The motivation behind this monthly newsletter is to provide better and more frequent communication to CAASA members, and to solicit suggestions and responses to the contents. We need feedback from you to ensure that the content of this newsletter, our webinars and annual conference remain both topical and relevant.
Any comments, suggestions or proposals please forward to secretary@adjudicators.co.za
CONTENTS:
Adjudication and Natural Justice
Construction Guarantees
CAASA Mentoring Programme
ADJUDICATION AND NATURAL JUSTICE
This concerns a recent court case in the English Technology and Construction Court and serves as a useful reminder of the need for adjudicators to comply with the rules of natural justice and the consequences of a failure to do so.
In the matter of Premier Modular Limited v Maidstone and Tunbridge Wells NHS Trust the Court was requested to enforce an adjudicators decision in the amount of £ 1,6 million.
The Contract was NEC4 Option A - Priced Contract with Activity Schedule. The works were for the design and construction of a new theatre at Maidstone Hospital.
The dispute arose around the Trust’s obligation to provide a permanent mains water supply for the Contractor to carry out testing and commissioning. The Contractor required this no later than 30 October 2023, but the Trust only provided this on 20 February 2024.
The Contractor notified of a Compensation Event citing Clauses 60.1(1), (14), and (18).
The Trust agreed that it was obligated to provide a water connection, but there was no requirement to provide the this by a particular date.
The Accepted Programme as identified in the Contract Data was never updated as the works progressed, the Project Manager never accepted later versions of the programme. The Accepted Programme did not provide any particular date for the Trust to provide water although a subsequent programme submission Rev 3 did. Both Parties agreed that, although later revisions were submitted, these were not “Accepted Programmes” in accordance with Clause 31.
The Rev 3 programme did set a date for the supply of water. In his decision the adjudicator decided that Rev 3 had become an Accepted Programme, the default position being where the Project Manager had not taken any steps to accept, reject or amend the programme, it was deemed “accepted.” As a result a Compensation Event Clause 60.1 (3) occurred, since the Trust had not provided the connection by the required date.
The court held that the adjudicator had decided the matter on a basis that was not argued by either party. Reference was made to Roe Brickwork Limited v Wates Construction Limited where the judge had stated:
“If an adjudicator has in mind to determine a point wholly or partly on the basis of material that has not been put before him by either party, he must give them the opportunity to make submissions on it.”
The judge in this matter accepted that an adjudicator is not required to base his decision only on the material put forward by the parties:
“but if he is to depart from the submissions, he must ensure that the issues have been fairly canvassed. The first time the Trust knew of the Clause 60.1 (3) case and that Contract Programme Rev 3 was “accepted”, was when they received the adjudicator’s decision.”
He had a duty to put his reasoning to the parties for comment and, in failing to do so, was in breach of the rules of natural justice. The court declined to grant the enforcement order as requested.
Adjudicators are given a great deal of latitude under adjudication rules to open up and review any previous decision, apply their own expertise, not follow the strict rules of evidence, provide rough and ready justice, even make the wrong decision and still have it enforced. However to ignore the rules of natural justice is a disservice to both parties and will lead to the decision being thrown out.
When in doubt, err on the side of caution.
CONSTRUCTION GUARANTEES
Construction guarantees are critical to the construction industry. They provide security to the other party should a party default on its obligations.
There are a number of service providers who make available such guarantees to the industry in return for a fee or payment of a premium.
In a recent court case Elasah Risk Consultants v NCR & Others (2026) the court rejected arguments that construction guarantees are credit agreements under the National Credit Act.
This 2026 High Court ruling clarifies a long‑standing grey area between the National Credit Act (NCA) and the Insurance Act. The court held that:
Construction guarantees transfer risk from the contractor to the employer.
Because they indemnify the employer against contractor default, they meet the statutory definition of insurance.
Issuers must therefore be licensed under section 5(1) of the Insurance Act.
Calling the instrument a “guarantee” or “credit facility” does not change its legal nature
The jurisprudence under the old Short‑term Insurance Act (STIA) still applies under the Insurance Act.
Providers like Fusion Guarantees were conducting insurance business unlawfully without a license
This is of critical importance to the construction industry in that
Banks, insurers, and guarantee providers must comply with insurance licensing requirements.
Contractors and employers must ensure guarantees are issued by licensed insurers — otherwise the guarantee may be unenforceable.
Regulatory exposure increases: issuing unlicensed guarantee insurance is unlawful.
Pricing and structuring of guarantees may well shift as they are now treated as insurance products, not credit instruments.
CAASA MENTORING PROGRAMME
The feedback to participate in our mentoring programme has been disappointing with very few responses to date.
CAASA needs a minimum of 6 people to participate in the programme. Any less and it is just not worthwhile.
If any members are still interested, we have extended the closing date to 15th July 2026. Please email secretary@adjudicators.co.za providing some details about yourself and your experience of adjudication.
