Case Law[2025] ZAWCHC 353South Africa
Pro-Khaya Construction CC v City of Cape Town and Another (9103/2023) [2025] ZAWCHC 353 (15 August 2025)
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## Pro-Khaya Construction CC v City of Cape Town and Another (9103/2023) [2025] ZAWCHC 353 (15 August 2025)
Pro-Khaya Construction CC v City of Cape Town and Another (9103/2023) [2025] ZAWCHC 353 (15 August 2025)
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# IN THE HIGH COURT OF
SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
# (WESTERN CAPE DIVISION,
CAPE TOWN)
(WESTERN CAPE DIVISION,
CAPE TOWN)
# Case
No. 9103/2023
Case
No. 9103/2023
# In
the matter between:
In
the matter between:
# PRO-KHAYA CONSTRUCTION CCApplicant
PRO-KHAYA CONSTRUCTION CC
Applicant
# and
and
# CITY OF CAPE TOWNFirst Respondent
CITY OF CAPE TOWN
First Respondent
JOHAN
G WASSERMAN
SC
Second Respondent
This judgment was handed
down electronically by circulation to the parties’ legal
representatives by email publication and
release to SAFLII. The date
and time for hand-down is deemed to be 14h00 on 15 August 2025.
JUDGMENT
MAPOMA,
AJ
[1]
This is an opposed application for enforcement of
the adjudicator’s determination in a construction dispute. The
applicant,
Pro-Khaya Construction cc (“Pro-Khaya”), a
construction company and former service provider to the first
respondent,
the City of Cape Town (“the City”), seeks an
order compelling the City to comply with the adjudicator’s
determination
dated 10 March 2023 (“the determination”).
[2]
The determination was issued by the second
respondent, Adv Johan G Wasserman SC, (“the adjudicator”)
in his official
capacity as an adjudicator in the adjudication
dispute resolution process of a dispute that was referred by Pro
Khaya for
resolution in terms of the standard Joint Building
Contracts Committee (JBCC) Principal Building Agreement, Edition 6.1
of March
2014 (“the JBCC Contract”), which were published
in January 2020, and the procedure set out in the JBCC Adjudication
Rules (“the JBCC rules”). The construction contract
between the parties provides for the JBCC rules to be used as the
dispute resolution mechanism in the event of there being a dispute
between the parties.
[3]
In the determination, the adjudicator ruled that
the City is required to make payment to Pro Khaya, of the final
payment certificate
in the amount of R8 095 536.22
excluding VAT. The City failed to honour the ruling of the
adjudicator. Pro Khaya has
approached the Court seeking a declaration
order and consequential reliefs which enforces the decision of the
adjudicator.
Although
determination is at the centre of these proceedings, no substantive
relief is sought against the adjudicator personally,
hence he took no
part in the proceedings.
[4]
The City is resisting Pro Khaya’s
enforcement application on the basis that the determination is
invalid and unenforceable
because, according to the City, the
adjudicator lacked jurisdiction to determine the dispute. In so
doing, the City launched a
counter-application wherein it seeks the
Court to review and set aside the adjudicator’s determination
on various grounds.
[5]
Pro Khaya is opposing the City’s review
application, contending that the decision of the adjudicator is not
open for judicial
review. This contention is advanced on various
bases, that include that the dispute had been determined in terms of
the contractual
agreement which encapsulates the JBCC rules as a
dispute resolution mechanism; that in terms of the JBCC rules the
determination
is final, binding and enforceable; and that the review
procedure is not applicable on the adjudicator’s determination
and,
as such, the court has no review jurisdiction on this matter.
Background facts
[6]
During 2018, pursuant to the City’s public
procurement process for appointment of a service provider to
undertake construction
of a new electrical depot in Hout Bay, Western
Cape, Pro-Khaya was a successful bidder and was duly appointed by the
City as a
preferred service provider to implement the project. The
depot comprised of a double-storey administration building with lift
system,
as well as a single-story building, a guardhouse, parking
carports and a boundary wall. The total construction value was
R34 658 874.16
(Including VAT), which was re-measurable and
subject to actual work performed and adjustments in terms of the
contract.
[7]
On 12
November 2018, the construction contract for the value of
R34 658 874.16 (Including VAT) was concluded between Pro
Khaya and the City. The contract comprised of the standard terms of
the Joint Building Contracts Committee (JBCC) Principal Building
Agreement, Edition 6.1 of March 2014 (“the JBCC Contract”),
subject to the changes specified in the Part C12 (Contract
Data) of
the City’s tender document.
[1]
The contract also included contract data with annexures, bill of
quantities, the model preambles for trade and contract documents
which included programme and technical documents such as drawings.
The City also appointed EBESA Architects (Pty) Ltd
as the principal
agent in terms of the JBCC contract (“the principal agent”).
