Court name
High Court Main Division
Case name
Roads Authority v Kuchling
Media neutral citation
[2016] NAHCMD 32
Judge
Parker AJ










REPUBLIC
OF NAMIBIA


HIGH
COURT OF NAMIBIA MAIN DIVISION, WINDHOEK


JUDGMENT


Case
no: A 188/2015


DATE:
22 FEBRUARY 2016


REPORTABLE


In
the matter between:


ROADS
AUTHORITY
.......................................................................................................APPLICANT


And


GERD
KUCHLING...........................................................................................FIRST
RESPONDENT


RONALD
BRUNAUER................................................................................SECOND
RESPONDENT


NICLAAS
LOUW.............................................................................................THIRD
RESPONDENT


ROADS
CONTRACTOR COMPANY LIMITED/


CONSOLIDATED
CONTRACTORS GROUP S.A.L


(OFFSHORE)
JOINT
VENTURE..............................................................FOURTH
RESPONDENT


ROADS
CONTRACTOR COMPANY
LIMITED.........................................FIFTH
RESPONDENT


Neutral
citation: Roads Authority v Kuchling (A 188/2015) [2016]
NAHCMD 32 (22 February 2016)


Coram:
PARKER AJ


Heard:
11 November 2015


Delivered:
22 February 2016


Flynote:
Building and construction – Construction contract –
Internal adjudication and arbitration clauses – Contract
providing for establishment of Dispute Adjudication Board (DAB) and
arbitration – Any party to contract entitled to refer dispute
to DAB – Dispute on preliminary issues – Court found that
DAB has not made a decision on dispute referred to it – In that
event, there must be cogent or convincing grounds entitling court to
intervene and stop internal adjudicating process and order referral
of the interim decision to arbitration – Court found that DAB
has not misconceived its duty under the reference when it made an
interim decision on preliminary issues – Court found further
that DAB did not breach any procedural rules in terms of the
agreement and did not violate common law rules of natural justice –
Court held that DAB was entitled to make the interim decision –
Interim decision does finally dispose of the dispute under the
reference – Decisional process under DAB has not come to an end
with the making of the interim decision – Court concluded that
DAB’s refusal to permit referral of the interim decision to
arbitration does not amount to a violation of the procedural duty to
act fairly and to adopt procedures suitable to the dispute, avoiding
unnecessary delay and expense – Consequently, court concluded
that applicant has not established any contractual right which the
court may protect by stopping the internal adjudicating process and
referring the interim decision to arbitration – Court held that
what the applicant now seeks will produce the very consequence the
applicant’s counsel fears, namely, unnecessary delay and
expense.


Summary:    
Building and construction – Construction contract – By
agreement between applicant (employer) and contractor (fourth
respondent) any party to the construction contract may refer dispute
to a Dispute Adjudicating Board (DAB) established, and members
thereof appointed, by agreement between the parties to the contract –
Upon receiving dispute referred to it DAB took some interim decision
on its jurisdiction, scope of the dispute and some procedural matters
– Court found that the DAB was entitled to make the interim
decision on the preliminary issues – The DAB did not
misconceive its duty under the reference and did not breach any
procedural rules under the agreement or rules of natural justice –
Applicant brought application for an order to refer DAB’s
interim decision to arbitration – Rule nisi was granted
by agreement between the parties – Upon the return day court
found that the interim decision has not brought finality to the
dispute under the reference and so the decisional process under the
DAB has not come to an end – Court found further that the
applicant has failed to establish that the DAB has violated
procedural rules under the agreement when it refused to permit its
interim decision to be referred to arbitration – The DAB’s
refusal cannot be considered as violating its procedural duty to act
fairly and to adopt procedures suitable to the dispute, avoiding
unnecessary delay and expense – Consequently, court concluded
that applicant has not established any contractual right which the
court may protect by stopping the internal adjudicating process and
referring the interim decision to arbitration – Court found
that what the applicant now seeks will produce the very consequence
the applicant’s counsel fears, namely, unnecessary delay and
expense – Consequently, rule nisi discharged and
application dismissed with costs.


ORDER


The
rule nisi issued on 31 July 2015 is discharged, and the
application is dismissed with costs, including costs of one
instructing counsel and one instructed counsel.


