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Ekurhuleni West College v Segal

11 June 2020

The SCA’s view on the applicability of “natural justice” to JBCC adjudication proceedings.

Ekurhuleni West College (“EWC”) and Trencon Construction (Pty) Ltd (“Trencon”) entered into a JBCC Principal Building Agreement in terms of which EWC was the employer and Trencon was the main contractor. Various disputes arose between the parties, which were referred to adjudication before Mr Segal (the “adjudicator”). Trencon submitted a statement of claim, to which EWC responded with a statement of defence, to which Trencon replicated. Notwithstanding the absence of any provision therefor in the adjudication rules, EWC submitted a rejoinder. Trencon objected to this further submission. The adjudicator informed the parties that the rejoinder would not be considered. In an email thereafter, the adjudicator directed questions to the parties to which Trencon responded. The adjudicator decided that a hearing would not be necessary and published his decision.

EWC filed a notice of dissatisfaction referring the matter to arbitration. EWC also sought an order from the High Court for the review and setting aside of the adjudicator’s decision. EWC contended that the adjudicator had exceeded his jurisdiction and had not acted impartially or independently when he rejected EWC’s rejoinder and failed to conduct a hearing. The High Court dismissed the application for review. In coming to this decision, the High Court considered whether the principles of natural justice had been breached and determined that they were not applicable to the matter.

The SCA agreed with the High Court’s decision and elaborated on why the principles of natural justice did not apply.

The SCA held that the legal position is as set out in the case of Turner Jockey Club of South Africa[1] which stated that the obligation of a tribunal created by contract to observe the principles of justice derives from the express or implied terms of the agreement. 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 into a contract.

In the circumstances of the parties, namely under JBCC adjudication proceedings, express contractual provisions regulate the procedure that the adjudicator had to follow. The JBCC adjudication rules provide for a statement of claim, statement of defence and a replication. The adjudicator is empowered to require a party to submit further information which he might reasonably require. The adjudicator is entitled to conduct a hearing but is not obliged to do so.

EWC never challenged any of these provisions as being contrary to public policy. Therefore, there is no room for the tacit importation of any rule of natural justice.

EWC thus had to show that the express contractual provisions had been breached. The SCA determined that the adjudicator had conducted the proceedings strictly in accordance with the contractual provisions and therefore, there was no merit in EWC’s reliance on procedural unfairness.

[1] 1974 (3) SA 633 (A).