Feb 9, 2023

Mawazo Writing Africa

Writing about the main

Aveng to pay penalties for not completing its work on The Leonardo on time

The civil engineering company Aveng Africa lost its tender to avoid fines for not completing what was then the tallest building in Africa, The Leonardo, on time.

Aveng’s bid failed in the High Court on Tuesday in Johannesburg to set aside an arbitral award made by retired Supreme Court Justice Robert Nugent, the Arbitrator, in February 2021 in favor of Seventy Five on Maude.

The Arbitrator found that Seventy Five was on Maude entitled to levy the penalty from May 1, 2019 if the agreed construction work has not been completed. Aveng and Seventy Five on Maude entered into a contract on October 25, 2015, under which Aveng was contracted to build Phase 1 of the basement of the mixed-use building.

Aveng was also contracted to build Phase 2 of the project, which consisted of the pedestal and tower portions of The Leonardo.

The parties agreed that the penalty would be R450,000 per day after the practical completion date was not met. The parties also agreed that no penalties would be imposed on the tower for the first 60 days of any delay in the overall completion date of the works.

The originally agreed date for practical completion of both phases was May 14, 2018.

However, Maude was granted a number of practice time extensions by Seventy Five.

Aveng claims that contrary to the 60-day moratorium on penalties, Seventy Five imposed on Maude from May 1st 2019 until June 29, 2019 penalties of R450,000 per day.

Seventy Five on Maude continued to impose the penalty until January 6, 2020 and purported to terminate the agreement. The termination is the subject of further litigation between the parties.

Aveng argued that the parties agreed that at least the agreed date for practical completion was no earlier than April 30, 2019.

Aveng’s basis for the request is that the arbitrator exceeded his authority and committed a gross irregularity in the conduct of the arbitration.

The Supreme Court said the issue to be resolved was whether the arbitrator exercised his authority exceeded when it rendered the award that Seventy Five on Maude was entitled to impose the agreed penalty effective May 1, 2019.

The Supreme Court said the Aveng case before the arbitration panel was that Seventy Five imposed penalties on Maude from May 1, 2019, although it was not entitled to do so. The Supreme Court said the practical completion date was clearly set by the Seventy Five on Maude as February 28, 2019, which was supported by evidence before the Arbitral Tribunal.

“The Arbitral Tribunal, correct in my opinion, has ruled February 28, 2019 as the practical completion date.

“It follows that the Arbitral Tribunal did not exceed the scope of its authority in granting February 28, 2019 as the practical completion date,” said Judge Marcus Senyatsi on Tuesday.

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