A Party may not refer a dispute to the tribunal unless this notification is given within four weeks of notification of the Adjudicator’s decision.’

 

4.11    Clause W1.4(3): ‘If the Adjudicator does not notify his decision within the time provided by this contract, a Party may notify the other Party that he intends to refer the dispute to the tribunal. A Party may not refer a dispute to the tribunal unless this notification is given within four weeks of the date by which the Adjudicator should have notified his decision.”

 

4.12    Clause W1.4(5): ‘The tribunal settles the dispute referred to it. The tribunal has the powers to reconsider any decision of the Adjudicator and review and revise any action or inaction of the Project Manager or the Supervisor related to the dispute. A Party is not limited in the tribunal proceedings to the information, evidence or arguments put to the Adjudicator.

 

5.         During February 2020 disputes arose regarding payment certificates 20 and 21 and the parties agreed to combine the disputes and the disputes were referred to adjudication in terms of the contract.

 

6.         An adjudicator was appointed and on 25 May 2020 the applicant delivered its Statement of Case; the respondent’s Statement of Defence was filed on 8 June 2020 and the applicant’s reply was filed on 15 June 2020.

 

7.         The respondent filed a rejoinder on 22 June 2020 and the adjudicator provided a schedule in terms whereof he would provide his determination “by no later than 20 July 2020 or 28 days after all information is received”.

 

8.         It is common cause that no further information was provided after 22 June 2020 and that the adjudicator’s determination was due on 20 July 2020.

 

9.         Due to the adjudicator’s failure to deliver his determination on 20 July 2020, the respondent forwarded a letter to him on 21 July 2020 to inform him that his decision was late.

 

10.      It became evident that the adjudicator thought his determination was due on 27 July 2020 and on 22 July 2020 he informed the parties as follows:

 

“I have erred on my dates and must apologise for my oversight. The dates were incorrectly recorded on my side.

As a consequence, I would return the deposits paid if that is seen as the route forward without          invoicing for the additional time spent.

Please advise.

I humbly apologise for my oversight and have never had to deal with this situation previously."

 

11.      On the same date, the respondent replied that the Adjudicator may keep his payment                                    and that his failure to provide a determination was, in effect, his determination, stating:

                                                            

"2        We thank you for your tender to repay the deposit paid to you and not to invoice for the additional     time expended.

 

3         Our instructions are that you may retain the deposit already paid. However, given that your contractual mandate has expired and is not capable of being reinstated or revived, our client shall not make further payments for time you have or may spend on this matter.”

 

 

12.      In response to the respondent’s letter, the applicant enquired from the adjudicator when he would be able to provide his determination and he replied on 3 August 2020, and he advised the adjudicator as follows:

 

“Please re-read the correspondence provided by both parties and the case I sent to you. What you fail to appreciate at this point is that the Respondent is vying for a position of finality when no determination has been provided. Their position not only violates the law I have set out, but the whole concept of due process and is frankly untenable. You are not "time-barred" and there is no such doctrine as functus officio in the manner the Respondent is claiming. Read what I have sent to you.

The Respondent is entitled to stop communicating if it so wishes. Such conduct will be addressed at the proper time. For now, we cannot do anything without a determination from you urgently. Furthermore, whatever results stem from your determination, will be dealt with in whatever forum that comes after your determination, either a court of law or arbitration, even the lateness of your determination. But we cannot move forward without a determination.

You have an obligation to finalize this matter as soon as possible and before the 27^th of July. The 3^rd of August is not acceptable, and we have not heard any good reasons as to why you cannot do so. You have had all the documentation for over a month.

Your conduct to this point is not acceptable and by delaying your determination even further only worsens the matter.”

13.      The respondent then replied to the adjudicator as follows:

 

“You may proceed as you wish to do. However please be informed the respondent shall not pay any invoices issued for the services rendered, as the award shall be unenforceable and a nullity.”

 

14.      The applicant’s final response was as follows:

 

"Please continue with the adjudication and do the best you can to provide a determination, as per your last email.                

