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The GCC2015 – DISSATISFACTION CLAIMS AND DISPUTE NOTICES

1 February 2022

The General Conditions of Contract for Construction, Third Edition, 2015 (“GCC2015”), a widely used contract within the South Africa Construction Industry, contains a gap in its dispute resolution provisions which may cause some confusion to Contractors and Employers alike and may require some revision by the GCC2015’s drafters when they are considering the release of a new edition.  

Clause 10.3 of the GCC2015 deals with the issuing of a dispute notice which is  a prerequisite for referring a matter to adjudication.  However, in order to issue a dispute notice, the dispute must arise from a rejected claim. The claim referred to in the GCC2015 is either a rejected contractor’s claim issued in terms of clause 10.1 or a rejected dissatisfaction claim issued in terms of clause 10.2.

If a Contractor or the Employer submits a claim to the Employer’s Agent in terms of the aforementioned provisions, the Employer’s Agent is required to provide the party who submitted the claim with an adequately reasoned ruling in respect of such claim within 28 days. If the claim is rejected, then the referring party can issue a notice of dispute and refer the matter to adjudication (if this is the method of dispute resolution chosen) within 28 days of such rejection.

Referring a matter is adjudication is simple where the claim is referred to the Employer’s Agent and the Employer’s Agent provides a formal rejection. The referring party can begin counting the 28-day time period the day after such a rejection is received. However, it is unclear as to the situation where no formal response is received – and this is unfortunately a common occurrence in construction projects.

A contractors claim in terms of clause 10.1 is submitted in the event that the Contractor is seeking an extension of time to the date for Practical Completion.  Clause 10.2. deals with claims by both the Employer and the Contractor which do not fall within the ambit of clause 10.1. Clause 10.2.1 states that “in respect of any matter arising out of or in connection with the Contract which is not required to be dealt with in terms of Clause 10.1, the Contractor or the Employer shall have the right to deliver a written dissatisfaction claim to the Employer’s Agent. This written claim shall be supported by particulars and substantiated.”

Clause 10.2.3 states that “The Employer’s Agent shall, within 28 days after the Contractor or Employer has delivered the dissatisfaction claim to him, give effect to Clause 3.2.2 and give his adequately reasoned ruling on the dissatisfaction…”

Therefore, the clause deals with the Employer/Contractor’s obligation to submit the dissatisfaction claim and the Employer’s Agent’s obligation to respond to a dissatisfaction claim but fails to offer any remedy regarding the situation where the Employer’s Agent fails to comply with its obligation and simply does not respond.

This creates a situation in the GCC2015 where the Contractor (or the Employer depending on the situation) is stuck in a limbo type situation and where it is unclear when the 28-day period for issuing a dispute notice begins and ends.

There are two potential ways to deal with the gap in the GCC2015, the first being that the period for issuing a dispute notice is not triggered and that instead an additional dissatisfaction claim must be issued which deals with the Employer’s Agent’s failure to respond to the initial dissatisfaction claim.

Alternatively, if the Employer’s Agent does not respond within the 28-day period, it is a deemed rejection of the claim and the 28-day period for issuing a dispute notice under clause 10.3 is triggered automatically and begins the day after the day on which the ruling by the Employer’s Agent is due.

The first option is, for lack of a better word, absurd and unlikely to yield any sort of different and instead is likely to lead to a multitude of unanswered dissatisfaction claims, and no resolution of the original issue which is not the intention of the dispute resolution provisions of the GCC2015.

Therefore, the approach that we have advised our clients to adopt is the second option which is to deem the Employer’s Agent’s failure to respond as a deemed rejection. Practically, this means that the 28-day period to issue a dispute notice would begin on the day after the Employer’s Agent’s ruling would be due and this would in turn in able the parties to proceed with the dispute resolution process under the GCC2015.

It remains to be seen whether the drafters of the GCC will remedy this gap in the GCC2015 in the new edition of the contract in due course and of their own volition or whether this gap will be challenged in court instead.

Author: Tamlynn Caelers-Avis, Associate