[8]
The contract commenced on 12 November 2018, to the
date of its conclusion. The duration of the contract was 15 months,
which would
be a 10 months’ period for construction until
practical completion, a three months’ defects period, and two
months
for builders’ annual leave. Accordingly, the contract
expired on 12 February 2020 but was renewed on 24 February 2020, for
a period of six months commencing on 1 March 2020 to 31 August 2020.
As a consequence of the contract renewal, the contract sum
was
increased by R2 733 545 (excluding VAT).
[9]
On 16 January 2019, the City handed over the
construction site to Pro-Khaya with the agreed timelines for project
completion. Project
delays leading to various extensions of time and
disagreements between Pro Khaya and the principal agent occurred
during the period
leading up to 31 August 2020. Pro Khaya did not
finish the project on the completion date of 31 August 2020.
[10]
On 26 August 2020, the principal agent
suspended Pro Khaya from operations on site upon noting that
inevitably Pro Khaya would not
finish the project by the completion
date of 31 August 2020. A disagreement arose between the City and Pro
Khaya regarding,
inter alia
,
the termination of the agreement and various extensions of time
(EOT). This culminated in the termination of the construction
contract by Pro Khaya on 14 October 2020, citing repudiation of the
contract by the City on 26 August 2020. On 16 October 2020,
Pro Khaya
vacated the construction site and did not return.
[11]
The issue of the termination of the contract
mutated into a dispute that was referred to an adjudicator in the
person of Mr Jamieson.
On 15 January 2021, Mr Jamieson handed down a
determination (“the Jamieson determination”), where he
found that the
purported termination by Pro Khaya was of no force and
effect. For some reasons not relevant in this matter, the
determination
was only published on 18 June 2021. On 26 June 2021,
Pro Khaya, acting in terms of clause 30.6.4 of the JBCC contract,
submitted
a notice of dissatisfaction with the Jamieson
determination. Thence, the dispute regarding termination of the
contract remained
open and Pro Khaya did not go back to site. Pro
Khaya did not proceed with neither arbitration nor litigation after
it issued a
notice of dissatisfaction with Jamieson determination of
26 June 2021.
[12]
Clause 30.2 of the JBCC contract provides
that where disagreement arising between the parties (employer or the
principal agent or
an agent and the contractor) and the disagreement
is not resolved within ten (10) working days of receipt of the notice
of disagreement,
the disagreements will be deemed to be a dispute.
Clause 30.3 provides that the dispute shall be referred to
adjudication within
ten (10) working days of the expiry of the period
referred to in 30.2 by means of a notice of adjudication by the party
that gave
the notice of disagreement. The dispute is adjudicated in
terms of the procedure set out in the JBCC adjudication rules.
[13]
On 13 February 2022, Pro Khaya delivered the
first notice of disagreement, followed by the notice of adjudication
on 4 March 2022.
This dispute concerned the termination of the
contract on 30 August 2020; failure of the principal agent to issue
the final account
pursuant to the termination of the contract and
non-compliance by the principal agent and the City with the
provisions of clauses
29.28 to 29.32 of the JBCC contract; proper
valuation of the final account including contractor’s claim for
extension of
time and additional costs, which remained uncertified by
the principal agent and unpaid by the City; and City’s failure
to
return the construction guarantees to the contractors in terms of
clause 29.17.5 of the JBCC contract following termination.
[14]
Later on, in particular on 31 October 2022,
Pro Khaya issued the second notice of disagreement, followed by the
notice of adjudication
on 18 November 2022. This dispute concerned
Pro Khaya’s position regarding the principal agent’s
failure to adjudicate
alternatively, rejection of Pro Khaya’s
extension of time claims 19 and 20 for late issuance of construction
information
and time lost due to civil unrest respectively.
[15]
On 23 January 2023, the Association of
Arbitrators duly appointed the second respondent as the adjudicator,
as required by the JBCC
contract to adjudicate the dispute in terms
of the procedure set out in the JBCC rules and make the
determination.
[16]
On 6 February 2023, Pro Khaya delivered a
referral submission for the adjudication of the dispute by the
adjudicator. In the referral
submission, Pro Khaya set out its
version of the dispute in detail as required by Rule 5.1 of the JBCC
Adjudication Rules. Essentially,
Pro Khaya elaborated and based its
submissions on the issues that characterised the dispute set out in
the two notices of adjudication
referred to above. I pause to point
out that notably, the historical facts preceding the referrals of 4
March 2022 and 18 November
2022 were not placed before the
adjudicator. These include the notices of dissatisfaction with the
Jamieson determination dated
21 June 2022 and the notices of
disagreement dated 11 February 2022 and 21 October 2022 that preceded
the referrals of 4 March
2022 and 11 November 2022 respectively.
