The key role during the execution of the agreement as "Engineer" (within the GCC) or "Principle Agent" (under the JBCC) requires frequent decisions and judgements relating to the activities on site. This function will also be often underestimated and will draw in significant liabilities.
Experts in the development and engineering industry are usually appointed as the Engineer or Principle Agent. It is required of the specialist fulfilling this very important function to be au fait not merely with all the terms of the contract, but also the execution thereof.
Consider some of the consequences of poor decision making by the Engineer or Principle Agent under these building contracts? One instance in which the courts discussed the yardstick with which the Engineer or Principle Agent is to be measured is in the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The decision not only sets the current standard in this regard, but additionally appears to be a warning to Engineers and Principle Agents to act in a reasonable way when conducting themselves as the Employer's consultant on-site.
In cases like this, like in a number of other scenarios in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded an oral contract with the Engineer. The Engineer was hired to supervise and manage particular agreement works.
The Employer then signed a written contract with a Service provider to do digging on a specific site. The written agreement between the Employer as well as the Builder included the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor mentioned a disagreement in connection with a "notification" of likely claims communicated to the Engineer inside a letter. The Engineer did however not consider the letter as suitable notification. The results of the Engineer's final decision would be a deadlock concerning the Employer and the Builder that had to get resolved by an Arbitrator. The Arbitrator ruled that the letter was indeed proper notice and therefore the builder was eligible for lay claim as advised therein.
Resulting from the Arbitrator's ruling, the Employer had to pay for the Contractor's claim, but then claimed damages for violation of agreement from the Engineer in the High Court. The Employer structured its claim on an accusation that the Engineer broke the agreement by neglecting to construe the Contractor's letter as an applicable notice of the plan to claim settlement for extra work as considered in clause 50(1) within the GCC.
The original court decided that no break of contract had transpired as the Contractor's letter did not constitute adequate notice as contemplated in clause 50(1) within the GCC.
Nonetheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason at all why the notice considered in GCC 50(1) couldn't be in the form of a letter given the letter was framed as to communicate unquestionably to the addressee that the writer was invoking, or depending upon, the conditions of the agreement which provided for the supplying 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 was so closely related to the substance of clause 50(1) that it satisfied that standard. The letter furnished the information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the prerequisites of the agreement in that it comprised all the info which was required to represent a notification as required by clause 50(1) of the GCC. The technical strategy used by the Engineer in working with the "notification" by the Contractor wasn't considered to be reasonable by the Court of Appeal. To the contrary, the Court found that the Engineer's conduct in this regard hadn't been acceptable as measured against the standard of the "reasonable engineer".
The letter as a result constituted a notice which any sensible professional could have interpreted as such. The Engineer's inability to do this therefore constituted a breach of the Engineer's duty of care and, as a result the agreement 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 arbitration between the Employer and the Builder.
Experts in the development and engineering industry are usually appointed as the Engineer or Principle Agent. It is required of the specialist fulfilling this very important function to be au fait not merely with all the terms of the contract, but also the execution thereof.
Consider some of the consequences of poor decision making by the Engineer or Principle Agent under these building contracts? One instance in which the courts discussed the yardstick with which the Engineer or Principle Agent is to be measured is in the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The decision not only sets the current standard in this regard, but additionally appears to be a warning to Engineers and Principle Agents to act in a reasonable way when conducting themselves as the Employer's consultant on-site.
In cases like this, like in a number of other scenarios in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded an oral contract with the Engineer. The Engineer was hired to supervise and manage particular agreement works.
The Employer then signed a written contract with a Service provider to do digging on a specific site. The written agreement between the Employer as well as the Builder included the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor mentioned a disagreement in connection with a "notification" of likely claims communicated to the Engineer inside a letter. The Engineer did however not consider the letter as suitable notification. The results of the Engineer's final decision would be a deadlock concerning the Employer and the Builder that had to get resolved by an Arbitrator. The Arbitrator ruled that the letter was indeed proper notice and therefore the builder was eligible for lay claim as advised therein.
Resulting from the Arbitrator's ruling, the Employer had to pay for the Contractor's claim, but then claimed damages for violation of agreement from the Engineer in the High Court. The Employer structured its claim on an accusation that the Engineer broke the agreement by neglecting to construe the Contractor's letter as an applicable notice of the plan to claim settlement for extra work as considered in clause 50(1) within the GCC.
The original court decided that no break of contract had transpired as the Contractor's letter did not constitute adequate notice as contemplated in clause 50(1) within the GCC.
Nonetheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason at all why the notice considered in GCC 50(1) couldn't be in the form of a letter given the letter was framed as to communicate unquestionably to the addressee that the writer was invoking, or depending upon, the conditions of the agreement which provided for the supplying 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 was so closely related to the substance of clause 50(1) that it satisfied that standard. The letter furnished the information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the prerequisites of the agreement in that it comprised all the info which was required to represent a notification as required by clause 50(1) of the GCC. The technical strategy used by the Engineer in working with the "notification" by the Contractor wasn't considered to be reasonable by the Court of Appeal. To the contrary, the Court found that the Engineer's conduct in this regard hadn't been acceptable as measured against the standard of the "reasonable engineer".
The letter as a result constituted a notice which any sensible professional could have interpreted as such. The Engineer's inability to do this therefore constituted a breach of the Engineer's duty of care and, as a result the agreement 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 arbitration between the Employer and the Builder.
About the Author:
Focussing exclusively on certain 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.
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