Frequently Asked Questions


  1. Construction law is the law which regulates construction projects. In this regard, the construction contracts that are predominantly entered into are: -
    1. The Joint Building Contracts Committee contracts;
    2. The General Conditions of Contract for Construction Works;
    3. The New Engineering Contract 3 and 4; and
    4. Fédération Internationale Des Ingénieurs-Conseils known as FIDIC contracts.
  2. Within realm of construction, there are various disputes that can arise due to the nature of the work. The contracts in respect of each matter govern the way in which the matter is handled. The general contracts are aimed at balancing the interests of the employer and the contractor while mitigating the risks associated within the works for either party.
Commercial  litigation involves disputes that arise within a business context. These can include; breach of contract cases, class actions, civil RICO claims, breach of fiduciary duty allegations, joint venture or partnership disputes, business torts, and shareholder issues. At CDV Attorneys, commercial legal disputes or issues are never viewed in isolation, but are viewed as multidimensional enquiries. As such, legal matters should be viewed from various angles, with the resultant advice ranging from what we term ‘a short-game approach’ to ‘a long-game approach’.  CDV Attorneys strategises with our clients to ensure that we provide you with comprehensive thinking and legal advice regarding viable legal and commercial approaches in commercial litigation.
The majority of construction contracts have alternative dispute resolutions mechanisms. Such dispute resolution mechanisms include mediation, adjudication and arbitration.

MEDIATION
Mediation is one of the alternative dispute resolution process whereby an independent party is appointed to assist the parties to negotiate a settlement. The process is a non-adversarial process which is quick, less formal and cost effective.

The contract between the parties will specifically refer to mediation as the dispute resolution process if it is required. The referring party will refer the dispute to mediation and the parties will agree to appoint a mediator. The mediator will assist the parties in attempting to reach a settlement agreement. However, mediation is often used to assist the parties in establishing whether the dispute will be referred to adjudication or arbitration.

ADJUDICATION
It is a process that allows parties to present their dispute to an independent party for a decision. It is generally elected when a dispute needs to be resolved speedily in order for the contract to continue. The party who is referring the dispute to adjudication is referred to as the claimant and the opposing party is referred to as the respondent.

The majority of the construction contracts will require the referring party to refer to the matter within a time-frame by way of a notice of dispute. Once the matter has been successfully referred, an adjudicator will be appointed and will consider the parties evidence and make a decision which is known as the determination (“the Determination”). Generally, the adjudicator has a specific time frame to make its Determination.

Once the Determination is being handed down to the parties, it will specify the time-frame in which the order must be given effect too. In the event that the unsuccessful party fails to make payment in terms of the Determination, the successful party may, inter alia, institute an enforcement application of the Determination in the relevant court in South Africa.

Subsequent to the Determination being handed down and pending an enforcement application, the unsuccessful party may refer the dispute to arbitration. Payment must be made to the successful party in terms of the Determination despite the dispute being referred to arbitration. In the event that the Determination is overturned in arbitration, the monetary amount previously received, will be returned.

ARBITRATION
A party’s right to refer a dispute to arbitration generally depends on the contract between the parties. Arbitration is generally elected when the contract between the parties has been terminated and there is a dispute pertaining to outstanding monetary claims, such as the certification of the final payment certificate or penalties incurred from the termination. This is a longer and more costly process compared to the other forms of alternative dispute resolution. The dispute is referred to arbitration by way of a notice. The referral process must be done within the allocated time-frames in the contract.

The contents and form will be specified in the contract between the parties. Once the dispute has been referred by the Claimant to arbitration, the parties will enter into an agreement whereby their rights and obligations are agreed upon and appoint an arbitrator and/or agree on the organisation which will appoint the arbitrator.

In an arbitration, written statements and reports of a technical nature are submitted by the respective parties. This will include all of the evidence which the party will rely upon during the arbitration hearing. Once all of the documentary evidence has been submitted by the parties, the parties will agree on a hearing date.

The arbitration hearing may take from a day to several months depending on the issues at stake. Once the arbitration hearing has taken place, the arbitrator will produce an award. Unlike the adjudication determination, this award is final and binding. In the event that the unsuccessful party fails to execute the award, the successful party may immediately approach the High Court of South Africa and issue a writ of execution.