[17]
In terms of Rule 5.2 of the JBCC Rules, the
City was required to deliver its response to Pro Khaya’s
submissions, if any,
within 10 days of the referral date, that is, by
20 February 2023. It is common cause that the City did not submit its
response
by the date mentioned above. Instead, the City delivered its
response out of time on 9 March 2023, the date preceding the issuance
of the adjudication determination.
[18]
On 10 March 2023, the adjudicator proceeded
to make his determination by default against the City without having
regard to the City’s
response. The adjudication determination
effectively awarded all the reliefs sought by Pro Khaya. In short,
the determination was
that:
1.
The Determination set out below is issued.
2.
The Contractor is entitled:
2.1.
to a determination that the Contract between the
Contractor and the Employer dated 12 November 2018 has terminated on
30 August
2020;
2.2.
to:
2.2.1.
be granted extensions of time in an aggregate
extension of 130 days and concomitant revision of the date for
Practical Completion
to 26 August 2020; and,
2.2.2.
an adjustment to the Contract Value, certification
of and, pursuant thereto payment of concomitant preliminary and
General costs
in the amount of R999 528 40 (excluding VAT);
2.3.
to a determination that:
2.3.1.
the Principal Agent is obliged to issue the final
account in accordance with the account, R26 to the Referral (and
attached is X
hereto), to reflect the amount of R8 095 536.22
(plus VAT to be added thereon);
2.3.2.
the Principal Agent is required to issue the Final
Payment Certificate within 7 calendar days of the date of this
determination,
taking into account the Final Account as determined
herein and reflecting the amount of R8 095 536.22 (plus VAT to
be added
thereon) as being due by the Employer to the Contractor;
2.3.3.
the Employer is required to make payment in terms
of the Final Payment Certificate as issued in accordance with
paragraph 2.3.2
above, within 14 calendar days of the issuance
thereof;
2.3.4.
the Employer is obliged to return the Construction
Guarantee to the Contractor;
2.3.5.
the Employer is obliged to make payment of the
adjudicator’s fees/costs.”
[19]
The City did not file a notice of
disagreement with the adjudicator’s determination as it is
allowed to do in terms of clause
30.6.4 of the JBCC contract if it
disagrees with a determination, where upon the matter would be
referred to litigation. Nor
did the City on its own litigate to
challenge the determination in terms of clause 30.6.4 of the JBCC
contract. Further, the City
did not comply with the award that is
contained in the adjudicator’s determination hence Pro Khaya
has approached the Court
to apply for enforcement of the
determination.
Dispute Resolution
Mechanism
[20]
The following are the relevant provisions of
the JBCC contract so far as it relates to the settlement of disputes
between the parties
and in particular, the adjudication process:
“
30.0
DISPUTE
RESOLUTION
Settlement
by the parties
30.1 Should any
disagreement arise between the employer (or the principal agent or an
agent) and the contractor arising
out of or concerning the
action or inaction of the employer (or the principal agent or an
agent) or the contractor, or any other
matter concerning this
agreement (including the validity thereof), either party may give
notice of a disagreement to the other.
The parties shall attempt to
resolve such disagreement between them and record such resolution in
writing signed by them.
30.2 Where the
disagreement is not resolved within ten (10) working days of receipt
of the notice of disagreement, the disagreement
shall be deemed to be
a dispute.
30.3 The dispute
shall be referred to adjudication within ten (10) working days of the
expiry of the period [30.2] by means
of a notice of adjudication by
the party (the referring party) which gave the notice of
disagreement.
30.4 The notice of
adjudication shall clearly define the scope of the dispute and the
relief sought by adjudication.
30.5 Failure to
comply with the procedure described [30.3-4] shall cause the dispute
to be resolved by arbitration and not
by adjudication.
Adjudication
30.6 Where a
dispute to be referred to adjudication:
30.6.1 The adjudication
shall be appointed in accordance with JBCC® Rules of Adjudication
current at the time when the dispute
was declared and the
adjudication shall be conducted in terms of such rules.
30.6.2 The adjudicator
shall not be eligible for subsequent appointment as the arbitrator.
30.6.3 A determination
given by the adjudicator shall be immediately binding upon and
implemented by the parties.
30.6.4
Where the adjudicator has given a determination, either party may
give notice of dissatisfaction to the other party and to
adjudicator
within ten (10) working days of receipt of determination, or an
extended time period provided in the JBCC® Rules
of Adjudication
wherein such dispute is referred to arbitration.
[2]
30.6.5 Where the
adjudicator has not given a determination within the time period
allowed or extended time period provided in the
JBCC® Rules of
Adjudication, either party may give notice to the other party and to
the adjudicator that if such determination
is not received within ten
(10) working days of receipt of this notice his appointment is
thereupon automatically terminated and
such dispute is then referred
to further adjudication or arbitration, at the option of the
claimant.”