The Respondent's letter is simply an attempt to bully you. They have not cited a single case or law                to support its position. Furthermore, it is a repudiation of the contract they signed, which has its own consequences. That and its legal obligation to pay fees will be dealt with in the appropriate forum.”

 

15.          On 27 July 2020 the adjudicator delivered his determination in terms whereof he awarded an amount of R2 531, 720, 48 to the applicant and in pursuance of the determination, the applicant sent a letter of demand to the respondent, which the respondent refused to pay.

 

16.          It is common cause, that the adjudicator's decision is binding on the parties unless and until revised by the tribunal and that it is therefore enforceable as a matter of contractual obligation between the parties.

17.          The respondent in cusu, however refused to accept the determination, because, the adjudicator, purporting to exercise mandatory powers under the agreement, exceeded his mandate in purporting to render an award after the period of his contractual mandate had expired.

 

17.          The respondent also disputed the determination and stated that it was unreasoned to such an extent that it was in breach of the agreement and did not deal with the issues presented to the adjudicator.

 

VALIDITY OF THE DETERMINATION

 

19.          The applicant relied inter alia on the judgment of Freeman NO and Another v Eskom Holdings Limited[1] (it was an application for summary judgment) where the adjudicator’s determinations were also delivered after the lapse of the four weeks.

 

20.          Regarding the first determination the first dispute submission was delivered on 4 September 2006, additional information was delivered on 2 October 2006 and the adjudicator had until 30 October 2006 to deliver his decisions, but only delivered it on 3 November 2006. The second dispute submission was delivered on 20 September 2006, additional information was delivered on 18 October 2006 and the adjudicator had until 15 November 2006 to deliver his determination, but only did so on 19 November 2006.

21.          Kathree-Setloane AJ concluded as follows:

 

“[21] However, in the present matter, I am satisfied that Eskom’s legal contention, that the adjudicator’s decisions are invalid because he delivered them outside of the time periods stipulated in the contract, is not reasonably arguable. Nor do I believe that a judge, who hears this matter at the trial or exception, would be in a better position than I am to decide this matter. As stated by Heher J, in One Naught Three Craighall Park, ‘the applicants are entitled to summary judgment now if the law is in their favour’. I accordingly proceed to determine the question of law in this application.

 

[22] Core Clauses 90.2 and 91 of the contract provide for an    adjudicator’s decision to be issued within four weeks of the end of the period for providing information, but nowhere in the contract is it stated that a late adjudicator’s decision would be invalid. Core Clause 90.2 of the contract reads as follows:

 

“The Adjudicator settles the dispute by notifying the Parties and the Project Manager of his decision together with his reasons within the time allowed by this contract. Unless and until there is such a settlement, the Parties and the Project Manager proceed as if the action, inaction or other matter disputed were not disputed. The decision is final and binding unless and until revised by the tribunal.”

 

Core Clause 91.1, entitled “The adjudication” reads as follows:

 

“The Party submitting the dispute to the Adjudicator includes with his submission information to be considered by the Adjudicator. Any further information from a Party to be considered by the Adjudicator is provided within four weeks from the submission. The Adjudicator notifies his decision within four weeks of the end of the period for providing information. The four week periods in this clause may be extended if requested by the Adjudicator in view of the nature of the dispute and agreed by the Parties.”

 

It is clear from a reading of Core Clauses 90.2 and 91.1 of the contract that although they provide for an adjudicator’s decision to       be issued within four weeks of the end of the period for providing information, they do not state that a late adjudicator’s decision is invalid. I have also been unable to find a clause in the contract which states that ‘unless the decision is made within a certain time it shall not be binding or of any force and effect’ thereby making time of the essence of the contract.

 

[23] It is important to bear in mind that an adjudication is not an arbitration and it is therefore not subject to the common law, or section 3 of the Arbitration Act 42 of 1965 which provides as follows:

 

“The arbitration tribunal shall, unless the arbitration agreement otherwise provides make its award –

 

1.             in the case of an award by an arbitrator or arbitrators, within four months after the date on which such arbitrator or arbitrators entered on the reference or the date on which such arbitrator was or such arbitrators were called on to act by notice in writing from any party to the reference, whichever date be the earlier date; and

 

2.             in the case of an award by an umpire, within three months after the date on which such umpire entered on the reference or the date on which such umpire was called on to act by notice in writing from any party to the reference, whichever date be the earlier date,

 

or in either case on or before any later date to which the parties by any writing signed by them may from time to time extend the time for making the award: Provided that the court may, on good cause shown, from time to time extend the time for making any award, whether that time has expired or not.”

