THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 1287/2018

In the matter between:

EKURHULENI WEST COLLEGE                                                                   APPELLANT

and

STANLEY HAROLD SEGAL                                                               FIRST RESPONDENT
TRENCON CONSTRUCTION (PTY) LTD                                      SECOND RESPONDENT

Neutral citation:
Ekurhuleni West College v Segal and Another (1287/2018) [2020]
ZASCA 32 (2 April 2020)
Coram:
PONNAN, VAN DER MERWE, MOLEMELA, DLODLO and NICHOLLS
JJA
Heard:
17 February 2020
Delivered:
2 April 2020
Summary:   Review – adjudicator’s determination under a building contract
susceptible to revision in pending arbitration – proceedings uncompleted – review
generally entertained only to prevent grave injustice – no such circumstance shown –
high court correctly dismissed review application.

_____________________________________________________________________

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (De Vos J sitting as court
of first instance):
The appeal is dismissed with costs, including the costs of two counsel.

JUDGMENT

Van der Merwe JA (Ponnan, Molemela, Dlodlo and Nicholls JJA concurring)
[1] The appellant, the Ekurhuleni West College (the College), is a public college
established as a juristic person in terms of s 3 of the Continuous Education and Training
Act 16 of 2006. In terms of a written building contract, the College employed the second
respondent, Trencon Construction (Pty) Ltd (Trencon), to build a conference centre on
its premises. By the time that the construction came to be ‘practically completed’ within
the meaning of the building contract, various disputes arose between the parties.
Trencon referred these disputes to the first respondent, Mr Stanley Harold Segal (the
adjudicator) for adjudication. Aggrieved by the adjudicator’s determination, the College
approached the Gauteng Division of the High Court, Pretoria for the review and setting
aside thereof. Trencon opposed the application and filed a counter-application for the
enforcement of the determination. De Vos J dismissed the application with costs and
granted the counter-application with costs on the attorney and client scale, in both
instances including those of two counsel, but granted leave to the College to appeal to
this Court.

[2] Clause 40 of the building contract dealt with the settlement of disputes. The
relevant provisions thereof were as follows:
‘40.0
SETTLEMENT OF DISPUTES
40.1
Should any disagreement arise between the employer, including his principal agent
or agents, and the contractor arising out of or concerning this agreement or its
termination, either party may give notice to the other to resolve such disagreement.

40.2
Where such disagreement is not resolved within ten (10) working days of receipt of
such notice it shall be deemed to be a dispute and shall be referred by the party which
gave such notice to either:
40.2.1
Adjudication [40.3] where the adjudication shall be conducted in terms of the
edition of the JBCC Rules for Adjudication current at the time when the dispute
was declared or,
40.2.2
Arbitration [40.4] where the arbitrator is to be appointed by the body selected by
the parties [41.3] whose rules shall apply. Where no body is stated or where the
stated body is unable or unwilling to act, the appointment shall be made by the
chairman for the time being of the Association of Arbitrators (Southern Africa).
The appropriate rules current at the time when the dispute is declared shall
apply.
40.3    Where a dispute is referred to adjudication the following shall apply:
40.3.1
The adjudicator shall be appointed in terms of the Rules [40.2.1]
40.3.2
The adjudicator shall not be eligible for subsequent appointment as the
arbitrator
40.3.3
The adjudicator’s decision shall be binding on the parties who shall give effect
to it without delay unless and until it is subsequently revised by an arbitrator
[40.4]
40.3.4
Should either party be dissatisfied with the decision given by the adjudicator,
or should no decision be given within the period set in the Rules, such party may
give notice of dissatisfaction to the other party and to the adjudicator within ten
(10) working days of receipt of the decision or, should no decision be given,
within ten (10) working days of expiry of the date by which the decision was
required to be given the dissatisfied party shall refer the dispute to arbitration.
40.4 Where a dispute is referred to arbitration the following shall apply:
40.4.1 The arbitrator shall be appointed at the request of either party by the body stated in
40.2.2
40.4.2 The arbitration shall be conducted by the arbitrator in accordance with the rules of the
body stated in the contract data
40.4.3 The arbitrator shall have the power to open or revise any certificate, opinion, decision,
requisition, or notice relating to the dispute as if no such certificate, opinion, decision,
requisition or notice had been issued or given
40.4.4 The arbitrator’s decision shall be binding on the parties who shall give effect to it
without delay.’