Issues for
determination
[21]
In light of the facts set out above, the
issues to be determined by the Court are the following:
a)
whether the adjudication determination is valid
and enforceable. The integral sub-issue in this regard is whether the
adjudicator
had jurisdiction to determine the issues.
b)
Embedded to the above issue, is whether the
adjudication determination is susceptible of review on the grounds
advanced by the City.
Pro Khaya’s
contentions
[22]
Pro Khaya contends that the City is bound to
comply with the adjudicator’s determination, because the latter
is an outcome
of a dispute resolution mechanism that was employed to
resolve a dispute that arose between the parties under the JBCC
agreement
and its rules, which is the alternative dispute resolution
mechanism agreed upon by the parties. Pro Khaya contends that it has
complied in all material respect with all its contractual obligations
and satisfied all the requirements for the relief it seeks.
[23]
Pro Khaya’s argument goes on to
contend that the City’s participation in the adjudication
process is a contractual obligation
which the City failed to comply
with, and as such, the City cannot approach this court to seek
intervention in circumstances where
it failed to comply with its own
contractual remedies. The applicant concludes by arguing there is no
basis in law for the court’s
intervention in a contractual
process.
[24]
In asserting its enforcement rights, Pro
Khaya relies on Rule 6.1.3 of the JBCC Rules which provides that the
adjudicator’s
determination shall be final and binding and that
the parties shall it carry out without delay. The applicant argues
that based
on the above and the fact that the City failed to issue a
notice of dissatisfaction within the prescribed period stipulated in
the JBCC Rules the adjudication determination is final and binding.
[25]
Further reliance is placed on Item 5.2 of
the JBCC Adjudication Rules which provide as follows:
“
5.2
The respondent may submit a written response to the details of
dispute not later than ten (10) working days from the referral
date.
Should the respondent not submit such written response to the
adjudicator within the said period, it shall be assumed that
he does
not dispute the details thus submitted by the claimant.”
[26]
It is common cause that the City did not submit
the written response to the adjudicator within the prescribed period
set out above.
The City did not submit a notice of dissatisfaction
with the determination either. On this basis, Pro Khaya argues that
the determination
is final and binding, and as such, the court should
grant the order enforcing the determination.
[27]
Regarding the City’s review
application that seeks to set aside the determination, Pro Khaya
contends that the determination
is not reviewable. The thrust of this
contention is that to the extent that the City relies on common law,
alternatively arbitration
in terms of the Arbitration Act 42 of 1965
(“the
Arbitration Act&rdquo
;), the application is misplaced, in
that, according to Pro Khaya, neither common law nor the
Arbitration Act applies
to the adjudicator’s determination, for
there was no arbitration agreement between the parties, and that the
determination
was made by the adjudicator as an expert, not an
arbitrator.
The City’s
response
[28]
In resisting the application, the City
launches a two-pronged approach in attacking the adjudicators
determination. In its first
leg, the City contends that the
adjudication determination is invalid and unenforceable for lack of
jurisdiction on the part of
the adjudicator. In such a situation, so
argues the City, the court should simply decline to enforce the
determination on the basis
that it is invalid and thus unenforceable.
[29]
In the second leg, the City contends that
the determination is riddled with reviewable defects, including the
jurisdictional point,
and therefore falls to be reviewed and set
aside in terms of common law, alternatively the Arbitration Act 42 of
1965 (the
Arbitration Act). In
advancing its reasoning for the
review, the City further contends that in cases like the present,
where the determination has become
both final and binding, the most
suited approach is to have the determination set aside for lack of
jurisdiction.
[30]
In seeking to have the adjudicator’s
determination reviewed and set aside, the City has advanced various
grounds on the basis
of which it argues that the determination award
is manifestly unjust and cannot be sustained. The grounds are the
following:
i)
the first and second referrals to adjudication
were irregular and as such the adjudicator lacked jurisdiction;
ii)
the extension of time (EOT) claims 16, 17 and 18
were irregularly before the adjudicator, in that they were not part
of the notice
of disagreement that preceded the referral notice;
iii)
the issue of whether the applicant had cancelled
the contract as a result of the City’s alleged repudiation is a
matter to
be resolved by the courts;
iv)
the adjudicator acted unreasonably, inexpertly and
ultra vires
;
v)
the adjudicator’s determination was made on
a default basis;
vi)
the determination was incompetent in terms of the
JBCC contract procedure; and,
vii)
there were further clear irregularities and
misdirections characterising the adjudicator’s endorsement of
the applicant’s
final account.