 

[24] In argument, Mr Kemack referred me to Jacobs, The Law of Arbitration in South Africa, para 160, page 130 where he states as follows:

 

“A court should be hesitant to grant an extension of time if the application is made at a late date. The fact that the parties in the arbitration agreement have put a limit both upon the time for making the award and the extent to which this time may be enlarged does not preclude the court from ordering a further enlargement. It would seem, however, that the parties may effectively agree that, unless the award is made within a certain time, it shall not be binding or of any effect, thus making time of the essence of the contract.”

(own emphasis)

 

[25] It is clear from Core Clause 92.1 of the contract that the adjudicator settles the dispute as independent adjudicator and not as arbitrator. His decision is enforceable as a matter of contractual obligation between the Parties and not as an arbitral award. So, in the absence of a clause, which makes ‘time of the essence’ failure by an adjudicator, to deliver his or her award in the time stipulated in the contract, cannot be rendered as binding on the parties or of any force and effect. Unlike in arbitrations, there is no statutory or common law contractual basis for declaring the delivery of a late adjudication award invalid, particularly where there is no agreement between the parties that unless the decision is made within a certain time it shall not be binding or of any effect. There is accordingly no basis in law for treating the adjudicator’s delayed award as invalid.

 

[26] To the contrary, Core Clause 93.1 of the contract specifically provides for the steps to be taken by a dissatisfied party should the adjudicator fail to notify his decision within the time period stipulated in the contract. It provides:

“If after the adjudicator notifies his decision or fails to do so within the time provided by this contract and a Party is dissatisfied, that Party notifies the other Party of his intention to refer the matter which he disputes to the tribunal.”

 

[27] As is apparent from Core Clause 93.1 of the contract, the agreed remedy for a delayed adjudicator’s decision is a notification by the dissatisfied party, to the other party, of its intention to refer the matter, which it disputes, to the arbitration tribunal. It is common cause that Eskom gave no notice of dissatisfaction on this basis, either before or after the issuing of the adjudicator’s decisions. I accordingly agree with Mr Kemack that, in terms of Core Clauses 92.1 and 90.2 of the contract, even a belated decision of the adjudicator, i.e. one that is made after the expiry of the time provided for in the contract, is contractually binding and enforceable unless and until revised by an arbitration tribunal. I am, accordingly, of the view that this defence would not constitute a bona fide defence that is good in law.”

 

22.      The respondent, on the other hand, relied to a large extend on the judgment of Twala J in Group Five Construction (Pty) ltd v Transnet SOC Limited[2]. The facts of this matter, regarding the handing down of the determination, were summarised as follows:

 

[4] The parties continued to exchange documents and correspondence and on the 19^th of June 2019 the adjudicator accepted the late response by the respondent and afforded the applicant an opportunity to file its response thereto by not later than the 29^th of June 2018. On the 25^th of June 2018 the applicant stated that due to the further response being required to be submitted by the 29^th of June 2019, the adjudicator’s decision was therefore due four weeks hence.

 

[5] On the 19^th of July 2018 the adjudicator requested further             information from the applicant in the form of an electronic copy of     the settlement agreement and same was provided to him on the       same day as it formed part of the documents submitted by the   applicant when the dispute was referred to the adjudicator. On the   30^th of July 2018 the adjudicator requested that both parties allow           him an additional seven calendar days to finalise his request for further information where after he should be in a position to finalise             his award within four (4) weeks. On the 31^st July 2018 the     respondent refused to grant the adjudicator the extension as             requested and on the same date it gave notice to the applicant to refer the dispute to the tribunal. On the 6^th of August 2018, the respondent indicated that its notice to refer the dispute to the tribunal shall stand and that the adjudicator’s intention to proceed was at his peril. However, during August 2018 the adjudicator    continued to communicate and received certain information from      the applicant without any further contribution and participation from         the respondent and published his decision on the 18^th of September 2018.”

