The key role during the execution of the contract as "Engineer" (under the GCC) or "Principle Agent" (within the JBCC) requires regular decisions and rulings around the activities on site. This function may also be often undervalued and might attract considerable liabilities.
Professionals in the development and engineering industry are usually employed as Engineer or Principle Agent. It is required of the professional completing this important function to be au fait not only with all the terms of the contract, but also the execution thereof.
What are the consequences of inadequate decision making by the Engineer or Principle Agent under these types of building agreements? One single scenario where the courts discussed the yardstick with which the Engineer or Principle Agent is to be assessed is in the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The decision not only sets the present benchmark in this regard, but also sounds an alert to Engineers and Principle Agents to act in a acceptable way when conducting themselves as the Employer's representative on site.
In this case, like in various other instances in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal contract with the Engineer. The Engineer was employed to supervise and manage certain agreement functions.
The Employer then entered into a written contract with a Service provider to do excavations on top of a specific site. The written contract involving the Employer and the Service provider incorporated the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor raised a dispute in relation to a "notification" of likely claims corresponded to the Engineer within a letter. The Engineer did however not regard the letter as proper notice. The results of the Engineer's judgement would be a deadlock concerning the Employer as well as the Service provider that had to get resolved by an Arbitrator. The Arbitrator decided that the letter was indeed proper notice and therefore the service provider was permitted to claim as informed therein.
Resulting from the Arbitrator's verdict, the Employer had to pay for the Contractor's claim, but then claimed damages for violation of contract from the Engineer in the High Court. The Employer founded its claim on an allegation that the Engineer breached the contract by neglecting to construe the Contractor's letter as an acceptable notice of the intent to claim payment for additional work as considered in clause 50(1) of the GCC.
The primary court established that no breach of contract had taken place as the Contractor's letter did not constitute sufficient notice as contemplated in clause 50(1) of the GCC.
Nevertheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason at all why the notice contemplated in GCC 50(1) could not be in the form of a letter granted the letter was so framed as to convey unequivocally towards the addressee that the writer was invoking, or counting upon, the terms of the agreement which provided for the giving of notice. It could do so expressly or by implication. In the present case, the contents of the final paragraph of the Contractor's letter were so closely related to the substance of clause 50(1) that it completely satisfied that standard. The letter furnished information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the specifications of the agreement because it contained the information that was necessary to represent a notice as needed by clause 50(1) of the GCC. The technical approach used by the Engineer in working with the "notification" by the Contractor was not considered to be sensible by the Court of Appeal. On the flip side, the Court found that the Engineer's behavior in connection with this was not satisfactory as assessed against the standard of the "reasonable engineer".
The letter hence constituted a notice that any reasonable professional could have construed as such. The Engineer's failure to take action therefore constituted a violation of the Engineer's responsibility of care and, as a result the contract with the Employer. The Engineer was found liable to the Employer for the amount owed and payable to the Contractor under the award of the Arbitrator in the first mediation between Employer and the Builder.
Professionals in the development and engineering industry are usually employed as Engineer or Principle Agent. It is required of the professional completing this important function to be au fait not only with all the terms of the contract, but also the execution thereof.
What are the consequences of inadequate decision making by the Engineer or Principle Agent under these types of building agreements? One single scenario where the courts discussed the yardstick with which the Engineer or Principle Agent is to be assessed is in the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The decision not only sets the present benchmark in this regard, but also sounds an alert to Engineers and Principle Agents to act in a acceptable way when conducting themselves as the Employer's representative on site.
In this case, like in various other instances in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal contract with the Engineer. The Engineer was employed to supervise and manage certain agreement functions.
The Employer then entered into a written contract with a Service provider to do excavations on top of a specific site. The written contract involving the Employer and the Service provider incorporated the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor raised a dispute in relation to a "notification" of likely claims corresponded to the Engineer within a letter. The Engineer did however not regard the letter as proper notice. The results of the Engineer's judgement would be a deadlock concerning the Employer as well as the Service provider that had to get resolved by an Arbitrator. The Arbitrator decided that the letter was indeed proper notice and therefore the service provider was permitted to claim as informed therein.
Resulting from the Arbitrator's verdict, the Employer had to pay for the Contractor's claim, but then claimed damages for violation of contract from the Engineer in the High Court. The Employer founded its claim on an allegation that the Engineer breached the contract by neglecting to construe the Contractor's letter as an acceptable notice of the intent to claim payment for additional work as considered in clause 50(1) of the GCC.
The primary court established that no breach of contract had taken place as the Contractor's letter did not constitute sufficient notice as contemplated in clause 50(1) of the GCC.
Nevertheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason at all why the notice contemplated in GCC 50(1) could not be in the form of a letter granted the letter was so framed as to convey unequivocally towards the addressee that the writer was invoking, or counting upon, the terms of the agreement which provided for the giving of notice. It could do so expressly or by implication. In the present case, the contents of the final paragraph of the Contractor's letter were so closely related to the substance of clause 50(1) that it completely satisfied that standard. The letter furnished information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the specifications of the agreement because it contained the information that was necessary to represent a notice as needed by clause 50(1) of the GCC. The technical approach used by the Engineer in working with the "notification" by the Contractor was not considered to be sensible by the Court of Appeal. On the flip side, the Court found that the Engineer's behavior in connection with this was not satisfactory as assessed against the standard of the "reasonable engineer".
The letter hence constituted a notice that any reasonable professional could have construed as such. The Engineer's failure to take action therefore constituted a violation of the Engineer's responsibility of care and, as a result the contract with the Employer. The Engineer was found liable to the Employer for the amount owed and payable to the Contractor under the award of the Arbitrator in the first mediation between Employer and the Builder.
About the Author:
Focussing exclusively on particular legal fields, Dirk is able to make early and accurate assessment of merits and manage legal disputes effectively. His specialist practice areas include construction law and engineering law, insurance law, property law, medical law and product liability law.