Applicable Legal
Principles
[31]
The purpose of adjudication as a first-tier
dispute resolution mechanism is to provide a quick and interim
resolution of construction
disputes so that the construction is not
interrupted or stalled by the disputes that might mutate to prolonged
arbitration or litigation
process. This is also restated by the
JBCC adjudication rules, where
Rule 1.1
of the JBCC adjudication
rules defines adjudication as:
“
an
accelerated form of dispute resolution in which a natural person
determines
the dispute as an expert (and not as an arbitrator)
and
whose determination is binding on the parties for immediate
compliance and which shall remain in force
until
a verdict is overturned by an arbitration award.
”
(Own
emphasis)
[32]
Further, Rule 5.1.4 of the JBCC Rules
reinforces this principle by stating that “
the
adjudicator shall act as an expert in determining the dispute.”
[33]
The adjudicator’s determination is
final and binding on the parties unless overturned by arbitration,
litigation or mutual
agreement between the parties. (See
Stefanutti
Stocks (Pty) Ltd v S8 Property (Pty) Ltd
[2013]
ZAGPJHC 388 (23 October 2013). Courts are reluctant to interfere with
or set aside such a decision unless there are serious
procedural
irregularities or if the adjudicator acted outside their
jurisdiction.
[34]
It is trite that the adjudicator's
determination is generally binding and enforceable even if it
contains an error of law effect.
(See
Sasol
Chemical Industries Ltd v Odell and Another
(401/2014)
[2014] ZASFHC 11). Further, clause 30.6.3 of the JBCC contract
provides that “
A determination
given by the adjudicator shall be immediately binding upon and
implemented by the parties.”
[35]
In the event where no notice of
dissatisfaction against the decision of the adjudicator has been
given within the prescribed period,
the decision becomes final and
binding on both parties.
(
See
Tubular Holdings (Pty) Ltd v DBT
Technologies (Pty) Ltd
2014 (1) SA 244
(GSJ). Further, Clause 30.6.4 of the JBCC contract provides that
where the adjudicator has given a determination, either party
may
give notice of dissatisfaction to the other party and to adjudicator
within ten (10) working days of receipt of the determination,
or an
extended time period provided in the JBCC Rules of Adjudication
wherein such dispute is referred to arbitration. The JBCC
contract in
this regard has replaced its arbitration clause with a litigation
clause.
[36]
However, where there is clearly no
jurisdiction on the part of the adjudicator to decide a dispute, the
court may decline enforcement
on the basis that the determination is
invalid. (See
Framatome v Eskom Holdings
SOC Ltd
.
[2020] ZAGPJHC 233 (30
September 2020). It is apposite to point out that the Supreme Court
of Appeal (SCA) overturned the High
Court decision in
Framatome v
Eskom Holdings SOC Ltd
2022 (2) SA 395
(SCA), the SCA did not
temper with the principle relating to the court’s power to
decline to enforce the determination where
there is lack of
jurisdiction.
[37]
In deciding whether the adjudicator had jurisdiction, the test
is whether the adjudicator strayed from the mandate as proscribed
in
the referral notice of adjudication. Crucially, the adjudicator
derives his mandate from the notice of adjudication. A contention
of
lack of jurisdiction will be sustainable if the adjudicator acted
outside the mandate as set out in the referral notice.
[38]
The adjudicator acts as an expert and not an
arbitrator. The significance of the distinction between an expert and
an arbitrator
in review proceedings is that unlike the arbitrator,
the adjudicator does not perform a quasi-judicial function but
reaches his
or her decision based on his or her knowledge
independently and based on the material placed before him. Further,
unlike arbitration,
adjudication is not subject to common law.
Accordingly, the power of the court to interfere with an expert
decision in review proceedings
is severely circumscribed. (See
Transnet National Ports Authority v Reit
Investments
(Pty) Ltd 2020 DJR 2104
(SCA) at para 33).
[39]
The principle regarding the limited powers
of the court to review and set aside the adjudicator’s
determination was well pronounced
in
Chelsea
West (Pty) Ltd v Roodebloem Investments (Pty) Ltd
1994(1) SA 837 (C) at 856 (C-D), where the court
held that unless there is fraud, collusion or capriciousness, or a
manifestly unjust
valuation, the parties are bound by the
adjudicator’s determination. This principle was also
confirmed in
Caviar Helicopters CC v
Executive Turbine CC and Another
2003
(3) SA 475
(W) at para 34, where the court stated as follows:
“
The
principles determining the circumstances in which a Court would
review and set aside a valuer’s determination have been
applied
in respect of the determination of other expert umpires. According to
these principles, the determination of an expert
can be set aside
only in the case of fraud, collusion or capriciousness or in the
event of the issuing of a manifestly unjust valuation.
Otherwise, the
parties are bound by the expert's determination.”