 

23.      Twala J concluded as follows:

 

“[17] I am unable to disagree with counsel for the respondent that    time is of essence in building contracts of this nature – hence the   provision that disputes between the parties are referred to     adjudication for speedy settlement. The terms of the contract are    that the adjudicator shall publish his decision within 4 weeks from    the date of the last submission unless he obtains consent from the          parties to extend that period. I disagree with counsel for the   applicant that if time was of essence, the contract would have   provided that a decision of the adjudicator shall be invalid if   published after the 4 week period. Further, I can find no reason why       I should not refer to the decisions of the United Kingdom in this      case as suggested by counsel for the applicant. The dispute resolution procedure as agreed to by the parties herein is based on               the laws of the United Kingdom and the document itself refers to      the United Kingdom Housing Grants, Construction and            Regeneration Act 1996.

 

[18] In Cubitt Building & Interiors Ltd v Fleetglade Ltd [2006] EWHC                         3413 (TCC) wherein Judge Peter Coulson QC stated the following:

“The importance of adjudication is speed. What matter most is the production of temporarily binding decision within the timetable provided by the 1996 Act or the terms of the applicable construction contract. Accordingly the ultimate correctness or otherwise of the decision matters less, because the decision is not binding and it can be challenged in court or in arbitration.”

 

[19] In Ritchie Brothers (PWC) Ltd v David Philp (Commercials) Ltd  [2005] 1 BLR 384 Lord Nimmo Smith made the following comment:

“If a speedy outcome is an objective, it is best achieved by adherence to strict time limits. If the timetable is not kept to, there is a clear risk that , instead of giving rise to a quick decision the adjudication will instead become a long drawn-out and necessarily expensive process, much more akin to arbitration. “

 

[20] Judge Richard Havery Q.C stated the following in Epping Electrical Company Limited v Briggs and Forrester (Plumbing Services)  [2007] EWHC 4 (TCC):

“If a speedy outcome is an objective, it is best achieved by adherence to strict time limits. Likewise, if certainty is an objective, it is not achieved by leaving the parties in doubt as to where they stand after the expiry of the 28-day period. These considerations reinforce the view that paragraph 19 means exactly what it says, so that it is not open to an adjudicator to purport to reach his decision after the expiry of the time limit.”

           

[21] In terms of clauses W1.3.3 and W1.3.8 of the agreement between the parties the time period for the publication of the      adjudicator’s decision is 4 weeks from the date when he receives the last submissions from the parties, unless the parties agree to grant him an extension of time. These clauses do not state what should happen when a party does not grant the consent to extend the period. I am of the respectful view that the intention of the parties to make the requirement of consent from the parties to afford the adjudicator more time is meant to give the parties control  over the process of the adjudication. It is meant to give the parties some power to deal, should they find themselves in that situation, with a recalcitrant adjudicator. The ineluctable conclusion is therefore that, absent such consent to the extension of time, the adjudicator should publish his report on due date failing which his mandate is terminated. I am therefore unable to disagree with counsel for the respondent that, from the plain wording of these clauses, the adjudicator is not competent to proceed and act beyond the time period set by the agreement if he is unable to secure the necessary consent from both parties. No other meaning can be ascribed to these provisions for they are not at all ambiguous.

 

[22] It is clear and plain from the wording of clause W1.4.3 of the      agreement that it is an escape provision for the parties when dealing with a recalcitrant adjudicator. It provides for a party to refer the dispute to the tribunal if the adjudicator does not publish his    decision within the prescribed period, provided that the party shall notify the other of its intention to refer the dispute to the tribunal within four weeks of the date when the adjudicator was to publish its decision. Once notice has been given to the other party within the specified period, then there is compliance with the requirements of clause W1.4.3 and the adjudicator cannot, in my view, be competent to continue with the adjudication.

