The legal implications for time baring clauses in engineering and construction contracts

When entering into contracts with Employers as the main contractor or as subcontractors construction companies especially BEE construction companies must take note of the provisions of exculpation clauses which can have dire financial consequences for the contractor especially in instances where notwithstanding that the contractor has performed the work it will not be entitled to additional payment for the said work and extension of time.

These clauses provides in most cases that if the Contractor considers himself to be entitled to any extension of the time for Completion and/or any additional payment, under any Contract, the Contractor shall submit a notice to the Project Manager, describing the event or the circumstances giving rise to the claim. The Notice shall be given as soon as possible, and not later than 28 Days after the Contractor became aware of the event or circumstance. Failure to give notice of a claim within such a period of 28 days would result in the time for completion not being extended and the Contractor not being entitled to additional payment, and the Employer being discharged from all liability in connection with the claim.

Clauses of this nature are peremptory and demand that the obligation regarding the notice and the notice period must be met for the Contractor to be entitled to any extension of the time for Completion and/or any additional payment, under any contract,

As a prerequisite to any claim submitted by the Claimant to the Dispute Board, entitling it to extension of Time for Completion and or additional payment, the Claimant must prove and satisfy to the Dispute Board that its claims complies with the provisions of time bar clause by stating and providing evidence to the effect that the requisite notice was submitted to the Project Manager and not later than 28 days after the Contractor became aware of the event or circumstance.

The UK Courts took the view that timescales in construction contracts are directory rather than mandatory. The Court ruled that this is the case especially where the contract clause in question clearly states that the party with a claim will lose the right to bring that claim if it fails to comply with the required timescale. Courts have further held that a notice provision should be construed as a condition precedent, and so would be binding if it states the precise time within which the notice is to be served, and it makes plain by express language that unless the notice is served within that time the party making the claim will lose its rights under the clause.

The South African Constitutional Court in Barkhuizen v Napier held that time bars will be upheld, where the parties had freely entered into a contract containing a time bar and provided the notice period is a clear and reasonable duration. When the parties agreed to such time barring provisions, it would be difficult to successfully argue the contrary, resulting in no case law supporting time bar provisions not being upheld.

State Liability Amendment Act – Process of attachment

In terms of s 3 (2) of the State Liability Amendment Act 14 of 2011 (SLAA),  that came into operation on 30 August 2011, the state attorney or attorney of record appearing on behalf of the department concerned, must, within seven days after a court order sounding in money against a department becomes final, in writing, inform the executive authority and accounting officer of that department and the relevant treasury of the final court order.

A final order against the department for the payment of money must be satisfied within 30 days of the date of the order becoming final; or

  • within the time period agreed on by the judgment creditor and the accounting officer of the department concerned (s 3(a)(i) and (ii)).

The accounting officer of the department concerned must make payment in terms of the final order and payment must be charged against the appropriated budget of the department concerned (s 3(b)(ii)).

If a final court order against a department for the s 3(b)(ii) payment of money is not satisfied within 30 days of the date of the order becoming final or the time period agreed on, the judgment creditor may serve the court order on

  • an executive authority and accounting officer of the department;
  • the state attorney or attorney of record appearing on behalf of the department concerned; and
  • the relevant treasury (s 3(4)).

The relevant treasury must, within 14 days of service of the final court order, ensure that the judgment debt is satisfied or that acceptable arrangements have been made with the judgment creditor, should there be inadequate funds in the vote of the department concerned (s 3(5)).

If the relevant treasury fails to ensure that judgment is satisfied or acceptable arrangements have been made in terms of subs 5, the registrar or clerk of the court concerned must, on the request of the judgment creditor, issue a writ of execution in terms of the applicable rules of court against movable property owned by state and used by the department concerned (s 3(6)).

The sheriff of the court must pursuant to the writ of execution attach, but not remove, movable property owned by the state and used by the department concerned. ‘The sheriff and the accounting officer of the department concerned, or an official of his or her department designated in writing by him or her, may, in writing, agree on the movable property owned by the state and used by the department concerned that may not be attached, removed and sold in execution of the judgment debt because it will severely disrupt service delivery, threaten life or put the security of the public at risk’ (s 3(7)(a) and (b)).

According to s 3(7)(c) ‘[i]f no agreement referred to in para (b) is reached, the sheriff may attach any movable property owned by the state and used by the department concerned, the proceeds of the sale of which, in his or her opinion, will be sufficient to satisfy the judgment debt against the department concerned’.