Jurisdictional
challenge
[40]
In this matter, Pro Khaya’s contention
is that an adjudicator’s award is final, binding and
enforceable subject only
to limited defences, none of which apply in
this case. According to Pro Khaya, the court can only review the
award in terms of
section 33(1)
of the
Arbitration Act, which
is not applicable in this case because the adjudicator acts as an
expert not an arbitrator. The City conceded this contention and
submitted that it would not be necessary to determine the
applicability of the
Arbitration Act to
the adjudication
proceedings. Moreover, so goes Pro Khaya’s argument,
there is no arbitration clause as the applicable
dispute resolution
mechanism is expressly stated in the JBCC contract, and as such there
is no legal basis for the court to review
the determination. Relying
on the general legal principles stated above and also rule 6.1.3 of
the JBCC Rules which provides that
the adjudicator’s
determination is final and binding, and the parties shall carry it
out without delay, Pro Khaya firmly
assets that the Court should
enforce the determination.
[41]
The City’s contention of lack of
jurisdiction on the part of the adjudicators is based on three broad
strokes. The first ground
is that the referrals of the disputes were
incompetent, in that they had not been properly referred in
compliance with the dispute
resolution procedure. The second ground
is that the disputes that were referred for adjudication were not the
disputes as captured
in the notices of disagreement and referral
notice of adjudication. The third ground is that relief claimed in
relation to the
final account was not contemplated by the empowering
provisions of the JBCC contract.
[42]
The question therefore is whether the
adjudicator lacked the requisite jurisdiction to make the
determination in the circumstances
of this case. The argument is that
he had no proper mandate, and that he acted
ultra
vires
, in that he acted outside the
purported mandate. It is trite that, if the adjudicator lacked
jurisdiction, the determination cannot
be enforceable. In the
Court’s view, based on the contentious issues in this case, the
answer lies on two-staged inquiry.
The first is, whether the dispute
was properly referred. The second, which should follow if the answer
to the first is affirmative,
is whether the adjudicator acted within
or strayed outside what was referred to him to make the
determination.
[43]
The City contends that the two referrals of
the respective disputes for adjudication were incompetent, for they
were not issued
in accordance with the required accelerated procedure
with strict timeframes, in that these disputes were referred out of
time
and way after Pro Khaya’s notice of disagreement, and long
after Pro Khaya terminated the contract and vacated the site. Further
contention is that the dispute relating to termination of contract
was determined by Jamieson and mutated to a matter for litigation.
As
such, so argued the City, these disputes fell to be resolved by
courts through litigations based on the incompetent referrals
which
were not in accordance with the procedure set out in clause 30 of the
JBCC contract.
[44]
Pro Khaya denies the City's contention
regarding the alleged irregular referrals, on the basis that the time
periods referred to
by the City in relation to the notices of
disagreement and subsequent notices of referral of the disputes were
complied with as
the timeframes prescribed in clause 30 of the JBCC
contract.
[45]
As stated above, the jurisdiction of the
adjudicator is founded on the referral notice. Now that the City
takes issue with the process
followed by Pro Khaya leading up to the
issuance of the determination, it behoves the Court to retrace the
steps and make the necessary
assessment of the contested referrals
and determine whether the referrals were properly placed before the
adjudicator to found
the mandate. This is so because in my view, the
mandate of the adjudicator in the dispute is derived from two
referrals that gave
rise to the determination in question.
[46]
The first referral was through the notice of
adjudication dated 4 March 2022 that was preceded by the notice of
disagreement dated
13 February 2022 (the first notice of
disagreement”). The second referral was through the notice of
adjudication dated 18
November 2022, that was preceded by notice of
disagreement dated 31 October 2022 (the second notice of
disagreement). The referrals
were submitted in terms of clause 30.3
of the JBCC contract.
[47]
The City contends that the referrals were
unreasonably out of time. In particular, the City alleged that the
first referral notice
of 4 March 2022, that is preceded by the notice
of disagreement of 13 February 2022 is ‘some eleven months’
late. It
is also contended that the referral notice of 18 November
2022 that was preceded by the notice of disagreement dated 31 October
2022 is ‘more than two months’ late. Notably, on perusal
of the referral notices mentioned above, it appears that the
City did
not respond to any of the two notices of disagreement to take issue
with the alleged unreasonable lateness of the notices
or any
procedural defect thereof.
[48]
In terms of clause 30.2 of the JBCC
contract, the parties are allowed 10 working days after the notice of
disagreement to resolve
the dispute. If the dispute remains
unresolved after the expiry of the 10 days period mentioned in clause
30.2, the dispute shall
be referred to adjudication in terms of
clause 30.3 within ten (10) working days after the expiry of the 10
days period referred
to in clause 30.2. In my view, both referrals
through the respective notices of adjudication were submitted within
the stipulated
timeframes and in terms of the procedure set out in
clause 30.2 and 30.3.
[49]
The City’s contention that first
notice of disagreement was some eleven months late and that the
second notice of disagreement
was more than two months is not backed
by facts. Pro Khaya proceeded to adjudication in terms of
clause 30.3. In any event,
the Court’s view is that the City
acquiesced to the adjudicator’s jurisdiction. It cannot
come at this late hour
challenging jurisdiction to which it did not
object throughout the stages. The contention that the referrals
are incompetent
in my view, lacks merit.
