The recent Judgment delivered on 8 June 2021 by the Honourable AJ Mossop in the application brought by the MEC for the Department of Transport, Kwazulu-Natal against Raubex (KZN) and the learned Adjudicator, considered the implication of the “time limitation” clause when a Referral to Arbitration may be made after an Adjudicator delivered a Decision. This Judgment also provided an insight on how a Court will consider the imposition of a time-bar clause.

Although the dispute between Raubex and the Department of Transport, Kwazulu-Natal arose in accordance with the General Conditions of Contract for Construction Works, Third Edition, 2015 (“GCC 2015”), after the delivery of the Adjudicator’s Decision, the principles established in this Judgment will similarly apply to the provisions of the JBCC, NEC and FIDIC conditions of contract.

On 24 March 2020 the learned Adjudicator’s Decision was received by the Parties.  Upon receipt of a Decision, Clause 10.6.1.2 of the GCC 2015 provides that none of the Parties shall “dispute the validity, or correctness of the whole, or specified part of the decision, before 28 days1 or after 56 days from the receipt of the decision“.  GCC 2015 therefore effectively allows for a “cooling-off” period for the dissatisfied party to carefully consider whether it is worth the effort and the resources to refer the matter to Arbitration. Clause 10.6.1.2 of the GCC 2015 then also provides that if a disputing party does not comply with the time limitation and misses the deadline of 56 days, the disputing party “shall have no further right to refer such a dispute to arbitration or court proceedings”.

Similarly, Clause 30.6.4 of the JBCC Principal Building Agreement (Edition 6.2, May 2018) provides a time-limitation of only 10 working days in which a dissatisfied party may dispute the Adjudicator’s Decision and refer a matter to Arbitration. Clause W1.4 (2) of the NEC3 and NEC4 provides a time-limitation of 4 weeks and the FIDIC Red Book (1999) provides a time-limitation of 28 days in which a dissatisfied party may dispute the Adjudicator’s Decision.

As per the Judgment, the period in which the Applicant had an opportunity to dispute the Adjudicator’s Decision was from 23 April 2020 to 22 May 2020. The Applicant only issued the notice on 12 August 2020. In terms of Clause 10.6.1.2 of the GCC 2015 the Applicant was effectively barred from further disputing the Adjudicator’s Decision and referring the dispute to Arbitration. To overcome this obstacle, the Applicant sought an order from the Court that enforcement of the time-limitation clause must be declared contra bonos mores. The Applicant also contended that to enforce the time-limitation clause would be unfair to it

The Applicant’s reasons for the belated notice of dispute was primarily that the Applicant appointed an attorney to represent it in the dispute before the Adjudicator. The attorney was a Mr Mkhulise (Mr Mkhulise) of the firm Mkhulise Attorneys. On Friday, 20 March 2020, four days before the Adjudicator delivered his decision, Mr. Mkhulise was tragically murdered. Following upon this, the Applicant was unable to get any information from Mr Mkhulise’s files from his office as he was a sole practitioner and his office was in ‘disarray’ following his death. It was also unable to receive legal advice concerning the decision. Attempts to appoint a successor to Mr Mkhulise were further hampered when the applicant approached its present attorneys and was told that they could not act until all outstanding amounts owing to Mr Mkhulise’s firm had been paid. The level 5 lockdown due to the Covid-19 pandemic also played an integral part in the Applicant’s delay in notifying the dispute. The applicant contended that the interplay of these two principal factors caused it difficulty in complying with the provisions of the time-limitation clause.

As per Barkhuizen v Napier 2007 (5) SA 323, the following was clarified:

“…where a claimant seeks to avoid the enforcement of a time-limitation clause on the basis that non-compliance with it was caused by factors beyond his or her control, it is inconceivable that a court would hold the claimant to such a clause.”

Although the Honourable Judge stated that “death is notoriously a great disruptor, and the imposition of a national lock down is unprecedented in the modern history of this country”, the Honourable Judge found that the essential question to be determined thus was whether compliance with the time-limitation clause was prohibited by factors beyond the control of the applicant and that the conduct of the Applicant’s employees must still be scrutinised notwithstanding the occurrence of the two factors relied upon by the Applicant. The Honourable Judge concluded, upon scrutiny of the actions and/or inactions of the Applicant’s employees that “the mere existence of the murder and the lockdown appears to be used by Ms Sithole as a cloak that is drawn down upon her activities to obscure them from view” and “whilst the lockdown was enormously disruptive, economic life had to continue even if it was conducted from one’s dining room table.”

The Honourable Judge then concluded that “insufficient reasons have been advanced in support of the allegation that the applicant could not have complied with the provisions of the time-limitation clause”, that “the Applicant’s founding papers, in which it is required to make its case, is characterised by an absence of facts” and “there is simply no evidence to satisfactorily explain why the applicant could not have complied with the time-limitation clause.”

The Honourable Judge further summarized that right thinking members of the community would require organs of state such as the Applicant to be diligent and vigilant in the performance of their contractual obligations and that those entrusted with the legal work of the Applicant were required to conduct themselves in a professional manner and to use their best endeavours to protect the interests of their employer.

Conclusion:

The Judgment by the Honourable AJ Mossop confirmed that whether something is immoral or not is a question of fact and that sufficient facts must be advanced if a declaration is sought that the enforcement of the time-limitation clause is contra bonos mores or contrary to public policy. A court, however, may not refuse to enforce contractual terms on the basis that the enforcement would, in its subjective view, be unfair, unreasonable or unduly harsh. If sufficient reasons have been advanced by the disputing party to prove it was prohibited by factors beyond its control, then the outcome may have been different. The mere occurrence of the circumstances did not suffice as such good reasons to not comply with the time-limitation clause of the contract. A disputing party should therefore carefully observe and strictly comply with time-limitation provisions of the contract, unless the occurrence of circumstances (which circumstances will have to survive an objective test), prevent a contracting party from complying with these provisions.