RULING


PARKER
AJ:


[1]       
In an urgent application, the applicant sought the relief set out in
the notice of motion. Without beating about the bush, I should say
that the instant application is brought to stop an internal and
domestic adjudication proceedings from continuing before a Dispute
Adjudication Board (‘the DAB’). The DAB was established,
and its members appointed, by agreement between the applicant and the
fourth respondent (‘the agreement’). The DAB consists of
first, second and third respondents. The instant proceeding concerns
the dispute between the applicant and the fourth respondent (‘the
dispute’). The duty of the DAB is, therefore, to resolve
dispute between the parties to the agreement through adjudication
proceedings.


[2]       
The contractor (fourth respondent) was awarded a tender by the
employer (applicant) for a road construction project. The contract of
employment is regulated by the Conditions of Contract for
Construction for Building and Engineering Works Designed by the
Employer, First Edition, 1999 (‘FIDIC’) and by Particular
Conditions of Contract (Volume I) (‘PCC’). The applicant
and the fourth respondent are the parties to the contract.
Henceforth, it will be referred to simply as ‘the building
contract’, and the applicant and the fourth respondent simply
as ‘the parties’.


[3]       
On 31 July 2015, after hearing Mr Corbett SC, counsel for the
applicant, and Mr Conradie, counsel for the fourth and fifth
respondents, and by agreement between the parties, the court granted
a rule
nisi.
In the course of events, the rule
nisi
was extended to 22 October 2015. Before that day arrived, on 19
October 2015, the rule
nisi
was further extended to 11 November 2015. On this extended return
day, Mr Corbett SC represents the applicant, and Mr Van Zyl the
fourth and fifth respondents, who have moved to reject the
application. The rest of the respondents have not so moved.


[4]       
It seems to me that despite the fact that it has been argued
extensively and a plethora of authorities have been referred to me,
this case falls within an extremely short and simple compass. The
essence of the material contentions of the parties that are at the
centre of the dispute between the parties resolve themselves into the
following interrelated considerations:


(a)      
Has it been established on the papers –


(i)     
that the DAB misconceived its duty under the reference by making the
interim decision?


(ii)    
that, in the terms of the agreement or the contract, the DAB was not
competent to make the interim decision?


(iii)   
that, in the making of the interim decision the DAB failed to follow
procedural rules that bind it?


(iv)   
that there has been a failure of justice in the making of the interim
decision because, for instance, there was bias or appearance of bias
on the part of the DAB, or because a party has been denied a proper
hearing?


(v)    
that the DAB’s refusal to permit a referral of its interim
decision to arbitration violates its duty to act fairly and
impartially between the parties and to adopt procedures suitable to
the dispute, avoiding unnecessary expense?


(b)      
(i)      Is the decisional process in
relation to the referral completed, with the making of the interim
decision?


(ii)    
Does the interim decision bring to finality the dispute in the
referral?


(c)       
If the applicant fails to establish that –


(i)     
the DAB, in terms of the contract or agreement, is not competent to
make the interim decision;


(ii)    
the decisional process in relation to the referral has been
completed;


(iii)   
the interim decision has determined the dispute referred to the DAB
for adjudication; and


(iv)   
the DAB, in refusing to permit a referral of the interim decision to
arbitration, has breached its duty under the agreement to act fairly
and impartially between the parties and to adopt procedures suitable
to the dispute, avoiding unnecessary delay or expense,


(aa)    
is there any contractual right of the applicant that this court may
protect;


(bb)    
are there any cogent or convincing grounds entitling the court to
intervene in and put a stop to the ongoing adjudication by the DAB
and order a referral of the interim decision to arbitration; and


(cc)     
will the order that the applicant seeks, if granted, not rather
subvert the DAB’s duty to adopt procedures suitable to the
dispute, avoiding unnecessary delay or expense?


[5]       
The DAB made the interim decision, dated 30 June 2015. The decision
is contained in an annexure entitled ‘Dispute Adjudication
Board’ (Annexure ‘FN9’ to the founding affidavit).
The decision (bar Appendixes) runs into 21 A-4 size pages. As I see
it, it contains the analyses, reasoning and conclusions which
resulted in the interim decision, which reads:


The
DAB decides that the scope of the dispute as referred by the
Contractor and defined in its CPP (PCC) (Dispute Referral) is
permissible. The DAB accordingly has jurisdiction over the dispute,
and the Parties are required to proceed with the adjudication
accordingly.’


