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The primary role during the execution of the contract as "Engineer" (under the GCC) or "Principle Agent" (under the JBCC) demands frequent judgements and judgements on the activities on-site. This function may also be often overlooked and will bring major liabilities.
Specialists in the development and engineering industry are usually hired as Engineer or Principle Agent. It is required of the professional completing this critical function to be au fait not only with the contract terms, but also the execution thereof.
What are the ramifications of poor decision making by the Engineer or Principle Agent under these types of building contracts? One particular occasion where the courts talked about the yardstick with which the Engineer or Principle Agent is to be assessed is inside the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The judgement not only sets the current standard in this regard, but additionally sounds an alert to Engineers and Principle Agents to act in a practical way when conducting themselves as the Employer's agent on site.
In this case, as in many other cases in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal contract with the Engineer. The Engineer was hired to watch over and administer certain contract functions.
The Employer then signed a written contract with a Builder to do excavations on a certain site. The written contract involving the Employer and the Builder included the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor mentioned a dispute in relation to a "notification" of likely claims communicated to the Engineer in a letter. The Engineer did however not respect the letter as appropriate notification. The outcome of the Engineer's decision was a deadlock concerning the Employer and the Builder that had to be resolved by an Arbitrator. The Arbitrator decided that the letter was definitely appropriate notification and that the contractor was entitled to claim as advised therein.
Because of the Arbitrator's verdict, the Employer needed to pay the Contractor's claim, but then claimed damages for violation of agreement from the Engineer in the High Court. The Employer based its claim on an accusation that the Engineer broke the contract by failing to construe the Contractor's letter as an appropriate notice of the intent to get settlement for additional work as considered in clause 50(1) of the GCC.
The initial court determined that no breach of agreement had taken place as the Contractor's letter failed to constitute suitable notice as contemplated in clause 50(1) within the GCC.
However, it had been held by the Supreme Court of Appeal that:
"...there were no reason at all why the notice considered in GCC 50(1) couldn't be in the form of a letter provided the letter was framed as to communicate unequivocally to the addressee that the author was invoking, or depending upon, the conditions of the contract which provided for the giving of notice. It could do so expressly or by implication. In the current case, the contents of the very last paragraph of the Contractor's letter was so closely connected with the substance of clause 50(1) that it satisfied that standard. The letter furnished information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with the prerequisites of the contract in that it contained all the info that was necessary to represent a notice as needed by clause 50(1) of the GCC. The technical approach used by the Engineer in dealing with the "notification" by the Contractor was not regarded as reasonable by the Court of Appeal. On the contrary, the Court discovered that the Engineer's conduct in connection with this was not suitable as assessed against the standard of the "reasonable engineer".
The letter therefore constituted a notice which any sensible engineer could have interpreted as such. The Engineer's failure to take action therefore constituted a breach of the Engineer's responsibility of care and, thus the agreement with the Employer. The Engineer was found liable to the Employer in the amount due and payable to the Contractor under the award of the Arbitrator in the preliminary mediation between Employer and the Builder.
Specialists in the development and engineering industry are usually hired as Engineer or Principle Agent. It is required of the professional completing this critical function to be au fait not only with the contract terms, but also the execution thereof.
What are the ramifications of poor decision making by the Engineer or Principle Agent under these types of building contracts? One particular occasion where the courts talked about the yardstick with which the Engineer or Principle Agent is to be assessed is inside the case of Hawkins & Osborn (South) (Pty) Ltd vs Enviroserve Waste Management. The judgement not only sets the current standard in this regard, but additionally sounds an alert to Engineers and Principle Agents to act in a practical way when conducting themselves as the Employer's agent on site.
In this case, as in many other cases in the construction and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal contract with the Engineer. The Engineer was hired to watch over and administer certain contract functions.
The Employer then signed a written contract with a Builder to do excavations on a certain site. The written contract involving the Employer and the Builder included the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The contractor mentioned a dispute in relation to a "notification" of likely claims communicated to the Engineer in a letter. The Engineer did however not respect the letter as appropriate notification. The outcome of the Engineer's decision was a deadlock concerning the Employer and the Builder that had to be resolved by an Arbitrator. The Arbitrator decided that the letter was definitely appropriate notification and that the contractor was entitled to claim as advised therein.
Because of the Arbitrator's verdict, the Employer needed to pay the Contractor's claim, but then claimed damages for violation of agreement from the Engineer in the High Court. The Employer based its claim on an accusation that the Engineer broke the contract by failing to construe the Contractor's letter as an appropriate notice of the intent to get settlement for additional work as considered in clause 50(1) of the GCC.
The initial court determined that no breach of agreement had taken place as the Contractor's letter failed to constitute suitable notice as contemplated in clause 50(1) within the GCC.
However, it had been held by the Supreme Court of Appeal that:
"...there were no reason at all why the notice considered in GCC 50(1) couldn't be in the form of a letter provided the letter was framed as to communicate unequivocally to the addressee that the author was invoking, or depending upon, the conditions of the contract which provided for the giving of notice. It could do so expressly or by implication. In the current case, the contents of the very last paragraph of the Contractor's letter was so closely connected with the substance of clause 50(1) that it satisfied that standard. The letter furnished information required by clause 50(1) (a) and (b)."
The Contractor's letter did comply with the prerequisites of the contract in that it contained all the info that was necessary to represent a notice as needed by clause 50(1) of the GCC. The technical approach used by the Engineer in dealing with the "notification" by the Contractor was not regarded as reasonable by the Court of Appeal. On the contrary, the Court discovered that the Engineer's conduct in connection with this was not suitable as assessed against the standard of the "reasonable engineer".
The letter therefore constituted a notice which any sensible engineer could have interpreted as such. The Engineer's failure to take action therefore constituted a breach of the Engineer's responsibility of care and, thus the agreement with the Employer. The Engineer was found liable to the Employer in the amount due and payable to the Contractor under the award of the Arbitrator in the preliminary 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.
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