- December 13, 2022
- |Concise Law Reports (CLR), Legislation
On 1 May 2014 the first defendant was awarded a contract by the National Housing Enterprise (NHE) to construct 600 houses at Swakopmund. The total value of the project amounted to N$165 666 540. It then seems that although explicitly prohibited without the consent of NHE, the defendants entered into a sub-contracting agreement for the houses with an entity known as Dessert Paving and Construction CC and one known as New Era Investments (Pty) Ltd. It seems that during the period of construction, NHE and the first defendant ran into financial difficulties which resulted in various incidents of defaults wherein the first defendant gave notice to one or both sub-contractors to suspend their work.
Between 7 September 2015 and 6 October 2015 NHE and the first defendant entered into a compromise which resulted in a new construction agreement being entered into under the Mass Housing Development Programme. This agreement replaced the previous agreement. This agreement had a number of expressed alternatively tacit terms.
It was then complained that the first defendant frustrated the plaintiffs’ rights under this second agreement as it did not complete the houses as agreed and within the timelines as agreed. As the sub-contractors did not receive payment, they obtained a lien against the construction site in 2015, which was still in place. The plaintiffs allegedly suffered a loss of N$ 87 637 510.19 which includes monies paid over to the defendants as well as professional fees and the costs of security. The plaintiffs further claimed for damages done to the property as well as contractual penalties, escalation and for additional security to safeguard the houses in the amount of N$ 28 182 434.10.
The defendants raised a special plea, being that the contract contains an arbitration clause and argued that the special plea should be decided on by assessing the pleadings. It is argued that the plaintiffs erred by wholly disregarding the dispute resolution procedure provided for in clause 27 of the agreement. The arbitration clause met the requirements as set out in O & L Leisure (Pty) Ltd v Kelanna Investment CC T/A Chicago’s Pub and Grill (HC-MD-CIV-ACT-CON-2020/01118) NAHCMD 107 (35 February 2021). This was an expeditious and less costly manner to resolve the issue and in terms of the agreement between the parties and as such, clause 27 should be applicable to the parties as there is a dispute between the parties, which fell within the compass of the arbitration clause.
RAKOW J considered the matter and held that:
- Plaintiffs’ is relief is wider than just in terms of the agreement.
- The relief will fall outside the contract and cannot be determined by an arbitrator.
- Held further that plaintiffs discharged the onus which rested on them to convince the court that the matter should not be referred to arbitration.
As a result, the application was dismissed with costs, such costs to include the costs of one instrcuting and one instructed counsel and the matter was postponed for pre-trail conference hearing.
GRN v Ferusa Capital Financing Partners CC (HC-MD-CIV-ACT-CON-2020-02695) [2022] NAHCMD 684 (13 December 2022)