The primary job in the execution of the agreement as "Engineer" (within the GCC) or "Principle Agent" (within the JBCC) necessitates regular judgements and judgements around the actions on site. This function is also often undervalued and can bring significant liabilities.
Experts in the development and engineering sector will often be appointed as the Engineer or Principle Agent. It is required of the expert accomplishing this essential function to be au fait not just with all the contract terms, but also the execution thereof.
Exactly what are the implications of bad decision making by the Engineer or Principle Agent under these types of construction contracts? One scenario in which the courts talked about 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 judgement not only sets the current benchmark in this regard, but additionally sounds a reminder to Engineers and Principle Agents to act in a acceptable manner while conducting themselves as the Employer's spokesperson on location.
In this case, like in various other cases in the building and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal agreement with the Engineer. The Engineer was employed to supervise and manage a number of contract functions.
The Employer then signed a written agreement with a Service provider to complete excavations on a specific location. The written contract involving the Employer and the Service provider contained the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The builder brought up a disagreement in connection with a "notification" of possible claims conveyed to the Engineer within a letter. The Engineer did however not think of the letter as proper notice. The outcome of the Engineer's final decision was a deadlock between the Employer and the Contractor which had to get resolved by an Arbitrator. The Arbitrator determined that the letter was indeed appropriate notification and that the service provider was eligible to lay claim as informed therein.
Because of the Arbitrator's judgment, the Employer had to pay the Contractor's claim, but then claimed damages for breach of contract 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 intention to claim money for further work as contemplated in clause 50(1) of the GCC.
The main court determined that no breach of agreement had transpired as the Contractor's letter failed to constitute sufficient notice as considered in clause 50(1) within the GCC.
Nevertheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason why the notice contemplated in GCC 50(1) couldn't be in the form of a letter given the letter was framed as to convey unquestionably towards the addressee that the writer was invoking, or depending upon, the conditions of the contract which provided for the giving of notice. It could do so expressly or by insinuation. In the present case, the contents of the very last 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 information needed by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the specifications of the agreement for the reason that it included all the info which was needed to represent a notification as required by clause 50(1) of the GCC. The technical strategy adopted by the Engineer in dealing with the "notification" by the Contractor was not regarded as sensible by the Court of Appeal. On the contrary, the Court found that the Engineer's conduct in connection with this wasn't suitable 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 failure to do this therefore constituted a breach of the Engineer's responsibility of care and, consequently the agreement with the Employer. The Engineer was found liable to the Employer in the amount owed and payable to the Contractor under the award of the Arbitrator in the first settlement between the Employer and the Contractor.
Experts in the development and engineering sector will often be appointed as the Engineer or Principle Agent. It is required of the expert accomplishing this essential function to be au fait not just with all the contract terms, but also the execution thereof.
Exactly what are the implications of bad decision making by the Engineer or Principle Agent under these types of construction contracts? One scenario in which the courts talked about 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 judgement not only sets the current benchmark in this regard, but additionally sounds a reminder to Engineers and Principle Agents to act in a acceptable manner while conducting themselves as the Employer's spokesperson on location.
In this case, like in various other cases in the building and engineering sector, the Employer (Enviroserve Waste Management) concluded a verbal agreement with the Engineer. The Engineer was employed to supervise and manage a number of contract functions.
The Employer then signed a written agreement with a Service provider to complete excavations on a specific location. The written contract involving the Employer and the Service provider contained the General Conditions of Contract for Works of Civil Engineering Construction - 6th edition.
The builder brought up a disagreement in connection with a "notification" of possible claims conveyed to the Engineer within a letter. The Engineer did however not think of the letter as proper notice. The outcome of the Engineer's final decision was a deadlock between the Employer and the Contractor which had to get resolved by an Arbitrator. The Arbitrator determined that the letter was indeed appropriate notification and that the service provider was eligible to lay claim as informed therein.
Because of the Arbitrator's judgment, the Employer had to pay the Contractor's claim, but then claimed damages for breach of contract 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 intention to claim money for further work as contemplated in clause 50(1) of the GCC.
The main court determined that no breach of agreement had transpired as the Contractor's letter failed to constitute sufficient notice as considered in clause 50(1) within the GCC.
Nevertheless, it had been held by the Supreme Court of Appeal that:
"...there was no reason why the notice contemplated in GCC 50(1) couldn't be in the form of a letter given the letter was framed as to convey unquestionably towards the addressee that the writer was invoking, or depending upon, the conditions of the contract which provided for the giving of notice. It could do so expressly or by insinuation. In the present case, the contents of the very last 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 information needed by clause 50(1) (a) and (b)."
The Contractor's letter did comply with all the specifications of the agreement for the reason that it included all the info which was needed to represent a notification as required by clause 50(1) of the GCC. The technical strategy adopted by the Engineer in dealing with the "notification" by the Contractor was not regarded as sensible by the Court of Appeal. On the contrary, the Court found that the Engineer's conduct in connection with this wasn't suitable 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 failure to do this therefore constituted a breach of the Engineer's responsibility of care and, consequently the agreement with the Employer. The Engineer was found liable to the Employer in the amount owed and payable to the Contractor under the award of the Arbitrator in the first settlement between the Employer and the Contractor.
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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