 

[23] I find myself in disagreement with counsel for the applicant that the adjudicator by requesting further information on the 19^th of July 2018 earned himself a further 4 weeks within which to publish his decision. If that was the case, there was no reason for the adjudicator to request the parties’ consent to extend his period by         a further seven days on the 30^th of July 2018. The adjudicator himself did not believe that his request of the 19^th of July 2018 earned him the extension – hence his request of the 30^th July 2018. I hold the view therefore that the adjudicator did not earn himself an extension by making the request for further information when in fact that information was already in his possession.

 

[24] It is on record that the adjudicator continued to communicate with and obtained further information from the applicant after the respondent refused consent to extend the time for the publication of the decision. It is also on record that the respondent did not participate any further in the adjudication process after it referred the dispute to the tribunal. However, the adjudicator decided to flagrantly disregard the fundamental principle of our law, the audi alteram partem, by proceeding to deal with the applicant in the absence of the respondent and this cannot be countenanced by the Court.

 

[25] It is my respectful view therefore that time is of essence in          adjudication matters and that the adjudicator’s mandate in the          present case was terminated by the respondent on the 31^st of July 2018 when it   refused to consent to the extension of time as requested by the adjudicator. Further, I hold the view that the         adjudicator was not       competent to proceed with the adjudication        without the participation and contribution of the respondent. I am of         the considered view therefore that the decision of the adjudicator     dated the 18^th of September 2018 was published late and in breach          of the terms of the agreement of the parties and is therefore not       binding and enforceable as against the respondent.”

 

24.      In Murray & Roberts Limited v SASOL South Africa (Pty) Ltd[3] the adjudicator’s determination was also outside the four-week period and the respondent argued that without both parties’ consent to the extension of the time period, the determination was invalid. In this matter, the applicant, without being requested to do so by the adjudicator, tendered additional submissions, but this did not, according to the respondent, extend the adjudicator’s time limits and he was therefore bound to deliver his determination within the agreed four-week period.

 

25.      Weiner J concluded as follows about the allegations of invalidity:

“[48] Neither party objected to the adjudicator’s request, nor did either of the parties indicate that they believed the adjudicator’s decision was due four weeks after Sasol’s submission, despite his    extended powers. The adjudicator thus accepted (as he was entitled to) that he had to hand down his decision within four weeks of the receipt of the last information. The adjudicator also referred   the parties to Clause 10 of the contract which required the parties to         act in a spirit of mutual trust and co-operation. The adjudicator thus             refuted Sasol’s suggestion that the time period had lapsed.

[49] M&R contended that Sasol should have filed the notice of          dissatisfaction on 12 March 2019 if it believed that the time period          lapsed on that day. Instead, it requested additional time, without at that stage, reserving its rights. It proceeded to file lengthy     submissions. Thus, M&R submitted that Sasol had waived the right to rely on this point. The adjudicator had the power to accept M&R’s contention that it was essential that it be permitted to respond to Sasol’s submissions.

[50] Sasol, despite its earlier objections, then agreed, without prejudice to its rights to attend the oral hearing on 16 April 2019. Both Sasol and M&R were present and filed heads of argument. Sasol was given the opportunity to respond in full to M&R’s submissions.

[51] From the aforegoing events, it is also evident that the alleged    irregularities relating to the lack of audi alteram partem, cannot be    accepted. Sasol was given every opportunity to deal with M&R’s claims, which were detailed in the referral. It fully participated in the proceedings (despite the objections it had raised). In its response,   Sasol elected not to deal with the quantification of M&R’s claims. It          attempted to have such claims dismissed on a legal basis only. It only raised the quantification issues during the oral hearing. Sasol   cannot now rely on this as a failure by the adjudicator to allow audi alteram partem. In any event, an irregularity in the proceedings        does not mean that the decision was incorrect. Such irregularity must relate to the procedure adopted, which prevented the party      from having its case fully ventilated. The above rendition of events            demonstrates that this is not the position here. The adjudicator considered every issue raised by Sasol and gave valid reasons for each finding.”

