Motheo Construction Group (Pty) Ltd v University of Mpumalanga

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Mashile J
• Judgment Date: 12 July 2023
• Citation: 2023 JDR 2583 (MN)
• Hearing Date: 12 July 2023
• Docket Number: 1174/2022
• Court: Mpumalanga Division, Mbombela

Mashile J:

INTRODUCTION

[1]

The Applicant seeks an order directing the Respondent to:

1.1

Comply with an adjudicators order of 06 February 2022;

1.2

Pay R14 062.50 to the Applicant in respect of the adjudicator’s costs;

1.3

Pay the costs of this application.

[2]

The Respondent opposes the application on the following five grounds:

2.1

That the referral of the disputes was not in accordance with the relevant provisions of the engineering and construction contract thus rendering the adjudicators award void and of no force and effect;

2.2

That the nomination of the adjudicator was not in line with the relevant provisions of the engineering and construction contract;

2.3

That the Applicant had agreed to stay the adjudication process pending the outcome of the settlement negotiations;

2.4

That the Applicant was aware of the Respondent’s reasons for non-compliance of the adjudicators decision, which reasons, are canvassed in the Respondent’s answering affidavit;

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2.5

That the Respondent, as an organ of state is bound to observe the provisions of section 195, as such could not partake in the unlawful and improper adjudication process, as it would be exposed to sanctions itself.

BACKGROUND

[3]

On 22 June 2020, and pursuant to a tender process, the Applicant was awarded a project described as “Contract Number: NIC0088 – Construction of the Irrigation Laboratory Building at University of Mpumalanga” (the project) by the Respondent. On 3 July 2020, The Applicant signed a form of offer and acceptance. The offer and acceptance was countersigned by the Respondent on 5 July 2020. The contractual relationship between both parties is governed by the NEC3 Engineering and Construction Contract, Third Edition of June 2005, with June 2006 amendments – Main Option B, as amended, (“the NEC3”).

[4]

The NEC3 has core clauses, which always apply, and option clauses which must be selected by the parties to the contract., The contract was carried out on an Option “B” basis. The material terms of the agreement between the Applicant and the Respondent relevant to this Application were as follows:

4.1

The Project Manager was Mr Rudi Louwrens of Glad Africa;

4.2

The Respondent, the Applicant, the Project Manager and the Supervisor act as stated in the contract and in a spirit of mutual trust and co-operation;

4.3

No change to the contract, unless provided for by the conditions of contract, would have effect unless it was agreed, confirmed in writing, and signed by the parties;

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4.4

A dispute arising under or in connection with the contract would be referred to and decided by the Adjudicator;

4.5

The parties were to appoint the Adjudicator under the NEC Adjudicator’s Contract current at the starting date;

4.6

If the Adjudicator is not identified in the contract data or if the Adjudicator resigns or is unable to act, the parties were to appoint a new Adjudicator jointly. If the parties did not choose an Adjudicator, either party could ask the adjudicator nomination body to choose one. The adjudicator nomination body was to choose the Adjudicator within four days of the request. The chosen Adjudicator would be the Adjudicator;

4.7

The adjudicator nomination body was the Chairman of ICE-SA, a joint division of the Institution of Civil Engineers and the South African Institution of Civil Engineering;

4.8

Disputes were to be notified and referred to the Adjudicator in accordance with the Adjudication Table;

4.9

In terms of the adjudication table, either party was to refer the dispute between two to four weeks after notification of the dispute to the other party and the Project Manager;

4.10

The party referring the dispute to the Adjudicator had to include referral information to be considered by the Adjudicator. Any more information from a party to be considered by the Adjudicator had to be provided within four weeks of the referral. That period could be extended if the Adjudicator and the parties agreed to an extension;

4.11

The Adjudicator could:

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4.11.1

review or revise any action or inaction of the project manager or supervisor related to the dispute and alter a quotation which had been treated as having been accepted;

4.11.2

take the initiative in ascertaining the fact and the law related to the dispute;

4.11.3

instruct a party to provide further information related to the dispute within a stated time; and

4.11.4

instruct a party to take any other action which he considered necessary to reach his decision and to do so within a stated time.

4.12

The Adjudicator would decide the dispute and would notify the parties and the Project Manager of his decision and his reasons within four weeks of the end of the period for receiving information. The four-week period could be extended by agreement between the parties;

4.13

The Adjudicator’s decision would be binding on the parties unless and until revised by the tribunal and would be enforceable as a matter of contractual obligation between the parties and not as an arbitral award. The Adjudicator’s decision would be final and binding if neither party notified the other within the times required by the contract that he was dissatisfied with the decision of the Adjudicator and that he intended on referring the matter to the tribunal;

4.14

The aforesaid notification had to be given within four weeks of the notification of the adjudicator’s decision;

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4.15

Either party could, at any time, notify the other party of the names of two persons he has chosen from the panel of NEC Adjudicators set up by ICE-SA whose availability to act as the Adjudicator the notifying party had confirmed. The other party was to select one of the two persons chosen to be the Adjudicator within four days of receiving the notice, failing which the person chosen by the notifying party would be the Adjudicator.

[5]

On 6 December 2021, the Applicant, through its attorneys, attempted to reach agreement on the appointment of an Adjudicator with the Project Manager and the Respondent. In his response, which was directed at the Applicant, the Project Manager indicated that he could not respond to the Applicant’s attorneys’ letter as it had not been advised that the Applicant gave its attorneys a mandate to act. Thereafter, he referred the Applicant to an amended clause Z3 from the incorrect contract. This, despite the Applicant’s attorneys making it clear that they were on record for the Applicant.

[6]

Given the response and lack of consensus as to an adjudicator, the Applicant’s attorneys made application to the Chairman of the ICE-SA for the appointment of an Adjudicator on 8 December 2021, in accordance with clause W1.2(3). The Applicant delivered its founding submissions, and all annexures thereto, along with its application, with the Respondent’s representatives and Project Manager in copy. By 8 December 2021, the Respondent and its Project Manager were in receipt of the Applicant’s founding submissions.

[7]

On that day, ICE-SA enquired as to whether the parties had attempted to reach agreement on the appointment of an Adjudicator. The Applicant’s attorneys advised ICE-SA that agreement could not be reached. On 9 December 2021, the Project Manager wrote to ICE-SA, advising ICE-SA that:

7.1

The Applicant had not followed clause Z3 of the contract;

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