TOOLS OF THE TRADE – MARCH 2022

THE PLEA OF LIS ALIBI PENDENS IN ADJUDICATIONS

1. The defence or plea of lis alibi pendens is sometimes encountered in adjudication proceedings. This defence is raised in circumstances where there may be legal proceedings which were instituted prior to the commencement of adjudication proceedings. The most common example is a case where a payment certificate had been issued in favour of a contractor without the employer demurring. The employer simply remains silent whereupon the contractor launches legal proceedings in a court to claim judgement. The employer then, for the first time, in the court proceedings, raises a defence arising out of the contract between the parties. This leads to the contractor instituting adjudication proceedings for the determination of the contractual dispute, when the court proceedings are already pending.
2. Lis alibi pendens is a special plea that can be raised where there is litigation pending between the same parties, based on the same cause of action, and in respect of the same subject matter.^[1]
3. In order for the special defence to succeed, the Supreme Court of Appeal in Caesarstone Sdol-Yam Ltd. v. The World of Marble and Granite 2000 CC and Others (“Caesarstone”)^[2], in describing its requirements, stated:^[3]
   ‘As its name indicates, a plea of lis alibi pendens is based on the proposition that the dispute (lis) between the parties is being litigated elsewhere, and therefore it is inappropriate for it to be litigated in the same court in which the plea is raised. The policy underpinning it is that there should be a limit to the extent to which the same issue is litigated between the same parties, and that it is desirable that there be finality in litigation …’.
4. Lis alibi pendens is a dilatory and not an absolute defence. This means that in the subsequent proceedings, if a party successfully raises this defence, the later proceedings are postponed pending the outcome of the previous or pending proceedings. This is to prevent a multiplication of actions of the same dispute. In such instances, the later proceedings may well be regarded as vexatious. As was stated by Navsa JA in Socratous v. Grindstone Investments (“Socratous”):^[4]‘Courts are public institutions under severe pressure. The last thing that already congested rolls require is further congestion by an unwarranted proliferation of litigation’^[5]
5. It is important, however, to note that a court or a tribunal retains a discretion based on convenience and fairness to allow a case to proceed, notwithstanding the pending earlier proceedings. In Loader v. Dursot Bros (Pty) Ltd (“Loader”)^[6], in dealing with this aspect, Roper J said the following^[7]:‘It is clear on the authorities that a plea of lis alibi pendens does not have the effect of an absolute bar to the proceedings in which the defence is raised. The court intervenes to stay one or other of the proceedings, because it is prima facie vexatious to bring two actions in respect of the same subject matter. The court has a discretion which it will exercise in a proper case, but it is not bound to exercise it in every case in which a lis alibi pendens is proved to exist ….’.
6. Plasket, J in Keyter NO v. Van Der Meulen and Another (“Keyter”)^[8], stated that, albeit that the elements of lis alibi pendens exist in the later proceedings, the party who instituted the later proceedings may be able to satisfy the court that, same notwithstanding, justice, equity and the balance of convenience are in favour of the latter proceedings being dealt with. If the court or tribunal is satisfied that this may well be the case, the discretion will be determined and exercised accordingly.^[9]
7. It is thus clear that, on considerations of fairness and convenience, a court or a tribunal which is vested with a discretion in determining this dilatory defence, may decide not to uphold the defence in the latter proceedings but to rather permit same to continue.
8. In adjudication proceedings, further considerations are of application. In Framatome v Eskom Holdings SOC Ltd (“Framatome”)^[10], Mathopo, JA stated:‘It is plain that the purpose of adjudication was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis …’.^[11]
9. Adjudication proceedings are designed to achieve a speedy and effective resolution of disputes. To this end, the parties, as well as the adjudicator, are at all times bound by the terms of the contract which, amongst other things, prescribe strict timelines for the conduct and finalisation of the adjudication proceedings.
10. The adjudicator does not have the power to allow the proceedings to run indefinitely. When the parties have agreed to adjudicate their disputes, and the adjudicator is properly appointed, he or she must determine the dispute. The adjudicator cannot adjourn the proceedings indefinitely pending the resolution of the dispute in another forum, such as the court.
11. Consequently, the consideration which underpins the plea of lis alibi pendens, namely, to prevent a duplication of proceedings in courts, does not necessarily apply in adjudication proceedings. This is because the party who initiated the adjudication process in terms of the contract, or the parties who are involved in adjudication proceedings over a contractual dispute, is or are merely pursuing remedies in terms of the contract. Therefore, such conduct cannot be described as vexatious.

Advocate Kiki Bailey SC FAArb (SA)

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^[1]    Nestle (South Africa) (Pty) Ltd v. Mars Inc, 2001 (4) SA 542 (SCA), paras.[16] and [17]
^[2]    2013 All SA 509 (SCA)
^[3]    Caesarstone at para. [2]
^[4]    2011 (6) SA 325 (SCA)
^[5]    Socratous, at para. [16]
^[6]    1948 (3) SA 136 (T) at 139
^[7]    Loader, at 138
^[8]    2014 (5) SA 215 (ECG)
^[9]    Keyter, paras. [12] and [20]
^[10]   (357/2021) [2021] ZASCA 132 (1 October 2021);  see also Ekurhuleni West College v. Segal and Another, (1287/2018) [2020] ZASCA 32 (2 April 2020) para. [15]
^[11]    Framatome, para. [23]