The Aveng Strabag Joint Venture (ASJV) on Thursday said it considers the dismissal, earlier this month, of its court application to prevent the South African National Roads Agency Limited (Sanral) from making a call on the bonds relating to the Mtentu bridge contract to be wrong.

It also reiterated its intention to appeal the judgment.

The ASJV on Thursday stated that it considers this matter to be “critically important” to both the ASJV and the broader South African construction industry.

The ASJV said it remains confident that its right to terminate arose after being prevented from executing works on the project site as a result of community unrest, protest action and threats of violence against its personnel.

It added that its entitlement and decision to terminate the contract “will be vindicated by the facts when properly ventilated and considered through the dispute resolution provisions of the contract”.

After terminating its contract with Sanral in February, the ASJV had launched a pre-emptive application in the North Gauteng High Court for an order preventing Sanral from making a call on the Mtentu bonds until its dispute with the agency had been resolved.

Two bonds had been provided – a R245-million performance guarantee and an R82-million retention money guarantee.

On March 22, Judge Tintswalo Makhubela dismissed the application with costs, but no reasons were immediately provided.

As a result of the application dismissal, the ASJV on Thursday said its view is that the performance security is not to be considered an “on-demand” bond, but rather a surety or accessory obligation.

It added that Sanral’s rights to make a call against the contract securities are strictly regulated and limited in terms of the Mtentu contract.

Additionally, the ASJV highlighted that it is “expressly and comprehensively indemnified for all losses resulting from any claim against the performance security, which Sanral is not actually entitled to make”.

The indemnity extends to all resultant damages and expenses, and not only to the recovery of an amount incorrectly claimed by Sanral, the ASJV advised, adding that Sanral has conceded that any potential call on the ASJV issued retention money guarantee is limited to a maximum amount of R22.5-million, thereby protecting a potential maximum call of about R82-million, together with the performance security of about R245-million.

Should a demand be made by Sanral, the ASJV said that it would take further action to protect its rights in this regard.