[3] It is common cause that the rules referred to in clause 40.2.1 of the building
contract were the JBCC Adjudication Rules (published: October 2014) (the rules).
Under the heading INTERPRETATION, rule 1.1 provided:
‘Adjudication is an accelerated form of dispute resolution in which a neutral person determines
the dispute as an expert and not as an arbitrator and whose determination is binding unless
and until varied or overturned by an arbitration award.’
The rules contained detailed provisions regulating the procedure to be followed by the
adjudicator. Rule 5.1 to 5.3 provided for only three sets of submissions, namely a
statement of claim, a statement of defence and a replication. In terms of rule 5.7.7, the
adjudicator was empowered to require a party, within a period determined by him, to
submit any further information, documents or evidence which he might reasonably
require to make a determination. Rule 5.5 provided that the adjudicator might conduct
a hearing but was not obliged to do so. And, in terms of rule 5.4.1, the adjudicator had
to act as an expert and not as an arbitrator in determining the disputes.

[4] Rule 6.1.2 provided that the adjudicator’s written determination of a dispute shall
include the reasons for his decisions. In line with clause 40.3 of the building contract,
rule 6.1.4 provided that the adjudicator’s written determination shall be binding on the
parties unless and until such determination of the dispute is overturned or varied in
whole or in part by an arbitration in terms of the dispute resolution clause of the building
contract. Rule 6.2 provided either party with the right to request the adjudicator to
correct a patent clerical or arithmetical error or to clarify an ambiguity in the
determination and to apply to the high court for the enforcement of the determination.

[5] In compliance with rule 5.1, Trencon submitted a detailed statement of claim with
supporting documents, consisting of a total of some 250 pages. In terms thereof
Trencon submitted 13 claims for determination by the adjudicator. The College
submitted a statement of defence and this was followed by Trencon’s replication in
terms of rule 5.3.1.

[6] Notwithstanding the absence of any provision therefor in the rules, the College
submitted a written response to Trencon’s replication (the rejoinder). Trencon objected,
which prompted the College to submit a ‘letter of appeal’. This essentially contained an
appeal to the adjudicator to accept the rejoinder. Matters threatened to get out of hand

when Trencon submitted separate written responses to the rejoinder and the ‘letter of
appeal’.

[7] Sanity prevailed, however, when the adjudicator informed the parties on 5
February 2017 that the rejoinder would not be considered for purposes of the
adjudication. This of course also applied to the submissions made in response to the
rejoinder. In a further email dated 14 February 2017, directed to both the College and
Trencon, the adjudicator, acting in terms of rule 5.7.7, requested further specified
information from Trencon. In the same email the adjudicator informed the parties as
follows:
‘At this juncture and based on the information requested, I doubt whether it will be necessary to
conduct a hearing in order to arrive at my determination.’
Trencon submitted the additional information to the adjudicator and the College on 21
February 2017. Neither the adjudicator’s email nor Trencon’s additional information
elicited any response from the College. In the event, the adjudicator decided that it was
unnecessary to conduct a hearing.

[8] On 14 March 2017, the adjudicator made his written determination available. It
contained extensive reasons for his conclusions. He only allowed five of Trencon’s
claims and determined the total amount payable by the College. At the behest of
Trencon, the adjudicator corrected a patent error of calculation and made a revised
written determination available on 19 March 2017. In terms thereof the amount of
R3 253 484,41 was payable by the College to Trencon.

[9] On 28 March 2017 the College gave notice of dissatisfaction in terms of clause
40.3.4 of the building contract and thus referred the disputes to arbitration. This did not,
of course, relieve the College of the obligation in terms of clause 40.3.3 to make
payment to Trencon without delay. However, the College neglected to do so. Instead,
on 13 April 2017, it issued an application to review and set aside the determination.

[10] The grounds for review relied upon in the application were firstly that the
adjudicator failed to comply with the rules of natural justice by: refusing to have regard
to the rejoinder; not affording the College an opportunity to submit a response to the
further information submitted by Trencon at the request of the adjudicator; and not

conducting a hearing. Secondly, the College attacked the determination on the
substantive merits of the claims that had been allowed by the adjudicator.

[11] The court a quo dismissed the review application on three independent grounds.
These were:
(a) that the notice of dissatisfaction and pending arbitration, on its own, precluded the
review application;
(b) that the rules of natural justice were not applicable to the matter and, even so, were
not shown to have been breached;
(c) that the adjudicator correctly determined the substantive merits of the claims in
question.

[12] As I shall elaborate below, in my view ground (a) is dispositive of the matter. In
the result it is not necessary to finally determine grounds (b) or (c). However, for the
benefit of the parties, I shall say something about of each of grounds (b) and (c).

[13] In respect of ground (b), the court a quo agreed with the dictum in Sasol Chemical
Industries Limited v Odell and Another [2014] ZAFSHC 11 para 18 that an adjudication
of this nature is not subject to the common law. This led the court a quo to conclude
that the rules of natural justice did not find application to the matter.