26.      Dissatisfied with the outcome of the matter, Sasol appealed against the judgment and the Supreme Court of Appeal in Sasol South Africa (Pty) Ltd v Murray & Roberts Limited [4]  found as follows:

 

[40]      From these events, it must be accepted that the date of hearing constituted ‘the end of the period for receiving information’. The adjudicator was therefore obliged in terms of clause W1.3(8) to deliver his decision and his reasons within four weeks of the end of      the period for receiving information (being 16 April 2019), which he did on 12 May 2019. The Group Five case upon which Sasol relied,              is distinguishable on the facts from the present case in that in that case the court did not consider the implication of additional clause   2.5 of the adjudicator’s contract which gives the adjudicator the          right to request and to receive additional information, after which      the four-week period for his decision commences. The contention      that the decision is invalid because of the adjudicator’s failure to       deliver his decision within four weeks of the end of the period for receiving information, must therefore be rejected.”

 

27.      It is common cause that adjudicator, in casu, did not receive or request any additional information after 22 June 2020 and the failure to deliver his determination on or before 20 July 2020 was due to his miscalculation or mistake and cannot be blamed on either of the parties.

 

28.      In Ekurhuleni West College v Segal and Another [5] De Vos J discussed the nature of the adjudication process as follows:

 

“[44] Having regard to the nature of the adjudication process, I accept that it is sue generis.  I further take notice of the fact that the very nature of the adjudication process carries with it a risk of unfairness, either in the way the adjudication is conducted, or in the result, or both.  The need to speedily resolve the dispute and the parties’ entitlement to an answer, increases the risk compared to a    hearing, arbitration proceedings, and/or court proceedings.  I further take into account that the adjudicator is entitled to take the initiative in ascertaining the facts and the law necessary to determine the dispute.  Having regard to the fact that adjudicators are experts in their own field and probably not qualified lawyers increases the risk that they may adopt a procedure that is or might be seen to be unfair.  I also accept that our courts are of the opinion that as long   as the adjudicator acted generally in accordance with the usual rules of natural justice and without bias and within his terms of reference, his decision is likely to be enforced. 

[45] … Enforcement of the adjudicator’s decision is critical to the      success of adjudication as a form of alternative dispute resolution,    and therefore our courts have adopted a robust approach in this       regard; see Transnet Soc Ltd v Group Five Construction (Pty)   Ltd and Others (7484/2015) [2016] ZAKZDHC 3 (9 February         2016). An adjudicator is a third-party intermediary appointed to    resolve a dispute between parties.  The decision of the adjudicator is binding and final, unless it is later reviewed by either arbitration or   court proceedings, whichever the parties selected at the time of formalising the contract.  Adjudication is intended to be a condition precedent to either arbitration or litigation.  Where the contract explicitly requires this, the parties cannot directly approach a court   of law for any relief.  This is a fundamental rule in construction   disputes where the parties have expressly subjected their disputes to adjudication and arbitration.  See also in this regard Tubular    Holdings supra; Esor Africa / Franki Africa supra.”

 

29.      The respondent in casu did not, due to the adjudicator’s failure to deliver his determination within the four weeks, notify the applicant that it intended to refer the dispute to the tribunal, nor did it, after receipt of the determination refer a dispute to the tribunal in accordance with clause W1.4(3), but persisted with its attitude that the determination was invalid, rendering the dispute referred to the adjudicator unresolved.

 

30.      Given the circumstances of this matter and with due consideration of the case law, I find myself in agreement with the conclusions by Kathree-Setiloane AJ in the Freeman NO – matter as quoted above in paragraph 21 that:

 

“His decision is enforceable as a matter of contractual            obligation between the Parties and not as an arbitral award. So, in the absence of a clause, which makes ‘time of the essence failure   by an adjudicator, to deliver his or her award in the time stipulated           in the contract, cannot be rendered as binding on the parties or of    any force and effect. Unlike in arbitrations, there is no statutory or      common law contractual basis for declaring the delivery of a late adjudication award invalid, particularly where there is no agreement            between the parties that unless the decision is made within a        certain time it shall not be binding or of any effect. There is    accordingly no basis in law for treating the adjudicator’s delayed    award as invalid.”