The sheriff of the court may, after the expiration of 30 days from the date of attachment, remove and sell the attached movable property in execution of the judgment debt. This can be done if there is no application by any party having any material and direct interest for stay in execution on the grounds that execution will severely disrupt service delivery, threaten life or put the security of the public at risk, or is not in the interest of justice.

If the above application is brought by the department concerned, the application must contain a list of movable property and the location thereof, compiled by the department concerned, that may be attached and sold in the execution of judgment debt.

This Act has brought sweeping changes and imposes enormous duty on creditors executing against the state. It is no longer possible for a creditor to issue a normal writ and proceed against the state without following the provisions of the Act as outlined above. In a point form, creditors should follow the following method:

  • The state attorney or attorney of record must notify the department concerned in writing within seven days after a court order sounding in money against a department.
  • The amount ordered by the court should be paid within 30 days.
  • If the court order is not satisfied, the creditor may serve the order on the
  • Executive authority and accounting officer of the department;
  • State attorney or attorney of record appearing on behalf of the department concerned; and
    Relevant treasury.
  • The relevant treasury must satisfy the court order within 14 days or make acceptable arrangements.
  • If the court order is not satisfied and acceptable arrangements are not made, the registrar or clerk may issue a warrant against the movables owned by the state. The sheriff must attach but not remove the goods. The sheriff and the state officials must agree on movable property owned by the state that may not be attached, removed or sold because it will disrupt service delivery, threaten life or put public safety at risk.
  • If no agreement is reached, the sheriff may attach any movable property owned by the state and used by the department concerned.
  • The sheriff of the court may, after the expiration of 30 days from the date of attachment, remove and sell the attached movable property in execution of the judgment debt.

It must be noted that the SLAA does not provide a definition for ‘state’. In this regard it might be necessary to rely on the following definition of ‘organ of state’ provided for in the Constitution:

‘Organ of state’ means

  • any department of state or administration in the national, provincial or local sphere of government; or
  • any other functional or institution –
  • exercising a power or performing a function in terms of the Constitution or a provincial constitution;
  • exercising a public power or performing a public function in terms of any legislation, but does not include a court or a judicial officer.

It can be argued that, by necessary implication, the SLAA applies to organs of state.

The author could not find any decided case that deals with this aspect of the Act and it will be left up to the courts to give clarity as to whether all organs of state can invoke the provisions of the SLAA.

This article was first published in De Rebus in 2013 (Sept) DR 20.

The Jurisprudence of Remote Piloted Aircraft Systems

drone

is South Africa ready?

The drone incident at Gatwick Airport in December 2018 has somewhat disrupted the aviation industry in the UK.

An estimated 1000 flights were cancelled and over 140 000 passengers were affected. The frustration experienced by government, business and ordinary citizens proved to be an uncomfortable, if hypothetical question to South Africa: would we be ready to handle such a disruption?

The use of Remote Piloted Aircraft Systems (RPAS), or drones as commonly known, is increasing worldwide and can no longer be ignored if we seek to not repeat the Gatwick incident. In South Africa, the RPAS are regulated by South African Civil Aviation Authority (SACAA). Legally, drones may be operated for commercial, corporate, non-profit and private operation.

Let’s look at private operations, as this is one area that is difficult to manage and enforce. Private Operations means the use of drones is for an individual’s personal use, where there is no commercial outcome, interest or gain. These operations can only be conducted in restricted visual line of sight referred to as class 1A or 1B RPA. Normally, class 1A and/or class 1B RPA is 400 metres height above the surface and cannot weigh more than 7 kgs.

Unlike commercial and corporate operations, private operations are not subjected to most of the regulatory rules or compliances. For example, there is no letter of approval required before operation, there is no need for the drone to be fitted with altimetry system capable of displaying to the operator the altitude and height and there is no need for the drone to be issued with a certificate related to personnel licensing, maintenance and logbook requirements.

However, there are important restrictions that must be observed by private operators when operating their drones. The pilot must observe all statutory requirements relating to liability, privacy and any other laws enforceable by any other authorities. Other notable restrictions include the following:

  • Cannot be operated in a 10km radius of an airfield
  • May be used during daylight in weather conditions which is clear
  • Not operated at a place of landing or take-off on a public road
  • Not operated within 50m or closer from any person or group of persons, any property without permission from the property owner

For private operators, they can be subject to either civil or criminal prosecution if they don’t comply with the above restrictions or if their actions infringe on privacy rights or lead to injury or death.

The most daunting challenge is do we have the capacity as a country to enforce these restrictions – is our aviation industry capable of managing potential disruptions, and will the judicial system be ready?