Aveng to pay penalties for missing The Leonardo deadline

Construction and engineering company Aveng Africa has lost its bid to avoid paying penalties for failure to complete the then tallest building in Africa, The Leonardo, on time.

Aveng on Tuesday failed in its application before the high court in Johannesburg to set aside an arbitral award given by retired Supreme Court of Appeal judge Robert Nugent, the arbitrator, in February 2021 in favour of Seventy Five on Maude.

The arbitrator found that Seventy Five on Maude was entitled to levy the penalty from May 1 2019, when the agreed construction work was not completed. Aveng and Seventy Five on Maude had concluded a contract on October 25 2015 in terms of which Aveng was appointed to construct phase 1 of the basement of the mixed-use building.

Aveng was also appointed to construct phase 2 of the project, which consisted of the podium and tower portion of The Leonardo.

The parties agreed that the penalty would be R450,000 a day after the practical completion date had not been achieved. The parties also agreed that no penalties would be imposed on the tower block for the first 60 days of any delay to the overall completion date of the works.

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

However, Seventy Five on Maude granted a number of extensions for the practical completion.

Aveng contends that contrary to the 60-day moratorium on penalties, Seventy Five on Maude levied penalties from May 1 2019 to June 29 2019 at R450,000 a day.

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

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

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

The high court said the issue for determination was whether the arbitrator exceeded his powers in making the award that Seventy Five on Maude was entitled to levy the agreed penalty from May 1 2019.

The high court said Aveng case before the arbitration tribunal was that Seventy Five on Maude had levied penalties from May 1 2019 when it was not entitled to do so. The high court said the practical completion date was clearly set out by Seventy Five on Maude to be February 28 2019, which was supported by evidence before the arbitration tribunal.

“The arbitration tribunal, correctly in my view, made an award that 28 February 2019 was the practical completion date.

“It follows therefore that the arbitration tribunal did not exceed the scope of its authority when it gave the award that 28 February 2019 was the practical completion date,” judge Marcus Senyatsi said on Tuesday.

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