[14] The legal position is, however, more nuanced than this. It was lucidly set out by
Botha JA in Turner v Jockey Club of South Africa 1974 (3) SA 633 (A) at 645H-646B:
‘In the case of a statutory tribunal its obligation to observe the elementary principles of justice
derives from the expressed or implied terms of the relevant enactment, while in the case of a
tribunal created by contract, the obligation derives from the expressed or implied terms of the
agreement between the persons affected. (Maclean v. Workers’ Union, (1929) 1 Ch.D. 602 at
p. 623). The test for determining whether the fundamental principles of justice are to be implied
as tacitly included in the agreement between the parties is the usual test for implying a term in
a contract as stated in Mullin (Pty.) Ltd. v. Benade Ltd., 1952 (1) S.A. 211 (A.D.) at pp. 214-5,
and the authorities there cited. The test is, of course, always subject to the expressed terms of
the agreement by which any or all of the fundamental principles of justice may be excluded or
modified. (Marlin’s case, supra at pp. 125-130).’
It is clear from the context that this passage dealt with tacit terms of a contract (the
unexpressed intention of the parties) and not with implied terms (imported into contracts

by law). See Ashcor Secunda (Pty) Ltd v Sasol Synthetic Fuels (Pty) Ltd [2011] ZASCA
158 paras 10-11 and authorities cited there. See also Marlin v Durban Turf Club and
Others 1942 AD 112 at 127; Jockey Club of South Africa and Others v Feldman 1942
AD 340 at 350-351 and Lamprecht and Another v McNeillie 1994 (3) SA 665 (A) at
668C-I.

[15] These principles impact on the present matter in the following manner. The
adjudicator operated as a tribunal created by contract. Express contractual provisions
regulated the procedure that he had to follow. The College did not challenge any of
these provisions as being contrary to public policy. It follows that there was no room for
the tacit importation of any rule of natural justice into the agreement of the parties. See
Robin v Guarantee Life Assurance Co Ltd 1984 (4) SA 558 (A) at 567B-F. The College
therefore had to show that the express contractual provisions had been breached.
Taking into account the nature and purpose of the adjudication, the adjudicator
conducted it strictly in terms of these contractual provisions. Therefore there appears
to be no merit in the College’s reliance on procedural unfairness.

[16] As to ground (c), it is trite that a judicial review is not concerned with the
correctness of the result on the substantive merits of the decision in question, but with
the fairness and regularity of the procedure by which the decision was reached.
Consequently the court a quo erred in entering into and determining the substantive
merits of the claims in question. The dismissal of the review application could not
properly have been based on ground (c).

[17] I now turn to ground (a). The question is whether the court a quo correctly held
that the pending arbitration, by itself, justified the dismissal of the review application.
The court a quo reasoned that by referring the disputes to arbitration, the College
elected to enforce one of two mutually exclusive remedies, resulting in the waiver of the
right to take the adjudicator’s determination on judicial review. I do not think that in the
circumstances the remedies of arbitration and review were necessarily mutually
exclusive. The review was inter alia based on alleged procedural unfairness, whereas
the arbitration will entail a rehearing of the merits of Trencon’s claims in terms of the
building contract.

[18]  But ground (a) is based on a different but very firm foundation, one which Trencon
was entitled to invoke in support of the order of the court a quo. In terms of clause 40.4.3
of the building contract, the arbitrator will revise the adjudicator’s determination as if it
had not been issued or given. Thus, the determination will be revisited during a further
step in the agreed procedure for the settlement of disputes. It follows that the College
required the court a quo to review unterminated proceedings.

[19] In Wahlhaus and Others v Additional Magistrate, Johannesburg and Another 1959
(3) SA 113 (A) at 119H-120B, this court held that by virtue of its inherent power to
restrain illegalities in inferior courts, the high court may, in a proper case, grant relief by
way of review, interdict or mandamus against the decision of a magistrates’ court given
before conviction. This power, said Ogilvie Thompson JA for the court, must be
sparingly exercised. The court said that it was impractical to attempt any precise
definition of the ambit of this power, for each case must depend on its on circumstances.
The court, however, laid down the general rule that the power should be exercised only
‘in rare cases where grave injustice might otherwise result or where justice might not by
other means be attained’.

[20] These principles have been approved and followed on countless occasions. Their
purpose is to limit piecemeal litigation in the interests of justice. They are not limited to
criminal proceedings. See Anglo American Corporation of SA Ltd v Sierzputowski 1973
(3) SA 709 (T) at 714C-H and Magistrate, Stutterheim v Mashiya 2004 (5) SA 209 (SCA)
paras 13-14. They have been applied to the proceedings of statutory and non-statutory
tribunals. See, for instance, Brock v SA Medical and Dental Council 1961 (1) SA 319
(C) at 324B-E and Laggar v Shell Auto Care (Pty) Ltd and Another 2001 (2) SA 136
para 14. In my view, the principles laid down in Wahlhaus are equally applicable to the
present matter.