DETERMINATION UNREASONED AND IN BRECH OF THE AGREEMENT

 

31.      The respondent’s second defence was that the determination was unreasoned and in breach of the agreement and therefore unenforceable.

 

32.      I considered the adjudicator’s determination and disagree that it was unreasoned and in breach of the agreement. It is true that he did not call for a hearing, but that does not have any bearing on the validity of his determination.

 

33.       The parties agreed in Clause W1.3(10) that the adjudicator’s decision is binding on the parties unless and until revised by the tribunal and that it is therefore enforceable as a matter of contractual obligation between the parties.

 

34.      I therefore find that the determination dated 27 July 2020 is valid and that the respondent should pay the amount of R2 531 720, 48 (Two million, five hundred and thirty-one thousand seven hundred and twenty rand and forty-eight cents).

 

 

 

 

COSTS

 

35.      On behalf of the applicant I was requested to grant a punitive cost order against the respondent. It is an accepted legal principle that costs ordinarily follow the result and a successful party is therefore entitled to his or her costs.

 

36.      The general rule is that costs follow the event, which is a starting point. The guiding principle is that costs are awarded to a successful party to indemnify him for the expense to which he has been put through having been unjustly compelled either to initiate or to defend litigation.

 

37.      In Nel v Waterberg Landbouwerkers Kooperatiewe Vereniging Respondent[6],  the following was stated in relation to costs on an attorney and client scale:

 

‘The true explanation of awards of attorney and client costs not        expressly authorised by Statute seems to be that, by reason of        special considerations arising either from the circumstances which give rise to the action from the conduct of the losing party, the court, in a particular case considers it just, by means of such an order, to ensure more effectually that it can do by means of a judgment for party and party costs that the successful party will not be out of pocket in respect of the expenses caused to him by the litigation.” 

38.      It is also an accepted legal principle that cost is in the discretion of the court. The basic rules were stated as follows by the Constitutional Court in Ferreira v Levin NO and Others[7]:

 

“The Supreme Court has, over the years, developed a flexible approach to costs which proceeds from two basic principles, the first being that the award of costs, unless expressly otherwise enacted, is in the discretion of the presiding judicial officer, and the second that the successful party should, as a general rule, have his or her costs. Even this second principle is subject to the first.”

 

39.       I considered granting a punitive cost award in favour of the applicant, given the history of the matter. However, in the exercise of my judicial discretion, I am not inclined to make a punitive cost order as requested by applicant.

 

40.      I therefore order as follows:

 

1.        The respondent is ordered to effect payment to the applicant in the VAT inclusive amount of R2 531 720, 48 (Two million, five hundred thirty-one thousand seven hundred twenty rand and forty-eight cents), in accordance with the adjudicator’s determination on 27 July 2020, which amount is compound as follows:

1.1    R600 922, 38 (six hundred thousand, nine hundred twenty-two rand and thirty-eight cents) awarded in terms of the respondent’s payment certificate number 20.

1.2    R18 970, 41 (Eighteen thousand, nine hundred seventy          rand and forty-one cents) due in terms of interest from the          date of the payment certificate to the date of the adjudication award regarding payment certificate number 20.

1.3    the amount of R1 8686 393, 00 (One million, eight hundred sixty-eight thousand, three hundred ninety-three rand) awarded in term of the respondent’s payment certificate number 21; and

1.4    R43 434, 69 (Forty-three thousand, four hundred thirty-four rand and sixty-nine cents) due in terms of interest from the date of the payment certificate to the dated of the adjudication award regarding payment certificate number 21.

2.        The respondent is ordered to pay contractual interest at a rate of 7% calculated from 28 July 2020 to the date of payment.

3.        The respondent is ordered to pay the costs of this application on a party and party scale.

 

 

ACTING JUDGE JF BARNARDT

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 19 November 2021.

 

APPEARANCES  

For the applicant:   Adv. Paul Bellin

Instructed by:         E Taylor Attorneys

                               Tel: 010 446 9746

 

For the respondent: Adv Henry Martin

Instructed by:          Werksmans Attorneys

                                Tel: 011 535 8000

 

 

Date heard: 6 October 2021

Date of judgment: 19 November 2021

 

---