[50]
Another contention by the City is that the
dispute referred on 4 March 2022 is a matter for litigation and was
therefore improperly
referred to the adjudicator. According to the
City, the dispute relates to the termination of the contract on 31
August 2020 and
is essentially the same dispute that was adjudicated
by Jamieson, who issued a determination that was published on 18 June
2021.
This dispute, according to the City, was left live after Pro
Khaya delivered a notice of dissatisfaction dated 26 June 2021 with
the determination by Jamieson. The dispute, so goes the argument,
should have been resolved by litigation as provided for in clause
30.6.4 of the JBCC contract, and not by adjudication. In essence, the
adjudicator acted
ultra vires
.
This is denied by Pro Khaya.
[51]
On the papers placed before court, the City
did not object to the mandate of the adjudicator to determine this
issue. The adjudicator
found that the parties are
ad
idem
that the contract was terminated
on 30 August 2020. Thus, the dispute relating to the termination of
the contract is moot. In
any event, clause 30.6.4 of the JBCC
contract provides that where the adjudicator has given a
determination, any party may give
notice of dissatisfaction to the
other party and to the adjudicator within ten (10) working days of
receipt of the determination
wherein dispute is referred to
litigation. No notice of dissatisfaction was submitted by the City.
[52]
The second referral was submitted on 18
November 2022, having been preceded by a notice of disagreement dated
31 October 2022. This
notice related to the principal agents’
failure to adjudicate, alternatively his rejection of Pro Khaya’s
EOT Claims
numbers 19 and 20 that the adjudicator determined. The EOT
Claims 16, 17 and 18 were placed before the adjudicator for
adjudication
through the referral submission that was delivered by
Pro Khaya on 6 February 2023, when elaborating in the extension of
time claims.
The mandate of the adjudicator is derived from the
referral. The referral was not contested. In the determination, the
adjudicator
found that all the EOTs were properly motivated in Pro
Khaya’s referral and that he found no reason why he ought not
to accede
to the relief sought by Pro Khaya.
[53]
In the Court’s view the adjudicator
was within his powers to determine all the EOT claims that were
placed before him. To
the extent that the City contends that the
adjudicator was wrong in his adjudication and determination, that is
a matter that delves
into merits, and not a matter for review that
ousts the jurisdiction of the adjudicator. Consequently, the
adjudicator’s
determination in respect of all the EOT claims,
including claims no 16, 17 and 18 that were placed before him for
determination,
were properly quantified and supported. Such a
determination could be reasonably arrived at by an expert in the form
of an adjudicator.
In my view, the adjudicator’s
determinations are valid.
[54]
In light of the reasoning laid out
above, the Court finds that the dispute resolution process prescribed
in Clause 30 was complied
with. It follows that the adjudicator had
the requisite jurisdiction to determine the disputes that were
properly referred to him.
Thus, the contention that the adjudicator
lacked jurisdiction to make determination is not sustainable and
plainly appears to be
an afterthought in the instant case.
Consequently, the Court finds that the determination is enforceable.
Review counter
application
[55]
In its counter application for review, the
City argues that adjudicator’s determination should be reviewed
and set aside in
terms of common law or the
Arbitration Act. Pro
Khaya contends that there is no legal basis in this case to review
the adjudicator's decision, for the narrow grounds upon which
the
court could interfere do not exist in this case.
Arbitration Act does
not apply to the adjudicator, purely because the adjudicator acted as
an expert not arbitrator, and there is no arbitration agreement
inviting the review of the adjudicator’s decision. That was
rightly conceded by the City.
[56]
In this case, the court has found that the
adjudicator acted within his mandate that is derived from the
referrals of the dispute
in terms of the JBCC contract and in
compliance with the JBCC adjudication rules. There is no contention
that suggests that the
determination was predicated on fraud,
collusion, capriciousness, and the court did not find that either.
[57]
The adjudicator acted as an expert and not
an arbitrator, and as such, there is no room for the court to review
the adjudicators
decision in terms of the arbitration act. Further,
the powers of the court to review are strictly narrow and limited.
This is also
because the parties bound themselves in the contract to
resolve a dispute through the adjudication process. The general
approach
by the court is to respect the contract agreed upon between
the parties. The Court is not empowered to re-write the terms
of the contract for the parties, in this instance, by tempering with
the powers and jurisdiction of the adjudicator that was agreed
to by
the parties.