[21] Did the College place its case for the review of the adjudicator’s determination
within the ambit of these principles? I think not. Central to the answer to this question is
the nature and purpose of the adjudication in terms of the building contract and the
rules. It was designed for the summary and interim resolution of disputes. The
adjudicator was given wide inquisitorial powers to resolve the disputes as expeditiously
and inexpensively as possible. But the adjudicator’s determination was not exhaustive

of the disputes, as it may be overturned during the final stage of the dispute resolution
process. See, in respect of similar provisions, Radon Projects (Pty) Ltd v NV Properties
(Pty) Ltd and Another [2013] ZASCA 83; 2013 (6) SA 345 (SCA) paras 7-9.

[22] The College agreed to be bound by the adjudicator’s determination. Its remedy
was to refer the matter to arbitration. It invoked that remedy and could have pursued it
expeditiously. In these circumstances holding the College to its contract would not
cause grave injustice nor irreparable harm.

[23] It follows that the review application had to fail and the counter-application for
enforcement of the determination was correctly allowed. The College complained,
however, about the attorney and client costs order on the counter-application and
pointed out that the court a quo gave no reasons for a punitive costs order. The absence
of reasons for a costs order may indicate that the court did not exercise its discretion
judicially. I shall assume in favour of the College that this is the case here and that this
court should reconsider the costs of the counter application. In my view the review
application amounted to an abuse of process. Instead of forthwith making payment in
terms of the interim determination as it was obliged to do and despite having
expeditiously invoked the remedy of arbitration, the College went to court with an
application that was bound to fail. Thus it intentionally frustrated the rights that
Trencon’s counter-application aimed to enforce. For these reasons costs on the
attorney and client scale was justified.

[24] In the result the appeal is dismissed with costs, including the costs of two counsel.

________________________
C H G VAN DER MERWE
JUDGE OF APPEAL

APPEARANCES

For Appellant:

P Ellis SC, P Ellis (Jnr)
Instructed by:

Roelf Nel Inc., Pretoria

Honey Attorneys, Bloemfontein

For 1st Respondent:

No appearance
Instructed by:

Gildenhuys Malatji Inc., Pretoria

For 2nd Respondent:

M D Cochrane SC, C de Witt
Instructed by:

Nupen Staude De Vries Inc., Pretoria

Claude Reid Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal
DATE

2 April 2020
STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

Ekurhuleni West College v Segal and Another (1287/2018) [2020] ZASCA 32 (2 April 2020)

Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs, from Gauteng
Division of the High Court, Pretoria (high court).

The appellant, the Ekurhuleni West College (the College), entered into a written building contract
in which it employed the second respondent, Trencon Construction (Pty) Ltd (Trencon), to build a
conference centre on its premises. By the time that the construction came to be ‘practically
completed’ within the meaning of the building contract, various disputes arose between the
parties. Trencon referred these disputes to the first respondent, Mr Stanley Harold Segal (the
adjudicator) for adjudication. Aggrieved by the adjudicator’s determination, the College
approached the high court for the review and setting aside of the determination. Trencon opposed
the application and filed a counter-application for the enforcement of the determination. The high
court dismissed the application with costs and granted the counter-application with costs on the
attorney and client scale, in both instances including those of two counsel.

Aggrieved by the high court’s decision, the College appealed to the SCA. The College submitted,
inter alia, that the adjudicator failed to comply with the rules of natural justice. The SCA held that
the adjudicator operated as a tribunal created by contract. Express contractual provisions
regulated the procedure which the adjudicator had to follow. It follows that there was no room for

the tacit importation of any rule of natural justice into the agreement of the parties. The SCA held,
that it is trite that judicial review is not concerned with the correctness of the result on the
substantive merits of the decision in question, but with the fairness and regularity of the
procedure by which the decision was reached.

The SCA considered whether the high court was correct in holding that the pending arbitration, by
itself, justified the dismissal of the review application. The high court had held that by referring the
disputes to arbitration, the College elected to enforce one of two mutually exclusive remedies,
resulting in the waiver of the right to take the adjudicator’s determination on judicial review. The
SCA held that the College failed to place its case for the review of the adjudicator’s determination
within the ambit of the Wahlhaus principles, which were applicable to this case. The SCA, further,
held that the College had agreed to be bound by the adjudicator’s determination. Therefore, its
remedy was to refer the matter to arbitration. The SCA found that the review application had to
fail and the counter-application for enforcement of the determination was correctly allowed.

With regard to costs on an attorney and client scale, the SCA held that the College intentionally
frustrated the rights that Trencon’s counter-application aimed to enforce, for such reasons costs
on the attorney and client scale was justified.

The appeal was dismissed with costs, including the costs of two counsel.