The Rhodesian Railways Ltd v Mackintosh

• Jurisdiction: South Africa
• Judge: Wessels ACJ, Curlewis JA, Stratford JA and Roos JA
• Judgment Date: 29 September 1932
• Court: Appellate Division

Wessels, A.C.J.:

The respondent, a railway contractor, entered into a written contract with the appellant company on the 1st February, 1931, for the construction of a portion of the line of railway between Deka and the Victoria Falls. The contract provides that the contractor should be paid in accordance with the schedule of rates attached to the contract. The respondent, who was the plaintiff in the court below, constructed the work and was entitled to payment in terms of the contract. A dispute arose with regard to three items: (1) The sum of £469 10s. 0d. The

Wessels, A.C.J.

plaintiff claimed this amount for 3130 cubic yards of cut to spoil for cuttings over 10 feet in depth at 3s. per cubic yard, where the rate for excavation was 2s. 9d per cubic yard. The dispute here is whether the plaintiff is entitled to 3s. per cubic yard because the cutting itself is 10 feet deep and over, or whether he can claim the 3s. only after 10 feet have been excavated (item 17 of schedule). (2) The sum of £4,448 16s. 11d. This sum the plaintiff claimed to be due to him for leads on cut to bank and for overhauls. The dispute here turns on the question whether he can only claim the rate for excavation, as the defendant contends, plus an additional 3d. per cubic yard for leading the stuff away or whether he can claim, as the plaintiff contends, (a) for the rate of excavation and (b) for the rate of excavation and in addition to this rate 3d. per cubic yard for the leads on cut to bank (item 8 of schedule). (3) The sum of £1,932 2s. 5d. This is a claim for leads on borrow to bank. The schedule (No. 11) provides that when narrow gauge material is supplied the payment for leads will be the same as for cut to bank, i.e rate of excavation plus 3d. (No. 8). The dispute here turns on a question of fact. The plaintiff claims that narrow cause material was supplied, whilst the resident engineer alleges that no narrow gauge material was supplied; and the defendant claims that the engineer's assertion is final. (4) The fourth claim is not disputed. It is for an amount of £743 18s. 10d retention money. The defendant admits that the amount is due and alleges that it was tendered but that the plaintiff clearly indicated that he was not prepared to accept the money even if formally tendered in cash. Plaintiff alleges that defendant has not made an unconditional tender as it was tendered in full settlement with the condition that if not accepted the cheque should be returned.

The defendant pleaded two special preliminary pleas and then pleaded over on the merits. The first special plea was to the effect that the plaintiff was barred from bringing the present action because the points in dispute are due to defective description or ambiguity with regard to the rates to be followed and the amounts to be paid under the contract; and that in terms of the contract (clauses 10 and 68) the decision of the points in dispute rested with the resident engineer: that he duly considered these points and decided against the plaintiff's contention.

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The second plea is in the alternative, and is to the effect that clause 38 of the contract provides that all disputes between plaintiff and defendant must be submitted to arbitration; that this is a condition precedent, that the defendant was willing to go to arbitration in regard to these disputes and that therefore the plaintiff is barred from bringing the present action. If these special pleas are overruled, the defendant pleads to the merits.

The Court fixed a day for hearing the special pleas and after argument it decided in effect: (1) That the special plea that the defendant's engineer was entitled to give a final decision as to rates to be followed or amounts to be paid should be dismissed on the ground that clause 10 does not apply to disputes between the parties which are now in issue, but only applies to the plans, specifications and detailed quantities which refer to the works orders issued from time to time. The real disputes relate to the general conditions of the agreement and the schedule of rates attached to the contract, and how these should be interpreted. (2) That the plaintiff was entitled to be paid according to the schedule of rates and that this is the dominant clause. The engineer's decision as to the amount which the plaintiff can claim under his contract is therefore not final. The decision of the engineer is only final as regards the rate which should apply or how it should apply. The Court apparently decided that the interpretation of the contract including the schedule was a matter for the Court to decide and not for the engineer. The first special plea was therefore dismissed.

As regards the special plea that the Court could not hear the case as it was a condition precedent that the disputes should be referred to an arbitrator, an objection was raised in limime that the Court could not entertain this plea inasmuch as the Rhodesian Arbitration Act, No. 8 of 1928, sec. 6 (1), required that an application should be made to the Court to stay proceedings, and that this was not done. The Court held that sec. 6 (1) of the Arbitration Act was permissive and not obligatory, and that therefore the matter could be raised by way of a special preliminary plea under the common law. The Court however refused to stay the action on the ground that there was a dispute as to the validity of the tender of £743 18s. 10d., and as this was a question of law it should not be referred to arbitration. The learned Chief Justice dealt with this matter in the following terms: "These authorities

Wessels, A.C.J.

seem to apply and it would certainly be proper that the plaintiff's three claims should be referred, were it not for the fourth claim in which the defendant has thought fit to plead a tender in full settlement. Now this tender in full settlement is intended to have two effects: First, to postpone payment of an admitted debt until the plaintiff's three claims have been decided, and second, to make the costs of the inevitable judgment for £743 depend upon the decision upon the three claims. Under these circumstances it seems to me that it would be necessary that the tribunal which decides the claim for £743 and costs should be the same tribunal as that which decides the other three claims. Mr. Tredgold admits that the dispute as to the tender does not fall under the arbitration clause, and I consider that it would not be proper to send the claim for £743 and costs to arbitration, and therefore the other three claims cannot be referred.

"It was not necessary to couple with a plea demanding arbitration a tender in full settlement. Such a tender cannot properly be considered by a tribunal other than the one which judges of plaintiff's claims as a whole. Under these circumstances there appears to me to be sufficient reason why the three claims should not be referred."

I shall first consider the question whether the fact that the first special plea was filed, and which is in fact a defence to the action, debarred the defendant from asking in the alternative plea that the matters in dispute should be referred to arbitration. This involves the...