A commercial litigator is a specialised attorney who is trained and experienced in disputes pertaining to commercial matters. This would include disputes arising from but not limited to commercial transactions, payments, liquidations, damages suffered due to non-compliance and/or breach. Our team are highly experienced commercial litigators.
A construction litigator is a specialised attorney who is trained and experienced in disputes pertaining to contractual disputes between stakeholders in governmental, commercial or residential construction projects. The stakeholders can range from representing funders, employers, principal agents, contractors and subcontractors in the dispute. The general forms of constructions contracts in South Africa are the following:
  1. The Joint Building Contracts Committee contracts;
  2. The General Conditions of Contract for Construction Works;
  3. The New Engineering Contract 3 and 4; and
  4. Fédération Internationale Des Ingénieurs-Conseils known as FIDIC contracts.
It is important to remember that the above forms of contracts differ depending on the date of release. Engage with our construction litigation team.
Commercial litigation involves a commercial dispute between two or more commercial entities. Civil litigation refers to litigation between parties (including individuals) that does not involve criminal proceedings. Have a problem that needs resolving? Contact CDV Attorneys
Depending on the specific facts of a particular case, the Business Rescue Practitioner ( “BRP”) may be removed in terms of section 130(1)(b) and 139(2) of the Companies Act, 71 of 2008 ( ‘the Act”) pursuant to an application for his/her removal being successful in a court of law. Read The requirements for the removal of a business rescue practitioner
  1. The common law duties prescribe that directors of the company have to act in a manner so as to protect the best interest of the company, these core ’fiduciary duties’ include, but are not limited to the following:
  • Performing their duties with care and skill;
  • Carrying out their duties with proper diligence;
  • Acting in the best interest of the company;
  • Acting within their scope of authority and for a proper purpose;
  • Exercising proper judgment
  • Avoiding conflicts; and
  • Not using the company to benefit himself/herself (Fiduciary duties cannot conflict with other their personal interests).
  1. The New Companies Act, Act 71 of 2008 partially codifies the common law fiduciary duties, in the event that that the New Companies Act does not cater for an instance then the common law will prevail – in all other instances the New Companies Act is the determining authority.
  1. We confirm that Caroline de Villiers Attorneys represented Smeg South Africa (Pty) Ltd (“Smeg”) in this case.
  1. This case is a reported judgement.
Summary
  1. Origo sought an order declaring Smeg’s purported cancellation invalid and that Smeg be ordered to comply with the agreement, in particular to prove Origo with stock as requested/ordered on 2 August 2017. Smeg counter-applied for interdictory relief, pending finalisation of the action, in effect to restraint Origo from disposing of or alienating any of the items lists in an annexure to the answering affidavit.
  1. The key question that arose in this case pertains to the validity and legal effect, in a contractual setting, of a tender to pay in lieu of actual payment.
  1. Pursuant to an agreement entered into between the parties on 8 July 2014, by a letter dated 14 August 2017, Smeg demanded payment from Origo International (Pty) Ltd (“Origo”), within 7 days, of the sum of R419 310.65 (the claim amount), in respect of goods sold by Origo on consignment, during December 2016, which in terms of the agreement, had become due and owing by 16 January 2017. The claim amount arose from four invoices, rendered by Smeg in December 2016, in respect of which two subsequent credits were passed. The demand further states that failing payment the agreement would be cancelled.
  1. On 18 August 2017, Origo prepared a detailed reconciliation of the account which showed that a lesser amount of R78 053.29 was due to Smeg which was forwarded to Smeg’s attorneys on 21 August 2017.
  1. Origo tendered the aforesaid amount to Smeg.
  1. Smeg subsequently cancelled the agreement on 22 August 2017, which was subsequently confirmed on 8 October 2017 and again on 9 October 2017.
Court decision  
  1. The relief sought by Origo was not granted.
  1. On the basis that Origo had undertaken to properly account to Smeg and to keep all fund properly determined to be owing to Smeg in regard to Smeg products sold ( and which items were in Origo’s possession) , in a suspense account, no interdictory relief was granted.
  1. It was held that the validity of Smeg’s cancellation of the agreement is wholly dependent upon proof of the amount claimed and that failing such proof, Smeg’s purported cancellation ought to be declared invalid in accordance with the relief sought by Origo in this application. A referral for trial or for the hearing of oral evidence generally would have followed but has become superfluous in view of the pending action and it will be for the parties which practically all information having been disclosed to either come to a sensible agreement concerning the quantification of the disputed amount or to effect such amendments to the pleadings as they may consider necessary, in order to give effect to this judgment.
Our Team are here to advise on your Commercial Litigation requirements. Contact the CDV Commercial Litigation team
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