[6]       
The next level of the enquiry takes me to an examination of the
aforementioned considerations. The starting point is the
identification of the duty of the DAB under the agreement. On the
papers it is clear that the DAB’s duty is to adjudicate
disputes referred to it by the parties to the building contract. In
the instant proceeding, a dispute respecting claim 2 and claim 3
arose; and so, a dispute was referred to the DAB. Of the view I take
of this case which will become apparent in due course, in this
proceeding, I am not interested in the respective contentions of the
parties. It need hardly saying that it was because a dispute
respecting the building contract and the agreement arose that was why
the dispute was referred to the DAB for the DAB to resolve it, and
the DAB has not resolved it and it has not refused to resolve it, as
will be explained in due course.


[7]       
I do not find it established that the DAB misconceived its duty under
the reference by making the interim decision. It has also not been
established that there has been a failure of justice in the making of
the interim decision on the basis that there was bias or appearance
of bias on the part of the DAB or on the basis that a party was
denied a hearing or that the DAB did not follow procedures it was
bound to follow.


[8]       
In its own papers, the applicant states that ‘there was an
exchange of correspondence between the parties and the DAB, and both
Parties made written representations to the DAB in connection with
the matter’. It seems to me clear that it was after the DAB had
considered the correspondence and the parties’ individual
written representations that it made the interim decision. And as I
have found, the interim decision was made as a result of analyses,
reasoning and conclusions covering some 21 A-4 size pages.


[9]       
In the decision (‘Annexure 9’) the DAB makes the
following pertinent introductory remarks:


The
Decision (Interim Decision) herein is given under sub-clause 20.4 of
the contract.


The
Contractor has referred a dispute to the DAB on 15 May 2015. The
Employer has raised its objection as to the scope of the dispute and
has questioned whether the DAB has jurisdiction to adjudicate the
Dispute referred to it. The DAB has decided to address these matters
before dealing with the referred dispute per se.


Decision:
The DAB decides that the scope of the dispute as
referred by the contractor and defined in its CPP (Dispute Referral)
is permissible. The DAB accordingly has jurisdiction over the
dispute, and the Parties are required to proceed with the
adjudication accordingly.’


[10]     
I see that the DAB made the interim decision in terms of ‘clause
20.4 of the Contract’ (ie FIDIC) on matters of scope of the
dispute and the DAB’s jurisdiction. I find that it has not been
established that the DAB was not entitled to consider these points at
the threshold before determining as the DAB puts it, ‘the
merits of the matter’. Indeed, clause 20.6 of the contract
indicates clearly that the agreement contemplated a situation where
the DAB would have to make a decision that is relevant to the dispute
referred to it but which does not dispose finally of the dispute
under the reference. And such decision could ‘be opened up,
reviewed and revised’ by the arbitrator.


[11]     
In my opinion, the interim decision falls into such category of
decisions contemplated in the aforementioned clause 20.6. And what is
more; the procedure adopted by the DAB to determine the preliminary
issues as a prelude to determining the dispute on the merits cannot
be faulted, if regard is had to the fact, as Mr Van Zyl submitted,
that the parties to the dispute agreed that the DAB was specifically
empowered to establish the procedure to be applied in deciding
disputes and to decide on the DAB’s own jurisdiction and on the
scope of any dispute referred to it.


[12]     
Furthermore, I find that DAB gave each of the parties to the dispute
reasonable opportunity to put their cases. And, as I have found
previously, it has not been established that there was bias or
appearance of bias on the part of the DAB, that is, that the DAB did
not act impartially.


[13]     
I conclude, therefore, that in making the interim decision the DAB
did not misconceive its duty under the reference and did not breach
any rule of natural justice. And it has not breached any procedural
rules under the agreement. And the irrefragable fact that remains is
that although a decision that is relevant to the dispute has been
made, no decision has been made that disposes finally of the dispute
under the reference. In sum, I find that the DAB has adopted
procedures suitable to the dispute, avoiding unnecessary delay and
expense, pursuant to the agreement.


[14]     
Based on these reasons and conclusions, with the greatest deference
to Mr Corbett, I fail to see how it can seriously be argued that the
DAB has breached any procedural rules under the agreement for
refusing to refer the interim decision to arbitration when the
decisional process in respect of the reference has not come to an
end. As Mr Van Zyl submitted, it has not been established that the
applicant will be denied the opportunity to put its case before the
DAB when the DAB is determining the merits of the dispute, which is
the subject of the reference.