[58]
Notwithstanding the above, it is trite that
where the adjudicator’s decision is tainted with irregularities
that render the
determination manifestly unjust, the court enjoys the
power to interfere with the adjudicator’s decision. In the
City
of Cape Town v Namasthethu Electrical (Pty) Ltd
[2018]
ZAWHC 150, at paragraphs 86-89, where an expert appointed on the
basis of their skills and experience delves on a knowledge
area that
is not his speciality, the court took a view that there was a nuanced
issue that called for the court’s intervention,
for the
determination was manifestly unjust.
[59]
Citing the abovementioned case, the City
contends that the adjudicator, being a practising advocate, made
determination on a dispute
that involves a complex technical area of
extension of time (EO) and for the production of a final account
without deferring to
technical expert in the area of the built
environment. The question is whether on the facts of this case, it
can be found that
the adjudicator made findings on a knowledge area
that is outside his expert knowledge and expertise.
[60]
While the Court accepts that manifest
injustice might arise in circumstances where the adjudicator
pontificates on an unfamiliar
specialist knowledge area without
deference, it does not follow that such a situation obtained in the
instant case. On the facts,
the adjudicator possesses not only legal
knowledge and skill. He was appointed by the Association of
Arbitrators based on his skills
as a seasoned practitioner in
construction law for more than 30 years, including years of
experience in construction dispute resolution
mechanism. Surely, if
there was a cause for concern insofar as jurisdiction is concerned,
he could have pointed that out to Pro
Khaya and or refused to
adjudicate the matter. Notably, at no stage did the City object on
the appointment of the adjudication
for lack of skills in the area.
The Court has not been taken into confidence in illustrating lack of
expertise on the part of the
adjudicator to determine the dispute. In
the premise, the Court is not persuaded that the adjudicator was not
armed with the necessary
expertise to adjudicate the dispute so much
so that the decision was vitiated by irregularities and or manifestly
unjust.
[61]
Another ground of review advanced is that
the adjudicator made the determination on a default basis. The
argument advanced is that
the adjudicator may not enter a default
judgment, and that in the absence of the other party, the adjudicator
was required to apply
his mind and conduct expert investigation on
the submissions of the other party.
Rule 5.2
of the JBCC rules
provides that should the respondent not submit such written response
to the adjudicator within the said period
it shall be assumed that he
does not dispute the details thus submitted by the claimant.
Admittedly, the adjudicator is bound to
apply his mind on the
argument placed before him. In this case, Pro Khaya made written
submissions to the adjudicator, to which
the City failed to respond
within the time stipulated by the JBCC rules.
[62]
In the Court’s view, the adjudicator
acted well within his mandate and powers in terms of the JBCC
contract in proceeding
with determination by default. Moreover, he
made the findings within his knowledge and expertise. It does not
appear on the facts
that in the determination of the dispute the
adjudicator did not apply his expertise to interrogate the
contractor’s submissions
placed before him in making the
determination simply because he made the determination by default. It
is not for the court to cast
aspersions on the correctness of the
expert’s determination that was made within the scope of the
dispute referred to him
by the parties. On the facts, it seems to me
that the adjudicator considered the contractors submission and
delivered a written
determination and expressed reasons for his
decision.
[63]
In this matter, the Court finds that a case
has not been made for the Court to justify the Court’s
interference with the determination
of the adjudicator. The review
grounds advanced by the City do not fall within the threshold of the
narrow grounds for review of
the adjudicator’s determination.
Accordingly, the Court does not find any reason to set aside the
determination. Consequently,
the counter-application seeking to
review and set aside the determination must fail. It follows that the
determination is final
and binding between the parties and thus
enforceable. Accordingly, the determination falls to be complied with
forthwith.
Costs
[64]
In this application, Pro Khaya has
succeeded. The general principle is that costs follow the results.
The Court does not find any
reason that this principle should not
find application in this case. It follows that costs should be
awarded to the successful
party. In my view, the complexity of this
matter warrants that costs be granted at Scale C of the High Court.
Order
In light of the above,
the following order is made:
1
The respondent is ordered to comply with the
Adjudication Determination dated 10 March 2023 published by the
Adjudicator Adv JG
Wasserman SC.
2
The counter application to set aside the
adjudicators determination is dismissed.
3
The respondent is ordered to pay costs of this
application, including costs of the counter application, at Scale C
of the High Court
ZL MAPOMA
Acting Judge of the High
Court
Western Cape Division
Appearances
Counsel for the Applicant
:
Adv P Tredoux
Instructed
by
:
Thiefenthaler Attorneys Inc, Cape Town
Counsel for the
Respondent: Adv S
Rosenburg SC with him Adv M Greig
Instructed
by
: Timothy
and Thimothy Attorneys, Cape Town
[1]
These
include the
Bills
of Quantities, The Model Preambles for Trade, and other Contract
Documents like programme and technical documentation such
a drawings
[2]
It must be noted that in
the instant case, the contract was amended to exclude arbitration
but to include litigation instead.
sino noindex
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