[15]     
After having pored over the applicant’s founding papers very
carefully – as I should – I see that the real and true
reason why the applicant contends the DAB has no jurisdiction to
determine the dispute referred to it after making the interim
decision is not what the applicant’s counsel, Mr Corbett, tells
the court in his submission, namely that, the DAB’s refusal to
refer the interim decision to arbitration violates the procedural
rules, that is, the duty to act fairly and the duty to adopt
procedures suitable to the dispute, avoiding unnecessary expense. The
true reason is captured in para 47 of the founding affidavit. The
deponent of the affidavit states:


It
is the essence of the Employer’s case that the material
misdirection by the DAB in accepting jurisdiction to determine the
belated second claim, involving as it does a claim of N$45 million,
and not permitting this decision of the DAB to be challenged by way
of arbitration, fundamentally violates the principles of the
procedural rules namely:


47.1      
The duty to act fairly; and


47.2    
The duty to adopt procedures suitable to the dispute, avoiding
unnecessary expense.


In
amplification hereof, the Employer points out the first dispute
lodged by the Contractor in 2012 involves a disputed issue which can
easily be determined by the DAB. The second claim being the belated
dispute concerning “new rates” is a very complex dispute
involving a claim of some N$45 million. According to my
investigations, there are at least 10 lever arch files of documents
related to this latter matter which will involve a huge amount of
effort on the part of the Employer, its engineers and their
instructed legal practitioners to peruse, analyse and prepare
evidence on this claim. This will in all likelihood amount to 2 weeks
of particular preparation on the second “new rates”
claim. It would require the detailed attention of a number of key
management personnel of the Employer, including its engineering
staff. It would add to greatly increased costs of the arbitration
both in time and in terms of the time involved and the cost of the
proceedings itself. Ultimately the DAB should not subject a matter
such as this to adjudication when it is absolutely clear the DAB has
no jurisdiction to determine the second belated “new rates”
claim.’


[16]     
This, on any pan of scale, is not a cogent or convincing reason to
impugn the interim decision and the DAB’s ruling that the
adjudicating proceedings should continue on the determination of the
merits of the matter that is, on the determination of the dispute
referred to it. It should be remembered that, after all, by agreement
the parties referred to a
final decision
of the DAB the dispute that stands between them. (Italicized for
emphasis)


[17]     
Given these facts and conclusions this court is not interested in the
merits or demerits of the contentions that were placed before the
DAB; neither is the court interested in whether the interim decision
is wrong, as the applicant contends. It cannot be the burden of the
court to determine whether the interim decision is wrong or right. It
is irrelevant in this proceeding. What are relevant are that: (a) The
DAB is competent to make the interim decision. (b) It is common cause
between the parties that the parties had ample and sufficient
opportunity to put their respective cases to the DAB, and they did,
before the DAB made the interim decision, including that ‘[T]he
DAB accordingly has jurisdiction over the dispute, and the parties
are required to proceed with the adjudication accordingly’. (c)
The DAB, therefore, acted fairly and impartially between the parties.
(d) The procedure the DAB adopted as respects determining the
preliminary issues before it enters upon the determination of the
dispute on the merits is suitable for the resolution of the dispute
and avoids unnecessary delay or expense; it avoids going back and
forth in the making of a final decision on the reference.


[18]     
What are equally relevant in the instant proceeding are that the
decisional process that the DAB is seized with has not come to an end
with the making of the interim decision; and so, the interim decision
does not determine the decision referred to the DAB. In that event,
the question that falls to be answered is this: Has the applicant
placed cogent or convincing grounds before the court entitling the
court to intervene and stop a domestic or internal process before the
process has come to an end, that is, ‘without there being
finality on the dispute’, as Mr Van Zyl submitted?


[19]     
What grounds have the applicant placed before the court in its
attempt to persuade the court to intervene in the DAB proceedings? It
is only this: ‘It is the essence of the Employer’s
(applicant’s) case that the material misdirection by the DAB in
accepting jurisdiction to determine the belated second claim of N$45
million, and not permitting this decision of the DAB to be challenged
by way of arbitration, fundamentally violates the principles of the
procedural rules namely: (47.1) The duty to act fairly; and (47.2)
The duty to adopt procedures suitable to the dispute, avoiding
unnecessary expense’.


[20]     
This ground is neither cogent nor convincing. I have previously found
that in the making of the interim decision, the DAB did not
misconceive its duty under the reference and the DAB acted
procedurally fairly and impartially. It did not violate any
procedural rules binding on it in terms of the agreement. As I have
said more than once, the DAB has not taken a decision on the dispute
referred to it. I accept Mr Van Zyl’s submission that what the
applicant seeks amounts to a piecemeal adjudication of the dispute
referred to the DAB, and that runs counter to the objective of the
DAB proceedings. In this I should say that it is rather the approach
the applicant urges the court to take that will undoubtedly cause
what Mr Corbett fears, that is, ‘unnecessary delay and
expense’.


[21]     
In all this, I take a cue from conciliation proceedings under the
Labour Act 11 of 2007. Under that Act, if a dispute is referred to a
conciliator to conciliate the dispute by conciliation proceedings and
the conciliator takes a decision – an interim decision –
relevant to the dispute, but has not decided on the dispute referred
to him or her, it will be unacceptable to approach the Labour Court
to stop the conciliation proceedings and order a referral of the
dispute to arbitration.


[22]     
As matters stand in the instant proceeding, the DAB has not made a
decision on the dispute that was referred to it. In this regard, I
have said previously, there must be cogent or convincing grounds
entitling the court to stop the DAB proceedings midway and order a
referral of the dispute to arbitration.


[23]     
It must be remembered that an arbitration envisaged in the agreement
is a tribunal. And being a tribunal, it is entitled to rehear the
dispute; and it is not bound by what was said or was not said at the
DAB proceedings; and what is more, the arbitrator can consider any
decision of the DAB that is relevant to the dispute even if ‘it
does not finally dispose of the dispute referred to it. Clause 20.6
of FIDIC says so:


The
arbitrator (s) shall have full power to open up, review and revise
any certificate, determination, instruction, opinion or valuation of
the Engineer, and any decision of the DAB, relevant to the dispute.’


[24]     
Thus, the aforementioned clause 20.6 also shows clearly that the
agreement between the parties, as I have found previously,
contemplated a situation where the DAB would make a decision that is
relevant to the dispute referred to it but that does not dispose
finally of the dispute; and such a decision could be opened up,
reviewed and revised by the arbitrator. The interim decision, as I
have said previously, in my view, falls into such category. Thus, as
I have found previously, in making the interim decision on those
preliminary issues, the DAB adopted a procedure that is suitable to
the dispute.


[25]     
With all these reasoning and conclusions in my mind’s eye, it
is with firm confidence that I respectfully reject the applicant’s
contention that by not permitting the interim decision to be referred
to arbitration, the DAB has breached its duty to act fairly and to
adopt procedures suitable to the dispute, avoiding unnecessary
expense, and has thereby violated some contractual rights of the
applicant.


[26]     
On account of these conclusions and as I have said previously, in
this proceeding I am not interested in the merits and demerits of the
respective contentions of the parties in their dispute; neither
should I concern myself with whether the DAB’s interim decision
was wrong or right. I, therefore, accept Mr Van Zyl’s
submission that whether the DAB was right or wrong in its interim
decision is neither here nor there for purposes of the present
application.


[27]     
It has not been established that the DAB has breached procedural
rules under the agreement or any common law rule of natural justice.
And the applicant has not placed any cogent or convincing grounds
before the court entitling the court to make such order. Based on
these reasons I am not disposed to finding that applicant has a
contractual right, as Mr Corbett submitted, which the court may
protect by stopping the ongoing DAB proceedings and ordering a
referral of the interim decision to arbitration. Consequently, I hold
that the applicant has failed to make out a case for the confirmation
of the rule
nisi
issued on 31 July 2015.


[28]     
In the result, the rule
nisi
issued on 31 July 2015 is discharged, and the application is
dismissed with costs, including costs of one instructing counsel and
one instructed counsel.


C
Parker


Acting
Judge


APPEARANCES


APPLICANT:
A W Corbett SC


Instructed
by Ellis Shilengudwa Inc., Windhoek


FOURTH
AND FIFTH


RESPONDENTS:
D R Van Zyl


Instructed
by Conradie & Damaseb, Windhoek